IKN #288Premium

The IKN Weekly
Week 288, November 16th 2014
Contents
This Week: No country for alpha, The difficult job of being a robot.
Fundamental Analysis: Fortuna Silver (FVI.to) (FSM) and First Majestic (FR.to): A silver pair
trade.
Stocks to Follow: Overview, Fortuna Silver (FVI.to) (FSM), First Majestic (FR.to), Rio Alto
(RIO.to) (RIOM), Coro Mining (COP.to), Reservoir Minerals (RMC.v), Amerigo Resources
(ARG.to), Minera IRL (MIRL.L) (IRL.to), Dalradian Resources (DNA.to).
Copper Basket: Overview, Oracle (OMN.to).
Low Cost Producer Basket: Overview.
Regional Politics: Mexico: The calls for President Peña Nieto’s resignation, Mexico: 60
conflicts between mining companies and local communities, More Mexico: Heavy tax burden
hitting miners, Dominican Republic: Barrick Pueblo Viejo is now significant to State coffers,
Puno Peru: Report on the run-off in the national press, Peru: Cajamarca protest march to Lima,
Guatemala: Roadblock protests in many parts of the country.
Market Watching: Anglo American (AAUK) looking to sell more copper assets in Chile, B2Gold
(BTO.to) (BTG): 3q14 financials.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
No country for alpha
We need to be honest. The IKN Weekly is never going to be the place that will feed you lines or
pander to your preferred worldviews in order to keep you coming back, I’m not here to win
popularity contests, nor here to make it rich as the modest though useful amount of money this
publication generates is far from the be-all-and-end-all of my brief existence on this wild and
whacky planet. Here come three statements:
• B2Gold’s 3q14, as witnessed by its financials published last week, was a prime heap of
crap.
• Rio Alto’s 3q14, as witnessed by its financials published last week, was a good period of
operations.
• The market doesn’t care.
Before we continue I’m not claiming a revelatory breakthrough in market understanding and
I’m aware of my own lack of vision and how I often get to these conclusions later than many
other people. So now we continue and check out this two day chart of BTO that sits next to
RIO.to and throws in the GDXJ as benchmark.
1

The shorter than normal timescale is chosen to highlight BTO, because on Thursday evening it
released its 3q14 numbers that got the main points highlighted on the blog (1) and those main
points were two:
• The write down of goodwill on Masbate and Gramalote that took $298m away from the
company and caused a 39c EPS loss for the quarter.
• Even when backing out that (probably necessary) goodwill adjustment, operating profit
was a poor $1m.
We take a closer look at the BTO results below, we care more about the share price reaction
here in the intro. We also take a closer look at the RIO results below, we care more about the
share price reaction here in the intro. And that share price reaction was...exactly the same.
People, this market is telling us that we can jawbone and brainstorm and stockpick until the
cows come home and nobody outside of the insular little world of gold/precious metals mining
gives a rat’s hind quarters. There’s a plain fact staring at us from out of that RIO/BTO
comparative chart. All you need to do is to avoid the producers that are under threat of being
crushed by heavy financial debt in the near or mid-term and it matters little which name you’re
left with, it’ll perform just like the others. And when it comes to the heavily indebted it doesn’t
even matter if your producer in question is small (Gran Colombia Gold) medium (Allied Nevada)
or large (Detour Gold), just make sure they’re not under any threat from the liabilities section of
the balance sheet (which should take you three minutes maximum) and you’re home clear, pick
whichever stock you like the name of, because they’re going to perform more or less equally.
If gold goes up, so will your stock. If gold goes down, so will your stock. The end.
Here today, November 2014, there’s no big advantage in stockpicking and precious little in the
way of alpha waiting for the analysis community. That’s the dirty little secret that you’re not
going to hear from people paid monthly salaries in office cubicles to crunch numbers, because
they don’t want you to know there’s no need to pay for analysis in this mining market.
The difficult job of being a robot
A nice little overview piece in MoJo and Medium this week (2) entitled “The Science of Why We
Don’t Believe Science”, which is aimed at a general audience (as the sub-header of the article,
“How our brains fool us on climate, creationism, and the vaccine-autism link” indicates) but
contains enough insights for those of us who try and often fail to eschew mental traps that
come with the market investment. Count me in on those failings. Here’s an extract from the
2

thing:
In other words, when we think we’re reasoning, we may instead be rationalizing. Or to
use an analogy offered by University of Virginia psychologist Jonathan Haidt: We may
think we’re being scientists, but we’re actually being lawyers. Our “reasoning” is a
means to a predetermined end—winning our “case”—and is shot through with biases.
They include “confirmation bias,” in which we give greater heed to evidence and
arguments that bolster our beliefs, and “disconfirmation bias,” in which we expend
disproportionate energy trying to debunk or refute views and arguments that we find
uncongenial.
The article is rather US-centric and looks more at political or interpersonal matters...
[sidebar: I like that the author chooses examples of how both the political left wing (e.g. vaccination-autism) and right
wing (e.g. climate change) chooses its beliefs and sticks with them no matter how many facts you might offer, as well as
showing the levels of sophistication in the refutation systems and how people who consider themselves more educated
fall into the exact same psychological traps as those they consider their intellectual inferiors]
...but it’s a simple step from where they are to where we, the investment community and if only
for the chance to shine a little light on our own weaknesses as traders it’s an excellent read.
I’ll leave it there, you guys are smart enough not to need a neat ending put onto this intro
piece, though I will add that these mental traps are much easier to identify in others than in
yourself. To give you just one mental pairing of my own, I find it easy to avoid the evangelical
belief of goldbugs but shaking my own inbuilt belief that juniors are undervalued and the best
are headed for massive gains no matter what gold does in the future is much more difficult.
The same mentality that has me holding Rio Alto today (good idea) had me holding it without
selling at over $5 in 2012 (turns out it was a bad idea) but the thing is, I’m not reading and
trying to get smart about this side of psychology to go work on others later, my subject is
myself. He’s a tough audience, too.
Fundamental Analysis of Mining Stocks
Fortuna Silver (FSM) (FVI.to) short and First Majestic (AG) (FR.to) long. The obvious
pair trade to take us into the new year
Today’s fundamentals section is all about two silver company trades that are now open at The
IKN Weekly. It comes after quite a bit of deliberation about both stocks in the last couple of
weeks and what you see today is my decision on what to do with the two trades, at least for
the next weeks as we move to the end of the year then we’ll see how 2015 unfolds later. So, a
quick intro, then discussion about both stocks, then a wrap up.
About the First Majestic position: As you may remember, I’ve been beating myself up as to
whether I should keep hold of my long position in First Majestic (AG) (FR.to), which has been
quite simply one of the worst investment calls I can remember making. It was badly timed and
came on the assumption that 1) silver wouldn’t drop too much and even then 2) if it did, FR.to
had plenty of asset margin that would help shore up the share price. I was wrong everywhere
on that call and having moved into FR.to as my preferred silver play (and once I’d dumped
Santacruz Silver my only silver play) I’m now severely underwater. The choice I’ve been
mooting was ostensibly “add/sell/hold?”, but in reality it’s “see or hold?” because unless there’s
a special circumstance trade that shows up, I’m not committing any more cash to long positions
until we see the back of the tax loss selling shadow, and that could last all the way up to the
closing bell on Wednesday December 31st this year.
The decision, as you’ll see below, is to hold FR.to and balance it out with a similar sized short
position in Fortuna, thereby making it into a pair trade that leaves me exposed to silver, but
with less risk and more balance. Read below for more on the why.
3

About the Fortuna Silver position: This is a short position, that was opened only last week
and originally planned as a quick trade around its 3q14 results. As it happens the original small
short got handed back to me on a silver platter after FVI came out with numbers that pleased
the market, timed along with a rebound in the silver price. FVI was bought heavily the next day
because of its apparently strong results (3) but even after eschewing my confirmation bias I fail
to see the strength that others saw, as not only were profits no more than acceptable it failed
to guide for any weakness in its balance sheet in the quarters to come and also skipped lightly
over future tax payments it needs to make in Mexico (to the tune of $10m). And then once I
began digging deeper into the results my suspicions about the weak financials being reported
by Caylloma were also confirmed (though it’s not so easy to notice at first light) which added a
bit of weight to my original short thesis even though the market told me of my mistake. All in
all, the Monday evening numbers made FVI’s operations look far rosier than they are.
As for that mistake of mine, it’s always so much easier with 20:20 hindsight (and darnit I would
have loved to have got all my current short at U$4.50 and above instead of just half of it) but
with a week’s worth of reflection behind me, I think I made a pretty dumb error of falling
headlong into a classic shorter’s trap, that one where the bear sees further and then naturally
assumes that everyone else is going to see it their way very soon afterwards. Hindsight states
clearly that I went in here too soon and should have waited until after the 3q14 numbers had
come out, because they were solid and based on a good production quarter, FVI didn’t need to
warn of looming problems or write down any assets before it was necessary (so they didn’t),
the world took the numbers at face value and bought the apparent outperforming sector stock
and current star of the junior silver producer scene.
More on Fortuna Silver and why it’s a short today: But even of you’re not on the same page
with me and don’t think it posted a weakish quarter, let’s consider just how much better FVI
has done to its peers in the last three months...
...or the last six months...
4

...or the whole of 2014.
And let’s repeat (until blue in the face if necessary): I’m not saying it’s a bad company or
anything or the ilk, on the contrary it’s a very well run operation. I am saying it’s an overpriced
stock and you can dress up its financials in any way you want, but it’s not making any money at
$16/oz silver, just like the rest of them.
FVI said during its ConfCall on Tuesday that they hadn’t looked at the issue of asset write
downs as yet and would consider them in its Q4 period. One part of that is certainly untrue,
because any commodity driven company worth its salt would have a good off-record idea of
where its asset value stands at any given underlying price for its products, mining or otherwise.
But be in no doubt, write downs are on the way here.
The 3q14 numbers: We start with the revenues ($46.384m), COGS ($29.664m) and Mine
Operating Income (MOI) ($16.72m) at FVI in
the quarter just gone, because as this chart FVI.to: Quarterly Earnings overview
50
shows they were pretty much in line with the
45
previous couple of quarters. This went as
40
expected, because the production upgrades at 35
San José (and minor at Caylloma) managed to 30
25 cancel out the price drop for the products. This
20
of course means that the price slide in silver,
15
gold and other metals we’ve experienced in 10
4q14 won’t be covered by new expansion, the 5
upgrades are now baked in and 4q14 is set to 0
come in with lower revenues.
However, where FVI sparkled this quarter was
in the “other expenses” part of the P+L sheet, as that came in at just $3.5m, with $2.467m of
that G&A. The reason is held in the SG&A filings found in the note 14 to financials.
$m FVI: SG&A by division, per quarter
10
9 San José
8 Caylloma
Corporate
7
6
5
4
3
2
1
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14
source: Company filings
5
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
source: company filings
srallod
fo
snoillim
revenues
COGS
Mine Op. Inc

Corporate expenses fell off a cliff at FVI, that’s how FVI managed to get things under $3.5m in
3q14, though it remains to be seen whether it will be able to repeat such a sharp drop. There
were just $57k in other items, so $13.2m of the MOI made it to operating profit. From there
FVI posted a crowd-pleasing $7.824m net profit and those who only get as far as the EPS
number before hitting the buy or sell buttons were happy. But as FVI has a big tax bill
(estimated at $10m on the ConfCall by the CFO) to pay in Q4, don’t expect the same this
quarter coming.
I want now to take a closer look at FVI’s Caylloma operations. I have no problem with the San
José mine and it’s a great operation, but as last week’s short thesis rested a great deal on the
perceived weakness of FVI’s other mine,
Caylloma in Peru, it’s time to see how that plan
is looking. I posited last week that Caylloma
was a breakeven operation in 3q14 and would
almost certainly make a loss in the quarter to
come, so what with lower market prices for
silver and unprofitable assets to consider, it was
ripe for write-downs. Those asset adjustments
didn’t happen in the 3q14 numbers, but from
what I see the company has only booted the
problem into the future and 4q14 will see them
obliged to do something.
By tracking the sales and received prices for
each of the four products from Caylloma (in order of financial importance silver, zinc, lead and
gold) and then using estimates for Q4 prices, and then using the per tonne cost basis to get an
overall cost reading for the mine, we can see what sort of operating margin this mine on its
own (without the benefits of San José or the drag of corporate HQ costs) runs. Here’s the
chart:
Caylloma: Total revenues versus total op costs
25
20
15
10
5
0
6
31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
FVI: London Fix Ag versus FVI realized Ag price
versus Net realized price, per quarter
35
30
25
20
15
10
5
0
$m
Revenues cost
source: company filings, IKN ests
As for costs, what’s remarkable is the steady state of costs in absolute terms at Caylloma. The
average runs at around $10.5m per quarter no matter how much metal they produce or what
fluctuation is seen in the throughput rates. This quarter, at $10.7m, was slightly higher but
that’s as big a difference as you get.
As for revenues, Caylloma benefited from extra zinc production this quarter as well as the
~10% higher prices at market for that metal. The margin as per the above chart was $7.18m
But with prices now dropped back and the big slide in silver prices already in, revenues are
going to drop in 4q14 and we expect the margin to drop to $4.53m
Here’s how that translates into mine earnings over the last three quarters, as well as our house
estimates for Caylloma for 4q14.
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
U$/oz Ag
Net realized $
realized $
London fix
source: Kitco, FVI data

Caylloma: income items, 2014, by qtr
$m
8 total revs - total cost
7 EBIT
net income
6
5
4
3
2
1
0
1q14 2q14 3q14 4q14est
source: company filings, IKN ests for 4q14
• In 3q14 net income for FVI from Caylloma was just under $2m.
• In 4q14 net income for FVI from Caylloma is expected to be just over $1m.
However, this confirms my theory that Caylloma is a breakeven-at-best, lossmaking-likely
operation because the above net returns come before sustaining capital or exploration expenses
are factored in, which is capital that comes from the corporate entity. So far this year FVI has
spent an average of $2.2m per quarter in 2014 on
sustaining capital at Caylloma, which in itself is a
$m FVI: Capex at Caylloma, last four years
reduced number from the original budget and 35
greatly reduced from the capital expenditure
30
budgets for Caylloma in years gone by.
25
20
It means that in essence the mine only broke even
15
in 3q14 (in fact it made a tiny loss to the
10
corporation) and you can bet large that it’s a net-
5
net money loser this current quarter. It will
0
continue to be so as long at silver stays under
2011 2012 2013 2014 to date
$17/oz, at which point it can aspire to break even.
source: company filings
Even so, at some point FVI will need to spend at
least a little more on sustaining capital at Caylloma
and to do that, it’s going to need either substantially higher metals prices or it’s going to be
happy about it taking profits from San José and using them to shore up its lossmaking mine.
The bottom line to this analysis is that the FVI 3q14 numbers really weren’t all they were
cracked up to be. San José’s a fine operation, but next quarter it needs to pay its taxes and that
will take care of all its profits. FVI managed to cut corporate G&A to the core, it remains to be
seen if that new low level can be sustained. But at Caylloma, the mine as expected made no
money and is on course to lose money this quarter, due to the current level of metals prices.
Add the high chance of the write downs in 4q14 and the quarter just gone is the last time FVI is
going to impress anyone with a headline EPS number for the foreseeable future, unless of
course silver and gold prices come to its rescue.
First Majestic (AG) (FR.to) 3q14 financials
FR reported its quarter on schedule early Wednesday morning (4) and as a long that day, when
I saw the numbers and the reaction from the market my heart sank. But my heart didn’t sink
because the FR.to results were poor as that was already a given, it sank because of the market
reaction because it was immediately clear that nobody had been paying attention, so the
$10.5m net loss (EPS -9c) came as some sort of an unpleasant surprise to the world.
I facepalm. Now that I’ve facepalmed, here’s a chart:
7

Based on the previously announced 3q14 production numbers and guidance at that time, our
house model put revenues at $42m and costs at an conservative $34m. As it happens revenues
came in a little shy of that at $40.77m, but FR.to did a better job at costs reduction than
expected and that number came in at $31.973.
However, in general terms the revs and COGS guesstimates were inside a reasonable margin of
error and largely cancelled out the misses on either side. We could note the lower than
expected amort/deprec, the forex gain and and the lower than expected investment gain on
financials but there comes a point when the details get a little too minor to affect the overall
narrative and the bottom line is, the net loss of $10.45m for FR.to in 3q14 was pretty close to
our forecast and a logical outcome knowing what we already knew about the quarter from the
company. Now check that chart above once more, because anyone who’d bothered checking on
the FR.to quarter would have known that a ~$10m loss was in the cards. But according to the
movement we saw at point [2] on the price chart, the open of Wednesday morning, the loss
came as a shocking surprise to a whole bunch of shareholders of this stock who proceeded to
dump it wholesale while the rest of the juniors market put in a small rally. To hammer it home,
let us be crystal clear; if I can get close with my creaky homespun spreadsheets, a brokerage
system of financial insto that holds and watches a large holding in FR.to should be able to
predict much closer than that just by feeding in the production numbers as offered in early
October then hitting a button. There are juniors and there are juniors, but the First Majestics
are not rocket science. I also lay before you the fact that FR.to is the company that’s been
beaten silly for the last few weeks by incessant selling, driven by the weakness in the price of
silver and its weak guidance for the quarter. The upshot was that when I dialed up the FR.to
3q14 quarterly at 7am on Wednesday morning I sighed with relief. It was negative yes, but it
was totally in line with what was expected of the stock and so, being long and having suffered
down from $10 and above, I thought I was in for a rally. Or at least it would move with the
greater tide. Or at least not get any worse that morning. Wrong, wrong and wrong.
As it happens, the Friday rally came [4] and saved my skin somewhat (and let us be clear,
every single percentage point of that ~11% bottom-to-top move was justified and deserved).
But still, I was a little flabbergasted that First Majestic sold off the way it did on financials that
had been flagged as clearly as they’d been, the bad news had been baked in and why holder
should sell at that point, beyond my understanding.
What I want to do now is show you why it’s going to be worth holding FR.to through the
current quarter, as it’s currently the mirror image of Fortuna Silver. FVI is overvalued, FR is
8

undervalued and the reason shows up when you start scraping at the company’s costs profile.
This chart gets to the heart of the matter. In its 3q14 guidance back in early October FR.to said
it was cutting costs but we wouldn’t see
the benefit flow to the bottom line until
4q14, when financial expenses such as
redundancy payments had washed
through (FR.to has laid off around 20%
of its workforce, significant upfront
expense comes with that many
pinkslips). The 3q14 numbers for
operating expenses show that FR has
indeed cut its costs significantly, we
just can’t see it yet on bottom line
numbers. We assume a continuation of
those efforts in 4Q and the total for
expenses (you see the five items listed
there) at $46.5m.
The driver of the cuts is at the mine level, at COGS. Here we see the relationship between mine
costs and total expenses, it’s a pretty regular ratio.
FR.to: COGS versus Total Expenses
70
60
50
40
30
20
10
0
9
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
$m
Cost of Sales
Total Expenses
source: company filings
And now for past and future revenues. First we need to take a guesstimate on production for
the quarter to come. There are a whole range of charts I could show you but I’m going to stick
with just one, that shows the consolidated Silver Equivalent (AgEq) production per quarter and
how it splits down into the company’s five working mines. Here you go:
FR.to: Silver Equivalent production, per qtr
4500000
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
FR.to: expenses breakdown
70
65
60
55
50
45 40
35
30
25
20
15
10
5
0
Oz AgEq
La Guitarra AgEq
Del Toro AgEq
San Martin AgEq
La Parrilla AgEq
La Encantada AgEq
source: company filings
The basic story here is that the poor production quarter at La Encantada and La Parrilla in Q3
90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4
$m
other
share-based payments
depletion, deprec& amort
G&A Cost of Sales
source: company filings

shouldn’t repeat and with that, we’ll return to the type of production profile seen in 2q14 (in
fact I have it at 3.90m oz AgEq, thanks to improved but not record silver production plus higher
base metals production than in 2q14).
We can then estimate an average price for silver in 4q14 base don what we know so far, then
factor in those silver ounces that FR in its infinite wisdom decided not to sell in 3q14 (they’re
now sold, we’re told), and put them together with costs in this chart:
90 FR.to: Quarterly Revs vs Total Expenses
80
70
60
50
40
30
20
10
0
10
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
source: company filings
srallod
fo
snoillim
revenues
Total Expenses
Indeed, our model predicts that the consolidated FR.to returns to operational profitability in
4q14. Maybe only just, but were in better shape than the quarter just gone for sure and that’s
despite the further drop in the price of silver.
FR.to: Operating Income per qtr
45
40
35
30
25
20
15
10
5
0
-5
-10
-15
90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4
source: company filings, IKN ests for 4q14
srallod
fo
snoillim
Once we get out of the end of the pipeline, the model points to a modest 1.7c/share EPS for
4q14 (and by the way I’m cheating slightly on this chart to keep in readable, as the 4q13
quarter was when FR.to swallowed its big write down and ended with a 69c negative EPS which
I’m not showing to full scale because it throws the pretty visuals out of kilter too much)
0.30 FR.to: Quarterly EPS
0.25
0.20
0.15
0.10
0.05
0.00
-0.05
-0.10
11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
source: company filings
erahs
rep
$
Under 2c/share isn’t much, but it’s better and it will also show the world that FR.to can indeed

survive and make money in the current low silver price environment. Which brings us to our
final chart today, equity (i.e. book value) per share:
FR.to: Equity per share
6.00
5.00
4.00
3.00
2.00
1.00
0.00
11
80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
source: company filings
erahs/$U
What we’ve seen in the last year or so is an FR.to with a fairly constant book value of around
$5/share (in fact, 3q14 has it at $4.97 and the model forecasts it to return to $5.05). Meanwhile
its operating performance has dragged, silver prices have dived and as a result the share price
has come down from its highs (remember it was a $20 stock not so very very long ago) and is
now trading at 1X book, give or take a tenth or so on any given day (at the U$5.28 close of
Friday we’re at 1.06X). That’s one serious fall from grace and on the evidence of 3q14 alone, it
can be justified if the company is incapable of generating free cash flow or operating profits.
Meanwhile, Fortuna Silver (FSM) (FVI.to) is being priced at 2.2X book and 2.37X book because
it’s capable of a $6m net profit. The fact that FVI has a large tax bill to pay in 4q14 and is likely
to write down assets, plus the way in which one of its only two mines was unprofitable in real
terms in 3q14 and will continue to be so in 4q14 has so far been ignored by the market.
Discussion and conclusion
The thrust of the argument should be plain by now, even if you skipped over the introduction to
this double-header fundies note.
FVI looks very expensive and overbought on a 3q14 result which might have pleased the
market due to its bottom line, but it wasn’t that great and it won’t be repeatable in Q4 or
beyond. Caylloma is indeed dragging on this company and will do until silver prices improve
substantially, meanwhile it trades at 2.3X book.
FR looks very cheap and oversold on a 3q14 result that was poor, but had already been flagged
and baked into the price (why it sold off again can only be answered by psychologists). It’s
cleaning up its costs act and we’ll see those benefits in Q4, so as long as it gets back on track
production-wise it should be able to return a modest net profit this current quarter, even under
the lower silver price deck. At 1.06X book it’s historically cheap and once it shows itself to be on
the mend, 1.5X is an easy get.
Therefore the trade is to pair these two medium sized silver producer plays and go long First
Majestic (FR.to) (AG) and short Fortuna Silver (FVI.to) (FSM), with a view to playing this pair to
year end minimum in order to bring a little stability to the tax loss season, as well as betting
that FVI will underperform FR in the weeks to come.
Stocks to Follow
There were eight winners (DNA.to, RMC.v, IRL.to, NCQ.to, LRA.v, GQC.v, COP.to, SRL.v) and
six losers (RIO.to, BTO.to, FCV.v, AG, ARG.to, FSM short) from our 14 open positions last week
and although the trend was for the smaller positions to be the winners and the bigger ones to

be the losers, even the losers didn’t lose much and they got a helluva lot better than where
they were midweek by the time the Friday close came around. The worst performance came
from Focus (FCV.v down 11.1%), while some good percentage gains were racked up by Coro
Mining (COP.to up 33.3%), Lara Exploration (LRA.v), Dalradian Resources (DNA.to up 14.5%),
Salazar Resources (SRL.v up 13.3%) and Reservoir Minerals (RMC.v up 13.0%), though we
need to point out that most of those were bouncing from particularly low lows and weren’t
doing much more than reacting to recent overselling.
With the opening and keeping open of the Fortuna Silver (FVI.to) (FSM) short there are now 14
open positions on our ‘Stocks to Follow’ list, one less than the self-imposed maximum.
Reco Current
company Ticker this week Avg Price date PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to buy C$2.30 07-apr-11 C$2.71 17.8% Top Pick, $3.30 tgt, Best PM Jr
Recommended long positions (in current order of preference)
B2Gold BTO.to buy C$2.32 12-sep-14 C$1.93 -16.8% High value entry point now
Dalradian Res DNA.to buy C$0.64 27-oct-13 C$0.63 -1.6% Nov'14 tgt $1.25, top Au expl
Reservoir Min. RMC.v buy C$6.05 18-jun-14 C$3.90 -35.5% Best spec Cu play
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.20 -13.0% tgt 50c, added, avged up
First Majestic AG spec buy U$10.51 10-aug-14 U$5.28 -49.8% Sole Ag, hit hard by dump
Amerigo Res ARG.to hold C$0.405 20-jul-14 C$0.345 -14.8% Small Cu play, good value
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.085 -68.5% Waiting for financing news
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.78 -25.7% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.485 -57.8% solid biz model, LT hold
Goldquest Min. GQC.v hold C$0.26 27-oct-13 C$0.11 -57.7% no point selling so cheaply
Recommended short positions
Fortuna Silver FSM SHORT U$4.12 10-nov-14 U$4.43 -7.5% New short
Smaller/Riskier
Coro Mining COP.to spec buy C$0.075 26-jan-14 C$0.04 -46.7% Added avged down Nov'14
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.17 -39.3% small spec, new China JV
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dec-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
Network Expl. NET.v feb'14 C$0.01 22-jul-12 C$0.005 -50.0% position closed, did nothing
Tahoe Resources TAHO feb'14 U$13.10 08-apr-13 U$21.72 -65.8% short closed due to reality
Darwin Res DAR.v mar'14 C$0.10 14-jul-12 C$0.045 -55.0% tiny risk play dropped
B2Gold BTO.to mar'14 C$3.07 28-nov-12 C$3.35 9.1% closed to free up capital
Pretium Res PVG mar'14 U$5.38 22-nov-13 U$6.50 -20.8% short closed as port longer
Gold Res Corp GORO may'14 U$5.07 26-jan-14 U$4.12 16.7% took profit
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Took profit, sm near-term win
Eco Oro Min. EOM.to aug'14 C$0.48 22-sep-13 C$0.26 -45.8% sold small loser to make room
True Gold TGM.v sep'14 C$0.395 02-feb-14 C$0.41 3.8% M&A won't happen, sold
Santacruz Silver SCZ.v sep'14 C$1.04 26-jan-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-apr-14 U$0.99 -28.3% failed trade, sell, raise cash
Kinross Gold KGC nov'14 U$2.90 20-oct-14 U$2.15 -25.9% V small trade, didn't work, chau
2009, 2010, 2011, 2012 and 2013 closed positions in appendices below
Now for some notes on a selection of the above stocks.
Fortuna Silver (FSM) (FVI.to): Short position opened. It’s opened under the FSM ticker in
the NYSE (far easier for retail to short in the USA than in Canada) and as explained in the Flash
12

update of Wednesday morning (see appendix 1) and above there’s been a change of plan
compared to this time last week. As things turned out I do well in opening the short on
Monday, managed to get a better price for the second tranche once the market went haywire
over what was reasonable but by no means great numbers, and come the end of the week FVI
had started to show signs of weakness. Unsurprising, as anything above CAD$5 is wholly
unsustainable.
First Majestic (FR.to) (AG): Holding. Again, a lot about the stock above and the decision to
hold through and make it the long part of the (artificially) new long/short pair on silver
producers. With the state of the market and my current uncertainty about what the year-end
tax loss selling season might bring, holding a long/short pair makes practical sense, that aside
from picking an overpriced stock for the short and one that’s been beaten in an unjustified way
to hold long.
Rounding off the subject today, here’s the ten day chart of FR.to, FVI.to and SLV. One of these
three is too highly priced.
Rio Alto Mining (RIO.to) (RIOM): Here are ten days of RIO.to set against GDXJ, which
shows our Top Pîck beating out its most logical benchmark by a few percentage points over the
last two weeks, though its also abundantly clear that the two trade together on the greater tide
of gold movements.
Still, it’s not a bad thing when your chosen vehicle reports a quarter and doesn’t get whacked
over the head for doing so in the current market climate, and that’s the case for RIO.to because
13

on Monday (5) it came out with strong numbers for its 3q14 period. The 8c EPS all fines and
personally the pick of the items was the All-In Costs number of U$940/oz (that’s everything
everything costs, not a line item left out, not “op costs” or “total costs” or “AISC” nor any other
malarkey number) which shows just how well RIO can stand up to the lower price environment
for gold in the near or mid-term future and
still keep churning out net profits. The
RIO.to: Quarterly Earnings Overview
numbers have been picked over by the $m
revenues COGS amorts gross profit
90
market commentators, the consensus is of
80
a strong quarter (hey, nothing much else to
70
say) and there’s also agreement that the
60
next price driver will be news on the 50
Shahuindo. I’m not going to go over the 40
results in great detail, but one chart does 30
stand out from all others on the house 20
model and that’s this one (right): 10
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14
Check out how RIO ignores gold price
source: company filings/IKN ests
fluctuation problems and just keeps
churning out $65m and $68m revenues
quarters in 2014, while trimming costs all the time. The result is better gross profit and it all
points to a mine called La Arena that runs on rails.
And of you were wondering who it was selling RIO in large chunks, including that late day
Friday burst that dragged to stock back to $2.71 at the close, that was Aberdeen (AAB.to) and
Stan Bharti, liquidating so they can go PGM mining in South Africa (6). Each to his own, I
suppose.
Coro Mining (COP.to): I’d heard on the jungledrums that the Sheldon Inwentash distressed
selling had caught the directors at COP somewhat unawares and it also came during a quiet
period when they weren’t allowed to buy or sell their own stock. I’d also heard that once the
quiet period was lifted they’d be in there buying, so it was gratifying to see exactly that happen
last week:
COP directors, led by Michael Philpot, bought chunks of their own stock at 3c and 3.5c, which
bolstered it at the right time and saw the price finish at 4c once Friday’s rebound was factored
in, all on above average volumes that were led by but certainly not exclusive to the insiders.
In other news, the San Jorge copper project in Mendoza Argentina is getting seriously pumped
by its new optionees the Russians. Here’s a link to the latest in features on the project in the
local and regional Mendoza press (7) dated Saturday November 15th and there’s plenty more
hearts and minds going on where that one came from. By way of a reminder, the Russians
(Aterra and Solway, known as A&S) are earning into 70% of San Jorge via work and small-ish
staged payments and have the option to buy the rest from COP.to. Here’s a snippet from the
COP MD&A to explain how that would work
14

“A&S may acquire the remaining 30% of San Jorge by paying an additional $3.0 million within 6
months from signing the DA or $5.0 million within 18 months from signing the DA, in which event
Coro will retain a 2.5% NSR on the production of all metals, except gold.
As the parties have now signed the Definitive Agreement (DA) the clock is now running on
those payments. I’ve heard that COP isn’t expecting A&S to go for the earliest payment
schedule, so perhaps eyes on a useful $5m cheque in 2016. But if the mine ever gets off the
ground the really useful part of the deal would be that 2.5% NSR, that could be worth a lot of
money come the day.
Reservoir Minerals (RMC.v): RMC did well and
its rebound started before the sector decided to
do the same. This ten day chart (I seem to be
turning into a 10 day chart fanboy at the moment,
I like the perspective of looking back on the
previous week’s moves and comparing them to
any words or thoughts of last week)
Shows RMC suffering from selling under volume
the previous week, but last week’s relative quiet
allowed it to bounce back up quite easily and
regain $4 before a slight fade into the close.
Amerigo Resources (ARG.to): It spent all week jumping around 35c, what looks like the
new normal level for this stock.
Minera IRL (IRL.to) (MIRL.L): Minera IRL’s 3q14 financials turned up a little earlier than I
thought they would on Wednesday evening and the basic story is that..
1) Still no finalized deal for Ollachea. This was expected (see last week) though by taking
a risk and reading between the lines where perhaps we shouldn’t (IRL has disappointed
too many times to be able to read or trust with soft guidance) the company is close to
a deal by the sounds and the tone of both the written documents and the ConfCall the
next day.
2) Until the Ollachea financing is closed, we’re not going to get much movement with the
share price.
3) But it’s worth noting that the small Corihuarmi operation offered up decent numbers,
with cash costs of U$704/oz meaning that it’s still throwing off useful free cash flow.
There was some exploration success reported in the period that looks likely to add a
little to the already extended mine life, perhaps another year to squeeze out of the
current ops, which means it could still be an operating heapleacher in 2017
4) Cash position at end quarter was ~U$5.4m, and that’s in line with expectations. It’s not
a perfect world on this score and the Macquarie debt sitting in liabilities means it’s still a
negative working cap company, but the treasury position as stands gives IRL some time
to play with while the final financing deal is worked out. As previously noted, IRL is
probably in shape as stands to get to 2q15, though anything much further than that
would mean it’s limping badly. The deal needs to be done and the sooner the better.
In trading, not much happened but it did at least come off the worst prices when the rest of the
sector lifted Friday. Seeing it move up with the tide is about the best I can hope for until it
generates its own market moving news. And that’ll be Ollachea, nothing else.
Dalradian Resources (DNA.to): It was good to see this one pop back up too, though volume
was only OK, nothing outstanding.
15

The Copper Basket
After forty-six weeks of 2014 The Copper Basket is showing a 17.88% loss to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 541.54 3.75 148.3%
2 Lumina Copper LCC.v 6.29 44.07 440.70 10.00 59.0%
3 NGEx Resources NGQ.to 1.43 186.52 242.48 1.30 -9.1%
4 Reservoir Min. RMC.v 4.97 47.55 185.45 3.90 -21.5%
5 Nevada Copper NCU.to 1.35 80.5 118.34 1.47 8.9%
6 Hot Chili Ltd HCH.ax 0.425 333.11 63.29 0.19 -55.3%
7 Western Copper WRN.to 0.76 93.68 61.83 0.66 -13.2%
8 Copper Fox CUU.v 0.375 402.96 58.43 0.145 -61.3%
9 Panoro Minerals PML.v 0.35 220.25 57.27 0.26 -25.7%
10 Curis Resources CUV.to 0.57 74.79 50.86 0.68 19.3%
11 NovaCopper NCQ.to 1.60 60.15 46.92 0.78 -51.3%
12 AQM Copper AQM.v 0.11 139.24 9.05 0.065 -40.9%
13 Cordoba Min. CDB.v 0.90 58.81 8.53 0.145 -83.9%
14 Coro Mining* COP.to 0.10 159.37 6.37 0.04 -60.0%
15 Oracle Mining OMN.to 0.27 49.03 2.45 0.05 -81.5%
NB: HCH.ax priced in AUD$, rest CAD$ //CDB 2x1 split May'14 Portfolio avg -17.88%
The basket average finally managed to stop the rot and put in a weekly gain, though it was still
less than 1% overall. There were five
winners on the week (RMC.v, NCQ.to, 25% The Copper basket 2014, weekly evolution
PML.v, WRN.to, COP.to), three unchanged 20%
stocks (LCC.v, AZC.to, OMN.to) and seven 15%
week over week losers (NGQ.to, CUU.v, 10%
HCH.ax, NCU.to, CUV.to, AQM.v, CDB.v). 5%
The biggest wins came from Coro Mining 0%
-5%
(COP.to up 33.3%) and Reservoir Mining
-10%
(RMC.v up 13.0%), with both of those
-15%
bouncing from recent low points. The 8.2%
-20%
put on by Western (WRN.to) wasn’t bad
-25%
either and between those three the overall
weekly basket balance was tipped in favour
of the bulls. For once.
16
ht5naj ht61 ht61 ht9 ht03 ht02 ht11 ts1nuj dn22 ht31 dr3gua ht42 ht41 ht5tco ht62 ht61
source: IKN calcs

Market prices for copper started and finished the week at just over $3/lb, and once again tried
and failed to meaningfully pierce the $3/lb downside resistance.
As this dailies chart emphasizes, three is indeed the number of counting. If you check out the
weekly and even the monthly charts for copper, the same story applies.
Chatter this week was again about Chinese State strategic copper buying and stocking, with
Andy Home of Reuters picking up on the issues we mentioned in passing last week. His
observation that just because China’s buying more in 2014 doesn’t mean it’s going to buy less
in 2015 fits well with what we’re seeing at the moment. Still bullish after all these months, my
confidence is now growing about this $3/lb level; I’d be surprised if the bears win out from here
to Chinese New Year. The problem is finding a decent copper junior to add to the bunch
already held, not that easy, a lot of imperfect projects out there.
Now for the inventories section and the weekly bullet points:
• Overall world stock levels dropped again last week, but not by much. They were down
1.469 metric tonnes (mt) (-0.5%) to finish the week at 277,470mt.
• The Shanghai Futures Exchange warehouse stocks dropped by 1,430mt (-1.6%) to
17

finish at 88,140mt for the week. That’s two weeks of declines, gradual for sure but
declines all the same.
• The LME copper warehouse inventories went up a tiny 450mt to finish at 160,800mt.
• The Comex warehouse stocks number dropped a little, down 489mt (-1.7) to end the
week at 28,530mt.
Overall, a quiet one for the numbers, more heat than light from the metals chattering classes.
Our usual look at the 2014 Shanghai inventory chart here, low levels prevail.
Shanghai Futures Exchange Warehouse Stocks, 2014
220000
200000
180000
160000
140000
120000
100000
80000
60000
18
ts13ceD ht5naj ht21 ht91 ht62 dn2bef ht9 ht61 dr32 dn2ram ht9 ht61 dr32 ht03 ht6rpa ht31 ht02 ht72 ht4yam ht11 ht81 ht52 ts1enuj ht8 ht51 dn22 ht92 ht6yluj ht31 ht02 ht72 dr3gua ht01 ht71 ht42 ts13 ht7 ht41 ts12 ht82 ht5tco ht21 ht91 ht62 dn2von ht9 ht61
Mt Cu
source: Cochilco
Now for some commentary on one of our basket stocks
Oracle Mining (OMN.to): OMN announced a deal in which it gets lifeline funding that will
allow the company to move forward on its development plans for Oracle Ridge, permits
allowing, in return for diluting current shareholders nastily. Which didn’t come as much surprise,
what with the share price already baking in this kind of thing (or worse).
Once upon a time it was interesting, now it’s not for anyone looking to play copper equities.
The Low Cost Producer Basket
After 46 weeks, the Low Cost Producer Basket is showing a 12.88% loss to level stakes
company ticker price 1/1/14 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Freeport FCX 37.74 1040 29.43 28.30 -25.0%
2 Goldcorp GG 21.67 812 16.58 20.42 -5.8%
3 Barrick ABX 17.63 1164.67 14.30 12.28 -30.3%
4 Newmont NEM 23.03 499 9.56 19.15 -16.8%
5 Franco Nevada FNV 40.74 156.08 8.16 52.52 28.9%
6 Silver Wheaton SLW 20.19 357.39 7.22 20.19 0.0%
7 Agnico Eagle AEM 26.38 173.43 4.35 25.11 -4.8%
8 B2Gold BTG 2.02 948.9 1.62 1.71 -15.3%
9 Pan American PAAS 11.70 151.41 1.53 10.12 -13.5%
10 First Majestic AG 9.80 117.02 0.62 5.28 -46.1%
all prices in U$, using NYSE ticker prices Portfolio avg -12.88%
The overall basket improved by 1.4% last week, thanks to the six winners (ABX, GG, SLW, FNV,
AEM, PAAS) winning out over the four losers (FCX, NEM, BTG, AG). Also notable was how most
of the moves were small or very small, with just a few pennies or tenths of percentage points in
either direction. The main exception to that rule was Silver Wheaton (SLW up 7.1%), which

rode the silver bullion snap back rally on Friday better than most. The other bigger winner was
the near-5% put on by Franco Nevada (FNV), which again suggests the future of this whole
caboodle is the streamer model. However, you have to wonder what the streamers will have
left to finance if things go on like this and that if they’re going to be successful, fixed assets will
have to get their necessary revaluation at some point.
Here’s a little datapoint for your consideration: At the start of the year, Newmont’s market cap
was $11.91Bn and Franco Nevada’s was $6.1Bn (see IKN244), which means the gap between
the two was $5.81Bn. Today, not even eleven months later, that gap is down to $1.46Bn and
that means FNV is well on its way to claiming another scalp in its rise and rise in importance.
The Low Cost Producer Basket: Weekly performance and
comparative to GDX control
40%
30%
20%
10%
0%
-10%
-20%
-30%
19
ts13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92 ht31 ht72 ht01 ht42 ht7peS ts12 ht5tco ht91 dn2von ht61
basket
gdx control
source: Yahoo! Finance, IKN calcs
Low Cost Basket: Percentage difference between
basket and GDX control, 2014
8%
6%
4%
2%
0%
-2%
ts13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92 ht31 ht72 ht01 ht42 ht7peS ts12 ht5tco ht91 dn2von ht61
source: ikn calcs, NYSE/Nasdaq data
Regional politics
Mexico: The calls for President Peña Nieto’s resignation
We noted the 43 students issue in IKN287 last weekend, which might not be getting worldwide
news coverage but is still a massive story in Mexico. The latest developments include violent
protests in the capital city and more focus on the poor way in which the naitional government
of Enrique Peña Nieto has conducted itself. Add to that the scoop (8) from Mexico’s Aristegui
Noticias last week which alleged Peña Nieto and his wife’s $7m house was paid by a contractor
who had coincidentally been award large and lucrative government contracts and the calls for
EPN to step down have moved from mere whispers from the radical corners of politics to loud
cries, all the social media campaigns and opposition boots being put into the mix that you’d
expect. Mexico’s political elite are under pressure and the average José Publico knows it.
Let’s be straight, the chances of Enrique Peña Nieto resigning are slim (previous leaders of the
PRI party have been implicated in far worse before without even breaking stride) so take the
worst of the polemic with a pinch of salt. However if the weird happens, things get worse, his
job becomes untenable and EPN does step down there is a constitutional mechanism in place in

Mexico to cope with the events. The Mex Files (9) brings you the details in this post dated
yesterday and notes the only time it was used, back in 1929.
Mexico: 60 conflicts between mining companies and local communities
In a report released last week (10) the Mexico national government’s Secretary of the Economy
(i.e. Finance Ministry) stated that there were currently 60 active conflicts between mining
companies and local communities and/or landowner groups (ejidarios) regarding land use and
ownership. The conflicts range from those where the two sides have been in conflict from the
word go to those where agreements are reached and then doubts arise on greater or lesser
issues later. The four states with the most problems are Durango, Zacatecas, Sonora and
Guerrero. The ministry recommendation at the end of the report is to formulate new rules and
regulations that will give a firmer framework to negotiations, instead of allowing talks and
agreements to happen in the ad-hoc, case by case manner that’s currently used.
More Mexico: Heavy tax burden hitting miners
Fernando Alanís Ortega is a director of Peñoles, so is in a good position to comment on things
such as the present level of State burden on mining companies. In an article he published on
the Mexico Chamber of Commerce (Camimex) website last week (11), in which he noted that
around two million families in Mexico depend on the mining industry for their income, he stated
that the combination of falling metals prices and the extra tax and royalty burdens on mining in
the country was now too great for many mining companies and if help wasn’t given to miners
soon, the country’s GDP would suffer. There’s some empirical evidence of this showing too, as
Mexico’s INEGI stats office last week reported country unemployment at 5.2% at end 3q14,
which is a very slight drop from the last reading. However in the mining-dependent region of
Chihuahua unemployment shot up from 3.2% to 4.6% (12) with the INEGI directly blaming the
price drop for metals and the resulting slowdown in mining for the jump in the number of
people out of work.
Dominican Republic: Barrick Pueblo Viejo is now significant to State coffers
The Dominican Republic (Dom Rep) tax office reported last week (13) that in the first ten
months of 2014 the Barrick Pueblo Viejo mine (ABX 60%/GG 40%) had paid a total of
RD$5.675Bn (U$128.7m) to the government in taxes (RD$4.8Bn in profit sharing taxes,
RD$874m in basic level corporate tax). Though the RD$4.8Bn profit-sharing part of that money
has come in 17.7% less than expected by the tax office at the beginning of the year, due to the
lower market prices for gold, the total paid by Barrick Pueblo Viejo to Dom Rep is still 61.1%
greater than the same period last year. This is due to the renegotiated deal between company
and government that we covered and followed in 2013 on these pages.
In other words, the mine is now a significant contributor to the State and provides much
needed cash for government projects. With President Danilo Medina riding high in opinion polls
for voter approval, we can expect Dom Rep’s pro-mining stance to continue.
Puno Peru: Report on the run-off in the national press
On Tuesday, Peru’s top circulation national La Republica ran this report (14) on the progress of
the round two run-off election between Walter Aduviri and Juan Juque Mamani for the job of
Puno regional president, which will happen on December 7th and is of course an issue we’ve
covered closely here at the Weekly. The report is long and gives details of the grassroots
campaigns of both candidates. It also documents events in which Luque presents his stump
speech in one of the Aduviri stronghold towns of the southern Aymara region and
equal/opposite, when Aduviri stumps in one of the Luque stronghold towns of the northern
Quechua region. Despite the natural level of unpopularity each player had in those towns,
dissent was apparently only at a minor cat-call level and others in both crowds told the cat-
callers to be quiet and show respect, while asking the candidates tough questions about what
they’d do as regards such-and-such local policy issue. This respect for visitors to town didn’t
surprise me in the least to read (though it may have surprised readers in the La Republica
target audience of Lima far more). Both candidates are clearly trying to capture the centre of
the voting spectrum and have modified their positions in order to make statements that sound
20

more acceptable to a greater cross-section of public. One of the main issues is that of mining,
with Aduviri’s official line being that he supports “artisan mining” but would put any “large scale
mining” project to local consultancy and vote. Luque’s play is to support “the formalization of
local informal miners” and notes that “locals must have say” in larger scale mines, but the
national government controls permitting. However, away from the two candidates the reporter
managed to put in this quote from a local governor in the Aymara town visited by Luque:
In Kelluyo there’s no room for discussion about the Santa Ana mining project. “We’ll
never let it happen”, said local governor Mario Choque in an emphatic tone of voice”.
I liked that quote and the context, because it hits the nail on the head. It’s also one of the rare
times I’ve seen a local, on-ground Aymara governor or town leader quoted on Santa Ana by the
national Peru press. It’s exactly like that, it just isn’t going to happen, period.
Overall a good report that covered the campaign to date in a very even-handed way. It also
underscored my strong conviction that Luque (pro-mining) will win the run-off. Those versed in
Spanish who care enough should read this one (and if you still care enough about local Peru
politics and don’t have enough Spanish, Google Translate is always there).
Peru: Cajamarca protest march to Lima
As from November 26th, supporters of the jailed and re-elected governor of Cajamarca region in
Peru, Gregorio ‘Goyo’ Santos, plan a staged protest march from the region to the nation’s
capital Lima in order to demand the release from remand prison of their governor and political
head (15). The march is bieng organized by Gregorio Santos’s brother, who says that the
political and business powers in the country, particularly the mining companies, are behind his
jailing on remand. The plan is for separate groups of pro-Goyo protesters to assemble in
various regional towns and cities, then join together the road at some point (I’m guessing
they’ll travel by bus most of the way, there are many hundreds of kilometres between
Cajamarca and Lima) in order to march on Lima together on December 1st.
Guatemala: Roadblock protests in many parts of the country
It’s a typical screenplay in institutionally weak Latin American states. A government is elected,
then ignores the rank and file population in its wider geography, favours the capital city and
business concerns over social issues, enough time passes and the provincial dwelling
population’s patience runs out and relatively ordered protests begin. Those protests are ignored
by those in power (which includes media channels and commentators of influence) at which
point the protests intensify and start using illegal methods, with road blocks being one of the
most common because it’s relatively simple, it annoys middle class business leaders because it
stops things from happening, and it’s one of the few methods locals have of getting people’s
attention. To which the national government responds by calling the violent and illegal
protesters “terrorists” and orders a “crack down” on their activities, which usually involves
police squadrons and bullets (rubber or live). Repression, then resentment, then re-start the
cycle ad infinitum.
For sure Guatemala isn’t the only example
of this pattern, but it’s the most topical. On
Tuesday protests began in a couple of
places and they quickly spread (some say
the multiple protests were pre-planned,
others say they sprang up in copycat style)
and this map of the country from this
report late Friday (16) shows the main
blocks as the weekend arrived. Rural
dwelling populations are demanding the
government take action on many issues,
with a telecommunications law and the
approval of a rural development law on the list, with the common theme that the government
21

of Otto Pérez Molina has failed to deliver on its promises. These issues were joined by a
forestry protection initiative protest (locals were promised they’d be paid for looking after
protected rural areas, something that hasn’t happened) as well as the inevitable protests
against mining activity in the region, with the argument that the government bends over
backwards to help big money foreigners but does little or nothing for locals. To be quite honest,
they have a point.
So far, the protests have left an official toll of eight injured police officers and one dead
protester, but the protest camps say that there have been many more injuries and dozens of
arrests that have not been reported (and as usual, it’s not easy to find reports of anything
wrong in the Guat national press).
Market Watching
Anglo American (AAUK) looking to sell more copper assets in Chile
According to Chilean daily Mercurio last week (17) Anglo American is looking to dispose of some
of its minor copper assets in Chile and has hired both Morgan Stanley and Goldman Sachs as
representatives to sell them. Anglo hasn’t named the exact things it wants to sell, only saying
(and to quote Anglo Norte’s VP Ops Giancarlo Bruno they’ve “decided to realize the possible
sale of its minor copper deposits”), but it’s pretty obvious they’re talking about the 100%
owned Mantos Blancos and Mantoverde assets, as well as its 50.1% stakes in the El Soldado
mine and the Chagres smelter. The rough-and-ready calculations put the whole package of four
at a total of around U$1Bn. Anglo has made the type of corporatese-type excuses and talk
about why they’re selling, including ‘cost reduction’ and ‘process efficiency’ how they think
these projects and mines ‘don’t meet their newly revised internal return rate hurdles’ (gotta love
the banter), but the real message is clear enough, they need the money.
The El Mercurio report set off a mini-investigation frenzy among the Chile bizpress and so far,
names that have been floated as potential buyers for the assets include:
• Glencore (of course)
• “The Chinese” (of course)
• X2 (the new seed capital entity run by ex-Xstrata head Mick Davis)
• Lundin (who recently bought Freeport’s 80% of the Candelaria mine, of course)
• Nevsun (the medium-scale Africa miner, not quite sure how this name came up)
• Warburg Pincus (the private equity firm, who’d presumably get patient and sit on
anything they buy in order to flip it out later.
B2Gold (BTO.to) (BTG): 3q14 financials
Thursday evening saw BTO file a mediocre set of 3q14 numbers (18), here’s a look at things.
One of the issues in covering a well-trodden and covered company such as BTO is bringing a
different angle to the table; BTO is one of the companies that’s just about de rigueur for
coverage at the brokerage houses these days and although I’m never that comfortable about
the cookie-cutter approach to the fundies analysis you get from them (some more than others,
but the bar isn’t very high) they do cover the main aspects of any given company’s straight
numbers.
• We know that BTO wrote down $298m in goodwill
• We know that it had a mine op revenues of around $15m and backed-out profit of just
$0.99m
• We know that’s not very good.
22

So rather than dig over the samo samo, I’m going to point to a couple of things that catch my
eye about today’s BTO and focus in on those. Come the end of the year when we have a “New
BTO” on our hands that has Papillon fully incorporated, its new mine running and contributing
to the production mix and a balance sheet that better reflects the true nature of the company
at present (i.e. I think there’s some more write-downs to come) we can take the 20,000 feet
view.
Production and outlook
We already had a good idea of this metric because BTO pre-announced its 3q14 production, a
low 90,192oz Au. We also noted in the
3q14 filing that the company made BTO: Gold produced
official its lowered forecast for the year, 120000
which is now put at between 380k and
100000
385k oz Au. But what that means is
80000
BTO expects things to get a lot better
in 4q14, as if we take the happy 60000
medium of the adjusted production 40000
guidance it tells us that BTO expects to
20000
produce 110,000 ounces in the current
0
quarter. That would be a new company
record, which surely will benefit from
the first pours at Otjikoto but also from
better production at Masbate (they’ve
got the new machinery in now, after a delay) and modest rebounds in the Nicaragua ops
(Limón came in low due to glitches). So yes, 3q14 was poor but with Otjikoto coming online
and then getting into its stride in 2015 all indications are that BTO will never see another sub-
100k production quarter again.
So to revenues, and here I’m going to be resolutely backwards-looking and concentrate on
3q14 without considering the next quarter’s
potential performance. I care more about why
BTO has sold off and is now a low-priced stock
compared to a few months ago then what it
might do in its next quarter. Here’s the chart
that puts operating revenues next to costs and
generally speaking, BTO has kept its absolute
costs at the same level since Masbate became
part of the mix without seeing much in the
way of cost reductions so far (the company
says that we should see costs come down on
a per-ounce basis as from this current
quarter). The problem has been with
revenues, as production hasn’t seen the type
of boost to stop them from dropping. As a
result op revs have been squeezed and that’s
shown clearly in this second chart, which
tracks operating revenue per share.
We’re down to a measly two cents here, and
that’s not enough to cover the corporate
expenses that this fast growing company
needs in order to remain profitable.
This is the only chart based on the balance
sheet that gets a showing today, as I think it
goes some way in explaining why BTO decided
to write down what it did at the end of the last quarter. The end of 3q14 came just before the
23
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
OzAu
source: company data
BTO: operating revenues and costs
180
160
140
120
100
80
60
40
20
0
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3
$m
revenues COGS Op. Rev
source: company filings, IKN ests for 4q13
BTO: Operating Revenue per share, per qtr
0.10
0.08
0.06
0.04
0.02
0.00
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3
$/share
source: company filings, IKN ests

closing of the Papillon merger deal and that means the share count was still at 680.2m (now
post-close we’re up to 917.5m). What we see in this chart is bump up of book value per share
in 3q14, even after the near-$300m in non-cash goodwill was discounted, due to the $600m+
that BTO has put into its investment projects and is now capitalized (lion’s share being Otjikoto,
the mine about to give us first pour in December). However, once you add in the new dilution it
becomes clear just how dilutive the Papillon deal has been to the asset structure of BTO. For
sure, compared to a couple of years ago it’s all the same, but now is clearly the moment to
“swap” the intangible fixed asset of goodwill at Masbate and Gramalote for physical assets of
mines and holes in the ground and steel girders etc.
BTO: Book value per share, per qtr
3.00
2.70
2.40
2.10
1.80
1.50
1.20
0.90
0.60
0.30
0.00
24
31q1 31q2 31q3 31q4 41q1 41q2 41q3 won
$
source: IKN calcs from BTO data
It’s also worth noting that this current quarter is the first one (I believe since Libertad went into
commercial production) that BTO has seen its share price trade under book. That’s your
commentary on the poor state of the market on one side, but BTO’s managerial decision to buy
out Papillon has to be part of the mix as well. CEO
Clive Johnson and his team has built a new medium-
scale producer from nothing by going this paper deal
route, market cap has expanded but so has share
count (which means long-term shareholders haven’t
benefitted much). As an empire building strategy it’s
worked up the the present, but the Papillon deal has
all the looks of a deal too far these days. Clearly
dilutive, it’s partly bad luck in timing it before gold
took another leg down. But the fact remains that at
an IKN calculated BV/share of U$2.47/share at
present, and a Friday close of U$1.71/share, B2Gold
is trading at a ~0.7X P/BV when it’s traditionally
traded at above (and sometimes plenty above) 1X.
Result: It looks cheap today.
Bottom line:The deal BTO’s offers here is for my money a smaller, goldstock-centric version of
Pascal’s Wager (19) or if you prefer, a simple example of game theory with the odds stacked in
your favour:
• If you believe gold stocks go down from here you shouldn’t hold any of them.
• If that is true, what are you doing here, spending your money on a weekly publication
that focuses mainly on the potential benefits of owning mining stocks?
• So if you believe there’s a good future you should hold gold stocks.
• If so, you should hold a gold stock that has a proven record in operations, has recently
invested in the future and is for the first time on sale for a fraction of its net asset
value.
BTO has had the wind well and truly taken out of its sails by the downturn in gold and the
stocks, but it didn’t help itself by going “a deal too far” with the Papillon merger (and hey, I

moaned about that one at the time and called it empire building). But it’s still a good operator,
that hasn’t changed, so glitches at Masbate aside the company is still an efficient gold miner
and will remain so. It’s also one that will see 100k+ oz gold production all quarters out from
here, which should start in Q4 with around 110k oz if the company’s revised guidance is to be
believed. Otjikoto is coming on line and the sell-off has left it well below book, a level it will
return to with a modicum of luck. If I didn’t own, I would. As it is, it’s an easy hold.
Conclusion
IKN288 is done, we end with bullet points:
• I wager that First Majestic performs substantially better than Fortuna Silver in what’s
left of 2014. If FR goes up in dollar terms while FVI drops then it’ll be a perfect score,
but the first objective of the pair trade is the comparative performance because that’0s
where the money lies.
• We’re in a world that only cares about the gold tide, not the boats which ride upon it.
That’s what BTO and RIO and a whole bunch of others told me last week.
• BTO may have put in a rough quarter, but it’s time to look to the future on that one.
It’s cheap here, so if gold obliges there’s a rebound to ride.
• Coro Mining (COP.to) did well on the back of some significant insider purchases. I can’t
think of a better tinycap spec play at the moment, beaten to shreds, but full of plans an
opportunities.
The top long-term pick is Rio Alto Mining (RIO.to). I thank you in advance for any feedback.
Flash updates will be sent promptly if required by events
I wish you good trading fortune, ladies and gentlemen.
Otto
Footnotes, appendices, references, disclaimer
(1) http://incakolanews.blogspot.com/2014/11/b2gold-btoto-btg-3q14-financials-much.html
(2) https://medium.com/mother-jones/the-science-of-why-we-dont-believe-science-adfa0d026a7e
(3) http://finance.yahoo.com/news/fortuna-reports-consolidated-financial-results-001308597.html
(4) http://finance.yahoo.com/news/first-majestic-reports-third-quarter-120000692.html
(5) http://finance.yahoo.com/news/rio-alto-reports-2014-third-123000323.html
(6) http://finance.yahoo.com/news/aberdeen-announces-portfolio-investment-014848682.html
(7) http://www.jornadaonline.com/Econom%C3%ADa/124887-De-qu%C3%A9-se-trata-el-proyecto-minero-San-Jorge
(8) http://www.12newsnow.com/story/27389547/enrique-pea-nieto-fast-facts
(9) http://mexfiles.net/2014/11/15/if/
(10) http://diario.mx/Economia/2014-11-13_e76ea534/documentan-60-conflictos-mineros-por-posesion-de-tierra/
(11) http://www.cpampa.com/web/mpa/2014/11/los-impuestos-golpean-a-la-mineria-mexicana/
(12) http://diario.mx/Economia/2014-11-14_53bd0c0d/cae-mineria-y-crece-el-desempleo-en-el-estado-/
(13) http://www.entornointeligente.com/articulo/4141145/REPUBLICA-DOMINICANA-Recaudaciones-por-el-ron-y-los-
cigarrillos-se-estancan-en-2014-15112014
(14) http://www.larepublica.pe/11-11-2014/la-agenda-minera-se-perfila-como-tema-clave-para-los-candidatos-de-puno
25

(15) http://www.rpp.com.pe/2014-11-13-cajamarca-organizan-marcha-para-exigir-libertad-de-gregorio-santos-
noticia_742033.html
(16) http://www.prensalibre.com/departamental/Persisten-bloqueos-varias-carreteras-pais_0_1247875243.html
(17) http://www.entornointeligente.com/articulo/4129190/Minera-AngloAmerican-estudia-la-venta-de-yacimientos-
menores-de-cobre-en-Chile-14112014
(18) http://finance.yahoo.com/news/b2gold-reports-2014-third-quarter-083000105.html
(19) http://en.wikipedia.org/wiki/Pascal's_Wager
Appendix 1: Flash update dated Wednesday November 12th
Good Wednesday morning, 07:10am, 2 hours 20 minutes before the open today and it's already hot and sunny.
Further short on Fortuna Silver (FVI.to) (FSM)
After shorting FVI as planned Monday and watching as a standard set of figures were filed by the company (NR here)...
http://finance.yahoo.com/news/fortuna-reports-consolidated-financial-results-001308597.html
...I was impressed that FVI shot higher yesterday on strong volumes. So impressed in fact that when it ran through
U$4.40 I shorted some more. The position is likely to stay open for a while longer, as well.
The rise was clearly connected to the rebound in silver and gold yesterday, but it was also stock-specific and pretty
violent. On asking around there was plent yof talk of short covering, both from pro desks and people I trust with keen
eyes for market movements.
The conference call was intesting this time as well (Seeking Alpha has a transcript here...
http://seekingalpha.com/article/2671265-fortuna-silver-mines-fsm-ceo-jorge-ganoza-on-q3-2014-results-earnings-call-
transcript?part=single
...as it became clear FVI will tackle its balance sheet issues (carrying value etc) at year end. Other matters such as
reserves levels and tax obligations in Mexico were touched upon as well.
The concise bottom line here is that this new short is likely to stay popen longer than first anticipated, but that's not a
bad thing (in my opinion, of course) because on reflection the portfolio was in need of short short hedging. As the issues
that make FVI weaker than the market perceives won't be tackled until year end, I see good reason to carry this new
holding through the tax loss period. Also, being a short it doesn't affect portfolio liquidity and I'll still have liquidity end
year for oppportunities if and when they arrive.
Compared to peers and in a rough market for silver stocks, FVI was overvalued Monday evening. It's even more
overvalued today and the decision to add to the short position was relatively easy.
Stocks To Follow Closed Positions 2013
Closed in 2013 closed close price
USA Graphite USGT feb'13 U$0.93 08-ene-13 U$0.17 81.7% short tgt made/trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
United Silver USC.to mar'13 C$0.21 28-oct-12 C$0.095 -54.8% small Ag sector trade, failed
Aurcana Corp AUN.v apr'13 C$1.07 11-nov-12 C$0.55 -48.6% closed on poor YE results
Gold Res Corp GORO apr'13 U$14.11 25-ene-13 U$9.38 33.5% short tgt made/trade closed
Marlin Gold MLN.v apr'13 C$0.075 10-feb-13 C$0.065 -13.3% closed trade
Bear Creek BCM.v may'13 C$2.58 01-abr-13 C$2.40 -7.0% near-term, time ran out
Lupaka Gold LPK.to may'13 C$1.12 23-oct-11 C$0.32 -71.4% towel thrown in
Tahoe Resources TAHO may'13 U$18.62 08-abr-13 U$14.70 21.1% took profit on ST short
OceanaGold OGC.to jun'13 C$3.03 16-sep-12 C$1.18 -61.1% sold on gold drop
IMPACT Silver IPT.v jun'13 C$1.14 13-ene-13 C$0.62 -45.6% sold on silver drop
Duran Ventures DRV.v jun'13 C$0.045 10-may-13 C$0.025 -44.4% ST trade never worked
Plata Latina PLA.v jun'13 C$0.79 10-abr-12 C$0.13 -83.5% closed
Bellhaven BHV.v jun'13 C$0.065 03-jun-13 C$0.12 84.6% closed ST trade
B2Gold BTO.to aug'13 C$3.07 28-nov-12 C$3.44 12.1% sold 1/2 to raise cash
Colossus Min. CSI.to aug'13 C$0.72 24-jul-13 C$0.79 9.7% closed thru nerves on future
Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% closed to raise cash
Bear Creek BCM.v sep'13 C$2.06 30-may-13 C$2.20 6.8% sold on pol risk decision
MAG Silver MVG oct'13 U$7.00 12-sep-13 U$5.62 19.6% near-term short
Gold Res Corp GORO oct'13 U$9.52 03-may-13 U$4.98 47.7% short tgt made, covered
AQM Copper AQM.v oct'13 C$0.31 16-oct-11 C$0.125 -59.7% closed failed trade
First Majestic AG nov'13 U$11.51 07-nov-13 U$10.50 8.8% v near term short, closed
Fortuna Silver FSM nov'13 U$4.00 07-nov-13 U$3.68 8.0% v near term short, closed
Primero PPP nov'13 U$5.70 07-nov-13 U$5.75 -0.9% v near term short, closed
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work, sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
26

Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
27

Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
28