IKN #289Premium

The IKN Weekly
Week 289, November 23rd 2014
Contents
This Week: Next week’s markets and Thanksgiving, Killing me softly, Random thoughts.
Fundamental Analysis: Tinka Resources (TK.v), the zinc market and a bit on Trevali (TV.to).
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), GoldQuest (GQC.v),
Focus Ventures (FCV.v).
Copper Basket: Overview, Curis Resources (CUV.to), Western Copper & Gold (WRN.to), This
is the way the world ends: Not with a bang but a whimper.
Low Cost Producer Basket: Overview.
Regional Politics: Southern Peru (SCCO), Tia Maria and rare honesty from a Peruvian
politician, South America and China, Peru: Tax breaks, Argentina: Barrick wants to remit,
Mexico: The fallout from the Guerrero student massacre continues, Peru: Madre de Dios miners,
Ollanta and corruption, Argentina Mendoza: The anti-mining credentials of the provincial
parliament, Peru: More on the Bear Creek Santa Ana developments.
Market Watching: Insider sales in silver producers, A headsup on Aguila American (AGL.v).
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
Next week’s markets and Thanksgiving
A quick reminder about next week’s curtailed market, as the stock markets are closed Thursday
for Thanksgiving in the USA and then only open until 1pm local time on Friday, on a day of
typically very light trading and newsflow.
Although I also greatly admire the thinking behind MLK Day, Thanksgiving is the one festival
that this outsider looks upon and thinks, “Hey, wouldn’t it be great if every country did that?”.
Instead, I got to read this week that the United Kingdom expects to enjoy a £200m boost in
sales from adopting the Black Friday sales day (1), that other US...tradition (??). Why Britain
has ignored the concept of formally gathering together close kin, family and friends who then
give thanks for their blessings, but quickly adopted the concept of a commercial window of
opportunity, is something I find a little sad and depressing. At the very least they should come
as a package. Anyway USA, be justly proud of your Thanksgiving Thursday.
Killing me softly
I consider it an interesting, though non–scientific (contrary) indicator and I know there’s a
section of this audience that’s interested in the relative health of the IKN subscription numbers
as well, because of feedback received when it’s been mentioned on previous occasions.
Therefore an update, but this time there’s a twist in the tale and I’m really not sure what to
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make of it.
All the talk last week of how fundies analysis in this current market is a waste of time and the
likelihood that we’re going through an extended bottoming process that squashes the alpha and
opportunity out of stockpicking seems to be having an effect, as last week saw a new raft of
unsubscriptions from this publication, The IKN Weekly. So less money coming in per month for
me, but that’s a minor detail in the great expansive scheme of things, more interesting is the
timing. Batches of unsubs at the same time have tended to mark (at least temporary) bottoms
in the juniors before.
However, the twist is that I’ve suddenly seen a whole bunch of new people sign up for the free
daily digest e-mail service on the blog, the one that sends the previous day’s posts to you mail
address the next morning. Not only that, but the people signing up (Google allows me to see
the mail addresses) have largely been market professionals and insto types coming in from
business addresses and brokerages. There’s normally a slow-ish trickle of people that sign up
for the free mail service, perhaps 10 or 15 per month is normal (there are ~1,400 active mail
addresses on the list), but in November alone 74 people have signed up. That and blog traffic
has seen a distinct pick-up too. So on the one hand we have (mainly private) investors throwing
in the towel, on the other we have pro-desks apparently searching around for new sources of
free information on the juniors market.
I highly doubt this to be a coincidence, but even after plenty of thought I don’t really know
what to make of it. However it is interesting, which is why it gets shared with you today. Make
of it what you will.
Random thoughts
We must be humble. We are so easily baffled by appearances
And do not realise that these stones are at one with the stars.
It makes no difference to them whether they are high or low,
Mountain peak or ocean floor, palace, or pigsty.
There are plenty of ruined buildings in the world but no ruined stones
Hugh MacDiarmid, 'On a Raised Beach'
There are a bunch of things on my mind after a week of mining and metals markets and as I
can’t think of a snappy way to strong them all together into a neat narrative, you’re getting
them this way.
Tax loss feedback: Talk of the tax-loss selling season has brought feedback from some of
you, with the consensus being against my position. People I respect for their smarts about the
Canadian capital markets suspect that the worst of the selling is already done and December
will either feature spotty bouts of selling in a few specific stocks, or nothing much at all.
Don’t pay the ferryman: Last week’s intro piece “No country for alpha” fitted right in with the
market action we saw between then and now. If anything, some the companies that have been
deservedly beaten down harder and the ones that have popped the most (e.g. check out the
whackaloon price movements in Allied Nevada these last ten days). I continue to advise you not
to pay anyone for market advice.
To be invested in producers: Mickeyman at The World Complex argued on Saturday (2) that
the current backdrop of rising US dollar and rising gold (admittedly a fragile recovery, but it’s a
recovery nonetheless) points us at gold producers as the place to be long. The bounds of his
thesis are vague, but I still agree. I would go further, saying that the place to be is quality
junior gold mining companies and the acid test to that definition is Rule One (make a profit). If
any given company has been capable of returning reasonable profits even at the lowest of the
lows, that’s one to have on your shortlist. I own Rio Alto Mining.
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The market is rigged. This is not news: Reader JR sent me the link to this article (3)
featured on the Centre for Research on Globalization (CRG) entitled, “Wall Street Banks and
Commodity Fraud” that gave opinion on the Senate report findings of last week, including the
way in which firms such as Glencore, Trafigura, JP Morgan, Goldman and other rigged the
aluminum warehouse markets in order to shore up prices (also a story I featured quickly on the
blog (4) last Friday). I want to quote a chunk of prose from the CRG article, then make a quick
comment:
Some figures from the report give a sense of what is involved. At one point, the
investment bank Morgan Stanley “controlled over 55 million barrels of oil storage
capacity, 100 oil tankers, and 6,000 miles of pipeline.”
JPMorgan built up a significant stake in the copper market, with “a copper inventory…
comprising nearly 60 percent of the available physical copper on the world’s premier
copper trading exchange.” Other activities of the banks documented in the report
include trading in uranium, selling jet fuel to airlines, and owning mines and power
plants.
One focus of the Senate subcommittee report is the control of the aluminum market by
Goldman Sachs, which has been sued by dozens of companies accusing the bank of
deliberately manipulating supply to increase aluminum prices and its own profits.
In 2010, Goldman purchased Metro International, a Detroit-area warehousing company
that stores about 85 percent of exchange-traded aluminum in the United States.
Goldman proceeded to implement complex new rules and incentives at its subsidiary
to bottleneck supplies, according to the report.
The bank “approved ‘merry-go-round’ transactions in which warehouse clients
[including banks and financial institutions such as Deutsche Bank and the London
hedge fund Red Kite] were paid cash incentives to transfer aluminum from one Metro
warehouse to another.” The result was curtailed supply and increased prices, which
the bank and its financial trading arm could anticipate because they were directly
responsible.
The report then brings in other examples of banker/Wall St wrongdoings and works itself into a
real lather of words along the way. But the one thing it doesn’t do is mention that the Senate
report last week did find things done by the banks etc that they thought were immoral, but
they didn’t find anything that was illegal. Along with the link, JR wrote the following cover mail:
One of the main reasons I don't subscribe/invest in others is the above.
Q#1 How do you factor in the above allegations in your recommendations?
Q#2 How can your subbers protect themselves and their investments against such
manipulation?
Because otherwise, it seems like investment in a casino, where the house has a
definite built-in edge, and the player is considered a mark.
As far as I see it, there are two angles to consider. Firstly, the latest round of “wrongdoings” by
Wall Street is exactly that, it’s the latest round. This isn’t a new thing, nor will it be the last time
that the people with the most money throw their weight around in order to get a larger market
leverage to profit. It’s “unfair” (inverted commas needed), it might be immoral but being a bully
isn’t illegal in this game, it’s how capitalism works, big fish down to the little fish. Here’s an
example, just one of a thousand, from the merry world of junior mining companies:
• The retail share buyer gets ripped off by the guy who got in on the private placement,
special price and half warrant and all,
• The private placement guy gets ripped off by the guy who got in on the ‘friends-and-
family’ placement, extra special earlybird price.
• The friends-and-family guy gets ripped off by the company founder, who gets his
shares by the truckload at a penny each.
• The company founder get ripped off by the lawyers and the bankers, who get all the
profit up front with no risk.
But if the share price goes up they all win and nobody cares.
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The other thing is about the word casino, as used by JR and many others when talking about
the stock market. Yes it is, of course it’s a casino, but it’s one with a specific difference; you get
to choose the game you want to play. The exact game, with variants and special factors that
you can trim down to your own bespoke tailored preferences. In my case, I know what things
I’m totally useless at doing, what things I can just about keep under control and what things I
being to the table that grant me an advantage. I don’t trade shares of Google or T-bonds or
Biotechs or (etc etc etc), but give me a junior miner that’s dependent on newsflow out of a
small backwater South American region and I’m in my element.
A diller a dollar a ten o’clock scholar: The dollar, the thing that runs the whole show, looks
at a potential resistance level now
Fundamental Analysis of Mining Stocks
Tinka Resources (TK.v), the zinc market and a bit on Trevali (TV.to)
Today’s Fundies section is mainly about the potential that Tinka Resources (TK.v) is starting to
show as an investment. Although not totally convinced about the recurring hype around zinc
the metal and the bullish price predictions it’s getting for 2015, I recognize that there’s a
potential opportunity and have been looking round for a while for a better way to play it than
the managerially challenged (putting it nicely) Trevali (TV.to). So on with the show.
A zinc think overview
The way that zinc’s performed recently hasn’t really caught my imagination as much as some
people, the ones that have been talking it up as the next big thing and how it’s going to go into
bigtime supply shortage next year (for the record, I’ve heard that train of logic used every year
for the last five), but even I have to admit that its market price has held up better than most so
if the rumours of China pushing the price to $1.20 and $1.50/lb turn out to be true, there has
to be a way of playing it.
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A little on Trevali (TV.to)
One way of not playing zinc round these parts will be via Trevali Resources (TV.to). Yes there
may be a fliptrade in the stock, as one that I potentially set up for myself then abandoned
before pulling the trigger a few weeks ago (in IKN281) shows to one and all. But an investment
in TV.to? No way, evidence for which is the sophists’ delight of a 3q14 financials report it
offered post-bell on Friday November 14th (5).
I’m not going to dwell on TV.to today, as I want to get to Tinka Resources (TK.v) and talk
about that a little more, but a few lines are due on TV.to and its 3q14 numbers.
1) It claimed a site cash cost number of 40c/lb and claims it sold its zinc at $1.02/lb.
2) It reported sales of 24.19m lbs zinc equivalent
3) It went on to explain that revenues were $27.959m, Mine Op Income was $5m and net
income was $1.589m.
If you just read those three items without knowing anything else about TV.to, it’s a bit of a
headscratcher. After all, a gross margin of 62c/lb on over 24m lbs of metal is closer to $15m in
profits, not $5m. How come it sold all that zinc after producing it so cheaply and only made
$1.6m on the quarter? My best answers are that TV.to is from the Cardero Group stable and
will bullshit you by second nature, plus the fact that TV.to paid its operator Glencore (via the
Glencore Quenales subsidiary) 40c/lb in operating expenses that doesn’t show on the site cash
costs. That’s over $9m cash. Add the other non-site costs in and total costs come to 90c/lb. And
whatever headline cost number TV.to throws at you now or in the future, that’s the type of
baseline cost number you’re always going to have at this marginal mine operation that’s going
to be profitable for Glencore (as pointed out in this blog post on November 17th (6), it’s going to
be profitable for TV management, but with the tightness of its true margins of operation (not
the fakey ones for corporate presentations) shareholders will have to wait at the back of the
queue and hope for a pop in the metal, I’m afraid. Trevali does have the potential to trade on a
near-term level if sector momentum goes its way, because it does good volume and there’s also
a dearth of alternatives in the junior zinc space, particularly producers. But invest in this thing?
With the inveterate liars who run it, it borders on insanity.
Enough TV.to, I’ll let others use it as their “choice in the zinc space” (noting in passing that
Scotia last week opened up coverage on the stock) because they’re just choosing it by default.
Aside from TV.to there’s precious little to consider in the junior or mid-cap producer space for
zinc unless you swallow hard and go for a silver play that has a plenty of revenue from its Zn
by-product kicker. Zinc miners are either very large (e.g. Teck, Nyrstar) or very small (whole
bunch of private companies).
Introducing Tinka Resources (TK.v)
But there are a few names to consider in the exploration side of the zinc market and one I’ve
watched quietly for a while is Tinka Resources (TK.v). It has its issues as a potential vehicle for
my money (see below) but it does have some things going for it, not least of which is some
decent looking rock. This isn’t going to be a full NOBS report but it is an opening of coverage of
sorts on TK.v, so let’s start by laying out the corporate structure.
Shares out: 116.022m
Options & warrants: 28,794m
Fully diluted shares: 144,816m
Current share price: $0.235
Market Cap: $27.27m
Approx cash per S/O: 4.3c
All prices are in Canadian dollars unless stated. Forex U$0.90=CAD$1
Projects: Its two main projects are Colquipucro and Ayawilca, that sit close to each other in
the central Pasco region of Peru (not so very far from Lima). Pasco is one of the most
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traditional mining regions of Peru and although micro-regional political and community issues
can come into play, it’s fair to say that’s it’s a good location for your mine or mining project.
Colquipucro is a silver project that has a 43-101 already. It’s not bad but neither is it great, and
the largish tonnage lowish grade aspect of the mineralization doesn’t look very attractive in
these days of $15/oz and $17/oz silver.
Ayawilca is the focus of attention at present and is a zinc project with some minor silver credits
(along with very minor copper and lead). We’ve already seen some very decent drill returns
from Ayawilca, including 212.9m of 5.34% Zn, a massive sulphide and very wide hit that makes
the target very promising. Ayawilca is a past producing mine that was in operation until around
1950. At that time it was known as a polymetallic mine and produced silver and copper in good
grades, along with zinc that graded at an historically estimated 7%. When the copper, silver
and the highest grading zinc ore was depleted the mine was closed. Those of you who’d like to
know a little more about the geological setting and mineralization can check out this two-pager
that went with TK.’s core shack presentation at PDAC 2014 (7).
Management: The CEO is Graham Carman, who came to TK from the merger it ran with
Darwin Resources (ex-DAR.v) earlier in the year. That’s a company we know round these parts,
as we covered it, I owned shares until throwing in the towel and it was my idea of a decent
small speculative investment on its gold oxide potential. It didn’t work out and as a result, TK
from the same group stable fused with DAR and we have our present structure. Behind the
scenes we have Michael Hudson and David Henstridge, two Australian mining entrepreneurs
who’ve worked together on many occasions, including at junior names such as Tumi, Mawson,
Darwin, Kola Mining, Tasman Metals and Flinders Resources, as well as Tinka today.
Treasury: Back to the present. Cash treasury at TK was $7.4m as at end July 2014 (they’d just
run a financing) which is more than enough to see the company through to the end of its
current 10,000m drill campaign set to run into the start of 2015. TK is then looking to publish
an initial resource on Ayawilca in mid-2015.
Recent drilling and results: The current drill campaign at Ayawilca (8,500m of the total 10k,
the other 1.5k due for Colquipucro) started in August after a small delay (but roughly on time).
Wednesday 12th November brought news of the first results (8), and they were pretty good too,
with four very solid holes including two that round out at roughly 150m of 4% Zn...not shabby
at all. Here’s the table of the four intercepts...
...though have to say that for my money, the hole from East Ayawilca that cut a relatively
modest 19.6m of 5.7% Zn is more interesting as it was sunk a full kilometre away from the
already discovered Ayawilca zone and opens the potential for big to get a lot bigger (we’ll get to
that later). See the full news release for the location map of the new holes for more, and while
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you’re over there check out the latest corporate presentation here (9) which helps on overview
matters. Then to round out this news sections, more news came on November 13th when TK.v
announced (10) it was graduating to Venture Exchange Tier 1 status and had brought a new
director on board to boot, one Michael J. Ballanger. There are now three rigs turning on
Ayawilca and we can expect newsflow from the project from now until March (coincidentally,
PDAC-time).
Now the not-so great stuff
This overview of TK.v has been pretty positive and upbeat on an exploreco in a down market
for your normally cynical author, so it’s time to examine the things I’m not so wild about in this
story. The main one is the promotional aspect of this company and its history of paying market
touts to scream its name from the rooftops. Here comes the story.
Here below right is the 10 day chart for TK.v, which shows a move the week before last away
from the 19c and 20c prices that happened before the news came on Wednesday 12th. Then
volume on that week’s Thursday and
Friday pushed it from 22c and 23c to the
Friday close of 26c, which means anyone
lucky enough to have bought a few at
19c and sell them on Friday afternoon,
i.e. trading round the news release,
would have banked a 36.8% pre-
commissions gains for a week’s worth of
speculation.
But as we can see, things have faded
since the heady days of a week and a bit
ago. TK.v has dropped back steadily, the
interest hasn’t continued and it’s only
thanks to a bit of Friday tape-painting
that we don’t stand at 22c again, an as-
you-were price level.
The year-to-date chart (right) doesn’t
make pleasant viewing for any loyal TK.v
longs out there, either. And for what it’s
worth it gets worse and you go further
back, as the stock peaked at $1.25 in
early 2013 (after being pumped from 50c
on a pretty heavy promo from several
quarters). Which brings me back to the
November 13th NR and the news of the
new appointment at TK.v.
On reading the potted profile of Mr.
Ballanger I had a mix of bells ringing in
the background and that feeling the published CV was skipping over too many things, which
means it’s the type of CV I want to know more about. On checking out a bit of the background
on Mr Ballanger it soon became apparent that this apparently “independent” and experienced
market professional has been actively pumping Tinka Resources (TK.v) since 2009. There are
many examples I could show you, but a single screenshot that gives a good overview is this
one from The Gold Report, at which he’s sometimes featured as an expert commentator. It’s
strange just how many times he’s able to steer the conversation around to TK.v during his
interviews (especially considering how poorly the stock has performed between the sharp peaks
of promotion-intense periods (11).
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Those seven quotes at The Gold Report span a period of two years of appearances, with five of
quotes are about Tinka Resources. By looking further into the links offered (8), he’s proud to
tell us he’s been reco’ing TK.v to the world since 2009 (12). So on checking his disclosure
segment (13) we note the following disclosure made by Michael Ballanger:
My company has a financial relationship with the following companies
mentioned in this interview: Tinka Resources Ltd.
He also, coincidentally, gets round to mentioning Darwin Resources too. But hey, probably just
a coincidence. Before we leave this subject I’d like to note on a semi-related basis the quality of
Ballanger’s advice (14) for this year 2014:
TGR: Parting thoughts for us, Michael?
MB: As a wealth manager, my job is balance risk versus reward potential. The most
important thing for 2014 is going to be risk management. It's going to be a rollercoaster
year if I'm correct in my assessment. Going long on miners and short on the S&P 500
is an excellent augmentation to the balanced portfolio approach.
So maybe Ballanger’s appointment as a director of TK.v a couple of weeks ago is simply about a
man needing a new job. But that’s just me being catty.
There are other examples of this type of paid and heavy promotion of TK.v to point to as well,
it comes up on all the “sponsored coverage” type places in the world and it also seems to have
attracted one of those “true believer” bullboard fan clubs (the type that can hear no evil of their
selected charge, GORO, CUU.v, CSI.to and plenty other stocks have attracted them over the
years). And as a final anecdotal, there’s this one guy who mails me with missives full of double
and triple exclamation marks every time something hits the airwaves about TK.v. He’s been
filling up my inbox for years, including the classic “gonna be bought out any minute, get on!”
mails when TK.v was climbing fast up through $1 a couple of years ago.
I could continue. The point I want to make here is that TK.v (deep breath, gets out 1974
Edition of the Boys’ Own Big Book of Diplomacy) is one of those stocks that gets promoted to
retailer investors with less of an idea of the traps that are waiting for them than the more
sophisticated end of the market (exhale). One the whole this is my idea of a negative for the
stock, but I also recognize this as a double-edged sword because if you can get on before the
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pump begins, there’s decent cash to be made by trading into a price and volume surge, the
greater fool theory writ large.
TK.v is a company with an interesting drill target on its hands, it’s creating its own newsflow
and what’s more they’ve put the company in the hands of new CEO Carman, who’s a smart
geologist and a straight-shooting person. Seeing him at the business end of this executive
allays some of my worries about this being a pure pump/dump vehicle, but at the same time
the board of directors has a long history of aggressive promo techniques and the new guy
brought on board can only be there for one reason. So the next question is, what can make this
stock move?
Potential for stock price appreciation
Among the cards that could be played here are:
• Upcoming exploration results. That’s going to be legit newsflow and the results will
speak for themselves.
• The shadow of PDAC: Last year TK.v went on the PR offensive in February, getting its
name in several trade publications via puff pieces and with drill results to boot. We may
see the same type of timing this year.
• The initial resource: Mid-2015 should bring the first 43-101 compliant resource for
Ayawilca, it’s what the current drill program is set up to achieve as well. We look at
what that might contain below.
• The needs for funds. TK has the cash to cover the current drill program and probably
enough to but not that much more. TK.v will need more cahs for exploration in 2015
and will probably need more for community relations too; the current surface access
agreement with Yanacocha community runs out in February 2015 (15). We’d assume
the two sides will look to reach a new deal and that the community will want more from
TK.v this time.
• Appreciation of the zinc price at market. This one is out of control of TK.v the company,
but there are plenty of anal ysts tipping Zn as one of the metals to watch in 2015
(again) because of supply issues (again) and rising demand (again) from China (yawn).
Yes I’m a cynic, but I’ve heard this “Zn about to rocket due to supply constraints”
chestnut every year for the last five. One of these days it may all even come true.
Overall I’m not against the idea that Zn may be a winner in 2015. I think it has a better chance
than in previous years, but I’m not holding my breath either and I’m sure that if Zn spot starts
moving up, there will be a whole new raft of small Zn mines (in China, in Australia and in other
places) that are currently marginal profitmakers but look good at $1.20/lb and will come out of
mothballs to take up the slack. I’m not against TK.v getting aggressive on the promo either, as
long as I’m in and long before the blahblah begins. But what I would really like to see, good
and straight CEO or not, is TK.v coming out with a resource that can support an economic mine
plan during 2015 and add some serious fundies backbone to what is up to now a rather over-
promo’d story stock. So for that, let’s try and make some guesses as to what Ayawilca actually
has as a resource.
How much zinc is there at Ayawilca?
Answer: It’s difficult to tell. In fact it’s really difficult to tell, but I’m going to have a shot at a
few numbers and show you what’s possible here. We’ll know more come mid-2015 when TK.v
published its maiden resource on Ayawilca, but we should at least be able to get a rough idea
and arm-wave a little.
VERY IMPORTANT: I may be overestimating here. The guesses that follow are just that, they
may be educated ones after staring at the maps and available literature for a few days, plus a
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little knowledge (dangerous thing) of how Zn-type deposits tend to form in this part of the
world, but I’m still making some pretty rough and ballpark-plus-carpark assumptions on
mineralization size. Even the grade used, though conservative, is a best guesstimate of what
might be there.
ALSO IMPORTANT: I may be underestimating here. For example The Ayawilca East target, one
that’s never been drilled or formally explored before (let alone mined), has already come back
with a promising intercept or two. If TK.v hits real paydirt there, the deposit and resource could
expand greatly and move from fairly large, through big to massive. With necessary caveats in
place, here below is a table. Assumptions include:
• Four different mineralization lengths, starting at 400m and ending at 1km (we choose
600m as our base case, that’s why it’s highlighted)
• An average mineralization width of 100m (likely to be wrong, a best guess)
• An average mineralization depth of 200m (also likely to be wrong, also a best guess)
• Specific gravity of 2.8 tonnes per cubic metre
• Average zinc grade of 4%.
From those assumptions we can work out the theoretical amount of contained zinc in the rock.
For example, in our base case guess it comes out at 2.963 billion pounds (with a B) Zn. Then
the final line shows that in in-situ valuation terms on this evening’s market cap for TK.v
(ignoring treasury cash, ignoring Colquipucro). Again to home in on my base case example,
each contained pound of zinc would be priced at 0.83 US Cents if that calc turned out to be
exactly right.
Tinka (TK.v): VERY rough estimate of contained zinc at Ayawilca
deposit length (m) 400 600 800 1000 m
width 100m 40000 60000 80000 100000 m2
depth 200m 8,000,000 12,000,000 16,000,000 20,000,000 m3 of rock
spec grav at 2.8t/m3 22.4 33.6 44.8 56 M tonnes resource
Zn content at est. 4% 1975.3 2963.0 3950.7 4938.3 Mlbs contained zinc
In-situ val at $27.3m mkt cap 1.24c 0.83c 0.62c 0.50c US cents
source: TK.v data, IKN SWAGS
To sum up so far, Ayawilca has a legitimate shot at being a multi-billion pound zinc deposit,
with a resource under 43-101 compliance by the middle of next year. If my best-guess base
case turns out to be right (by a weird quirk of fate) the deposit’s being valued at less than a
penny per pound at the moment.
Yes, but is it (potentially) economic?
It’s one thing to have a X million units of metal underground sitting in rocks, but ask anyone
who fell for the International Tower Hill (ITH.to) spiel (to find one quickly, check round those
who are currently falling for the Corus Gold (KOR.to) spiel) or any number of other crashed and
burned low grade projects and they’ll tell you that you need to be able to get them out of the
ground at a profit before they’re worth anything.
I’ve debated on whether to run this section (it’s way too early to get very specific on economics
here) but in the end I’m pushing the window this far, and no further, in order to give a rough
idea of economics that Ayawilca might provide. Assumptions for the following include:
• A 2,000 tpd processing facility (very similar to Trevali at Santander). And on this
subject, this would make Ayawilca a long mine life operations as (for simplified
example) an eventual 3Bn lbs contained would be a 45 year mine life.
• Grade of 4% Zn with a 10g/t silver byproduct kicker. No credits for any lead (Pb) or
Copper.
• Recovery grades of 90% for the zinc, 70% for the silver
• Operating cash costs of U$40/tonne (similar to Trevali at Santander)
• Reasonable guesses for G&A, depreciation, etc
10

• 5% TC/RC deduction (which is low, but I’m assuming synergies)
• Low interest payments on financial debt, but that doesn’t really matter either way
because I’m assuming the mine is funded by a third party (so operating income
potential is more important than net income potential)
• State burdens as per in Peru (including the new 28% corp tax level).
• Four different price levels for zinc, as seen in the table.
And with those in place plus a few minor tweaks, here’s what the spreadsheet spits out:
TK.v at Ayawilca: Income items for model year
At 2k tpd thruput 90c/lb Zn 100c/lb Zn 110c/lb Zn 120c/lb Zn
Sales (U$m) 52.0 57.9 63.7 69.5
Cash COGS 29.2 29.2 29.2 29.2
Depreciation 5.0 5.0 5.0 5.0
SGA 3.7 3.7 3.7 3.7
Op income 13.5 19.3 25.0 30.8
Interest 2.0 2.0 2.0 2.0
Workers Part. 1.1 1.5 2.0 2.5
Tax 2.9 4.4 5.9 7.4
Net income 7.5 11.3 15.1 18.9
Shares out (m) 300 300 300 300
EPS 0.03 0.04 0.05 0.06
Capex -5 -5 -5 -5
FCF/sh 0.03 0.04 0.05 0.06
Source: TK data, IKN ests
As alluded to above, I’m not really worried too much about how much debt servicing is paid or
how many shares out there are, because the best guess here is that TK.v doesn’t get close to
building and operating this mine and it gets sold to somebody with deep pockets who funds the
mine construction and is more interested in getting its hands on a regular and long-lasting
supply of zinc concentrate. Yes, that’s Glencore or Trafigura.
What we see here is that in these rough and very ballpark terms, from around 59m lbs of Zn
per year priced at $1/lb and silver credits that come to about $3m give or take, the mine would
be able to return an operating profit of around $20m. That’s not a great return, but it is the
type of thinnish margin typical to the zinc world and the attraction here would be a machine
that is good to go for many years. If zinc spot prices improve, so do profit margins and quickly
(as the table suggests, a 20% rise in zinc price points to a 59.6% rise in op income).
Bottom line: These rough calcs show a modestly profitable mine potential with good leverage
to metals prices. As a stand-alone operation I wouldn’t be too interested, but if it were
incorporated into another larger zinc mining entity and could raise initial capex easily via deep
pockets, then its long mine life would make it an attractive option.
Conclusion
I don’t like the bullshit promo air that’s hung around Tinka Resources (TK.v) for many years,
but with a good and solid pro geol in Graham Carman now as CEO, plus the way in which it’s
pointing to a good looking resource coming in 2015, plus the optimism around zinc at the
moment, plus the way in which zinc deposits tend to be snapped up and developed by larger
mining companies, all point me tentatively towards TK.v as a decent way of playing zinc in
2015. In an ideal world, a company such as Trevali picks it up at say 3c/lb Zn or 5C/lb Zn, we
buy at 25 and sell at 75c or $1, we all live happily ever after. That may even happen too.
I’m not buying TK.v yet, but it’s one that I like as a potential for the zinc market. Consider it on
my shortlist. Far better than being definitely scammed by a Trevali promo is being potentially
scammed by Tinka promo, no?
11

Stocks to Follow
The list had a good week, with seven uppers (RIO.to, BTO.to, DNA.to, RMC.v, ARG.to, IRL.to,
COP.to) that included all your author’s biggest positions in dollar terms bar Focus, then tow
UNCHes (FCV.v, SRL.v) and five losers (AG, NG, LRA.v, GQC.v, FSM short). The worst loser was
Lara Exploration (LRA.v down 15.5%) as it jags about on low volume here at this bottom. The
best percentage winners were Coro Mining (COP.to up 37.5%), Minera IRL (IRL.to up 11.8%)
and Reservoir Minerals (RMC.v up 10.3%).
There are currently 14 open positions on our ‘Stocks to Follow’ list, one less than the self-
imposed maximum. Two green, the rest red, still plent yof work to do to get back to reasonable
levels.
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$2.85 23.9% 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$2.06 -11.2% High value entry point now
Dalradian Res DNA.to buy C$0.64 27-oct-13 C$0.67 4.7% Nov'14 tgt $1.25, top Au expl
Reservoir Min. RMC.v buy C$6.05 18-jun-14 C$4.30 -28.9% 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$5.25 -50.0% Sole Ag, hit hard by dump
Amerigo Res ARG.to hold C$0.405 20-jul-14 C$0.35 -13.6% Small Cu play, good value
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.095 -64.8% Waiting for financing news
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.77 -26.7% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.41 -64.3% solid biz model, LT hold
Goldquest Min. GQC.v hold C$0.26 27-oct-13 C$0.105 -59.6% no point selling so cheaply
Recommended short positions
Fortuna Silver FSM SHORT U$4.12 10-nov-14 U$4.57 -10.9% New short
Smaller/Riskier
Coro Mining COP.to spec buy C$0.075 26-jan-14 C$0.055 -26.7% 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.
12

Fortuna Silver (FSM) (FVI.to) and First Majestic (FR.to) (AG) Pair Trade: Here’s how
I’m going to present this pair in the weeks ahead, it’ll normally come with a comparative chart
that takes it starting point at Monday November 17th and reading this one is simple: If the FSM
line (black) is higher than the AG line (gold) then my pair trade isn’t working. If swapped over,
it is working.
This week, it’s not working. My bad and the fact that (for example) FVI.to in Toronto
performance worse than FSM in New York last week is of zero importance, this trade is via the
NYSE tickers and period.
Fortuna still has that “star of the sector” look about it, the go-to stock for people wanting silver
exposure. Which is fine by me. I remind readers that with or without the sector strength last
week, there are precious few companies making a profit on sub-$17/oz silver.
Rio Alto Mining (RIO.to) (RIOM): The pattern on the last three months has been RIO.to at
$3(cid:1) fails to hold (cid:1) drops hard and
rebounds hard to $3 (cid:1) fails to hold (cid:1)
drops hard and rebounds hard to $3. For a
moment on Friday we, yes indeed, we
touched a 3-handle for a few seconds (with
plenty of trading between $2.94 and $2.98)
before the weekend profit-takers moved in
and took the best of the gains off the stock
(and most others in the junior producer
sector, they all bobbed on the same tide).
The IKN position couldn’t be clearer; RIO is
worth more than $3 even at $1.2k gold.
The future will show whether that call is
correct.
In fundies news, costs are coming down at RIO.to so expect one of the most competitive cash
cost gold operations out there to get even cheaper per ounce.
• Peru’s Finance ministry has just cut corporation tax from 30% to 28% (see below)
• RIO is now on the electricity grid, which means its processing plant at La Arena doesn’t
need the on-site generators any longer, with significant costs savings.
• The drop in the fuel price in Peru, which I’d previously expected in December (there
was an expected lag between the drop in crude prices and the drop in pump prices in
13

Peru, due to the higher priced inventory that needed to be worked through) has come
into effect a little earlier than expected and retail prices are now down by an average of
about 10% (depending slightly on which type of hydrocarbon you put in your engine).
This alone could take $1.5m off of COGS at La Arena per quarter (according to the
spreadsheet).
• Finally, this:
The strength of the US Dollar against nearly all country currencies in the last few months makes
it cost effective to have operations in foreign countries when you report in USD. RIO.to is by far
the only example, but it’s very much included in the mix. The 3q14 forex averaged 2.82
Peruvian Nuevo Sol (PEN) to the US Dollar (USD), that’s average is currently 2.915 in 4q14,
which means RIO.to gets an extra 3.4% cost saving in dollar terms on everything it needs to do
in Nuevo Sol terms.
Coro Mining (COP.to): Yes, you too could have bought COP.to at 2c just a couple of weeks
ago. And yes, you too could have
picked up all the 2.5c you could
have ever required around that
low point (I know because I got
some myself and the fill was
easy).
If you’d filled up at 2.5c you’d be
sitting o a 120% win, not shabby
in half a month. You may consider
selling the cheap shares for a
quick profit, personally I’m
holding.
Reservoir Minerals (RMC.v): Buoyed by the new optimism in juniors, the firmer copper price
and the search by new money for quality projects at knockdown prices, RMC.v managed to get
above $4 and stay there this time. Volumes weren’t great, but they don’t have to be at the start
of a rally. A good week, but there’s plenty of distance between my cost average and green ink
here.
We did get news from RMC last week on its Cameroon early stage exploration properties, but
the market won’t see it move on news unless the word Timok is in the release.
Amerigo Resources (ARG.to): Continues to bobble around the 35c price point on low
volumes and little interest. The necessary catalyst will be news on the financing for its
14

expansion, until then all quiet methinks. Easy to hold.
Minera IRL (IRL.to) (MIRL.L): Minera IRL’s 3q14 hope for until it generates its own market
moving news. And that’ll be Ollachea, nothing else.
Dalradian Resources (DNA.to): Closer study of the last three or four weeks in DNA.to gives
reason for optimism about the state of the market. On October 30th DNA released its updated
PEA for its Curraghinalt project (16). I mentioned on the public blog (17) that I considered DNA
and its new document a good litmus test for the state of capital markets. Then in IKN286 dated
November 2nd we ran the numbers and finished the Fundies section that day with this
paragraph:
Dalradian Resources (DNA.to) at 55c this weekend is all the evidence you need to
declare this market über-bearish, because under any other circumstances (e.g. merely
bearish would do) its share price would be a lot higher. Having recently added and
made this position pretty large I’m not adding any more, but I’m pleased about the
data the company handed over last week and good about holding this one, thick or
thin. Those of you looking to buy a beaten down exploreco with a quality project in a
politically safe region should look no further, but this one.
Let’s run that list in the last sentence again: Are you looking to buy a beaten down exploreco? A
quality project? In a politically safe region? Look no further.
We’re now at 67c, 21.8% higher
than just three editions ago (and
27% higher than the day DNA
published its new PEA), what’s
more DNA.to was trading in the 70s
this week until Friday profit-taking
came around. This chart shows
how our charge has done against
the GDXJ benchmark and GLD
(notably flat, point to point) and
that’s why I say there’s an
optimistic signal coming from DNA,
not just for this stock (in which I’m
happily long on a large-ish position
after averaging down) but for
others that can check on those three criteria above.
Our current $1.25 target is generated from $1,100/oz gold. Cheap stock, own some.
GoldQuest Resources (GQC.v): Two bits of news from GQC last week. First up GoldQuest
reported its 3q14 numbers after the bell on
Friday, 21 November 2014. Being a straight GQC.v: "corporate vs field" expenses
3
exploreco with very little in the way of hidden
2.5
corners there’s no need for the whole suite of
pretty IKN charts, so here are the ones that 2
matter:
1.5
1
As total expenses at GQC is as near as dammit
to both operating and net losses for this 0.5
exploreco, this chart that breaks down 0
expenses into “field” and “other” works as a
proxy to just about everything you need to
know on its P+L:
15
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3
$m
other expenses
Eval/Expl costs
source: company filings

The regular burn rate at GQC kept on keeping on in 3q14. That brings us to cash at the
company, the thing that concerns just about
every exploreco out there at the moment. In the
case of GQC the company is in relatively good
shape and treasury is one of the stronger points
it brings to the table right now. This is good.
Here right is the asset chart, which shows fixed
assets to be a small part of the overall plan at
GQC (cash burned is expensed) so the lion’s
share of things is the cash treasury held. As at
3q14 cash treasury stood at $6.875m, with an
IKN-forecast of $5.4m at 2014 year-end.
I’l skip lightly over the liabilities chart, because GQC holds no debt and only run-of company
bills to pay. The question that arises from the cash position is how long GQC will be able to go
before it needs (rather than strategically decides, or wants, or is offered, we’re talking needs
here) to go back to market and raise capital. The way forward is to assume a regular burn rate,
with the same type of exploration rhythm from GQC in what’s left of this year and then in 2015.
Then we plug in best-guess numbers and check out working capital, which looks like this:
GQC.v: Working Capital per qtr
22
20
18
16
14
12
10
8
6
4
2
0
16
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4 tse51q1 tse51q2
source company filings, IKN ests
srallod
fo
snoillim
GQC.v: Assets Breakdown per qtr 24
22
20 18
16
14
12
10
8
6
4
2
0
The answer is, GQC is good to go until the end of 3q15, in other words even if it doesn’t curtail
its activities this cash-sipping company has the funds to keep going for another full year. That’s
not bad.
Meanwhile On Thursday GQC gave us an update on exploration via a separate NR (18) one of
those arm-waving “here we are” type of NRs. The “highlights” bullet section of the NR is good
to show here, it gives the idea in a short space:
Highlights:
Confirmed extensive hydrothermal alteration at La Bestia
Drilling encountered silicic lithocap, upper part of epithermal system (same system as Romero)
Commenced field work at Imperial target directly south of Romero deposits
"Our exploration efforts have focused on identifying new mineral systems, similar to the system
which hosts our Romero deposits. I am pleased we have succeeded in locating two new large
hydrothermal systems on our property," commented Julio Espaillat, GoldQuest's CEO. "Our goal
is to locate potential gold/copper mineralization in these systems and to increase our mineral
resources in the district."
In other words GQC continues to work diligently and explore its Dom Rep properties. Meanwhile
its share price has been pushed down to ultra-low levels by the sector selling, so if the current
rebound has legs we should get the second tier type of names such as GQC moving up again.
With at least a years’ worth of funds to its name and plenty of discovery potential, it has plenty
in favour for speculators. At such a low price it’s easy to hold through, if it rose I’d consider
lightening up.
Focus Ventures (FCV.v): With gold and friends suddenly back in fashion, things like
phosphate plays are suddenly out of fashion. Market prices for P2 have even improved some
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 tse41q4
source: company filings, IKN ests
srallod
fo
snoillim
fixed
other current cash

and the latest $115/tonne is $10 higher than when I made my site visit to Bayovar 12.
Insiders continue to buy small or medium sized chunks of FCV, which is a reasonably good sign.
The Copper Basket
After forty-seven weeks of 2014 The Copper Basket is showing a 15.21% loss to level stakes.
company ticker price 1/1/14 Shares out Market Cap current pps gain/loss%
1 Augusta Res AZC.to 1.51 144.41 541.54 3.75 148.3%
2 Lumina Copper LCC.v 6.29 44.07 440.70 10.00 59.0%
3 NGEx Resources NGQ.to 1.43 186.52 244.34 1.31 -8.4%
4 Reservoir Min. RMC.v 4.97 47.55 204.47 4.30 -13.5%
5 Nevada Copper NCU.to 1.35 80.5 117.53 1.46 8.1%
6 Western Copper WRN.to 0.76 93.68 70.26 0.75 -1.3%
7 Hot Chili Ltd HCH.ax 0.425 333.11 63.29 0.19 -55.3%
8 Copper Fox CUU.v 0.375 402.96 58.43 0.145 -61.3%
9 Panoro Minerals PML.v 0.35 220.25 56.16 0.255 -27.1%
10 Curis Resources CUV.to 0.57 74.79 50.86 0.68 19.3%
11 NovaCopper NCQ.to 1.60 60.15 46.32 0.77 -51.9%
12 AQM Copper AQM.v 0.11 139.24 10.44 0.075 -31.8%
13 Coro Mining* COP.to 0.10 159.37 8.77 0.055 -45.0%
14 Cordoba Min. CDB.v 0.90 58.81 8.53 0.145 -83.9%
15 Oracle Mining OMN.to 0.27 49.03 2.21 0.045 -83.3%
NB: HCH.ax priced in AUD$, rest CAD$ //CDB 2x1 split May'14 Portfolio avg -15.21%
There were five weekly winners (NGQ.to, The Copper basket 2014, weekly evolution
25%
RMC.v, WRN.to, COP.to, AQM.v), no fewer
20%
than six stocks remained unchanged on the
15%
week (LCC.v, AZC.to, CUV.to, CUU.v,
10%
HCH.ax, CDB.v) and four losers (NCU.to,
5%
NCQ.to, PML.v, OMN.to). The basket 0%
average’s weekly gain was 2.67% and -5%
that’s an ok rebound, fuelled by Coro -10%
Mining (COP.to up 37.5%) but with AQM -15%
Copper (AQM.v up 15.4%), Western Copper -20%
& Gold (WRN.to up 13.6%) and Reservoir -25%
Minerals (RMC.v up 10.3%) to back it up.
Droppers were led by the 10.0% down in
17
ht5naj ht61 ht61 ht9 ht03 ht02 ht11 ts1nuj dn22 ht31 dr3gua ht42 ht41 ht5tco ht62 ht61
source: IKN calcs

Oracle (OMN.to), but in reality that was a half cent move on a broken stock under very light
volume.
Market prices for copper stayed range-
bound, despite the flurry of activity that
came when China’s central bank dropped
interest rates by 0.4% with a view to
injecting liquidity into its national economy.
Copper popped for a while to $3.07/lb (or
so) but fell back to the just-above-$3 level
that we’re starting to get used to seeing.
Best copper price chatter this week came
from Chile. First up the country’s Cochilco
survey asking 19 financial entities for their
call on the average copper price for 2015
(19). The middle ground was between
U$3.01/lb and U$3.05/lb, 11 of the 19 said
copper’s average would remain above
U$—7lb, eight said the average would sink
below the psychologically important number.
Most bullish were Wood Mackenzie
(U$3.55/lb average in 2015) and JP Morgan (U$3.45/lb), most bearish were Numis (U$2.53/lb)
and Wilson HTM (U$2.69/lb).
Second up was the news that Codelco would charge Chinese buyers a $133/tonne premium for
copper in 2015. This is roughly 4% lower than the $138/tonne premium set for 2014, but it still
surprised the market because current premium on spot for shipping and insurance is $60/tonne
and the forecast was for Codelco to set at $130/tonne or lower. This Bloomberg report (20) on
the news also brought this moneyshot quote..
The fundamentals of the copper market will remain strong in the medium- and
long-term as urbanization continues in emerging economies such as China,
Oscar Landerretche, chairman of Codelco, said today during a presentation at
the conference. The company sees prices as “quite stable,” he said.
Looks like Codelco is far more optimistic about the shape of 2015 than most market analysts.
But what does the world’s single largest producer of copper know, anyway?
Now for the inventories section and the weekly bullet points on a very quiet week for world
copper warehouse movements:
• Overall world stock levels dropped by just 30 metric tonnes (mt) to finish the week at
277,440mt.
• The Shanghai Futures Exchange
Shanghai Futures Exchange Warehouse Stocks, 2014
warehouse stocks were unchanged
220000
on the week at 88,.
• The LME copper warehouse 200000
180000
inventories went up by just 25mt to
160000
160,825mt.
140000
• The Comex warehouse stocks
120000
number dropped by just 55mt to end 100000
the week at 28,475mt. 80000
60000
It’s difficult to imagine a quieter five days for
the copper stocks scene. Now for some
commentary on one of our basket stocks
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 dr32
Mt Cu
source: Cochilco

Western Copper & Gold (WRN.to): I have this pet theory about WRN, it moves up on
weeks such as this when people want
1) To get spec on copper
2) So look around for a decent junior exploreco that’s cheap
3) Can’t find a single one
4) Decide to settle for something that’s marginal but at least with the corporate side run
well, with some cash to see it through and without any obvious fatal flaws in the
deposit on political/community risk.
5) Find little, settle for WRN.to
6) Buy some.
Curis Resources (CUV.to): Thursday saw the rubberstamp news on the Taseko takeover
arrive on schedule and from this moment onwards (and in the same style as with AZC.to and
LCC.v) we’ll be assuming UNCH on this now taken-over stock, no matter if a few remnant
shares trade in the days to come.
This is the way the world ends: Not with a bang but a whimper
With just five weeks to go until we wrap up another year of the copper basket, it occurred to
me that it’s getting more and more difficult to find something interesting to say about these 15
names. After a bit of thought, it seems to be because there aren’t many left that I’d call actively
interesting as potential trades on the list. Here are the categories:
Now bought out (automatically uninteresting now)
• Lumina (LCC.v)
• Augusta (AZC.to)
• Curis (CUV.to)
Never interesting to begin with (in my personal opinion at least)
• Copper Fox (CUU.v)
• Nevada (NCU.to)
• Panoro (PML.v)
Maybe interesting once, but now they’re clear flops
• NGEx Resources (NGQ.to)
• Cordoba (CDB.v)
• Oracle (OMN.)
One I own (therefore covered in ‘Stocks to Follow’ above)
• Reservoir (RMC.v)
• NovaCopper (NCQ.to)
• Coro (COP.to)
What’s left
• Hot Chili (HCH.ax)
• Western (WRN.to)
• AQM Copper (AQM.v)
In other words, I’ve left myself with just three stocks that still hold the attention as possibles
(NB, not probables, merely possibles) after 11 months of play).
1) AQM Copper (AQM.v) because I’ve thought about buying it at these low low levels on more
than one occasion. It has a quiet period ahead of it in 2015 as the Zafranal JV does the serious
work to get the project to feas level, but AQM has its side of the budget covered and will
eventually come out with 30% of a live project that has its chance of becoming a mine.
2) Western Copper & Gold (WRN.to) because it’s not bad from any angle without being really
19

good or outstanding, it’0s kind of best-of-the-rest. The low grade and remote location puts me
off the most here.
3) Hot Chili (HCH.ax) because it’s the only one I really like as a potential investment right now,
from what’s left here anyway. I’ve hummed and hahed about it more times than I care to
remember, but up to date the market circumstances haven’t warranted my attention on this
and the thought of adding another tinycap beaten down copper junior exploration story kind of
gets me queasy. That may be changing though and if so, HCH is the one I’d probably add to
my copper holdings.
The Low Cost Producer Basket
After 47 weeks, the Low Cost Producer Basket is showing a 9.33% 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 30.77 29.59 -21.6%
2 Goldcorp GG 21.67 812 16.66 20.52 -5.3%
3 Barrick ABX 17.63 1164.67 14.97 12.85 -27.1%
4 Newmont NEM 23.03 499 9.83 19.69 -14.5%
5 Franco Nevada FNV 40.74 156.08 8.54 54.71 34.3%
6 Silver Wheaton SLW 20.19 357.39 7.62 21.31 5.5%
7 Agnico Eagle AEM 26.38 173.43 4.62 26.64 1.0%
8 B2Gold BTG 2.02 948.9 1.75 1.84 -8.9%
9 Pan American PAAS 11.70 151.41 1.59 10.50 -10.3%
10 First Majestic AG 9.80 117.02 0.61 5.25 -46.4%
all prices in U$, using NYSE ticker prices Portfolio avg -9.33%
The overall basket improved by 3.55% last week as the fightback continues, with just one loser
(AG, a 3c slip on late Friday profit taking) and nine winners. Best of the bunch was the 7.6%
put on by B2Gold (BTG), with AEM’s 6.1% improvement worthy of note as well.
The Low Cost Producer Basket: Weekly performance and
comparative to GDX control
40%
30%
20%
10%
0%
-10%
-20%
-30%
20
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

I’m again keeping things light in this section on the commentary. I should do more, I know.
Regional politics
Southern Peru (SCCO), Tia Maria and rare honesty from a Peruvian politician
Whether it was some kind of reverse-psychology ploy on his part remains to be seen, but the
stance taken by Peru’s Minister of Energy and Mining, Eleodoro Mayorga (who to your author’s
great surprise has held onto his job after surviving accusations of being knee-deep in illegal
lobbying over a gas pipeline contract earlier this year) over Southern Copper’s (SCCO) troubled
Tia Maria copper project in the Arequipa region, if taken at face value, was refreshing in its
honesty.
The quickest re-cap: The $1.3Bn capex SCCO Tia Maria project would be built in a lowland
valley area that’s also fertile farmland. Locals have strongly opposed the project for years, a
few years ago the protests ended in two deaths and many injuries after clashes with police, the
Enviro Permit (EIA) was revoked, but in August 2014 a re-worked EIA was granted, still against
the wishes of the local community. In October this year of of the leaders of the anti-Tia Maria
project was elected mayor of the province in question during the regional elections.
In declarations on Thursday (21) during a visit to the Arequipa region, Minister Mayorga noted
that the original EIA had been voted down, a new one granted and the main original reason for
the opposition to the project, that of water supply, had been overcome because the new Tia
Maria project would use seawater, a desal plant and a pipeline to supply it with water that
wouldn’t touch the local water table or affect agro supply (in fact recycled fresh water from Tia
Maria could augment local water supply). However, he want on to concede that although the
project has the environmental permit, it does not have local permission via the so-called “social
permit” that can only be granted by those living nearby and without that agreement, he said
that the project should not go ahead in order to avoid further conflict. In his words (22),
“The fact is that there are members of the (local) population who don’t want
the mine, even when you demonstrate to them that there would be no
damage. What else can we do but to accept their position? That population
won’t get royalties, this government won’t get revenues (from the mine).”
And this is correct. The plain fact is that there are many communities around Peru (and the
world) who, when given the choice, don’t want massive open-pit mines built next door to where
they and their families have been living for generations. They’ll throw the best logic reason at
their opponents (in this case water) but if that problem is knocked down, their basic opposition
doesn’t just melt away and die. Is this really hard to understand on a conceptual level?
We see it in Santa Ana, in Cañariaco, in Cajamarca just to mention three other community-
opposed projects in Peru that we’re familiar with here at the Weekly. But we also see it in
Ecuador (Quimsacocha and others), Argentina (Malagüe, Suyai and others), Brazil (Volta
Grande and others), Mexico (Baja California Sur, Veracruz, Morelos and many others), Colombia
(La Colosa and others) even that paragon of mining jurisdictions Chile (El Morro, Pascua Lama
and others). That little list came off the top of my head too, no recourse to Google, so stick me
in a corner for a while and I could triple it without breaking into a sweat.
The issues are many and varied. They include the emancipation of previously vulnerable
cultures and communities, who have found there are legal ways to fight against impositions
from the politically powerful and wealthy (as well as illegal methods, of course). They include
the way in which a legacy of arrogance and high-handedness from mining companies in the
past has left bitterness and rejection of them in the present, even if the majority of those
companies have (I believe) substantially changed their ways and do work for win-win situations.
It can be tough to convince someone of this if the same company caused the early death of
21

family members a couple of decades ago. But it’s also a reminder that our idea of the bright
and better future, that of growth and investment and monetary wealth, isn’t shared by
everyone on this planet. Frustration and anger is heaped upon small local communities that
oppose big civil engineering projects because of the disconnect in cultural attitudes. But even if
we disagree with their choice to say no to a project like Tia Maria we need to recognize that in
error or not, those that oppose are making what they believe to be the best decision for their
own quality of life. You know that one about money buying you happiness, don’t you?
South America and China
China’s charm offensive in the Southern Cone region continues unabated, if anything it’s
recently intensified. Here come headlines from regional mainstream media channels in the last
48 hours (all translated from the Spanish), count ‘em up, folks.
This from Argentine media (23):
The President of China Sends a Message to Cristina and Invites her
to Visit His Country
Xi Jinping sent a letter to the Argentine President to wish her a “swift
recovery” and invite her to China to continue with the “bilateral cooperation”.
[sidebar: CFK was ill the week before last though she’s now back on duty]
This from Chilean media (24):
Minister Williams Meets With Chinese Authorities To Open Areas of
Cooperation
[sidebar, as part of the presser event, Chile’s mining minister told those
present that, “We have future (mining and mining infrastructure) projects
worth over U$100Bn and development must be accompanied by engineering
and suppliers over the next ten years”]
This from Peruvian media (25):
Humala and Zhang Dejiang Talk Peru-China Strategic Association
The President of Peru, Ollanta Humala, and the president of the National
Popular Assembly of China, Zhang Dejiang, today conversed in the
Government Palace in Lima about the achievements of the Integral Strategic
Association between the two countries.
[sidebar: Peru’s minister of energy and mining, Eleodoro Mayorga, was also
present at the meeting]
But it’s probably just coincidence, right? For the record Zhnag Dejiang is in Colombia next
week, meeting with President Juan Manuel Santos and his ministers.
Peru: Tax breaks
This week the government of Peru, under the plan of new Finance Minister Alonso Segura,
introduced a new stimulus package that looks very Keynesian in nature. There are several
measures planned, including sponsorship of public works and job creation schemes funded by
debt emission (Peru placed $3Bn of bonds to fund the plans), but the main ones we care about
are reductions in taxes.
Point one: The minimum taxable threshold has been raised, which will most benefit those
Peruvians in formal employment who earn between S/.2,000 (U$685) and S/.4,500 (U$1,541)
per month. That’s an important salary range from working class to (lower) middle class in Peru
and it’s calculated by the Finance Ministry to cover around 1.6 million workers (roughly 5 million
people on the family count), what with there being a great number of jobs still undeclared in
this country of 30 million people. Benefits vary according to salary range, but the savings can
be up to 44% of current tax paid, according the the Finance Minister. The cost to the State is
22

estimated at around U$1Bn per year in tax revenues
Point two: The corporation tax on profits (Sp: impuesto a la renta) will be cut from its current
30% to 28%, and then further cut to 26% by the year 2019 (though we’ll have to wait and see
if that last part ever happens).
Let us be clear, we should applaud the decisions made by Peru’s government last
week. They’re smart countercyclical initiatives, they put money in the pocket of its citizens and
that will help revive the flagging internal economy. The risks of currency devaluation in the
medium term are minimal, as Peru has plenty of financial back-up and room to take on more
debt, especially in this year-or-two timeframe proposed. This is smart macroeconomics and my
only criticism is that we didn’t see this happen sooner, therefore my crits are minor.
Plus, more importantly for us, Peru is a better place for FDI new and old, not only mining but
we care more about that sector than others round here. Here’s what José Antonio Blanco,
president of the Peru investment promotions organization ‘inPerú’ said about the
announcements (26):
“Peru is more attractive (as a destination for FDI) than before. Not only because
investors will consider their projects more attractive in Peru than before, but also
because Peruvian domiciled companies will have better profit margins and when they
look to get financing or float shares they’ll get more competitive prices”.
Because of this he said that the reduction by two percentage points in the corporation
tax, from 30% to 28%, is very important, even more so because this rate will drop to
26% in 2019.
“The decision to reduce these taxes is absolutely correct, and comes when other
countries such as Chile are doing the opposite and raising corporation tax”, he said.
This publication agrees with Señor Blanco.
Argentina: Barrick wants to remit
After years in which Barrick has taken the paper profits made by its Veladero mine in San Juan
province Argentina and ploughed them straight back into capex budgets inside Argentina (the
very same Veladero, the ‘Lama’ side of Pascua Lama, other exploration), thereby avoiding all
those knotty problems that come with trying to get US Dollars out of Argentina, things have
changed and last week it was reported by the (anti-CFK) press (27) that ABX has applied to the
government (via its Central Bank) to remit dollars to its mothership. Clearly, ABX is looking to
bolster its balance sheet with a bit more hard currency, a bit less in the way of fixed assets.
According to the head of Barrick Argentina, Guillermo Caló, it’s the first time they’ve applied to
remit cash but despite the reputation the CFK government has of holding tight to its foreign
currency reserves, he’s not expecting any problems with the application. In his words, “We
have a surplus balance that we’ve generated from exports...and we want to transfer them via
dividends (i.e. remittances of profits)”.
In other minor news, anyone versed in Spanish who’d like to read a funny and sharp
lampooning of Argentina’s supremely entrenched Mining Minister Mayoral, a man incapable of
saying anything that resembles the reality of his sector of charge, should read this article (28)
that showed up on Argentina’s hardcore politics website parliamentario dot com. I’ve long since
stopped giving any sort of credence to Mayoral’s opinions (and so should you) but it’s nice to
see some fun made of him by people inside the country.
Mexico: The fallout from the Guerrero student massacre continues
From what I’ve seen, English language coverage of the turmoil in Mexico has been mixed. On
the one hand I don’t think this major, world-level story it’s getting the amount of mainstream
coverage it needs (deserves?) and that might be for any number of reasons (not “sexy” enough
for editors, political/diplomatic reasons, not MidEast, not ebola, not a fashionable religion-based
conflict, not enough dead people (yet), etc). On Thursday evening alone there were an
23

estimated 30,000 people (mainly students) in the capital’s Zocalo main square, with thousands
of others attending satellite protest gatherings in the main squares of cities in the states of
Guerrero, Puebla, Chihuahua, Morelos, Oaxaca, Veracruz and Baja California (notably, that’s
coincidentally a neat list of the States worst affected by narcotrafficking violence and alleged
State-level corruption).
On the other and thanks to the wonders of our interconnected planet, there are many places at
which you can read up on the issue and latest development sin the English language (if you
care enough). Because of that, here comes a quick overview of where we are and then the
reason for today’s piece on our specialist subject here at The IKN Weekly, mining and FDI.
First, the overview: This week has seen massed and sometimes violent protests against the
government of President Enrique Peña Nieto, mostly due to the ongoing fallout from the
presumed massacre in Guerrero State of the 43 students...
[Sidebar: See editions passim, but the potted story is that the students were detained by police,
then ordered handed over by the regional governor to narcotrafficking groups who killed them all
and burned their bodies to dust before dumping the remains in a river. The horror of the manner
of death, the obvious collusion between the country’s police force, the local political powers and
the nacro families, the way in whicih the national government refused to investigate for weeks
before national outrage forced their hand, there lies the combo compounding national unrest]
...but also connected to underlying feelings of discontent about the nation’s direction under
Peña Nieto, corruption cases with evidence of wrongdoings that very much include the
President himself in bribery accusations, the disdain under which the current ruling PRI party is
held by many Mexicans (though supported by others of course, as classic party politics is part of
the problem)
As is sometimes the case, the most insightful piece I’ve read about the continuing problems for
President Enrique Peña Nieto wasn’t written by anyone in Mexico, but by another looking from
the outside in. Argentina’s La Nacion newspaper is the location, the article is entitled “More
than just anger, the case has destroyed social trust” and captures well problems now being
heaped upon the national government (29) as well as the government’s handling of the crisis so
far and the opportunities Peña Nieto has to further rectify matters.
Now for our specialist subject matter, mining and political/community risk. We already have the
provincial governor who ordered the detention of the students under arrest. This weekend
brings news that the police chief in Guerrero in charge of the arrests (and presumably the one
who handed the students over to the narcos) has been arrested after being on the run for the
last six weeks (30). The issue here is the governability of Guerrero State, as it’s been run by
these people for years and the undercurrent of violence and murder (kept neatly boxed away
from the world’s attention) has been institutionalized by them. This is not an easy place to
govern and though obviously corrupt from the top down, the defence of the region’s leader is
(and will be at trial) that it was the only way to maintain law and order. They’re probably right,
as the next stage of lawlessness now that the head has been chopped off of this corrupt system
is about to show. We can expect two things from Guerrero State in the months to come. First, a
significant upsurge in violence as those who would want to control/wrest power come into
conflict. Second, more reporting of every event out of the State, which won’t just make it sound
more unstable than before, but a lot more unstable than before due to reports being gagged
for so many years. And therefore, I’ve said it before and I’ll say it again, choose another region
for Mexico, because Guerrero is not the address for your mining equities exposure. The place is
a tinderbox, governmental control has just been weakened, the vacuum will be filled and at
least until we know who wins, it’s going to be a very unpleasant and notorious place.
Peru: Madre de Dios miners, Ollanta and corruption
Last week saw an interesting Q&A in Peru national daily newspaper Peru21 (politically anti-
Humala, but not ragingly anti) with a Diocesan Roman Catholic priest of Madre De Dios, Pedro
Zavala, a Dominican who has been in the controversial jungle zone of Peru for the last six years
24

(31). In the interview, Father Zavala gave voice to accusations that Humala benefitted from
donations to his election campaign from the illegal miners, told them he would help and support
them, only to turn his back on them when it suited him. In sum, it’s very similar to the sort of
accusations levelled against Humala by the rural population of Cajamarca. Here are just a
couple of the Q&As from the entire piece:
Peru 21: The illegal miners gave 17 kilos (546.55 oz) of gold to President
Humala?
Zavala: It’s vox populi in Madre de Dios that the (illegal) miners donated gold
to Humala during his 2010 election campaign. I wasn’t an eye witness
because I don’t have anything to do with that business.
Peru 21: Humala betrayed the miners?
Zavala: Yes. He should never have promised things he couldn’t deliver. In
meetings (in MDD) he promised he would help formalize them, but he never
did so and now he blames them for working illegally. There was an
agreement between the miners and the Nationalist Party (that of Humala).
The interview goes on to recount the way police corruption works in the region. One example
given is fuel brought into the Madre de Dios, where a jerrycan of fuel (worth 50 Soles) brought
in needs a 10 Soles bribe paid to the police. Father Zavala states that police officers have told
him their official monthly salary is 1000 soles (U$342) per month, while their sideline salary is
10,000 Soles per month. He also states for the record that the corruption goes up through the
ranks to the generals and directors of the national police force.
Argentina Mendoza: The anti-mining credentials of the provincial parliament
Last week, an application for an environmental impact permit to explore the old ‘Hierro Indio’
iron ore mine was debated and voted upon by the parliaments of Mendoza province. The
application passed by 19 votes to 18 in the Senate, but then the House of Deputies voted
against granting the permit by 30 votes to 13 (32). This means the enviro permit was denied
and the private company wishing to explore the old mine in order to determine how much iron
ore is left there, what grade, what the economic prospects of re-opening the mine etc etc
cannot move forward.
This is the same provincial parliament that stopped the San Jorge copper mine in its tracks
when denying it the key environmental permit (back when it was 100% owned by Coro Mining)
and is backed by anti-mining sentiment at a population and business level (there are plenty of
Green Ecovoters in Mendoza province, plus the wine industry there doens’t want competition for
the cheap labour it enjoys...but they’ll tell you it’s all about water and pollution of course).
Once again, we underscore the vital importance of regional politics in Argentina’s mining scene.
Peru: More on the Bear Creek Santa Ana developments
On the blog Friday I reported the development in the Bear Creek (BCM.v) Santa Ana vs Peru
government case, in which the company had reportedly dropped its court action against the
State (33). It turns out to be true, but the reason behind the BCM.v is more straightforward
than first met the eye. Even though local anti-Santa Ana leaders in the Puno region were quick
to claim a victory on the back of the move (34) it turns out that the dropping of the case in the
national courtrooms was a requirement for the case to continue and be heard in the
International CIADI/ICSID tribunal (the body attached to the World Bank that hears
international arbitration cases and gives unappealable verdicts). In the words of this report in
local Puno media Pachamama (35) on Friday evening (translated) “...a spokesperson for the
Canadian mining company told Pachamama Radio that under the Free Trade Agreement (FTA)
between Peru and Canada, the company had taken its case to the CIADI tribunal in order to
resolve the controversy”. However, the spokesperson said that in order to hear that case at this
international court, all judicial processes in Peru had to be stopped, which is why the company
asked for the case it had brought in 2012 against the Mining and Energy ministry, The Defence
25

Ministry and the National Executive of Peru to be stood down.
To my surprise BCM didn’t make any sort of announcement about this material event last week.
It should do soon (unless the Canadian authorities are even more lax than I suspect) and when
it does, we should expect them to state that they are now concentrating 100% on the
international arbitration body (as well as their absolute confidence in winning etc etc). Although
the shelving of the Peru court case doesn’t preclude an out of court settlement between the
two parties, we should now expect the dispute to go the full distance at CIADI/ICSID and that’s
a question of perhaps a couple of years in realistic terms before a verdict is reached (though a
judgment in 2015 isn’t out of the question). Bottom line: Santa Ana BCM vs Peru continues, but
don’t hold your breath.
In other news, polling in Puno region has Luque on 54% and Aduviri on 46% for the December
7th run-off vote. That’s closer than I expected (though the polls are not particularly reliable in
Puno region), but fits with word received that Luque has been keeping a low public declarations
profile and allowing Walter Aduviri to make more of local media channels to promote his cause
and detract from that of his rival, as he’s been using plenty of negative attacks. The two
candidates will meet next Sunday evening November 30th in live debate, at which point we’ll
have a clearer picture.
Market Watching
Insider sales in silver producers
As mentioned a few weeks ago when talking about insider trade filings, some insider moves are
more indicative than others. First example today is (36) Tahoe Resources (TAHO) (THO.to)
insider selling and here’s a table extracted from Canadian Insider:
Let us be clear, that above is a lot of money’s worth of shares. Even though company President
and CEO Kevin McArthur still owns a little under 3.3m shares of his company, he’s just made
himself $10m richer by selling off 526,666 of his shares.
Second example is Fortuna Silver (FVI.to) (FSM), which is of course my current short position.
We note that this company’s President and CEO, Jorge Ganoza, has also been keen on
liquidating some of his position but this time it’s been via the exercise of 75,800 of his options
with a floor price of $4.03, which were then sold into last week’s market at an average of
around $5.20. (37) in this case we don’t show you the list of trades (you can check it out on
that link), rather the price chart shown by the Canadian Insider site.
26

The regularity in the way FVI insiders have exercised and sold into the $5 level over the last
few months really catches the eye.
Although the proceeds of around $90,000 (pre-tax on those trades have made Ganoza far less
wealthy than TAHO CEO McArthur in dollar terms, I’d argue that the signal is equally as strong
as CEO Ganoza is share-poor in his own Fortuna holdings (he only has 32,100 to his name) but
is options rich, with nearly 1.4m to his name. He’s taken the opportunity to make a little over a
Loonie on a chunk of his options, though one wonders just why $90k pre-tax is important to
him. My own position as regards the over-expensive FVI share price today is stated as clearly as
it possibly could be, perhaps Ganoza reads The IKN Weekly and agrees. But speculation aside
the facts remain clear: Two Pres/CEOs of high profile silver producers both use the post-
reporting window to sell insider holdings into the market.
A headsup on Aguila American (AGL.v)
Aguila American (AGL.v) is a tinycap exploreco with assets in Peru that’s been going nowhere
fast for some time. It’s run by one John Huguet, who was the person responsible for the
enormous mess made by the community relations team at the Invicta mine, then owned by
Andean American (AAG.v), now in the hands of Lupaka Gold (LPK.to) and still going nowhere
fast. AAG in its time also controlled the Sinchao project, now called Antakori and under the
control of Regulus Resources (REG.v) after its recent buyout of Southern Legacy (ex-LCY). A
total mess was made of community relations at Antakori/Sinchao as well.
Huguet owns 1.82m shares of AGL.v and has been adding in dribs and drabs these last few
months. As AGL.v currently has 13.466m shares out (18.055 F/D) after a recent-ish 5-for-1
rollback, that means Huguet owns 13.5% of the company. It closed at 5c on Friday, which
gives the company and teenytiny market
cap of $673,300. This is as small as they
come, folks.
To finish up the very-quick-and-dirty on
company structure, AGL.v has very little
cash, burns around 100k per quarter in
tickover-type exploration and expenses
and as at its last reported quarter ended
July 31st 2014 was running a working cap
deficit of $231,479. Bottom line, this is a
pennycrapper start to finish and it has the
expected type of beaten to death share
price you’d expect as a result:
Bottom line: It’s a 5c stock.
27

So far there’s not much to separate this vehicle from the host of pathetic, going nowhere
juniors that are dying their slow deaths on the TSXV. But there’s more to this pennycrapper
than first meets the eye, so read on and to make it simple, I’m going to list the reasons why
this nanocap has caught my eye in bullet form:
1) Nick de Mare is on board the company and still there despite all its travails, currently holding
the positions of CFO and company secretary as well as director and a member of the audit
committee. When it comes to making a buck in the world of junior explorecos there are no flies
on Mr de Mare, he’s also unafraid of resigning from any no-hoper company if necessary (you’ll
find his name attached to a dozen companies at the moment, many many more in the past too)
so there must be a good reason for him to keep the faith here, let alone offer his services as
CFO/corp sec.
2) AGL held its AGM this week, to be precise at 10am on Tuesday November 18th , so the first
thing that caught my eye is the way the company waited until late Friday evening (19:42 ET
November 21st on SEDAR) to make the necessary NR on the meeting, with no cover NR sent to
the market wire services.
3) At the bottom of the NR, there was this paragraph:
Community Relations
350 TPD High Grade GOLD Processing Plant
With respect to the Company’s proposal to construct a gold procession plant, in a full community meeting held on
Saturday, November 15th and follow up document signings, the community voted unanimously to extend the permit and
30 hectare (73.5 acres) mill site use for a period up to 15 years. Subsequent document signing concluded yesterday
with 106 families signing off on the resolution in favor of the extension. The document will be taken to the public registry
on Monday of next week.
Aguila thanks the community for their support on this initiative.
This is connected to the AGL-owned ‘Angostura’ project in the Apurimac region of Peru, some
180km South of Cusco. It’s not far from the big now-Chinese owned Las Bambas copper
project, due to start production in 2016.
This news tucked away late on a Friday evening is also interesting, because it means AGL.v is
trying to set up the same type of operation that’s seen relative share price success for Dynacor
Gold (DNG.to)...
and Inca One (IO.v).
28

The business plan is simple and goes 1) set up a gold processing plant then 2) buy freshly
mined ore from the local small-scale/informal/artisan-type small one man or three man
operations that (quite literally sometimes) pick and shovel at thin-veins of high grade gold in
Peru, then 3) process, sell the gold and keep the difference as profit.
Please note that I’ve used a 12 month timescale for IO.v, but a three year timescale for DNG.to,
in order to show the share price growth periods of each company (DNG has been established
for a while, IO.v is just in its growth phase if its NRs are to be believed. Also note that I’m not a
big fan of DNG.to the company and I’m particularly leery about IO.v as a company. However
I’m not going to knock success too hard and the share prices gains as seen above should be
taken at face value; both have given the investor the opportunity to buy-low-sell-high and in
the end, that’s capitalism.
For further illumination, here’s an extended section of the latest MD&A for AGL.v. It’s reprinted
here not to use up space in IKN289, but because it’s interesting.
Business Plan
The Company has been investigating the viability of a small production facility for the
Company’s Angostura project. The Company has in place a five year community
agreement with the community of Mollepina (see news release dated March 12 2014).
The Company is in the final stages of completing the formalization in accordance with
Peruvian regulations of the Artisan Miners which, when completed, will allow the legal
production and processing of minerals by the Artisan Miners.
By way of background, the formalization process began in March 2012 when the
Peruvian Government passed important new legislation affecting the artisan or
“informal” (read illegal) mining communities and those who purchase their production.
Following initial public protests by some 400,000 informal miners, the Government
granted a two year grace period for these miners to be legalized. Essentially two
categories exist:
(i) those informal miners who have agreed to formalize and are mining on a legal
concession, with the concession owners consent; and
(ii) those informal miners who either do not have consent to mine a legal mining
concession, or have not agreed to formalize.
In the case of the Angostura Property, the informal miners are in category “(i)”. They
have consented and have agreed to formalization.
The Company has signed a five year agreement with the community for the use of a 30
hectare site to build a mineral processing facility. The basic facility is being designed
around a 350 TPD agitated leach gold processing plant. The plant will feature an
oversized coarse ore stockpile, multiple weigh scales and assay facilities to
accommodate multiple sources. The plant will be able to effectively treat high grade
gold to accommodate the local production variances.
29

The Company has also commissioned an Environmental Impact Assessment (“EIA”),
in accordance with Peruvian mining legislation. The EIA is substantially complete
pending only the certificate from the Director Regional Energy and Mines (“DREM”) for
the formalization of the Artisan Miners to be included in the submission. The EIA
should have initial government observations within 30 working days of submission.
The preliminary investigation into the technical and financial viability of the Company’s
business plan has yielded positive feedback. The Company is investigating financing
options, including debt facilities, to finance the production facility and initial working
capital for the acquisition of the unprocessed minerals from the local, legalized,
communities. The Company has taken these actions in light of the Peruvian
Government’s initiatives to enforce the legalization of the artisan miners in Peru and
bring them into the taxable mainstream. Approximately 70,000 artisan miners have
applied to be formalized since the government instituted the new mining laws. The
government estimates another 100-140,000 artisan miners remain to be formalized. In
support of the new legislation and as demonstration of its resolve to enforce the
legislation the government forces has been destroying illegal processing plants across
the country. The Company is working closely with the government’s regional Energy
and Mining offices to ensure alternate, legal processing facilities will be available.
IKN289 back. Therefore the announcement buried at the back of last week’s TSXV newsflow is
significant; AGL was looking to sew up its community agreements and they’ve done just that.
Therefore AGL now has:
1) Agreement with locals to build a processing facility that will be supplied by small-scale
local miners (with the apparent blessing of the national government).
2) A business plan that’s worked for Dynacor Gold (DNG.to) and is in process for Inca One
(IO.v) in the Chala coastal town of the Nazca region. All they’re doing is moving it to a
new location in the Andean uplands.
But what they don’t have yet is money. But what’s also interesting is how they’re obviously
trying to keep this as low-key as possible at the moment, which smacks to me of an upcoming
friend-and-family round of financing, or perhaps cheap options time, or perhaps the opportunity
to buy up cheap stock before the promotion begins. Or a combination of all three.
With the low share count, a significant player in de Mare still on board, a recently closed
community agreement, a new business plan already in place, the Peru government on baord
and the recent law changes in Peru that will make the permitting track easier and quicker, this
is a stock to watch. There’s obviously a lot of speculative assumptions and best-guesses in this
article today and therefore risk is high; there’s no guarantee that AGL will be able to raise the
financing necessary (debt or otherwise) in this current tough market or even if it does, whether
it will be able to build out on its business plan and make a go of the “new Angostura”. Also,
there’s the very patchy background of Mr Huguet in play and the question of whether he’s
either willing or able to keep locals onside and everybody happy.
But I’m 100% sure that AGL doesn’t want anybody buying up the cheap shares until the
insiders have their business plan in place. I’m also sure that when it suits them, they’ll start
rolling out an aggressive promotion to try and get that share price rising. And therein lies our
advantage as outsiders looking in on a nascent promotion.
Which brings us to the end of this heads-up on the AGL set-up. Do with this what you will. I’m
going to nibble at a few shares of AGL.v in the days ahead but for the moment it’s won’t be
added to the formal ‘Stocks to Follow’ list above. Lesson learned with taking a very minor
position in Kinross recently, then bailing when it went against me, then getting all sorts of
criticism for playing sillyflipper and making it a headlined trade. It turned out to be a no-win
situation so this time I’m going to stick a foot in the door more quietly. If the stock starts to
move and the news starts to flow as imagined, it can become a formal position.
30

Conclusion
IKN289 is done, we end with bullet points:
• Tinka’s (TK.v) a possible way of playing zinc in the year ahead. If you can time it before
a big promo push comes along, even better. I’m still considering it, but it’s definitely on
the shortlist.
• Aguila American (AGL.v) should be considered über high risk. But the intentions are
clear enough, there are the right sounding names on board and the way in which
they’re trying to keep developments as quiet as possible also catches the eye.
• Gold price will dictate whether this time next week we’re talking winners or losers. Tide
in, tide out, simple as that.
• Quite a lot of political talk about Peru this week. It sometimes falls that way.
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://www.theguardian.com/business/2014/nov/22/black-friday-promises-high-street-stores-a-christmas-bonanza
(2) http://www.worldcomplex.blogspot.ca/2014/11/decision-time.html
(3) http://www.globalresearch.ca/wall-street-banks-and-commodities-fraud/5415367
(4) http://incakolanews.blogspot.com/2014/11/chart-of-day-is_21.html
(5) http://finance.yahoo.com/news/trevali-announces-third-quarter-2014-210100086.html
(6) http://incakolanews.blogspot.ca/2014/11/trevali-tvto-3q14-financials.html
(7) http://www.pdac.ca/docs/default-source/Convention---Exhibitors---Core-Shack-2014/tinka-resources-ltd-
.pdf?sfvrsn=4
31

(8) http://www.tinkaresources.com/s/NewsReleases.asp?ReportID=683079&_Type=News&_Title=Tinka-Intersects-
Thick-High-Grade-Zinc-Mineralization-In-Four-Drill-Holes-A...
(9) http://www.tinkaresources.com/i/pdf/ppt/TK-Sept2014-PP.pdf
(10) http://www.digitaljournal.com/pr/2331512
(11) http://www.theaureport.com/pub/htdocs/expert.html?id=2771
(12) http://www.theaureport.com/pub/na/14934
(13) http://www.theaureport.com/pub/na/15373
(14) http://www.theaureport.com/pub/na/15878
(15) http://www.tinkaresources.com/s/NewsReleases.asp?ReportID=576673&_Type=News&_Title=Tinka-Secures-
Surface-Agreement-with-Yanacocha-Community-for-Ayawilca-Zone-...
(16) http://finance.yahoo.com/news/dalradian-announces-pea-36-2-121712059.html
(17) http://incakolanews.blogspot.com/2014/10/dalradian-dnato-provides-market-litmus.html
(18) http://finance.yahoo.com/news/goldquest-exploration-tireo-project-dominican-110000905.html
(19) http://www.bloomberg.com/news/2014-11-20/codelco-seen-trimming-2015-china-copper-premium-amid-
surplus.html
(20) http://www.aminera.com/index.php/mineria-nacional/item/8328-19-consultoras-y-bancos-de-inversi%C3%B3n-
prev%C3%A9n-cobre-a%C3%BAn-sobre-us$-3-en-2015.html
(21) http://www.rpp.com.pe/2014-11-20-minem-nuevo-retraso-de-proyecto-tia-maria-afectaria-crecimiento-economico-
noticia_743917.html
(22) http://www.larepublica.pe/21-11-2014/piden-a-southern-no-iniciar-tia-maria-si-hay-oposicion
(23) http://www.lanacion.com.ar/1745913-el-presidente-chino-le-envio-una-carta-a-cristina-y-la-invito-a-visitar-su-pais
(24) http://www.aminera.com/index.php/component/k2/item/8346-ministra-williams-se-re%C3%BAne-con-autoridades-
chinas-para-abrir-espacios-de-colaboraci%C3%B3n.html
(25) http://noticias.lainformacion.com/politica/camara-baja/humala-y-zhang-dejiang-conversan-sobre-una-asociacion-
estrategica-peru-china_ceyk0FPoUkEdkirm5mC63/
(26) http://gestion.pe/economia/inperu-reduccion-impuesto-renta-hace-que-peru-sea-mas-atractivo-inversion-2114648
(27) http://www.ieco.clarin.com/economia/Oro-Pascua_Lama-mineria-Barrick-dividendos-Chile_0_1250875131.html
(28) http://www.parlamentario.com/noticia-78044.html
(29) http://www.lanacion.com.ar/1746000-mucho-mas-que-solo-ira-el-caso-destruyo-la-confianza-social
(30) http://www.americaeconomia.com/politica-sociedad/politica/confirman-arresto-de-ex-jefe-de-policia-mexicano-
vinculado-con-desaparici
(31) http://peru21.pe/opinion/mineros-pagan-policias-50-soles-2204392
(32) http://infocampo.com.ar/nota/campo/64317/finalmente-la-legislatura-mendocina-rechazo-el-proyecto-hierro-indio
(33) http://incakolanews.blogspot.com/2014/11/beart-creek-mining-bcmv-drops-its-suit.html
(34) http://www.losandes.com.pe/Regional/20141121/84259.html
(35) http://www.pachamamaradio.org/21-11-2014/tribunal-internacional-definira-demanda-de-bear-creek-por-proyecto-
santa-ana.html
(36) https://www.canadianinsider.com/node/7?ticker=THO
(37) https://www.canadianinsider.com/node/7?ticker=FVI
32

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
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
33

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
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
34

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.
35