IKN #291Premium

The IKN Weekly
Week 291, December 7th 2014
Contents
This Week: Gold and Japan pair trade, CIM 43-101: The natural evolution of graft and
corruption.
Fundamental Analysis: Rio Alto Mining (RIO.to) (RIOM) update.
Stocks to Follow: Overview, Comment, Fortuna Silver (FVI.to) (FSM), First Majestic (FR.to),
Coro Mining (COP.to), Reservoir Minerals (RMC.v), Dalradian (DNA.to).
Copper Basket: Overview.
Low Cost Producer Basket: Overview.
Regional Politics: Ecuador: Another dead anti-mine campaigner, Peru: Regional run-offs
today, Peru: Anglo American makes its exit from Michiquillay official, Venezuela and China and
Mining, Colombia: mining costs less, Corruption: Why am I unsurprised?
Market Watching: The new royalty in Guatemala makes Tahoe Resources (TAHO) (THO.to) a
decent near-term trade buy, Mines And Money London UK 2014, Watching Tinka Resources
(TK.v), watching Starcore (SAM.to) first, watching Aguila American (AGL.v), even watching
Regulus (REG.v), Tax loss selling and pornography.
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
Gold and Japan pair trade
Thanks to an early headsup from reader PB last week I posted (1) a link to the now widely read
report “Long Nikkei/Short Gold: Profitable, dangerous and missed by everybody?” by a man
named Paul Mylchreest who I’d never read before but is apparently well known in gold circles.
In the post I said it was good brainfood without going much further on any critique, but as the
gold community seems to have latched onto the note and is now using it as some sort of new
religious icon in their holy battle against the fiat-fuelled forces of darkness, I want to add a few
thoughts to the mix
Firstly, it offers no clue as to when the supposed long Nikkei/Short gold trade unwinds. Or if it
can be unwound in a controlled manner. Or whether it can go on indefinitely. Just because
something is identified, it’s not going to disappear into a puff of smoke and even if this
conjectured trade is true, I have the strong suspicion that by sheer wright of money alone it
can go on for what could feel like forever.
Secondly, it is conspiracy theory goldbugging. That’s something that usually turns me off
immediately, but I’m also open to the potential of at least some of the us vs them mentality to
be based in fact and as it happens, this note does provide at least some substance to its
suppositions (instead of the normal wafer thin type of evidence the goldbug community tends
to hang its wilder theories upon). However the evidence is not always weighing objectively,
there seems to be a rush to bias confirmation at times.
1

Next, the author Mylchreest name-checks Zerohedge, he name-checks Antal Fekete, he ropes in
silver to the gold equation by giving us rote explanations of silver’s dual purpose
precious/industrial nature, then cherry-picking the one that suits his cause and all without any
idea or mention of the supply difference silver brings to the table (i.e. that it is mainly a by-
product). In short, he checks the boxes you need for the hardcore gold followers who are into
this us vs them bunker mentality towards gold.
The bottom line is that I think there may be something there, but there may not be. The main
beef is that even if the theory is spot on I don’t see it as particularly actionable because the
theory provides no proof of possible outcomes that can then be tested. In short, you can’t trade
this idea and as it’s all about the up/down movement of a financial market device, that makes it
a cute talking point rather than something useful. But I don’t have a problem with outright
raging conspiracy theorists...as long as they’re right ☺.
CIM 43-101: The natural evolution of graft and corruption
Aurcana (AUN.v) last week announced a new 43-101 resource for its La Negra mine and (of
course) I couldn’t resist pointing out the glaringly bizarre nature of what was being put forward
as a logical and understandable development by AUN.v in a blog post (2). Here’s the table from
that post...
...which should be enough for this intro today. That post resulted in a lot of very interesting
feedback from several separate sources, including a three-cornered discussion between myself
and two regular mailpals, both sector professionals (and for what it’s worth a couple of the best
brains in the business for my money...but then again I’m going to say that because they’re both
going to read these words ☺) which morphed into the whole concept of the 43-101 reports and
whether they were worth anything these days. What happened, in rough terms was that
1) I put forward the case that these days the 43-101 report system was a waste of time, it
needed to be scrapped and that one of these fine days the Candian Institute of Mining,
Metallurgy and Petroleum (CIM) who oversee it are going to find themselves in legal trouble
from some lawsuit or other, which will be the end of it for sure.
2) One of my two mailpals disagreed with this position. He took the stance that the CIM 43-101
system isn’t there to “protect the investor”, it’s there to lay out information required by the
regulations and to make sure a set of protocols (normally geological) are adhered to. His point
was that it’s never been designed for investment decisions or the retail (or even insto)
community, it’s a hard-nosed geol thing and as geology is not an exact science, conclusions are
and will always be open to interpretations. His position is that people put too much confidence
in 43-101 and that’s not CIMs fault; in fact CIM makes sure the caveats to the 43-101 system
are there and written in every report.
3) This is of course well-worn territory and it wasn’t really the point I was trying to make. My
point is that 43-101 only came to exist because of Bre-X and was created out of the mess and
rubble left by that debacle because the world had lost its faith in the mining and exploration
business. No trust = no money so the mining sector, led by the Canadian geology people (along
with Australia and its JORC rules that came roughly in parallel) had the task of re-gaining the
trust of the world. The answer was 43-101 and it was invented as a form of protection. And hey
it worked, because with these official documents in hand (technical reports, resource reports,
PEAs, Pre-Feas, Feas) the mining industry could once again attract capital to its business. But it
only worked for a while, because we’re now in a situation where the system has been co-opted
by the scumbags of the mining world, the Lenic Rodriguez’s of Aurcana, who take a rulebook
2

that was created to protect and use it as a weapon in order to scam people out of their money.
This is why I specifically used the word "worthless" in my post to describe 43-101; we can play
the pass-the-parcel blame and point to the problems of the system and blame the other set of
people until the cows come home. It's been done several times before but it doesn't change the
basic problem, that of the CIM system as stands being worthless.
4) This two-sided debate continued for a while longer and it didn’t reveal anything particularly
new, but it was noticeable that the third member of the triangle wasn’t joining in. Then all at
once the following mail arrived from the third corner and blew us both away. I’ve asked for and
been given permission to reproduce it here (as long as a couple of very small edits happen in
order to protect IDs). This is the best thing I’ve ever read on the subject of 43-101, I
hope you get a kick out of it too.
So much fun… but I beg you both to go back to the beginning. There was a
time that miners and mining were a conservative lot; mining executives were
generally grey haired types who understood the risks and made cautious,
long-term investments and paid reliable dividends to shareholders. Back then,
companies prepared what are now considered non-compliant resource and
reserve estimates using paper, pencils and perhaps more importantly people’s
brains and experience valued.
Then along came a revolution in computers, spreadsheets, speed, capital
markets, bankers and a new game was invented. The barrier to entry was so
low and potential rewards so high that our casino called mining attracted all
matter of humanity, replete with many motivated entirely by greed alone. A
modern day Klondike if you will. It wasn’t until the now infamous Bre-X crime
was perpetrated that 43-101 legislation was drafted and approved. The
process was originally only meant to provide more documented evidence of
the integrity of data, sampling and assaying (which few people read and even
fewer understand) along with the assumptions that are used in estimating
resources and reserves.
Now, some dozen years out, the odds on the game remain stacked heavily in
favor of the issuer and against the lowly common shareholder. Consider the
process where the issuer hires and pays the consultant to provide a product to
his liking and will subsequently reward that contractor with yet more work.
Where, within this system, is there any inherent need to ensure integrity. The
43-101 legislation conferred that responsibility on a new class of professional
– the P.Geo, complete with a full disciplinary and punitive process which
requires that professionals call one another to account. But no, it has never
occurred. Even where the most blatant examples of misuse we find scant
evidence of any sort of fine, punishment or consequence for the production of
an inferior product.
Yours truly duly sat the exams, earned the P.Geo designation was awarded a
qualified persons official stamp and soon afterward realized the folly of the
club, its members and the entire process. In time I abandoned the club
altogether as it served no useful purpose. Over the ensuing period I’ve been
witness to more sophisticated forms of 43-101 trickery, which in your author’s
experience, is the natural evolution of graft and corruption the world over. To
wit, our modern western world is as corrupt a place as you can find but it is
now veiled in such a manner as to appear legitimate and of no consequence
to the commoner (retail investor).
Meanwhile, back to the matter at hand, documents of all types must be looked
on with skepticism and disbelief. Financial statements still provide the best
measure of the health of a business, but footnotes need to be read with
care. Reserves and resources, whether 43-101 or not, need to be examined
wherever we can, however it is my view that it comes down to our awareness
3

of the quality of those people managing and governing the business that best
differentiates the best from the worst.
It’s a privilege to see that kind of thing turn up in one’s mailbox, quite brilliant.
In the last dozen years, the rules of 43-101 have been turned on their head and offer no sort of
protection to anyone, because they can be used for good by good people and for bad by bad
people. Any system that allows Aurcana to state that it has 115m ounces of silver in a specific
bunch of rocks, then just two years afterwards say that there’s just 10% of that number in the
same rocks under the same classification, then suffer no sort of penalty or sanction afterwards,
is the epitome of dysfunctional. It is, in a single word, worthless.
What isn’t worthless is good people doing good honest work, that hasn’t changed, but the label
at the top of reports that says “43-101” no longer means anything. We’re back to the pre-Bre-X
days when diligent work by peer-respected individuals counted for everything and when
slipshod work could be thrown into the same piles and promoted as legitimate by scamsters,
hucksters and purveyors of dreams. The main problem with 43-101 today is that it still has a
sense of gravitas, it’s still considered a solid and reliable benchmark not just by us retail grunts
at the bottom of the food chain, but by fund managers, brokerages, geologists, engineers,
CEOs, merchant bankers and even the third party compilers who make their money from
supplying the work that goes into the reports.
The CIM 43-101 system is broken, the case Aurcana proves that without a shadow of a doubt.
And as with all broken items, they’re either fixed, replaced or totally ignored.
Fundamental Analysis of Mining Stocks
Rio Alto Mining (RIOM) (RIO.to) and Shahuindo: Thoughts and an updated model
On Monday the IKN Top Pick stock Rio Alto Mining (RIOM) (RIO.to) delivered (3) the first solid
details of its plans for the newly acquired Shahuindo project in Cajamarca. We were given a
timeline to first production in 1q16, as well as the first official capex estimate of $70m and a
ramp-up plan that involves a starter-type pit operation for 2016 that runs at a modest 4,000
tonnes per day before the tonnage starts ramping up to the potential capacity that Shahuindo
offers. The new information, along with the new corporate presentation available on the RIO.to
website here (4) dated December 2014, now give us enough to begin a more detailed model of
what we can expect from Shahuindo and how it can benefit RIO the company. We’ve already
done a bit of very preliminary modelling on the new mine in the June 2014 update on RIO.to,
today we refine a little further as well as adjust the model in light of the new levels in the gold
price, etc.
Let’s start with a few op-ed type observations on Monday’s NR:
The timeline looks fine. In previous conversations RIO had suggested that first gold pour
could come as early as 4q15 (i.e. this time next year) and that may still be the case; after all,
this company has a good reputation for UPOD (under-promise/over-deliver). If they’ve decided
to cut themselves some slack on the tightest of timelines that’s OK by me, because getting to
first pour by January 2016 would be more than sufficient for my taste. The greatest threat to
that timeline is likely to be permitting, because even with Peru now promising to streamline the
permits process and the EIA already submitted (September 2014) I have much less trust in the
word and the goodwill of the government of Peru than I do in the management and team at
RIO.to.
That $70m headline ticket price isn’t the capex price to build Shahuindo; it’s the money
4

needed to get to the proposed January 2016 first pour. That means it includes the 4k tpd
operation but we can deduce RIO will need more to build out to the eventual full running
capacity at the mine. For what it’s worth, I don’t think we’re going to get close to the original
Sulliden (ex-SUE.to) planned spend of ~$125m, but I’m expecting another $20m in capex (even
if they call it “sustaining capex”, they can put whatever label they want on it) once the mine is
operational in year one, 2016.
Therefore I’m going to slate in $90m as the spend on Shahuindo, until better numbers
are known. This is better than the original SUE plan, it’s not quite the bargain basement price
had been suggested in soft/off-record guidance from RIO this year. However it is a manageable
number for today’s RIO, the financing should be relatively straightforward to procure
(particularly in this two stage approach) and what remains to be seen is the type of deal done.
I’m going to presume straight debt financing aside from the cash that RIO can bring from its
balance sheet.
I like the plan to start with a small footprint and work larger, as it will be more
amenable to the local population and will help avert any issues arising from the arrival of a
large civil works project to a largely agricultural and rural area. Even though my doubts were
largely assuaged after visiting the Cajabamba locality, talking with the people and visiting to
site (see IKN265) it still makes sense to start in a low key manner, get the world used to a mine
operating and then expand. Strategically smart, it fits right in with the underlying cultural
mentality encapsulated in the expression, “It’s easier to ask for forgiveness than for permission”
(más vale pedir perdón que pedir permiso). The truth is that Rio Alto at Shahuindo is unlikely to
be an “intrusive” mine to the local way of life, it’s in a relatively secluded spot and the company
knows how to do community relations the right way (they’re track record is pure win-win at La
Arena and yes, it’s a latent factor as to why I like being a long-term shareholder of the
company).
As for the gold reserve/resource at Shahuindo, for the time being I’m good with
modelling the rock and its content on the 2012 September 2012 numbers as given to the world
by Sulliden at the time. That means an all category total of 4.064m oz gold (with a by-product
kicker of 46.56m oz silver) in oxides, mixed and sulphide rock. However what we really care
about is the non-sulphide at Shahuindo, that’s what the deposit is all about and why it makes
for a good mine, so the paydirt there is
• 1.022m oz Au (plus 11.56m oz Ag) in proven & probable reserve
• Then another 1.416m oz Au (plus 21.8m oz Ag) in measured & indicated resource (that
number doesn’t include the P+P above).
In 3q15 we’ll have new figures from RIO.to after it’s done all the exploration it wants to do to
that point. However, until we get there we can base a reasonable guesstimate model around
those reserve/resource numbers that point to around 2m oz of recoverable gold (once recovery
percentages are factored in). The P+P, plus M+I together give us a 12.5 year mine life estimate
and that’s good enough to get moving on a model and get neatly inside the ballpark.
Another resource/reserve subject is that the best gold grades tend to be found in the
proven reserve oxide material (the 43-101 has them averaging 0.9 g/t) and that’s very likely to
be the stuff that’s first mined by the RIO.to planned 4k tpd starter operation in 2016. Casting
our minds back to the start of La Arena, RIO first identified and then mined a higher-grading
part of Calaorca that typically ran at over 1 g/t gold (I remember it well, having stood on top of
it a few weeks before it was blown to pieces and used as pad feed) and then considering the
RIO.to plan to start small and with the easiest access/easy treatment rock at Shahuindo, and
then considering the way in which the company bangs on about the remarkable similarities
between the two deposits, it all points to RIO.to having identified some higher grading material
with which it can start things rolling and get Shahuindo into FCF+ status quickly, even at
today’s depressed gold prices. That forms part of the today’s model spreadsheet as well.
5

Modelling Rio Alto’s production future and target prices
So to operations and the financials, which are tackled in three parts:
• We consider the future of consolidated production, adding in the latest information
from the company and comparing to the last time we attempted a model in mid-year
• We put together a cash flow model for Shahuindo, long with a reasonable price target
for this component under today’s market conditions
• We adjust our model for La Arena to current market conditions slightly
• We put the two parts together and come up with a target
Modelling Rio Alto’s production future
Back in June/July 2014 this was the model of consolidated forward production I used for
RIO.to, with the three elements of a) La Arena oxide (its current production) b) Shahuindo and
c) La Arena Sulphide Stage Two (which is assumed a mine that produces 2/3rd of its revenues
from copper, 1/3rd from gold and is marked here in gold equivalent). In short, we had annual
production peaking at 400k oz AuEq in 2020 as Shahuindo ran at full tilt, the oxide ops depleted
and Stage Two go into full gear.
RIO.to: Original June 2014 Forecast
450
400
350
300
250
200
150
100
50
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
source: IKN estimates *assumes 2/3rd AuEq Cu, 1/3 Au at La Arena Stage 2
6
)2
anerA
rof
qEuA(
uA
zO
La Arena 2*
Shahuindo
La Arena 1
With the news this week, along with reconsideration of this and that, here’s how the adjusted
annual production forecast now looks:
RIO.to: New December 2014 Forecast
400
350
300
250
200
150
100
50
0
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
source: IKN estimates *assumes 2/3rd AuEq Cu, 1/3 Au at La Arena Stage 2
)2
anerA
rof
qEuA(
uA
zO
La Arena 2*
Shahuindo
La Arena 1
The first change is to the production schedule at Shahuindo, which now takes into account a
gentler build-up to full production that starts hitting close to 170k oz Au as from 2019.
Second, La Arena Oxide (i.e. current ops) are now expected to run a little longer based on the
new drilling results at La Arena. It’s tempting to add even more mine life than the chart above
(that still starts its fade in 2020), but as usual we’re erring on the side of cautions.
Third, development of the Stage 2 Sulphide is basically pushed back a year, with first

production in 2020 and full production no earlier than 2022. The signals from RIO.to on this
project have been pretty clearly “we’re in no hurry” for a while and with the weakness we see
in copper at the moment (RIO bases its modelling on $3/lb Cu) it’s going to be easy to defer.
The result is a flattening of the growth curve and although I wasn’t aiming for the effect, as
soon as the new numbers went in and I hit return, the resulting chart you see above made
sense at an intuitive level as well. RIO.to has the air of a company setting itself up as a 300k+
annual producer, the production elements dovetailing and making the production schedule into
a regular and long-term plan. According to the number-play we’re not going to see RIO.to get
to 400k, but we are going to see the company use La Arena oxide as its springboard to a long-
term future as a medium-scale gold mining company.
Modelling the Shahuindo component of Rio Alto
With the new information this week comes a tighter model for the next RIO.to mine. We make
a few global assumptions, as well as some specific assumptions starting with the first
production year of 2016 and moving through until 2019, at which point we assume Shahuindo
at its full capacity production rhythm. First for the global assumptions:
• Gold is priced at U$1,200/oz, silver by-product is priced at a flat U$16/oz
• COGS at a flat $12/tonne, which is reasonably conservative for this model but also
points to a low cost mine overall, with projected operating cash cost of under U$600/oz
every year. That fits in with company and industry assumptions for Shahuindo (for what
that’s worth).
• Recoveries at 85%
• Silver production is assumed a by-product credit
• Forex CAD$1 = U$0.90
• Reasonable guesstimates for depreciation, amortization, G&A (which will benefit from
synergies with La Arena), exploration (which is likely to be expensive in the first five
years)
• A best-guess that RIO takes out pure classic debt financing for Shahuindo that costs it
$15m per year for the first four years in payback and servicing
• Shares out at 333m, basically today’s count
• Peru State burdens as stand today, including the new 28% corporate tax level that is
scheduled to begin next year.
Now for the specific annual assumptions:
• In 2016, we assume (for practical model purposes) that production begins January 1st
and averages 4,000 tpd in the year. We also assume RIO.to uses higher grading
material with 1.0 g/t gold on average (and silver 10 g/t)
• In 2017 we assume a throughput average of 10,000 tpd in the year. As for grade,
that’s set at an average of 0.9 g/t gold (and silver 10 g/t)
• In 2018 we assume average throughput of 17,000 tpd in the year and a gold grade
average of 0.8 g/t. This time we put silver at 15 g/t, as tables show rising Ag grades in
other parts of the reserve/resource. This is the year which we use for our valuation
purposes today, as it shows the growth being priced in without full maturity reached
• In 2019 we hit our estimates for full speed at Shahuindo, with throughput at 24,000
tpd. Gold grade is now down to the reserve median of 0.7 g/t
With those in place, here’s our condensed financials table which draws the eye to 2018. I’ve
added in the projected gold ounce production for each year in order to save space:
7

Shahuindo Only: Forward sales forecasts
Year 2016 2017 2018 2019
Au prod. Oz 39,904 89,783 135,672 167,595
Total sales ($m) 47.9 107.7 162.8 201.1
Cash COGS 23.4 51.1 68.3 96.4
Depreciation 4.0 8.0 10.0 12.0
SGA 9.0 17.0 13.0 9.0
Op income 15.3 41.0 95.5 117.6
Interest 15.0 15.0 15.0 15.0
Workers Part. 0.0 0.0 0.0 0.0
Tax 0.1 7.3 22.5 28.7
Net income 0.2 18.7 58.0 73.8
Shares out 333 333 333 333
EPS $ 0.00 0.06 0.17 0.22
FCF/share 0.01 0.08 0.20 0.26
Sources: IKN estimates
And the valuation table that comes from this is here. Please be clear that this is a valuation for
Shahuindo only, not the consolidated company:
Sales and earnings RIO.to: SHAHUINDO ONLY valuation data
2016 2017 2018 2019 At U$1200/oz gold
Sales ($m) 52 117 187 235 12 month target $1.20 (based on 6x EPS
Sales growth 127% 59% 26% for 2018)
EPS 0.00 0.06 0.17 0.22 Mkt cap ($m) $869 Enterprise value $933
Cash flow 0.01 0.08 0.20 0.26 P/sales (2016) 7.42 EV/sales (2016) 7.97
P/E (2016) 4583.8 EV/EBITDA (2016) 48.4
P/E (2017) 47.9 EV/EBITDA (2017) 19.0
P/E (2018) 15.5 EV/EBITDA (2018) 8.8
I’ve chosen a low 6X PE to value the Shahuindo part, because it’s still a project of a mine and
not a mine, plus there’s a long timeline before we get to 2018 and the year on which we base
our reasonable valuation model on cash flow. The result is a Shahuindo mine that gets a per
share valuation of $1.20 on today’s share count and gold price.
Adjusting the La Arena component of Rio Alto
This part hasn’t changed much since the last time we looked, the only major differences
• We now use U$1,200/oz gold as our baseline level, rather than the U$1,300/oz base of
mid-year, to reflect the reality of late 2014.
• We continue to assume a 220,000 oz gold annual production from the mine (not a
change, but worthy of mention at this point just to make sure)
• We assume costs from 2015 onwards are U$580/oz op cash costs, down from our
previous $625/oz assumption, reflecting the more competitive pricing that RIO and
other mining companies are now enjoying. As RIO has returned better than expected
cash cost figures in what we’ve seen in 2014, this isn’t a difficult leap of faith.
• There are some other minor changes, such as the new tax levels, lower G&A that
reflect the shared resources with Shahuindo and beneficial synergies, as well as slightly
lower exploration assumptions for the mine (a flat $6m annual).
With all the changes big and small, here’s the new condensed financials:
8

La Arena: Forward sales forecasts (at $1.2k/oz Au)
Year 2014 2015 2016 2017
Total sales ($m) 267.0 264.0 264.0 264.0
Cash COGS 125.0 127.6 127.6 127.6
Depreciation 30.0 31.0 33.0 35.0
G&A + Expl 13.0 11.0 11.0 11.0
Op income 99.0 94.4 97.4 105.4
Interest 5.0 5.0 5.0 5.0
Workers Part. 7.5 7.2 7.4 8.0
Tax 25.9 23.0 23.8 23.1
Net income 60.5 59.2 61.2 69.3
Shares out 333 333 333 333
EPS $ 0.18 0.18 0.18 0.21
FCF/share 0.27 0.27 0.28 0.31
Sources: IKN estimates
And here’s the target box (again, this is La Arena only):
Sales and earnings RIO.to: LA ARENA ONLY valuation data
2014 2015 2016 2017 At U$1200/oz gold
Sales ($m) 267 264 269 279 12 month target $1.96 (based on 10x EPS
Sales growth -1% 2% 4% for 2015)
EPS 0.18 0.18 0.18 0.21 Mkt cap ($m) $869 Enterprise value $939
Cash flow 0.27 0.27 0.28 0.31 P/sales (2014) 3.29 EV/sales (2014) 3.56
P/E (2014) 14.8 EV/EBITDA (2014) 7.3
P/E (2015) 15.2 EV/EBITDA (2015) 7.5
P/E (2016) 14.7 EV/EBITDA (2016) 7.2
This time I’m basing the valuation on a 10X PE from next year, as this is a working mine and
we know where we’re coming from, it’s profitable and has gained a deserved reputation for
reliability these last four years. Under those circumstances, 10X is probably conservative. The
result is a $1.96/share valuation for La Arena today.
Consolidated target for Rio Alto
That’s now easy: Add up those two numbers and you get the answer, CAD$3.16
representing a 17% upside from Friday’s close of CAD$2.70. but we should also take
into account price sensitivity to gold for RIO.to, because any change in the gold price from the
current morose U$1,200/oz or so is going to affect things greatly. Hence this table:
RIO.to: consolidated Target sensitivity at various Au prices, P/Es
Avg Au (U$/oz) Target High PE Target Base PE Target Low PE
1000 2.11 1.67 1.24
1100 3.02 2.41 1.79
1200 3.75 $3.16 2.37
1300 4.86 3.89 2.93
1400 5.78 4.63 3.50
1500 7.29 5.37 4.06
High PE = 12X for La Arena, 8X for Shahuindo
Base PE = 10X for La Arena, 6X for Shahuindo
Low PE = 8X for La Arena, 4X for Shahuindo
source: IKN calcs Dec'14
Our baseline price target call is $3.16, it’s shaded in peach and uses U$1,200 as well as our
9

“baseline PE assumptions of 10X for La Arena and 6X for Shahuindo (see above). In that
“Target Base” column you see how $100/oz step changes to the gold price affect the target, so
if for example you think gold’s going to U$1,300/oz soon, you can look for RIO.to to go to
$3.89 (+44.1% from this evening).
But consider the two other columns as well. They shows higher and lower PE assumptions
respectively and represent a change in market sentiment towards either RIO.to the company,
gold miners in general or perhaps a combo of both. If for example the market decides its willing
to pay up to own a gold miner all of a sudden, and gold goes to U$1,400/oz on a big (and hey,
welcome) price spurt, the target for RIO.to moves to $5.78 which represents a 114.1% increase
from Friday’s close.
I’ll leave you in peace to consider the ramifications of a change in the gold price on RIO and
move swiftly to the conclusion.
Conclusion and recommendation
Rio Alto Mining (RIOM) (RIO.to) remains the Top Pick stock at The IKN Weekly and I continue
to state, loud and clear, that you can’t find a better place in which to invest in the gold mining
scene. I could change the current price target slightly, but after due consideration I’m
happy to leave the price target at $3.30 because 1) the news on Shahuindo so far has
increased the project value 2) thanks to costs controls RIO is coping well with the lower
$1,200/oz price for gold and 3) gold shifts up by just $20/oz and $3.30 is suddenly below the
mathematical target instead of being above the nominal $3.16 you see above.
Own this stock first and if you’ve only ever followed The IKN Weekly and my back pocket into
one trade, it should have been this one. It’s not too late to own RIO.to either. Top Pick, as
simple as that.
Stocks to Follow
Just three of our 14 positions registered gains last week (RIO.to, BTO.to, FR.to), with two
others unchanged (COP.to, SRL.v), which leaves nine stocks ars weekly losers including the
bigger percentage losses seen in GoldQuest (GQC.v down 21.1%), Minera IRL (IRL.to down
20.0%), NovaCopper (NCQ.to down 11.6%), Fortuna Silver (FSM short down 11.1%) and Focus
Ventures (FCV.v down 10.5%).
There are currently 14 open positions on our ‘Stocks to Follow’ list, one less than the self-
imposed maximum. Just the top pick is in the green,
10

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$2.70 17.4% Top Pick, $3.30 tgt, Best PM Jr
Recommended long positions (in current order of preference)
B2Gold BTO.to buy C$2.32 12-sep-14 C$1.92 -17.3% Excellent entry point now
Dalradian Res DNA.to buy C$0.64 27-oct-13 C$0.62 -3.1% Nov'14 tgt $1.25, top Au expl
Reservoir Min. RMC.v buy C$6.05 18-jun-14 C$3.80 -37.2% Best spec Cu play
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.17 -26.1% tgt 50c, added, avged up
First Majestic AG spec buy U$10.51 10-aug-14 U$4.08 -61.2% Now in pair trade with FSM
Amerigo Res ARG.to hold C$0.405 20-jul-14 C$0.30 -25.9% Small Cu play, good value
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.06 -77.8% Waiting for financing news
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.61 -41.9% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.37 -67.8% solid biz model, LT hold
Goldquest Min. GQC.v hold C$0.26 27-oct-13 C$0.075 -71.2% no point selling so cheaply
Recommended short positions
Fortuna Silver FSM SHORT U$4.12 10-nov-14 U$4.30 -4.4% In pair trade with AG
Smaller/Riskier
Coro Mining COP.to spec buy C$0.075 26-jan-14 C$0.065 -13.3% Added avged down Nov'14
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.14 -50.0% v. small spec, 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.
Overview: Last Monday and Tuesday showed just the type of gold rebound action I was
looking for in IKN290, but interest fizzled as the week wore on and when the world fell in love
with the USA and its strong jobs numbers all over again on Friday our sector of focus was
reduced to footnote status. There really wasn’t much happening, so again the notes this week
will be brief.
Fortuna Silver (FSM) (FVI.to) and First Majestic (FR.to) (AG) Pair Trade: Here’s the
chart of this pair trade since it began on November 16th (the Friday 14th close marks the spot)
and with Fortuna (FSM) beating out First Majestic (AG) by about 18% since conception, so far
it’s a loser. The continuing story seems to be total unlove awarded to First Majestic, while
Fortuna survives relatively unscathed despite the weakness in both companies’ underlying
metal. The more I watch the tape the more I suspect FR.to as one of the prime victims of tax
11

loss selling this festive season, which may be my own lame excuse but does fit in with its very
poor performance of the previous 11 months; you get a lot of tax credit bang-per-share by
cashing in on an FR position.
First Majestic brought news to the
market (5) on Monday morning and as
I mentioned on the blog later that day
(6) I thought it was pretty interesting
and a potential market mover. That
didn’t turn out to be the case,
obviously. Perhaps the world thinks the
benefits from winning the case against
Hector Davila aren’t recoverable, but as
he has his own operating
silver/zinc/lead mine in Mexico there
are at least assets to embargo and,
theoretically at least, able to be handed
over to FR.to. It might not be a black and white award, but it’s now ratified by the Supreme
Court, the loser has nowhere left to go and with FR.to down where it is, anything that’s
recovered will be of tangible benefit (and of course, a novelty to the balance sheet).
Coro Mining (COP.to): This time last week, the musing was on whether COP had any more
uplift left in it in the near-term. The action last week fitted right into that supposition, with
some money bidding up the stock Monday but then sellers pushing it down to 5.5c before
Friday afternoon and some buyer leaving the stock unchanged on the week.
I’m not a seller, neither am I a buyer. The first quarter of 2015 will see whether COP can make
good on its promise to be a small producer soon enough, then from there we can consider the
case for further ownership.
Reservoir Minerals (RMC.v): Down again last week, though trading was light and it’s drifting
in the range, so not a worry here.
Dalradian Resources (DNA.to): This one finished the week softly on a bit of selling pressure
and dipped to 62c at the end. That looks a great price and it’s the one exploreco that tempts
this weekend. Tax loss selling time throws up strange events and DNA seems to be suffering a
little, but that also means it could suffer more in the next three weeks.
12

The Copper Basket
After forty-nine weeks of 2014 The Copper Basket is showing a 18.41% 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 1.43 187.71 225.25 1.20 -16.7%
4 Reservoir Min. RMC.v 4.97 47.55 180.69 3.80 -23.5%
5 Nevada Copper NCU.to 1.35 80.5 115.92 1.44 6.7%
6 Western Copper WRN.to 0.76 93.68 65.58 0.70 -7.9%
7 Panoro Minerals PML.v 0.35 220.25 55.06 0.25 -28.6%
8 Copper Fox CUU.v 0.375 402.96 52.38 0.13 -65.3%
9 Hot Chili Ltd HCH.ax 0.425 333.11 51.63 0.155 -63.5%
10 Curis Resources CUV.to 0.57 74.79 50.86 0.68 19.3%
11 NovaCopper NCQ.to 1.60 60.15 36.69 0.61 -61.9%
12 Coro Mining* COP.to 0.10 159.37 10.36 0.065 -35.0%
13 AQM Copper AQM.v 0.11 139.24 9.75 0.07 -36.4%
14 Cordoba Min. CDB.v 0.90 58.81 7.35 0.125 -86.1%
15 Oracle Mining OMN.to 0.27 49.03 1.96 0.04 -85.2%
NB: HCH.ax priced in AUD$, rest CAD$ //CDB 2x1 split May'14 Portfolio avg -18.41%
The Copper basket 2014, weekly evolution
A small change in the basket average, 25%
down just 0.4% from this time last week, 20%
which sums up the overall wash we saw in 15%
the copper sector well enough. There 10%
were just two weekly winners (NCU.to up 5%
0%
11.6%, WRN.to) and seven losers NGQ.to,
-5%
RMC.v, CUU.v, HCH.ax, NCQ.to, CDB.v,
-10%
OMN.to), but most of those were pennies
-15%
this-or-that side. We had six unchanged
-20%
stocks (the three bought-outs, then -25%
CUV.to, COP.to, AQM.v). The only real
downer move was in NovaCopper (NCQ.to
down 11.6%) but even that was on low
volume and looked like a single seller taking
any price for year-end purposes. In all, a
quiet week.
The copper price showed resilience, only
buckling back under the weight of bullish
dollar trades Friday on the back of that
strong jobs number. But it did ok (at least I
thought) and held its own after the previous
week’s strange and artificial dump move.
We did note Goldman Sachs calling $2.50/lb
on copper late last week (7) which may have
affected things, particularly amongst those
player who only read Bloomie terminal
headlines before hitting the red or green
buttons. In fact what Goldman said was that
in the event of X and Y and Z happening,
they wouldn’t be surprised to see copper
down to $2.50/lb (most of the variables
China related, natch) but you can’t expect
13
ht5naj ht61 ht61 ht9 ht03 ht02 ht11 ts1nuj dn22 ht31 dr3gua ht42 ht41 ht5tco ht62 ht61 ht7ceD
source: IKN calcs

anyone to actually read analysis reports these days.
We move to the inventories and the world of the warehouse continues becalmed:
• Overall world stock levels rose by just under 2,000 metric tonnes (mt) to finish the
week at 275,208mt.
• The Shanghai Futures Exchange warehouse stocks dropped by 2k mt to86,223mt.
• The LME copper warehouse inventories put in the biggest move, up by 4,075mt to end
the week at 163,475mt. But even that wasn’t much to write home about
• The Comex warehouse stocks number dropped just 84 to end at 25,510mt.
We register another “mu” result from inventories. Roll on the new year.
Shanghai Futures Exchange Warehouse Stocks, 2014
220000
200000
180000
160000
140000
120000
100000
80000
60000
14
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 ht03 ht7ced
Mt Cu
source: Cochilco
The Low Cost Producer Basket
After 49 weeks, the Low Cost Producer Basket is showing a 16.28% 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 27.05 26.01 -31.1%
2 Goldcorp GG 21.67 812 15.86 19.53 -9.9%
3 Barrick ABX 17.63 1164.67 13.46 11.56 -31.1%
4 Newmont NEM 23.03 499 9.50 19.03 -17.4%
5 Franco Nevada FNV 40.74 156.08 7.94 50.84 24.8%
6 Silver Wheaton SLW 20.19 357.39 7.56 21.16 4.8%
7 Agnico Eagle AEM 26.38 173.43 4.11 23.71 -10.1%
8 B2Gold BTG 2.02 948.9 1.62 1.71 -15.3%
9 Pan American PAAS 11.70 151.41 1.49 9.85 -15.8%
10 First Majestic AG 9.80 117.02 0.48 4.08 -58.4%
all prices in U$, using NYSE ticker prices Portfolio avg -16.28%
The overall basket improved by 1.64% last week, which is better than nothing. It was
noticeable that the biggest market cappers in FCX, ABX and GG were the only three to show
losses and the smaller ones underneath all made gains. The best moves came from B2Gold
(BTG up 6.2%), Silver Wheaton (SLW up 6.2%) and Pan American Silver (PAAS up 5.2%).
Maybe there’s a sweet spot size developing, as the tinycappers get ignored (see ‘Stocks to
Follow’ above) and the biggest too, as players look for a Goldilocks size (plus the necessary
liquidity) for trading gains.

The Low Cost Producer Basket: Weekly performance and
comparative to GDX control
40%
30%
20%
10%
0%
-10%
-20%
-30%
15
ts13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92 ht31 ht72 ht01 ht42 ht7peS ts12 ht5tco ht91 dn2von ht61 ht03
basket
gdx control
source: Yahoo! Finance, IKN calcs
Low Cost Basket: Percentage difference between
basket and GDX control, 2014
8%
7%
6%
5%
4%
3%
2%
1%
0%
-1% ts13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1nuj ht51 ht92 ht31 ht72 ht01 ht42 ht7peS ts12 ht5tco ht91 dn2von ht61 ht03
source: ikn calcs, NYSE/Nasdaq data
Regional politics
Ecuador: Another dead anti-mine campaigner
Agence France Presse is one of the few international news agencies to have picked up on this
story (8). José Isidro Tendetza had been missing since November 28th and according to the
Ecuador indigenous confederation CONAIE (the politically influential umbrella organization of
smaller indigenous organizations and traditionally opposed to mining projects) was found dead,
“tied up with a blue cord” on the banks of the Zamora River on the Ecuador side of its border
with Peru. CONAIE also stated that José Isidro Tendetza was “...was a well-known leader
opposed to the presence of mining companies in the South Amazonia zone [of Ecuador]” and
that he was best known for his opposition to the Mirador copper project owned by the now-
Chinese capitals ECSA company.
Just because this event doesn’t get widely reported in the international business and trade
press, it doesn’t mean that it won’t become an issue. This is the type of catalyst that’s set off
strong anti-mining protests and demonstrations in Ecuador on previous occasions and may
become a rallying point against President Correa’s new push to get mining moving in the
country. There have been some newly bullish sounds coming from industry watchers this year
about Ecuador’s potential, we’ve also seen efforts by the JV between Chile’s Codelco and
Ecuador’s ENAMI state mining entities on copper projects there (most notably the Llurimagua
project, once called Junin or sometimes Intag and centre of very strong local community
opposition to development...that namechange thing is always a good clue) and players such as
Ross Beaty take positions at cheap prices in Ecuador exposed juniors, presumably taking the
longview. Personally I’m more than happy to stick with my very minor diceroll in Salazar
Resources (SRL.v) and be done, its political and

Peru: Regional run-offs today
Today Sunday, Peru sees governors chosen for 14 of its regions that couldn’t decide on a clear
winner in October. That includes the Puno region and the election we’ve watched closely (then
not so closely) which will decide whether Walter Aduviri Calisaya of the Democracia Directa
party or Juan Luque Mamani of the PICO party become the next regional governor. IKN cares
about this one, of course, because there is (was) a potentially interesting trade via Bear Creek
Mining (BCM.v) in play and we care more about making a profitable trade than the future of a
couple of budding politicos in regional Peru. It’s capitalism.
Reader HW wrote in late last week to ask the short, sweet, simple and 100% pertinent
question, “Do you think bcm is a trade on the vote?”. My answer is that no, I still don’t think
BCM.v is a buy on the election result because 1) Luque’s win is now discounted by the market
and 2) the fate of Corani will be decided on the price of silver, not on the politics of the Puno
region. This is why I haven’t peppered you with any Flash updates on the matter, I simply don’t
see a trade there. Right now silver at $16 and bits means Corani is uneconomic, period. I’d go
as far as to say that Corani is only a potential mine at $20/oz and even then, we’re talking
potential and not probable.
Anyway, by the time you read these words we may have a preliminary result from the Puno
region along with other regions of Peru (e.g. Arequipa and my wife gets to vote today just after
spending a couple of hours in a notorious road bottleneck zone in order to get to her voting
station...the marvels of South American organization writ large). Chances are the Puno race will
be close enough not to have a winner immediately declared and a few days will pass before
Luque’s win is recognized. We’ll see.
Peru: Anglo American makes its exit from Michiquillay official
On Friday December 5th Anglo American (AAUKY) (AAL.L) made official its intention to drop the
Michiquillay copper project and hand it back to the government of Peru via this NR (9) and just
so you get the info straight from the horse’s mouth, here’s what they wrote:
Anglo American announces that its wholly owned subsidiary, Anglo American Michiquillay S.A.,
has given notice to the government of Peru to terminate the 2007 privatisation agreement which
will result in it withdrawing from the exploration phase Michiquillay copper project. Under the
terms of the 2007 privatisation agreement, Anglo American Michiquillay S.A. has begun the
appropriate legal processes to return the project to Activos Mineros S.A.C.
In the current economic environment, in which Anglo American is bringing increased focus to its
portfolio and prioritising its capital to drive greater returns, Anglo American believes that the
prospects for the development of the Michiquillay project would be improved under different
ownership.
Anglo American’s immediate priority is to ensure a responsible exit from the Michiquillay project,
which includes the successful transfer of its role in the existing Michiquillay Social Fund to the
government.
Duncan Wanblad, CEO of Anglo American’s Base Metals and Minerals business, said: “While
Michiquillay represents an attractive copper deposit, we have made the decision to withdraw
following a comprehensive evaluation of the potential of our long-dated project options. We have
reduced the capital required to sustain projects during the pre-approval phases of their
development as we focus the portfolio and prioritise our capital on the projects and assets that
offer the greatest source of potential value to us, over the short and long term.”
Anglo American continues to progress its Quellaveco copper project in southern Peru and is
targeting submission of that project to its Board in 2015.
AAL.L has spent what’s estimated at U$1Bn on Michiquillay, including the $403m ticket price
and then exploration/development/community etc costs (that last item has never been able to
combat the ill feeling among Cajamarca locals towards the project) but still, Friday’s
development didn’t come as much of a surprise unless apparently you work for Peru
mainstream media, who proceeded to give us stories of angst and lost opportunities and
rejection by the world. Anglo has been saying off-record that they'd leave, it’s been assumed a
done deal on the streets (and fine lunchtime restaurants) of Lima for a while, the company
wrote down $300m in assets from its 2013 year-end balance sheet and deferred $37m of
budget originally planned for Michiquillay in 2014 (10), as well as making very clear noises in
April this year at the Chile CESCO conference that it was seriously considering the drop.
16

However, what is fair to say is that Anglo hasn’t managed to find another company to take it off
its hands. The decision to hand back to the government and drop the concession must be a
second choice to selling it and the clear noise in 2014 means Anglo has been trying to offload it
to another company for at least 6 months.
Therefore Anglo hasn't found a buyer, which is surely a combo of the depressed market for
copper, the bad community/political relations of working in Cajamarca and the politics of
dropping Michiquillay in order to push harder on Quellaveco in the southern Moquegua region.
But it’s also a commentary on the state of play in the big copper world today, that’s for sure.
Anglo doesn’t want to pay any more the land upkeep, no other company likes the project today,
but those rocks have been in place for 20,000,000 years and can wait another ten or so if
necessary for capitalism to swing through aother pendulum round. The future is its own
mystery.
Venezuela and China and Mining
We don’t cover much Venezuela on these pages, simply because it’s an awful place to even
consider FDI and speculation on miners. But the news out of the country last week (11) that
China and Venezuela are seeking closer ties and co-operation on several fronts, including that
of mining, fits in with news reports seen and mentioned in the last couple of weeks out of
Colombia, Argentina, Peru, Ecuador and Chile. The pattern is set and China continues to make
diplomatic capital in LatAm.
In this case, the Vice-Minister of the Economy in Venezuela, Rodolfo Marco Torres, met with
Chinese Vice Prime Minister Zhang Gaoli while on a visit to China and agreement to “advance
cooperation in areas such as energy, mining resources, agriculture, infrastructure and high
technology”. So while we don’t care much about Venezuela, we care a lot more about China’s
plans for resource strategies in the region and so you get to read these words today.
Colombia: mining costs less
DANE is the name of Colombia’s official beancounter office and they announced on Friday (12)
that costs for the mining industry (in Colombia they include hardrock and hydrocarbon in the
same definition, including coal and oil&gas) had dropped by 3.46% YoY, compared to the
country PPI average of -0.08%. In other words, the mining industry pulled overall producer
prices into negative territory and if it weren’t for that sector, Colombia would have registered a
0.11% gain in PPI. That’s a big single month drop in mining PPI, be in no doubt.
Here’s the longer view chart of PPI in Colombia from the same website, which runs from post-
Lehman January 2009 and shows how inflation moved through to mid 2012 and has since
levelled off and is now dropping.
Colombia: Producer Price Index for Mining, monthly, 2006 to date
200
190
180
170
160
150
140
130
120
110
100
17
9002naj .rpa .luj .tco 0102naj .rpa .luj .tco 1102naj .rpa .luj .tco 2102naj .rpa .luj .tco 3102naj .rpa .luj .tco 4102naj .rpa .luj .tco
source: DANE Colombia
6002
rebmeceD
=
001

Corruption: Why am I unsurprised?
On Tuesday the OECD published its 2014 Foreign Bribery Report (13), which came with the
subheader ‘An Analysis of the Crime of Bribery of Foreign Public Officials’, and that’s as good a
description as there is of the document. The OECD analysed 427 cases of bribery seen in the
last 15 years (a reasonable sample) and came up with this as one of the main conclusions
OECD: Corruption per industrial sector, 1999 to 2014
30%
25%
20% 19%
15% 15%
14%
15%
10%
10% 8% 8%
6%
5%
5%
0%
18
evitcartxe noitcurtsnoc &tropsnart
egarots
smmoc
&
TI
erutcafunam htlaeh
namuh
sag/yticirtcele
cilbup
ecnefed/nimda rehto
source: OECD
Indeed it’s shock and surprise time the extractive industries (i.e. mining and oil&gas) were the
most prone to corruption. Not. Here are a few more conclusions from the report (which is
extensive and full of data so yes, of course I’m cherrypicking):
• 53% of cases involved corporate management or CEOs which shows that (unlike the
image boards of directors are so keen to convey at tough moments), more often that
not collusion goes right to the top of a company hierarchy
• Just 2% of cases were brought to light by whistleblowers, while one in three cases
were started by self-reporting. This shows that even among the cases we hear about, a
minority are brought by people in the know. This points to a lack of institutional
strength in countries as an open door for bribery
• 261 cases were settled with monetary sanctions, just 80 people did prison time which is
a tiny amount even of the cases that were investigated, brought to trial and convicted.
• 75% of bribes used intermediaries to pass along the cash, 35% of cases used
companies as the intermediary, typically the anonymous offshore shell type.
• Over 80% of bribes were offered, promised or paid to people working in State-owned
enterprises, which again should come as no surprise, considering the asymmetric
amount of power that a government official can hold compared to the lower salary level
compared with the private sector at a similar level of responsibility and power.
More besides, go see the interesting document and wonk out all by yourself. And now consider
this graphic, sent over to me by reader FA and from the recent report out of Transparency
International on corruption.

Notice the similarity? Yes indeed, those rich industrialized countries that enjoy economic
freedom just happen to score low on the corruption ranking as well. There are other factors
behind this, such as higher salaries discourage people to grab for dirty cash, or in the way that
countries such as The USA have de-facto legalized corruption by turning it into something called
“lobbying” and letting companies give politicians large swathes of cash in return for sponsorship
of their pet projects, but the main one here is that rich countries don’t have corruption, they
export corruption. The trade is quid-pro-quo for new markets or cheap sources of labour and
the target countries tend to be institutionally weak ones where individual politicians hold
outsized levels of power over citizenry.
The mining industry in the 21st century hits all the right bells. Large corporate players from the
rich industrialized nations, requiring access to natural resources in less developed countries that
are dependent on the say-so of government officials who wield great power compared to their
monthly take-home; it’s exactly the recipe. But fortunately, IKN is happy to report that it’s not
19

your mining company that’s doing these things. It’s not the one you invested in because it
never is, it’s always one of the other ones.
Market Watching
The new royalty in Guatemala makes Tahoe Resources (TAHO) (THO.to) a decent
near-term trade buy
I won’t play cute. I missed the news last week that Guatemala had moved its royalty on mining
from a statutory 1% to 10% (with 9% to go to central government and 1% to local
municipalities hosting any given mining operation) and didn’t include it in IKN290 out of
ignorance, not choice. The change in the royalty law came as part of the nation’s 2015 budget
proposal debate that was passed in rather shady circumstances late evening Friday November
28th by the Guatemala parliament (who apparently passed it quickly in order that member could
adjourn and go to President Otto Pérez Molina’s birthday party celebrations being held that
same night...gotta love Central America).
The news hit the trade airwaves thanks mainly to Tahoe Resources (TAHO) (THO.to) which
published this NR (14) pre-bell Monday and got it in front of the mining sector’s eyes very
quickly. Here’s how TAHO’s
share price did last week
compared to silver (SLV)
and other miners (GDX):
Not such a great time for
TAHO. The news was met
by erroneous analyses from
several quarters about the
amount of State burden
TAHO would need to carry
if the law was enacted, but
the true situation is that
they’re going to have to
pay a maximum of 5%
more royalty, perhaps less
if the company curtails its
local community budget
program, and all that’s pre-corp tax as well. The total hit may be as low as 3% in real terms of
TAHO decides to cut its other discretionary payment.
Personally, my initial reaction was that it was only 50/50 to be promulgated by the presidential
signature and become law. As it happens my scepticism on this one at least) was misplaced and
on December 5th as reported in Guatemala’s decent quality daily ‘El Periodico’ (15) the new
budget was signed into law by President Pérez Molina. In the presser that accompanied the
move, Pérez Molina defended the 2015 budget and went after the chambers of business
(including the chamber of mining) who “make statements about any subject, but when it comes
to taxes nobody wants to pay” and trusted that the business community wouldn’t try to use the
courtrooms to try and block the tax hikes as they’ve done in the past.
Therefore we’re in a situation where the law has been passed and ratified and is now set to
become active law unless there’s a legal challenge. We therefore should assume mining
companies in Guatemala will pay the new rate in 2015 and onwards, but even so a) it’s not that
bad at 4% or perhaps 3% more than paying this year and the small fact that seems to have
slipped the detractors’ (and mining companies) minds that Guatemala is cutting its corporate
tax rate from 28% to 25% in 2015 (16). With VAT (sales tax) at a low 12% and no obligatory
workers’ profit sharing legalislation, companies are still getting a good deal in Guatemala
compared to just about anywhere you care to mention. It’s just not as giveaway great as it was
a couple of weeks ago.
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TAHO has suffered from risk perception, rather than true risk. It’s by no means my favourite
silver mining company out there, as its methods for for imposing itself on the local community
has caused anger and rifts as well as outright violence at times. But it’s on of the few dedicated
silver mining companies that’s clearly profitable at current silver price levels and that’s due to its
high grading wide veins and large scale resource at Escobal that makes for cheap and cost
effective operations. I expect TAHO will close that oversold gap in the days and weeks ahead,
though we may have to wait until the December tax loss selling season is over now before the
recovery sets in. I’m not a buyer because I don’t like Guatemala exposure and don’t want any
more silver exposure until things clearly change for the better, if you’re more relaxed about
those variables then this looks like a great buy window.
Mines And Money London UK 2014
Last week saw the annual Mines and Money conference in London UK (17) one of the bigger
mining bashes of the year and the biggest in Europe. I received an anecdotal report from
trusted source and regular at M&A reader D, who attended the show on one of the days and
gave the following observations among others:
• “It was pretty dead, but not as dead as it might have been.”
• “Mostly industry people (but it's usually that way).”
• Even the gold debates weren't that full which is a good sign.”
• “The balconies would have been full of booths 3 years ago. They were empty this
year.”
• “I'd say attendance was about 40% of what it was”.
When D talks about a ‘good sign’ above, he’s talking contrary indicator of course. He also took
some shots of the conference and was kind enough to send a few over. This one gives the
panoramic of the hall and shows there were attendees all right, but they’re hardly packing out
the aisles.
I did like these shots though. One of B2Gold’s (BTG) (BTO.to) attitude to the five day event
come day five and the other showing that Santacruz Silver (SCZ.v) can’t even get the respect of
21

having its corporate name spelled correctly.
Thank you reader D, highly appreciated.
Watching Tinka Resources (TK.v), watching Starcore (SAM.to) first, watching Aguila
American (AGL.v), even watching Regulus (REG.v)
In the past two or three weeks I’ve floated a few small company ideas at you, namely Tinka
Resources (TK.v), Aguila American (AGL.v) Starcore International (SAM.to) and Regulus
Resources (REG.v). Apart from a very small starter position in AGL.v that’s not going to be
expanded yet (it’s more a memory-jogger position for me than anything else, it’s seriously very
small) I haven’t committed to
any of the stocks and I’m not
a buyer yet, but after a few
inquiries from different people
over the days I’d like to try
and make clearer my opinions
on the names for all, because
I am possibly (probably,
definitely, stop kidding
yourself Mark) guilty of being
a little too vague on the calls
here.
This ten day chart shows how
things are going pricewise
with AGL, SAM and TK. The
story is of general disinterest,
perhaps SAM doing the better
volumes but even that one isn’t much. These are unloved and ignored stocks
22

• Of them all, AGL.v is the easiest to ignore today. From that one we want news of a deal
to finance its plans for a toll mine for local artisan-type miners and then we want to
hear how it’s being built and what the timeline to production will be. I see no near-term
catalyst yet, it’s on the radar and nothing else.
• Then there’s TK.v, which should come at us with more drilling results soon. The last set
of drill numbers got the stock to pop a little but the move didn’t last, we’re back to 20c
or so, volumes are thin. This one shows all the signs of being hit by tax loss selling (see
below) and if good drilling news comes again in the days ahead, I’d be unsurprised to
see it do the same type of pop-then-drop pattern as we saw a couple of weeks ago.
• Starcore (SAM.to) is more interesting now, because this week should see it report its
quarter and I’m expecting it to be pretty lacklustre. If selling comes on the back of
mediocre financials, it could be time to buy in for the reasons expounded last week.
• As for Regulus Resources (REG.v), mentioned last week (but not shown on that price
chart) and the subject of some keen feedback (of the “you think it’s a buy?” type) that’s
one for the medium-term and not for now. Before considering REG.v and its Antakori
project i want to see 1) the end of the rainy season the the Cajamarca uplands 2) a
signed, sealed and delivered agreement with ALL communities directly affected by
Antakori development and then maybe 3) news of a drillbit turning. Until those things
are in place, especially and particularly an agreement that covers all communities (not
just a selection of them), it’s watching only because it could go a lot lower before
making any turn.
The bottom line here? These are small plays, illiquid plays and even if the market catches a bid,
they’re the type of stocks that won’t move first (buy McEwen Mining, Argonaut, Rio Alto, for
that kind of fun and don’t stare too hard at the fundies, it won’t be necessary). But they’re
interesting because if you catch these little guys right and are able to suffer through barren
patches or wrenching volatility, there could be some very large percentage winners to show if
assets begin to get revaluations. Apart from that tiny spot of AGL, I’m sitting and watching
these for the time being, but yes I’m interested. Time is a key factor, however.
Tax loss selling and pornography
Both are tough to define, but when you see them you know what they are. But that’s as far as
the sex goes in The IKN Weekly, our interest is tax loss selling and if there’s one thing that I’ve
been ‘Market Watching’ for these last few days, it’s this. As noted a couple of issues ago the
jury was out as to whether we were about to get another volley or two of selling in December
or whether this year’s season would be benign.
As for my personal observations there does seem to be a decent amount of tax-loss selling still
happening this month. It’s not across the board but there are enough stocks showing moves
unlike peers in the more liquid names, as well as the lower-market cap companies that get
bopped on the head every time they have the temerity to catch a bid, to suggest that there is
enough tax loss selling to consider it a real influence in 2014.
Therefore the cash on the sidelines remains right there, with the bargain hunting deferred until
very late December at the earliest, January more likely. At that point we can check the lie of the
land and pick out a few names that have (in the opinion of this author at least) been unduly
whacked and look ready to bounce. Trading gains, that’s what we’ll be looking for.
Conclusion
IKN291 is done, we end with bullet points:
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• Gold rebounded and stayed over $1,200/oz for most of the week, then the BLS jobs
report took the shine off things. It’s a tough December marketplace now and discretion
is surely the greater part of valour until Christmas is out of the way.
• If you’re looking for a trade Tahoe Resources (TAHO) looks unduly hit on last week’s
news and should bounce back. The risk of buying first thing tomorrow morning is that it
may become a target for tax sellers, so perhaps hold back a while. Still, the Guatemala
royalty effect is overstated here. The other one that has my trigger finger itching is
Dalradian (DNA.to), simply because it looks cheap here. That’s no guarantee it can’t get
any cheaper in the wilds of December, but it looks cheap all the same.
• Rio Alto Mining is still my top investment idea, which may be boring but it’s true. But
even that might get thrown around by end-year volatility.
• I’m keeping an eye out for the Starcore (SAM.to) quarterly next week. One of those
unusual situations where I hope it’s as mediocre as I expect it to be.
• That mail I received about 43-101 is the best thing in this week’s edition. My sincere
thanks to A. Person for writing it, sending it and then letting me run it here.
The top long-term pick is Rio Alto Mining (RIO.to). I thank you in advance for any feedback.
Flash updates will be sent promptly if required by events
I wish you good trading fortune, ladies and gentlemen.
Otto
Footnotes, appendices, references, disclaimer
(1) http://incakolanews.blogspot.com/2014/12/long-nikkeishort-gold-profitable.html
(2) http://incakolanews.blogspot.com/2014/12/the-aurcana-aunv-43-101-resource-for-la.html
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(3) http://finance.yahoo.com/news/rio-alto-announces-shahuindo-stage-130000422.html
(4) http://www.rioaltomining.com/_resources/presentations/corporate_presentation_december_2014.pdf
(5) http://www.newswire.ca/en/story/1455565/supreme-court-of-canada-dismisses-appeal-application-by-hector-davila-
santos
(6) http://incakolanews.blogspot.com/2014/12/the-funny-thing-about-this-first.html
(7) http://gestion.pe/mercados/goldman-sachs-preve-que-cobre-podria-bajar-us-250-2116067
(8) http://www.vistazo.com/webpages/pais/?id=31424
(9) http://www.angloamerican.com/media/press-releases/2014/05-12-2014-a
(10) http://www.bloomberg.com/news/2014-02-14/anglo-profit-falls-7-amid-1-9-billion-asset-writedown.html
(11) http://noticias.terra.cl/mundo/asia/china-ofrece-a-venezuela-mayor-cooperacion-en-energia-mineria-y-
tecnologia,a991ede1f681a410VgnCLD200000b1bf46d0RCRD.html
(12) http://www.dane.gov.co/index.php/indices-de-precios-y-costos/indice-de-precios-al-productor-ipp
(13) http://www.oecd.org/corruption/oecd-foreign-bribery-report-9789264226616-en.htm
(14) http://finance.yahoo.com/news/guatemalan-congress-proposes-royalty-increase-125000319.html
(15) http://www.elperiodico.com.gt/es/20141205/pais/5823/Presidente-responde-a-empresarios-y-defiende-
aprobaci%C3%B3n.htm
(16) http://www.chambersandpartners.com/guide/practice-guides/location/233/6090/1111-200
(17) http://www.minesandmoney.com/london/
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
25

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

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