IKN #302Premium

The IKN Weekly
Week 302, February 22nd 2015
Contents
This Week: Not all paper is good paper.
Fundamental Analysis: Starcore International (SAM.to) 2q15 production numbers.
Stocks to Follow: Overview, Teranga Gold (TGZ.to) (TGZ.ax), McEwen Mining (MUX)
(MUX.to), Starcore Intl (SAM.to), First Majestic (AG) (FR.to), Fortuna Silver (FVI.to) (FSM),
Minera IRL (IRL.to) (MIRL.L), B2Gold (BTO.to) (BTG), Rio Alto Mining (RIOM) (RIO.to),
Dalradian Resources (DNA.to), NovaCopper (NCQ.to).
Copper Basket: Overview.
Low Cost Producer Basket: Overview, Pan American (PAAS), Barrick (ABX) plus NEM.
Regional Politics and Market Watching: Teranga Gold (TGZ.to) (TGZ.ax) 4q14 results,
Mexico changes mining tax redistribution (at last), Bear Creek Mining (BCM.v) thoughts, Troy
Resources (TRY.to) (TRY.ax) presentation.
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
Not all paper is good paper
By way of a case study, let’s consider the reactions in price of four juniors miners now involved
in M&A action. There are two deals of note going down in the sector at the moment, namely
Tahoe Resources’ (THO.to) (TAHO) take over of Rio Alto Mining (RIO.to) (RIOM) and Timmins
Gold’s (TGD) (TMM.to) take over of Newstrike Capital (NES.v). They have some similarities of
course...
• Both see a PM junior working LatAm taking over PM junior working LatAm
• Both recent
• Both all-paper (the cash element in each deal is purely symbolic)
...but when it comes to the reaction to the deals the clear differences begin to show. This is the
ten day comparative chart for Tahoe
Resources (THO.to) (TAHO) take over Rio
Alto (RIO.to) (RIOM), which includes the
reaction on the day of the announcement
and the days that follow. The key stock
here is the buyer, in this case TAHO,
because once the (customary for paper
deal) drop had occurred the stock has
shown resilience and has even managed
to rise gently
Here below is another way of looking at
the same companies in the same period,
this time with benchmarks GLD (the gold
bullion ETF) GDX (the precious metals
1

miner ETF) and GDXJ (the PM juniors ETF) thrown into the mix.
In the above chart I took out the effect of the Monday Feb 9th adjustments to RIO and THO in
order to see how they’ve performed against the benchmarks in the period and the fact is,
they’ve done very well. The market obviously likes this deal and is buying into it.
Now let’s check the second study, the ten day comparative chart for Timmins Gold (TGD)
(TMM.to) and Newstrike Capital (NES.v). Again the buyer on the gold line, the target in black:
In this case we see the reaction on the day of the news was indeed similar to that of the
TAHO/RIO.to, with the target stock (NES.v) popping higher on volume and the buyer company
(TMM.to) adjusting lower, again typical in an all-paper deal. But then things change, as the
buyer stock is sold and moves down away from the first -5% immediate reaction level, down to
-10% and as Friday came and went, dropping to -17% since the deal was struck. As this is an
all-paper deal the target stock is now performing as a virtual proxy and drops as well, which
has turned a ~5% gain on the news into a ~5% loss this weekend.
The difference isn’t in the quality of the target company (even though my opinions RIO.to and
NES.v are very different indeed). The difference is in the quality of the buyer company. When I
heard the TMM.to news last week one of the comments on the blog (1) was if the deal
“reminds you of the time Elgin bought out Gold-Ore Resources, I won't be at all surprised”
because it reminded me about that one a lot. I was long GOZ.v at the time and grabbed at the
chance to sell into the deal. As a result I escaped a position with a small profit, but just a few
weeks later the new Elgin/Gold-Ore merged company had dropped like a stone. Bad paper.
Whereas THO.to is good paper. It matters not my opinion of the company, the mine,
Guatemala political risk or whatever. What matters is the big backing of Goldcorp, the asset
value consigned, the profitable operations, the proven management team (let’s remember
2

MacArthur’s track record), those are things the market wants from a precious metals miner
going places. It’s one of the reasons I’m happy to hold my RIO.to position for a few weeks and
“play” the silver/gold exposure, because this hook-up isn’t going to do what TMM and NES have
done in the last couple of days. If RioTahoe drops it’ll be for wider market reasons, TMM/NES
has been dropping because of its internal corporate dynamics. Big difference
Fundamental Analysis of Mining Stocks
Starcore International (SAM.to) 2q15 production numbers
On Tuesday our small gold producer play Starcore International (SAM.to) released (2)
production numbers for its 2015 second quarter that ended on January 31st 2015. Here we take
a good look at the numbers, consider what they’ll mean to the company’s financials and update
our recommendation on the stock.
The production numbers: We start at the top, with the gold equivalent production number
SAM.to headlined in its NR. The 5,130 oz AuEq (great majority pure gold, some minor silver
production makes up the rest) was a bit light compared to previous quarters and a long way off
the type of 6k+ oz production the mine is capable of on occasion.
SAM.to: Gold Equivalent produced
12000
10000
8000
6000
4000
2000
0
3
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj
oz AuEq
source: company filings
Tonnage throughput was however, higher. That combo suggests that head grades were lower
for the period and sure enough, at 2.22 g/t Au on average it’s the worst we’ve seen since 2012.
SAM: tonnes per day throughput
900
880
860 840
820
800
780
760
740
720
700
In mitigation SAM.to stated that, “Grades and recoveries continue to conform with those
predicted in reserve estimates” so there’s reason to believe they were expecting this relatively
lower grading material this quarter (plus they upped throughput, which also suggests they were
expecting it). On the subject of recoveries...
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj
tpd SAM.to: Avg gold head grade (g/t) per qtr
3.50
3.00 2.81 2.89
2.50 2.40 2.14 2.15 2.03 2.01 2.23 2.38 2.55 2.34 2.42 2.36 2.22
2.00 1.70
1.50
1.00
0.50
0.00
source: company filings
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj
g/t Au
source: company filings

SAM.to: Gold recovery percentage
100
95
89.00
90 88.20 86.70
84.61 84.50
85 89.00 86.00 79.30 86.90 86.30
80 83.90
81.00
75 78.40
75.00
70
69.50
65
4
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj
source: company filings
...they came in like this. At a pinch they were in line. That brings us back to gold production
and this time we consider potential sales, too. This chart has both pure gold production (not
gold equivalent) which is estimated at 4,814 oz Au (silver equivalent ounces making up the rest
of the 5,130 oz AuEq, of course).
SAM.to: Gold produced vs gold sold, per qtr
7000
6500
6000
5500
5000
4500
4000
3500
3000
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
Oz Au
gold prod
gold sold
source: company filings, IKN ests for gold sold jan'15
As you can see, in order to run revenues and eventual financial estimates, I assume that
SAM.to sells the same amount of ounce it produces in the quarter. You can also see that in
previous quarters there’s invariably a discrepancy between the production and sales figures.
This is an obvious weak point of the SAM.to analysis, which is why it even got a mention in the
brief Flash update of last Thursday morning (see appendix 1). The plain fact is that with
financials modelling “you have to start somewhere” so a reasonable guess gets made. But the
nature of a small producer such as SAM means that just a few hundred ounces less or extra in
quarterly sales makes a big difference to that quarter’s financials. Yes for sure, it all gets
evened out in the end and if one quarter has light sales, the next will make up for it (check the
chart again) but it does make predicting a single quarter’s worth of revenues and financials a
hit or miss affair. These tinycaps are tough to model, period.
Cost and revenue estimates: With production noted and our sales guessed, we add in
money thoughts. Here we go with two
SAM.to: Revenue by metal
revenues charts and this shows the revenues 10
9
breakdown by metal
8
7
You see how gold revenues really dominate 6
5
things and silver’s a minor thing. You also 4
see how the “calculated revenue” for the 3
2
quarter ended January 2015 comes in at just 1
over $6m, $6.18m to be exact. That’s done 0
by straight multiplication of assumed sales
and spot prices in the period.
21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
$m
silver
gold
source: company filings, IKN ests

However as this next chart points out, for the last six quarters SAM.to has posted revenues that
are slightly higher than the straight calculation. For the record, I’m ok with that as long as it’s a
regular thing as math calc estimates are just that, estimates. The pattern is the key here.
SAM: "Calculated" vs Reported revenues, per qtr
10 (calc revs = tonnage + grade + recovery + realized prices for gold and silver)
9
8
7
6
5
4
3
2
1
0
5
21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
$m
total rev calc
total actual revs
source: SAM filings, IKN calcs, Jan'15 ests
Therefore, assuming the pattern continues, I’m best-guesstimating that SAM.to posts revenues
of $6.8m for the quarter just closed. As you can see, that’s down on previous quarters which is
the joint effect of lower gold prices and that modestly lower production number.
Now let’s add in some cost estimates and here are two different ways of cutting and slicing
basically the same information. This shows gold realized price versus cash cost per ounce of
gold equivalent. Things are still positive for SAM (which means in real terms that its mine is still
free cash flow positive) but that gap is closing.
SAM.to: Cash cost AuEq vs Au realized price
2000
1800
1600
1400
1200
1000
800
600
400
200
0
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
U$/oz
Au realized price
cash cost AuEq
source: company data, IKN ests
Here’s the same information, but this time considered on a per-tonne basis.
SAM.to: Revenues/tonne vs cash cost/tonne
140
120
100
80
60
40
20
0
21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
$/mt
revs/tonne
cash cost/tonne
source: company filings, IKN ests
The bottom line: reasonable revenues and costs estimates suggest margins got thinner at
SAM.to in the last quarter.

Financials forecasts: Three P+L type charts and just one balance sheet type chart to indicate
the estimated effects of the quarter just gone at SAM.to. This is the main chart to consider,
which sticks revenues against COGS and gives us mine operating earnings:
SAM.to: Operations overview
11
10
9
8
7
6
5
4
3
2
1
0
6
21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
$m revenues
COGS
mine op earnings
source: SAM filings, IKN ests
This chart zeroes in on the MOI, the same dataset as above but easier to see:
SAM.to: Mine Operating Earnings
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
source: company filings/IKN ests
srallod
fo
snoillim
From MOI, little is taken out of SAM.to cash. Financing costs used to be a chunkette, but since
they completely paid down debt last year they’re now minimal. Then come “other corp” which
includes G&A, admin etc and is estimated at just under half a million for the period, as this is a
tightly run operation. Which brings us to this chart of pre-tax and net earnings.
SAM.to: Earnings
8
7
6
5
4
3
2
1
0
-1
-2
-3
11.rpa 11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj
$m
pre-tax earnings
net earnings
source: SAM filings, IKN ests
Pre-tax we’re expecting SAM.to to break even, then it’s up to the tax bill they pay (or defer).
I’m guessing net comes in slightly negative, but that could be out either side.
Final chart is working capital from the balance sheet and this time the forecasts are stretched
out a little further into the future. This is one of SAM.to’s stronger points as a company and

operator in fact, it has cash ($7.3m in cash and short-term investments as at October 2014)
and liquidity isn’t a problem. It’s exactly this that allowed it to pay $2m cash for the Creston
Moly assets this year, it can write a cheque like that without fretting over the salary bills.
16 SAM.to: Working Capital per qtr
12
8
4
0
-4
-8
-12
7
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco tse51.naj tse51.rpa tse51.yluj
source company filings/IKN ests
srallod
fo
snoillim
We’re estimating a dent in this quarter’s working cap to $10.5m, and then assuming the
Creston purchase and a flat U$1,200/oz gold price, working cap drops a little more to $9m in
the quarter we’re in now (that ends April). From there and ceteris paribus we should see
SAM.to collecting cash again.
Discussion and conclusion
The Starcore Intl (SAM.to) recommendation isn’t changing, it’s still my idea of a decent
speculative buy in the gold space.
The negatives
• The quarter just gone wasn’t great. It wasn’t bad, but production was on the light side
and they’re not going to wow the market when the financials get printed on this one.
• Financially speaking, at current gold prices it’s basically a breakeven company. One
quarter might be a small net loss, another a small net profit, but without a significant
rise in the gold price it’s going to tread water.
• It’s small and ignored by the world.
• If gold drops substantially, it will start returning net losses that can eat into its cash
position and threaten corporate stability.
The positives
• It’s cheap. At around $20m market cap you get a small producing gold miner that runs
its operations with positive free cash flow.
• Its balance sheet position is strong and there’s no liquidity problems as long as the gold
price doesn’t fall to bits on us.
• The recent purchase of the Creston Moly assets could become a latent winner. Come
the time of a sector revival, assets such as these get revalued and SAM.to’s bargain
basement purchase would look very smart indeed
• The fact that it can tread water at current gold prices means that it’s one you can bide
you time with. The risk is gold going lower, but if gold moves higher (and hey, I say it
will) it will move SAM.to into significant profits, no matter if a quarter comes in light.
For example, $1,300/oz gold adds at least $0.5m to revenues.
• With this type of small producer, it only take one quarter when mined mineralization
grades go higher in a certain spot for a big production difference to happen. When that
shows up so do profits and SAM.to has already shown it’s willing to share in net profits
now.
• Last year’s dividend payment could be repeated, for example at July 2015 year-end.
SAM.to popped higher on the news in 2014 (from ~15.5c to ~22c, a 42% upmove).
With just over 151m shares out, a 1c dividend would take a managable $1.5m from
treasury and in the event of better gold prices, a 2c dividend would cost $3m.

Overall, this is a great small risk/reward holding. Unless things get mightily bad in the gold
space this comapny isn’t going away (in fact, many other would die before this one does), right
now it’s in a holding pattern, with gold higher the stock price will move up nicely. Along with
the potential of asset revaluation from the Creston purchase, at $20m or so market cap this has
all the hallmarks of a bargain today. You need to keep clear that holding penny-priced stock
such as this will always come with volatility, but as long as to walk into a high risk situation with
eyes wide open, the potential for even higher rewards is clear. Holding.
Stocks to Follow
We have 13 open positions and last week, six of them posted gains (TGZ.to, SAM.to, IRL.to,
NCQ.to, LRA.v, FSM short) and the other seven were losers (RIO.to, MUX, BTO.to, DNA.to,
FCV.v, AG, GQC.v), which may at first sight look like an evens-ish week but as most of the
winners came from the smallfry, it wasn’t. Mind you, the relatively small dent taken in Top Pick
Rio Alto compared to many others in the sector means it wasn’t a particularly bad week, either.
Best upmoves came from the newly opened Teranga Gold (TGZ.to up 10.9% from buy price),
NovaCopper (NCQ.to up 10.3%) and the Fortuna Silver short (FSM short up 7.7%). Biggest
losers were printed by Dalradian (DNA.to down 12.3%), GoldQuest (GQC.v down 10.7%) and
First Majestic (AG down 8.4%).
With the addition of Teranga Gold (TGZ.to) to the list we currently have 13 open positions on
our our ‘Stocks to Follow’ list, two less than our self-imposed maximum. Four are in the green,
nine are in the red.
8

Current
company Ticker this week Avg Price Reco date PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to hold C$2.30 07-apr-11 C$3.72 61.7% Top Pick, Best PM Jr, M&A tgt
Recommended long positions (in current order of preference)
McEwen Mining MUX STR buy U$1.16 25-jan-15 U$1.04 -10.3% New position, excellent value
Dalradian Res DNA.to buy C$0.64 27-oct-13 C$0.93 45.3% Nov'14 tgt $1.25, top Au expl
B2Gold BTO.to hold C$2.32 12-sep-14 C$2.03 -12.5% Dependent on Au price moves
Teranga Gold TGZ.to buy C$0.55 15-feb-15 C$0.61 10.9% New position, 83c tgt
Starcore Intl SAM.to buy C$0.12 10-jan-15 C$0.14 16.7% Small Pos., added, tgt 19c
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.205 -10.9% tgt 50c, due Feb'15 financing
First Majestic AG MAY SELL U$10.51 10-aug-14 U$5.57 -47.0% Now in pair trade with FSM
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.065 -75.9% Waiting for financing news
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.75 -28.6% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.43 -62.6% solid biz model, LT hold
Recommended short positions
Fortuna Silver FSM SHORT U$4.12 10-nov-14 U$4.21 -2.2% In pair trade with AG
Smaller/Riskier
GoldQuest Min. GQC.v hold C$0.26 27-oct-13 C$0.125 -51.9% may sell soon
Closed in 2015 closed close price
Argonaut Gold AR.to jan'14 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'14 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'14 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'14 C$0.075 26-jan-14 C$0.035 -53.3% sm, sold on Cu downturn
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
Now for some notes on current basket stocks.
Teranga Gold (TGZ.to) (TGZ.ax): Position opened. We take a closer look at the 4q14
results in ‘Market Watching’ below, here a comment or two on trading. Exactly why TGZ started
moving up on Wednesday afternoon just before the Q4 year-end results were published that
evening (3) isn’t known to me. Perhaps a leak, perhaps spec buyers or perhaps just a vacuum
being filled, but whatever the reason was the real strength was how TGZ followed through on
Thursday once the numbers were known to the world. All in all, a good start to this new
position.
On more thing: Tomorrow Monday Feb 23rd TGZ is presenting at the BMO conference. On this
link (4) is the presentation material they’re giving.
McEwen Mining (MUX) (MUX.to): MUX trading was weak and in broadstroke terms followed
the sentiment in the gold and miners’ sector pretty closely. That’s to be expected at this point.
I’ve been taking a few mails from a few of you about this new position in MUX and although the
specific points made are disparate (and I think I’ve answered all those mails, please re-send if
you’re annoyed at me for not answering) the underlying theme is “hey, hasn’t moved so far” or
“hey, this one’s down, you noticed?”. This MUX long has been compared in your mails to AR.to
on several occasions and for me that’s a tell.
Specific, near-term, time constrained opportunities such as AR.to are rare. I thought that one
would be wrapped up in less than two months which is mightily quick on my timescale, but in
the end was even more dynamic and was open-plus-add-then-close in less than one calendar
month. To repeat, that’s rare. The case of MUX will be fundies-driven and it will need to show
9

its change in attitude and performance via hard results that come in quarterlies. We don’t have
the quarterlies yet. Plus there’s the well-documented way in which my personal timing on entry
points for trades tends to suck hard, so I’m in at prices 10% greater than I could have achieved
on this, but that’s smallstuff and I’m not sweating it. In my opinion MUX will need until at least
mid-May and its 1q15 results (between now and then come the 4q14 numbers as well) before it
gains momentum. After that it’ll be time to review this trade, not before.
Starcore International (SAM.to): Three pieces of news from SAM.to last week and all
reasonably positive as well:
a) We got the SAM.to 2q15 (to end Jan’15) production numbers last week (5) and as noted in
the Flash update last week (see appendix 1), without being great they were OK enough to keep
me in as a holder. We looked at those in detail in ‘Fundamentals...” above.
b) On Thursday, just a couple of hours after that Flash update, came news from SAM.to (6)
that it had successfully closed the Creston Moly purchase, which included confirmation that it
had got rid of the bankruptcy claims on the property that mean the finder’s fee litigation held
over from the Mercator/Creston Moly period had been dropped. This is probably good news for
SAM.to and I was impressed to the point of surprise that it had managed to get the deal
straight and closed in such a short time from the LOI.
c) That same Thursday we saw a very large block trade cross on the market via Canaccord. The
timing of that trade with the closure of the Creston deal catches the eye, meanwhile it’s been
fairly clear (from where I sit at least) that there’s been a persistent seller of SAM shares for
weeks and they may have just sold the lot in a pre-arranged deal. If so, there’s now less to
hold back SAM.to from going higher. We’ll see.
Fortuna Silver (FSM) (FVI.to) and First Majestic (FR.to) (AG) Pair Trade: First our pair
trade tracker chart, starting from the launch of the equal-weighted pair trade (AG long, FSM
short) as at November 16th 2014.
First Majestic (AG) is up ~15%, Fortuna Silver (FSM) is down ~6%, our pair is ~21% to the
good. This despite the way the gain in the FSM smaller was slightly less than the loss in the AG
long in the last five days, but that’s the insurance policy that pairs bring with them.
On of the shorthand phrases I use on these pages is “happy holder”, to denote when I’m
relaxed about the current situation and/or price action of a stock held. That’s not the case with
First Majestic (FR.to) (AG) today, because I’m a nervy holder, I’m a skittish holder and I’m a
holder who stared, rabbit-like into headlights, at the hold/sell conundrum on Friday and in the
end froze, couldn’t make up his mind. It was really pathetic and I’m glad that only my dog bore
witness to it.
10

I decided to hold because I’m guessing (and that’s all I have) that even bad news from the
4q14 numbers due out tomorrow was being baked into the pie. That guess also came with the
thought that the Q4 bottom line from FR.to is set to be pretty good on a headline basis, so
even if the underlying fundies suck, there’s a decent chance of being able to sell into a pop
tomorrow or more likely Tuesday. If I sell, expect a Flash update first.
As for Fortuna Silver (FSM) (FVI.to), we still don’t have a date for its annuals but as the few
years it hasn’t filed until the middle or third week of March (i.e. very close to the limit date for
the company’s annuals), it’d be a surprise to see them this side of PDAC.
Minera IRL (IRL.to): Up half a penny and some volume, though the look of a stock that’s
settling into a new price after the comings and goings of the last few weeks. Same order.
B2Gold (BTG) (BTO.to): A volume
monster when it’s popping and moving
higher, the notable factor in trading in
BTO in recent days has been the lack of
precisely that, as such it drifts down and is
largely ignored. We’ve had the “majors”
report this week and with three full weeks
before BTO releases its 4q14 and year-
end numbers (scheduled for pre-open
Friday March 13th) that may be one of the
causes.
Rio Alto Mining (RIOM) (RIO.to): Hold, it’s trading just fine, though I’d ratchet down the
chances of that third party bid coming from 15% to less than 10% possible now, as the days
pass and the market trades RIO.to in lockstep with TAHO the assumption of this one going
through gets more solid.
Dalradian Resources (DNA.to): In the medium and long-term nothing has changed and this
is still my idea of a top ranking exploreco for 2015, with a strong chance of getting bought out.
In the very near term of last week I was more than a little dumb and naive by not anticipating
the strong sell-off after the February 19th warrants exercise date, as the successful move of
warrants into shares also meant there was suddenly a whole new bunch of fully paid-up shares
and a decent portion of those were looking to be liquidated into cash profits. Which is what
happened and we saw the PPS drop hard as a result. It’s nothing to be particularly concerned
about, nothing has changed except for near-term prices. Could even be a bargain entry point
and one of the last times you’ll be able to buy DNA at under a Loonie, but that daring
statement depends less on my wishful thinking and more on the gold price action in the weeks
to come.
NovaCopper (NCQ.to): This one caught a few light bids last week, which was mildly
interesting though we should only actively care if volume starts moving properly higher. It went
through a tough 4q14 but seems to be slowly bouncing back, from here I expect it to drift with
the fortunes of copper at market because its project is on a very long timeline.
The Copper Basket
After eight weeks of 2015 The Copper Basket is showing a 8.35% loss to level stakes.
11

company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 519.45 1.36 -33.0%
2 NGEx Resources NGQ.to 1.17 187.71 204.60 1.09 -6.8%
3 Reservoir Min. RMC.v 3.96 47.55 203.99 4.29 8.3%
4 Nevada Copper NCU.to 1.65 80.5 121.56 1.51 -8.5%
5 Western Copper WRN.to 0.68 93.68 65.58 0.70 2.9%
6 Copper Fox CUU.v 0.135 402.96 50.37 0.125 -7.4%
7 Amerigo Res ARG.to 0.27 173.65 47.75 0.275 1.9%
8 Hot Chili Ltd HCH.ax 0.16 333.11 46.64 0.14 -12.5%
9 NovaCopper NCQ.to 0.58 60.15 45.11 0.75 29.3%
10 Panoro Minerals PML.v 0.295 220.25 41.85 0.19 -35.6%
11 Regulus Res REG.v 0.35 56.39 18.61 0.33 -5.7%
12 Metminco MNC.ax 0.008 1822.6 10.94 0.006 -25.0%
13 AQM Copper AQM.v 0.06 139.24 9.05 0.065 8.3%
14 Catalyst Copper CCY.v 0.305 31.39 8.79 0.28 -8.2%
15 Coro Mining* COP.to 0.045 159.37 4.78 0.03 -33.3%
NB: HCH.ax & MNC.ax priced in AUD$, rest CAD$ Portfolio avg -8.35%
The overall basket average dropped by 1.62% on the week, product of six weekly winners
(NGQ.to, WRN.to, ARG.to, HCH.ax, NCQ.to,
CCY.v), one unchanged stock (PML.v) and 4% The Copper Basket 2015, weekly evolution
eight losers (CS.to, RMC.v, NCU.to, CUU.v, 2%
REG.v, MNC.ax, AQM.v, COP.to). Biggest
0%
upmoves were in Hot Chili (HCH.ax up
-2%
16.7%), NovaCopper (NCQ.to up 10.3%)
-4%
and Catalyst Copper (CCY.v up 9.8%),
-6%
biggest downers were Metminco (MNC.ax
-8%
down 25.0%), Coro (COP.to down 14.3%)
-10%
and AQM Copper (AQM.v down 13.3%) but
as most of those big swinging moves were
the nanocaps that are easily swayed by a
penny or even a fraction of a penny here or
here, I wouldn’t read too much into any of the moves.
Copper prices seems to be finding a New Normal at or around the $2.60/lb level. We’re now
into the Chinese New Year period, Shanghai futures are closed for the duration, things are likely
to be quiet for a while.
We move to our regular inventories tracking and the bullet points:
• Overall world levels dropped by a thin 1,492 metric tonnes (mt) (-0.3%) in light trading
for a total this weekend of 469,330mt.
• The Shanghai Futures Exchange adjusted down by 1,031mt (-0.6%) early week before
closing up for the holidays, stocks this weekend at 154,671mt
• LME warehouses stocks moved up, but the action was agin thing and small. Warehouse
tonnages moved to 298,200mt, up 2,900mt or +0.1%. Small but still another 36 month
high to record as we adge to the psychological 300k barrier.
• Comex inventories dropped by a small 377mt (-2.2%) to finish the week at 16,459mt.
Our tracking chart of the key Shanghai warehouse looks like this. Unlikely to change by this
time next week, either. All Quiet on the Far Eastern Front.
12
ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22
source: IKN calcs

Shanghai Futures Exchange Warehouse Stocks, 2014/2015
220000
200000
180000
160000
140000
120000
100000
80000
60000
13
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 ht41 ts12 ht82 ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22
Mt Cu
source: Cochilco
The Low Cost Producer Basket
After 8 weeks, the 2015 Low Cost Producer Basket is showing a 11.40% gain to level stakes.
company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 812 17.41 21.44 15.8%
2 Barrick ABX 10.75 1164.67 15.01 12.89 19.9%
3 Newmont NEM 18.90 499 12.76 25.58 35.3%
4 Franco Nevada FNV 49.19 156.08 7.88 50.48 2.6%
5 Silver Wheaton SLW 20.33 357.39 7.66 21.42 5.4%
6 Agnico Eagle AEM 24.89 173.43 5.27 30.37 22.0%
7 Kinross KGC 2.82 1114.5 3.02 2.71 -3.9%
8 Buenaventura BVN 9.56 254.19 2.64 10.40 8.8%
9 Pan American PAAS 9.20 151.41 1.51 10.00 8.7%
10 B2Gold BTG 1.62 948.9 1.53 1.61 -0.6%
all prices in U$, using NYSE ticker prices Portfolio avg 11.40%
A negative week overall for our big producer basket, but with two stocks that moved up (ABX,
NEM) that can be considered the winners of earnings week. The other eight lost ground,
including big negative moves for Pan American Silver (PAAS down 15.6%) and Goldcorp (GG
down 8.9%), which both came in with larger than expected asset write downs.
The gap between our basket and the GDX control benchmark is still to the basket’s advantage
but is down to a mere sliver, just 0.14%.
The Low Cost Producer Basket: Weekly performance
and comparative to GDX control
25%
20%
15%
10%
5%
0%
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42
Low Cost Basket: Percentage difference between
basket and GDX control, 2014
0.50%
0.00%
-0.50%
-1.00%
basket
-1.50%
gdx control
-2.00%
-2.50%
-3.00%
source: Google Finance, IKN calcs
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42
source: ikn calcs, NYSE/Nasdaq data

Pan American Silver (PAAS) (PAA.to): For a couple of weeks (with editions of the Weekly
as witness) I’ve been wondering out loud why PAAS had managed to outperform and continue
outperforming in the silver space in 2014, with the thought that perhaps its 4q14 and year-end
numbers were going to be better than expected. Last week we got the cruel reality, the market
had overestimated things here and once the 4q14 numbers were known PAAS dropped heavily
and re-adjusted back to the mean. There were two parts to the bad news.
1) In the wee small hours of Thursday PAAS reported earnings (7) which included a 4q14 net
loss of $525.7m, or $3.48 per share, largely due to a well-flagged impairment of nearly $500m.
But what got people particularly dismayed were the adjusted net loss (i.e. backing out the
impairment) of 14c/share and also the fact that PAAS ran a mine operating loss of $21.4m in
the quarter. The company made logical excuses, but Mr. Mkt bailed in quicktime all the same.
In our modern thrusting mining world, year end impairments aren’t a surprise to anyone, but
no free cash flow from your ops is a sin.
2) The separate reserve count update NR just before on the Wednesday evening (8) took over
23m oz of silver off its reserves count. Here’s the small table that came with the news:
The blame was put on PAAS dropping its reserve price to $18.50/oz silver from the assumed
$22/oz at end 2013. Though you may have noticed that the last time silver bullion traded at or
above U$18.50/oz was September 18th 2014. I’m forced to wonder how many more ounces
would be lost if the real silver price on December 31st 2014, U$15.97/oz, had been used.
Barrick Gold (ABX)
There were many 4q14 results filed by the big mining companies last week, including NEM, GG,
most other large name you’d care to mention along with several of the wannabe large names
you can mention. NEM’s numbers were good and the stock rightly rallied, but when Barrick
(ABX) reported its 4q14 and year-end numbers on Wednesday evening (9) it caught much of
the limelight, to the point where little old IKN bothered to make mention of the NR (10). There
was a lot of talk in the NR and subsequently in the mining chattersphere about the NR, with all
its promises and that Back To The Future motif. You’ll also note that ABX rallied on the news
and, like NEM, bucked the sector trend to finish positive on the week. On discussing the results
with a couple of trusted mailpals in this crazy business I wrote the mail below at one point and
one of my pals told me it deserved a bigger audience, that I should stick it in the Weekly. So for
what it’s worth, here it is (grammar slightly scrubbed, but it’s the same):
My read from the ABX NR (and reaction) is the Goldman Sachs angle. The narrative is
that Thornton is adopting a strategy more akin to "real business", i.e. more transparent,
clear goals and deeply concerned with the things anal ysts like, your balance and your
debt and your positive free cash flow and the love and deep respect for the
shareholder.
Yes, of course it's BS. But it's the type of BS perfected in and by the Vampire Squid.
The delivery of the message is also key because the company that wants to project
this cannot say it out loud, but instead plays to the egos of its audience by stating its
case and leaving them to "discover" the subtext, which is then relayed to the paying
audience (i.e. we insto/retail chumps who buy shares) as their considered analysis of
the situation. Hence we get "ABX turning a corner". We get "the giant is awakening".
We get "time to be on". Pure style over substance, pure neoliberal playbook. What
could possibly go wrong?
14

Suffice to say that I was less impressed by Barrick than with Newmont last week. To ABX I say
“Where’s the beef?”.
Market Watching
Teranga Gold (TGZ.to) (TGZ.ax) 4q14 results
As noted above, TGZ put in a good set of Q4 numbers and the rise in share price as a result
means this position has started well enough. So the job today is to check on those results and
compare them to our model, as from last week, in order to show differences when necessary
and point out what we can expect in the next couple of quarters. We show the main differences
by updating the charts that show the bigger changes (and tell you the numbers that were in
IKN301 last week). If you want to play at visuals, open IKN301 and compare.
And in fact the main differences were good
differences, headed up by the operating and
net profit number. Net earnings (as usual
very close to operating earnings, with TGZ
taking small $1.563m tax provision against
the total this time though we should
remember that it starts paying corp tax at
25% as from May) looks like this, with net to
TGZ of $27.693m
Our estimate for the quarter was $13.5m
and that’s a big difference so in a moment
we’ll look at the reasons for that, but before
leaving the above chart please note that despite the blowout earnings quarter of 8c/share, we
haven’t adjusted the much lower expected earnings for the three quarters to come. That’s
something we’ll come back to at the end.
So to sales revenues (below green bars), which came in very close to the expected at
$76.553m (we estimated $76m) but the change came in costs, with COGS for 4q14 at $42.49m.
We’d estimated $55m and that $12.5m is the reason revenues look so strong.
TGZ.to: Quarterly Earnings Overview
90
80
70
60
50
40
30
20
10
0
-10
15
41q1 41q2 41q3 41q4 tse51q1 tse51q2 tse51q3
TGZ.to: Net Earnings
30
25
20
15
10
5
0
-5
-10
-15
$m revenues
COGS
gross profit
source: company filings/IKN ests
So, why were costs lower than expected? Answer, an asset credit in the form of a reversal in
write-downs from earlier in the year. Here’s what TGZ said in its 4q14 MD&A on the subject:
Consolidated profit for the three months ended December 31, 2014 was $27.7
million ($0.08 per share), compared to a consolidated loss of in the prior year
quarter of $2.4 million ($0.01 loss per share). The increase in profit in the
current year quarter were primarily due to higher revenues and a reversal of
31q2 31q3 31q4 41q1 41q2 41q3 41q4 tse51q1 tse51q2 tse51q3
source: company filings/IKN ests
srallod
fo
snoillim

non-cash inventory write-down to NRV totaling $16.0 million recorded in the
second and third quarters of 2014.
We now put that in chart form in a couple of ways, so you get the idea. This first chart below
puts the total COGS before any changes in write downs or “write ups” (i.e. the reversal of write
down) in green bars, and then the reported total COGS as seen in the P+L in light blue. As you
can see, they’re normally the same or very similar (1q13, 1q14, 3q14 etc) but in a couple of
cases there’s a difference.
Specifically in our case, we notice that total reported COGs in 2q14 was bigger than the pre-
write-down figure and that’s because TGZ took a write down during that period. However, the
accounting guys have decided to reverse that now and have credited the company with virtually
the same asset value again, so in 4q14 it was docked from the total.
COGS pre/post inventory (write down/"write up") adjusment
$m
total COGS pre-inventory adjustments
80
Total COGS
70
60
50
40
30
20
10
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14
source: company filings
In other words, the green bars give a real idea of how much money is being spent on
operations and costs, the light blue bar is what TGZ reports. Therefore our guess of $55m for
4q14 wasn’t far out compared to the $53.764m pre-adjusted total but in the end TGZ took a
credit, booked costs came in a lot lower, profit shot higher.
Here’s another way of looking at the same dataset, this time comparing mine production costs
against the reported COGS number.
$m TGZ: mine production costs vs total reported COGS
60 Mine prod costs
Total COGS
50
40
30
20
10
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14
source: company filings
TGZ has many line items in its COGS figure including (take a deep breath) mine production
costs, capitalized deferred stripped, depreciation/amortization from deferred stripping assets,
depreciation/amortization from property/plant/equipment/mine development expenditures,
royalties, rehabilitation and cash inventory movements (breathe out). Bits and pieces get
credited and debited on each one but the main item is “mine production costs” which is exactly
what it sounds like, i.e. the costs of running the mine. That’s what you see in the dark blue
columns in that chart above, while the light blue is again the total reported COGS. We can
again say that though costs of “doing the mining things at the mine” rose slightly in 4q14
16

compared to the previous quarter, reported COGS dropped sharply and that again is largely due
to the write-down reversal.
What I’m saying is that the bottom line profits returned by TGZ were good and they were
strong and yes, of course we liked them, but they weren’t just about pure cash earned and
were also about changes in the books. You see that if we go to the balance sheet and check
out the working capital number which rose to $30.69m:
50 TGZ.to: Working Capital per qtr
45
40
35
30
25
20
15
10
5
0
-5
-10
-15
-20
17
31q2 31q3 31q4 41q1 41q2 41q3 41q4
source company filings/IKN ests
srallod
fo
snoillim
That compared to our model estimate of $23m and was a lot higher. Now I’m good with that,
better working cap suits me fine and I was glad to see my number incorrect to the blue sky
side. But it wasn’t so much cash because treasury position came in at $35.81m...
TGZ.to: Cash treasury per qtr
60
55
50
45
40
35
30
25
20
15
10
5
0
31q2 31q3 31q4 41q1 41q2 41q3 41q4
source: company filings/IKN ests
srallod
fo
snoillim
...which was just $0.11m away from our model estimate. So if the model gets the cash right
and working cap wrong, it’s the other current assets that make up the difference such as...
TZG: Total inventory
$m
80 other inventory (fuel/supplies/etc)
gold inventory (bullion, in circuit, n/t stockpile)
70
60
50
40
30
20
10
0
4q12 1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14
source: TGZ filings
...the ~$6m rise in current asset inventory values (gold inventories plus fuel and supplies held).
To wrap up this brief look at things in the Q4 financials (and it’s only semi-on topic), this
trade/payables chart shows that the near term “real cash” liabilities at TGZ rose slightly in 4q14.
This is one I noted last week as on the high side and though I’m OK about its modest upmove

this quarter, it’s one I want to see dropping in 2015.
TGZ: Trade and other payables
(i.e. near-term run-of-mine financial liabilities)
70
60
50
40
30
20
10
0
18
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4
$m
A/cs payable to Senegal
Govt royalties
sundry creditors
trade payables
source: TGZ filings, IKN ests for 4q14
The conclusion to this Q4 review piece on TGZ is that the numbers last week were good, the
bottom line caught people’s eyes and the stock found itself bought as a result. Rightly so
because it’s cheap and that’s why I’m long at 55c, but to hark back to the very first chart in
today’s overview, that of net earnings, be clear that assuming U$1,200/oz gold we’re not
expecting the 4q14 number to repeat and TGZ will return a more modest net in 1q15 and the
quarters after that. Don’t expect too much from the stock in 1q15. It is in my opinion still very
undervalue, but this isn’t necessarily a quickflip winner, either. TGZ has now done the hard
corporate structure work to make it fit and healthy in the new low(er) gold price environment
and that’s starting to show through. As in starting. Given a fair wind on the gold price, it’s one
that will appreciate and become fundamentally and operationally strong over quarters and
years, not weeks.
Mexico changes mining tax redistribution (at last)
This week, with plenty of government fanfare to accompany the move, the Peña Nieto
administration announced (11) that via its Sedatu department (Secretary of Agrarian, Territorial
and Urban Development, or in Spanish Secretaría de Desarrollo Agrario, Territorial y Urbano ) it
was finally getting round to setting up the new tax redistribution écheme that’s been collecting
the additional taxes (more or less a royalty on EBIT) since 2013. Better late than never I
suppose.
The plan revolves around three extra taxes voted in by the EPN government which are the
7.5% “additional” on pre-tax earnings, the 0.5% “extraordinary” on top of that for gold, silver
and platinum revenues and the “special” tax now levied on the number of hectares held under
concession (that used to be very cheap in Mexico, now the burden is normal by world
standards). These monies have been collected by the tax office all through 2014 but now the
new “Fondo Minero” is being set up, which will take 80% of the cash raised and redistribute it
to the municipalities (62.5%) and States (37.5%) where mining activity takes place. The idea is
therefore similar to the Peruvian ‘Canon Minero’ and the plan is to provide funds for locals
works that will improve the life quality of populations in mining areas. As always, these things
sound great on paper.
Bear Creek Mining (BCM.v) thoughts
Some comments on this stock are due, mainly because BCM “pre-announced” its updated 43-
101 compliant feasibility study for the Corani project in highland Puno, Peru last Thursday pre-
open (12) as well as updating on the progress in the ICSID/CIADI international tribunal case.
First Corani and we were told the updated Feasibility will be with us by the end of 1q15. In
other words six weeks maximum, in other words it won’t be with us before PDAC so they need
to say something.
The main issue I have with the revised plan at the moment is conceptual, rather than anything
we can nail down and quantify. If you read through the NR you’ll get to hear about this change
and that change to the plan, with optimization very much the order of the day but BCM still

trying to maintain its strong production plan (14m oz per year silver). Which is good to know,
but ultimately narrative and worthless until we get to see and crunch the numbers. The
conceptual problem here is that BCM is swapping and changing and adjusting and what-have-
you in order to make a marginal project...less marginal? Reasonable at what price silver? We
don’t know, but as a rule robustly economic mining projects will stand on their own and don’t
need tinkering in order to look acceptable, or reasonable, or good. They start good and
adjustments can make them better.
In other words the substance of the Corani update last week was a wash, the style has me
waving a small red flag. Until we have numbers it’s not one to try and second-guess. It may
turn out to be a good project (and surprise me) and if so I’ll take the pleasant surprise, but I’m
not going to get optimistic today and leave myself open to any unpleasant surprises.
As for Santa Ana, the company provided a timeline update on proceedings and I’m going to
paste it out here and follow with comments below. Note the two parts bold-typed and
underlined by your author.
SANTA ANA - In other news, the Company participated to a preliminary
hearing called by the ICSID tribunal in January 2015 , which addressed an
agenda comprised of largely procedural matters. Following the preliminary
hearing, the ICSID tribunal issued a Procedural Order No. 1 addressing the
procedural issues discussed during the preliminary hearing. A summary of
the tribunal's material decisions follows:
• Bear Creek will submit its memorial on the merits containing a full set
of its arguments, witness statements, expert witness statements and
supporting documentation by May 29, 2015 ;
• The Government of Peru will have 130 days to prepare a counter-
memorial respond to Bear Creek's memorial and introduce objections
to the jurisdiction of the ICSID tribunal (if any);
• Bear Creek and Peru will then each have the opportunity to submit
another round of pleadings; and
• The final hearings before the ICSID arbitration tribunal will take
place in Washington D.C. on September 8 - 14, 2016.
As indicated continuously since the rescinding of Bear Creek's rights in 2011,
the Company remains open to negotiating a settlement and willing to re-
engage in discussions that took place before the GOP suspended talks in
August 2014. Meanwhile, the Company is vigorously preparing its case for
international arbitration.
Two points to make on this, the first about the bold-typed section and the second about BCM’s
chances in the ICSID/CIADI arbitration when it eventually comes to pass. BCM may want to
reach a deal before arbitration, but the new date for the final hearings means that it’s going to
happen after the end of the current presidential mandate of Ollanta Humala (who goes as far
as July 2016). What’s more, with things the way they are there’s a decent chance (call it 30%
in my book) that the next President who takes over will be Alan García again, the President who
signed the order to annul the Santa Ana concession. In short, the chances of Ollanta’s
government reaching a negotiated settlement with BCM just went down to near zero. Ollanta is
extremely unlikely to “take one for the team” if his arch-rival García will have to take it. This is a
problem that the current administration will be happy to boot into the future and the new
timetable of events allows it to do just that. BCM won’t get a settlement before that date.
The second point to make is that it’s one thing to make this type of claim against Peru, it’s quite
another to win it. As this article in El Comercio (right wing editorially and regarded as
newspaper of record in Peru) by repected Peruvian economist Arturo Bullard points out (13)
Peru’s track record in ICSID/CIADI arbitration cases is very good. Here’s a section (translation,
your author) of the article:
19

In the last few years the Peruvain State has been taken to court on this type of
arbitration in ten cases. Peru has won eight of them (among those the famous Luchetti
case). It lost in the other two, but those weren’t really losses either. In one they were
sued for U$37m and were ordered to pay U$18.5m, so in reality it was a draw. In the
other Peru was sued for more than U$20m and was ordered to pay U$750,000, just
3.75% of the amount demanded. In reality, Peru won.
Conclusion: Peru has won nine cases and drawn the other. It was sued for a total of
more than U$50Bn and has only been made to pay a little more than U$19m, a tiny
percentage of 0.038% of the amounts demanded.
And the story doesn’t end there. From these arbitration procedures the State has
received payments from the counterparties of more than U$50m, something very
unusual in these typse of cases. Peru has collected more than it has been made to
pay. If the Peruvian State were a lawyers practice it would be one of the most effective
litigants with the most positive results in history.
Let’s see how the updated feas comes out before making any strong decision. But at the
moment and even considering BCM’s low share price, it’s an avoid.
Troy Resources (TRY.to) (TRY.ax) presentation
A new corporate presentation is available on this link (14) which may be of interest to those,
like myself, who are still mulling this one as a potential purchase. Along with Lake Shore Gold
(LSG.to) it’s still on my gold producer shopping list. The most interesting point of the new TRY
presentation are the photos from Guyana, which shows how advanced the project is. They’re on
course for first production in 2q15 and that’s not very far away.
Conclusion
IKN302 is done, we end with bullet points:
• The first job next week will be to check over the year-end financials of First Majestic
(FR.to) (AG) when they’re published tomorrow, Monday February 23rd. They may come
at any time but as the ConfCall is set for Wednesday, chances are FR.to reports post-
closing bell. If I decide to sell the position you’ll get a Flash update. If I hold, the Flash
update won’t be necessary but there may be something to say, therefore I may or may
not bug you.
• Teranga’s (TGZ.to) (TGZ.ax) 4q14 was in-line with expectations. 1q15 won’t be as
wonderful but that’s OK, this is a company building strength. That’s why it’s still cheap.
• Majors dominated the news last week while the juniors give off that feeling of girding
their collective loins for PDAC, which kicks off next weekend. Monday March 2nd is likely
to be a day with plenty of NRs hitting the wires. Until then.
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
20

Footnotes, appendices, references, disclaimer
(1) http://incakolanews.blogspot.com/2015/02/timmins-gold-tgd-tmmto-to-buy-newstrike.html
(2) finance.yahoo.com/news/starcore-produces-5-130-equivalent-140000308.html
(3) http://finance.yahoo.com/news/teranga-gold-announces-record-free-031319991.html
(4) http://www.terangagold.com/files/doc_presentations/2015/02-23-15-BMO-Q1-Investor-Deck-FINAL_v001_o3t07s.pdf
(5) http://finance.yahoo.com/news/starcore-produces-5-130-equivalent-140000308.html
(6) http://finance.yahoo.com/news/starcore-closes-acquisition-creston-moly-171253144.html
(7) http://finance.yahoo.com/news/pan-american-silver-announces-unaudited-063500859.html
(8) finance.yahoo.com/news/pan-american-silver-reports-updated-014500950.html
(9) http://finance.yahoo.com/news/barrick-reports-fourth-quarter-full-000751644.html
(10) http://incakolanews.blogspot.com/2015/02/barrick-abx-4q14-results.html
(11) http://www.economiahoy.mx/empresas-eAm-mexico/noticias/6494727/02/15/Por-primera-vez-en-Mexico-se-
pondra-en-marcha-el-Fondo-Minero.html#.Kku8iqSaZCjlHoT
(12) http://finance.yahoo.com/news/bear-creek-provides-feasibility-study-133000298.html
(13) http://elcomercio.pe/opinion/columnistas/cuando-se-hacen-cosas-bien-alfredo-bullard-noticia-
1792889?ref=portada_home
(14) http://clients2.weblink.com.au/news/pdf2%5C01601072.pdf
Appendix 1: Flash update dated Thursday February 19th
Good Thursday morning, about half an hour before the opening bell on a bright and sunny Thursday morning.
I've been in two minds to send you this update, not sure how useful or urgent it is, but as overall it doesn't do any harm
here we are. Some brief thoughts on developments in several covered companies:
Starcore (SAM.to)
Its production numbers for the quarter ended Jan 31st, announced Tuesday...
http://finance.yahoo.com/news/starcore-produces-5-130-equivalent-140000308.html
...at 5,130oz were on the light side of acceptable. By no means a blowout, but not bad. Assuming SAM.to sells all the
ounces is produces (not always the case) it will break even on the quarter give or take a small amount either side. The
quarter is acceptable. The invetsment thesis of holding a small thing that's financially solid and will benefit from any gold
upside works, and is especially solid when the company is just a ~$20m market cap. Happy holder.
Teranga Gold (TGZ.to)
TGZ reported yesterday evening...
http://finance.yahoo.com/news/teranga-gold-announces-record-free-031319991.html
...and the numbers came in much as expected, with the main surprise a pleasant one in a approx ~10m credit against
depreciation which made the bottom line profit look even better (EPS 8c). The model and investment thesis as
discussed in IKN301 looks good here and I'm happy to be a holder at 55c. Working cap at a touch over $30m is the
window into the newly found balance sheet strength here and we can expect that to continue in 2015.
Bottom line: A long mine life, profitable 200k+ gold producer, at under $200m market cap. solid looking mining corps
don't get much cheaper than this. Own some.
First Majestic (FR.to) (AG)
I'm still not totally decided and I'm going to try and be cute by micromanaging things and watching the action in silver
and gold over today and tomorrow, but I'm now leaning towards selling my AG and not holding it through its earnings on
Monday. I'll be watching the trading in Pan American (PAAS) (PAA.to) today, as it missed and also wrote down heavily
on its assets. It could set the tone for the silver space, but fundies are one thing and price is another. If I decide to sell,
there will be another Flash update tomorrow.
Rio Alto (RIO.to) (RIOM)
Along with TAHO and in general lockstep, Rio Alto has traded like a champ all week, ignoring the gold (silver) weakness
and getting plenty of insto support. The market likes this deal. Still holding and no need to sell just yet, that can happen
in March. My feeling is that RIO.to could really benefit from the gold rebound today and $4+ numbers on the Canadian
listing are not out of the question.
Enjoy your Thursday.
21

Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dic-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-abr-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-ene-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-ene-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-abr-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
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.145 -48.2% lost China sponsor
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
22

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
23

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.
24