IKN #304Premium

The IKN Weekly
Week 304, March 8th 2015
Contents
This Week: Fed raise: It’s when not if, How your preferred metal is doing in 2015 in US
Dollars, Regarding your author’s ever-worsening keyboard dyslexia.
Fundamental Analysis: The new land grab part two: Cripple Creek, Metates, Mt Todd and
why you should buy land asset shares in the mining sector
Stocks to Follow: Overview, Legend Gold (LGN.v), McEwen Mining (MUX) (MUX.to), Teranga
Gold (TGZ.to) (TGZ.ax), Starcore Intl (SAM.to), First Majestic (AG) (FR.to), Fortuna Silver
(FVI.to) (FSM), Minera IRL (IRL.to) (MIRL.L), B2Gold (BTO.to) (BTG), NovaCopper (NCQ.to),
Rio Alto Mining (RIOM) (RIO.to), Dalradian Resources (DNA.to).
Copper Basket: Overview, Reservoir Minerals (RMC.v).
Low Cost Producer Basket: Overview, Goldcorp (GG) (G.to).
Regional Politics: Guerrero Mexico political risk again in the spotlight, News of Barrick (ABX)
at Pascua Lama, Chinese Arithmetic: Chinalco at Toromocho is finally getting into gear, I’ll take
Latin America every time thank you, Peru: Southern Copper (SCCO) at Tia Maria and
Quellaveco.
Market Watching: Continental Gold (CNL.to): Permits don’t pay for mines, Tinka (TK.v)
feedback, Re-Revisiting Argonaut (AR.to), All this talk about Mariana Resources (MARL.L), Rio
Alto Mining (RIO.to) (RIOM): At the risk of repeating myself.
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
Fed raise: When not if
“War is merely the continuation of politics by other means*”
‘On War’, Carl von Clausewitz, 1832
Let us be clear; The US Federal Reserve will raise rates. Let’s also be clear that this should
come as no surprise to anybody, as it’s what the Fed has done time after time at this stage of
the US economic cycle.
So with the “if” taken care of, now we consider the “when” which is this weekend’s subject of
hot economic debate among the hot rockstar economists doing their economic thing. It’s where
all the cool kids hang out, you know. But the fact is that we’re now doodling in the margins of
the text, there may be a marginal algo-pushed advantage to being able to predict whether the
first raise comes June or later in the year as has been previously assumed by the smarter of the
chattersphere (such as McBride (1)). Apparently, it will all hinge on whether the Fed keeps or
removes the word “patient” from the March FOMC statement, so expect plenty of words spilled
this month from people paid to spill words over that one.
And now to get closer to subjects within the scope of The IKN Weekly, what does all this mean
for gold? If you take your cue from the ridiculous vicious-cricle overselling of gold and its
1

mining companies we saw on Friday, the answer is instant doom. But if you consider we’ve
known for a long time that the Fed will raise rates and it’s only a matter of when, then the deep
and existential meaning for gold gets less time-sensitive because it was largely baked into the
pie already. So it might be June and not September...feel like weeping? No, me neither.
The market’s treatment of gold after the jobs report on Friday does not bear up to the scrutiny
of logic. In the same way that war isn’t something that pops up out of nowhere but is rather a
stage further along from diplomatic or political attempts to resolve differences, so gold’s price
doesn’t hinge on one single event, much less one that’s been telegraphed for many months.
*An alternative translation of the famous phrase from ‘On War’ allows the word “policy” to replace “politics”. The
difference is more about the vagaries of the English language than the meaning that von Clausewitz’s case in point. For
instance and common to most Romance languages, the word ‘politica’ in Spanish means both “politics” and “policy”.
How your preferred metal is doing in 2015 (in US Dollars)
It’s when a concept is repeated until it becomes rote that your author’s antennae perk up and
decide to question it. The latest in the metals world, particularly the goldbug or gold supporters’
club is, “Gold’s the one that’s kept its value against the dollar in 2015”, or “The almighty dollar
smites everything in its path, except the classic store of wealth that is gold”, or, “Only gold has
been able to stand up against the all-conquering dollar”. You know the story.
Therefore, I took the December 31st prints of nine major traded metals (using the Comex close,
or London Fix, or LME spot) and compared them against the Friday close prices, giving us the
percentage change for 2015 to date. Here’s the chart:
How's your metal doing in US dollar terms in 2015?
2 1.48
1 0.13
0
-1
-2
-3 -2.38
-4 -3.32 -3.07
-5
-6 -5.55 -5.42
-7
-8
-7.65
-9
-10
-9.66
sources
c o
:
p
K
p
i
e
tc
r
o/LME
z
/C
i n
o
c
mex/
n
L
ic
o
k
n
e
d
l
on Fix
al u
pl ati
n u m g ol d lea d silver
p
alla
di u m
2
ot
ts13
ced
egnahc
egatnecrep
5102
ht8
hcraM
In this same lapse of time the US Dollar index (USD, or DXM15 contract if you prefer) has
moved from 91 to 98, a percentage gain of 7.7%. It’s therefore reasonable to state that any
metal that’s lost less than 7.7% against the US Dollar has been a winner in non-US Dollar terms
(be that the Loonie, the British Pound, the Brazilian Real or whatever, we’re talking “world ex-
USD).
• Copper has done badly, whatever currency you care to choose.
• Zinc is right on the line, so it’s lost badly againt that all-conquering dollar but held its
own in other currencies.
• Then come nickel and alu, down in USD terms but slightly up ex-USD
• Platinum and gold have performed roughly equally. That would have been a much
better print for gold if it weren’t for the haywire selling spree we saw on Friday, but
rules are rules so instead of being just a tenth or two down, gold finds itself down
3.07% against the greenback in 2015.
• Lead has held up better than all other base metals, but that’s largely because it sank
the hardest in late 2014 and had less downside left in it.
• Silver surprised me, but there’s no getting round the way it’s held better than gold in
2015. It’s 2014 that was the bummer for this metal, not 2015 to date.

• Palladium is the best of the bunch, having appreciated against the USD by 1.48% in the
first ten weeks of 2015.
So enough of this nascent goldbug rah-rah about its magnificent defence versus the Evil Fiat
Paper of North American Doom; Gold’s doing ok vs the greenback, but it’s hardly unique in that.
One thing that’s occurred to me is that the way in which gold mining companies are now
swinging round to the crowd-pleasing, shareholder pleasing and mainstream business pleasing
concept of mining for profit, aiming for free cash flow and putting more stock in bottom line
financial results may change the way in which the metal itself is viewed. Even I’m looking at
gold as more of a commodity (when if you scrape hard at my surface I’ll define gold as an asset
class) because in the strict mining sector it’s now less an asset, more a thing to produce for X
and pass on to the next person at a price of X+1. That’s what a commodity is, after all.
On further consideration, perhaps gold pricewise is indeed acting as if it were a commodity at
the moment. If so it’s a period that shall pass, as all things eventually do.
Regarding your author’s ever-worsening keyboard dyslexia
It may be the onset of a midlife crisis, or a lack of caffeine or something, but I fear my typing is
getting worse. The phemonenon is sometimes known as ‘keyboard dyslexia’ and I find my
lapses particularly annoying, because under normal circumstances I’m a pretty good speller. It’s
got to the point where I’m beginning to wonder whether it’s an unimportant trifle or perhaps a
symptom of something more serious developing, so last week I took time out to read up a little
on the subject. There may be cause for real concern, but then again while searching I found
this:
I cdnuolt blveiee that I cluod aulaclty uesdnatnrd what I was rdanieg. The
phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at
Cmabrigde Uinervtisy, it dseno’t mtaetr in what oerdr the ltteres in a word are,
the olny iproamtnt tihng is that the frsit and last ltteer be in the rghit pclae. The
rset can be a taotl mses and you can still raed it whotuit a pboerlm. This is
bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the word as
a wlohe. Azanmig huh? Yaeh and I awlyas tghuhot slpeling was ipmorantt!
So now I’m not sure whether it matters that much.
Fundamental Analysis of Mining Stocks
The new land grab part two: Cripple Creek & Victor, Metates, Mt Todd and why you
should buy land asset shares in the mining sector
A follow-on from last week’s “The new land grab: Be part of it” piece.
Today’s little narrative starts last Tuesday, when Vista Gold (VGZ) reported its 4q14 numbers.
As it happens I’m fully aware of the trainwreck that is VGZ, but with my mind currently open to
revision of companies and also thinking about the whole “cheap asset land grab” concept, I
decided to spend a little time checking over the VGZ numbers because trainwreck or not, it
does still own the big and gold-laden Mt Todd project in Australia. So thinking about land assets
and such, I took more time over VGZ’s financials than I have for at least a couple of years.
The next day a mail appeared from reader DV, who happens to be one of the nicer people I’ve
virtually met over the duration. Here’s the relevant part of DV’s mail...
“...I wonder about your thoughts on CKG. It was a favourite of Claude
3

Cormier and many years ago I held it and actually made money. Now I know
that you do not like these large low grade projects and simply wonder whether
that would include CKG.”
...which also name-checked the smart, respected and straight-shooting independent analyst
Claude Cormier. To be clear, DV’s “CKG” refers to Chesapeake Gold (CKG.v) and its Metates
project in Mexico which is also another very big open pitter, similar enough to the Mt Todd I
was chewing over the evening before. That caught my attention.
Therefore, so far we have on the table the Mt Todd project owned by Vista Gold and the
Metates project owned by Chesapeake Gold. I’ll get to my reply to DV in a moment, but before
doing so I’m going to add in one more mine asset to the mix because it’s one I referenced in
my reply and today’s title. That’s the Cripple Creek & Victor gold mine owned and operated by
AngloGold Ashanti in Nevada USA.
With today’s three examples now framed, here come short and potted case studies of each to
bring us all up to speed:
Vista Gold (VGZ) (VGZ.to) at Mt Todd: Located in the Northern Territories region of
Australia, it’s a brownfields project at a past-producing mine and boasts 7.6m oz gold in M+I
resource, of which a hefty 5.9m is proven and probable reserve. The P+P grade is 0.84 g/t.
According to the company, the project has strong support from the necessary local and regional
government bodies.
According to its May 2013 pre-feas study (that saw slight amendment in mid-2014, but nothing
to change materially the economics or plans) the base case project (2) envisages a 50,000
tonne per day open pit mining operation that would produce an average of 370,000 oz Au per
year over its 13 year mine life. All well and good, until you hit the capex projection, which is
U$1.046Bn. Then the IRR, which is slated at a marginal 15.9% if we assume (hold your breath)
U$1,450/oz gold.
Admittedly the project would benefit greatly from the new low forex of the AUS vs the US Dollar
and we should also point out that the pre-feas offers an smaller alternative plan that would run
at 33ktpd and with a capex bill of U$0.76Bn. But still, that’s a lot of money for an IRR at an
elevated gold price.
The skinny: Mt Todd isn’t going to work and it’s not going to be bought out any time soon. VGZ
today is a U$29m company and even if some miner steps up and buys it out at double that
price, it’s not getting “7.6m oz of gold for $60m” or whatever other bunkum marketing they’d
use. They’d be getting a project that still needs a cool billion thrown at it, all that aside from iffy
economics. VGZ the company probably has the cash to limp through a year, perhaps two if it
starts stretching its cash (likely via the sale of its final tranche of Midas Gold shares) but beyond
2016 things don’t look particularly great.
Chesapeake Gold (CKG.v) at Metates: Located in Durango State Mexico, Metates is another
big gold mining project, with 18.5m oz gold in proven and probable reserve as well as big zinc
and silver by-product kickers. This is how CKG promotes Metates on its website front page (3):
M3 Engineering & Technology of Tucson, Arizona completed a positive Pre-Feasibility
Study ("PFS") on Metates. The PFS indicates a large 120,000 tpd open pit operation
with a 25 year mine life. Average annual production during the first six years of full
production is 845,000 ounces of gold, 25 million ounces of silver and 190 million
pounds of zinc at a gold equivalent cash cost of $355 per ounce, net of zinc credits.
Sounds good, no? All that gold, a big operation, long mine life, an annual production that would
move the dial of even the largest Tier One gold mining company, all at a post-credit cash cost
of under U$400. But again we hit problems with the project economics, because the capex
estimated for Metates under the current plan is $4.3Bn (yes, four point three billion United
4

States Dollars) and at U$1,350/oz gold (along with $25/oz silver and $1/lb zinc) this low
grading open pitter (AuEq 0.87g/t) gives us a 16.6% post-tax IRR.
However, it’s clear that CKG understands its own weak points and due to that we’re in the
process of getting a new updated pre-feas from CKG that will provide a Phase One/Phase Two
approach to the construction and operation, thereby lowering the entry barrier. Here’s a chunk
of the latest NR on that (4), though we’re still waiting for the updated pre-feas to show:
Overall, the positive testwork and scope changes should result in a significant
reduction in the capital cost to place Metates into production. The initial capital cost for
the Phase 1 operation is anticipated to be in the range of US$1.0-$1.5 billion.
Chesapeake has also identified other potential areas for further "outsourcing" of capital
that may be incorporated into the updated PFS. In comparison, the Phase 1 initial
capital cost of the 2013 PFS was estimated at $3.2 billion with a production rate of
60,000 tpd. On an annual basis, Phase 1 metal production for the updated PFS is
anticipated to average 140,000 ounces gold, 16 million ounces silver, and 58 million
pounds of zinc, with early production from Phase 2 (years 5 through 10) anticipated to
average 675,000 ounces gold, 14 million ounces silver, and 150 million pounds of zinc.
But again, that’s not the price they’d pay. To unlock Metates, the Phase One $1Bn needs to be
spent and then no matter whether, none, some or all of Phase Two comes from initial cash
flow, cost is cost and it’s fair to assume another $3Bn or so would be needed. Your ticket price
for Chesapeake Gold today is not $100m, it’s $4,100m. A difference.
CKG.v today has a CAD$94m market cap, with a treasury of $30m to help justify the value (that
also means it’s not working against the clock of a dwindling treasury position). We know it’s
looking for a buyer so if some large mining company paid CAD$130m tomorrow Monday
morning they’d get a large amount of in-situ gold that has just about all its major permits to
production in place, majority supported by locals and politicos for a $100m EV. But again, the
buyer isn’t committing to $100m when buying CGK, it’s committing to at least $1Bn in a first
stage and eventually $4Bn worth of capex to bring the mine into full production.
AngloGold Ashanti at Cripple Creek & Victor: Located in Nevada, Cripple Creek & Victor is
a working open-pit heap leach gold mine that can produce gold at at rate of around 250,000oz
per year, though FY13 (231k oz) and FY14 (211k oz) saw lower production. All-in sustaining
cash cost revolves around the U$1,000/oz price point (FY13 lower, FY14 higher). As at the last
reserves and resources report dated December 31st 2013, CC&V had an all-categories
(measured, indicated and inferred) resource of 10.84m oz gold grading an average of 0.71 g/t
Au, with just 0.56m oz of that in the inferred category. In other words, there’s a whole lot of
mine life left in this asset. Current permits are good until 2025 and there’s no reason to
suppose the mine cannot go on for a lot longer than that.
It’s widely known in the mining world that AngloGold Ashanti is under balance sheet debt stress
and needs to raise cash. It’s also widely understood that it wants to sell some assets and CC&V
is one that’s been put up for sale. The AngloGold Ashanti position is one that can perhaps be
called “semi-distressed”; the company knows it needs to reduce its debt load in the near-term
and although it is representing that it has several options to do so, those with a less biased
viewpoint see little else than a company that needs to sell assets. This adds up to a potential
sale of CC&V that for sure AngloGold doesn’t want to do as it’s one of their more attractive
assets (~5% of corporate total production, long mine life ahead, poilitically very stable
jurisdiction) but recognize that they’ll be able to get a decent price from the sale.
It’s understood that CC&V today has a preliminary price tag of around U$800m and it’s also
been widely telegraphed that several companies have been kicking its tires recently, including
“The Chinese” (that nebulous catch-all title), Agnico Eagle and (for me the most likely buyer)
Kinross.
So to sum up our three quick’n’dirty cases:
5

• Mt Todd: A big, low grade heap leach project in Australia that needs time and U$1Bn
spent on it to move from project to operating mine.
• Metates: A big, low grade heap leach project in Mexico that needs time and up to
$4Bn spent on it to move from project to operating mine.
• CC&V: A big, low grade heap leach mining operation in The USA that can be bought
tomorrow for $800m.
Which brings me to my reply to reader DV: Here’s the bit that matters:
AngloGold Ashanti wants to sell Cripple Creek & Victor and wants perhaps
$800m cash for the asset. For that price you get a working mine that's doing
~250k oz Au per year and 10m in resource ounces, so a long mine life.
When I was thinking about Mt Todd last night my thought was "Ok, imagine
you're Kinross, with a billion in treasury and the desire to get a new asset.
what do you spend it on?" and for me the answer at this point is a total no-
brainer...you buy the mine that's working and producing and giving you
immediate cash flow instead of sinking costs into the next two, three four
years before seeing a return on your money. That argument applies exactly to
CKG Metates, too.
Now all this goes in the face of the arguments being put forward by the market
thinkers at the moment, those at PDAC doing interviews and telling us that the
sector is in trouble because it's not replacing its ounces and things are going
to get bad for the producers etc etc. But it's really easy to talk that talk when
you're not the person who makes the call and has $1Bn of asset buying to do,
with shareholders round your neck and having watched a whole bunch of star
CEOs get fired in the last 2 years for making really stupid mistakes (which at
the time were framed as "calculated risks"). There ain't nothing coward like a
million dollars, they say. It's clear to me that the sector producers will not
make the long-term decision right now while asset prices are low. That kind of
thing will be left for the visionaries and/or those without fear or accountability
to the moneypeople.
There are several potential subjects we could discuss at this point but I’m going to steer clear
of the large miner corporate strategy angle, stay away from the academic arguments, not enter
into the metals supply and demand questions and try as much as possible to stick to the brief
that The IKN Weekly tries to offer.
It seems blindingly obvious from where I sit that the majors are not about to make large-scale
top-ups of their project pipeline in order to replace those depleting reserve and resource ounces
we keep hearing about from the analyst world hand-wringers. The majors know how many
ounces they have now compared to how many they had before, they’re perfectly capable of
using pocket calculators and they’re also fully aware that they can’t deplete gold
reserve/resource ounces down to zero. So the question begs as to why they’re not out there,
replacing ounces at (what we’re told are) cheap prices for resource ounces.
• The answer (1): Because the ounces are going to get cheaper.
• The answer (2): Because an ounce priced at $10 in-situ isn’t worth even that if it
costs you $1,300 to get it out the ground and you can only sell it for $1,200. That
ounce is worth zero dollars and zero cents.
• The answer (3): The market, the shareholders, the analysts demand cash flow and
profits from these people today, not expansion via projects into which (literally) billions
of dollars and several years must be sunk before any return is forthcoming.
This is why Metates will not sell, but Rio Alto has been bought. This is why nobody wants NGEx
Resources and its Vicuña copper project in Chile at U$150m when it was three times that price
6

in 2013, but Lundin just paid $1.8Bn for the Candelaria working copper mine in Chile. This is
why Coeur now regrets buying Orko Silver though they’d never say as much in public. This is
why International Tower Hill was $10 a share and is now 50c. I could reel out a thousand
example if you wanted (but neither you nor I want that).
When market analysts, commentators and wise saws line up to point at the way the “majors
aren’t replacing their ounces”, that’s true, but the implicit message of “they’re stupid not to
repalce their ounces” is false. The mining companies today are doing what they’re duty bound
to do. They’re being logical and making the right decisions for their own circumstances, of that
there is no doubt. This whole construct of “why oh why oh why don’t the majors back up the
truck on these cheap ounces now?” is a false narrative which is brought to you by people who
either don’t understand the position of the major mining companies or with their own personal
agendas that they’re foisting upon you. The majors will replace their ounces come the time
(that or go out of business, which will simply mean that the majors that are left will replace
their ounces), but that time is not now. Theier job today is to make money on a present-day
cash flow level, not sink investment into a future. These are not individuals with the luxury of
being able to do what they want, they’re accountable entities that must justify their actions to
their superiors and their owners. Their owners (shareholders) demand profits, they respond.
However, it should be clear by now where the niche and our advantage is. All too often, we the
retail shareholder and small player are under the impression that there’s no market advantage
left for us, that we’re bound to either lag behind “the big players” or even fail to profit while
others become rich, simply due to the size advantage but today there’s a big counter-cyclical
market opportunity staring us all in the face. If you are in the position where you can play Buy-
Hold-And-Forget on a slice of your net worth it’s time to do just that. The example last week
was of Ross Beaty and his Lumina Holding company. Back in the laste 1990’s when nobody but
nobody wanted the big porphyry copper projects that were no longer considered assets by the
major mining companies but liabilities, he went around and scooped them all up, put them in a
big box, closed the lid and waited. The rest, as they say, is history.
Today we see the same thing happening, we’re at the same point in the cycle ladies and
gentlemen. Majors aren’t buying, they’re disposing. Large low grade deposits are conceptually
out of fashion and that word “conceptually” is an important one, because for sure there has
been a whole lot of moose pasture fobbed off as potential mines these last five years, but in
amongst the dross there are land
packages and concessions that are
prospective with a decent shot at
success, but have been dragged down
along with the rest.
The investment advantage is there for
us, the people with patience, time and
the clarity of how the mining cycle will
eventually move through to bullish again.
But you’re not going to get this advice
from anyone and that’s because it’s bad
for business. It’s bad for brokerages,
because they want you to buy and sell.
It’s bad for people like me because you’ll
end up un-subscribing to a weekly missive that says little and offers nothing but “ok...we’re still
holding...thanks for sending me those dollars every month...”. And you certainly won’t hear it
from the people currently doing exactly this and setting up their buy’n’hold portfolios because
they don’t want to dilute the advantage they’re currently enjoying.
At the bottom of it all is a basic truth; only you can make yourself a financially wealthy person.
It’s not up to anyone else, it’s a wholly individualistic matter. Gautama Siddhartha said, “Man is
born alone, lives alone dies alone and it is he alone who can blaze the way which leads him to
7

Nirvana”. Financial wealth is unlikely to be where Nirvana lies, but that’s another story for
another day. Today we’re about the trifle of trying to turn a profit in juniors, so be smart, be
contrarian and buy what the others are selling; the cycle is on your side if you do.
Stocks to Follow
Well, that was fun. Not. The Curse of PDAC strikes again?
In fact it wasn’t all utterly bad in the port, with two weekly winners that both returned decent
percentage gains (NCQ.to up 8.6%), (FSM short up 13.1%). Then there were two UNCH stocks
(IRL.to, LGN.v). So, ten weekly losers and I’m not listing them all, let’s just note the big chunky
losses in GoldQuest (GQC.v down 18.5%), First Majestic (AG down 11.0%), Rio Alto (RIO.to
down 10.2%), Teranga (TGZ.to down 10.1%), McEwen Mining (MUX down 8.8%) and B2Gold
(BTO.to down 7.6%). You’ll obviously see the bigger percentage downmoves were also my
biggest weighted positions. Harrumph.
With the addition of Legend Gold (LGN.v) to the smaller/riskier end of our ‘Stocks to Follow’ list
we now have 14 open positions, one less than our self-imposed maximum. Five are in the
green, eight are in the red one is unchanged (but then again it only opened this week).
Current
company Ticker this week Avg Price Reco date PPS Gain/Loss% Notes
Top Picks
Rio Alto Mining RIO.to selling soon C$2.30 07-apr-11 C$3.52 53.0% Top Pick, Best PM Jr, M&A tgt
Recommended long positions (in current order of preference)
McEwen Mining MUX STR buy U$1.09 25-jan-15 U$1.03 -5.5% Added Mar'15, top value
Dalradian Res DNA.to buy C$0.64 27-oct-13 C$1.08 68.8% Nov'14 tgt $1.25, top Au expl
B2Gold BTO.to buy C$2.32 12-sep-14 C$1.95 -15.9% Dependent on Au price moves
Teranga Gold TGZ.to buy C$0.55 15-feb-15 C$0.62 12.7% New position, 83c tgt
Starcore Intl SAM.to buy C$0.12 10-jan-15 C$0.15 25.0% Small Pos., added, tgt 19c
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.185 -19.6% tgt 50c, finance news due
First Majestic AG hold U$10.51 10-aug-14 U$5.50 -47.7% Now in pair trade with FSM
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.07 -74.1% Waiting for financing news
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.88 -16.2% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.365 -68.3% solid biz model, LT hold
Recommended short positions
Fortuna Silver FSM SHORT U$4.12 10-nov-14 U$3.91 5.1% In pair trade with AG
Smaller/Riskier
GoldQuest Min. GQC.v hold C$0.26 27-oct-13 C$0.11 -57.7% may sell soon
Legend Gold LGN.v spec buy C$0.09 01-mar-15 C$0.09 0.0% new spec buy, v small trade
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
8

Now for some notes on current basket stocks.
Legend Gold (LGN.v): Position opened. It traded as high as 14c on a spike last Monday, so
whoever paid that price needs their head examining. I thought I wasn’t going to get any at all,
in the end I got just a few and with plenty of time and space to add if it goes lower (which I
think it will).
So trade opened and now looking to average down. Or at worst pay a max of 10c. But be clear,
this is a small and high risk position until further notice.
McEwen Mining (MUX) (MUX.to): Position added. As per the Friday morning Flash update
(see Appendix 1) that came after the US BLS jobs report and resulting from the auto-button
selling of gold and its derivative stocks, I added to this position and it’s now out-sized. And
although at this time on March 8th my position in MUX is underwater, love and the weight of
capitalist truth will out in the end.
Over at PDAC the Rob McEwen marketing drive may have helped the stock, too. Several people
told me about the 400 oz gold bar at the MUX booth that you could get your photo taken with
and although the stock dropped with most others, it didn’t suffer as badly as many on the
Friday dumpage and I ended up paying U$1.02 instead of the U$1.00 that I’d had in mind.
To blanket answer a few replies to Friday’s Flash update the basic reasons for my purchase are
1) I consider MUX excellent value 2) I’m prepared to put more money where my mouth is on
my turnaround story theory for this stock 3) with just days before the 4q14 numbers are due
we’re now at showtime but most of all 4) for me the gold selling on Friday was just so much
overreactive BS and the metal’s price will float back up in the days to come.
Teranga Gold (TGZ.to) (TGZ.ax): Last weekend in IKN303 came the blushes of watching
this one ride high very quickly and those type of epic moves can make you feel like a king for
day. This week’s correction therefore lends
some cold reality and it was probably
necessary, too. Now is not the time to be
aggressive on TGZ. This one isn’t a
fliptrade, it’s the real thing that has the
potential to lead us to a land of sunshine,
speaking strictly tradewise of course.
TGZ is marketing in the UK this week and
has updated its corporate presentation for
the occasion. It’s on this link (5) if you want
the very latest from them, though there
really isn’t much substantial difference from
the recent examples already linked to you
in previous Weeklies.
Starcore International (SAM.to): It was easy like Sunday morning to buy on Friday and due
to that it finished lower on the week, but there’s still a lot to like about the way this tinycapper’s
trading. Evidence suggests 15c is a new floor price and even though it might be a bit cheesy of
me to encourage you in at this price, what with being long at 12c without any plans to add for
the moment, I do think SAM.to has higher to run. As long as gold behaves, of course.
Fortuna Silver (FSM) (FVI.to) and First Majestic (FR.to) (AG) Pair Trade: As usual, 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.
9

AG is up 8% since the pair trade began, FSM is down 15% in the same period, the pair is
therefore 23% to the good.
We now have a date for Fortuna Silver’s (FSM) (FVI.to) 4q14 financials, which is March 12th and
that’s next Thursday. The company Conference Call is the morning after and we care a lot
about what they say in that, so it’s one to tune into.
Minera IRL (IRL.to): While checking on the larger numbers in Peru’s January production
report for mining companies (see Rio Alto and Toromocho sections today for examples), I also
noted in passing that Minera IRL produced 1,676 oz gold in January at its Corihuarmi mine.
That’s somewhat lower than the ~2k/oz month rate we saw at the end of last year but it’s also
in line with previous January figures. As Corihuarmi is a small part of the overall IRL mix, it’s
also a minor point.
More relevant for comment today is the news from IRL on Friday (6) that CEO Courtney
Chamberlain is taking leave of absence due to health issues. The stock moved a little on the
news but recovered its 7c price (on low volumes), which is probably a fair reflection of what it
means to IRL at this point. IRL today is all about securing the financing deal for Ollachea and as
that is in an advanced stage (which means by definition that all the players and parties know all
the details on the table) then the CEO can be replaced and the deal continued smoothly.
Finally, I’d like to wish Courtney a speedy recovery from whatever ails him at the moment. I
deliberately haven’t mailed IRL or asked around, because in the end it’s neither my or our
business. Chamberlain is one of the nice guys in mining, I wish him the very best. Get well
soon, sir.
B2Gold (BTG) (BTO.to): B2Gold was doing just fine until Friday, which again smacks of BS
overselling that should correct in the days to
come.
Next week brings the BTO 4q14 financials Friday
pre-open (7) (yes folks, Friday The Thirteenth) as
well as the ConfCall that same morning. We’re
overdue a decent in-depth look at BTO and that
will happen next Sunday, being as it is one of the
bigger positions now that RIO.to’s on the way out
of the portfolio.
10

NovaCopper (NCQ.to): Once again the message to IKN Weekly readership (and to myself) is
not to read too much into this
continued NCQ recovery in
2015 because the featherlight
volumes involved, e.g. less
than 14,000 shares traded all
last week (and that was PDAC
week, folks) shouldn’t fool
anyone. Still, even though the
buying volume is light there’s
reason to believe that this
move may be equally due to
the way there are no sellers out
there. We know NCQ got
whacked hard last year and I
thought it went to silly low
levels. Looking at it today and
88c, it’s the type of drop I can
at least understand from my original purchase price.
Rio Alto Mining (RIOM) (RIO.to): Away from the comings and goings of the TAHO offer
and the ups and downs of the silver and gold price, Rio Alto stuck in another good month’s
worth of production at La Arena in January. The Peru MEM numbers for that month were
released yesterday Saturday March 7th and at La Arena, production came in at 19,890 oz. Here’s
how that compares to the 2014 monthly reports:
RIO.to: Monthly gold production figures
Ozt Au
22000
1 2 8 0 0 0 0 0 0 0 17627 17812 17686 17488 18753 18190 19435 17199 18599 18793 18199 19819 19890
16000
14000
12000
10000
8000
6000
4000
2000
0
Jan14 feb mar apr may jun jul aug sep oct nov dec jan15
source: MEM/IKN
In other words better than any month last year. There’s more on Rio Alto in ‘Market Watching’
below that concentrates on the latest in its buyout process and how your author is positioning.
Dalradian Resources (DNA.to): DNA gave up ground and wasn’t immune to the Friday jobs
report selling, but of what I’d roughly class as my “main positions” it did the best. There’s
obviously decent support for the stock and I wouldn’t expect a spike low to stay very long,
simply because every other recent spike low has been bought up. We’ll see next week.
The Copper Basket
After ten weeks of 2015 The Copper Basket is showing a 5.94% loss to level stakes.
11

company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 488.90 1.28 -36.9%
2 NGEx Resources NGQ.to 1.17 187.71 197.10 1.05 -10.3%
3 Reservoir Min. RMC.v 3.96 47.55 185.45 3.90 -1.5%
4 Nevada Copper NCU.to 1.65 80.5 139.27 1.73 4.8%
5 Western Copper WRN.to 0.68 93.68 62.77 0.67 -1.5%
6 Amerigo Res ARG.to 0.27 173.65 60.78 0.35 29.6%
7 Copper Fox CUU.v 0.135 402.96 58.43 0.145 7.4%
8 NovaCopper NCQ.to 0.58 60.15 52.93 0.88 51.7%
9 Panoro Minerals PML.v 0.295 220.25 44.05 0.20 -32.2%
10 Hot Chili Ltd HCH.ax 0.16 333.11 41.64 0.125 -21.9%
11 Regulus Res REG.v 0.35 56.39 19.17 0.34 -2.9%
12 Metminco MNC.ax 0.008 1822.6 10.02 0.0055 -31.3%
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 3.98 0.025 -44.4%
NB: HCH.ax & MNC.ax priced in AUD$, rest CAD$ Portfolio avg -5.94%
It wasn’t so bad in the junior copper space, despite the Friday selling spree and despite the
weak market prices for copper the metal
that ran from higher to lower all week. The 4% The Copper Basket 2015, weekly evolution
count is six basket stocks higher (NCU.to, 2%
PML.v, CUU.v, ARG.to, NCQ.to, CCY.v), one 0%
unchanged (AQM.v) and eight weekly losers
-2%
(CS.to, NGQ.to, RMC.v, WRN.to, HCH.ax,
-4%
REG.v, MNC.ax, COP.to). A couple of
-6%
decent percentage upmoves seen in
-8%
Amerigo Resources (ARG.to up 9.4%) and
-10%
NovaCopper (NCQ.to up 8.6%), but the
downmoves were generally bigger and
included Coro Mining (COP.to down
16.7%), Regulus (REG.v down 13.9%), Hot Chili
(HCH.ax down 10.7%) and Capstone (CS.to down
9.9%).
Over at the metals markets, copper moved lower all
week and ended bumping back to the U$2.60/lb
level, with the bullish exuberance of the day after
China New Year seemingly a long time ago.
However, in the same way I called the IKN stance on
copper wholly neutral in the face of the bull talk last
week, things haven’t changed at this desk and the
call is still neutral while confronted with those who
think that everything’s ruined and falling to pieces.
We move to our regular inventories tracking and the
bullet points:
• Overall world levels made another significant upmove, up 47,313 metric tonnes (mt)
(+9.1%), for a total this weekend of 565,092mt and pouring a large bucket of cold
water over the copper market.
• The Shanghai Futures Exchange made another big move up 19,194mt (+9.4%) to
224,340mt. The Shanghai-only chart below shows the damage well.
12
ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22 ts1ram ht8
source: IKN calcs

• LME warehouses stocks also went up significantly, with stocks finishing at 323,050mt,
which is up 26,675mt (+9.0%). As noted on the blog last week (8), the psychological
300kmt barrier is now well and truly broken. Also, I think it’s pretty notable that the
LME Europe warehouse stocks have moved from 23k tonnes on January 1st this year to
93k tonnes this weekend.
• Comex inventories moved up for the first time in several weeks, rising by 1,444mt
(+8.9%) to finish the week at 17,702mt.
Our tracking chart of the key Shanghai shows the upmove and we’re now at the highest levels
since early 2013. Another 16k tonnes and it will be an all-time record here.
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
13
31'13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1enuj ht51 ht92 ht31 ht72 ht01 ht42 ht7 ts12 ht5tco ht91 dn2von ht61 ht03 ht41 ht82 ht11 ht52 ht8 dn22 ht8
Mt Cu
source: Cochilco
Now for some updates on a couple of basket stocks
Reservoir Minerals (RMC.v): About a couple of weeks ago, a well-sourced snippet did the
rounds about a hole being drilled at Timok by project operator Freeport McMoRan (FCX).
Apparently a step-out hole that’s aiming at the porphyry target to the East of the high-grade
discovery zone was at that time at a depth of 2.2km and still being drilled.
That’s a long, long hole and to go that deep, the people running the exploration must have a
good reason to keep going. Although the information didn’t come with any indication of the
visuals on the rock being recovered, it’s
a fair assumption that to go that deep
they must be finding something of
interest and if that’s the case, then
chances are they’ve hit a big porphyry
system with no apparent bottom...yet.
We could be looking at over 1Km of
continuous mineralization, though
grade is anyone’s guess, of course.
If there were a faster disco very
process on RMC it would be good, but
this is just one of five programmed
deep holes, they take time to sink and
they’re not quick to assay, either.
Those still long here (and I don’t blame
you, as I wonder what sort of mistake I’ve made by selling) need to apply patience and ride
over the times when RMC drifts lower, as it’s done recently. On this one I wish those who
remain long the very best of luck and if copper continues its recovery it’s the first place I’ll add
back.

The Low Cost Producer Basket
After 10 weeks, the 2015 Low Cost Producer Basket is showing a 3.03% 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 15.47 19.05 2.9%
2 Barrick ABX 10.75 1164.67 13.21 11.34 5.5%
3 Newmont NEM 18.90 499 11.63 23.30 23.3%
4 Franco Nevada FNV 49.19 156.08 7.62 48.84 -0.7%
5 Silver Wheaton SLW 20.33 357.39 6.72 18.79 -7.6%
6 Agnico Eagle AEM 24.89 173.43 4.97 28.66 15.1%
7 Kinross KGC 2.82 1114.5 2.80 2.51 -11.0%
8 Buenaventura BVN 9.56 254.19 2.63 10.33 8.1%
9 B2Gold BTG 1.62 948.9 1.47 1.55 -4.3%
10 Pan American PAAS 9.20 151.41 1.38 9.11 -1.0%
all prices in U$, using NYSE ticker prices Portfolio avg 3.03%
Last week saw plain simple carnage in the larger producers as the plug was pulled by larger
insto cash. Friday’s race for the door made ugly viewing in many gold stocks, but the main
casualties were at the top of the mining food chain. All ten lost ground and to spare you the
narrative, this chart does the job of showing how bad it was out there:
Week-Over-Week losses in our ten basket components
0%
-2%
-4%
-6%
-5.9%
-8%
-7.7% -7.4%
-10%
-12% -10.9% -10.8%
-11.6% -11.5%
-14% -13.3% -13.0% -12.9%
-16%
GG SLW ABX KGC NEM AEM BVN BTG FNV PAAS
source: NYSE
14
ssol
ylkeew
%
Note that the “least worst” are also our smallest market cap components. Meanwhile the sector
big boys like GG and ABX got a full-scale hammering. In all our basket lost 12.22%, though as
the tracking chart shows it actually did a little better than the benchmark GDX (which lost a cool
14.69%). Our basket has a slight advantage again and that’s because we equal-weight the
smaller caps. This basket is becoming a useful guide to the relative performances of the big
ones vs the little ones this year (certainly more useful since FCX was left out).
The Low Cost Producer Basket: Weekly performance
and comparative to GDX control
25%
20%
15%
10%
5%
0%
The other thing that’s changed this week: the arrival of red. From out of nowhere we have five
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8
Low Cost Basket: Percentage difference between
basket and GDX control, 2014
1.00%
0.50%
0.00%
-0.50%
basket -1.00% gdx control -1.50%
-2.00%
-2.50%
-3.00%
source: Google Finance, IKN calcs
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8
source: ikn calcs, NYSE/Nasdaq data

of the ten stocks negative on the year.
Goldcorp (GG): With the greatest of respect to The Market Gods, this price chart is just plain
silly. The U$19 closing price on Friday isn’t
quite as bad as the double-bottom GG made in
December at just over U$17 but it was still an
8% drop on what was little more than panic.
This is the same GG that made a profit of
7c/share in 4q14 (backing out the widely
expected write downs) and which guided to
produce between 3.3m and 3.6m oz gold this
year, around 20% higher than last year on the
median and at a lower all-in sustaining cash
cost as well ($875-$950 for FY15, $949 in
FY14). I could go on about its fundies, but you
can read better analyses of the large caps in
other places and suffice to say, this was is and
will be a well-run and profitable gold mining
company (in fact many consider it the best run miner of any metal there is, not just gold). Yes
gold dropped by $30/oz or so but it was the type of orchestrated move, with people following in
Pied Piper style just because others followed, typical of herd-like panic and is rarely sustained.
There’s no better example of Friday’s illogical market moves than pointing to an 8% drop in GG,
noting that it took U$1Bn from its market cap and asking why.
If you want a place to trade next week’s rebound, look no further. Unless gold bullion price
action greatly surprises me by going lower still in the week ahead, expect decent gains from a
long in GG taken early Monday morning.
Regional Politics
Guerrero Mexico political risk again in the spotlight
With the news this weekend (9) that four workers have been kidnapped from the Goldcorp
(GG) Los Filos mine in Guerrero, Mexico, IKN once again takes time and a few lines to reiterate
its stance on the region and its off-scale political risk.
Simply, what part of the phrase “AVOID GUERRERO” do you not understand?
15

Above is a quick, admittedly unscientific but what I consider to illuminating chart that shows the
2015 year to date price performances of Torex Gold (TXG.to), Newstrike Capital (NES.v), and
Timmins Gold (TMM.to) (TGD). All juniors with heavy exposure to Guerrero in one way or
another and then compared to the GDXJ juniors ETF as benchmark. We note the following:
• Newstrike Capital (NES.v) was already feeling the weight of its geographical location
before the current round of unrest began.
• Torex Gold (TXG.to) loosely tracked the GDXJ performance until the weekend of its
kidnap story. Since then it’s been down and is now at the same year-to-date
comparative level as NES.v.
• Timmins Gold (TMM.to) (TGD) also tracked the GDXJ line closely (in fact very closely) in
2015 until it decided to make a friendly, all-share bid for NES.v. I still can’t get over
how stupid that was and have called it as such (9a) since the deal was announced on
February 17th, but it may now be sinking into the brains of TMM management as well.
Instead of seeing NES.v move up to TMM’s level of performance, TMM has sunk under
the weight of this voluntary exposure to Guerrero and TMM is now down with TXG and
NES.
And to that mix we can add the Nyrstar (10) mine closure at Campo Morado in February due to
its blockade by transport workers (the unions say Nyrstar is being unfair, Nyrstar says it’s being
extorted). Now this weekend a second kidnapping event, this time Goldcorp (GG) and
apparently involving four of its mine workers who were on the way from a shift when abducted.
We are obliged to note in passing that multi-national companies such as Nyrstar and Goldcorp
won’t feel as much direct effect from these events in Guerrero, even when they’re the
protagonist company. But NES.v will, TXG.to will and now that it’s decided to voluntarily step in
front of this political risk steamroller by buying into the region, add TMM.to to that list.
News of Barrick (ABX) at Pascua Lama
A long-form read (11) turned up in Chile’s quality right wing newspaper ‘La Tercera’ this
weekend on the latest from Pascua Lama, Barrick’s (ABX) troubled (I think that’s the word they
tend to use these days) mega-gold mine development on the Chile/Argentina border. In fact it’s
a pretty good piece of journalism which covers all the angles and gets viewpoints from all the
players, including those locals who are both pro and contra the project. The impression one
comes away with is of a project that still has its staunch opposers, but also one that’s managing
to bring round enough of the local community population to be able to realistically justify its
‘social licence’ status. One section that catches the eye is on how ABX now allows groups of
visitors from local communities to visit the project on a regular basis (typically 8 to 10 people
every Wednesday) on an ‘open door’ policy which allows them to freely visit and inspect any
corner of Pascua Lama they choose. As the lawyer for the local community pointed out, this is a
sea-change from the pre-environmental closure days when not even national government
authorities could get permission to visit from a far more secretive ABX. The policy and attitude
change is clear.
But the main reason to mention the La Tercera piece is that is says ABX is looking to re-gain
environmental approval and the necessary permits from the government of Chile that were lost
in late 2013 “by the middle of this year”. That would imply it’s going to pay the rumoured very
large fine that the Chilean judiciary wants to impose (said to be in the hundreds of millions of
dollars) for its previous environmental infractions. It also means that Pascua Lama is still
considered economically viable by ABX (the report reiterates the internal 15% IRR hurdle being
used by the company on all its development projects) and we can also assume the now well-
documented Chinese JV money is waiting in the wings to fund or help fund (we’ll see how the
chips fall) the last stages project and finally turn it into a mine.
Chinese Arithmetic: Chinalco at Toromocho is finally getting into gear
Houses as big as JP Morgan forecast that the Chinalco Toromocho copper mine in central Peru
would produce 167,000 metric tonnes of copper in 2014, its first full year of production, and as
16

late as September last year they
were still predicting (12) a total of Toromocho: Monthly copper production
85,000 tonnes Cu after it had 14000 June 2014 to January 2015
gone through some pretty 12000
significant teething problems in
10000 early 2014. In the end the mine’s
total copper production for 2014 8000
came in at 70,262mt, but the first 6000
month’s worth of figures from
Peru’s Mining Ministry (MEM) for 4000
January 2015, out yesterday 2000
Saturday, show that Toromocho is
0
finally getting into gear (right).
jun.- jul aug sep oct nov dec jan15
2014
The 11,642mt reported for source: MEM
January is head and shoulders
above any previous month’s production and represents an annual run-rate of 140,000mt. As
January tends to be one of the quieter produciton months in Peru (due to summer vacations
etc) it’s fair to assume production figure will be beaten readily in the months to come. For what
it’s worth, MEM forecasts Toromocho production at just under 210,000mt copper in 2015 and
once fully ramped up it will be capable of a 275,000mt annual copper production rate.
I’ll take Latin America every time thank you
I’ve had a near-miss on True Gold (got out in time) and I was very edgy about Teranga
(TGZ.to) before getting comfortable enough to buy the stock. Let’s add to that the very small
risk/reward land holding play Legend Gold, (LGN.v) opened last week.
In the period before, during and after the TGZ buy decision I’ve received a few mails from a
few of you about expanding the West Africa exposure, with the most often named being
Endeavour Mining (EDV.to). It’s not likely to happen, people (13):
(Reuters) - A Sahara-based Islamist group on Saturday claimed responsibility
for a rare attack in Mali's capital that killed five people, including two
foreigners, highlighting continued volatility in the African nation two years after
France helped retake territory from al Qaeda-linked militants.
Rare, they say. I cannot stress this enough; I’m horribly ignorant about Africa in general (it has
lions) and West Africa in particular (it has chimpanzees). I needed to check a map when BTO
bought into Namibia and by that I don’t mean a map of the country to see where Otjikoto is,
but a map of the continent to see where Namibia is (not West Africa, it turns out). I’ve read
Joseph Conrad’s ‘Heart of Darkness’ several times over a 30+ year period and from that novella
alone deduce what investing in the Congo could do to my wallet. It took me a long time to do
just about enough research on one tranquil and peaceful provincial region of Senegal to get me
into Teranga, I don’t want or need the multi-nation multi-cultural multi-political exposure and
subsequent headache-inducing non-stop vigilance that would come with a purchase of EDV.to
or similar.
I’d readily agree that West Africa is one of the most prospective regions in the world right now
for the junior exploreco sector and I’d encourage you to do the necessary DD if you’re
interested. But I am not and will never be your expert, the small-to-medium sized long in TGZ
is as far as I’ll ever get.
Peru: Southern Copper (SCCO) at Tia Maria and Quellaveco
One good and one bad from Southern Copper (SCCO) and its growth plans in the South of Peru
last week. The good is that according to very strong rumour (14), with the rumour mongers
including no less a figure than the country’s Vice Minister of Mining while at PDAC, SCCO is
about to get what it’s wanted for a couple of years and take at least a portion of the Anglo
17
reppoC
sennoT

American (AAL.L) Quellaveco copper project in the Moquegua region of South Peru.
The bad is that opposition to its Tia Maria project in coastal Arequipa region, also south Peru, is
not going away anytime soon. This weekend after a meeting of locals in the Cocachacra district
where Tia Maria is located, they’ve decided to stage an indefinite strike which will almost
certainly involve roadblocks to either the project site, or the main coastal highway that runs
through the zone, or both. That’s an open invitation to serious conflict, so it remains to be seen
how bad things get.
Market Watching
Continental Gold (CNL.to): Permits don’t pay for mines
A lot of play came from the announcement at PDAC on the morning of Tuesday March 3rd by
Colombia’s Minister of Mines and Energy, one Tomás González, that Continental Gold (CNl.to)
would be awarded its enviro permit by May this year.
Example Scotia (currently with sector perform and a $4.50 price target):
Continental Gold To Receive Its Environmental Permits No Later than May: Colombian Minster of Mines
(PDAC) - Colombia's Minister of Mines, Tomaz Gonzalez (at PDAC), said that CNL will receive its
environmental permits no later than May. This is positive given that CNL has prior given a guideline of
receiving its permits by Q2 or Q3 of this year.
Example TD Sec (currently with spec buy and a $7 price target):
This morning, we attended a presentation from the PDAC representatives for the Colombian
Government organized by Continental Gold to discuss mining and related policy in the country. In
attendance was the Minister of Mines and Energy, Tomas Gonzalez, and the Vice Minister of the
same department. Mr. Gonzalez stated that he saw no issues with Continental's Buritica project
receiving its environmental permits and he went on to say that this permit could come in May (the
company's guidance is for the completion of permitting in Q3/15)
And of course example the stock price, which bounced hard on the news and its eventual wider
dissemination, all on raised volume.
The move was classically PDAC promotional (in what must be called an otherwise quiet week
for PDAC promo pumps) but come the end of the week CNL was basically unchanged after the
pop had quickly retraced, as you see.
As you’re probably aware I’m no fan of this stock and that’s because of its management team
and its track record. The combo of CEO Ari Sussman and geologist Vic Wall were behind
Colossus (ex-CSI.to) and its Serra Pelada project in Brazil that turned from high grading
18

headline story to dismal failure and as this same pair are the driving force behind CNL, caveat
emptor should be writ very large indeed.
Something I’m also aware of, and painfully so, is that the awarding of the environmental
permit, the construction permit or any other permit to a mining company from a government is
not an automatic green light to the building of a mine. The example that comes most quickly to
my mind is that of Minera IRL (MIRL.L) (IRL.to) at Ollachea in Peru, which has the major
permits but hasn’t until now been able to raise the capital and has seen its share price whacked
hard as a result (though as a long I live in (ugh) hope (ugh)). In the case of CNL.to, we can
now assume the enviro permits will be forthcoming (in May or perhaps a little later) from a
Colombian government that’s very keen on getting a flagship large formal mine project into
production and is very company-friendly as a result. But what of the financing?
We know that as at end 2014 CNL.to had a working capital of $58.2m and as that had dropped
by $57.8m during 2014, we can assume a fair proportion (or even all) of the current liquidity
will be used in 2015 for development purposes. We also know that the capex bill going forward
for its Buritica mine is placed at $390m, so we can assume that’s the figure CNL needs to raise
in order to build its mine. And that’s where the problems begin. First and in passing I’d like to
re-show you this (below), the CNL published timeline from its September 2014 corporate
presentation (with my notes scribbled on that were part of this (15) post over at the open
blog). It was before the PEA was delivered to CNL and at that time, CNL’s position was that it
would complete the PEA, then make a construction decision and finance the project in the
second half of 2015 without the need for a pre-feasibility study or feasibility study, build the
mine using the requisite OPM and come 2017 be in production:
Then came the publication of the PEA for Buritica, announced in November 2014 and available
on SEDAR, in which the lead consultant M3 gave the following as its conclusion and
recommendation. Here I’m reproducing the whole of the M3 script on the subject (from the
document intro) because the full context is important but have enlarged/underlined/bold-typed
the most relevant lines:
1.14 CONCLUSIONS AND RECOMMENDATIONS
Based on favorable preliminary economics, M3 concludes:
• CGL should continue to further define and potentially expand the current resource through exploration drilling,
particularly down dip. In addition, CGL should perform an infill drilling program to convert existing inferred
mineral resources to measured and indicated mineral resources. The total amount of drilling for this effort is
19

estimated at about 75,000 meters with total drilling, assaying and supervision costs of $25 million.
• CGL should continue with metallurgical testing to improve overall metal recovery and examine the
grade/recovery relationships and optimize reagent consumptions at a cost of about $300,000.
• CGL should continue with the evaluation of waste disposal options for both the waste rock and tails, including
alternate locations at a study cost of about $350,000.
• CGL should continue optimization studies including staged development options and alternate processing
rates to minimize capital cost while maximizing economic returns. The cost of these studies is estimated at
about $300,000.
• CGL should proceed with a Pre-Feasibility study to further de-risk the project.
The overall cost of the Pre-Feasibility study, including the cost of the above
recommendations, is estimated to be in the range of $27 million to $29 million.
This study has defined a measured and indicated mineral resource of 8.39 million tonnes at 10.4 g/t gold and 31 g/t
silver. In terms of contained metal this amounts to 2.8 million ounces of gold and 8.43 million ounces of silver. The
Inferred mineral resource is an additional 16.7 million tonnes at 7.8 g/t gold and 24 g/t silver. This amounts to 4.2 million
ounces of gold and 13.1 million ounces of silver. Inferred mineral resource is currently about 66% of
the resource tonnes. A key component of future work will be additional drilling to attempt
to upgrade this mineral resource.
The proposed processing flow sheet is technically feasible and economically viable. Further testing for the Pre-
Feasibility study should focus on increasing the overall gold and silver recoveries and
optimizing reagent consumption and grind size.
IKN304 back and I think that’s as clear as it can possibly be. M3 as 43-101 compilers
recommend that Buritica be taken to a pre-feasibility stage in order to de-risk the project.
Which brings us to the third exhibit in today’s show, the latest promo push by CNL at PDAC via
its Feb 2015 corporate presentation (16):
As of today, after receiving its PEA from M3, Continental Gold does not intend to run a pre-feas
on Buritica. Instead it’s going to produce an “updated PEA” and then in some mysterious move
20

jump straight to construction (without giving us a time item for either the construction decision
or the project financing as it did last September) and at the same time as construction produce
a feasibility study on the mine.
Excuse me if I’m mistaken here, but doesn’t the word “feasibility” actually mean something?
Surely a feasibility study is produced in order to study if a project is feasible! It makes no sense
to raise cash and then start building your mine and at the same time try to work out whether
the mine’s economics are feasible!
And at this point it’s also worth a line or three to point out the difference between an “updated
PEA” of the type CNL.to plans to produce in 2015 and the “pre-feasibility study” that M3
recommends for the project. There are other matters, but the big difference in this case is that
according to the CIM 43-101 rules you’re allowed to include inferred resources in a PEA, but
you can’t do that in a pre-feas. What M3 proposes is that CNL works hard, drills, explores and
spends money in order to turn as much of the current inferred resource into Measured and
Indicated (M+I) resource, which will then form part of a pre-feas. But CNL doesn’t want to do
that, it wants to assume the inferred is OK and cut a big corner by producing another PEA and
then raise capital on the back of the new report.
And while on the subject, on that plate above do you see that small “1” next to the title of this
timeline page, ‘Estimated Project Schedule’? Well if you search for the footnote it tells you:
“Preliminary mine plan and start date based on indicative timeline which is dependent
on, among other things, continued exploration success, environmental and board
approvals, completing positive economic studies and the determination that the deposit
is economically viable.”
I’d also confidently assume that it’s dependent on raising $390m, but that phrase “...and the
determination that the deposit is economically viable” surely does catch the eye.
It’s at this point when the track record and bona fides of the people running your junior come
back into focus. By way of an example, I remember sitting down with Jorge Ganoza of Fortuna
Silver (FVI.to) (FSM), discussing the recently produced pre-feas study for its then project-stage
San José mine (now the very good producing mine in Oaxaca Mexico) and him saying that
producing a pre-feas was probably a waste of time in hindsight and they should have made a
production decision on the back of the PEA. The full reasoning is long, but includes how a vein
system deposit will need a lot of expensive and time-consuming drilling to get it all to M+I level
and that Fortuna was confident on the quality, the good and consistent width, and the reliability
of the veins without having to turn them into M+I resource. Let’s be clear here:
Jorge Ganoza comes from a multi-generational family of Peruvian mine owners, builders and
operators. At that point he’d already taken the FVI Caylloma mine from drawing board to highly
profitable operation. He’s one of those rare birds that is good at geology, good at mine
engineering and good at running a profitable mining company. There’s every reason to trust his
word when he looks you in the eye and says “San José will be a good mine and you can trust
its inferred resource because I do”. Ari Sussman is not. As I put it in in October last year (17):
“... the last time Ari Sussman and Vic Wall got together to play at mining, they picked
the following as their promo vehicle:
• A high grade gold deposit
• In South America
• Highly promoted to retail with brokerage coverage all around
• Scant mention of the poor community relations through the development and
exploration phase
• Construction decision made without producing a PFS or an FS
The name of that company was Colossus Minerals.
21

If any mine financier made a decision to write a $390m cheque to FVI on the back of a PEA and
the word of Jorge Ganoza, I wouldn’t bat an eyelid. If any mine financier made a decision to
write a $390m cheque to CNL on the back of a PEA and the word of Aris Sussman and Vic Wall,
I would either tell them they were certifiably crazy or I’d wheel out my own pet project to see if
they’d fund it (maybe that one about purchasing a fleet of Ferraris to give guided tours around
Peru to high net worth visitors, one of my favourites).
I’m not going to labour this point any further.
Buritica doesn’t have the type of wide and predictable veins that FVI at San José (to name just
one) enjoys; its system is a mass of thin veins that pinch down to mere centimetres at times
and mean a lot of waste will have to be mined. The inferred resources, which currently make
up two thirds of the resource at the project, are not reliable enough on which to make a serious
decision on the project economics, or in the words of the footnote a “...determination that the
deposit is economically viable”. For its own sweet reasons, CNL is currently making out to the
government of Colombia, to a whole bunch of brokerages and to us the investment community
that it will be able to raise its financing and build its mine on the back of a PEA. I’ll take the
under on that assumption. Avoid this stock.
Tinka (TK.v) feedback
After last week’s piece on the developments at Tinka Resources (TK.v) including its new 43-101
resource at Ayawilca and the price action thoughts, I received a mail from company CEO
Graham Carman with comments arising. Here’s part of the mail from CEO Carman (in fact the
bulk of it, with little more than the pleasantries either side missing), reproduced with
permission.
“...there is one important point that you have missed, and that is the potential
to dramatically expand the resource with more drilling. I recommend you take
a look at the maps on pages 9, 10, and 11 of our most recent presentation on
the website. You will notice that only a small part of the prospective area has
actually been drill tested. We have a far better understanding after our recent
drill program, of the geological controls, for both the zinc system (NW
trending) and the earlier tin-copper mineralization (NE trending), the latter
which also offers some interesting upside. Page 10 plots the resource
wireframes on a map with all drill holes, all structures are open along strike.
Also, Zone 3 and Chaucha are not yet drill permitted, we expect those permits
to come through around mid year.
So, this resource is a solid start, but the deposit has a good chance to grow
quickly once we get the drills turning again.”
I think that’s very fair comment. TK.v is one I’m going to keep an eye on and if zinc the metal
makes a price upmove it may still become a trade on these pages.
Re-Revisiting Argonaut (AR.to)
It would be remiss not to point this out, if only quickly. Last week we revisited Argonaut Gold
(AR.to), chewed over this and that and the final call was basically, “Stay away until March 16th
and its 4q14 filings, at that point it may be a trade”. This weekend it’s 35c lower than last
weekend at $1.73, a drop of 16.8% since IKN303. That’s a big drop.
Now once again this isn’t about “oh look aren’t I clever?” (because I’m not) or about looking
backwards, it’s all about looking forwards and sniffing out potential trades. Obviously, starting
at $1.73 makes a trade potential in AR.to more interesting and although we have no idea what
price it might be at the end of next week, the margin for a potentially lucrative trade does look
better. I repeat for the record that I’m not a buyer of AR.to before I get to see its financials
(and hopefully AR.to will give FY15 guidance in its filings too).
Let’s see how things this time next weekend. I’m hoping AR.to files on the Friday evening, thus
22

giving us a head start on the numbers. We’ll see.
All this talk about Mariana Resources (MARL.L)
A word about Mariana Resources (MARL.l), a junior exploreco name which seems to be on
everyone’s lips after a combo of 1) two very strong drill assay news releases in 2015 2) a PDAC
core shack presentation which had many of my geol friends and acquaintances purring in
admiration about the rocks and 3) the not-insignificant sponsorship it’s just picked up from the
Sprott group, which has bought into the company and is now putting out its favourable opinion
via several channels (including this one on Friday evening (18)).
Centre of attention is its Hot Maden property in Turkey, on which MARL.L is being carried on a
30% interest until the current drill program (which will probably run through 2015 and into
2016) is complete. There was a discovery hole back in January then just under a month ago the
Hot Maden program returned an eye-popping cut of 82m grading 20.4 g/t gold and 1.94%
copper. The assumption among the now very but very interested geologist community is that
the JV has discovered a big VMS system and from what was reported to me from geols
checking over the available core at PDAC last week, a feeding frenzy could develop on its
potential. Just as one example, it was favourably compared by one pal to the Noranda Horne
mine in Quebec and that’s no small matter, as that mined seriously high grading gold and
copper rock for over 50 years and basically made Noranda as a company.
So, good rocks. The problems start when we look at the company on top of them, as Mariana
now has something in the order of 762 m shares out, trades for under two pence on the
London AIM market and has the type of management team that I normally run a mile from.
And I’ll tell you now, I’m going to run from this one as well because I’m not a buyer of MARL.L
shares, no matter how good those rocks turn out to be. As I put it to a friend in a reply mail
last week as this subject was discussed, “...chances are that some group of people will be
royally screwed before the deposit becomes a mine and from history's Big Book of Learnin',
that's likely to be the retail equity holders. Me. Us”.
For what it’s worth, I think Hot Maden has a great chance of being a significant discovery. But
the corporate structire on top has way too many red flags and warning signs, it seems to me
that the ones who’ll benefit from these rocks aren’t the smallfry investors such as I. So this is
one I’m not going to play with,
follow or buy no matter how good
those rocks turn out to be or how
enthusiastic the geols get over its
potential. I’ll let others show you
the 2015 year-to-date price chart
of MARL.L, I think there’s more to
be gleaned from its five year
chart:
MARL Bottom line: Top class
mining people can and often do
take sub-optimum assets and
make a success out of them. Sub-optimum mining people can and often do take top class
assets and ruin them for everyone. This one’s for those who are able to turn a blind eye to
sector crooks if the rocks are pretty enough, it’s not for me.
Rio Alto Mining (RIO.to) (RIOM): At the risk of repeating myself...
While Tahoe Resources (TAHO) (THO.to) and its newly minted proxy Rio Alto Mining (RIO.to)
(RIOM) were either seeing a modest mutual increase in their share prices or holding their
ground firmly while other sector stocks faded, mailbag on the deal was pretty light. That
changed last week after Rio Alto topped on Monday at CAD$3.99 (the market teasing us all)
then dropped along with TAHO and the sector to finish the week at $3.52 in the case of RIO.to.
23

As from Wednesday the “what are you going to do?” or “what should I do?” or “is this the
end?” or variant mails came from both IKN Weekly subscribers and blog readers, and after
making mention of my soon-to-be-sold position in RIO.to in the Flash update of Friday morning
(see Appendix 1) another batch arrived. To a few I replied by referencing the section in IKN301
that considered the news of the deal at the time and I’m going to point to a few phrases from
that text here today as well (so maybe it’d be better to go read the whole thing from IKN301,
dated February 15th).
So here we go with a few of the questions received (mostly paraphrased but all on-topic):
1) Why don’t you want to own the new RioTahoe company? Why are you going to
sell before the deal closes:
From IKN301: “...but what I’m not going to do is be part of a ~$3Bn market cap company that
has 2/3rds of its net worth exposed to Guatemala, it’s as simple as that.”
There are two parts to this: Firstly my antipathy towards Guatemala political risk is well-
documented. Second, at around around $3Bn this company is no longer a junior, it’s well and
truly mid-tier. There’s nothing particularly bad about that, but it clearly pushes hard on the
window of the brief here at The IKN Weekly as we cover (mainly) junior mining companies
operating (mainly) in LatAm.
2) Why didn’t you sell immediately? Why did you decide to hold your RIO.to until
March/until after PDAC/for a few weeks after the deal was announced?
From IKN301: “...that time is also a bit of a roll-the-dice on improvement in the gold and silver
price, because if they go up so will RioTahoe, therefore so will RIO.”
What that boils down to is me your author trying to be cute and playing the metals market in
the very-near-term, for good or bad. I could have taken the $3.70 offered in RIO.to on the
news, I could have taken the $3.90 and above prices available the week before last, I could
even have got really lucky and dumped the lot at $3.99 on Monday. But I’d already decided to
try my luck, allow time for a possible (not likely but possible, see previous weeks) third party
counter, see whether gold and silver went higher and pulled this position with them. As it
happens that worked right up to the moment when it didn’t. So be it, let’s see how next week
unfolds and as the plan also involved holding “until after PDAC” we’re now firmly in that zone.
3) What do you think of the deal? Good or bad? Don’t you think Alex Black is making
a mistake?
From IKN301: “The work here isn’t to decide whether TAHO is paying too much or too little, it’s
to recognize that RIO.to has entered into a friendly buyout and respect that fact.”
Fact is, my opinion doesn’t matter in the slightest. My place may be as a guy who’s opinionated
about stocks and can back up his sometimes correct/sometimes incorrect calls with numbers
and logical streams of thought, but ultimately it’s as an investor in these stocks and a minority
retail investor at that. And that means I must always play the cards dealt, not the cards I’d like
to be dealt (or try and deal some off the bottom of the pack, to stretch the imagery just a little
further).
4) When are you going to sell?
From IKN301: “...I’m not going to start trying to work out whether there’s the chance of a 5%
arb in play today. There are only two things you need to do in the stock market to become rich.
The first one is to buy low, the second is to sell high. On Rio Alto Mining (RIO.to) (RIOM), by
far my biggest position, I’ve done the first. It’s time for the second part.”
24

The answer is I don’t know. I know it’ll be this month, I don’t know at what price, I don’t know
what day or date because in my cute, stupid and overthinking-it way I prefer to watch and wait
for my exit point. It’s not going to be as a direct function of price (e.g. a 4-handle would be
nice, but it’s a secondary consideration at this point), neither of timing (repeat: no date set).
But I do know I’m about to sell, add plenty of cash liquidity to the port and what’s more, it’ll
comply with the second part of “buy low sell high” just fine, thanks.
The bottom line: I am the same as you, an imperfect investor, an imperfect trader.
Sometimes I make wholly good decisions, sometimes I make wholly bad ones but most of the
time I make decisions that fall in the large and wide grey area between the two extremes. If I
were you I’d be less concerned about what I’m doing with my RIO.to stock and far more
concerned about what you’re planning to do (or not to do) with yours.
Conclusion
IKN304 is done, we end with bullet points:
• The best IKN Weekly idea for a winning trade next week? Look no further than
Goldcorp (GG) (G.to), which is normally too big for these pages’ active consideration
but after the wild selling by over-panicked money on Friday it looks steeply discounted
this weekend. Gold moving back up is the obvious prerequisite for the trade of course,
but simply by holding where it is (around U$1,170/oz) should be enough for smarter
money to take the place of the nervous exit money. Nobody should be digging the
grave of this company yet.
• A lot of words for a “Don’t buy Continental” piece, which is a bit negative but the plain
fact is, most of the stocks I look at get rejected and the only unusual thing is to devote
a larger chunk of space to such a decision. This stock isn’t likely to go to absolute zero
in the way Colossus did, but when delays to the cash raising process start showing the
collision with reality isn’t likely to be pleasant. Those of you long CNL.to and unaware of
the Colossus story should introduce yourself to that immediately, it may inspire you to
get out.
• Teranga’s ricochet off from quick highs wasn’t welcomed with open arms at this desk,
but it was understandable. Those of you interested in this stock should consider the
current price a good place to enter. Those like me already in and running were a little
helpless under the circumstances, but in the end little significant damage was done and
support came in the low 60s.
• I’m looking forward to the scheduled reporting of both Fortuna Silver (FSM) (FVI.to)
and B2Gold (BTG) (BTO.to) in the week ahead, plus the likelihood that McEwen Mining
(MUX.to) (MUX) weill also report. Plenty to get my teeth into for IKN305 next Sunday.
• I started a joke in this edition, a bit of a running one but it’s only for this week. If you
caught on that’s fine and consider it a small victory (for the record, there are 27) but if
not fret not, you’re missing little. Keep the faith, no more than that can be done.
I thank you in advance for any feedback. Flash updates will be sent promptly from the edge of
the world if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
25

Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/2015/03/duy-patient-is-history.html
(2) http://vistagold.investorroom.com/2013-05-29-Vista-Gold-Corp-Announces-Mt-Todd-Gold-Project-Preliminary-
Feasibility-Study-And-Increase-In-Reserves-Of-44-To-5-9-Million-Ounces-Of-Gold
(3) http://www.chesapeakegold.com/
(4) http://finance.yahoo.com/news/chesapeake-provides-development-plan-metates-140000478.html
(5) http://www.terangagold.com/files/doc_presentations/2015/03-11-15-UK-Investor-Presentation-March-9-11-
2015_v001_t672ke.pdf
(6) http://finance.yahoo.com/news/minera-irl-ceo-taking-leave-182556824.html
(7) http://finance.yahoo.com/news/b2gold-corp-fourth-quarter-end-184446174.html
(8) incakolanews.blogspot.com/2015/03/lme-copper-warehouse-inventories-broke.html
(9) http://incakolanews.blogspot.com/2015/03/another-guerrero-mexico-mining-company.html
(9a) http://incakolanews.blogspot.com/2015/02/timmins-gold-tgd-tmmto-to-buy-newstrike.html
(10) http://incakolanews.blogspot.com/2015/02/guerrero-political-risk-update-nyrstar.html
(11) http://diario.latercera.com/2015/03/08/01/contenido/negocios/27-184997-9-el-segundo-tiempo-de-pascua-
lama.shtml
(12) http://incakolanews.blogspot.com/2014/09/expert-copper-supply-predictions.html
(13) http://www.reuters.com/article/2015/03/07/us-mali-attacks-idUSKBN0M305G20150307
(14) http://elcomercio.pe/economia/peru/southern-lograria-comprar-participacion-quellaveco-noticia-1795377
(15) http://incakolanews.blogspot.com/2014/10/ari-sussman-and-vic-wall-playing-it.html
(16) http://www.continentalgold.com/files/doc_presentations/2015/02%20-%20February/WEBSITE_02_05_2015_CNL-
Continental-Gold-Corporate-Presentation_v001_n03f78.pdf
(17) http://incakolanews.blogspot.com/2014/10/ari-sussman-and-vic-wall-playing-it.html
(18) http://sprottglobal.com/thoughts/articles/why-this-new-gold-find-interest-me-as-a-speculator-steve-todoruk/
Appendix 1: Flash update dated Friday March 6th
Good Friday morning, less than 30 minutes after the opening bell here on a cool and cloudy day in the Andean foothills.
A quick note to say that I plan to add to my position in McEwen Mining (MUX) (MUX.to) this morning and average down.
This will make the position overweight compared to the rest of the portfolio. And I'm 100% fine about that.
Considered in the mix are 1) the gold selling this morning on the back of the US BLS jobs report, the cheaper entry point
for MUX and of course my own portfolio"virtual" cash position, which will soon get a big boost once I sell my RIO.to
(though I stress, that's not happened yet). Therefore as usual a mix of macro, specific stock and specific personal
criteria. That and I'm unafraid of the selling today. At the bottom of it all this is gold we're talking about, not a transitory
commodity.
The first big test of the IKN long theory for MUX will come with the publication of its 4q14 financials, which should come
next week.
Anyway, enough. This update is a long-winded way of saying "adding MUX". That's all.
Enjoy your Friday.
Stocks To Follow Closed Positions 2014
26

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
Stocks To Follow Closed Positions, 2012
27

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
Stocks To Follow Closed Positions, 2010
28

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.
29