IKN #308Premium

The IKN Weekly
Week 308, April 5th 2015
Contents
This Week: Changing the 'Stocks to Follow' list, The disappointing jobs report on Friday.
Fundamental Analysis: Regulus Resources (REG.v): Reasons behind the new purchase.
Stocks to Follow: Overview, Phoscan Chemicals (FOS.to), GoldQuest (GQC.v), Fortuna Silver
(FVI.to) (FSM), Rio Alto Mining (RIOM) (RIO.to), Starcore Intl (SAM.to), First Majestic (AG)
(FR.to), Teranga Gold (TGZ.to) (TGZ.ax), Focus Ventures (FCV.v), Minera IRL (MIRL.L) (IRL.to).
Copper Basket: Overview, Reservoir Minerals (RMC.v), Panoro Minerals (PML.v), Western
Copper & Gold (WRN.to).
Low Cost Producer Basket: Overview.
Regional Politics: Regional risk update.
Market Watching: First Mining Finance Corp (FF.v) IPO, What I plan for my Rio Alto money.
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
Changing the 'Stocks to Follow' list
This week, the shift in direction of The IKN Weekly and its exposure to the junior mining market
is formalized by a change in the presentation of the 'Stocks to Follow' list. For sure it might be
regarded as merely cosmetic, but the decision to re-group the open positions under new
categories is designed to show how there are currently two general ideas floating round my
(admittedly rather vacuous) head as ways of making money in the junior mining market,
version 2015. Re-jigging the presentation shows that more clearly and (with a little luck) it will
be able to demonstrate whether the ideas work or fail as the year gets older. That's the
blahblah intro, here's how the 'Stocks to Follow' list gets categorized as from this week onwards
and there will be three main groups:
• Metals producers: These are currently all precious metals and mostly gold
producers at that (silver's there via First Majestic and the credit metal
production). The strategy is to be long quality and cash flow positive PM
producers as gold picks up and moves towards my U$1,400/oz target.
• Land Grab stocks: These are the stocks that come under the banner of cheap
asset holders, or companies in the right position to benefit from the upturn in
land asset prices once the markey starts turning. The philosophy (if that isn't too
grand a word) was first laid out in IKN303 and IKN304.
• Other recommended positions: The catch-all category I suppose, but that
doesn't make it a lesser group, either. Here you'll find other stocks and trades I
like that aren't necessarily part of the two strategic thrusts for 2015.
Along with those I'm still not averse to adding short trades to the pile and if so, they'll come as
a separate group as before. Also, I'm still selling the Top Pick Rio Alto (RIO.to) (RIOM) for all
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the reasons discussed sans cesse these last few editions and haven't as yet chosen a new Top
Pick to replace it, but when I do it will be clearly marked. For what it's worth, my current best
candidate for that is McEwen Mining (MUX) (MUX.to) but before it gets the added burden (and
more of my cash in its shares) I want to see how the 1q15 financials turn out and also, a little
love from the gold price wouldn't go amiss. Go see the new list below, it's in the usual place.
The disappointing jobs report on Friday
I use that title because of the media convention, not because of any great personal belief. The
headline number from the BLS jobs report was a big miss from the expected, and to that we
must add the downwards revisions from previous months that have taken the edge off the most
bullish forecasts for the US economy. Gary BiiWii likes to employ the image of Kabuki Theatre
for the whole US macro jawbone scene and for me it fits nicely, so to crib from his idea we can
now expect the usual suspects to be wheeled on and do their bits in turn, reminding us all how
one month of job numbers are not to be relied upon and how it's the long-term trend that
matters. Admittedly we get this from the saner end of the commentaristas every month, but
this time they'll mean it. Expect more in the next 48 hours as the world comes out of its long
weekend of financial slumber. And while you read their virtual ink, keep it realworld and
remember that the Fed will hike; It's not an if, the only question is when.
But back to the very-near-term; Money talks and bullshit walks and though initial market
reaction was limited by the Easter holiday, this paragraph from this Bloomie report Friday (1)
sums things up:
"The yield on 10-year Treasuries dropped 7 basis points to 1.84 percent at 12
p.m. in New York, reaching a two-month low. Standard & Poor’s 500 Index
futures lost 1 percent and the Bloomberg Dollar Spot Index slid 0.8 percent.
The MSCI Emerging Markets Index topped 1,000 for the first time this year in
its biggest weekly gain since 2012. Markets across Asia, the U.S. and Europe
were closed for holidays Friday."
Bottom line: "There Will Be Blood" is a likely overstatement, but be braced for an equities sell-
off when markets re-open either Monday or
Tuesday, depending on where you live. As for
the real main event, I've decided on this longer-
term chart to make the point I want to make
about the U.S. Dollar (right).
The IKN Weekly is not the blog, it doesn't look
to be polemic or extremist, but prefers the
reasonable position by stating that the US
economy is improving and is leading the world
out of its slump (whether other world regions
decide to follow is up to them), because that's
pretty obvious on the macro level. It's certainly
a dynamic reflected in its currency moves over
the last year but since late January we've seen
something akin to a blow-off top form in the
USD, with particular attention needed to the
early/mid-March period when USD reached and
touched through 100, dropped back and
reached for it again, without being able to hold
the line. The point being, TA blather or not
Friday's snap drop in the dollar isn't a sudden reversal from a non-stop upmove, but the latest
dent put into a dollar rally that was already failing.
When robust, healthy and working right, the way capitalism works is to over-estimate and
overshoot at times and I contend that's what we're seeing in the dollar today. A blow-off top?
2

It's part of the gig, people. Of course one set of jobs figures for one month isn't going to
suddenly slam the brakes on its GDP recovery and growth, but the dollar's trading has been
flashing signals for the last few weeks and now you're going to see more people getting that
message: Yes the US is doing fine but not quite as well as you may have believed for a while
back there, madam/sir in the bull camp.
And as for gold, the heavy lumpy thing that determines to a great extent the fate of the mining
sector, yes we should expect it to rally once markets re-open this week. I get the strong feeling
there will be moves to cap its gains (recall that I'm one of those nutbars who acknowledge
market manipulations happen and will affect prices for this-and-that in the near term, but rarely
gripe about it and just on and deal with it because it'll all wash out eventually) and the rah-rah
end of the Official And Loyal Gold Supporters Club are going to feel a little let down, but the
most obvious dynamic of them all should be the driver next week, dollar down gold up. I'll even
provide a best-guess for you so that you can laugh at me in IKN309: Gold U$1,223/oz this time
next weekend.
PS: The above was laid down Saturday afternoon. As I edit and proof this Sunday evening I
note that gold's already popped U$15 to U$1,218/oz. The dollar's move was always going to
make a "gold up" call a bit of a no-brainer call for Monday, but let's see how the week unfolds
before claiming any small victory.
Fundamental Analysis of Mining Stocks
Regulus Resources (REG.v): Reasons behind the new purchase
As per the Flash update on Wednesday evening (see Appendix 1) I'm now a buyer of Regulus
Resources (REG.v), looking to open a small starter position in the stock. As things turned out I
didn't get any of my envisaged "max 30c" shares Thursday because the hilarious and not-at-all
skewed stock price was moved by what roughly stands in for a market maker to 33.5c on a 2k
trade, with the bid stuck at 31c all day. As made clear last week I'm not going to pay up for this
starter position, it's cheap shares or nothing at this point in the story.
However, the Flash update did underscore my renewed interest in this company and it's story,
so while I wait for my required entry point to reappear (and it will, I'll get my 30c shares no
worries) today's main note goes into why REG.v is firmly back on my radar screen. The TL:DR
goes as follows:
1) Forget everything else it owns, including the Argentina Rio Grande project
and the USA Golden Brew properties, this is all about the Antakori project in
Cajamarca, Peru.
2) Antakori, which used to be called Sinchao, has for a long time been
considered as a great exploration property with strong potential economics for
its gold and copper content, but a difficult community and regional political
risk story.
3) I'm still not sure, but I think Regulus is on the right track to remedy the
sticky social and community issues at the project.
4) If so, and if they can get locals on their side, the stock is a 100% no-
brainer slam dunk to move higher.
5) To add to the potential upside, there is already enough that we know
about the property today for the stock to move higher, but according to the
very smart geology team at REG.v (for whom I have the greatest of respect,
one of the best in the business) Antakori's rocks may turn out to be even
better than are currently assumed.
3

As things stand today, April 2015, the risk/reward balance lies between buller point number
three and point four on that above list. If (repeat if, underscore if, bold-type if) REG.v can get
the locals onside the stock is an excellent buy. If they can't, this vehicle is going to fail the
same way as other public listed company tickers that have held this concession have failed
(Andean American, that morphed into Sinchao Metals, that morphed into Southern Legacy).
That in essence is what we on the outside have to bet on today.
After meeting recently with the REG.v team and hearing what they have to say, I now have a
better idea of where they stand as regards the key community relations issue and because of
that I'm looking to open the foot-in-the-door position in the company. To wrap up the opening
salvo, let's stress there's risk involved here but as things stand, the low entry point on offer
these days and the improving chances of a reasonable and solid community relations
agreement make this an attractive risk. As we move through 2015 and into 2016 we'll be able
to better judge the results of the current community relations program and adjust the holding
up or down accordingly. Here comes a three part story:
A) The basics, that show the current structure of REG.v
B) The plans the company has for the next 12 months approx
C) A short discussion and conclusion.
A) The Basics
Corporate structure: Let's start with the topbox share structure of REG.v
Shares out: 56.391m
Options: 4.63m
Warrants: 5.555m
Fully diluted shares: 66.573m
Current share price: C$0.335
Market Cap: C$18.89m
Approx working cap per S/O: 19c
All prices are in Canadian Dollars unless stated. Forex U$0.80=CAD$1
One thing that stands out is the cash position, which currently stands at an IKN-estimated
CAD$10.7m and a working cap that covers 19c of the 33.5c share price, pretty solid. Cash was
most recently replenished in November 2014 via a private placement of 11.11m units (unit =
share + 1/2 warrant at 70c strike). We made
special mention of that placement in IKN290
(Nov 2014) because 3.585m of the units were
taken by insiders. I also understand that a lot
of the shares are held by insto supporters and
that further funding from those sources
shouldn't be too difficult. The skinny is that
unlike many other juniors of the 2014 and
2015 vintage REG.v has cash, has sources of
further funds and will be able to fund its
exploration plans with no problems.
Next (right) here's a price chart of the last 12
months in REG.v. As you can see, it ran up on
low volumes between June and August, only
to drop back on the same low vols and return from whence it came by the end of 2014. Late
February saw a big spike in volume as one insto gave up and another came in, but apart from
that it's been bouncing round its new 30c to 40c level for at least six months without attracting
much attention.
4

Next, here's a link to the latest corporate presentation is available here (2) and gives a
reasonable overview of what there is to know. I've taken a couple of shots from it to share
below, but anyone interested in the words in this week's 'Fundamentals...' section should go
and take a look for themselves as I'm only selecting my own take on REG.v, I'm not telling you
everything about the company. Another necessary document for further reading is the 43-101
compliant technical report on Antakori from 2012, available on SEDAR or this link (3).
Financials overview: We cover the main topics in some of the usual suspect charts. REG is a
pretty straightforward story on the quarterlies, with expenses and net profits here that cover
maybe 50% of the total burn.
REG.v: Expenses and quarterly loss
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
5
21.ceD 31.raM 31.nuJ 31.peS 31.ceD 41.raM 41.nuJ 41.peS 41.ceD
source: company filings, IKN ests
srallod
fo
snoillim
tot expenses
Net Loss
The rest is put into the ground via exploration expenses, but as the assets chart shows...
REG.v: Assets Breakdown per qtr
70
60
50
40
30
20
10
0
31.peS 31.ceD 41.raM 41.nuJ 41.peS 41.ceD tse51.raM
source: company filings. IKN ests
srallod
fo
snoillim
fixed
other current
cash
...all that cash (and more) was written off at the end of the last financial year (REG.v has its
year end on September 30th) due to the big
write down it took on its exploraiton to date
REG.v: Liabilities per qtr
(nearly all Rio Grande in Argentina) so we 4.0
can basically kiss that cash goodbye. But 3.5
that's what happens in exploration, 3.0
2.5
sometimes it just doesn't work out, so you're
2.0
better off taking the fixed asset hit and being
1.5
clean about the real value of what you hold.
1.0
0.5
Liabilities are smallfry stuff, the company is 0.0
real-world debt free. Optimum.
Working capital (below) is probably the most
important chart because it shows in one neat
shot what the company's been up to and
31.peS 31.ceD 41.raM 41.nuJ 41.peS 41.ceD tse51.raM
source: company filings, IKN ests
srallod
fo
snoillim
LT debt
current debt

what we can expect for the rest of this year.
REG.v: Working Capital per qtr
15
14
13
12
11
10
9
8
7
6
5
4
3
2
1
0
6
31.peS 31.ceD 41.raM 41.nuJ 41.peS 41.ceD tse51.raM tse51.nuj tse51.pes tse51.ced
source company filings
srallod
fo
snoillim
There is an underlying burn rate at REG.v and I've figured in a little more for the four quarters
to come as it goes through the community relations program as well as the permitting
processfor the drilling it wants to run in 2016
on Antakori. This has REG.v leaving 2015 with
REG.v: Shares Out
around $5m in working cap (or $6m cash if you
60 (split-adjusted)
prefer) which is still a good position but not 55
enough to run the type of large-scale 50
45
exploration that REG.v plans in 2016. The 40
inference is that it will raise again come 2016 if 35
30
it has a drill program to fund. 25
20
15
REG.v ran a three-for-one reverse split last year 10
as part of the process to incorporate Southern 5
0
Legacy (i.e, Antakori) into its structure. Here's a
split-adjusted share count and as you see, after
the recent raising we're not expecting REG.v to
add any more shares this year. However, it
wouldn't surprise me to see the share count at 70m once 2016 were done, REG.v will need to
raise more capital in some way or another once the drills start turning and equity is the most
logical channel, what with the company enjoying good insto support.
The bottom line on the financials: A simple company to model and watch, it's all about how
quickly it burns its cash. This year 2015 things should be modest, come 2016 the burn rate is
expected to accelerate with the advent of an extensive drill program.
People: The main players at REG.v are John Black and Kevin Heather, the driving force behind
Antares, then Mark Wayne, CFO and director of REG who had the same role at Antares and is
the corporate financial side of the package. Then added to the REG.v team is Fernando
Pickmann, who came to REG.v from the fusion with Southern Legacy. Pickmann is the company
COO and has reportedly made decent progress with comunity and local relations already. Also
found on the directors' slate is Anthony Hawkshaw, who's been round the mining scene in CFO
roles for many years including stints at Pan American Silver and Rio Alto Mining (he's currently
also a diretcor of Timmins Gold among other places) and Raymond Jannas, a Chilean geologist
and mining figure who has been involved in the Andean exploration scene for many years, for
example he was part of the team that discovered what is now the Pascua Lama gold mine
project owned by Barrick. A heap of other credits to his name too, including a lot of work for
Gold Fields at its nearby property which means he knows this area intimately.
To discuss that list a little further one of the main things to like about REG.v is its people, led
up by John Black and Kevin Heather. Not only are they a couple of the smartest exploration
geologists out there in the world of junior miners, but they also have a proven successful track
21.peS 21.ceD 31.raM 31.nuJ 31.peS 31.ceD 41.raM 41.nuJ 41.peS 41.ceD tse51.raM tse51.nuj
source: company filings, IKN ests
serahs
fo
snoillim

record of cultivating positive community relations in provincial and upland Peru. We saw them
take Antares (ex-ANM.v) from a exploreco through discovery of the very large porphyry deposit
at Haquira to being bought out by First Quantum (FM.to), which was also a big win for this
publication and my own back pocket to boot. Aside from the smart geology that saw them hit
the (now rather famous) 937m hole grading 1.14% Cu among many others, their cultivation of
good community relations was a big factor in getting the company sold at a high premium.
Since that success, the Heather/Black show has has mixed results in directorships in other
companies (Black was unable to do anything about the Snafu that Candente Copper (DNT.to)
has created for itself at Cañariaco), in projects (Regulus was originally spun out of Antares to
explore the Rio Grande project in Argentina, with some geological but little business success)
and even in semi-retirement (they both tried and failed to step away from the whole geology
scene and do more of the quiet family thing for a while, which never works when you're
workaholics and in love with rocks). But now they're back and front and centre at REG Antakori.
The Antakori property: Once known as the Sinchao property from the name of a local
village, its new name literally translates as "copper gold" but it's slightly clumsy Quechua (or so
I'm told). Located in the middle of the Cajamarca mining belt of northern Peru, if it weren't for
the politics it would be one of the most enviable places to have a project in the world. As it is,
mining is still viable in the area as shownn by the nearby working Cerro Corona gold mine
owned by Gold Fields (GFI), some 7km from Antakori, as well as the very but very nearby
Tantahuatay (Quechua for "old stream") operation owned in JV by Buenaventura (BVN),
Southern Copper (SCCO) and a private mining company. Tantahuatay backs onto the Antakori
property and we'll have a little more to say about that later. We're also in the "big mine"
country of Yanacocha (working) and Conga (polemic
to say the least) a little further out, plus other large
area projects that have been politically bogged down
such as Michiquillay, El Galeno and La Granja.
Politically difficult, what we can say to Cajamarca's
advantage is that is has all the infrastructure a large
mining project will ever need (power people, roads
and water...perhaps too much water). We'll talk more
about politics further down.
Today Regulus owns 100% of most of the key areas it
needs, but as this concession ownership map (right)
taken from the latest corporate presentation (page 18)
shows, the Antakori/Regulus rights in red have some
gaps between them. This is one of the things that the
company is working on and we should expect some
ownership consolidation news as 2015 wears on.
The resource: At present Antakori has a 43-101 resource that dates from the 2012 technical
report which looks like this: (table from the 43-101):
This is usually presented to the world (for example in the corp presentations) as "5.9Bn lbs
copper equivalent at a 0.92% CuEq" which is fair enough I suppose, but it does kind of mix
7

things up quite a lot. For example it throws in moly (which would be recovered on a separate
circuit and would need to show its own stand-alone economics) and copper in the open pit
oxide rock (would that be recoverable at all? At Tantahuatay it isn't) and gold in the sulphide
(unlikely to get strong recoveries) alongside the main copper sulphide resource. But as a start
it's okay.
• What conceptually more important today is the long-standing word in Peru (and if
I've heard this once I've heard it a hundred times from no end of different sources) is that
the Antakori/Sinchao deposit is "great rock, bad community relations". There's never been
much doubt of its potential economic robustness among the lima mining world.
• What's conceptually more important tomorrow is that the REG.v team think the
property has a lot more to offer than its current resource and plan to explore to that end
next year.
• What's really more important today is that literal next door neighbour Tantahuatay
has already shown good profitability from mining virtually the same rock. Here's a closer
look at that
Tantahuatay, the neighbour: Bordering the project to the North West, as in right next door
to it, is the Tantahuatay gold mine run by the Peruvian registered mining JV "Coimolache SA",
owned by Southern Copper (SCCO 44.29%), Buenaventura (BVN 40.09%) and ESPRO SAC
(15.67%, a private company owned by the Peruvian Lanata Watson brothers, Gonzalo and
Gabriel). As BVN is the operator it's to that company we look for data. Tantahuatay cost just
under U$82m to build and started producing in mid-2011. It runs at a nameplate capacity of
12,000 tonnes per day and to begin with was envisaged as an approx 100,000 oz per year gold
oxide leach operation (with a small silver kicker). In recent years production has been better
than expected and it now typically produces between 30k and 40k oz Au per quarter. For
example, 2013 production was 143k oz Au and according to latest figures from BVN, in 2014
Tantahuatay produced 143,643 oz gold. As for costs, these are reported by BVN as "costs
applicable to sales", which is roughly equivalent to mine operating costs. The most recent data
has these Tantahuatay costs at around U$500/oz (typically over $500/oz in 2013, dropping to
$423/oz in 3q14 on lower exploration costs) and though this isn't a total op cost, AISC or All-In
for the mine, it gives a good indication that it's a low-cost operation and clearly profitable for
the JV. If you got me to guess, a similar fully-contained company working next door on Antakori
could be expected to produce at an All-In Cost (i.e everything everything, tax and all) of
U$900/oz. Or put in a different way, even at today's lower-range U$1,200 per year gold price,
those two Lanata brothers with the minority holding are on a post-tax U$3m per year each.
Nice work if you can get it and I understand they spend plenty of time these days at Lima's
most exclusive country club and golf course, much less in the Peruvian highlands.
As for mine life, at its current reserves/resource level Tantahuatay has enough to run for
another eight or nine years on oxides alone. After that, it has deeper lying sulphide material
that could be exploited, either via a larger open pit operation or underground.
How Tantahuatay fits into the Antakori story
From the overview above, we can pick out the following details as important to Antakori:
• Tantahuatay is a profitable operating mine. It also shows the immediate location is open
to mining activity.
• Tantahuatay has a limited mine life under its present operation
• Tantahuatay doesn't just lie next to Antakori, but right next door. The part of Tantahuatay
being mined runs right up to the boundary between the two properties and that's where
the Antakori mineralization and resource begins. One of these days Tantahuatay will quite
literally mine right to to its edge of the border and will want to keep digging in order to
mine the profitable rock.
• In order to continue as a mine, it doesn't take a rocket scientist to work out that the
mid/long-term future of Tantahuatay (or more precisely, the Coimolache joint venture) is
Antakori. Either Antakori is bought for the continuation of its open pit oxide gold content,
8

or the two properties are put together in order to create the large, open pit copper/gold
sulphide operation. Either way, Tantahuatay will need the physical location currently
possessed by Regulus Resources at Antakori.
Therefore, we can say that REG.v at Antakori already has a natural exit strategy staring it in the
face; sell out to BVN/SCCO and friends. Which sounds easy of course, but there are more
dynamics in play. For one thing, any other mining company will know there's only one logical
buyer, so the chances of a bidding war are slim. For another REG.v still has its community
issues to sort out. For yet another, it's understood that relationships were frayed to near
breaking point by the previous owners and developers of the Antakori property when called
Sinchao (that was basically Andean American and their name is mud these days in Peru), so
(re)establishing good relationships between the business parties are going to be almost as
important as getting the local communities on side.
B) The company's plans
While on the Focus Ventures (FCV.v) Piura site visit a couple of weeks ago, I had the chance to
meet up again with REG main players Kevin Heather and John Black, as well as meet for the
first time Raymond Jannas. We had plenty of time over a couple of meeting sessions in Lima to
discuss where REG.v is as a company today and what they planned for the next year or so.
Here come the notes and observations.
Antakori is the focus of attention. This didn't surprise, but it was good to hear it confirmed.
REG.v doesn't plan on disposing of Rio Grande and still sees potential in the project, what with
the exploration to date only having scratched the surface of a very large project with multiple
targets. But it's not the one for a small and budget-limited junior in the current market scene
and the REG.v people recognize that. There will be low-cost baseline work done there, as well
as at the Golden Brew project in USA. but REG.v 2015-2016 is all about Antakori.
REG is working hard on community relations. On this John Black was most illuminating,
during our head-to-head and also a long phone exchange held a few days before. The situation
is complicated and there are several movng parts to contend with that involve the separate
communities as well as neighbouring mining companies. Another part of the task facing REG.v
is to rebuild trust in exploration on the property after it had been eroded down to basically zero
by the previous operators out of Andean American, who irritated locals to the point that their
people got thrown off the property at gunpoint back in the mid-noughties. What I heard from
CEO Black were the right noises, which didn't surprise me coming from him (he's good at this
part) and it's clear they're making progress, but REG.v as a company is keen not to overpromise
on this aspect until it has some formal agreements in place.
On more than a couple of occasions during 2014 and in February/March this year I expressed to
REG.v my desire to go up to Antakori and see what's happening for myself, talk with the
stakeholders concerned etc. 2014 turned out to be a false start but this year REG is good about
the idea. However it really wants to get those formal agreements in place before inviting nosy
pests such as myself up who could interfere with the current negotiation process and quite
frankly, I think that's fair enough. However, REG.v is going to drag me up to the heights of
Cajamarca once they've got to a certain point in their commnity relations negotiations, which I
suppose will be a stage on the agreement track that even I couldn't mess up afterwards.
Permitting a big drill campaign. While this is going on, REG.v is also going through the
permitting process for permits to run a large drilling program as from next year. In arm-waving
terms, it's relatively simple to get a small scale drill permit for up to 20 platforms in Peru, but if
you want to put together a larger-scale drill program you need what's called a "semi-detallado"
(semi-detailed) permit, which is more complicated and involves plenty of baseline studies on
flora, fauna, water use, environmental impact and all sorts of other fun things. This isn't a
simple permit to get and REG.v estimates that it's going to take perhaps nine months from
submission to permit award.
9

So time and money need to be invested in a semi-detallado, but in this case it makes sense.
This year REG.v is all about getting the locals to agree on the company's ongoing presence
there, which means there's no rush to drill (also, we understand the main financial backers are
perfectly at ease with dedicating all of 2015 to community relations and permitting, with drilling
in 2016). And with a semi-detallado in hand, REG.v will be able to run a larger-scale and more
flexible drill campaign come the time, exploring all the targets it's now interested in. This runs
into the next point, which is...
Developing new targets at Antakori. This is potentially the most interesting of all, but it's
also where I have to defer to the geological experts in the mining company (as you know, I'm
not a geol and never pretend to be) but at least in this case the questions don't concern
trustworthiness, because the REG.v team are as straight shooting as you can imagine when it
comes to rocks and related matters. According to Heather and Black, the whole Antakori zone
hasn't been well explored yet and they've identified the potential for another big porphyry
system on the land. On this they're keen to work in joint agreements with their mining company
neighbours (such as BVN and Gold Fields) but if their theory is right, there may be a lot more
left to discover at this project. The 2016 drilling program will be about confirming, expanding
and improving the reliability of the current resource, but REG is also going to be exploring for
bigger, deeper and altogether more valuable things.
To be clear, I'm not getting my hopes up on this issue and the shares I plan on buying don't
need a single drill hole hitting a single metre of new discovery mineralization in order to go
higher; that's going to be more about the winning of trust and friends at a community level that
would allow REG.v to consolidate the land position and allow development programs to move
ahead with the good wishes of all concerned. I'm a small-scale buyer of REG.v today for its
current resource combined with the assumption of good progress being made at a community
level. However, knowing what this team did at Haquira when under the Antares banner makes
the blue-sky talk much less of a theoretical or hypothetical situation. If Heather and Black say
there's a possible big system to be discovered at Antakori, they've already fully earned the right
to be taken at their word, period, no further questions. And that's exciting.
c) Discussion and Conclusion
What REG.v at or below 30c offers, here and now in early April 2015, is a good entry point for
what's still a very high risk story. The idea today is to get in, mark the card and then look to
REG.v to hit the progress targets we're looking for as the year goes on, with the real
development acceleratin coming in 2016. The first thing to look for is a formal community
agreement and once that's in place, I'm looking to head up the Cajamarca hills in order to find
out for myself as much as possible. It's around then that REG.v may turn from a speculative
candidate into a live investment of a more serious nature. So for the moment a starter position
is order of the day because this property's history has clearly shown it to be difficult. With smart
and honest people now running the show there's reason to be optimistic, or to put that another
way I wouldn't even be considering a buy if it weren't for the reputations that Heather/Black
bring to the table. This is the right team for the task and if they can't unlock it, nobody can.
The other part of the puzzle to consider is that even in the best of situations, REG.v isn't going
to be drilling until this time in 2016. There are permits to obtain and that process is now
running concurrently with the 2015 community relations efforts. That gives us plenty of time to
position into this stock at relative leisure. Although I'd expect REG.v to appreciate on the
eventual announcement of a strong and binding agreement with the local communities, that will
be because the property is understood to be great rocks in Peru and there will be speculative
interest from this end of the world. When it comes to real push and promo, that's going to be
Canadian and if one thing has been pounded into my head about juniors, even in more bullish
markets, it's that Canadian listeds only make serious move on results from the Truth Machine.
If things go well REG will be higher than its current 30c-or-abouts come the end of this year.
But if things go well in 2016, any number from this year could be left in the dust. As it stands
today, the price is right for a starter position but as made abundantly clear in the Flash update
10

of Wednesday evening, at this stage it's all about bagging real value prices and not any old
price. If the deal doesn't work and they can't reach a reasonable agreement with locals that
allows them to move forward, getting in cheap today will mean getting out with little or no
harm done. Any bidding up adds unnecessary risk, which is exactly what I'm not going to do.
Stocks to Follow
Of the 13 names now open just four showed gains last week (RIO.to, MUX, IRL.to, LGN.v) and
the other nine all lost ground, but apart from Lara Exploration (LRA.v down 13.4%) the losses
and the gains were small and even LRA.v drop was inside its recent trading range. In short it
was another wash of a week, all told.
As explained in today's intro, today sees the start of a new presentation table for 'Stocks to
Follow', designed to give a clearer view of the two main ideas we'll be promoting in 2015;
Quality Producers (gold and other metals) in the junior realm and Land Grab stocks that
we'll play in order to try and benefit from the revaluation of fixed assets as the mining cycle
begins to turn back up. Of the two, it's probably superfluous to mention to this audience that
the 'Land Grab' section will generally be a higher level of risk/reward and the producer plays the
more solid group of companies, but a line today to spell that out doesn't hurt.
With the disposal of GQC.v, the covering of the FSM short and the new purchase in FOS.to we
now have 13 open positions in our Stocks to Follow list, two less than our self-imposed
maximum. Four are in the green, nine are in the red. If things go perfectly, this time next week
it'll still be 13 on the list, with RIO.to out and REG.v in. What could possibly go wrong?
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Metals Producers (in current order of preference)
Rio Alto Mining RIO.to SELLING C$2.30 07-apr-11 C$3.36 46.1% still selling
McEwen Mining MUX STR buy U$1.09 25-jan-15 U$1.04 -4.6% Added Mar'15, top value
B2Gold BTO.to buy C$2.32 12-sep-14 C$1.91 -17.7% Dependent on Au price moves
Teranga Gold TGZ.to buy C$0.55 15-feb-15 C$0.64 16.4% New position, 83c tgt
First Majestic AG spec buy U$10.51 10-aug-14 U$5.49 -47.8% Holding, only silver exp left
Starcore Intl SAM.to hold C$0.12 10-jan-15 C$0.14 16.7% Also "land grab", tgt 19c
Land Grab Stocks (in current order of preference)
Phoscan Chem FOS.to buy C$0.28 29-mar-15 C$0.275 -1.9% New trade, 36c/share of cash
Legend Gold LGN.v spec buy C$0.085 01-mar-15 C$0.07 -17.6% Spec buy, v small trade
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.76 -27.6% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.355 -69.1% solid biz model, LT hold
Other Recommended Stocks (in current order of preference)
Dalradian Res DNA.to buy C$0.64 27-oct-13 C$0.90 40.6% Nov'14 tgt $1.25, top Au expl
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.22 -4.3% tgt 50c, good finance news
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.065 -75.9% Waiting for financing news
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
Fortuna Silver FSM mar'15 U$4.12 10-nov-14 U$3.75 9.0% Short used as hedge
GoldQuest Min. GQC.v mar'15 C$0.26 27-oct-13 C$0.085 -67.3% given up ghost
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
11

Now for some notes on current basket stocks.
Phoscan Chemicals (FOS.to): Position opened. I was happy to buy all the 28c that I
wanted on Monday. There's little else to say
about this stock for the time being, as I
expect it to give us little in the way of
newsflow until it has something really
significant to say to the world (e.g. it
decides to do something with that large
treasury position). With my idea of a full
position already in place I won't be adding
any more, either.
Before we leave, here's a three year chart
that gives an idea of what you'd be buying
if you bought into FOS.to tomorrow
morning. the red line shows the net cash
positin per share, and although it's
obviously "value" according to logic, we also see that the stock has hardly moved all this time
the the company and its team sit on that cash pile, waiting to do something with it. The market
is bored with FOS.to too, as apaert from a couple of flurries we don't see much action in the
stock. If you too buy into this, you may get lucky and buy in just days before they announce a
whizzo deal to put the cash to work that the market loves, thereby doubling your money. Then
again it may turn out to be dead money for an other three years. I'm a buyer (in fact, I'm a
bought) but I went in with eyes wide open; you should, too.
GoldQuest (GQC.v). Position closed. As it happens I sold just before another round of
disappointing exploration news out of GQC Tuesday (4) that pulled the stock lower. Sadly, a
penny or two either way isn't much of a consolation to this abject loser of a trade. Sometimes
there's no mitigation, you simply have to hold your hands up and say "loser". The idea was to
take a position in a Dominican Republic exposed junior because I like the governmental attitude
towards mining there. As it happens that hasn't changed, but when it comes to trades among
the juniors, so far it's been very thin pickings. Eric Coffin will disagree (his Precipitate Gold the
vehicle), but until something changes I'm just going to watch, a bit like Nicaragua I suppose.
Fortuna Silver (FSM) (FVI.to): Short covered. The useful short that was part of the pair
with AG was covered on Monday (the "family business" day, now there's just the outstanding
close of Rio Alto left to do). Technically it's a blob of green for the table for the rest of the year,
in reality it's a wash trade when considered on its own. The value I got from this short was the
pairing and to use it to stop worrying about the crappy way in which First Majestic has traded
over the Northern winter. The new positioning to be longer has the FSM short taken away
which exposes the AG long and brings the portfolio that much longer going forward.
Rio Alto Mining (RIOM) (RIO.to): Still selling. As noted in the Flash update of Wednesday
evening (see Appendix 1) we now officially own
Tahoe Resources (THO.to) (TAHO) as the
merger has been signed and sealed, but there's
still plenty of trading in the RIO.to ticker so with
a little luck I won't need to jump through the
brokerage hoops and swap them over before
finally selling. What was interesting was the
full-court promo press that greeted New Tahoe
on Thursday once news of the merger closure
had come, with several brokerages emitting buy
calls on the stock.
As noted in the Flash update, I'm still after
12

something around CAD$3.60 for my RIO.to, which translates as around CAD$16 if I need to
transfer to THO.to first. We'll see if that transpires, but chances are high that gold will rally next
week on that "disappointing" US BLS jobs number, so if RIO.to (or TAHO, or RioTahoe...now i'm
confusing myself) pops with the move I may well get the out price I'm looking for. Hope so.
Starcore (SAM.to): Thin trading and it was possible to pick up SAM.to stock at 13c last week,
which would have been a decent bargain for those so disposed. A word about the category for
SAM in the new style table above, because of all of the names currently covered, SAM.to is the
one that could easily be classified in more than one spot. It has its working and cash flow
positive small gold mine, but it's also in the business of picking up cheap land assets, as we've
seen with its paper merger with American Consolidated and its cash purchase of the Creston
Moly assets. For the time being we're going to class it with the other gold producers, because
that's what it's being valued on by this crummy market, but if the "Land Grab" idea starts taking
off, I'd expect SAM.to to fly quickly higher thanks to its fixed assets recently bought.
First Majestic (FR.to) (AG): Maybe it's rose-tinted specs, but I'm seeing signs of life in this
position and it seems to be reclaiming the go-to mantle for silver stock trading. Here's First
Mejestic (AG, the black line) 2015 year-to-date versus a bunch of silver producer plays and also
GDXJ:
It's not a massive lead, but it is a little better than the pack and positive for the year. What First
Majestic really needs is a pick-up in traded volumes and that's most likely from the NYSE AG
ticker (it typically does four times as much business in the USA than in Canada via FR.to). It's
now back flying free and on its own in the 'Stocks to Follow' portfolio, my only true silver
exposure. As we're now into April we need to look out for 1q15 preliminary production numbers
from the juniors and in the case of FR.to, it'd be great to get some idea of the costs from the
quarter just gone too. Aside from any pop in silver, that's the potential price driver here.
Teranga Gold (TGZ.to) (TGZ.ax): I hope you had time to check out that analysis note out of
Macquarie last week that was sent in the Flash update (see Appendix 1), anyone long or
considering going long should make a point of it. Here I'm going to take the liberty of quoting
the part of the report about community and social relations, because it underscores the part
that at first most concerned me about going long on yet another West Africa play, then getting
me in as TGZ is obviously one of the better political risks out there. Here's the Macquarie note
excerpt:
Two items that rarely become a topic of conversation with investors unless of course they go
wrong are safety and community relations. Having visited our fair share of mines we would be
remiss if we didn’t mention them here and give a special shout out to the TGZ team for their
exemplary work on these fronts. Considering safety first, Sabodala has not recorded a loss-time
incident (LTI) in roughly a year and a half. That is a remarkable achievement for a mine and tells
us that the management culture and employee engagement are both working at the highest level.
13

It was evident to us as we witnessed a well maintained site and crew that, despite coming from all
corners of the globe, all seemed genuinely happy to be either at work or enjoying the camp
facilities in their off hours. TGZ consequently enjoys low turnover among expat staff and local
workers alike. Make no mistake, a safe and pleasant working environment translates directly into
efficiency and low costs.
On the matter of corporate social responsibility (CSR), stating we were impressed does not do
their program justice. TGZ program, which costs roughly $2m per year, has had a remarkable
impact on the lives of the local residents and does not go unrecognized at the highest levels of
government. Mine staff work in collaboration with the surrounding communities to identify
community based projects that will be sustainable and provide long-lasting benefits. In addition to
the usual education, health care and water and infrastructure, TGZ has engaged a team of
around 450 local women to operate and manage local market gardens. In 2014 they produced
some 72 tons of fresh produce, more than enough to provide for the local population and now are
looking at a transportation network to bring their product to communities in the district.
TGZ’s work on the CSR front is something that both the team and investors alike can be proud of.
Mining attracts a good deal of criticism for its checkered track record; at Sabodala, TGZ has set a
standard that the industry would do well to adopt.
You know I care about this subject, but it's not just because I'm a touchy-feely pinko lefty
Commie decaf-latte drinking bedwetter; a solid community relations and political risk profile is
slowly but surely getting reflection in the valuation and stock price of the better mining
companies and that's a trend I expect to accelerate as the market continues to evolve and look
for better ways of sorting the junior mining wheat from its chaff (and my stars, there's a helluva
lot of chaff out there). A glowing report of the type reaped by TGZ above, written by one of the
straightest shooting analysts out there, is worth real money.
Focus Ventures (FCV.v): Here's an interesting snippet that I'm kind of late to, because its
potential significance didn't occur to me until this weekend. Hey, I'm slow, bite me. One of the
ongoing gripes about FCV from out there in investor-land is that it hasn't been available for
purchase through the US markets via a pinksheet ticker, what with the company originally being
rolled into a company shell that had a cease trade order in the US. But as of last month that
problem is fixed, thanks to the 20-F form filed by FCV to the SEC and its acceptance (5). To cut
a long story short this means US nationals don't have to jump through a bunch of hoops any
longer in order to buy FCV.v stock via Canada TSXV only. As it happens, I've heard through the
grapevine that FCV is out marketing in the USA next week, meeting with key and potential key
investors. Eyes on volume I suppose, because that's where we'll see a difference if any occurs.
For what it's worth I don't think FCV has a designated pinksheet ticker yet.
Legend Gold (LGN.v): Not much to report here, but we did find buyers at the 6.5c level that
popped it back up to 8c last week. LGN settled at 7c and that now looks like the right price to
slowly accumulate. This position is still very small, I have plenty of room (real cash and
mentally) to add without getting over-exposed, I'm looking to pick quietly at a few shares in
order to bring my cost average down, maybe half a cent or a cent. Then I'll be done.
Minera IRL (IRL.to): IRL came out with its now unwelcome traditional NR last week (6), the
one that comes at the end of the quarter, informs us that the financing deal isn't closed for
Ollachea yet and then goes on to tell us that it expects the deal to be wrapped up in the
quarter to com. Harrumph and harrumph again, but I'm going to stick to the plan and hold until
real news arrives. The silver lining came in this part of the NR...
As at 31 March 2015, the Company had a cash balance of approximately $1 million and an
agreement in principle for an additional short-term credit facility of $2 million and continues to
proactively manage its working capital. Combined with the expected cash flow from its Corihuarmi
gold mine, the Company believes it should have sufficient funding to meet its cash requirements
until project financing is secured, which is anticipated to occur during the second quarter of 2015.
...which did show the company still has liquidity to play with. Yes that $30m Macquaries loan is
a heavy lump on the balance sheet, but it's not going to cause IRL to roll over and die. Not in
the near-term anyway.
I get the occasional mail with "IRL at 6c/7c...worth a risk?" and yes, it's tempting to write back
14

and say something along the lines of "if you're clear about the risks involved, it's a great...." etc
etc, but the bottom line is that in order to sleep well my opinions cannot diverge too far from
what I do with my own money, it's the nature of the beast. The fact is that I'm not selling IRL,
but I'm not adding any more either, not until we have real solid news on a real financing deal.
It's therefore way too cheesy of me to start pointing to the stock as a cheap buy today.
The Copper Basket
After fourteen weeks of 2015 The Copper Basket is showing a 5.73% loss to level stakes.
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 469.80 1.23 -39.4%
2 Reservoir Min. RMC.v 3.96 47.55 191.15 4.02 1.5%
3 NGEx Resources NGQ.to 1.17 187.71 187.71 1.00 -14.5%
4 Nevada Copper NCU.to 1.65 80.5 136.85 1.70 3.0%
5 Copper Fox CUU.v 0.135 402.96 96.71 0.24 77.8%
6 Amerigo Res ARG.to 0.27 173.65 64.25 0.37 37.0%
7 Western Copper WRN.to 0.68 93.68 53.40 0.57 -16.2%
8 Panoro Minerals PML.v 0.295 220.25 50.66 0.23 -22.0%
9 NovaCopper NCQ.to 0.58 60.15 45.71 0.76 31.0%
10 Hot Chili Ltd HCH.ax 0.16 333.11 38.31 0.115 -28.1%
11 Regulus Res REG.v 0.35 56.39 18.89 0.335 -4.3%
12 Metminco MNC.ax 0.008 1822.6 9.11 0.005 -37.5%
13 AQM Copper AQM.v 0.06 139.24 8.35 0.06 0.0%
14 Catalyst Copper CCY.v 0.305 31.39 5.65 0.18 -41.0%
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 -5.73%
The basket average down is down 0.95% since 4% The Copper Basket 2015, weekly evolution
last weekend, with just three weekly winners to 2%
boast from the list (NGQ.to, PML.v, REG.v). 0%
There were three unchanged prices too -2%
(ARG.to, MNC.ax, COP.to) which leaves nine
-4%
losers (CS.to, RMC.v, NCU.to, WRN.to, CUU.v,
-6%
HCH.ax, NCQ.to, AQM.v, CCY.v) in a lacklustre
-8%
week with low volumes all round.
-10%
The biggest percentage moves came from the
gains in Panoro (PML.v up 27.8%) and Regulus
(REG.v up 17.5%), plus the loss registered in
Catalyst (CCY.v down 14.3%).
As for copper, the market shrugged off the potential
supply blocks from the heavy rains in Northern Chile
and the metal moved lower. Yes there have been some
pretty dramatic pictures coming out of what's normally
famed as the world's driest desert region, but the
supply bottleneck isn't going to last long. While demand
remains sluggish the reasonable assumption is that the
market can cope with temporary disruptions without
them showing up directly in traded prices.
Inventories time, here are the regular bullet points:
15
ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22 ts1ram ht8 ht51 dr32 ht92 ht5rpa
source: IKN calcs

• Total world copper stocks did the same as last week, by losing a little but staying above
600k. 601,410 metric tonnes (mt) this weekend.
• Shanghai Futures Exchange was unchanged last week at 243,592mt.
• LME warehouses stocks dropped by a minor 3,625 mt (-1.1%) to finish the week at
333,550mt.
• Comex warehouses rose again, up 2,389mt (+10.9%) to finish at 24,277mt. It's the
smaller of the three, but in a quiet week its moves made the difference.
In other words, a nondescript set of figures that give little clue. What we're roughly expecting
in the next weeks is a drawdown of stocks in Asian warehouses (both Shanghai and LME) of the
type seen in the last couple of years. If it doesn't happen it'll be a surprise, and the market
doesn't like surprises. Therein lies the fulcrum of the current price action.
Now for some notes on a couple of our basket components during what was a quiet week.
Reservoir Minerals (RMC.v): The mystery here is the low volume, which surprises me as I
thought RMC would get more trading due to its now closed JV budget and deal on Timok with
FCX. This stock needs more retail interest to send it higher and it's the one thing that's glaringly
missing form the equation. The result is a share price that's again drifting low in the trading
range.
My "needs more volume" lament is by no means restricted to RMC and I'm aware how tedious
it is to say the same thing over and again. But it's also true, so bite me one more time.
Panoro Minerals (PML.v): The price jump on low-ish volume action may signal that the way-
long-overdue PEAs for either Cotabambas or Antillas or both are in the pipeline. Or it may not.
Western Copper & Gold (WRN.to): Mentioned last week, I'm still looking at this as a
potential trade on pure technicals. The plan is as simple as they get; WRN sinks to its current
55c/60c level, we buy a small number of shares, WRN bounces back to 70c just like it's done on
several occasions in the last 12 months, the small trade is sold. Not a trade that would change
my life, perhaps a trade to pay for the Easter eggs.
The Low Cost Producer Basket
After 14 weeks, the 2015 Low Cost Producer Basket is showing a 2.83% gain to level stakes.
16

company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 812 15.31 18.85 1.8%
2 Barrick ABX 10.75 1164.67 13.84 11.88 10.5%
3 Newmont NEM 18.90 499 11.15 22.34 18.2%
4 Franco Nevada FNV 49.19 156.08 7.74 49.62 0.9%
5 Silver Wheaton SLW 20.33 357.39 6.86 19.19 -5.6%
6 Agnico Eagle AEM 24.89 173.43 5.16 29.73 19.4%
7 Buenaventura BVN 9.56 254.19 2.66 10.47 9.5%
8 Kinross KGC 2.82 1114.5 2.59 2.32 -17.7%
9 B2Gold BTG 1.62 948.9 1.44 1.52 -6.2%
10 Pan American PAAS 9.20 151.41 1.36 8.97 -2.5%
all prices in U$, using NYSE ticker prices Portfolio avg 2.83%
The average improved by 1.14% in the Good Friday shortened trading week, thanks to the sum
total of six winners (GG, ABX, NEM, FNV, AEM, BVN) beating out four losers (SLW, KGC, PAAS,
BTG). Most of the moves up or down were of the modest variety, the biggest shift came from
Barrick (ABX up 6.2%). It's notable how the bigger cap names performed generally better than
the smaller caps on our list, too. Fits in with what we saw in our main 'Stocks to Follow' above.
The Low Cost Producer Basket: Weekly performance
and comparative to GDX control
25%
20%
15%
10%
5%
0%
-5%
17
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8 ht51 dr32 ht92 ht5rpa
basket
gdx control
source: Google Finance, IKN calcs
Low Cost Basket: Percentage difference between
basket and GDX control, 2014
1.00%
0.50%
0.00%
-0.50%
-1.00%
-1.50%
-2.00%
-2.50%
-3.00%
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8 ht51 dr32 ht92 ht5rpa
|
source: ikn calcs, NYSE/Nasdaq data
Regional politics
Regional risk review
It’s quarter-end and time for the review of regional political risk for junior mining. This is the 8th
edition of the revised format (as seen in IKN218, IKN230, IKN243, IKN255, IKN269, IKN283,
IKN295) and as a reminder, here’s how the scoring works (full details, IKN218). The 6
categories are:

a) National Government Miner Friendly: The country on its national stance towards
mining activity.
b) Community/Social Miner Friendly: The overall attitude of locals towards mining,
either in specific zones or in country regions.
c) Foreign Direct Investment (FDI) Friendly: The openness towards FDI and the
safeguards it gives to foreign capital looking for a home.
d) Mining Culture: Countries or regions with generational traditions in mining are easier
places in which to operate than those which have little previous exposure to formal
mining operations.
e) Geopolitical Optics: The way in which the outside world sees this country, an
important factor, no matter if the perception be right or wrong.
f) Internal/National Political Stability: A gauge of how stable the place is politically.
We tend to concentrate on nine countries with the potential to host companies, rather than try
to offer a comprehensive LatAm-wide view that takes in countries with little or no appeal for
investment or speculation in juniors. Therefore we focus on Chile, Peru, Mexico, Brazil,
Colombia, Nicaragua, Dom Rep, Argentina and Guatemala. At least one beady is kept on
Panama, Uruguay, Ecuador and Guyana. Here’s this quarter’s table, below the country-specific
notes.
December 2014 Latin American Country Risk For Foreign Mining Companies
Nat. Govt Community/Social Geopolitical Internal Nat.
Country FDI Friendly Mining Culture Total
Miner Friendly Miner Friendly Optics Political Stability
LatAm countries under active consideration for junior mining project location
Chile 8 7 8 10 8 8 49
Peru 9 6 9 9 7 6 46
Mexico 8 5 7 9 7 7 43
Brazil 7 5 8 8 7 7 42
Nicaragua 8 5 7 7 6 6 39
Dom Rep 8 5 7 5 5 8 38
Colombia 6 4 8 6 5 6 35
Argentina 8 6 4 6 4 6 34
Guatemala 7 4 5 5 4 6 31
Potentially relevant LatAm countries for junior mining
Panama 7 5 9 4 9 7 41
Guyana 8 7 7 6 6 4 38
Ecuador 7 4 5 4 8 8 36
Uruguay 6 5 7 3 6 7 34
Countries of little or no interest for junior mining exposure
Bolivia 3 6 2 9 6 8 34
Paraguay 7 5 6 3 4 6 31
Honduras 7 3 4 5 3 4 26
Costa Rica 1 1 5 1 6 7 21
Haiti 6 3 4 1 3 4 21
El Salvador 1 1 4 1 6 5 18
Venezuela 1 5 1 3 1 2 13
source: The IKN Weekly house estimates
Chile: Geopolitical Optics down 1 point, Internal National Political Stability down 1
point
Chile has been taking some knocks to its reputation as the best mining jurisdiction in Latin
America, but most of those are not its fault. The headline-capturing Pascua Lama saga is
dragging on and has people wondering just why the country of Chile is being so obdurate with
a company that wants to bring in investment and create jobs and wealth. That's mainly because
18

Barrick broke the law of the land on numerous occasions and wants to appeal every ruling that
gets handed down, but the ignorant on the outside only see government red tape stopping the
show. The other matter is the North of Chile, which just a couple of weeks ago was making
headlines because it doesn't have enough water to go around and mining companies who want
to set up may have to add multi-billion dollar desal plants to their capex. Now it's the same
region making headlines for having too much water, as the biggest rainfall event in 80 years
has played havoc with infrastructure, closed down mines and threatened the stability of several
tailings facilities in the region (that last one coming with the added bonus of environmental
activists claiming that a breach would poison people living in the coastal cities, which is just
plain stupid but we should never let facts get in the way of a good story).
Then there's the whole quesiton of the current wave of unpopularity with the relatively new
Bachelet administration. This has come from a few internal political spats, plus the relative
strength of the opposition parties in the country, plus the complaints that the Bachelet
government has done little or nothing to help the flooding victims in and around the Atacama,
plus the way in which the President herself doesn't seem to be putting up much of a fight. On
that last score I think it's because Bachelet is a smart and seasoned politico who understands
the election cycle, when to make it into a fight (later) and when to give opponents enough rope
so that they hang themselves (now).
The bottom line with Chile is that there's much ado about nothing. Floods have disrupted
mining ops and port supply of metals, but it's a temporary thing. Politically the government is
running through a low popularity moment in the cycle, that will change. I expect the points lost
this quarter to be added back eventually. Chile still rules the roost.
Peru: Community/Social Miner Friendly down one point, Internal National Political
Stability down 1 point
We're still over a year before the next Presidential election, but the lame duck presidency of
Ollanta Humala that's leading us there means that the campaign to succeed the most
disappointing President in The Americas (save perhaps for Obama) has already begun. And
Peru being Peru that doesn't mean putting yourself forward as a candidate with good and
positive qualities, but attempting to sabotage anyone you consider a threat to your eventual
ascendancy. The result is minor scandal after minor scandal and a political scene that befits 4th
grade schoolchildren more than adults. It also means that government and the job of running
the country, producing reforms etc has ground to a bureaucratic halt.
Next on the list is economic growth, or lack of it. Your author pointed out the negative signals
from Peru's economy all through 2014, but it has only dawned on the rest of the world in the
last quarter or so that Peru isn't doing nearly as well as its marketing would have them believe.
GDP in 2014 was a mediocre 2.4% after being predicted at over 5% and we're already seeing
the same pattern emerge this year, with the original 5.5% projections now down to "around
$%" according to the IMF.
Then come the high-profile anti-mining issues in the country, led up by the now extremely
tedious Tia Maria project owned by Southern Copper (SCCO). Words cannot describe how
stupid that company was two weeks ago when its spokesperson announced the cancellation of
the project, with the CEO then denying the cancellation just hours later. The whole confused
episode came with SCCO calling the anti-mine demonstrators "mining terrorists" on repeated
occasions, and then complaining when the main opposition group refused their invitation to
clear-the-air talks earlier this week! This in a country where the word "terrorist" really means
something, thanks (?) to the Maoist Shining Path movement of the 80s and 90s.
To be clear: Tia Maria is a badly conceived project, owned and promoted by a most arrgoant
and pompous mining company that until recently didn't give two hoots for the locals in the
valley where it wants to set up shop. They now give one hoot because they've been forced to
do so, but the Cocachacra locals want to know what happens to their agricultural livelihood not
just during the 18 year mine life of Tia Maria, but for the generations that come afterwards. It's
19

one thing to set up a massive open pit mining operation in a desert or semi-desert zone (Cerro
Verde, Toquepala), quite another in one of the most fertile agro zones in the South of Peru with
an established population who like their lifestyle and have de facto power of veto
Another problem with Tia Maria is that it's now a national political football (see the Presidential
preliminary show above), blown up out of all proportion by the anti-Humala factions who are
now saying that if Tia Maria doesn't move forward, no project can move forward in Peru. Utter
nonsense of course, as Tia Maria has been a troubled project for at least five years and a
measure of SCCO's desperation is the scare tactics it's now resorting to use. But it's now "an
issue" and as Humala doesn't have a scrap of credibility left on either side of the political
spectrum, he's going to have the subject rubbed into his face for the next year.
Mexico: Community/Social Miner Friendly down two points, FDI Friendly up one
point
Last quarter the optics went from bad to worse for Mexico and to reflect the problems I've
docked the points from "Community/Social" rather than "geopolitical" because the bad view of
Guerrero isn't exclusively from foreigners looking in, it's also Mexican nationals who don't want
to go and work in mines there. This report out (7) out of Reforma starts this way...
Despite there being work opportunities in the Mexican mining sector, specialist
professionals are rejecting them due to insecurity and safety threats, according to
sector representatives. Maneul Ryes Cortés. president of the Association of Mining
Engineers, Metallurgists and Geologists of Mexico (Asociación de Ingenieros de
Minas, Metalurgistas y Geólogos de México (AIMMGM)) said that workers werew
afraid to go and work in zones such as Guerrero.
...and sums up the feeling concisely. Guerrero isn't everywhere in Mexico of course, but it's
catsing a long shadow on the country at the moment. The way in which the whole Geurrero
political risk has been hidden from polite conversation for years, now only showing up after the
horrors of the 43 students, also has people worrying about the type of mushroom politics that
may have been used in other regions. As I've tried to point out on innumerable occasions,
Mexico is a mixed bag of political risk and as long as you stick to the beaten paths things aren't
that difficult for miners. But be careful, because for every Durango there's a Veracruz, for every
Sonora a Morelos.
Brazil: Internal National Political Stability down 1 point
One point lost from the same category as last quarter, but for somewhat different reasons. The
Pëtrobras corrptuion scandal along with the slowing of economic growth ijn Brazil to what's now
a virtual standstill has hit the popularity of this Dilma Rousseff government hard and Dilma is
now polling the lowest approval ratings of her double mandate, which also means it's the
lowest PT Party approval ever (including Lula da Silva before her). I still cannot for the life of
me understand why the opposition parties didn't make more of the Petrobras affair during the
elections of last year (the story had broken by then), but they didn't and Dilma was re-elected.
Here we are six months down the line and here popularity has been severely dented, not by
any thought of her own corruption (her personal image is clean) but of her association with PT
party members now up to their necks in serious corruption allegations.
Inertia is the problem for the country (as corruption accusations are hardly a new thing in
Brazil). The government in Brasilia is unable to enact reforms to kickstart the economy while
the opposition is in its current strong position, blocking every move made.
Nicaragua: Unchanged
For the second quarter running Nica stays unchanged, a result of the no news = good news
principle. There is opposition in the North of the country forming against mining, with particular
mention needed for the Pavón project bought form Radius by B2Gold. The local town of Rancho
Grande has been the focal point of protests against the mine, which have been propagated by
the active anti-mining NGOs in the region. At this point it's difficult to gauge just how much real
opposition there is towards mining on a national level as the antis have been picking their fights
20

at a local and project specific level. Overall I don't think there's enough to warrant taking any
points away from the country, as unlike other Latam states, in Nicaragua the national
government's decisions still largely override local ones.
In other news, I'm still on the lookout for a decent way of playing Nica that isn't B2Gold, but
even the hotly tipped Calibre (CXB.v) has come back to the field after running hard on the news
Pierre Lassonde had bought in in 2014.
Colombia: National Government Mining Friendly up 1 point
We have an overall positive result to report for Colombia for a change, which is pleasant. The
good news comes from a governmental level, because we've seen real and important permits
for mining companies being awarded by the necessary government offices that will at last allow
(in theory at least) the exploration stage mining projects in the country to move into
production. The poster child so far at least is Red Eagle (RD.v), which got a mention in the last
two weeks' editions thanks to the awarding of its main permits and then putting together its
financing package. My good friend and expert on many things Colombia, Steve Bodzin (Setty
(8)), put it well in a feedback mail he sent after IKN306 and here's an excerpt:
I'm sure you're right that there are economic interests in play on RD, but don't
underestimate the political interests. Colombian government folks are hypersensitive to
the anti-mining label they've stuck on themselves, especially with the presidential
elections looming. From what I heard in Toronto, they want to show that they can get a
mine into production and this is their chosen vehicle
Agreed. And also at PDAC, the Colombian government mining people told those assembled that
they expect to award the main permits to Continental Gold (CNL.to) in May this year, which will
be another clear step forward in its promotion of miner friendly. The relative merits of RD.v, of
CNL.to and of any other junior working in Colombia can be debated, but seeing permits coming
out of the notoriously stodgy bureaucratic system in Colombia is a clear fillip for the sector
there and needs to be recognized accordingly.
In other news, the benefits for companies such as miners of a weaker local currency against the
US Dollar are well documented. If for example you operate in Peru and pay your local
workforce an average of 2,000 Soles per person per month, this time last year that cost you
U$719 in dollar terms and today it costs you U$645. Quite a a saving and it's the type of cost
input that's been helping many a miner reduce that all important cash cost number in the last
couple of quarters.
But it's not all great news, as forex is a constant double-edged sword and when your national
mining industry is mainly homegrown and operating and reporting in the local currency, and
when there's little in the way of national manufacturing industry infrastructure, it means that
you have to import to produce and that suddenly becomes very costly. This Reuters report (9)
noted that Colombia's Producer Price Index inflation gauge jumped 3.79% in March 2015 and
inside that figure, "Prices associated with mining rose by 17.22% in March". That's a year-over-
year figure and it gives a clear indicated of how much inflation is being imported by capital
goods into Colombia.
Argentina: Geopolitical Optics up 1 point
Down one point last quarter, the point from geopoliticals is reinstated this quarter because
Argentina is getting a small dose of better publicity from the mining world. Don't worry, it won't
last.
The reason seems to be a combo of several factors, rather than a single event. There's the
start-up of Goldcorp's (GG) Cerro Negro mine, which hasn't been perfect but it's now producing
gold and there's enough for supporters to cheer. Then there's Pascua Lama and how Argentina
is looking like the better partner than Chile for that project. It's weird but it's true. Then there's
the whole dying down of the Nisman affair and how it hasn't shaken the CFK government to its
foundations in the way that the foreign press expected it to do. Colour me unsurprised. Finally,
21

we're now into the soft campaign season for the October presidential election and so far at
least there hasn't been any big revelation or move to startle the status quo of Massa, Macri and
Scioli as the frontrunners.
It occurred to me last week that IKN has three regional risk updates to get through before we
know the next President of Argentina, which means there's a long way to travel on this story
yet. The next official step will be the PASO elections in August, which are tantamount to a
primary vote (though not exactly, I'm not going to bore you with the fine details) and after that
we'll be into the full-on election season. As for a prediction on the way the Presidential election
race is shaping up, the first thing to say, yet again, is that it's still too early to call anything with
great confidence but things stand so far, my tentative selection of Daniel Scioli for the win has
firmed up and looks a little more likely. Not only have we seen Massa dropping slightly in the
polls (10) with the latest linked there showing Scioli 31%/Macri 25%/Massa 21%, but we're not
seeing any significant opposition emerging from the ranks of the CFK-officialist party to make a
serious challenge to Scioli. Interior Minister Florencio Randazzo is the only serious challenger
from inside the government to Scioli's likely PASO "primary" election in August, but even he
isn't pushing his claim too hard and it's all rather too polite to be a real competition.
The other change in the election scene to date is what looks like the fading of the Sergio Massa
campaign star. He led the polls all through 2013 and most of 2014, but as above the most
recent voter intention numbers now have him in a clear third place. There's also signs that the
main media power group, Clarín, is going cold on Massa as "their" candidate and is moving
towards supporting Macri. This points to the current path of least resistance being a second
round run-off between the government-anointed candidate Daniel Scioli and the right wing
Mauricio Macri. If that happens, current polls also suggest that more Massa votes will move to
Scioli than to Macri, Scioli wins the run-off and the current government gets its continuation
(and on that, let's be careful what we wish for). But again and to emphasize, it's really too soon
to make a firm call and I'm simply projecting current tendencies; We're talking about Argentina,
it's not a serious country, anything can happen and probably will. What 2015 does make for is
one of the best spectacles possible for the Spanish-speaking political junkie, this election makes
the UK General Election look like a quiet stroll on a Sunday afternoon; Yes, it's going to be fun.
Guatemala: Mining culture up one point
The extra point gets awarded basically for the successful and smooth merger of Tahoe with Rio
Alto (well, the buyout) which has been accepted without much consternation by the general
market and takes the country another step down the road towards better acceptance of the
industry. The big political event in Guatemala this year is of course the Presidential election and
that's not yet showing up as a big factor on the wider political radar. We're seeing mainly
jockeying for positions inside the political parties, no big campaign trail or declarations of
support for pro or anti mining groups.
Potentially relevant countries
Guyana: Community/Social Miner Friendly up one point, FDI Friendly up one point
Interesting in the last update, more so now, Guyana is suddenly making serious strides as the
next jursidiction in LatAm that can be taken seriously for formal foreign mining companies. The
reason for the two point rise is the best one of all, we have mining projects being built out
successfully and showing every sign of going into production on time (or strictly, according to
the latest timelines) at Guyana Goldfield's (GUY.to) Aurora and Troy Resources' (TRY.to)
(TRY.ax) at Karouni (aka West Omai). Both projects are now fully funded, well on their way to
completion and reported by their respective companies to be on track for production and first
pour in 2q15 or 3q15, with commercial production before 2016. It's now developing into
something of a race to see which one pours gold first, but whatever the outcome the positives
look set to be reaped by the country of Guyana and its political risk re-rated.
This time in IKN295 I stated that at least conceptually, I liked TRY.to as a potential play on
22

Guyana more than GUY.to. Since then and taking into account the details of its financing
package, as well as its exposure to Argentina via the Casposo gold/silver mine (which is now
turning into a silver/gold mine) I've tqken a close look at TRY.to and in the end I passed. Not
because it was particularly bad and not for
its political risk levels either, but because
Teranga (TGZ.to) (TGZ.ax) stacked up
better as a potential investment. As this
comparative chart shows, that's turned out
to be the right call, so far at least.
Turning to GUY.to, this might be a more
interesting trade now. My doubts about the
risk during construction are now looking
more likely misplaced (a mouthful of words
for "I was wrong") and for a whole heap of
evidence, check out the photos in the April
2015 corporate presentation (11). The
thing to like about GUY.to at Aurora is its
size, because with a 3.5m oz resource, an initial run rate of 150k oz/year, a designed peak of
between 250k oz and 285k oz and a long 17 year mine life, it's the size that could move the dial
of a mid-tier or even large tier producer looking to add production. It's probably not a raging
bargain at today's market cap (C$456m) but it is cheap as long as it delivers smoothly on its
plan.
But this is less about the specific companies today, more about the country and Guyana has the
look of the next go-to country. It's avoided the legal mess of Colombia, the political mess of
Veenzuela and (so far at least) the community permitting mess that many Latin regions suffer
though. With the advent of two new formal mining operations of decent size, funded by foreign
capital and run by public traded foreign mining companies, the likelihood of it being seen with
new eyes soon is high.
Ecuador: Geopolitical Optics up 1 point
We're currently seeing Ecuador's image as a mining destination imporve in the eyes of the
wider world, which is why there's yet another point added to its total this quarter. There are
two fronts to consider:
1) Fruta del Norte: The Lundin tribe now has the mining community talking seriously about this
project again (e.g. did you see last week that Global Mining Observer Q&A with Pierre Lassonde
in which he stated that the two stocks he's been buying personally are Teranga and Lundin
Gold?).
2) The national government push to promote itself as the next place of interest. Ecuador went
all out at PDAC to show itself off and has been pushing the media channels since the annual
bash, with this recent Northern Miner interview with Ecuador's Strategic Sector Minister, Rafael
Poveda a good sample of the post-PDAC after-sales service (12). In reality, it's no secret that
Rafael Correa (he's the government) has been keen on getting formal mining projects into the
country for quite a while, but the country seems to have gained some traction with its message
recently. For sure it also helps that the local community risk angle and the way in which mining
activity is frowned upon by many of the rural areas in which the projects are located has been
neatly swept under the table.
The interview with Poveda was interesting in the respect that Ecuador seems to have done its
homework and now has a better idea of how to market itself. The story is "we now offer a
stable rulebook" as per permitting, State burdens etc. Poveda was asked whether the
somewhat contentious windfall tax would remain in place and his avoidance of a straight
answer either means "yes" or it means "Rafael hasn't told me yet", but he was quick to counter
with this: "Our analysis has shown that mining companies seek countries with legal and political
23

stability, with a clear tax burden, with control entities specialized and essentially not
maintaining social conflict with the development of activity. This is why we have worked to
modify the rules and even created the Ministry of Mines". That's a fair point and on a national
level Ecuador has been all about saying "OK world, here's the deal we offer, it's 51% for us and
49% for you, take it or leave it". That probably works when you have something as high grade
as Fruta Del Norte (gross margins will leave a lot for both company and state), it's less obvious
whether lower grade projects will be able to make it.
The other thing that's happening in Ecuador is a shift by the anti-mining opposition groups to
protest less against mining, more against open pit mining. This will again suit the Lundins at
FDN, less so Codelco at Llurimanga or INV Metals at Loma Larga (ex-Quimsacocha), amongst
others.
The bottom line question that needs answering is whether Ecuador is now turning into a mining
destination that we, the merchants of FDI, can trust. The best answer right now is that it is
making the right moves and turning into a mining destination, but no we can't trust the country
yet. Certainly not at a nationwide level of "If FDN works then Ecuador is miner-friendly", as
that's naive, even assuming FDN becomes the mine that LUG.to hopes it will be.
Market Watching
First Mining Finance Corp (FF.v) IPO
A quick headsup to note that the new initiative from the people who brought you First Majestic
(FR.to) (AG), the asset holding company First Mining Finance, is due to IPO this week (and if it
doesn't it won't be long before it does). It will trade under the ticker FF on the TSX Venture
exchange. I'm not a buyer of this new FF.v vehicle yet, but I'll be watching it carefully. It'll also
be interesting to note how much attention it gets in the trade media because the more people
start thinking "land grab", the better my chances are of making some money on my own tilts at
the trade such as FOS.to, LGN.v etc.
What I plan to do with my Rio Alto money
I've been asked this quite a bit, either in roundabout ways or just straight out and although I've
pointed to some ideas and made some general indications, there hasn't been some policy
statement on what I plan to do with the large (for me anyway) amount of cash that's about to
hit my junior mining account thanks to the disposal of by far its largest position, Rio Alto
(RIOM) (RIO.to). So here's a list of the plans:
• Hold more cash: Firstly I'm not going to plough it all back in immediately, even if some
chunky purchases get made (different to the doodle-round-edges purchases in LGN.v,
REG.v etc). I tend to be patient by nature when it comes to purchases (to the point of the
trait becoming negative and making me indecisive and whussy) which is going to suit
2015, there will be time to position the cash according to the risk involved.
• Buy more McEwen Mining (MUX): This is the one I'm looking to as the next potential
Top Pick and even without that epithet I'm likely to add to the position in order to replace
at least some of the junior gold exposure being lost to RIO.to. I'm looking for the right
type of fundies numbers from its 1q15 production results, which should come in week two
or week three of April, in order to make a more informed decision. But the main driver
here will be the gold price so if gold moves up, MUX will be obviously profitable and with
Rob McEwen at the helm it'll have plenty of promotional exposure for good news. It's
under U$300m and that's very cheap, as long as circumstances work out.
• Buy more B2Gold (BTO.to) (BTG): This is the one to buy and hold, with a three to five
year time horizon. The assumption is that BTO has done with its acquisition phase and
won't dilute the merry hell out of current holders by adding more assets for paper. Rather,
24

the current pahse will be about building out what it has, starting with the now
commercially producing Otjikoto and following through with its next big project at Fekola,
as well as optimizing and tweaking for growth at its currently producing assets (Masbate,
Libertad).
• Buy Lake Shore Gold (LSG.to): In short, top of the shopping list. I've even thought
seriously about calling buy on it this very weekend and adding next week, what with the
US Jobs causing a likely pop in gold, but I've decided against it because I'd probably end
up chasing the price next week instead of letting it come to me. Anything under $1 would
tempt me in easily from now on.
Other ideas include additions to other held stocks such as adding to the small ones in LGN or
SAM. Then there's the potential to buy Reservoir Minerals (RMC.v), which looks like it's going
through another fallow period so may be ripe for some cheap purchases on an opportunistic
basis.
Conclusion
IKN308 is done, we end with bullet points:
• The case for Regulus (REG.v) is set out. As I see it today, it's a high risk proposition
because its community agreement isn't in place yet, but that risk is countered by the
low entry price. REG in 2015 (and 2016) will be about de-risking the story; if we see it
hit the right achievements sstarting with a formal agreement with the communities
around Antakori/Sinchao, then consolidate the land position, then get its permitting,
then perhaps even get some sort of agreement with the neighbouring mining
companies, risk will drop and further purchases can happen. If not, keeping things
small at this stage means that little financial harm will be done. As noted in the Flash
update last Wednesday, we're marking territory.
• For me at least the new arrangement for the 'Stocks to Follow' list gives a better visual
idea of the two main trade ideas I'm going to promote this year: Buy quality junior PM
producers, buy cheap assets.
• As for the quarter's regional risk, for me the biggest story is Guyana and the strides it's
making as a mining country. I sense a re-rating in the air.
• We did our annual indoor egg hunt today, then we ate chocolate. Both of those things
were fun. Symbols that represent real concepts are useful things, the problems begin
when humans think the symbols are the reality.
I thank you in advance for any feedback. Flash updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
25

Footnotes, appendices, references, disclaimer
(1) http://www.bloomberg.com/news/articles/2015-04-03/asian-stocks-rise-as-dollar-holds-losses-before-payrolls
(2) http://www.regulusresources.com/wp-content/uploads/20150115-REG-CORP-PPT.pdf
(3) http://www.regulusresources.com/wp-content/uploads/AntaKori-Technical-Report-Scott-Wilson-Consulting.-July-2-
2012.pdf
(4) http://finance.yahoo.com/news/goldquest-provides-assay-results-first-110100032.html
(5) http://www.sec.gov/Archives/edgar/data/1471603/000121716015000057/focus20famend1.htm
(6) http://finance.yahoo.com/news/minera-irl-provides-corporate-074352347.html
(7) http://suracapulco.mx/archivos/263660
(8) https://settysoutham.wordpress.com/
(9) http://lta.reuters.com/article/businessNews/idLTAKBN0MV00720150404
(10) http://incakolanews.blogspot.com/2015/03/latest-poll-from-argentina-for.html
(11) http://www.guygold.com/i/pdf/ppt/GUY%20Presentation%20April%202015-final.pdf
(12) http://www.northernminer.com/news/interview-ecuador-minister-of-strategic-sectors-confident-on-countrys-
prospects/1003553871/?&er=NA
Appendix 1: Flash update dated Wednesday April 1st 2015
Good post-close Wednesday afternoon,
Three main subjects to cover in this update. Please note the attachment too.
Rio Alto Mining (RIO.to) (RIOM)
I didn't expect to be holding RIO.to after its merger with Tahoe Resources (THO.to) (TAHO) had been completed, but
here we are with the news today...
http://finance.yahoo.com/news/tahoe-resources-rio-alto-mining-214708751.html
...and as I'm still waiting for a reasonable price at which to exit (after calling sell and expecting to get out at CAD$3.60 or
so last week), that's now the official situation. I'm still a seller of my full position and may be able to sell my RIO.to in the
ensuing remnant trading without depositing the shares and receiving THO.to, but I don't know how liquid or true that
time-limited market is going to be yet. Therefore and for the record, If I need to swap out for THO.to, my sale target price
will be approx CAD$16 for THO.to held (or above if possible, of course). However, when the time comes and for the
purposes of the record I'll book the sales in RIO.to equivalent for the 'closed position' lines of the 'Stocks to Follow'
table.
To be clear: I'm selling my shares for the reason stated in previous editions of The IKN Weekly, but on the other hand
there's no rush to sell at any old price. As trading in RioTahoe (now just plain Tahoe) has been rather weird, I'll go the
patient route and pick my exit point accordingly. I also wish anyone who stays in the stock the very best of fortune.
Teranga Gold (TGZ.to) (TGZ.ax)
I've been given permission to share the attached report out of Macquarie this week (March 31st) on Teranga. I strongly
agree with most of its findings and I'm sure that fellow longs will appreciate the write-up. My only doubt is whether using
a 0.8X NAV multiple is a little too rich in the current gold market atmosphere. All the same, even a 0.65X or 0.7X
multiple gives a strong upside to today's share price according to this Macquarie analysis. Also, note the emphasis
placed on its strong community relations at and around the mine, as it's just the sort of eyewitness report we'd want to
see. TGZ looks a good bet from here and it's notable how much attention the company is now attracting from respected
market commentators.
Regulus Resources (REG.v)
I'm going to start a small position in Regulus Resources (REG.v) this week in order to take advantage of the current
sub-30c price level. Expect a full write-up on the company this weekend in IKN308, but as current prices are particularly
cheap and there's the potential for the US jobs news to push metals prices higher I'm going to get my foot in the door
before this weekend
IMPORTANT---> I stress that there's no rush to get on REG.v at any price. Anything above 30c is for somebody else, I
want cheap REG.v shares or I'll wait for a moment down the line. As I'll explain in IKN308, the buying window is likely to
last all through 2015 and I expect several opportunities to pick up cheap ones, not just this week. Tomorrow I will pay
max 30c, not a penny more. Also, be clear that this will be a small starter position. If REG.v shows good progress,
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additions will come in the months ahead. If not, no real harm will be done to my back pocket. Bottom line: this purchase
and the note in IKN308 mark territory, no more no less.
Other
In other news and while here, apart from RIO.to, the other trades as stated in IKN307 last Sunday have happened in
good order (GQC.v disposal, FSM short cover, FOS.to purchase).
Enjoy your long Easter weekend.
Best, O
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
27

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
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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.
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