IKN #311Premium

The IKN Weekly
Week 311, April 26th 2015
Contents
This Week: US macro headsup, Dedicated Followers of Fashion, Reviewing the 'Land Grab'
thesis.
Fundamental Analysis: Our next Land Grab stock: Atacama Pacific (ATM.v).
Stocks to Follow: Overview, Timmins Gold (TMM.to) (TGD), Dalradian Resources (DNA.to),
McEwen Mining (MUX) (MUX.to), First Majestic (AG) (FR.to), Teranga Gold (TGZ.to) (TGZ.ax),
Lake Shore Gold (LSG.to), NovaCopper (NCQ.to), Focus Ventures (FCV.v), Starcore Intl
(SAM.to), Legend Gold (LGN.v).
Copper Basket: Overview, Western Copper & Gold (WRN.to), Reservoir (RMC.v), Panoro
(PML.v), Catalyst Copper (CCY.v).
Low Cost Producer Basket: Overview, Newmont (NEM), Buenaventura (BVN).
Regional Politics and Market Watching: Peru: More Tia Maria (trying to make it the last in
the line), Colombia: Another round of worthless and time-consuming lawmaking, Nicaragua
romancing Chile, Argentina Elections update, Mining executive deaths in Mongolia, Venezuela:
Hocking its gold, El Salvador; Selling its gold, Tahoe Resources (ex-Rio Alto) will start the
Shahuindo build-out in July, More on the Mexico cartel shakedown scene.
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
US macro headsup
Next Wednesday April 29th will be a good day for newsflow, as aside from IKN-specific matters
such as the expected quarterlies from Timmins Gold, Teranga Gold and Lake Shore Gold we get
the US Q1 GDP number (currently expected at +1.0%) and also the communique from the Fed
as its latest meeting comes to a close. As usual, the advice is to keep eyes on Calculated Risk
(1) as a better source on US macro doesn't exist.
Dedicated Followers of Fashion
The Nasdaq set a new all-time closing high closing last week (though it still has to take out the
intraday record) and the S&P and the Dow hit new records too. And as we live in a world that
pushes Go Daddy up from an IPO of $20 to $25 in less than a month (valuing it at almost $4Bn,
or 150% of Kinross) the verdict for commodities was handed down in simple terms by Deutsche
Bank Fixed Income Research end-week report on Friday:
Commodities Weekly
24 April 2015
Overview:
Commodities continues to remain as the worst asset class with negative
returns as compared to benchmark index returns for EM, FX, fixed income
and global equities.
1

And that's the true bottom line, something your author has noticed as subscribers have recently
left the service, typical comments along the lines of "Thanks, I'll be back, saving some money,
all good, like the service, I'm not even looking at mining companies right now" .
UPDATE Sunday morning: The above was laid down Saturday and left unfinished, because
sometimes there are moments when you know what you want to say but aren't sure how to say
it. So on opening Gary Tanashian's NFTRH weekly missive this morning the following popped
out and, "Yep, that's exactly it" thought I. Permission sought from Gary to re-print the section,
he agreed, here we are:
"It looks like a rotation of hot speculative games. This kind of rotation is probably not
very healthy but it is in line with the upside acceleration and speculative blow off
scenario we have kept an eye on.
"Think of it this way, pretend we are talking about commodities and you see Uranium
blow off, Oil go to $140 a barrel and Copper fly up to $4.60 a pound. Finally, Silver puts
the exclamation point on things at 50 bucks an ounce. That was the rolling, speculative
rotation in the hot commodity games we used to talk about. Casino stuff. It was also a
precursor to the commodity bull market’s end. Point made?
"Shorting Oil, Copper or Silver would have gotten you killed before these bubbles blew
out. So we need to remain respectful of stock markets but also on watch for the flame
out. It remains a market to play as players will, but with the understanding of what it
probably is."
IKN back and here in the quiet and ignored sub-sub-section of the market called junior miners,
we continue to grind out the thoughts and analyses be they fashionable or not. One of these
fine days the sector will roar back into fashion (the only tough one is knowing when because
there's no if about it, that's what fashion does) and when it does we'll just be a small voice
quickly drowned out by those who will shout from the rooftops that they were "right about
metals" and "right about miners" because prostitution is a necessary part of success. What's the
point in winning if nobody else knows about it, right guys? In the meantime, we watch from the
hinterland while the world promotes New York City real estate as the best store of value for
those of vast wealth, or perhaps a minor Jackson Pollock, or one of the 10,000 limited edition
lithos of Hirst's latest spot painting of Mickey Mouse. So call me old fashioned, mock me if you
must but I'll keep storing some cash for my kids in gold, thanks. And seeking out a bargain or
two in the mining space while nobody's watching.
A review of the 'Land Grab' thesis
Back in IKN303 I ran our intro to one of the things I thought would become a trend in 2015 and
called it "Land Grab". The piece was intro'd with this phrase...
"There’s a new trend picking up steam, the renewed interest in land assets."
...and went on to expound the thesis that the bigger mining boys would start looking to add
land assets to their books by snapping up those beaten-to-death explorecos with all land, no
treasury, running on fumes and with both shares and assets valued at pennies on the dollar.
That was nearly two months ago, since then we've seen just that sort of land grab action begin
to pick up. Recent examples include Great Panther grabbing incestuously at Cangold (a deal
being finalized right now) Agnico Eagle (AEM) grabbing Soltoro (SOL.v) and most recently last
week's land grab by Yamana of Mega Precious Metals (MGP.v), which is one we featured on the
blog last week (2). We've also seen bigger deals, such as Goldcorp buying Probe, Timmins Gold
buying Newstrike, Alamos buying out AuRico (well, billed as a merger of equals but McCluskey
is running that show) and then a third type, where Moose Pasture devils are clubbing together
to form bigger holders of moose/llama/yak pasture, take Revelo's move on Altius as your
example there, or maybe Rockcliff (with a property) combining with Solvista (with the treasury,
though not a king's ransom). All those and more and we've also seen FF.v (the Neumeyer
"mineral bank" thing) get off the ground. I'm not going to run a whole list but the trend for
2

consolidation is beginning to happen and about time, too.
In general, what we've seen fits into the patterns we were looking for in IKN303 except for one
tiny detail: Nobody's buying the ones I've bet on (yet). Hey ho, them's the breaks, but all the
same let's review the criteria I'm looking for in my Land Grab potential plays. Here's the list of
crtieria as seen in IKN303 but just the titles this time, if you want to check back on the notes
that came with each idea then IKN303 is the place:
• The land must be cheap
• The land must be reasonably attractive.
• The location must have a reasonable political/community risk profile.
• The management must have a record of honestly and integrity to uphold.
• Good financial contacts inside mining that can fund or re-fund their
company.
• The ability to hold and wait.
As I look back at my little list I wonder whether I'm asking too much, for example wanting
honesty and integrity from my managerial team. I also note that "the ability to hold and wait"
fits, as this land grab idea is only in its early days here, we haven't seen that many deals that
truly fit and we haven't see the type of cross-sector fixed asset revaluation that has pushed the
exploreco juniors higher as a group. This chart of the TSX Venture exchange is all you need to
know on that score:
But let's state it loud and clear, the Mega Precious Metals (MGP.v) buyout announced by
Yamana (YRI.to) (AUY) last week was particularly encouraging as although it's not one we hold
here the profile fits very closely with the Land Grab thesis, right up to and including size of
holding being more important than its apparent economics because, to be frank, the MGP
assets are barking dogs. YRI's strategy may be something akin to the FF.v so-called Mineral
Bank and as we've already seen YRI fence off some of its non-core Brazilian assets into the
wholly-owned Brio Gold subsidiary (3), maybe the MGP projects will end up there and then
maybe, way down the line when gold's trading at the McEwen $2k/oz or $5k/oz or wherever,
the thing gets spun off into the hype and crazy buying of a wonderful future time where we will
all live happily ever after. What could possibly go wrong)
Anway and more seriously, the announcement of the MGP deal has encouraged your author
and his pet theory. As a result I've been checking again at companies that I've filtered and
discarded over the last year and one, above all has stood out. See below.
3

Fundamental Analysis of Mining Stocks
Our next Land Grab stock: Atacama Pacific (ATM.v)
Before we get to the sales pitch (for want of a better phrase) we need to revisit IKN coverage
on Atacama Pacific (ATM.v). Back in IKN276 we featured ATM.v for the first and (I believe) the
only time in these pages in a note called "Filtering a News Release" and the specific section on
ATM.v was "Atacama Pacific (ATM.v) pre-feas news release", all about the events of that week
around ATM.v as it released its Pre-Feasibility Study (PFS) results for its flagship Cerro
Maricunga project. Later on that week in August 2014 I even stuck the note on the open public
blog (4) and it must be said, I wasn't very nice about the company or its project. Here's how
that piece came to a close:
Bottom line: A junior exploreco is selling you a story, no more no less. If you can’t trust
their story they have nothing to offer, so the job is to pick holes in their promo and see
whether their pitch stands up to a little critical thinking. In this case I’ve already seen
enough (more than enough, in fact) and don’t have the slightest inclination to check out
capex assumptions, check whether they’ve taken into account the changes in the tax
cose under the new Bachelet government, any number of other line items. I only need
to be bullshitted once in order to walk away and the way in which this company has
stretched parameters away from the conservative, through the potentially acceptable
and out to a world of perfect for their purposes is all I need to know. If they’re doing it to
me with things as obvious as a “base case” for gold that sits $50/oz higher than current
spot, or with a CLP/USD forex rate that has no connection at all with reasonable
assumptions for the future, then I simply don’t want to know.
For the record we noted at the end of the IKN276 note that on the back of the very same PFS,
our friends at Canaccord had decided to open coverage on ATM and give it s $2.10 target price.
Also for the record, I took quite a bit of negative flak for that piece (people mailing in with
unfounded assumptions regarding my mother, her marital status at the time of my birth, etc).
So to toot the horn before getting past this (already too long) intro, it might be due to being
right for the wrong reasons (or others being wrong for the right reasons), but The IKN Weekly
call to avoid ATM.v last year was the right one and Canaccord (along with those mail plas I
picked up at the time) got it wrong. Let's not even consider what the ATM.v share price has
done since the company's conception a little under five years ago and just consider the last 12
months that includes the period before and after the PFS of August 2014:
That 75% loss since the PFS covers the previous opinions mooted here on ATM.v well enough.
That's the intro done, it's time to get up to date and explain why ATM.v is an interesting
alternative in 2015. For that we consider what's changed and here's a list:
4

"Land Grab" is one of the 2015 themes: The idea was posited in January, it's beginning to
show its fruits. Times change and the market rules of how to buy low/sell high change with it,
so while 2014 was battening downt he hatches and letting the asset values drop, from now
onwards it's time to pick at the cheap prices before they're bought up by real money.
Atacama Pacific is cheaper: Indeed 19c is cheaper than 77c, this is not rocket science. With
56.31m shares outstanding and priced at 19c apiece this weekend, ATM.v runs a market cap of
CAD$10.7m (or if you prefer, U$8.6m) That's a long way down from the $37.58m market cap
ATM had on the day of the PFS announcement in August 2014. The treasury position is thin at
under $0.5m on December 31st 2014 and even with the obvious cut in burn rate this year, by
IKN estimates the cash will run out by the end of this current 2q15 quarter.
I've taken a good look at the 43-101 PFS document. Back in late August, the analysis
that led to the discarding of ATM as a serious investment option came on the back of the NR
published by ATM, not on the back of the 43-101 compliant pre-feas study that was still not in
the public realm. As you're likely aware, companies don't have to publish the full studies at the
same time and in the case of Canadian miners have a maximum of 45 days to file on SEDAR. By
the time ATM had got around to its filing in early October, I'd already rejected this company out
of hand and the slippage in the share price was backing up the call...and who reads 333 page
PDF technical reports for fun, anyway?
That was then and this is now. One of the criticisms I levelled against ATM at the time was a
lack of clarity (which included speculative buying and selling patterns pre-PFS, delays in delivery
and a general mushroom politics feel for their work). The good news here is that I'm going to
eat my words after studying the Cerro Maricunga PFS. It's a detailed and well written
document, which lays open the company's project for all to see and as far as I can make out,
hides nothing from view. As a "good PFS" it stands up to close scrutiny.
The project economics are improving. There are several factors involved with this, but the
bottom line is the most obvious and something that's now reasonably common knowledge in
the mining sector; it's getting cheaper to build and/or operate a mine. In the last few months
we've seen costs drop over a wide range of inputs, including capex prosaics such as rebar and
cement to opex matters such as NaCN or the key fuel component. To illustrate, what I'd like to
to is critique my own critique of ATM.v at Cerro Maricunga in IKN276 last year because I picked
up specifically on two inputs as examples of bad assumptions. In fact at the time I'd still say
they were poorly judged, but the passage of time has shown us a new and different reality.
1) Forex: The first one is on the forex rate assumptions used by ATM (in fact to be strictly
accurate its 43-101 compilers but you know what I mean here) in the PFS. In August ATM
chose to use a forex of 600 Chilean Pesos (CLP) to the US Dollar (USD) and though the pair had
spiked through that a couple of times, it was typically lower than that opver long-term periods
(perhaps CLP500 to 550 would have been a more reasonable estimate). The act of choosing a
"cheaper Peso" for an
economic study of course
favours the econonics of
the mine plan, which is one
of the things I was quick to
point to in August. I was
about filtering a NR, about
seeing whether the project
was worth further and
more careful study and that
means checking for BS. For
me at the time, using a
CLP600=U$1 forex was
pretty obviously a massage, it smacked of BS and I don't want BS from a junior.
5

But since then, we know what's happened to the dollar. This chart above shows the dollar
versus the CLP and the forex has stayed handily above 600 for close to six months. That's a big
change and it's indicative of cheaper op-ex across the board, be it Chile or any other LatAm
country that's seen the same type of currency devaluation against the almighty greenback.
2) Fuel: Another of my sharper criticisms about ATM in August was how it was assuming a fuel
price input of U$0.90/litre, lower than the prevalent price of fuel in Chile (and especially in the
logistically challenged North Chile regions) at the time. That was of course August and I doubt
there's anyone in The IKN Weekly audience who needs remindng about what's happened to the
price of crude and its derivatives since then.
Today the average price for diesel in the North regions of Chile (5) stands at CLP 528, or
U$0.86, which is well inside the benchmark parameters set by ATM in its PFS. What's more, on
checking the 43-101 document (instead of my blithe assumptions on reading the August NR)
we note the PFS had discounted the VAT (sales tax) component in fuel, which runs at 20% on
Chile and is one of the taxes that gets refunded easily in Chile. As this wouldn't be an expense
per se the PFS apparently excluded that. In effect that brings the real fuel price for ATM in Chile
right now to U$0.69/litre, the type of number which isn't just inside the range but gives a very
comfortable margin of error to the 90c assumption. As fuel is assumed to be 20% of Life of
Mine op-ex at Cerro Maricunga, we're talking about a very significant savings to the current PFS
parameters. Even a reasonably conservative ballpark of fuel at U$0.75/litre, modelled all-in
costs would drop by $40/oz gold.
Some inputs are better than expected
This again comes from closer reading of the PFS instead of rushing to conclusions from the
August NR. An example is water, always a thorny issue in the Northern Chile regions but in the
case of ATM they have a deal signed and in place that would provide 80g/s of supply to the
plant, which compares to an estimated 85g/s to 90 g/s that would be needed at the preferred
run rate of 80,000 tonnes per day of mineral. As things stand the 80g/s supply is good for a
65,000tpd operation and according to the terms of the contract held by ATM, the company has
first right of refusal on extra supply and a very high likelihood of getting that offer in the next
couple of years. Another noted advantage is infrastructure, as Cerro Maricunga is located in an
established mining camp next to or close to working mines and other projects. Matters such as
roads, power and labour are on its side.
And now, to the gold price
In the 2014 PFS, capex outlay is put at just under U$400m. As this next chart from the PFS
document below shows, improvement in that capex (re-bar and cheaper labour) would be
welcome but it's more important to get op-ex lower, which points us again to the potential
savings in fuel.
6

But even opex sensitivity pales into insignificance next to the most sensitive economic input of
gold. In its PFS, ATM (or again, the third party 43-101 compilers) chose to base the study
around a U$1,350/oz baseline. Now for sure they can pick any number they want, but even
then that was looking high for a baseline and it was obviously chosen to paper over the largest
of the economic cracks.
At U$1,200/oz gold, post-tax NPV drops sharply to U$152m and implies an IRR of 12.8%.
That's not good and it's not enough to interest me as an investor at face value with this project.
But at its current U$8.6m market cap makes this the type of "call option" play that an
investment-minded mining company may actively consider. This next table from deeper in the
PFS says the same thing in a different way:
At U$1,200/oz this project (under its previously assumed capex and opex) is ho-hum and
unlikely to become a mine. But the leverage to the gold price is clear and at higher prices, this
is one that gets built.
The case for the buyout
In one sentence, the risk is back-end loaded for any potential buyer and that makes this a live
prospect. In this respect it's similar to the MGP.v deal of last week The cash poor ATM.v
currently trades at under CAD$11m, so if the pattern we've seen recently in cheap asset
buyouts such as Sunward (SWD.to) or Mega (MGP.v) is transferred to ATM.v, the friendly buyer
would have to bid at least $20m for the company and give spec buyers (e.g. me) their near
double from the current unloved lows.
When it's about building a mine for $400m, the purchase of the rights for $20m are the least of
your problems. Therefore ATM becomes a call option on higher gold prices for a larger mining
company that dosn't want to risk much. There's enough here to like including
• 5.7m oz gold M+I (3.7m oz of those are P+P reserve)
• A Pre-Feas study, complete and in the books. It's not am earlier stage and less
solid PEA and it's a pretty good one at that. That study alone is worth money.
• Country location, as Chile is as good a place as possible.
• Better water supply (and other infrastructure) than previous assumed. The
current deal provides most of the water an 80ktpd machine would need, the rest
looks eminently gettable.
7

But be clear: I'm not writing up ATM as a glowing and favourable project that you just HAVE to
buy and own because it's going to be the next gold mine in South America. That's not the point
of the 'Land Grab' theory under which this stock becomes a potential trade. There are still
things I don't like about ATM:
• The aggressive parameters in the August NR: Some are up for debate, but others aren't
such as basing at U$1,350/oz gold. Hindsight is a wonderful thing of course.
• The 5% discount rate, when I'd prefer to see baselines set on 8%. For what it's worth, an
8% discount rate pulls down post-tax NPV by aorund $100m to around $300m.
• Cash treasury: ATM is now a bottomless pit and it's likely going to run out of money soon,
definitely before the end of the year. It will need to do some sort of deal to remain afloat
over the medium term (which of course may be a help to us, the speculative bottom
feeder buyers today).
• Mediocre economics at the current gold price: This is about leverage to the future, as no
CEO in their right mind would sign a $400m cpaex cheuqe in this current market for a
project with sub-15% IRR.
In the end, it's all about "buy low sell high"
At U$8.6m for a company with 5.7m oz of gold under 43-101 pre-feas compliance in Chile,
ATM.v today looks right in the sweet spot for a Land Grab play. Part of this whole thesis is that
you or I cannot buy projects or companies on which the market is sweetest; by definition we're
buying the out of favour companies, the ones going at deep discounts. Today, April 2015,
nobody wants large tonnage, low grade, open pit heap leach gold projects. Nobody. So we put
ourt Land Grab hat on and look around to find the best of this bad bunch. After a filter or three
one shows up that combines a multi-million ounce deposit, decent infrastructure, good location,
advanced stage exploration and a dirt cheap share price.
This is the mineral resource table from the 43-101, which outlines the M+I at 5.429m oz gold,
that gold contained in 433.8m tonnes of rock grading an average of 0.38 g/t Au.
Within that, 3.743m oz gold is held under proven and probable reserves (294.4m tonnes
grading 0.4 g/t) and that reserve forms the focus of the economic study. As we've pointed out
already today, this type of low grade high tonnage proposal suffers from mediocre economics at
low-end gold prices, but at least in this case the assumptions are conservative. The 43-101
assumes a 79.5% recovery rate, $10/oz refining carge and a 3% mining dilution, all reasonable.
It's when we compare Cerro Maricunga to the current valuations for Atacame Pacific that its
bargain basement status shows through:
8

Atacama Pacific (ATM.v): In-situ valuation of gold ounces (resource & reserve)
PPS (C$) Mkt Cap (C$m) In-situ/ M+I resource OzAu In-situ/ P+P reserve OzAu
0.10 C$5.63m U$0.86 U$1.20
0.15 C$8.45m U$1.29 U$1.81
0.19 C$10.70m U$1.63 U$2.29
0.20 C$11.26m U$1.72 U$2.41
0.25 C$14.08m U$2.15 U$3.01
0.30 C$16.89m U$2.57 U$3.61
0.35 C$19.71m U$3.00 U$4.21
0.40 C$22.52m U$3.43 U$4.81
0.45 C$25.34m U$3.86 U$5.42
0.50 C$28.16m U$4.29 U$6.02
0.55 C$30.97m U$4.72 U$6.62
0.60 C$33.79m U$5.15 U$7.22
does not include inferred ounces source: ATM 43-101 PFS, IKN calcs
forex: CAD$1 = U$0.80
Another thing about valuing an exploreco in the way you see above; in-situ valuations are also
wildly out of fashion. It wasn't much more than a couple of years ago that I'd read comments
of how U$10/oz gold in situ valuation was wildly cheap. It depended on the project of course
and these days mining companies are far more bottom-line oriented and want to know about
margins and profits before size mine life potentials, but all the same we see that ATM.v, with a
PFS in place that gives a clear and reasonably reliable yardstick to its economic potential, has
its gold ounces currently valued at under a buck apiece. And I've chosen just one box to
highight, that of the P+P reserve ounces at a 40c share price, which even then still values those
in-ground oucnes at under U$5 a pop.
Bottom line: The straight dope: Yamana Gold has just paid CAD$17.5m for Mega Precious
Metals and Atacama Pacific is worth more than that freakin' dog. Neither are great, both fit into
the "Land Grab" world we're looking at today, but if MGP can find a buyer, this one can too.
ATM is for the large mining company that wants to get its hands on a big deposit for little
current cost, with the view to seeing its project economics move from mediocre through to
good when the price of gold improves. Current risk in buying ATM today is minimal for both
large (Tier 1 or 2 mining company) or small (retail player buying a few shares), the potential
rewards in the event that gold mining and commodities in general become fashionable once
again are great. In the light of the move we saw last week by Yamana on MGP, it's your
author's considered opinion that the 'Land Grab' is about top pick up speed and ounces of the
ARM.v variety are going to get an overdue revaluation.
I'm not in this one to make Cerro Maricunga into a mine. I'm in this one to ride the nascent
trend and sell some shares higher than the price I bought them, maybe a few months down the
line. The IKN Weekly recommends Atacama Pacific (ATM.v) as a speculative buy with
a nomainal price target of 40c, respresenting a 110.5% upside to Friday's closing
price of 19c. The better class of unloved deposit is about to find a little traction and although
it's one we disparaged in the middle of last year, its precipitous drop in price and the changing
dynamics of the sector have turned it into an attractive speculative vehicle. I will buy some
ATM.v next week and add it to the IKN 'Stocks to Follow' list as of next weekend, in the 'Land
Grab Stocks' sub-category. Buy low, sell high.
9

Stocks to Follow
A wholly negative week, with our list dragged down by the weakness in gold. Only one stock
made gains on the week and ironically it was the company with the week's worst news. Minera
IRL (IRL.to) gained a penny, or 13.3%. Two others remained unchanged on the week (MUX.
FOS.to) which leaves a full twelve losers. Not listing them all here we note the bigger losses
taken by NovaCopper (NCQ.to down 14.3%), Legend Gold (LGN.v down 13.3%), Regulus
Resources (REG.v down 10.5%) and Starcore Intl (SAM.to down 10.0%). Generally spekaing,
the bigger the market cap, the smaller the loss.
With the addition of Timmins Gold (TGD) as a trade we now have 15 open positions in our
Stocks to Follow list, our self-imposed maximum. Five of those are in the green, one is
unchanged, nine are in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
Metals Producers (in current order of preference)
McEwen Mining MUX buy U$1.09 25-jan-15 U$0.984 -9.7% Added Mar'15, top value
B2Gold BTO.to buy C$2.32 12-sep-14 C$1.88 -19.0% Dependent on Au price moves
Teranga Gold TGZ.to buy C$0.55 15-feb-15 C$0.62 12.7% New position, 83c tgt
Lake Shore Gold LSG.to buy C$1.04 07-apr-15 C$1.07 2.9% New FCF+ prod. Poss M&A tgt
First Majestic AG hold U$10.51 10-aug-14 U$4.81 54.2% Holding, only silver exp left
Timmins Gold TGD spec buy U$0.60 19-apr-15 U$0.585 -2.5% New, ST spec rebound play
Starcore Intl SAM.to hold C$0.12 10-jan-15 C$0.135 12.5% 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$0.28 0.0% New trade, 36c/share of cash
Legend Gold LGN.v spec buy C$0.085 01-mar-15 C$0.065 -23.5% Spec buy, v small trade
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.66 -37.1% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.305 -73.5% 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$0.87 35.9% Nov'14 tgt $1.25, top Au expl
Regulus Res REG.v spec buy C$0.30 06-apr-15 C$0.34 13.3% New bet on 2016 drill prog.
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.21 -8.7% tgt 50c, now raising cash
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.085 -68.5% 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
Rio Alto Mining RIO.to apr'15 C$2.30 07-apr-11 C$3.57 55.2% Top pick, bot out, big win
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
Now for some notes on current basket stocks, though not so much as it was a pretty quiet
week all told.
Timmins Gold (TGD) (TMM.to): Position opened. As per the call of last week I got all I
wanted at U$0.60 (using the TGD ticker on this trade) and we now await the April 29th meeting
that's set to approve the merger between TMM and Newstrike (NES.v). As noted last week,
once the deal is set and the company signs off on its 1q15 numbers, we can expect TMM to go
on the offenisve and market its benefits hard. That's what this trade is about, after all.
Dalradian Resources (DNA.to): Despite the weak gold sector, DNA managed to hold the 90c
10

line until midway through the Friday sesson when somebody dumped 350k shares onto the bid
and the price cracked down to 85c.
Come the end of the day DNA closed
at 87c, which shows that even the
hotpot sector favourites are vulnerable
to a seller of medium size these days.
Chartists may be worried about the
lower lows being posted since the
start of 2015 (so I'm told at least),
personally I've watched everything
under the Ross Beaty number (90c,
where he bought his chunk) getting
bought back up quickly and have no
reasons to worry here. What I know
as a fact is that adding when I did in
November last year has turned out
well. An easier hold is impossible to imagine in the exploreco sector.
McEwen Mining (MUX): On Thursday April 23rd MUX announced the following in an SEC
filing (no news release) (6):
"McEwen Mining Inc. (the “Company”) announced today that effective
April 22, 2015, Craig P. Stanley, Vice President, Corporate Development is no
longer employed by the Company."
That was the whole of the filing content and that qualifies as "terse". It also came just one day
after that, VP Corporate Development, "is no longer employed by the company". This news
came just after Craig Stanley signed off on the Tuesday April 21st NR (7) on exploration at El
Gallo I.
The fall guy is chosen and another "Rob McEwen isn't an easy guy to work with" story rolls
across the mining gossip zone.
As for the April 21st El Gallo I NR, it was pretty positive, though the charm offensive is now
showing clearly. The message of "El Gallo I mine life will be extended, 3q15 full results" is the
type that would normally wait until 3q15 came around and official numbers get attached, but
Rob McEwen is currently keen on combatting the (self inflicted) negatives around MUX with
positive news. Fair enough, it'll all wash out in the end. However, the bottom line is the
message here and the message is that El Gallo I is expected to be a sustainable mining
operation under its new higher grade configuration, with plenty of mine life to add. As we now
calculate that mine to be handily profitable (the occasional multi-million dollar robbery
notwithstanding) that leaves the 49% participation in the San José mine as the difference
between making a profit and a loss at current metals prices.
As for trading, MUX ended bizarrely UNCH on the week at the price of U$0.984. Stranger things
have happened.
First Majestic (AG) (FR.to): Two bits of news from FR.to last week. On Thursday we heard
that the company will release its 1q15 financials on May 7th (8) and a day before that on
Wednesday April 22nd news came that the $30m bought deal financing had closed in the
correct manner (9). A neat and quick closure to this FR.to equity placement is the next best
thing to not having to run the damned thing in the first place, so one cheer for that. It still irks
that FR had got itself into the position where a financing was necessary, I will therefore
continue to beat myself up about owning a piece of this.
Teranga Gold (TGZ.to): A reminder that TGZ is due to report its 1q15 financials next week,
11

on April 29th (10). In other news, a report out of Senegal last week made for negative reading
about community relations at TGZ. Specifically, the growth Goraproject which is due to come
online in 4q15 has had a shadow cast over it by reports that one set of locals aren't happy with
the situation and are apparently blocking the development work (11). It's one of those
situations where you feel local rivalries and politicking are more likely the causes than direct
opposition to the mining company and its plans. It's also to my eyes and ears one of those
situations that local politicos want to make sound important and big so that they get the fix
they want as quickly as possible. But we shouldn't be too dismissive of the circumstances and
at face value, the bickering represents a threat to the TGZ 2015 growth and expansion plans,
as it would delay the flow of the new and higher grading material.
Lake Shore Gold (LSG.to): Wednesday April 29th is going to be a busy day for your author,
as along with TGZ and TMM we also have LSG.to due to report its 1q15 quarter (12), though
the numbers are almost certain to hit in the evening as the company has its AGM that afternoon
and will sign off on the numbers then, surely. Plus the ConfCall is set for the morning of
Thursday April 30th.
Final warning: We're expecting an excellent blowout profit number from LSG.to, so that means
the rest of the market will expect one too. For share price appreciation, we're relying on
surprise rippling through the headline-only readers with more money than sense who inhabit
those bastions of deep DD called hedge funds. There are many more of them than you'd ever
suspect. We'll also look for any guidance for the rest of 2015 that the company cares to offer.
NovaCopper (NCQ.to): In one fell swoop your author finds himself on the sharp end of a
Land Grab move. Sunward (SWD.to) is a stock I used to own and managed to wring out a
couple of successful in-out trades as well as bail on the position just before big damage was
done to its stock price. It and its Titiribi project in Colombia are known to these pages. SWD
also has an owner in common with NCQ, Thomas Kaplan via the Electrum investment company,
so with 20/20 hindsight in operation it's
not that difficult to see how these two fit
together.
That's one of the problems with M&A;
the moves often seem so logical after
the fact. Anyway, this is what happened
to SWD stock on the news while NCQ
was sinking 14.3% on the week and
stripping away most (not all) of the gains
it's put together in 2015.
The main advantage to NCQ is that it
gets hands on the approx $21m in cash
treasury held by SWD. The advantage to SWD shareholders (other than Kaplan, who's put the
deal together) is that they get a piece of a high grading project that has the chance of going
somewhere , instead of the low grade gold property with permitting issues that's going strictly
nowhere in the currenty gold price environment. Overall it's an OK deal and from a relative
outsiders point fo view (i.e. the retail shareholder with a small long position), the main
advantage is that it lifts the pressure of financing off the shoulders of NCQ. Its budget was for
the current 12 months and treasury wasn't expected to last much further than that, so adding
perhaps $20m once the lawyers have been fed means NCQ won't have to kowtow to a tight
financing market for at least two years, probably three (or more if they go the parsimonious
route). It's the cash addition that makes sense and will keep me on, because the financing
burden gets taken away and NCQ could become a speculative vehicle more easily. I'm not in
love with the deal or this stock and could sell easily enough, let's see how it trades first though.
Focus Ventures (FCV.v): We note that Radius Gold (RDU.v) (aka the Gold Group mothership)
last week (13) had its AGM where this happened:
12

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 23, 2015) - Radius Gold Inc.
(TSX VENTURE:RDU) is pleased to announce that at the annual and special meeting
of the Company held today, the shareholders voted in favour of all matters brought
before the meeting including the proposed change of business of the Company from a
Tier 2 Mining Issuer to a Tier 1 Investment Issuer (the "Proposed COB") on the TSX
Venture Exchange ("TSXV").
This moves RDU one step closer to being able to add more money into the FCV structure if it
requires or desires. This would be an obvious way in which FCV can sidestep the Sword of
Damocles type conditions it has with the current Sprott loan. As for the current equity
placement, we understand the book has filled quickly (in fact it's turned out to be
oversubscribed) and that's a good thing.
Finally, here's a photo of the two rigs currently drilling the infill pattern at Bayovar12, taken last
week by the FCV team and kindly passed on. As we've mentioned before this is big country and
that's underscored by the size of the rigs in this photo; they're 2.5km apart.
Here's what one of those two rigs looks like up close (I'm not sure which one):
Starcore Intl (SAM.to): SAM had a weak week, trading down to 13c for the first time in a
long time and finishing a full 10% lower than this time last week. After eharing on the
13

grapevine the week before last that production numbers were looking a little better thanks to
improving head grades, that came as a bit of a bad surprise to your author. Though on thinking
about it, the gold weakness is enough for any of these stocks to be hit at any time. Come mid-
May we'll have the quarter production numbers and know more, but SAM does look cheap here.
Legend Gold (LGN.v): The share price continues to bounce around the 7c to 8c range, and
volumes are still light, but noticably it's now trading nearly every day which is a good place to
start the recovery. Friday saw LGN trade for the ninth consecutive day, which is the best run of
opening every day since September 2014
At this point we can't ask much more than for some light interest.
The Copper Basket
After seventeen weeks of 2015 The Copper Basket is showing a 9.07% loss to level stakes.
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 550.01 1.44 -29.1%
2 Reservoir Min. RMC.v 3.96 47.55 205.42 4.32 9.1%
3 NGEx Resources NGQ.to 1.17 187.71 174.57 0.93 -20.5%
4 Nevada Copper NCU.to 1.65 80.5 149.73 1.86 12.7%
5 Copper Fox CUU.v 0.135 402.96 74.55 0.185 37.0%
6 Amerigo Res ARG.to 0.27 173.65 67.72 0.39 44.4%
7 Western Copper WRN.to 0.68 93.68 58.08 0.62 -8.8%
8 NovaCopper NCQ.to 0.58 60.15 39.70 0.66 13.8%
9 Hot Chili Ltd HCH.ax 0.16 333.11 33.31 0.10 -37.5%
10 Panoro Minerals PML.v 0.295 220.25 33.04 0.15 -49.2%
11 Regulus Res REG.v 0.35 56.39 19.17 0.34 -2.9%
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 31.41 6.28 0.20 -34.4%
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 -9.07%
the overall basket average dropped 1.24% on the week to hit its lowest weekend position of
the year (by a few tenths). The damage was done by seven downers (NGQ.to, PML.v, CUU.v,
ARG.to, HCH.ax, NCQ.to, REG.v) versus four uppers (CS.to, RMC.v, WRN.to, CCY.v), with the
other four UNCH on the week (NCU.to, MNC.ax, AQM.v, COP.to). Best upmoves came from
Western Copper & Gold (WRN.to up 21.6%) and Reservoir Minerals (RMC.v up 10.8%). The
bad downers were NovaCopper (NCQ.to) and Regulus (REG.v down 10.5%).
14

4% The Copper Basket 2015, weekly evolution
2%
0%
-2%
-4%
-6%
-8%
-10%
15
ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62
source: IKN calcs
The story of copper price action was lower on
assumed slack world growth, followed by a sharp
change in direction Thursday and Friday which
brought the price back to the $2.75/lb range. The
reason was Shanghai, as a big drop in SHFE
warehouse holdings coincided with hard evidence that
the Chinese strategic stockpiling of copper had
resumed.
Inventories time, here are the regular bullet points
that dovetail nicely with the price action:
• Total world copper stocks dropped, nearly all
thanks to Shanghai. The world of warehouse
copper saw an overall exit 24,806 metric
tonnes (mt) (-4.2%) to close Friday at
567,986mt.
• Shanghai Futures Exchange dropped by bug fat 22,490 (-9.7%) to finish at 208,285mt.
This follows on from the 4.1% drop we saw the previous week and is wholly good news
for bulls, the China restock is on. Check the chart below for more.
• LME warehouses stocks were hardly changed, rising a tiny 450mt (+0.1%) to finish the
week at 337,675mt.
• Comex warehouses dropped a big percentage/smallish absolute 2,706mt (-10.9%) to
finish at 22,026mt. Yes it helped the overall world story along some, but the only real
news in town was Shanghai.
The Shanghai-only weekly tracker shows the good news for the bulls very clearly: the stocks
have rolled over and now they're dropping fast. It's happening maybe a month later than in
2014, but it's happening all the same and it's why Cu put in its recovery late last week.
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
31'13ceD ht21 ht62 ht9 dr32 ht9 dr32 ht6rpa ht02 ht4yam ht81 ts1enuj ht51 ht92 ht31 ht72 ht01 ht42 ht7 ts12 ht5tco ht91 dn2von ht61 ht03 ht41 ht82 ht11 ht52 ht8 dn22 ht8 dn22 ht5rpa ht91
Mt Cu
source: Cochilco

Now for some notes on a few of our basket components.
Western Copper & Gold (WRN.to): The idea in buying a few of these was to play the
rebound potential in its rather wide recent trading range. The good news is that last week saw
the rebound come, a big percentage upmove and a lauinch towards our 70c target. To remind
you all, this short-term and nearly total chart based trade isn't going to be part of the formal
'Stocks to Follow' list, win lose or draw. Also a quick reminder that if I see 70c I'm taking it and
will sell for my quick profit.
Reservoir Minerals (RMC.v): This one had a good week, up 10.8% on smallish traded
volumes but a steady and persistent stream of people willing and able to hit the ask. We're still
inside its recent trading range so I'm not going to read too much into this move, but those long
must have enjoyed the action. Yes i was tempted to join at those sub-$4 prices, no I didn't buy
any. More fool me on this stock one more time, it's one I just can't seem to get right for myself.
Panoro Minerals (PML.v): Dead man walking. End.
Catalyst Copper (CCY.v): The second smallest market capper in the basket reported its
annuals after the bell on Friday. As at December 31st it had $414k in cash and a similar number
of its working cap ($412k). As it's currently sipping at its cash without making any serious
exploraiton moves, its current treasury can be reasonably expected to last another half a year
but at some point in 2015 it's going to have to collect some more cash. With "Endeavour
Financial" sponsors such as Frank Giustra and Gordon Keep among others, this should be too
difficult. Unless of course the New York Times drives them all out of business before then.
The Low Cost Producer Basket
After 17 weeks, the 2015 Low Cost Producer Basket is showing a 5.91% gain to level stakes.
company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 812 15.44 19.01 2.6%
2 Barrick ABX 10.75 1164.67 14.58 12.52 16.5%
3 Newmont NEM 18.90 499 12.47 24.98 32.2%
4 Franco Nevada FNV 49.19 156.08 7.69 49.24 0.1%
5 Silver Wheaton SLW 20.33 357.39 6.85 19.16 -5.8%
6 Agnico Eagle AEM 24.89 173.43 5.17 29.82 19.8%
7 Buenaventura BVN 9.56 254.19 2.83 11.15 16.6%
8 Kinross KGC 2.82 1114.5 2.56 2.30 -18.4%
9 B2Gold BTG 1.62 948.9 1.47 1.55 -4.3%
10 Pan American PAAS 9.20 151.41 1.39 9.18 -0.2%
all prices in U$, using NYSE ticker prices Portfolio avg 5.91%
The basket average improved 0.37% while our GDX control dropped by 2.12%, which means
the little competition between the two squiggly lines has swung our basket's way again. No, it's
nothing to do with my stockpicking abilities, but it's interesting to check out just why one
performs a lot better than the other on any given week and this time it was about strong
fundies results from NEM and BVN, a couple of our equal-weight names compared to the
variably weighted ETF.
Of our ten basket stocks, four went up (NEM, FNV, KGC, BVN), one remained unchanged (BTG)
and five went down (GG, ABX, SLW, AEM, PAAS) during the course of last week. The two
strong performances came from Newmont (NEM up 6.0%) and Buenaventura (BVN up 5.8%),
the worst of the week came from Goldcorp (GG down 4.0%).
16

The Low Cost Producer Basket: Weekly performance
and comparative to GDX control
25%
20%
15%
10%
5%
0%
-5%
17
ts13ceD ht11 ht52 ht8 dr42 ht8 dr32 ht5rpa ht91
basket
gdx control
source: Google Finance, IKN calcs
Low Cost Basket: Percentage difference between
basket and GDX control, 2014
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
-2.0%
-2.5%
-3.0%
ts13ceD ht11 ht52 ht8 dr42 ht8 dr32 ht5rpa ht91
|
source: ikn calcs, NYSE/Nasdaq data
It again occurs to me when considering the +5%-or-abouts average performance of both our
basket and the GDX that there's a whole lot of badmouthing in the general market sector about
gold, gold stocks, miners etc this year. The average performance of the big cap names shows
it's largely undeserved, the 32.2% gain that Newmont's put in year-to-date compares with any
big name company in any other sector you care to mention. No, they're not wowing the market
the way the Nasdaq index and its favoured tech/biotech sectors are doing, but they're quiet
achievers all the same.
Newmont Mining (NEM) and its blow-out quarter
NEM impressed the market with its quarterly numbers out on Thursday evening post-close (14)
and you don't need a thousand words from me to get the reaction, just check out this five day
chart:
Enough said, but I'm going to nail down some of the fundies numbers (a wonk resists a set of
cool resuts? No way). EPS 35c/share and adjusted EPS 41c/share headlined things, with that
adjusted number (the one the analysts who cover this one like the most) being a big beat from

the typical 20c to 25c expected range. The reason for the beat was slightly due to lower
exploration costs, slightly due to tax savings but mostly due to the single reason that's music to
the ears of the mining world: lower operating costs. Hence the big pop and the awarding of
"Gold Standard" title to NEM this quarter; GG, ABX and the others have been set a target.
The NR above has the details, as does your friendly Canadian house and its own version of the
glowing report, so no deep numberwork here but i want to highlight the All-In Sustaining Cost
per ounce gold of U$849/oz, that beat a typical estimate of U$1,000/oz with a full U$25/oz of
that coming from lower fuel costs company-wide. NEM surely stuck in a good one, but the fuel
savings are now likely to work their way through all the Tier 1 sector and adjustments to
estimates are now underway for NEM's peers. We shall see.
Buenaventura (BVN) coat-tails the good NEM numbers
BVN owns 43.65% of the NEM-majority owned/operated Yanacocha mine in Cajamarca, Peru.
As we noted last week in the BVnm coverage, we knew the Yanacocha production numbers
were strong. As it happens they were even better than expected and with 100% mine sales
reported by NEM at U$301m and Costs Applicable to Sales (CAS, close enough to "operating
cash costs" for our use) of U$114m plus deprec/amort of $71m, the realistic margin due to BVN
is 50.6m and that's a pretty penny for a single quarter from just that subsidiary of the smaller
company. BVN's share price had a good week too, but didn't really break away from the pack
until Tuesday and has a bit of a sleeper's look about it.
But it did well, reacted correctly to the NEM numbers and the market will now want a strong
bottom line from BVN when it reports.
Regional politics and Market Watching
Peru: More Tia Maria (trying to make it the last in the line)
I did a piece on the Tia Maria issues last week, Tia Maria got space in IKN308's Peru section of
the regional review, we covered the deterioration in the social situation on the blog last week,
so I really don't want to repeat and repeat on this story but we need to cover a little today
starting with what Peru's Minister of Energy and Mining, Rosa María Ortiz, said to foreign
journalists on Friday because it's indicative of where this problem is headed (15).
(Reuters) - Peru's energy and mines minister said on Friday that the government could
ask Southern Copper Corp to make additional changes to its $1.4 billion Tia Maria
project after protests by farmers turned deadly this week.
18

And as noted on the blog, the only way that can happen is either 1) SCCO voluntarily dropping
its previously awarded Environmental Impact permit or Peru's government taking it away from
the company. That's not a good signal for Peru to the world, period. Meanwhile, the heavy-
handed tactics of police officers colluding with the popular right wing press in the Tambo Valley
were shown in stark detail on Friday, when a video emerged of a police officer planting a
weapon (similar to a metal throwing star) on a protester so that a cameraman from the high
circulation El Correo newspaper could photograph him holding the "evidence" of violence
against police. That photo made the front page of Correo on Friday morning and made them
look very bad indeed come Friday evening. The newspaper has made no retraction or apology,
but the officer who planted the evidence has been charged with misconduct (16). This false
evidence planting event is mentioned here as an example of the way in which the whole Tia
Maria situation has spun wildly out of control for Southern Copper (SCCO) and the Ollanta
Humala government.
I'm going to keep it brief today (else subject you to another 5,000 words); the root of the
problem isn't the government of Peru, neither is it the Southern Copper company of Peru which
has been a reasonably good corporate citizen over the years, give or take and depending on
the era. For my money the problem is the complete idiots who run Grupo Mexico and hand
down directives to its now subsidiary company without having the first clue of what they're
doing. Tia Maria is a now political, industrial and diplomatic problem for Peru due to the
arrogance and stupidity of the directors of Grupo Mexico who don't have the first clue about
how to run a decent community relations program and are stuck in the 1980's when it comes to
issues such as the rights of local dwellers around large civil works.
Anyway, expect Tia Maria to get nowhere. Either that, or expect a whole lot of blood to be
spilled in the Tambo Valley. The sooner the project is scrapped (or shelved, or delayed, or re-
considered, or whatever other spin they put on it) the better for all concerned. Finally, one of
the very few media outlets that gives the Tambo Valley side of the argument is this Youtube
channel run by the valley residents themselves (17). Worth your while to see the other side to
things and get some perspective, though be prepared for Spanish language only.
UPDATE Sunday: Peruvian pollster GfK came out with its latest opinion poll on country affairs
this morning which included a question or two about Tia Maria (with the poll taken between
April 18th and 21st, during the latest Tia Maria protests but before the latest rounds of
violence). Here's a screenshot from the report, with a translation below:
Header: Opinions and actions regarding Tia Maria
Question asked: With which of these two options do you feel closer to in
relation to the conflicts at the Tia Maria project?
1) The locals (at Tia Maria) are right, the project will pollute and the actions
19

planned by the mining company to avoid this are not enough: 51%
2) The mining company is right. It has already presented a plan that ensures
the solution and eliminates pollution risks in the zone: 32%
3) Don't know/No answer/No opinion: 17%
Colombia: Another round of worthless and time-consuming lawmaking
During his closing address to Colombia's National Mining Congress last week, President Juan
Manuel Santos announced (18) he was sending a law proposal to the national parliament to
combat the environmental damage caused by informal/illegal mine operators in the country. He
said (translated):
"A law that clearly defines mining environmental crimes and establishes penalties not
only for those who explore and operate, but also for those who benefit from, store,
transport, transform or commercialize minerals that come from criminal activities."
"The law project will make the illicit extraction of minerals into something that is also
the source of money laundering activities, and it will be clear to those who dedicate
themselves to this activity that they will not be able to hide in the loopholes of the
criminal law statute."
Forgive my cynicism about this latest initiative from the Santos government, but it's going to be
a near-unworkable law even if it passes through parliament quickly, which it won't if all
evidence of the workings of the nation's congress when it comes to mining laws stands up. It's
getting a lot of airtime in Colombia and in the international business wires and the whole
concept sounds just fine, but until there's lasting peace and a Colombia that's truly policeable
on a rural and regional level, the whole of the informal gold industry isn't going away. There
are laws against it now, they never get applied to the wrongdoers, why should another layer
suddenly tip the balance. Meanwhile, the country's parliament will debate and see the law
project in and out of a bunch of committees while Colombia effecttively sees no change yet
again in the aspect of its mining sector.
Nicaragua romancing Chile
Last week in Nicaragua saw the "Opportunities for Chilean Investors in Nicaragua" conference
(19) which wasn't all about mining opportunities in the country (also on the agenda was
energy, infrastructure, agro, tourism, textiles etc) but mining certainly featured strongly in the
mix. The conference was organized jointly by the Ortega government and private sector
companies (mostly via chambers of commerce) looking for sources of FDI to grow their sectors
and was headed by the Minister for Investment in the Government of Nicaragua, Álvaro
Baltodano. At the moment Chile's trade with Nicaragua is tiny, amounting to Chile selling
U$35m of goods to Nicaragua in 2014 and Nica selling U$14m to Chile in 2014. In this context,
the expertise that Chile could bring to Nicaragua and its desire to expand on its mining industry
is obvious, not least due to the shared language.
Argentina Elections update
This weekend sees a further round in regional election primaries (PASO), with the news-splashy
one happening in the city of Buenos Aires (again the city centre with a little over 2.5m voters,
rather than the far larger bigger Greater Buenos Aires conurbation or region with perhaps 14m
voters and over a third of the total population of the whole country). It's one that will make a
lot of media noise but it really isn't that important in the big scheme of the national elections
(Cap. Fed BsAs never decides the nationals no matter what you might hear next week, period).
However, the thing that's struck out like a sore thumb so far in the early stages of the PASO
and other regional primary-type election votes is how the percentages of people voting for the
current government candidates (FpV, the Cristina Fernández de Kirchner (CFK) party) has
stayed very similar to the same stages of the election process in 2011 when CFK went on to win
the national vote with a 54% majority in the first round (and for what it's worth, that was a
20

bona fide landslide victory under the terms of an Argentina election). As this political
commentator noted in this op-ed (20) the opposition media to the current government (which
includes the main circulation newspapers Clarin and La Nacion, as well as a lot of the major
news TV channels) are making a lot of noise when an opposition candidate wins a primary in
the provinces, but the results aren't anything different to last time around. For example in the
last popular vote in Mendoza in 2013, the UCR "Radical" party won 47% of the vote, FpV 27%,
the the third placed FIT (a local region party) got 13%. This time in 2015 the UCR scored 44$,
FpV 40%, FIT 6% (and the move from FIT to FpV is mostly because people were voting with
the national scene in mind, not just the local regional issues).
Then this post in a pro-Kirchnerist blog (21) noted how closely the popular vote percentages in
the three PASO votes to date (the provinces of Salta, Santa Fe and Mendoza) correspond
closely to 1) the percentages gained in 2011 and 2) the voter intention levels being reported for
the assumed FpV candidate for President in 2015, Daniel Scioli. Here's a table from that post...
...and sure enough, the 33.8% of the popular vote for FpV, against all-comers, fits the general
narrative well.
The bottom line is that the grassroots support for the CFK government (and the greater
Kirchernist movement that's been in place since 2003) has maintained well and has not faded in
the last couple of years. This again points to the favourite's chance that Scioli has come
October 25th and in any eventual run-off for the big job.
Mining executive deaths in Mongolia
The news that Khan Resources Chair Jim Doak had died while on a business trip to Mongolia
was another in the line of death news out of the Canada mining industry last week (22) but as
A. Reader with a memory pointed out, it's not the first time a Canadian mining executive has
fate their fate while in that country. Mr. Doak was in Mongolia to demand from its government
the payment due to Khan Resources after it won international tribunal proceedings against the
state. Here's how the Globe & Mait put it:
Khan had been engaged in a prolonged legal battle with the Mongolian government
over a uranium project. Last month, an international arbitration panel ruled that the
government should compensate the company for cancelling uranium licenses in 2009
and expropriating property where Khan had planned to develop a mine. The company
said the compensation award, plus interest, totalled $103.8-million (U.S.) as of the end
of March.
Company officials, including Mr. Doak, held talks this week with government
representatives in Ulan Bator. During those talks, the company demanded full payment
of the award and vowed to take enforcement action.
It's interesting (I think that's the word) to compare the untimely death of Mr. Doak to a case in
1999, when one Armand Beaudoin died of an apparent heart attack while in Ulan Bataar,
Mongolia (23) (24) (25). At that the mining prospector, mover and shaker Beaudoin was in
dispute with the government of Mongolia over a resource deal. According to an anecdotal
(though wholly reliable) report supplied to your author last week, once dead of the heart attack
Beaudoin's body was dragged out of his accomodation and into a open courtyard by police.
Any resemblance to the fate of Jim Doak, also in Mongolia at the time of his death after looking
in good health on BNN TV just a couple of weeks before flying out there, also dead from a
21

suspected heart attack in his hotel room and also while in dispute with the government of
Mongolia over a resource deal...well, it's purely coincidental.
However fair is fair and there are differences as well. On checking up, Beaudoin was described
to your author as "shady" by more than one person and was apparently mixed up in the Bre-X
scandal in the 1990s before coming totally unstuck in Mongolia at the end of that decade.
Meanwhile, the recently deceased Mr. Doak had a far better personal reputation in the industry
but was also considered a fearless voice and unafraid to ruffle sector feathers. His naked body
wasn't put on by public display last week, either. Small mercies.
The Oyu Tolgoi copper deposit, now on the way to being a fully fledged mine, shows the
exceptional geological potential of Mongolia and there are many other examples, with gold,
uranium and coal deposits being particularly attractive. Miners have been queuing up to do
business here since the laws were changed to allow in FDI in 1997, but stop-start resource
nationalism moves (sometimes very heavy handed (26)) and near-legendary levels of
institutional corruption have remained in place, leaving Mongolia with a Wild West reputation to
this day. Those companies betting their future on this country are in a higher risk bracket than
most.
Venezuela: Hocking its gold
We don't get to mention Venezuela on these pages very often, mainly because it's a waste of
time even thinking about a mining company investment in that country. But today a note,
because according to reports (27) midweek that were later picked up by international
newswires, Venezuela's central bank has finalized the swap deal with Citibank (local name for
Citigroup) on an assumed 1.4m oz of gold held in its reserves for U$1Bn in cash. It's a deal
that's been in discussion for at least a month and in public view too, so it's not big news that
it's closed but interesting that it has closed relatively quickly. It's also similar to one mooted in
2013/2014 with Goldman Sachs, but in the end that one didn't close (probably the oil price drop
has made it more pressing for Venezuela). Basically a collateralized loan, Citi's forwarding
U$1Bn and Venezuela will pay interest on the loan in cash; the difference being that it's backed
up by those gold ounces that are currently worth U$1.68Bn at market value.
Let's mention at this point that Venezuela has plenty more gold to use as loan collateral if it
requires, with estimates varying as to how much Venezuela physically owns but the
assumptions start with at least ten times the amount it hocked last week. Also, Venezuela has
shown this year its capacity to forward sell its PDVSA crude to China in exchange for handy
foreign currency. So once again the country is going to defy its doomsayers and remain solvent
this year. Yes the clock may be ticking, yes you can disagree with the way its government runs
the country, no it's not going to implode any time soon.
El Salvador; Selling its gold
On a smaller scale than the Venezuela gold-backed loan but even more definitive, El Salvador
announced last week that during March it had sold 80% of its gold reserves, some 5.412 metric
tonnes, for U$206m. According to Reuters (28):
El Salvador's central bank sold about 80 percent of its gold reserves last month to
diversify risk and take advantage of the metal's appreciation, a central bank official
said on Friday.
This is not the place to decide on the sagacity of this move by El Salvador's Central Bank.
However it's noteworthy that El Salvador's President Sanchez Ceren on Thursday last week also
successfully pushed his plans through the national government his plans to raise U$900m via
the sale of sovereign bonds (29). That sale will now go ahead and give his administration the
necessary funds for a mandated public works program. This new debt emission adds to the
U$15.2Bn in total debt, which according to country represents around 60% of annual GDP.
That's not my favourite benchmark (cash flow is not balance sheet etc etc) but it's one of the
quick ways to show how far a country's in hock and in El Salvador's case, the debt's obviously
22

heavy compared to its overall economy.
Tahoe Resources (ex-Rio Alto) will start the Shahuindo build-out in July
According to a local release (30) Tahoe Resources (TAHO) (THO.to) will begin the construction
of the Shahuindo mine and heap leach facility in July this year, with first pour production
expected in 1q16. When it comes to Cajamarca, no news is good news so the low-key reaction
to this positive step is exactly the one any long of THO would want to see.
More on the Mexico cartel shakedown scene
Ioan Grillo is one of the better English language reporters on the LatAm beat and last Sunday
April 19th published a strong report in Global Post that followed up on the whole "Miners And
Drug Cartel" can of worms so elegantly (?) opened up a couple of weeks ago by Rob McEwen.
It's entitled "Mexico's drug cartels are making millions robbing multinational corporations" (31)
and it's worth a full read, but here are a selection of tidbits from the text:
But many businessmen working in troubled parts of Mexico have long acknowledged the problem
of organized crime. Gangsters have also tried to shake down multinationals, attacked operatives
and torched assets.
“There is lack of rule of law in some parts of the country,” says Jon French, a former US State
Department official who is now a security consultant in Mexico. “It has been bad for four or five
years and I don’t see any improvement under the current administration of President [Enrique]
Peña Nieto.”
Some incidents have been made public. In March, thugs set fire to a local subsidiary of Houston’s
Key Energy Services in the Gulf coast state of Tabasco.
Tabasco’s top prosecutor Fernando Valenzuela said the attack appeared to be over extortion.
Last year, alleged members of the Zetas cartel used a homemade tank to fire at a hotel where
employees of oil services multinational Weatherford were staying in Ciudad Mier, near the Texas
border.
And back in 2012, gunmen from the Knights Templar cartel set fire to more than 30 trucks and
two warehouses belonging to a local potato-chip company owned by PepsiCo.
Some company insiders concede there are also more incidents they do not report for fear it will
hurt their public image and share prices.
An employee of a global agricultural company said cartel members have stolen three of their
trucks at gunpoint over the last year in rural areas where the cartels operate.
French said he has also helped companies fend off extortion attempts in the troubled states of
Guerrero and Tamaulipas.
But other cases involve gunmen who have broken off from cartels to form smaller gangs. The
Tabasco prosecutor Valenzuela described how a government crackdown on the Zetas cartel left
many splinter groups. These gangs don’t have the capacity to traffic, so they turn to shaking down
workers and businesses.
“I have investigated kidnappers of local oil workers and found that they used to work for the Zetas,
but now have no contact with the cartel,” Valenzuela told GlobalPost in an interview last year.
That little lot gives the general flavour.
Conclusion
IKN311 is done, we end with bullet points:
• Atacama Pacific (ATM.v) is the latest to be added to our now lengthening list of 'Land
Grab' potential trades. The inspiration was the strong signal sent out by Yamana
(TRI.to) (AUY) and its purchase of Mega (MGP.v) last week wehich fit the house thesis
like a vertiable glove. We've seen more M&A action since January than just that one of
course, but the move fits on all the levels. The game is on.
23

• Next week's going to be a busy one, not least April 29th as that day sees a flurry of
quarterly numbers as well as the US macro news. Any and all of that could move the
portfolio.
• Though let's be clear, we're still bobbing on the big tide of gold prices and that's where
the moves will translate into share price changes.
• Courtney Chamberlain started as another contact in the mining world and ended as a
friend. RIP, sir.
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
Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/
(2) http://incakolanews.blogspot.ca/2015/04/yamana-auy-yrito-and-mega-mgpv-another.html
(3) http://www.yamana.com/English/portfolio/producing-mines/brio-gold/default.aspx
(4) http://incakolanews.blogspot.com/2014/08/filtering-news-release-from-ikn276.html
(5) http://www.bencinaenlinea.cl/web2/buscador.php?region=2
(6) http://www.sec.gov/Archives/edgar/data/314203/000110465915029694/a15-9750_18k.htm
(7) http://finance.yahoo.com/news/mcewen-mining-announces-exploration-el-113000642.html
(8) http://finance.yahoo.com/news/first-majestic-silver-corp-first-150000929.html
(9) http://www.newswire.ca/en/story/1522559/first-majestic-silver-corp-announces-closing-of-c-30-million-bought-deal-
financing
(10) http://finance.yahoo.com/news/teranga-gold-first-quarter-2015-123000307.html
24

(11) http://www.seneweb.com/news/Energie/exploitation-de-l-rsquo-or-a-kedougou-le_n_153116.html
(13) http://finance.yahoo.com/news/lake-shore-gold-announces-details-214805524.html
(14) http://finance.yahoo.com/news/radius-gold-obtains-shareholder-approval-183847820.html
(15) http://finance.yahoo.com/news/newmont-announces-first-quarter-operating-200100720.html
(16) http://incakolanews.blogspot.com/2015/04/tia-maria-scco-what-minister-just-said.html
(17) http://elcomercio.pe/peru/arequipa/mininter-reconoce-que-policia-sembro-arma-detenido-islay-noticia-
1806587?flsm=1
(18) https://www.youtube.com/channel/UCTmZl4xyoOPSgrCMKGP7Uqw
(19) http://www.entornointeligente.com/articulo/5759442/COLOMBIA-Habra-castigo-para-quienes-cometan-delitos-
mineroambientales-24042015
(20) http://www.enorsai.com.ar/politica/15331-miedo-opositor--el-kirchnerismo-repitio-en-las-provincias-sus-numeros-
de-2011.html
(21) http://adandeucea.blogspot.com.ar/2015/04/actualizacion-de-resultados-paso-2015.html#.VTXW17HHkKM.twitter
(22) http://www.theglobeandmail.com/report-on-business/prominent-bay-street-figure-jim-doak-dead-at-
59/article24090898/
(23) http://www.mine.mn/WPJ1_3_JVAG_fall.htm
(24) http://www.northernminer.com/news/obituaries--armand-beaudoin/1000163642/?&er=NA
(25) http://www.siliconinvestor.com/readmsgs.aspx?subjectid=8471&msgnum=82&batchsize=10&batchtype=Previous
(26) http://www.financialpost.com/scripts/story.html?id=bd5c323c-cde2-4f93-8a7a-65dde63079a8&k=21658
(27) http://www.reuters.com/article/2015/04/24/venezuela-cenbank-idUSL1N0XL0TY20150424
(28) http://noticias.terra.com/mundo/latinoamerica/congreso-de-el-salvador-avala-emision-de-bonos-por-900-mln-
dlrs,a6d07d0350bec410VgnCLD200000b2bf46d0RCRD.html
(29) http://www.reuters.com/article/2015/04/25/elsalvador-debt-idUSL1N0XM00Y20150425
(30) http://www.portalminero.com/pages/viewpage.action?pageId=96754990
(31) http://www.globalpost.com/article/6520998/2015/04/19/mexico-cartels-vs-mining-energy-multinationals
http://marcotradenews.com/noticias/direcon-delegacion-publico-privada-de-nicaragua-busca-incrementar-la-inversion-
chilena-en-ese-pais-35707
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
25

Stocks To Follow Closed Positions 2013
Closed in 2013 closed close price
USA Graphite USGT feb'13 U$0.93 08-ene-13 U$0.17 81.7% short tgt made/trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
United Silver USC.to mar'13 C$0.21 28-oct-12 C$0.095 -54.8% small Ag sector trade, failed
Aurcana Corp AUN.v apr'13 C$1.07 11-nov-12 C$0.55 -48.6% closed on poor YE results
Gold Res Corp GORO apr'13 U$14.11 25-ene-13 U$9.38 33.5% short tgt made/trade closed
Marlin Gold MLN.v apr'13 C$0.075 10-feb-13 C$0.065 -13.3% closed trade
Bear Creek BCM.v may'13 C$2.58 01-abr-13 C$2.40 -7.0% near-term, time ran out
Lupaka Gold LPK.to may'13 C$1.12 23-oct-11 C$0.32 -71.4% towel thrown in
Tahoe Resources TAHO may'13 U$18.62 08-abr-13 U$14.70 21.1% took profit on ST short
OceanaGold OGC.to jun'13 C$3.03 16-sep-12 C$1.18 -61.1% sold on gold drop
IMPACT Silver IPT.v jun'13 C$1.14 13-ene-13 C$0.62 -45.6% sold on silver drop
Duran Ventures DRV.v jun'13 C$0.045 10-may-13 C$0.025 -44.4% ST trade never worked
Plata Latina PLA.v jun'13 C$0.79 10-abr-12 C$0.13 -83.5% closed
Bellhaven BHV.v jun'13 C$0.065 03-jun-13 C$0.12 84.6% closed ST trade
B2Gold BTO.to aug'13 C$3.07 28-nov-12 C$3.44 12.1% sold 1/2 to raise cash
Colossus Min. CSI.to aug'13 C$0.72 24-jul-13 C$0.79 9.7% closed thru nerves on future
Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% closed to raise cash
Bear Creek BCM.v sep'13 C$2.06 30-may-13 C$2.20 6.8% sold on pol risk decision
MAG Silver MVG oct'13 U$7.00 12-sep-13 U$5.62 19.6% near-term short
Gold Res Corp GORO oct'13 U$9.52 03-may-13 U$4.98 47.7% short tgt made, covered
AQM Copper AQM.v oct'13 C$0.31 16-oct-11 C$0.125 -59.7% closed failed trade
First Majestic AG nov'13 U$11.51 07-nov-13 U$10.50 8.8% v near term short, closed
Fortuna Silver FSM nov'13 U$4.00 07-nov-13 U$3.68 8.0% v near term short, closed
Primero PPP nov'13 U$5.70 07-nov-13 U$5.75 -0.9% v near term short, closed
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work, sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
26

Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
27

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.
28