The IKN Weekly, issue 314 — May 17, 2015
The IKN Weekly
Week 314, May 17th 2015
Contents
This Week: B2Gold (BTG) (BTO.to) now a Top Pick stock, Curb your enthusiasm (a bit),
Canada markets closed Monday 18th.
Fundamental Analysis: NOBS update report on B2Gold (BTO.to) (BTG).
Stocks to Follow: Overview, Teranga Gold (TGZ.to) (TGZ.ax), Timmins Gold (TMM.to) (TGD),
Atacama Pacific (ATM.v), McEwen Mining (MUX) (MUX.to), Lake Shore Gold (LSG.to) (LSG),
B2Gold (BTG) (BTO.to), Focus Ventures (FCV.v), Regulus Resources (REG.v), Minera IRL
(IRL.to) (MIRL.L).
Copper Basket: Overview, Reservoir Minerals (RMC.v), Copper Fox (CUU.v), Nevada Copper
(NCU.to).
Low Cost Producer Basket: Overview, Pan American Silver (PAAS) (PAA.to).
Regional Politics: Argentina: Presidential election poll tracking, Ecuador: No more benefits
for mining companies, Burkina Faso: No trade for my taste, Dominican Republic: Pueblo Viejo
cleans up the river, Nicaragua: Expecting $1,300/oz gold, Chile Exponor, Guatemala: A new VP,
Peru: Your Tia Maria soap opera weekend update, More Peru: Laws passed and strikes planned.
Market Watching: A return to the silver producers mentioned last week plus silver thoughts,
Atico (ATY.v) update, Newmarket Gold buy Crocodile Gold, Agnico Eagle (AEM) buys some Belo
Sun (BSX.to) and some more Pershimco (PRO.v), Almaden (AMM.to) (AAU) and an attractive
spin-out, Tahoe Resources (TAHO) (THO.to) update.
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
B2Gold (BTG) (BTO.to) now a Top Pick stock
The analysis is in the 'Fundamentals...' section but as per normal and to make clear, a couple of
lines to note that we have a new Top Pick stock for the weekly in B2Gold (BTO.to) (BTG). It
means I'll be adding to my position and averaging down as well. Details below.
Curb your enthusiasm (a bit)
According to what I've read over the years, when the mining market is trading like a large pile
of animal excrement one of the tasks of your friendly neighbourhood market commentator is
that of the cheer-you-up, not-so-bad, keep-the-faith optimist who keeps spirits high (and cash
in the system) in order to keep everybody engaged in the sector.
I've never been very good at that one, ladies and gentlemen. You may have noticed.
But when I put my mind to it I can be pretty effective at the "Whoa! Hold on there Alice and
your To-Da-Moon! Calm those jets, Mr-Gonna-Be-Rich!" messenger boy, because a grouchy
cynic at heart is far better suited to that role. Last week's market was solid and positive, as this
2015 YTD chart of the bullion ETF GLD versus the juniors ETF GDXJ shows. The tiny near-
1
illegible scribbles point to a gold price that's at its highest point since St. Valentine's Day (love is
in the air) and a miner's index fully recovered from the post-PDAC dumpage.
So yes, it was a good week for mining companies and for precious metals no ifs or buts, so I
am therefore contractually obliged to point out reasons not to be so cheerful. Here's the best I
could manage:
We saw profit-taking on Friday among juniors that ignored the rock-solid trading in the
underlying metals and saw many mining stocks sell off, particularly those that had flown
highest during the week. I've picked three for illustrative purposes in this chart in Endeavour
(EXK), B2Gold (BTG) and First Majestic (AG) to sit next to GDX and GDXJ, those three because
I followed them closely last week and they came to mind as decent examples as I started
writing this up (and I know that's subjective, bite me). What this says is, positive week or not,
we're still in a skittish period where traders are happier to scalp a quick profit than to hold a
position over a long weekend (if a week's a long time in politics, three whole days must be an
eternity in capital markets). Anyone calling that the only way is up from here is reckless at best,
this market can still turn on a dime and although it's not something I'd want, large net long that
I am, the chances of seeing gold under U$1,200/oz again are still high indeed.
And there ends the bearish spiel I've been trying to run on myself all weekend. I've tried hard
to curb my own enthusiasm about what we witnessed in the mining stocks last week, but the
2
simple fact is that I'm most encouraged by the action we saw last week, it has the right look of
a sector suddenly attracting top-down money, the drop in the US Dollar says the right thing,
silver beating out gold was also a nascent signal of potentially better times for the whole sector
too. And because of that, the next section on BTO and its bullish message exists.
Canada markets closed Monday 18th
A final quick line or four by way of reminder: Tomorrow Monday May One Eight, Canada
celebrates May Two Four and its markets are closed for the day. By the way, it's probably not a
coincidence that Queen Victoria's birthday is the same number as the quantity of beer bottles
per case in Canada. And you thought marketing was a recent invention...
Fundamental Analysis of Mining Stocks
This week we update on B2Gold (BTO.to) (BTG).
NOBS fundamental update report dated May 17th 2015
B2Gold Corp. (BTO.to) (BTG)
Company Overview
B2Gold Corp (Canada: BTO.to, USA: BTG, Frankfurt: 5BG.f) is a mid-tier gold mining company
operating in several countries worldwide. Its major producing assets are located in The
Philippines, Nicaragua and Namibia. It also owns exploration and development properties in
Mali, Colombia, Burkina Faso and Nicaragua. Current share structure is as follows:
Shares out: 925.077m
Options: 5.1m
Fully diluted shares: 930.087m
Current share price: U$1.70
Market Cap: U$1.573Bn
Approx cash per S/O: U$0.05
All prices are in United States Dollars unless stated. Forex U$0.80=CAD$1
NB: Even though I personally own B2Gold via its Canadian listing BTO.to, as BTO
reports in US Dollars and does most of its business via the world's reference currency,
today's analysis will make things simple and use the US listing BTG as benchmark.
Today’s update: Numbers only
The dubious social activities (let's say) around BTO that made headlines over the northern
winter season are not our focus today. Neither is a big blow-by-blow detailed look at each of the
moving parts at this company, because we're taking the 80/20 approach to this write-up. What
matters at BTO in 2015 is delivery of production and plan, so what you're going to get most of is
chart-plus-comment, then onto another chart.
Background: BTO tips its hand (and shows us aces)
BTO announced its 1q15 financials on schedule in this NR on Friday morning (1) as well as the
financials posted to SEDAR late Thursday evening. Friday also brought the company
conference call which was worthy listening. Added to all that is the latest corporate presentation
3
(2) over at the BTO website that you may want to check out (though I'm not going to quote from
it in today's note).
The sum total of what we saw from BTO, both in the shape of 1q15 numbers and guidance for
the rest of 2015, was strong and got a positive reception from those watching. After taking the
last three days and chewing hard over what we saw, I believe that what we got was a BTO
that's finally tipped its hand and shown the market where it's going. I'm also going to keep it as
brief and on-topic as possible, so if it feels like I'm skipping over an issue or two along the way
you're probably right, I am. Thing is, after crunching this one to death over the weekend I've
managed to convince myself to raise the rating, add a clearly reachable target and (most
importantly) buy some more BTO shares. Do I have to convince you too? Oh...okay.
This company is finally coming out of the doldrums and is doing so on the two major fronts that
matter in 2015 precious metals mining:
• Production: Though 1q15 wasn't a blowout quarter, the message that "it gets better from
here" was put across loud and clear. For 2015 BTO will improve quarter on quarter, then
the steady state of 600k oz per annum at competitive costs will then run into the next big
growth leg, Fekola in 2018.
• Costs: This is the new favourite toy of the precious metals market and BTO is in prime
position to benefit from this fashion trend. Again, the 1q15 numbers weren't earthshattering
but at op cash cost U$701/oz and AISC U$1,091/oz with all that Otjikoto development
going on, they were perfectly acceptable. But when BTO announced its aim to move
operating costs down from $680/oz in 2014 to $630-$660/oz this year (which includes the
$701/oz just booked) all driven by the impressive start at the low-cost Otjikoto, the market
was being fed exactly what it wants to hear.
Added to the growth promise of Fekola, the combo of more ounces at better margins is catnip to
the brokerages. With BTO's excellent track record for delivery of projects the market will now
bake in the post-Fekola 900k/annum production rate as a done deal which now makes BTO the
type of target for takeover that would move the production dial of even the largets of the Tier 1
mining companies.
So from here we now offer up the following, it's more numbers and less talk today.
• Mine production: An overview of what each mine did in 1q15 and what we expect from it
in the rest of 2015
• Consolidated production: How that all fits together, both for 2015 and the years ahead.
• Balance sheet work: Not so much here, as BTO's balance sheet has always been solid
and we expect it to remain that way. But a quick overview all the same.
• Operations and financial results: How we expect the improving costs and stronger
production to affect the quarterly numbers to come. This stuff matters.
• A conclusion: In which I tell you that I'm raising BTO to Top Pick and buying more. By this
time I hope to have convinced you that I'm on the right track at least.
Mine production
We start with a look at the four working mines, plus a quickie on Fekola.
Libertad
The worst performing mine of the four producers in 1q15 was La Libertad in Nicaragua, which
had pre-announced a low 25,326 oz production (so there wasn't any surprise on Friday).
However operating cash cost was new info and at U$841/oz it was higher than anything last
year. That's understandable considering the lower production levels, of course. Libertad will
continue at a lower production schedule until the new Jabali zone comes online in the second
half of 2015, at which point production is expected to step back up as seen in the chart below.
Notably, BTO affirmed its guidance for Libertad of between 135,000 and 145,000 ounces gold
at U$605/oz to U$635/oz operating cash cost. That's a strong signal that it's going to leave this
one weak quarter behind. For the record, the IKN forecast for the quarters as seen in this chart
4
being a total production for Libertad in 2015 of 135,326oz Au, just scraping inside the low
guidance number.
BTO: Libertad gold production, per qtr
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
5
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
Oz Au
source: company filings
El Limón
The Limon mine produced 13,158 oz at an operating cost of U$738/oz in 1q15, which is a
Steady Eddie number from BTO's smallest operation. We expect Limon to see slight growth in
production in the quarters to come, ranging towards 15k oz for 4q15 as new development
projects add to mine efficiency. BTO forecasts 2015 prodcution at between 55k and 65k for
Limon. We at IKN are going to go conservative and the chart you see here adds up to 55,158oz,
at the bottom end of guidance.
BTO: Limon gold production, per qtr
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
Oz Au
source: company filings
Masbate
After its one-off blowout quarter in 4q14 Masbate stuck in another decent quarter by producing
46,241 oz at an operating cash cost of $674/oz, which is low cost but most notably it's $67/oz
lower than BTO's own plan. As you can see from the production chart here, we expect Masbate
to churn out at roughly the same rate for the rest of the year, with a flat rate 43,750 forecast for
each quarter. That would being the year in at 177,500 oz Au, just under the BTO upper range
guidance of 180k oz.
BTO: Masbate gold production, per qtr
65000
60000
55000
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
Oz Au
source: company filings
Otjikoto
The new mine has started in fine style, with higher than expected production in its first quarter of
commercial production. Notably, cash costs reported for March were a low U$477/oz. Also, the
April monthly production figure of of 13,1414 oz was given by the company (21% higher than
the plan) in order to show the bright start to Otjikoto is continuing into 2q15. Here's the
production chart for the new mine (1q15 adds in the pre-production ounces) and the forecast is
for a gradual rise in the quarters to come as the mine hits its stride.
BTO: Otjikoto gold production, per qtr
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
6
51q1 tse51q2 tse51q3 tse51q4
Oz Au
source: company filings
The chances of BTO beating its own guidance figures for Otjikoto of between 140k and 150k for
2015 are high. The IKN forecast is therefore put at 152,134 oz.
Fekola update
The company rolled out some extra details on its plans for Fekola in Mali on Friday, but it's not
going to be a focus of our attention today apart from noting how this project is the obvious
growth pipeline now that Otjikoto is up and running. Here's the opening paragraph of the Fekola
section to give an idea, please check the company literature for more.
The Company is committed to advancing its newly acquired Fekola Project. Based on
current assumptions and subject to completion of financing and mine construction, the
Fekola Project has the potential to increase the Company's annual gold production by
approximately 300,000 ounces per year in 2018.
As you'll see a little further down, we're currently assuming BTO gets Fekola up and running in
2018 as expected but our guidance will leave a little more room for manoeuver by assuming just
250k oz gold comes from this mine in year one. By the way, does anyone else think that BTO
should appoint an Irishman to run this mine at some point, or is it just me?
Consolidated production forecasts
From all that above, we now lump the numbers together to show how we see BTO the company
in 2015 and beyond. Let's start with the
production guidances for each mine BTO: 2015 guidances and IKN forecasts for each mine
and this chart, which has the low and Oz Au
BTO low end guidance
high guidance as set by BTO in the 200000
BTO high end guidance
monochrome bars, then the IKN 175000 IKN forecast
estimates in red. 150000
125000
As you can probably make out, we're
100000
not pushing the window on anything
75000
given by BTO very much, except for the
50000
over-guidance estimate for Otjikoto
25000
that's a function of its bright start as a
mine in the first four months of this 0
year. So cutting and slicing a different Limon 2015 Libertad 2015 Otjikoto 2015 Masbate 2015
way, here's how we see the next three source: company filings, IKN ests
quarters developing:
BTO: gold production by mine
160000
150000
140000
130000
120000
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
7
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
oz Au
Otjikoto prod
Masbate prod
Limon prod
Libertad prod
source: company filings, IKN ests
Otjikoto has taken up the slack created by the dip in Libertad production, but once that
rebounds on the back of the new higher-grading Jabali zone BTO will be approaching 150k oz
per quarter by the end of 2015. That fits right in with the current rough guidance from the
company of 600k oz in 2016 and 2017, as seen here below. We're pitching for 520k from the
company in 2015, which is right in the middle of the BTO guidance low and high.
BTO: annual production and estimates
1000
900
800
700
600
500
400
300
200
100
0
0102 1102 2102 3102 4102 tse5102 tse6102 tse7102 tse8102
OzAu
Fekola
Otjikoto
Masbate
Limón
Libertad
source: BTO filings, IKN ests
As for Fekola, we assume that comes online as slated in 2018 and that 250k oz comes in the
first year. After that, BTO wouldn't be far from a 1m oz year (if it still exists as a company).
Balance sheet items
We're going for a quick tour of balance sheet items as adjusted by the new model after the 1q15
numbers and new expectations for 2015, but in the overview assets and liabilities charts there
isn't really that much to see due to the fixesd assets and long-term debt positions outweighing
the liquid parts of the company financials.
BTO: assets
3000
2500
2000
1500
1000
500
0
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
$m BTO: Liabilities
800
fixed
other current 700 cash&ST 600
500
400
300
200
100
0
source: company filings, IKN ests for FY15
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
$m
LT debt
current debt
source: company filings, IKN ests for FY15
Where we get a difference is on working capital, because that's now predicted as seeing its
lowest level right now, at end 1q15. The rest of
2015 will see BTO going into cash collection
mode and adding to its liquidity position by
upwards of U$50m, if I have my sums right.
This looks nice to me and it comes from the
operations numbers as plugged into the model
below. A BTO adding to treasury this year will
be sending another popular and fashionable
message to the market.
A nod to the share count, which was declared at
925.077m shares out as at May 6th in the
company's Management Information Circular.
We assume it will stay at that level, but chances
are that it will ratchet up by a million or two as
options are converted into paid-up shares. It's a minor thing, though.
BTO: Shares outstanding
1000
900
800
700
600
500
400
300
200
100
0
8
70q3 70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
m S/O
source: company filings/IKN ests
Operations and forecasts
Here's the overview operating chart, with the next three quarters' worth of estimates plugged in.
We're assuming U$1,200/oz gold for the current quarter Q2, which then goes up to U$1,250/oz
for the second half of 2015. Again, I personally think gold is going to go higher than these
numbers but I've tried to strike a conservative medium on the modelling here.
BTO: operating revenues and costs
200
180
160
140
120
100
80
60
40
20
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
BTO: Working capital 350
300
250
200
150
100
50
0
$m
revenues COGS Op. Rev
source: company filings, IKN ests for FY15
The above chart is where the story of growing production and dropping cash costs per ounce
turns shows what it means and what it can achieve. The model assumes BTO takes its normal
options awards in Q2 (see this chart below and the way Q2 spikes every year))...
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
$m
source: company filings, IKN ests for FY15
B2Gold (BTG) (BTO.to): Quarterly G&A
16 15
14 13.094
12 10.509
9.957 9.708 10 10
10
8 6.78 6.656 7.924 7.322 7.604
6
4
2
0
9
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
$m
source: company filings
...and production increases quarter on quarter gradually as seen in the previous section. The
result is a 2q15 that will see financial results improve on 1q15 but not drastically, but the real
boost starts in 3q15 when operating margins
are expected to really catch the eye. It's at this BTO: Quarterly revenues
200
point that we can expect BTO to move higher
180
and start gathering real market momentum but
160
by then I'll already be longer at the current 140
lower prices. 120
100
To focus on revenues only, here right is the 80
60
expected development. BTO is scheduled to
40
return a new quarterly record revenue in 3q15
20
even at U$1,250/oz gold, a lot lower than the 0
average numbers of 1q13. From there it will
only go higher, gold price willing.
As for bottom line revenues, both here and
when I come around to setting a target, the net
net bottom line hallelujah number isn't the one
we should care about with BTO because strong
cash flow producer or not it's still very much a
growth story and its not about bottom line cash
profits, not yet anyway. So operating revenues
(pre expenses and tax) is a better way to judge
the company and here right is how the per
share results are expected to look.
Back in the days before Masbate was
incorporated into the company, BTO would
churn out an 8c/share operating revenue. We
won't quite get there this year but the forecast
7c is close and will be the best result for the
new and much larger BTO, Masbate and
Otjikoto included. In this chart the fallow 2014
period is easily identified, as is the turnaround
we've just got from the 1q15 numbers that point
the way out of the trough.
If you prefer, here right are the adjusted net
earnings (things such as impairments and one-
time credits backed out) which again show how
BTO is moving out of a breakeven period and
back into operational profits. This is again the
key to buying in today; the market has been
given the signal that BTO is waking up, the
01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
U$m
source: company data, IKN ests for FY15
BTO: Operating Revenue per share, per qtr
0.10
0.09
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0.00
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
$/share
source: company filings, IKN ests
BTO: Adjusted net earnings
60
50
40
30
20
10
0
-10
-20
-30
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
$m
source: company filings, IKN ests for FY15
1q15 numbers point the way but the hard evidence comes later on in the year. By that time the
world will again be congratulating Clive Johnson for his business knowhow, purring over the
numbers and paying a lot more for the privilege of owning the stock. We'll already be on board.
Conclusion and recommendation
I don't care who Clive Johnson hits in the face in swanky restaurants in Toronto and it matters
not whether he wins or loses the fights, either. I no longer care about the sluggish 2014 suffered
by BTO and I don't care much about the badly timed "deal too far" purchase of Fekola either,
because that's also water under the bridge. When it comes to BTO what I care about here and
today, May 2015, its the mathematics of its quarters to come. And because they look a whole lot
better all of a sudden I like what I care about, too. It's time to get more serious about BTO and
add to the position, make it the central pillar of the IKN Weekly portfolio and consider it the
single go-to company of the junior (mid-sized) sector. In short, make it a Top Pick.
As for where the new target is being set, that's also as a direct function of the cash flow
expected from the higher production and better margins out of BTO this year. It's also aimed
squarely at the numbers BTO is expected to show as 2015 turns into 2016. We can expect the
current 2q15 to be solidly profitable without blowing anyone's socks off, but the real value and
growth in BTO to start showing through in the second half of this year and most specifically in
4q15. At that point BTO will be running at roughly the 600k oz annual gold rate expected in
2016 and 2017 (before Fekola comes online) and will show its profitability to one and all. As
BTO will still be a growth story and its ultimate aim is to improve produciton via capex, rather
than pump profits to the bottom line, using operating revenues rather than net earnings gives a
better yardstick.
I'm therefore basing the target on what we can expect in 4q15 and that 7c/share operating
revenues (before expenses and tax are taken out). On a straight line project to an annual rate
and then a reasonably modest 8X multiple, our generated target is a simple U$2.24. That
implies a 31.8% upside to this weekend's U$1.70 price for BTG. For those of you in the
Canadian stock (such as myself), that implies a CAD$2.69 target price at this weekend's forex,
which I'd round up to $2.70.
This isn't a massively high target price, but
30% or above is more than enough to be
getting along with and especially because it's
on an established position that's about to get
larger. A Top Pick is one that needs all ducks
in line and aside from the obvious variable of
the gold price, the one we cannot control,
BTO has exactly that today. It's the right
stock in the right space at the right time, it's
going higher and I want more of it. I'll add
some next week but not all the amount I'm
aiming to get, as I'm still a little leery about
the state of this gold market. There may be a
better entry into BTO a little down the line, so
on a personal level I'm looking to add some in the days ahead (I'll stick with the Canadian
listing, so from Tuesday onwards) and then top up at a later, undefined date. Once I'm done it
will be my biggest position by quite a distance.
End of Report
Stocks to Follow
It was a good five days for your author's portfolio, which is always pleasant to report. Of our 16
open positions eight made gains on the week (MUX, BTO.to, TGZ.to, AG, TGD, FOS.to, FCV.v,
IRL.to), another four remained unchanged (SAM.to, NCQ.to, LRA.v, DNA.to) and four were
10
losers (LSG.to, ATM.v, LGN.v, REG.v). Best percentage moves were made by McEwen Mining
(MUX up 12.1%) and Minera IRL (IRL.to up 11.8%), the biggest loser was in Regulus
Resources (REG.v down 16.3%) as it adjusted back from the previous week's weird trading.
We currently have 16 open positions in our Stocks to Follow list, one more than our our self-
imposed maximum in a temporary situation that will change soon enough. Of those 16, eight
are in the green, one is unchanged and seven 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$1.11 1.8% Added Mar'15, top value
B2Gold BTO.to STR BUY C$2.32 12-sep-14 C$2.03 -12.5% NEW TOP PICK $2.70 tgt
Teranga Gold TGZ.to buy C$0.55 15-feb-15 C$0.74 34.5% New position, 83c tgt
Lake Shore Gold LSG.to buy C$1.04 07-apr-15 C$1.26 21.2% New FCF+ prod. Poss M&A tgt
First Majestic AG hold U$10.51 10-aug-14 U$5.37 48.9% Holding, only silver exp left
Timmins Gold TGD spec buy U$0.60 19-apr-15 U$0.639 6.5% New, ST spec rebound play
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.145 20.0% Also "land grab", tgt 19c
Land Grab Stocks (in current order of preference)
Phoscan Chem FOS.to hold C$0.28 29-mar-15 C$0.28 0.0% New trade, 36c/share of cash
Atacama Pacific ATM.v spec buy C$0.19 26-apr-15 C$0.20 5.3% New Spec buy, cheap adv proj
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$0.67 -36.2% small Cu play low vols, hold
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.30 -73.9% 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
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.41 36.7% New bet on 2016 drill prog.
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.215 -6.5% tgt 50c, now raising cash
Minera IRL IRL.to hold C$0.27 22-jul-12 C$0.095 -64.8% 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.
Teranga Gold (TGZ.to) (TGZ.ax): Last week TGZ traded solidly at 75, touched 77c and
finished at 74c so there's still a gap between
the stock and my desired 83c out price.
It's going to depend on gold making a
further move and if that happens I'd be left
with a pleasant dilemma. As things stand
(and to be as clear as possible) TGZ.to at
83c with gold under U$1,250/oz and I sell. If
gold's higher than that on the day TGZ hits
the mark, further numbercrunching will
happen before a decision gets made.
11
Timmins Gold (TGD) (TMM.to): This is the other one I'll potentially sell soon. TMM hasn't
moved the way I'd expected it to move and is obviously underperforming. I'm going to give the
stock a little longer to show, but as it's only ever been a near-term play I wouldn't bat an eyelid
about closing the trade out earlier if things don't pick up. Let's give it another week, but if IKN
315 comes around and it's still flatlining it'll probably get the cull.
Atacama Pacific (ATM.v): May add a few. Volume dead and back to 20c, a move that
conforms to logic. While moving for the BTO I'm going to stick a small bid in at 19c next week
and see if I can't add a few to the small pile. ATM is one of those that won't move with the first
or even the second line of traders. In the event of a continued rise in gold it will either sit there
a while and do nothing then get bought out for shares by an opportunist larger player, or it
slowly will float up on small volumes. What could possibly go wrong?
McEwen Mining (MUX):A good week. This comparative chart shows how MUX popped nicely
when gold saw buying first on Tuesday then Wednesday, which makes sense as the company's
sensitivity to gold prices is right around the
current levels. It's also nice to see with
green ink next to its name in the above
chart for what (I think) is the first time on
these pages.
I'm not expecting MUX to rocket up higher,
nor would a retrace surprise me much.
Right now it all depends on the gold price
and added to that, we're likely to go
through a quiet period for real news until
the 2q15 production numbers are known in
early July. As mentioned last week at the
end of the update report, for the time being
I'm reasonably happy about the size of my
personal position in MUX and won't be adding any more. Come Q2 results that can be reviewed.
Focus Ventures (FCV.v): Aside from a 60k insider purchase made by Mario Szotlender on
Monday (4) there's not much direct news on FCV, but indirectly we note that Miski Mayo
phosphates operation run by Brazil's Vale next to the FCV Bayovar12 property got its EIA
approved by the government of Peru for its updated mine expansion plans in April, a permit
confirmed and made public last week (5). Though much more than a "yes you can do business
on the Sechura plain" confirmation, it's a positive signal of money being invested and the Peru
government watching and approving so I thought I'd mention it here.
Lake Shore Gold (LSG.to) (LSG): After seven news releases in the space of a month (April
7th to May 5th), LSG took a week off from telling us about what it's doing. Now I'm fine about
12
the constant chatter because it came at the right time (smacks of an on-the-ball IR dept) but it
can't go on forever, neither can the share price growth
To back this up, let's note the insider selling action that sprouted last week from LSG. As usual,
it's easy to read too much into insider action of this type and I'm not calling it a red flag by any
means. But it is perhaps a yellow flag and it's certainly worthy of mention here. So far at least
(there may be more) three insiders of LSG have filed sales made last week (3). All of them were
the exercising of in-money options which were then 100% sold into the market (i.e. it's not a
case of getting free paid-up shares, these people sold them all and took the money).
• Natasha Vaz, VP of Technical Services, exercised 28,000 options priced at 87c and 58,361
options at 41c, which were all sold at $1.30. This brought her $79,739 pre-commission
profit.
• Merushe Verli, VP Finance, exercised 67,576 options priced at 41c and 47,000 options at
87c, which were all sold at $1.31. This brought her a$81,498 pre-commish profit.
• Alasdair James Federico, VP General Counsel & Corp. Secretary, exercised 76,792 options
priced at 41c sold, all sold at $1.31. This brought him a $69,113 pre-commish profit.
Like I say, don't read too much into this and I for one am not about to dump my positions just
because of these sales. But when the selling window is opened at corporate level and there's a
rush to get the bonus cash by not one but (at least) three insiders, it certainly catches the eye.
B2Gold (BTO.to) (BTG): We've done a lot on
BTO today in 'Fundamentals...' above, here a note
on how it traded during the week. What we saw
was a healthy pattern on strong volumes (16+m
traded on BTG and 33+m traded on BTO last
week), BTO rose with the sector and took its
quarterly earnings numbers nicely in stride on
Friday morning, which means they got a decent
reception from the button traders. The chart
presented here also shows how came at the
opening bell on three days in a row and how the
stock fared like others during the Friday afternoon
profit-take. A very nice week for our new Top Pick.
Regulus Resources (REG.v): REG fell back but managed to keep its price in the 40s for the
week, which slightly surprised me. I still think there will be plenty of opportunity to buy stock at
13
35c or under and as such, there's no rush to get in yet.
The 2015 Management Information Circular (MIC) was filed to SEDAR on Friday, previous to the
company's AGM set for June 4th, and the filing reminded me of another reason to like REG that
I'd forgotten to mention on these pages. That gets repaired today, so let's note that in 2014 the
company paid its four executive officers in the following style:
• John Black, President and CEO: $54,163
• Mark Wayne, CFO: $48,510
• Javier Robeto, VP Exploration: $68,245
• Kevin Heather, Chief Geological Officer: $81,591
Small small small money. And before you ask, those are
16 REG.v: Cash Tresury per qtr
the annual salaries they drew, not monthly. Not only
14
that, but in 2014 there were no share-based awards
12
granted. While other directors and company insiders
10
talk the talk on austerity, this company's heads are 8
walking the walk and paying themselves a relative 6
pittance compared to their peer group. And as this is a 4
company with an (IKN estimated) $10.5m cash 2
0
treasury, it's not as if they are just cutting back because
there's no cash available with which to cut cheques for
themselves. In the case of this company, I'll have zero
problems or issues when they award themselves
incentive options this year.
Minera IRL (IRL.to) (MIRL.L):
It's not a massive volume-driven move, let's be plain and clear about that. However, IRL did
touch 10c last week and equalled its highest price in 2015 and that's not to be sniffed at. We
still need news from the Ollachea financing deal, plus let's be clear that my decision to go for
the patient approach until news arrives isn't much more than the only one possible, other than
selling and walking away.
If IRL can hold 9c and 10c better than it did in February (i.e. for more than a single week) then
I'll be a little more impressed with this move. I'll be substantially more impressed with some
real volume (there was little in London last week, either). Until then IRL isn't going to be centre
radar stuff.
The Copper Basket
After twenty weeks of 2015 The Copper Basket is showing a 5.53% loss to level stakes.
14
31.peS 31.ceD 41.raM 41.nuJ 41.peS 41.ceD tse51.raM
source: company filings. IKN ests
srallod
fo
snoillim
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 569.11 1.49 -26.6%
2 Reservoir Min. RMC.v 3.96 47.55 220.63 4.64 17.2%
3 NGEx Resources NGQ.to 1.17 187.71 178.32 0.95 -18.8%
4 Nevada Copper NCU.to 1.65 80.5 154.56 1.92 16.4%
5 Amerigo Res ARG.to 0.27 173.65 76.41 0.44 63.0%
6 Copper Fox CUU.v 0.135 402.96 64.47 0.16 18.5%
7 Western Copper WRN.to 0.68 93.68 59.02 0.63 -7.4%
8 Hot Chili Ltd HCH.ax 0.16 333.11 41.64 0.125 -21.9%
9 NovaCopper NCQ.to 0.58 60.15 40.30 0.67 15.5%
10 Panoro Minerals PML.v 0.295 220.25 36.34 0.165 -44.1%
11 Regulus Res REG.v 0.35 56.39 23.12 0.41 17.1%
12 AQM Copper AQM.v 0.06 141 7.76 0.055 -8.3%
13 Metminco MNC.ax 0.008 1822.6 9.11 0.005 -37.5%
14 Catalyst Copper CCY.v 0.305 31.41 6.44 0.205 -32.8%
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 -5.53%
Nine weekly winners (CS.to, NGQ.to, RMC.v,
NCU.to, PML.v, WRN.to, ARG.to, HCH.ax, 4% The Copper Basket 2015, weekly evolution
MNC.ax), to that stayed unchanged (NCQ.to, 2%
COP.to) and just four losers (CUU.v, REG.v, 0%
AQM.v, CCY.v) was the total on the week, but -2%
as the four losers had some heavy percentage -4%
hits (REG.v down 16.3%, CUU.v down 11.1%, -6%
AQM.v down 8.3%) and the only big win was
-8%
the 25% put on by MNC.ax, the final basket
-10%
average moves down 0.53% instead of
improving.
As for copper metal prices, they traded in a
tight range between $2.90/lb and $2.95/lb with ever
threatening to move higher or break lower. The world
of industrial metals seems to have its eye firmly fixed
on the US Dollar's "weakness" (which looks more like
a healthy calming and retreat to me) than any
particular supply or demand issue in the physical
pipelines.
We move to inventories and here's the weekly action
and their bullet points:
• Overall world copper stocks dropped by
16,609 metric tonnes (mt) (-3.0%) to finish
the week at 531,824mt.
• Shanghai Futures Exchange stocks again
made the big move, falling 15,008mt (-8.0%)
to finish Friday at 173,157mt.
• LME warehouses stocks were down a mere 1,075mt (-0.3%) to finish at 338,000mt.
That's the fourth week in a row where the LME stocks have done little or nothing (the
action is SHFE and China, be in no doubt).
• Comex warehouse stocks dropped a small 526mt (-2.5%) to finish at 20,667mt.
So not much news on this front this week, either. The Shanghai-only weekly chart shows the
15
ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62 dr3yam ht01 ht71
source: IKN calcs
continued spookily close repeat of the 2014 pattern, with the downgrading of stocks back up
and running. The only difference is the timing, this years trend is a month later than last year's
and that might be due more to the early Chinese New Year than anything else.
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
16
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 dr3yam ht71
Mt Cu
source: Cochilco
Now for some notes on a few of our basket components.
Reservoir Minerals (RMC.v): If volume were heavier I'd be more enthusiastic, but the move
back up to this weekend's $4.64 close still shows cash returning to just about the most
interesting copper junior story in the world right now. The last time RMC traded more than
100k shares in a single day was on December 9th 2014 and until real news comes along, it's
probably going to stay that way. The real news everyone's waiting for (or so the jungledrums
go) is results of the latest FCX drill program, including the intriguingly long 2.2km hole cut
through what was supposed to be the target area just East of the main high-grading Timok
mineralization where the porphyry is posited to be located. FCX is taking its sweet time on
things and those long holes take time to assay.
Copper Fox (CUU.v): Pumped and dumped.
Nevada Copper (NCU.to): One of the few copper explorecos with a NR last week, on
Wednesday NCU offered (6) one of those news-but-not-news NRs it comes out with on
occasion that seems to obfuscate as much as cast light, and somewhere in the words offered
somehow hints of delays to timelines. This is pretty typical of a company with a poor track
record of over-promising on development timing. I'm never quite sure where the real info lays
in these NRs, but after a couple of re-reads my eyes get drawn back to this section...
A Congressional decision to convey the lands is not appealable however there are
several procedural reviews needed to complete the land conveyance. The BLM and
the City have executed various agreements and all parties are working diligently and
cooperatively to try to complete the land conveyance in Q3-2015.
...that suggests, with the odd use of the verb "try" in there, that it's going to be the fault of
those pesky government people if (when)
the land conveyance doesn't come out in
time. And as this part of the paperwork is
critical path for its permitting, the whole
process may take more time than
previously anticipated. I may be reading too
much into that and the interpretation might
turn out to be too negative, but having a
default position of cynic about anything
from this company is a far better thing than
swallowing its spiel without question or
thought. What I do know is that if things
indeed take longer than expected and later
in the year NCU doesn't get its conveyance
completed by end 3q15, you can bet dollars
to donuts they say "Well, we did warn you in that May 13th NR!". Here's the 2015 YTD chart
and frankly, I fail to see the attraction. Just because it's one of the few advanced copper
projects not in large company hands doesn't mean to say it's a good project. The fact it hasn't
been bought out in the years it's been shopped around already is testament itself.
The Low Cost Producer Basket
After 20 weeks, the 2015 Low Cost Producer Basket is showing a 15.26% gain to level stakes.
company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 830 16.10 19.40 4.8%
2 Barrick ABX 10.75 1164.67 15.28 13.12 22.0%
3 Newmont NEM 18.90 499.08 13.82 27.69 46.5%
4 Franco Nevada FNV 49.19 156.5 8.51 54.38 10.6%
5 Silver Wheaton SLW 20.33 403.75 8.26 20.47 0.7%
6 Agnico Eagle AEM 24.89 214.12 7.18 33.52 34.7%
7 Kinross KGC 2.82 1146.2 2.91 2.54 -9.9%
8 Buenaventura BVN 9.56 254.19 3.11 12.24 28.0%
9 B2Gold BTG 1.62 921.27 1.57 1.70 4.9%
10 Pan American PAAS 9.20 151.64 1.54 10.15 10.3%
all prices in U$, using NYSE ticker prices Portfolio avg 15.26%
Be clear, this was a very good week The Low Cost Producer Basket: Weekly performance
for our Low Cost Producer Basket. The and comparative to GDX control
25%
average rose by 5.7%, all of the
components put them rose, with the 20%
best numbers returned by 15%
Buenaventura (BVN up 10.9%) and 10%
Pan American Silver (PAAS up 7.0%). 5%
0%
-5%
17
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62 dr3yam ht01 ht71
basket
gdx control
source: Google Finance, IKN calcs
Low Cost Basket: Percentage difference between
2.0% basket and GDX control, 2014
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
-2.0%
-2.5%
-3.0%
18
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62 dr3yam ht01 ht71
|
source: ikn calcs, NYSE/Nasdaq data
And just for the record, this IKN basket is now 2.48% ahead of the GDX benchmark. This is the
type of move we'd want to see if that nice Mr. Market ever decided to award a bonus to
companies able to produce gold (and silver) at decent margins.
Pan American Silver (PAA.to) (PAAS): This section is called the low cost producer basket,
but it's now debatable as to whether PAAS deserves a place in a place with such a title. Last
week's 1q15 financials from PAAS saw it return a net loss, what with this-n-that below the fold
financial adjustment, but the real worry here is that PAAS barely managed to get into positive
territory on mine operating earnings (chart from the Monday evening blog post (7)).
Despite the mediocre looking 1q15 PAAS managed to rally well during the week with at least
some of that likely due to the warm reception of the news that the company is (finally) going to
build the mill it's thought about building at its
Dolores gold/silver mine in North Mexico (the
one they got when they bought Minefinders all
those years ago), as well as opening an
underground mining operation at site to feed
higher grading material through the new
machine (8). It's always been a case of being
able to justify the capex on this upgrade
project and apparently (we'll see one of these
fine days) PAAS has played with the numbers
to its own satisfaction and the project was
passed by its board. Here's how the first
paragraph of that separate NR on Monday
announced the news:
Pan American Silver Corp. (NASDAQ: PAAS; TSX: PAA) ("Pan American", or
the "Company") today announced that its Board of Directors has approved the
investment of $112.4 million required to expand its Dolores mine in
Chihuahua, Mexico, by adding a milling and pulp agglomeration circuit to
improve silver and gold recoveries, as well as by developing an underground
mine to extract mineral resources that exist beneath and to the south of the
ultimate open pit (the "Project").
That decision seems to have gone down well in a week that caught silver on the upswing, and
hey that's fair enough. But this one is not for me and to explain, here's a mail I sent to A.
Reader during the week by way of a reply. I've polished the grammar and taken out a few
sidebar notes, but apart from that it's as sent.
Ok, I'm good on the Dolores numbers too. And as some background, I owned Minefinders when it
was bought out by PAAS for the Dolores mine. It's always been clear that the upgrade was
needed there.
But the context here is necessary. PAAS isn't an up'n'coming jr, it's an established producer.
What you're looking at is a company risking what's basically its treasury on capex, so the question
is what happens if silver goes downhill further? For my money, PAAS isn't being rational and
hasn't gone about the necessary cost cuts on its core business. If a crap-assed thing like EDR
has done that, why hasn't PAAS? That's why i stuck that MOE chart on the blog, $2.6m in MOE
isn't enough, period. Instead of reducing costs (therefore risk) PAAS has decided to gamble, to
add to risk. Fine, good luck I say, but this is a $1.5Bn company and that's a lot to put at risk.
Bottom line: From what i see in PAAS, the risk is too great and the reward slim. If i want the risk in
silver i buy a really beaten down issue and get massive potential upside compared to the double
PAAS would give me. If i want mere exposure to Ag i buy a solid earner. Or even better, I just buy
SLV and be done. There's no reason to own PAAS for me, barring the marginal reasons around
the divi.
Now this could be me just being picky or even plain wrong (would hardly be the first time) but I
find today's PAAS an easy...well, an easy PASS. I'd much rather see improvement on its costs
base these quarters than watch it use money for 2017 production ideas. It falls between two
stools as a current trade, that over and above my general disdain for silver plays. So ping me in
six months' time when PAAS is up 50% and easily out-doing the other companies in its sector,
I'll admit everything.
Regional politics
Argentina: Presidential election poll tracking
Two new voter intention polls to note from May 2015, with both confirming the trend of Daniel
Scioli (government candidate) leading Mauricio Macri (right-wing politics oppposition) and
Sergio Massa fading.
• Aragón y Asociados: Scioli 32%, Macri 26%, Massa 20%
• Hugo Haime: Scioli 36%, Macri 29%, Massa 20%
Those results taken from the recently dicscovered and useful Andy Tow poll of polls blog page
(9), very much the Nate Silver Argentina copy. Easy to use even for non-Spanish speakers.
Ecuador: No more benefits for mining companies
To pass this snippet on, I'm going to directly translate this (10) article as it does a good job in
few words.
The President of Ecuador, Rafael Correa, said that there would be no more changes in
the mining legislation of the country and that investors would have to adapt to the
current conditions in order to develop large scale gold and silver mines. Some foreign
mining companies have asked for changes in the current mining laws, which set
19
various tax burdens on the sector, in order to speed up projected investments and
inject new capital into the nascent sector. Since 2009 Ecuador has passed several
reforms to attract mining investment, with the latest in 2014. "We have great mining
potential, but we're not going to give away the country's resources. With the conditions
as stand, all who want to invest are welcome", said Correa.
No prizes for guessing that Lundin Gold (LUG.to) has reportedly been at the forefront of
lobbying and its main objective has been to remove the windfall tax laws currently in place. It
looks as though that effort isn't going so well. It's what did for Kinross at FDN, you'll recall.
Burkina Faso: No trade for my taste
Africa is not Latin America (!) but I'm still keeping an eye on Burkina Faso, because if things
settle down True Gold (TGM.v) may become a decent trade and if not, it may be another nail in
the coffin of Sandstorm (SAND) due to a neverending reputation for investing in the wrong
projects. Last week we had a government press release (10a) that asked locals to allow TGM to
re-start its development activity and it was more like a polite request or plea than any sort of
directive. So this political risk review report (11) from IHS Jane's (decent reputation) last week
is worthy of highlighting here, not least because TGM is directly mentioned in the wider context
of the upcoming October elections and what we might see before and after that date. Here are
the key point headers:
Key Points
• Passage of the electoral law on 7 April means the presidential and legislative elections on
11 October 2015 are likely to be held on schedule.
• The frequency and scope of violence are likely to increase due to the ongoing political
rivalry, communal grievances, and the rising cost of living.
• The country's fragile political stability will be threatened in the event of the former ruling
party returning to power.
And here's the bit in which TGM gets a mention:
Outlook and implications
Burkina Faso's roadmap for transition back to democratic rule is on track following the passage of
the revised electoral code on 7 April. The new code sets the stage for presidential and
parliamentary elections on 11 October 2015. Should the CDP win the elections in October, the
risk of protests against alleged theft of funds by Compaoré's government will increase.
The overthrow of the previous government has also emboldened local mine workers and
communities alike to use force, including arson attacks, against foreign mining firms to demand
social and financial benefits. The Canadian firm, True Gold Mining's Karma gold project operation
was halted for almost three months when residents in Noogo village, Namissiguima, in January
set fire to mining equipment, causing significant damage. The attack on True Gold came two
months after similar incidents on foreign mining operations. In the build up to the elections there
will be an increased threat of violence against the mining sector, such as the invasion of sites to
loot, vandalise, or commit arson.
However, I'd recommend a full read of the report if you're interested in the subject. Suffice to
say that as things stand today, Burkina Faso is a very easy place to avoid in my book.
Dominican Republic: Pueblo Viejo cleans up the river
Barrick Pueblo Viejo (BPV) (ABX 60% and operator, GG 40%) is doing it the right way in Dom
Rep. The case of the Margarita River in which where the company does the right thing and
vastly improves the local environment after arriving is by no means an isolated case in the
world of mining, but these reports never seem to get as much attention as the enviro-disaster
type of report that hangs around mining operations. That's probably due to the media's (and
the world's) appetite for bad news stories, but I'm sure that if mining companies did a more
effective job of tooting their own horn I wouldn't have to dig these stories out from regional
reports in Spanish.
In this case (12), when (BPV) arrived in Dom Rep in 2006 one of the things it inherited in the
location of its mine was a river that was badly polluted by the actions of local informal/illegal
mining operations. The river had been closed off to the public for 12 years before PBV took the
concession due to toxic residues that has started building up there in the 1970's - Once its BPV
20
mine was up and running, the company got round to its overdue clean-up job starting in 2013.
Part of the problem was solved by running the water supply through the mine and taking
advantage of the mine's water filtering and cleaning systems, while another line of attack was
to stop rainfall water from running through areas that had been deeply contaminated by
suphides on the way to the river. The result two years on is a river that's now been re-opened
for public use.
I'm no big ABX rah-rah fan and I need little reminder of the enviro-mess they've made of
Pascua Lama (just as one example). But this company and many others do good environmental
work like this all across The Americas, so it's about time word is spread more effectively.
Nicaragua: Expecting $1,300/oz gold
Maybe the business community of Nica knows something we don't. In this local report last week
(13) on the state of mining in Nicaragua, the only company or commerce chief who was
guarded about the future price of gold
was the B2Gold (BTG) (BTO.to) U$m Nicaragua: U$ value of gold exports per annum
representative, who spoke of being able to 500
435.85
adapt to current market price conditions 450
385.91 400
as the most important for the country's 400
350
gold mining industry. All other interviewed
300
were bullish on the gold price and quickly
250
quoted U$1,300/oz (or more) as their
200
2015 target exit price.
150
100
As for this year 2015, the country aims to 50
export U$400m worth of gold, with 0
volumes slightly greater than the
2013 2014 2015est
9,485.68kg moved in 2014. The two
source: Nicaragua mining chamber of commerce
largest producers in the country are the
Libertad mine of B2Gold and the Bonanza mine run by Hemco (the one mentioned last week as
focus of a strike action).
Chile Exponor
Antofagasta in the Northern region of Chile played host to the big Exponor mining conference
last week, with plenty of emphasis on the local specialty of big copper mining. Reports have the
conference as subdued in atmosphere though also well attended, with all local bigwig mining
people on hand. The headlines were a mix of populist soundbites for non-trade press, such a
Codelco head Nelson Pizarro's "Codelco has reserves for copper production for the next 70
years" (14) to more specific matters such as (15) how the Chile's project book for large scale
mines (mostly copper projects, with some gold) for the years to 2025 has been cut down from
a value of U$104m to a new U$74.226m due to the re-pricing of some projects and the
dropping of others. On this subject, a lot of debate centred around mining infrastructure and
and the demand for water in the North region's mining industry to 2025 was set to rise by 64%
compared to 2014 and electricity by 80% in the same lapse. As Chile's normally quite good at
planning for the future on such matters, it's good to report the open debate going on today.
Guatemala: A new VP
After the scandalous resignation of Roxana Baldetti the week before last, the administration of
Otto Pérez Molina was keen to plug the Vice Presidency gap as quickly as possible and the new
replacement has been named as one Alejandro Maldonado Aguirre. Central American politics
expert Mike Allison has more on his blog about the appointment (16) but here we quickly note
that President Pérez Molina chose Maldonado and his candidacy was passed by the nation's
Congress (in double-quick time).
Maldonado is very much an ally of the President, from the politcal establishment and a clear
stop-gap appointment that aims to get the government to the end of its mandate as painlessly
as possible. With the presidential election set for September, it doesn't have so very far to limp
21
and we can't expect more than the lamest of lame-duck endings now. The concern for us on
the outside looking in is the potential for the public rejection of corrupt politics to turn into
something more activist and bring forward an outsider not part of the current cozy club to make
a serious run for President. The next couple of months will have to be watched closely.
Peru: Your Tia Maria soap opera weekend update
The ongoing mess that is Tia Maria got worse as the week wore on, so perhaps it's better not
to bore you with a blow-by-blow commentary and just how stupid both sides have been. The
most important events happened at the end of the week in which first President Ollanta Humala
addressed the nation to tell them there wasn't going to be any concession cancellation or
suspension of the Tia Maria project, a statement that was quickly followed (in a plan obviously
hatched in cahoots with the government) by an announcement from Southern Copper (SCCO)
that they were putting the project "on pause for 60 days" in order to hold further and more
detailed discussions with the locals living close to the project in the Tambo Valley, the central
players of all protests.
For sure it was a behind-scenes deal between company and government, nothing particularly
wrong with that. But it's also purely cosmetic stuff, as a "60 day pause" for a project without
any construction permit or real development going on doesn't and won't change a single thing.
The move is designed to lower the now rarefied atmosphere in the Tambo Valley and the whole
of the Arequipa region (there were some pretty tense confrontations between police and
protesters on Tuesday, Wednesday and Thursday just a few kilomtres from this very office, but
the advantage was that schools were closed and I got to play with the kids for some extra
days). A calming of the waters for two months would be welcomed by all sides, but on a
practical level both project opposition (17) and government ministers (18) are already stating
(and quite correctly in my view) that if Southern Copper (SCCO) couldn't convince Tambo Valley
locals to accept the project in the last six years, how are they going to convince them in 60
days? As for the reception by Tambo Valley locals to the "pause" news, this photo-reportage
(19) with shots taken after the announcements shows that locals aren't about to pack up their
protests and go home on the word of people they clearly no longer trust (if they ever did).
In practical terms, what we're seeing is the first stage of the re-freezing of the Tia Maria
project. It can't be fully cancelled because it would send a toxic signal about the state of FDI in
Peru to the rest of the world. It can't go ahead as planned, because even if the government
tried to force it through (which they won't) the location and strong opposition makes it
practically impossible (take that phrase literally rather than in its usual figurative way). What
can happen is a re-negotiation of the deal between locals and company (SCCO has not offered
much to locals compared to the project value) if tempers ever die down to a level where real
negotiation can take place, but we're talking years rather than months for that to happen. So
last week saw what I strongly suspect to be the first of several "temporary pauses" to the
project. I'd expect the next one to include a full review of the current EIA (which was signed off
in dubious circumstances) and that's the type of relay that can easily be stretched right into the
end of Ollanta Humala's mandate in mid-2016. Hot potato passed on.
STOP PRESS (ish): This Sunday afternoon May 17th organizers of the Tambo Valley anti-mining
campaign announced (20) a new 48 hour strike in the Arequipa region against the project, on
May 27th and 28th. We may get another couple of days with the kids at home.
More Peru: Laws passed and strikes planned
Aside from the ongoing Tia Maria FUBAR, one good and one bad from Peru. First the good and
while all the Tia Maria Pause story captured the mining headlines in Peru Friday, the nation's
congress managed to pass the law package (21) designed to speed up environmental
permitting processes, as well as make property expropriations and compulsory purchases
easier to achieve. Meanwhile the bad and a nationwide strike action expected by mining worker
unions is scheduled to begin tomorrow Monday (22), with disruptions in production in several
large mining companies such as Antamina, Shougang, Volcan, Antapaccay etc. If it goes ahead
the strike is over pay and conditions (unions are concerned about the erosion of profit sharing
22
for their members), but it's still not clear whether the strike will go ahead (a stay for more
negotiations is possible) or how effective it will be in the fractured syndicate world of Peruvian
mining that has a tough job in getting enough people to stop work as the same time to be able
to truly disrupt production (Chile's unions are far better organized, for example).
Market Watching
A return to the silver producers mentioned last week, plus silver thoughts
In IKN313 we shone a quick light on four silver producers, namely First Majestic (AG) (FR.to),
Fortuna (FVI.to) (FSM), Great Panther (GPR.to) (GPL) and Endeavour Silver (EDR.to) (EXK) as
they'd all returned their 1q15 numbers that week and they were all reasonably comparable as
companies too (apples-to-apples always ends if you go deep but they're all juniors, silver
producers and working mainly or fully in Mexico). After the quick look, I stated that (excerpts to
cut to the chase):
• "...EDR.to looks like the best turnaround story right now"
• "...if silver goes up they all go up and suddenly we're all genuises"
And as this five day chart of the four stocks plus silver (SLV proxy) shows...
... not to put too fine a point on it I was right on both counts, even with the round of profit-
taking we saw on Friday afternoon. You'll
forgive me for the horn-tooting for once,
yeah? On a more general level I'm still
very much in "show me" mode when it
comes to silver, same as with the recent
failed run at beating $1.10/lb that zinc
has recently put in (23). It's true that on
Friday the gold/silver ratio fell to below
70X for the first time since early October
and that's what you'd want to see as a
start of a rally for the minor metal.
But I'm not convinced as yet, not by a
long chalk and still much prefer (as in
MUCH prefer) to have exposure to gold
miners than silver miners. Therefore First
Majestic (AG) (FR.to) remains my only
real direct exposure and if I decide to
open on EDR.to, at present I'm more
23
likely to sell AG in order to buy EXK than hold both at the same time.
Atico (ATY.v) update
Two weeks ago in IKN312 I made mention of a rising interest in Atico Mining (ATY.v), the
Ganoza family (of Fortuna Silver fame) operation in Colombia. Since that intro and overview
piece on ATY.v, two things have happened and one hasn't yet:
1) One of the large insto holders, Geologic Resource Partners has cut its holding in ATY by
2.94% to 8.18% of the fully diluted shares (6.457m shares and 1.665m warrants).
2) The share price has gone up (without me on board). This ten day chart shows how ATY has
reacted well along with the market and risen from the then 45.5c of IKN to this weekend's 56c,
a non-too-shabby 23.1% upmove.
3) We still haven't had the quarterly numbers. They should arrive soon and if they're as weak
as I expect, ATY may reverse and drop.
Back in IKN312 I considered the 45.5c price at the time as a reasonable potential entry point
without representing really great value and as such, I wasn't going to take the plunge
immediately. Which proves how little I know, because I managed to pass up on a decent little
two week difference but all the same I'm not gagging at the mouth to own this stock, which
means it's going to stay on the watchlist only until and unless the value proposition becomes
compelling. For sure it could go higher from here, but if it does it'll be without me.
Newmarket Gold buy Crocodile Gold, Agnico Eagle (AEM) buys some Belo Sun
(BSX.to) and some more Pershimco (PRO.v)
The deal news in the mining space last week was dominated by these two announcements, first
that of the Newmarket Mining (virtual) shell run by a host of supposedly A-list mining people
taking over Crocodile Gold (CRK.to) in order to pay down debt and make it the kernel of a new
mid-tier company. I mentioned that deal on the blog on the morning of the announcement (24)
and after looking more closely, it reminded me a lot of how New Gold (NGD) got started. Not
coincidentally, Randall Oliphant is centre stage in Newmarket, too. For the moment there's too
much razz and hype about this story and they're probably paying too much for CRK as well, so
I'll sit it out and watch.
Then late week came the Agnico Eagle (AEM) move to buy more Pershimco (PRO.v) and a new
position in Belo Sun (BSX.to) (25). We note that AEM has done business before with Bharti
companies such as Sulliden, so this one isn't that much of a surprise. The PRO deal is a top-up
and we already know AEM tends to support the equities into which it's already bought. As for
BSX, that's for 62.5m new shares and once the deal is done BSX.to with have 359.6m shares
out and around 29m options, 17m of which are in the money (no warrants outstanding). As at
Friday's close that values BSX at CAD$93.5m and that's way too much for a project that's under
24
serious environmental scrutiny and community dislike. I'll leave this to others.
But even though I'm not a fan of the specific deals cut by AEM (sidebar: They tend to be
remembered for their winners, but the company's overall track record of investing in juniors is
patchy at best, there's no auto slamdunk when AEM invests in something) I like the uptick in
activity between buying majors and selling juniors. It's what I want to see as I buy into my own
preferred Land Grab positions. All boats will rise on this tide eventually.
Almaden (AMM.to) (AAU) and an attractive spin-out
Friday lunchtime saw Almaden (AMM.to) (AAU) release details (26) of the spin-out they've been
planning for a few months. The deal is basically to leave Almaden as we know it with its most
advanced Ixtaca project, while spin out just about everything else it owns, including 21
exploration projects, a suite of 22 NSR royalties, $3m in cash, 1,597 oz of gold bullion and a
bunch of equities held in other companies into the newco, to be named Almadex. For every
share of AMM today the company plans to issue 0.6 shares of Almadex, which means that with
the current count of 73.15m shares out in AMM Almadex would have 43.9m shares out at
conception.
In its latest corporate presentation dated May 1st 2015, AMM (27) offered the pre-plan of the
spinout deal and this flowchart was part of the presentation...
...which does a reasonable visual job of explaining how things will be. Then semi-related we got
more news from AMM on Wednesday (28) with the the filing and a 43-101 report on its 100%
owned 'El Cobre' project in Veracruz Mexico, one of the more advanced projects that would
make up Almadex.
The basic concept behind the spin-out deal is that AMM isn't getting any sort of value added for
its other properties and assets and in this way they can realize more value from the current
corporate structure. I agree. This looks like an attractive deal that will add value and it fits right
in with my personal 'land grab' thesis that suggests fixed assets currently priced close to or at
zero will appreciate in the months to come. The downside is that by largely vacating AMM
expect for minimal cash and Ixtaca, directors are obviously planning to run an equity financing
to re-fill the treasury of the mother company and that might weigh on the valuation. However,
that's the minor concern right now and I'm going to watch how this trades very closely in the
week ahead, with a view to possibly taking a position in AMM before the spin-out occurs.
25
Tahoe Resources (TAHO) (THO.to): Some strictly first person thoughts
According to the merger deal struck between Tahoe Resources (TAHO) (THO.to) and Rio Alto
(ex-RIO.to) in early February, the former valued the latter at CAD$4.00 per share by offering
0.227 THO for every RIO. On the morning of the announcement THO was a C$17.55 stock and
since that date it's been below the nominal number, right up until late last week.
With THO.to closing at C$17.61 on Friday, if I hadn't sold my RIO.to shares back in April for
C$2.57 they'd now be worth $4.00 each (minus three tenths of a penny), so more fool me. In
the last couple of weeks this desk has heard about THO running an aggressive and effective
marketing campaign on several fronts in The Americas as well as Europe and the feedback
received from (non-company) sources has been pretty positive as well. That doesn't surprise
me in the least, I know to my own back pocket benefit how good Alex Black is at his job and I
wish him and the new THO the best of fortune, but I still won't be joining him as a shareholder
of the company. When reader 'PA' mailed last week I said roughly the same thing and
reiterated my basic concern; if nothing untoward happens in Guatemala and/or the Escobal
mine, chances are that THO will continue to be a real moneyspinner of a company. What's
more, because of the Black Swan nature of any negative that might hit, things would be fine
there right up to the very moment that they weren't. And I'm not saying a serious, company
threatening problem will arise either, the whole thing could sail off into the sunset without a
single hitch along the way for decades for all I know. But my position is however much I trust
the mining company and their operational prowess, I'll never trust a political jurisdiction like
Guatemala and prefer to sleep well at night by simply avoiding its exposure there, not least in a
company that has 2/3rds of its near CAD$4Bn market cap embedded there.
The longer I'm wrong about hating the risk profile the better for all concerned, I hope to remain
wrong for as long as possible.
26
Conclusion
IKN314 is done, we end with bullet points:
• B2Gold (BTG) (BTO.to) gets promoted to Top Pick on the back of a solid 1q15, but the
real reason is what it should now achieve in the quarters and years ahead. I made a
short mention of its takeout potential in today's text, but the way things are I can easily
envisage one of the larger players stepping up and buying out BTO. With rock solid
financials, production growth on dropping costs, Fekola as the next high quality project
and a management team that delivers results better than punches, it ticks all the right
boxes. I'm buying more, its time has come.
• The other PM producer plays we own mostly reacted well to last week's decent gold
action, Friday profit-take or not. The only one that concerns is Timmins (TGD) and as
it's the one I'll most easily drop, it has a week to show me what it can do.
• I was pleased with the way McEwen Mining (MUX) traded traded lastw eek, it fit the
hypothesis we're working on very well. At $1.30 and above I may even be able to
convince myself I was right to buy it.
• Almaden's (AMM.to) proposed spin-out of its undervalued assets looks most interesting.
• For those of you tuning in from Canada, enjoy your short week.
I thank you in advance for any feedback. Our Top Pick stock is B2Gold (BTG) (BTO.to). 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://finance.yahoo.com/news/b2gold-reports-first-quarter-2015-073000732.html
(2) http://www.b2gold.com/wp-content/uploads/2015/05/MAY-2015.pdf
(3) https://www.canadianinsider.com/company?ticker=LSG
(4) https://www.canadianinsider.com/company?menu_tickersearch=FCV%20%7C%20Focus%20Ventures
(5) http://www.snmpe.org.pe/prensa-y-multimedia-snmpe/sintesis-de-noticias/mineria/aprueban-eia-por-
modificaci%C3%B3n-de-bay%C3%B3var.html
(6) http://finance.yahoo.com/news/nevada-copper-land-permitting-land-110000486.html
(7) http://incakolanews.blogspot.com.ar/2015/05/pan-american-silver-paato-paas-1q15.html
27
(8) http://finance.yahoo.com/news/pan-american-silver-proceed-dolores-013000646.html
(9) http://www.andytow.com/blog/borra/?compe=Presidente%201ra%20Vuelta&pop=Nacional
(10) http://www.snmpe.org.pe/prensa-y-multimedia-snmpe/sintesis-de-noticias/mineria/ecuador-no-dar%C3%A1-
m%C3%A1s-incentivos-a-miner%C3%ADa.html
(10a) http://burkina24.com/2015/05/16/exploitation-de-la-mine-de-karma-lappel-du-gouvernement/
(11) http://www.janes.com/article/51343/civil-unrest-set-to-intensify-as-burkina-faso-s-presidential-poll-draws-closer
(12) http://www.portalminero.com/pages/viewpage.action?pageId=96758144
(13) http://www.tecnologiaminera.com/tm/d/noticiainternacional.php?id=8376
(14) http://www.lanacion.cl/noticias/economia/mineria/codelco-tiene-reservas-de-cobre-para-operar-los-proximos-70-
anos/2015-05-14/184242.html
(15) http://www.holaciudad.com/la-cartera-inversiones-mineras-chile-baja-74226-millones-2015-2025-n585385
(16) http://centralamericanpolitics.blogspot.com/2015/05/from-anti-communist-youth-leader-to.html
(17) http://gestion.pe/economia/si-tia-maria-no-convencio-cinco-anos-no-lo-hara-dos-meses-segun-marco-arana-
2132010
(18) http://gestion.pe/politica/tia-maria-gobierno-admite-que-lograr-convencer-poblacion-podria-tomar-mas-60-dias-
2132028
(19) http://larepublica.pe/438-se-intensifican-las-protestas-en-cocachacra-luego-del-mensaje-presidencial
(20) http://rdespeciales.com/peru-mineria-convocan-nuevo-paro-de-48-horas-contra-proyecto-minero-del-grupo-mexico/
(21) http://gestion.pe/economia/congreso-aprueba-paquete-medidas-que-agilizan-permisos-ambientales-y-facilita-
expropiaciones-2131995
(22) http://elcomercio.pe/peru/pais/sindicatos-trabajadores-mineras-preven-acatar-huelga-noticia-
1811654?ref=portada_home
(23) http://incakolanews.blogspot.ca/2015/05/zinc-has-failed-again-at-110lb.html
(24) http://incakolanews.blogspot.com/2015/05/the-world-informs-me-that-i-need-to.html
(25) http://www.newswire.ca/en/story/1537487/agnico-eagle-announces-investments-in-belo-sun-and-pershimco
(26) http://finance.yahoo.com/news/almaden-enters-arrangement-agreement-spin-164525321.html
(27) http://www.almadenminerals.com/Investor%20Centre/Documents/Almaden_Presentation.pdf
(28) http://finance.yahoo.com/news/almaden-files-technical-report-el-201954959.html
28
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
29
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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