IKN #320Premium

The IKN Weekly
Week 320, June 28th 2015
Contents
This Week: It's a US BLS week, The Shanghai Gold Exchange to fix a gold price in Yuan, Greek
chicken.
Fundamental Analysis: A short half-year review of IKN's position as regards silver.
Stocks to Follow: Overview, Timmins Gold (TMM.to) (TGD), NovaCopper (NCQ.to), Minera
IRL (IRL.to) (MIRL.L), Teranga Gold (TGZ.to) (TGZ.ax), B2Gold (BTG) (BTO.to), Lake Shore
Gold (LSG.to), McEwen Mining (MUX) (MUX.to), Starcore Intl (SAM.to), Regulus Resources
(REG.v).
Copper Basket: Overview, Cochilco copper yearbook.
Low Cost Producer Basket: Overview, Goldcorp (GG).
Regional Politics: Regional Risk Review.
Market Watching: Standard Tolling (TON.v): Interesting, First Mining Finance (FF.v): Pump
on, Almaden (AAU) (AMM.to): Coming back to its field, Torex Gold (TXG.to) (TXG): May be a
trade.
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
It's a US BLS week
The regular macro headsup. As The United States of America takes Friday July 3rd off in order
to fully appreciated its Independence Day on Saturday (your author fully approves) and all the
normal stock markets and government bureaux are closed there, this week's US BLS jobs report
comes on Thursday July 2nd. Calculated Risk (1) currently has the headline number consensus
at +228k non-farm payroll and 5.4% unemployment, down a tick. Those may be adjusted as
the week goes on.
The Shanghai Gold Exchange to fix a gold price in Yuan
It started with the announcement at a conference on Thursday: Here's Reuters doing some
straight reporting:
"We will be introducing a renminbi-denominated fix at the right moment, we
are hoping to introduce by the end of the year," Shen Gang, SGE's vice
president, said at the LBMA Bullion Market Forum in Shanghai on Thursday.
And in time-honoured style, within hours those loveables in the "Gold Community" were (2):
China’s Gold Hoard Will Slay the Mighty Dollar — Here’s Why(cid:24)
And perhaps even more ridiculously (3):
Chinese Gold Standard Could Create 'Fireworks'
1

And those are without looking at Zerohedge. Give me a break western world doom-merchants,
will you? Setting a moveable price for gold in local currency, be it on a daily or weekly or
monthly or quarterly basis, is NOT a "gold standard". It is NOT "backing your currency with
gold", it's PRICING gold in your currency and not the other way around. Read that Reuters
quote again because as usual, reality is boring. China plans to do something akin to what
London does every single day of the working week. But what the traditional (tall, white, male)
financial system does is easily ignored if there's an alternative narrative to plug. What's more,
we're talking about the Renminbi/Yuan, a currency that is itself currently soft pegged to the US
Dollar. Yes I know China wants its currency to become part of the big basket and at some point
it's going to need to sever its soft peg to do so...oh hey, maybe just maybe...
Now I'm not saying this news is inconsequential, don't get me wrong and veer off the other end
of the hype-o-meter. The move by China is a logical one and it's medium/long-term bullish for
gold too, as China has made it plain that it encourages gold ownership amongst its citizenry.
Making gold ownership more accessible via setting a price in local currency is a clear step along
that path but please, taking last week's announcement and watching goldbugs magically
transforming it into what they want to read instead of what's there, this is precisely and exactly
why they're being ridiculed today for the myriad of bunkum false predictions and guesswork of
three and five years ago. Stop. The. Stupid.
We should welcome the continued gradual opening of the gold market to rank and file China,
which is real and will benefit the price and of gold over time, as well as the new swathe of gold
owners (of course). But anyone using this modest and reasonable positive to the long-term gold
market as an excuse to peddle their own preferred version of future dystopia on the back of
samo samo entrenched nonsense needs a quick reminder about how bad the other predictions
from this very same mindset have been recently.
Greek chicken
“Never regret thy fall,
O Icarus of the fearless flight
For the greatest tragedy of them all
Is never to feel the burning light.”
Oscar Wilde
Although it's not an IKN Weekly subject, the potential for ripples through what we know as "the
financial system" demand a few lines on Greece. The way I see it, the politics are more
pressing than the financials at the moment and though I'd expect some flight to quality to
cause near-term strength in the dollar (first port of call), plus one of those red days on the
world stock markets Monday, it's not going to be a big one for the markets to digest, in the
near-term at least. Further out there may be much bigger issues coming, things that will make
for those stressed-broker-on-phone-holding-head-in-hand photos on front pages of national
newspapers, but not right now.
To expand on that: Greece and its fallout is indeed a serious political problem, first for Greece
itself, second for the EU. For evidence look no further than the Greek PM Tsipras's decision to
run a snap referendum, followed today by the closure of banks and imposition of withdrawal
controls, which is carrot/stick populist politicking and Greek Drama Theatre (I'll allow myself
one groaner cliché) of the first level. But the financials look contained for the time being and
even more so now that a bank holiday has been declared for the week ahead, you can have a
run on the banks if they refuse to open their doors. It's also one of these in which the world
wants to see panic in the streets (in this case, of Athens) and will therefore see what it wants to
see. For example, today Sunday morning the ECB decided to maintain its emergency funding to
Greece at 89Bn Euro, which was spun at us as "freezes funding". Well okay fair enough, and
the frame was soon long (photogenic) queues outside banks on Sunday night as your average
Greek middle classer tries to extract their cash from their account. Before. It. Is. Too. Late.
The next week through to Sunday's referendum (which will vote not to accept the
2

ECB/Troika/IMF deal, be clear on that) will provide lots of headlines. It will provide ample
opportunity for media-created drama too, but for the real effects watch the Dow and the dollar
because as noted last week on the blog and even taking into account this weekend's
developments, Monday wobbles aside I expect but minor ripples in the world financial structure
from Greece. In the medium-term things could get far stickier, though. First up, expect eyes to
turn from Greece to Portugal and its potential exit from the Eurozone. But the real killer will
come two or three years down the line if Greece does indeed exit the Euro this year and then
starts to recover and grow. The single worst thing that can happen to the current world
financial order is that the heterodox alternative to its pervading wisdom is shown to be better
than the status quo and that nightmare scenario (a nightmare for those in power at least)
would have its chance via Greece, the Drachma and (horror of horrors) a true left wing
government. There lies the potential for a true final death knell for the Euro as it stands today:
If the ECB decided to eject (or "allow to choose to leave", if you must) Greece, the Euro as a
currency would die if Greece did better than the rest of the region Therefore Germany and its
friends will actively want a Greek failure and continued strife and failure for years on end, from
the moment it leaves un til thy kingdom come. Want messy politics in a difficult world region?
You got it.
From the outside looking in (my viewpoint South of the Equator is as close to detached as they
come in capitalist terms) I see Greece and Syriza playing a very big game of chicken with
ECB/Troika/IMF. And Syriza is playing it well too, the snap call for a referendum is populist yes,
it's cheap yes, it's a handing off of responsibility when the Euro exit hamemr comes down yes,
but it's also a reasonably astute chessmove that must have shaken its opposites hard. You have
to wonder just how much Merkel, to name but one, is prepared to gamble (because it's now
just that, it's very very high stakes gambling) on Greece today. And I repeat, the big gamble
isn't whether Greece goes through a couple of tough years because that's a given whatever
happens in the days ahead, austerity pill or Drachma pill. The big one is whether Greece follows
the pattern of Argentina and Iceland and emerges economically robust and dynamic after a
modest rough seas period. Whatever course be taken, Greece does not die tomorrow, nor next
week. That's also true for the Euro tomorrow and next week. The acid test, the Euro and its
potential to unravel, will be the economic progress of Greece if it's allowed to leave the
Eurozone because the second any other Southern Eurozone member starts to feel jealous of
Greece's lot, the game is over. And yes, before somebody else mentions it that's a good reason,
a proactive solid smart reason, to hold gold in your overall asset portfolio. The type of reason
that sits squarely on the shoulders of non-counterparty assets and above day-to-day pricings of
forex pairs.
Fundamental Analysis of Mining Stocks
A half-year review of IKN's position as regards silver
No specific mining stock again this week, instead a shorter note as I coast lazily through the
summ...sorry, as I carefully consider options for investments during this quiet market period
(see 'Market Watching' below for a little more on those). You know IKN likes gold miners more
than any other right now (check the main places in which we're invested right now if that's not
clear), you know I'm leery of industrial metals exposure (first up copper, but zinc, lead, alu,
nickel moly etc all count too) but what about the one that causes the headaches, the Jekyll and
Hyde metal, silver?
I've spent at least a chunk of time in the past seven days checking over my thesis on silver and
why I prefer gold exposure in my mining stocks to that of silver, stress-testing if you like. The
upshot is that I'm happy with my preference for gold over silver. Let's start by opening myself
up to accusations of cherrypicking with a January 21st 2015 Bloomberg report, "Silver Poised
for Bull Market as Economic Woes Boost Demand" (4). Yes it suits my argument against silver
to pick an example of what's gone wrong in the pro-silver camp but believe me folks, after
spending a while wading through the hype-laden silverbug material and what passes for
analysis (total guff) that's out there I could have chosen something that looks plain stupid
3

instead of just wrong. Anyway, to the example and here's a quote:
“Silver will benefit from all the stimulus measures and rate cuts being announced
aggressively by the central banks,” Caroline Bain, a commodity economist at Capital
Economics Ltd. in London, said in a telephone interview. “The stimulus measures will
at some point boost usage of the metal.” Bain said she expects the price to rise to $20
by the end of the year.
On January 21st, the date of that report, silver closed at $18.22/oz on the London Fix. This
weekend we're at $15.83, a drop of $2.39 or 13.1%. And before you say anything that same
day had gold at $1,199/oz, which is a tad higher than today's close but still under U$1,200/oz
and in the at-or-abouts range with which your author is trying to model investments in the gold
space. So okay, long story short some analyst at a desk made a bad call, not the first time and
not the last but I'll bet you a large amount of my money to a small amount of your money that
calling badly to the upside only gets remembered by irritating little guys such as myself who
snuffle around the web and dig up forgotten news reports. Dare to call silver lower (dare to call
anything shiny lower) in public, get the call wrong in your timeframe and you never hear the
end of it. I can promise on that one, I have the scars and the mails to prove it.
Next up, I also spent some of my Friday reading Jim Sinclair's views on silver. Yes seriously,
that Jim Sinclair the "Dear Comrades In Golden Arms" Sinclair, via this post on his website (5)
dated Friday June 26th and entitled "Don’t Push A Bad Position" which seems to be either co-
authored or authored with Sinclair's tacit approval by one Bill Holter (I'm not sure of the
protocols in silverbugland and can't be bothered to find out). Anyway, there was a lot of the
usual "it's a fix!" and "it's not fair!" stuff so go read it if you like, but along the way a point
made in this paragraph caught my eye and I've highlighted the bit that matters:
To finish this section, there is NO market anywhere on the planet where the
amounts of futures dwarf the physical product so overwhelmingly than in
silver. Why is silver so important? Why has it been bludgeoned so badly and
even priced below the cost of production? You must understand how small
the silver market is. Total global production is less than $15 billion per
year (cid:24)"but", silver cannot be left alone because high silver prices do
not jibe with low gold prices. (cid:24)And gold MUST be kept down and out of
the limelight because high gold prices do not fit with low interest rates
(cid:24)which are an absolute must in an effort of reflation. You see, in no way
can interest rates be allowed to rise with the amount of global debt
outstanding. Higher interest rates will crush the debt outstanding, the silver
market is at the VERY BEGINNING of the "food chain" that keeps the lid on
interest rates. I believe the Chinese hold this market in their back pocket paid
for with "pocket change", they will use is it at their own discretion!
And in that bold-typed and underlined section there are three points with which I agree:
1) Total global production is less than U$15Bn per year. In fact, if we take 2014's production
number and a U$16/oz price for 2015 and it would be under U$14Bn.
2) Yes, it makes sense to use silver as a "handle" to keep a cap on gold. We all know about the
gold/silver ratio and how it's moved up to towards 75/1 recently. We also know about the 15/1
legends and the 50/1 averages since the US dropped the gold standard, there's any number of
numbers with which one can feed.
3) It helps the "mainstream financial world" (an ugly phrase, but it'll do in a pinch and you at
least know what i'm talking about) to keep gold out the limelight or under control.
However, this very paragraph also points to how and why this horrible naughty unfair stomp-
your-feet silver manipulation isn't going away anytime soon. Something Mr. Sinclair ignores.
4

• Yes, silver's a "handle" on gold but by no means completely effective, else the gold/silver
ratio would not have drifted to where it is today, North of 70X for for over half a year.
• Yes, silver's a small market in absolute terms and that makes it easy enough to control, as
all the articles pointing to the large JP Morgan position in silver will attest.
• But why is there this assumption, or at the very least implication, that just by pointing to
out the manipulation it's going to go away?
We've witnessed metals market manipulation on a far greater scale recently in the copper
market and that only saw action taken against it because end-users we're complaining that the
price they were paying was artificially high (and as a result threatened the LME which in turn
changed its rules on warehousing, bringing all the fun to an end). So tell, me, what end user
(rather than end-hoarder, big difference) is going to
kick up a fuss and complain about artificially low
silver prices? The masochist end of the silver
market, perhaps? Silver is nominally "precious" but
it's stilll an industrial metal and more than half of
annual production goes to industrial uses. It's not
gold, never has been, never will be.
The fact is, this silver manipulation by the big bad
nasty JPM and its friends shows no signs of going
away soon, none at all. We've even seen the bank
successfully defend its position in courts, which
annoys the manip-callers no end but that's the way
it is. Call it legit market device, call it immoral, call it
illegal, your opinion counts as much as mine (i.e.
zero) but if we assume 1) the runners of this silver
market are making their profit and 2) there are no
rules being broken and 3) it's small money in
comparative terms and 4) it at least helps the bigger game of gold control, I see no reason why
it should suddenly stop just because Keith Neumeyer sends a mail to the CTFC. "Not fair" you
say? Well fuck fair, since when has 'fair' been a part of capital markets?
In December 2014, as part of my prediction post for the year (6) we're now experiencing, I
wrote this:
The gold/silver ratio to stay high, by which we mean 1/70 or above. It can spike
down briefly under that along the way, but I don't expect it to trend down meaningfully.
When they call silver "the poor man's gold", the real message is "the choice that poor
people make". Semi-on-topic, I'd definitely
hold gold miner stocks over silver miner
stocks this year.
That's still looking like a good call and it's why,
error-strewn position in First Majestic
notwithstanding, I'm in gold over silver every
time. As on that subject before wrapping up,
re. First Majestic (FR.to) (AG) I'm still looking
for a slightly more elegant exit point than is
currently available at U$5. It's going to be a
gut call and as this comparative chart of AG
against the silver bullion ETF (SLV)
demonstrates, it's nearly all about the price of
silver. But if AG can put in a decent Q2
production number (that should come mid-July, if last year's timing of July 14th for the 2q14
production NR is anything to go by) we could see it rally a little and give me a slightly less
5

embarrassing out. As things stand today, I'd take U$6.
Stocks to Follow
Last week we had seven uppers (BTO.to, AG, FOS.to, LRA.v, IRL.to, FCV.v, REG.v), four
unchanged (LSG.to, ATM.v, LGN.v, DNA.to) and five downers (TGZ.to MUX, TGD, SAM.to,
NCQ.to) from the 16 open positions. There was one bigger bigger percentage winner (LGN.v up
11.1%) and one bigger percentage loser (REG.v) but both of those were minor in real terms,
for the most part our portfolio was one that saw small movements either side of neutral. The
only one that can truly be called irksome is the 7c drop seen in B2Gold, but even that isn't out
of its current trading range.
Half the smallstuff moves were due to illiquid or ignored stocks that were just ignored some
more, the other half were the better than average performances from stocks that deserve their
market leader status, such as Dalradian, Teranga or Lake Shore. In a week that saw gold (via
GLD) drop 2.2% and the PM stocks (via GDX) by 3.0%, I'll take that kind of result.
With the disposal of the Out Of Time Timmins Gold (TGD) position we now have 15 open
positions in our 'Stocks to Follow' list, which is back at the max. Of the 15, six are in positive
territory overall, two are unchanged and eight are in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICK
B2Gold BTO.to STR BUY C$2.17 12-sep-14 C$1.94 -10.6% Top Pick, 1st tgt $2.70
Metals Producers (in current order of preference)
Lake Shore Gold LSG.to buy C$1.04 07-apr-15 C$1.31 26.0% Will be bot out soon, bullish
Teranga Gold TGZ.to hold C$0.55 15-feb-15 C$0.75 36.4% Good prod. 83c tgt
McEwen Mining MUX str buy U$1.09 25-jan-15 U$0.935 -14.2% Leverage value, cheap now
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.125 4.2% Also "land grab", tgt 19c
First Majestic AG hold/sell? U$10.51 10-aug-14 U$4.93 53.1% may sell into rally
Land Grab Stocks (in current order of preference)
Phoscan Chem FOS.to hold C$0.28 29-mar-15 C$0.295 5.4% 36c/share of cash, add -30c?
Atacama Pacific ATM.v spec buy C$0.19 26-apr-15 C$0.185 -2.6% Spec buy, cheap adv proj
Legend Gold LGN.v hold C$0.085 01-mar-15 C$0.05 -41.2% Spec buy, v small trade
NovaCopper NCQ.to hold C$1.05 09-apr-14 C$0.63 -40.0% looking to sell, out of Cu exp.
Lara Expl. LRA.v spec buy C$1.15 08-apr-12 C$0.255 -77.8% 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$1.01 57.8% Nov'14 tgt $1.25, top Au expl
Minera IRL IRL.to adding C$0.23 22-jul-12 C$0.115 -50.0% New tgt jun'15 23c, adding
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.22 -4.3% tgt 50c, 3q15 PEA
Regulus Res REG.v spec buy C$0.30 06-apr-15 C$0.325 8.3% Bet on 2016 drill prog.
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
Timmins Gold TGD jun'15 U$0.60 19-apr-15 U$0.62 3.3% near-term trade, out of time
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
6

Now for some notes on current basket stocks. Not much this week, things remain quiet overall.
Timmins Gold (TGD) (TMM.to): Sold. After I'd sold mine, TGD dropped to under my original
60c buy price, showing again the type of weakness I wasn't expecting from this position. But
the deed is now done and though it will go down officially as a small green blob on the closed
positions, the bottom line is that this trade was a wash and a failure. We move on.
NovaCopper (NCQ.to): Still looking to sell. I'm not committing to any ask position for my
shares, as the nature of the moves NCQ makes on low volumes means that it could go 20% for
little reason and make for a better out. Plus it's now close to its 2015 lows, off which it's
bounced a couple of times, so my sense is that I don't need to take the current prices. But the
practical reason for not having sold yet is that there really was very little doing in this stock last
week, trading was superthin. I can wait to leave.
Minera IRL (IRL.to): Still Adding. I got some more at 11c, adding carefully and not rocking
any boats because there's time over the Northern summer to add them all. The cost average
came down a couple of notches as a result of the purchases last week, however. I consider
there's room to own some more still. As for the stock, it traded at 11c and 11.5c virtually all
week and at a guess, that's where we're going to be until the financing gets wrapped up and
Ollachea is fully offically funded and job closed. It's around then that the wider market might
wake up to the opportunity, by which time I'd hope we're all on at the current price to our
satisfaction. Because it's going to go higher.
In other news, in a research note Canaccord London reaffirmed its buy call on IRL.to as well as
its 10p target on the stock (MIRL.L closed last week at 5.5p), which is CAD$0.19 for those of
you who own this via Toronto. That sounds reasonable, at least for a first-stop target.
Teranga Gold (TGZ.to) (TGZ.ax): Will still sell at 83c if offered. TGZ is holding up well
under the strain of gold's modest weakness, testament to accumulation.
B2Gold (BTG) (BTO.to): Another week of sellside brokerages queuing up to sing the praises of
B2Gold, another week when the market ignored the touting and sold B2 down, though we're
still in trading range. I read a particularly good analysis on BTO out of Macquarie Toronto dated
June 24th and entitled "Why is B2Gold’s share price lagging?", in which analyst Michael Gray
considered the potential weaknesses of the company and its story in a stress-test manner and a
decent dosage of critical thinking on his own bullish position towards the stock. Here's a
paragraph from the front page of his note:
We have identified five potential reasons for the B2Gold share price lag: 1)
dilution risk via further M&A; 2) lack of FCF in the next two to three years; 3)
dilution risk via an equity financing deal; 4) unforeseen Otjikoto ramp-up
difficulties; and 5) lower gold price leading to additional funding requirements
and delayed FCF. We conclude that other than the gold price these factors
are relatively low risk or being well managed. In our analysis we stress-tested
for a lower gold price (Fig 6) and concluded BTO would only need additional
financing at $1,150/oz gold in 2017.
For the record Gray/Macquarie has a CAD$3.75 price target on the stock, which is plenty higher
than my own first stage target of $2.70 so the guy's seriously bullish on this company, even
taking into account the sellside brokerage sheen. If anyone would like to read the whole thing,
throw me over a mail and I'll be happy send it by return.
Lake Shore Gold (LSG.to): On top of a brief trading halt Thursday came some positive
exploration news out of LSG (7), the company announcing a new discovery at (or rather next
to) the 144 Gap zone at its Timmins property. As with the main 144 Gap zone discovery, the
attraction here is that via a reasonably straightforward connection from current operations, this
mineralized zone (now baptized "144 Gap SW") is theoretically easily accessible and at the
7

offered grades shown by the NR such as 3.3 g/t Au over 40.8m and 3.22 g/t Au over 14.7m
among others, the mining should be profitable
too.
What a buyer (Goldcorp) of LSG wants is first
profitable operations and second, exploration
upside. LSG last week added another positive
piece to the pie.
McEwen Mining (MUX) (MUX.to): Soft
again, and MUX drifts down away from the $1-
level. We chewed over the previous week's
dividend news in IKN319 and that came down
to style over substance, a $3m annual spend on
a $280m market cap company. Big deal.
Then last week we got news out of MUX on the 2q15 production so far (8), which was a little
strange as we're so close to the real end of quarter. It again smacks of marketing more than
anything else (Mr McEwen?) but there was
MUX: El Gallo 1, gold sold per quarter substance at least. The main news is that El
20
Gallo 1 is going very well, with 15,600oz gold
18
reportedly produced in 2q15 to date (with one 16
week left to run in the quarter, plenty of time 14
for another pour). We need to take into account 12
10
the 6,350 oz AuEq that was stolen from the
8
mine and will be accounted for in this period, so
6
this chart is our estimated sale from El Gallo 1, 4
with the IKN estimate at 9,250 oz until further 2
notice (sales may not match production-minus- 0
robbery).
Aside from this, no news on any insurance
agreement or payment, we'll have to wait for the financials for that I suppose.
Meanwhile over at the 49% owned San José in Argentina (owner/operator Hochschild (HOC.L)),
the guidance for Q2 was very close to our original estimates (bizarrely so, in fact). We're in the
hands of HOC here so we'll need the real end quarter numbers, but for the moment these two
charts do justice to what we know, plus forecasts:
The good news from San José: Production has increased from the Q1 levels as expected,
despite there having been some small disruptions reported to output this quarter (minor strike
action). The bad news is the silver price, which may be out of control of the company but still
puts this mine firmly into "breakeven at best" category.
Overall and going on what we saw in last week's NR, McEwen Mining is doing ok operationally.
8
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
Koz Au
source: company filings, MUX, IKN ests
San José (100%): Gold Prod. and 2015 ests
30
25
20
15
10
5
0
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
Koz Au San José (100%): Silver Prod and 2015 ests
2000
1600
1200
800
400
0
source: MUX/HOC filings (MUX 49% attributable)
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
Koz Ag
source: HOC/MUX filings (MUX 49% attributable)

Its shares are out of fashion and in the slump, but given the mines are going well there's no
real reason for worry. We do have the U$200m prospectus filed on the SEC now (the official
one) which means MUX is in the process of raising cash, that's unlikely to be the full $200m and
equity is only one way it's considering to raise cash, but the news may have created a
headwind on the stock price. I'm good about holding, but gold price moves notwithstanding I
won't add or make any further decisions until we know more about the MUX plans. I kind of
feel as though the same message is all I have on MUX and it's pretty Captain Obvious, too:
MUX will see higher share price if gold goes up. End.
Starcore Intl (SAM.to): What we saw from SAM last week was "we're at the bottom here"
type of low-volume trading. I'm in at 12c, we're now floating at that price and I'm now fully
confident this isn't going to collapse on me (and you). Whether it bounces up rapidly is another
question, which is why I'm not adding here for the time being.
Regulus Resources (REG.v): Soft yes, but still very much in trading range and for me it's in
the buyable/addable zone in its low 30s.
The Copper Basket
After twenty-six weeks of 2015 The Copper Basket is showing a 10.74% loss to level stakes.
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 473.62 1.24 -38.9%
2 Reservoir Min. RMC.v 3.96 47.55 207.32 4.36 10.1%
3 NGEx Resources NGQ.to 1.17 187.71 168.94 0.90 -23.1%
4 Nevada Copper NCU.to 1.65 80.5 127.19 1.58 -4.2%
5 Copper Fox CUU.v 0.135 402.96 88.65 0.22 63.0%
6 Amerigo Res ARG.to 0.27 173.65 74.67 0.43 59.3%
7 Western Copper WRN.to 0.68 93.68 52.46 0.56 -17.6%
8 NovaCopper NCQ.to 0.58 60.15 37.89 0.63 8.6%
9 Panoro Minerals PML.v 0.295 220.64 31.99 0.145 -50.8%
10 Hot Chili Ltd HCH.ax 0.16 333.11 31.98 0.096 -40.0%
11 Regulus Res REG.v 0.35 56.39 18.33 0.325 -7.1%
12 Metminco MNC.ax 0.008 2410.5 12.05 0.005 -37.5%
13 AQM Copper AQM.v 0.06 141 7.76 0.055 -8.3%
14 Catalyst Copper CCY.v 0.305 31.41 5.65 0.18 -41.0%
15 Coro Mining COP.to 0.045 159.37 4.78 0.03 -33.3%
NB: HCH.ax & MNC.ax priced in AUD$, rest CAD$ Portfolio avg -10.74%
The overall basket average lost 2.68% on the back of just two weekly winners (NGQ.to on the
dead cast rebound and a decent 20.0% pop
in Coro Mining (COP.to) as a sleeper on its 4% The Copper Basket 2015, weekly evolution
financing news), three unchanged stocks 2%
(NCU.to, CUU.v, MNC.ax) and ten losers 0%
(CS.to, RMC.v, PML.v, WRN.to, ARG.to, -2%
HCH.ax, NCQ.to, REG.v, AQM.v, CCY.v). The -4%
-6%
biggest percentage losses were taken by
-8%
Catalyst Copper (CCY.v down 14.3%),
-10%
Regulus Resources (REG.v down 11.0%) and -12%
Panoro (PML.v down 9.4%).
-14%
This week marks 26 weeks of 2015, that's
the halfway point and so here's a chart-
based comparative performance of our 15 Copper Basket stocks (the 13 week point in the grey
9
ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62 r3yam ht01 ht71 ht42 ts13 ht7nuj ht41 ts12 ht82
source: IKN calcs

bars behind) to see what's hot and what's not.
Copper Basket Components after 26 weeks
100%
63.0%
80%
59.3%
60%
40%
8.6%
20% 10.1%
0%
-4.2%
-20% -8.3%
-7.1% -17.6%
-23.1%
-40% -33.3%
-37.5%-38.9%-40.0%-41.1%
-60% -50.8%
10
v.UUC ot.GRA v.CMR ot.QCN ot.UCN v.GER v.MQA ot.NRW ot.QGN ot.POC xa.CNM ot.SC xa.HCH v.YCC v.LMP
source: TSX, ASX, IKN stats and calcs
Of the whole bunch, only Copper Fox (CUU.v) and Amerigo Resources (ARG.to) can be said to
have put in significant gains and even then CUU.v is on the back of a BS move that has little to
do with the mediocrity of its company assets. So ask me and I'd tell you that of the 15, only
ARG.to has been a true winner in the first half of 2015. Then come the bunch between
Reservoir (RMC.v) and AQM Copper (AQM.v), revolving slightly above or below unchanged,
which have managed to hold their own in a tough market without setting the world on fire.
Western (WRN.to) and NovaCopper (NCQ.to) are half-year losers, then come the big droppers
which have lost at least a third of their value (many of them already beaten up hard from 2013
and 2014) and in the case of the woeful Panoro, over 50%.
It's been a tough old time in the first half of this year for the copper juniors, of that there is no
doubt. On a personal level I've dabbled a bit in the sector without ever being exposed greatly,
I've pulled away and haven't put myself in harm's way, all the time leery about the prospects of
the underlying metal too, so I'd give myself a pass mark on copper so far this year. The big
single regret for me was selling Amerigo for a loss and too early, just before it took off and
would have moved me into a reasonable profit. My trade timing continues to suck.
Moving to copper price action for the week, this chart shows how the metal recovered 10c from
its lows of the previous weekend to finish at $2.66/lb or
so, which was better than expected though I still have no
regrets about calling "get out of there" on the sector, it
still looks extremely weak.
The daily chart shows that to maintain this rally, copper
will need to break through $2.70 in the days to come and
the chances of reversal are high. If, as I suspect, what
we saw last week was a dead cat bounce, $2.50/lb won't
be far away. Yes, I'm still very bearish about copper in
the near-term.

Now for the regular weekly inventory section, first up the bullet points:
• Total world copper stocks continued down, with both main warehouse systems seeing
net withdrawals last week. Overall stocks dropped by 16,904 metric tonnes (mt) (-
3.6%) to finish the week at 449,147mt.
• Main reason was the drop at the Shanghai Futures Exchange, down again by its 10k
and a bit. This time the exact number was me by 12,270mt (-9.8%) to finish Friday at
112,921mt.
• LME warehouses stocks dropped, wiping out the possible trend change of the week
before last. Stocks dropped 7,400mt (-2.3%) to finish at 310,300mt.
• Comex warehouse stocks also moved up by a significant amount, 2,755mt which is
+11.9% in percentage terms but the absolute number is big enough to make a
difference in the total mix for a change. This Friday stocks stood at 25,926mt.
Here's the Shanghai-only inventories chart, which shows the regularity of warehouse
drawdowns has continued unabated all the way from April until today. There were a lot of
"summer's coming, demand's dropping" articles on the airwaves about China and copper these
last few days and the expectations include a reversal of the warehouse drawdowns. That
suggests we're about to get a clear actionable signal from this dataset, perhaps for the first
time this year.
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
11
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 ts13 ht41 ht82
Mt Cu
source: Cochilco
Cochilco copper yearbook
This week saw the publication of the 2015 Cochilco Yearbook, an excellent source for copper
data, numbers and all sorts (with an emphasis on the Chilean mining world, of course). It's a
mostly bilingual publication, by which I mean the main information is there in English as well
(passages, chart titles etc) so don't be afraid to download your own copy, the link is at (9)

below. As for an idea of content, here's a paste-out of the English language intro page to give
you the feel in their own words (better than mine):
We offer the public a new version of the Yearbook: Copper and Other Mineral Statistics, which
this time contains mining statistics between 1995 and 2014. This 34th edition includes, among
others, production statistics and exports; history of mining taxation, investment, and employment.
Also, incorporates more information on energy consumption in copper mining, and for the first
time, data on water use in the sector; all of which allows a comprehensive view of the
performance of mining activities in the country. We expect this Yearbook will help increase the
information already available on mining in Chile, and to be used to understand the situation of this
productive activity, as well as allowing the public and private sector to propose solutions to ensure
sustainability in the long run. The statistics compiled in this document are the result of a major
effort made by Cochilco professionals, who provide the best and more detailed data about this
activity. We invite our readers to consult this book and all other publications Cochilco has on its
website www.cochilco.cl.
And here picked at semi-random (I like these datasets, but there are so many more to choose
from) is an idea of the data content. This table shows the average grade of copper mined in
Chile between 2005 when it was 0.93% Cu, to 2014 when it had dropped to 0.71%. But there
subsectors also have their story to tell, as mineral mined for concentrates has seen the biggest
drop of all and the decline shows no signs of stopping either.
Meanwhile on page 86 of the report, this table...
12

...tells us about the rise in costs at the major privately owned copper mines as well as the
Codelco mines. Taking 2005 as our benchmark, average production costs are up by more than
double across the board, with Codelco's 94.6% rise in ten years "better" (in inverted commas)
than the average of the private sector mines on show.
The Low Cost Producer Basket
After 26 weeks, the 2015 Low Cost Producer Basket is showing a 0.62% 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 13.70 16.51 -10.9%
2 Barrick ABX 10.75 1164.67 12.69 10.90 1.4%
3 Newmont NEM 18.90 528.08 12.58 23.83 26.1%
4 Franco Nevada FNV 49.19 156.5 7.61 48.62 -1.2%
5 Silver Wheaton SLW 20.33 403.75 7.15 17.72 -12.8%
6 Agnico Eagle AEM 24.89 214.12 6.24 29.16 17.2%
7 Buenaventura BVN 9.56 254.19 2.66 10.46 9.4%
8 Kinross KGC 2.82 1146.2 2.66 2.32 -17.7%
9 B2Gold BTG 1.62 921.27 1.46 1.58 -2.5%
10 Pan American PAAS 9.20 151.64 1.36 8.94 -2.8%
all prices in U$, using NYSE ticker prices Portfolio avg 0.62%
The overall basket reverted to its losing
ways, dropping 2.78% overall and with just
The Low Cost Producer Basket: Weekly performance
two winners (GG, KGC) compared to eight
and comparative to GDX control
losers (ABX, NEM, FNV, SLW, AEM, BVN, 25%
PAAS, BTG) on the week. The biggest 20%
losers were Agnico Eagle (AEM down 15%
5.8%), Barrick (ABX down 5.1%) , B2Gold
10%
(BTG down 4.8%) and Pan American (PAAS
5%
down 4.7%), those four between them
0%
dragging things down efficiently.
Meanwhile, our GDX benchmark returned to -5%
negative territory for only the second time
this year, our list just managing to keep its
head above water still.
Last week at this point I wrote that the
previous week's rebound was, "...a pretty
solidly positive development and a sign that
these gold stocks can put in a rally in the
next few weeks". Errr, no.
Goldcorp (GG) (G.to): One of the few
bright spots in a grotty week for the bigcap
PMs, Goldcorp even managed to get me
saying nice things about it on the open blog
Thursday (10) when I pointed at it as a
potentially decent fliptrade. So far that hasn't
worked out (it's about 2% lower than when I posted) but that's okay, it's only following gold
and if the metal makes a move higher GG will as well.
13
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62 dr3yam ht01 ht71 ht42 ts13 ht7nuj ht41 ts12 ht82
basket
gdx control
source: Google Finance, IKN calcs
Low Cost Basket: Percentage difference between
3.0% basket and GDX control, 2014
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
-4.0%
ts13ceD ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dr42 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62 dr3yam ht01 ht71 ht42 ts13 ht7nuj ht41 ts12 ht82
|
source: ikn calcs, NYSE/Nasdaq data

Regional politics
Regional Risk Review
It’s quarter-end and time for the review of regional political risk for junior mining. This is the 9th
edition of the revised format (as previously seen in IKN218, IKN230, IKN243, IKN255, IKN269,
IKN283, IKN295 and IKN308) and as a reminder, here’s how the scoring works (full details,
IKN218). The 6 categories are:
a) National Government Miner Friendly: The country on its national stance towards
mining activity.
b) Community/Social Miner Friendly: The overall attitude of locals towards mining,
either in specific zones or in country regions.
c) Foreign Direct Investment (FDI) Friendly: The openness towards FDI and the
safeguards it gives to foreign capital looking for a home.
d) Mining Culture: Countries or regions with generational traditions in mining are easier
places in which to operate than those which have little previous exposure to formal
mining operations.
e) Geopolitical Optics: The way in which the outside world sees this country, an
important factor, no matter if the perception be right or wrong.
f) Internal/National Political Stability: A gauge of how stable the place is politically.
We tend to concentrate on nine countries with the potential to host companies, rather than try
to offer a comprehensive LatAm-wide view that takes in countries with little or no appeal for
investment or speculation in juniors. Therefore we focus on Chile, Peru, Mexico, Brazil,
Colombia, Nicaragua, Dom Rep, Argentina and Guatemala. An eye is kept on Panama, Uruguay,
Ecuador and Guyana. Here’s this quarter’s table, below the country-specific notes.
June 2015 Latin American Country Risk For Foreign Mining Companies
Nat. Govt Community/Social Geopolitical Internal Nat.
Country FDI Friendly Mining Culture Total
Miner Friendly Miner Friendly Optics Political Stability
LatAm countries under active consideration for junior mining project location
Chile 8 7 8 10 8 7 48
Peru 9 6 9 9 6 6 45
Mexico 8 6 7 9 7 7 44
Brazil 7 5 8 8 6 7 41
Nicaragua 8 5 7 7 6 6 39
Dom Rep 8 5 7 5 5 8 38
Colombia 6 4 8 6 5 5 34
Argentina 8 6 4 6 4 7 35
Guatemala 6 4 4 5 3 4 26
Potentially relevant LatAm countries for junior mining
Panama 7 5 9 4 8 6 39
Guyana 8 7 7 7 6 4 39
Ecuador 7 5 5 4 8 7 36
Uruguay 5 5 7 3 6 7 33
Countries of little or no interest for junior mining exposure
Bolivia 4 6 2 9 6 9 36
Paraguay 7 5 6 3 4 6 31
Honduras 7 3 4 5 3 3 25
Costa Rica 1 1 5 1 6 7 21
Haiti 6 3 4 1 3 4 21
El Salvador 1 1 4 1 6 4 17
Venezuela 1 5 1 3 1 2 13
source: The IKN Weekly house estimates
14

Chile: Internal National Political Stability down 1 point
The dropping of a point in Chile isn't strictly about mining. The point is dropped this quarter due
to the increasingly unpopular Bachelet government, though the corruption scandals that have
seen the arrests of high-ranking public service and political figures revolve around the mining
sector (particularly "cash for favours" type bribes to make permitting easier in the lithium
sector) have not helped in any way. But really the grumbles in Chile are of a more generalized
political flavour, GDP growth is at a low point, reforms promised in the elctions have been slow
in coming (to the point of invisible) and Chileans, egged on by a largely opposition right wing
press, feel the centre-left Bachelet admin has been slow to react to a series of minor crises via
weak proposals. So a point is lost over ground-level feeling in Chile towards the way in which
the country is developing, but context is always necessary and the concept of "things are bad"
in Chile is one that's far removed from a country where a government is institutionally weak
and a potential for toppling. Life will go on in Chile, it's in solid enough state.
When it comes to our focus, which is more hard rock mining than anything connected with
lithium brines, things trundle on in the usual way in Chile. The Pascua Lama running sore
continues to run without any resolution in sight as Chile's environmental body, the SMA, has
decided to lump its two cases into one before presenting them as a single package in what they
imagine will be in July (which could be August or September, know how slowly things happen).
But in the rest of the country mining goes on as per normal and longer-term plans laid for the
sector (mainly copper and copper mining byproducts, but other metals count too) and the
recent high altitude discoveries in the gold sector (eg the aptly named 'Alturas' owned by
Barrick) show that exploration, though subdued, continues.
Peru: Geopolitical Optics down 1 point
In the last edition of Regional Risk in IKN308, the latest chapter of the Southern Copper (SCCO)
Tia Maria saga had just begun and the protests were in the first couple of weeks that we've
then watched spiral into violence and back down to today's calm-ish stalemate. The whole
episode has done nobody any favours and is the main reason for Peru dropping its point this
quarter as the headlines put non-specialist people off the place as a destination for mining, but
once the surface is scratched there's not much that has changed.
In fact I've been in two minds whether to add a point or even two to Peru's score in other
places, because there have been a couple of notable positives in the country's mining scene in
the last three months. However on balance I'm going to wait and see on how they pan out over
the quarter to come, we're not in a dynamic momentum market and that's not a good thing,
but it at least gives time to reflect and weigh up changes rather than having to react to them.
The good things include the streamlining, in theory at least, of permitting in the mining sector
thanks to law and rule changes pushed through the country's Congress that should make it (not
will, but should, we watch) easier to get mining and exploration done. The second good thing is
the news that came from the deal between Minera IRL and COFIDE, which we've examined in
some detail via the recent pieces on IRL.to. This is a de-facto new source of potential capex
funding for other companies in Peru and the full consequences of COFIDE's most positive move
haven't yet sunk into the mining sector. Thirdly and behind the scenes, while Tia Maria locals
fight and bicker with SCCO another community has quietly come to a definitive agreement with
Milpo (11), the subsidiary of Brazil's Votorantim in Peru, for the social licence for its U$480m
Magistral copper/moly mine in the Ancash region of Northern Peru that proves win-win deals
can be struck between mining company and locals as long as the negotations are done right
(SCCO has a lot to learn). All this while other projects are brought forward and closer to
production (e.g. Las Bambas, Buenaventura's Tambomayo), other expansion projects happen
(Cerro Verde) and the new mines such as Antapaccay, Constancia and Toromocho ramp up to
full speed.
Mexico: Community/Social Miner Friendly up one point
In this category Mexico dropped two points in our last review, but it's managed to claw one of
them back. The reason is that despite the murder of four candidates in the run-up to the
15

municipal and regional elections in the country and the subsequent murder of one of the
winners of a local race in Guanajuato, the regionals went off fairly smoothly (yes, five murders
and I'm saying that, it's weird) and what's more the PRI party of President Enrique Peña Nieto
did fairly well in absolute terms, much better than most expected in real terms and overall saw
the President's political position strengthened, which is a rarity in Latin american midterms.
Meanwhile hotspot Guerrero has seen no news from its mining sector, which is very good news
as far as Torex (TXG.to) is concerned (see 'Market Watching' below for more thoughts on that
stock). Another positive for mining companies are the continued reports coming in that the
government of Mexico is reimbursing mining companies on IVA (sales tax equivalent) owed to
them by the State, which makes no difference to most balance sheets but adds cash to
treasury,, the asset that really matters in these times. On the flipside, the industry grumbles
about over-heavy tax burdens continue.
Brazil: Geopolitical Optics down 1 point
Dilma's government approval rating has dropped on the back of the economic inertia now firmly
gripping Brazil. Corruption scandals have now spread from the centre of Petrobras out and
caught up the CEO of Odebrecht, Brazil's largest construction and civil works company, who
was arrested a few days ago. That's an enormous political development, worthy of Galbraith
and his "Bezzle" concept (when times are good corruption is overlooked, when times are bad
every nook and cranny is examined) and the downfall of this massive figure in Brazil's bizworld
is equivalent to seeing one of the brightest stars in the US business firmament, an Elon Musk or
Tim Cook, be arrested on charges of bribery or similar.
In the mining world not much has changed, which isn't a good thing. We note in passing that
IKN Weekly long position Lara Exploration (LRA.v)is involved indirectly with one litigation and
directly in another over ownership rights, which isn't unusual but shows how legals overshadow
everything. I repeat the adage once told to me by a very smart Brazil mining operator (who will
remain nameless) who said that for 100% of an in-country budget, in Peru 90% goes on
community relations and 10% on lawyers. In Brazil it's 10% community relations, 90% lawyers.
The slow speed of permits issued hasn't changed, neither has the lack of rainfall in the southern
zones (see the Carpathian RDM news of only last week, though that particular company may be
using the water issue as a convenient excuse not to continue mining at a loss).
The good news on the horizon is the forex rate, which has stayed above 3-to-1 we last spoke
and sits at R$3.13 (Real, BRL) to the US Dollar. Yes, this is the very same currency that traded
at 1.55 and 1.60 to the dollar in 2011.
That means very significant capex and opex savings on operations, of course. We're now at the
point where even a dog like Jaguar Mining may be able to break even.
Nicaragua: Unchanged
This year has been marked by anti-mining protests in Nicaragua on a regular basis for perhaps
the first time, mainly in the northern regions of the country and mostly organized in fairly
16

classic "water yes mining no" NGO style. We noted them in the Regional Review of IKN308,we
do the same today but overall they don't seem to be getting the required amount of critical
mass to become a serious. sector threatening issue as we've seen in other Central American
states (eg Costa Rica, El Salvador).
Meanwhile the pro-mining Daniel Ortega government continues on and the initiative we noted
last week about Peru and Nica looking to sign a Free Trade Agreement (FTA) with mining one
of the main pillars of joint trade is another step in the right direction.
I continue to lament the lack of an "exciting junior" in the country and that may change. But
the decision to turn B2Gold into our newest 'Top Pick' and add significantly to the position
shows the confidence this desk has in Nicaragua as a safe and fair mining jurisdiction.
Colombia: Internal National Political Stability down 1 point
The quarter just gone included the month of May, was supposed to be the month in which
Continental Gold got its environmental permits from the government of Colombia for its Buritica
project, that according to the government mining and energy ministry man Tomas Gonzalez
himself while at PDAC in March. So far, nothing. We did have enviornmental permits come for
Red Eagle's (RD.v) during 1q15 for its San Ramon mine in Colombia, but that much smaller
mine on the site of an old works is still the only fully permitted new mine in the country. This is
the way of Colombia.
On the subject of slow, the snail's pace peace negotiations between Colombia's government
and the FARC terrorists have reached something close to breaking point, with no real progress
being made, an uptick in violence and attacks from both sides and all opinion polls in the
country signalling a population that's quickly running out of patience with President Santos and
has push for peace. To the right of the political spectrum, the Alvaro Uribe supporters are
shouting "told you so" about the liars and two-faced FARC ever more loudly, and frankly they
have a very good point. We have perhaps until the end of this year for a meaningful
breakthough in talks because if not, the conflict is set to flare up again and the hot war will be
back on. Be clear, that would be a strong negative both for Colombia as an investment location
and for the mining sector, exposed as it often is to rural zones.
Argentina: Internal National Political Stability up 1 point
The main news here all national party political:
1) Daniel Scioli is now the official government (President Cristina Fernandez de Kirchner, CFK,
the FpV party, the Kirchnerists, "Los K") candidate for the October election, with CFK having
cleared his path by "asking" his only rival, Florencio Randazzo, to stand down his candidacy.
CFK has also picked his Vice-President candidate ticket runner in Carlos Zannini, a staunch CFK
supporter who is there to show the Kirchnerist faithful that the less-hardcore-to-the-K-cause
Scioli can and will be kept in line.
2) Mauricio Macri is now Scioli's only true rival for the job of President in October. The right
wing PRO party candidate has won the battle between himself and the other deemed opposition
candiadacy of Sergio Massa, whose campaign has faded badly and left him as the also-ran.
Macri's chosen his ex-VP in the city of Buenos Aires, Gabriela Michetti, as running mate. That
comes as little surprise and doesn't change the ticket ideology one jot.
3) Daniel Scioli will win, either in the first round of voting or in the second round run-off
between him and Macri. I'd put Scioli's chances of winning in round one at perhaps 50%, a lot
depends on what previous prospective Massa voters decide to do (stick with Massa, move to
Macri, move to Scioli). But get used to the idea that the current government and its economic
policies continue into the years to come. Scioli is the next President of Argentina, period.
This time a quarter ago it was a firming towards Scioli as favourite, a quote in IKNB308 being,
"...it's still too early to call anything with great confidence but things stand so far, my tentative
17

selection of Daniel Scioli for the win has firmed up and looks a little more likely". Today I have
little doubt and that's mainly due to the astute manner in which CFK has played her cards in the
last few weeks. Massa was the main enemy, his political base has melted away as high-profile
defectors to his FR party have been welcomed back into the government fold. Polls show Scioli
leading Macri any which way you'd like to read them, and what's more Argentina's economy is
(oh so coincidentally) coming out of recession just at the right time to support the sitting
government's cause. There are other matters too, such as the key policy issue of the bonds
holdouts/vulture funds (label them and think of either side as you like, not my problem either
way) which has always been a strong card of the government with large scale support, whereas
Macri&Co are on record as saying Argentina should pay up as per Judge Griesa's wishes. This
alone greatly favours the Scioli side, the issue touches deeply in Argentina.
As for our focus sector, a Scioli government will mostly represent a continuation of current
government mining policy at a national level, for the first couple of years at least (then we'll see
if he's given any leash to move Argentina a little more towards the centre and away from the
Kirchnerist left wing...but that's for the future). Therefore in mining the government policy will
be theoretically pro-industry but as always the practical pluses and minuses will be at regional
level, which is where our analysis will lead us today (a little) and in the future months. In
Chubut province for example, the strongly pro-mining Martin Buzzi has played his pre-election
campaign very well and is set to beat out Mario Das Neves to retain his governorship. That
should be good news for Pan American Silver at Navidad. In Santa Cruz, CFK's son Maximo
Kirchner is running for Congress for the first time (he'll get his seat no problems), but as he
represents the hard left of his party (known as La Cámpora) that might cause problems to the
Santa Cruz mining sector...hard to tell right now. Meanwhile in San Juan the governor's job held
by strongly pro-mining/pro-government José Luis Gioja since 2003 is up for grabs as he's
standing down, so there might be a change in the attitutudes towards mining there or there
may be a vote that reaffrims's that province's pro-mining credentials. Personalities count for a
great dela in that one. In other words, worth watching closely.
Guatemala: National government miner friendly down 1 point, FDI friendly down 1
point, Geopolitical Optics down 1 point, Internal National Political Stability down 2
points
Talk about how Central American countries can suddenly fall apart. This time last review in
IKN308 it was...
"The big political event in Guatemala this year is of course the Presidential
election and that's not yet showing up as a big factor on the wider political
radar. We're seeing mainly jockeying for positions inside the political parties,
no big campaign trail or declarations of support for pro or anti mining
groups."
...and general tittle tattle, today it's a full-scale corruption crisis, 16 and counting arrests of
politicos made for bribes in the "La Linea" scandal, a President who was clinging on by the
fingernails to his job for a few days and is still by no means out of the woods, a political class
that's been thoroughly disgraced and protests of tens of thousands of people every other
weekend in the main square of the capital demanding the resignation of Otto Pérez Molina and
his government.
Institutionally weak governments have this inherent problem, and institutionally weak
governments are what you're nearly always buying into when you expose to Central America.
This is why you have the Guatemala total score down five points this quarter and your author's
strong recommmendation (if you hadn't got it previously) not to get involved with this country.
Yes Tahoe Resources is a fine mine and hugely profitable, do you perhaps think that the people
running for election this very Septmeber don't know that too?
On the bright side of Guatemala, we did se the THO merger with Rio Alto close successfully and
the stock rallied afterwards as well (without me) until the recent Goldcorp (GG) secondary sale
18

put the dampener on the move. More Guatemala-specific, more good news came last week
(12) when the official election period was declared and the vote confirmed for September 6th.
Neither President Otto Pérez Molina nor Vice President Baldetti (now Ex VP) attended (a great
photo of their empty seats in the auditorium on this link (13)) when they normally would, what
with the President doing everything he can to stay out of sight, out of mind and get through to
term-end...or at least September. The other bright point (though it's highly debatable) is that at
this time the red hot favourite for the September election win and to be new President is the
head of the LIDER party, very much the establishment. That will mean no clear-out of the
corrupt politicians in the years to come, so assuming there isn't a full-blodded revolution in the
country we're heading back to shady business as usual.
Potentially relevant countries
Guyana: Mining Culture up 1 point
Guyana rises again as the Guyana Goldfields (GUY.to) Aurora project and the Troy Resources
(TRY.ax) West Omai project both near commissioning. These will be the first formal mining
operations in the country since 2005 and the way in which both seem to be progressing
towards operational status will provide a fillip for the nation and its risk perspective by the end
of this year. I'm now at the point where Guatemala may get swapped out of the main list and
replaced by Guyana.
Ecuador: Community/Social Miner Friendly up one point, Internal National Political
Stability down 1 point
The points total remains the same, but inside that one point was gained due to the increased
promotional push being given to mining by both President Correa and his government, as well
as the reasonable noises coming from the test case Lundin Gold (LUG.to) Fruta del Norte
project, which is now at the stage of formal burdens negotiation with the government of
Ecuador. Meanehile a point gets docked due to the unexpected surge in protests and marches
agianst Correa and his government, which staretd due to a tax he wanted to levy on property
ownership, but that's now more of a gathering point for protests against Correa by a vociferous
and angry minority (led by the right wing media and the middle class who are fed up with
paying for the Citizen's Revolution, or so they say).
The protests have the air of mid-term grievance about them rather than a serious threat to
governability and if they were in another country in the region (eg Argentina) they wouldn't
register much. But as this is Ecuador, a country with a police and military that actually tried to
overthrow this President a few years back and with a long tradition of political instability (before
Correa came along at least), we pay more attention. Not one that's really worrying me, anyway.
As for mining, the same advice applies. Ecuador is potentially good but it has plenty to prove
first. Consider that if LUG.to can't make a go of Fruta del Norte (and by that the real test is
return a share price win, we retailers have only that to gauge with), nothing will work.
Market Watching
Standard Tolling (TON.v): Interesting
I've mentioned it before on these pages and I've
run the name past a couple of readers of this
publication recently too, so I think it only fair to
say that I'm interested in Standard Tolling
(TON.v) as a prospective investment and it's now
on the shortlist. There's no decision being made
yet and there are more than a few issues I want
to get straight before making any final yes/no
call on this company, but it's a possible and I'd
encourage you people out there to have a good
19

look at the stock, too. I'm scheduled to meet TON.v management in the near future.
First Mining Finance (FF.v): Pump on
This time last week we noted the rumblings about an impending pump in First Mining Finance
(FF.v) the Keith Neumeyer "mineral bank" start-up. Part of last week's notelet was:
"From what I understand, first we'll get a wave of purely marketing type promo, then
comes a second round of solid news from the company."
Here's how the ten day chart looks, with a before/after red line showing the change in market
rhythm:
Yup, right on time and schedule, the pump came. The second part of the jungledrums I picked
up last week was about substance, rather than style. I'd heard that we'd first get the promo
wheels turning on FF.v and pop its price, then some substance would come from the company
itself in the form of a solid deal. As the share price is higher the potential leverage on a deal is
now that much better, so first blood for the company's "strategy". We now wait to see if FF.v is
about to announce something on the back of this move and how it affects things.
To reiterate, I'm not a buyer of this stock today as I fail to see the sense of buying into this
model during the current market circumstances. This from IKN315 is repeated because nothing
has changed since then:
But don't get me wrong, I like the "mineral bank" idea and my own far
smaller Land Grab concept is based squarely on the belief that mining land
asset prices are at a nadir and that cheap property prices won't last. However,
it makes logical sense to buy into the same companies with the same beaten-
down land asset prices that FF.v and its ilk are aiming to snap up, rather than
buy into FF.v (at this point) and pay a premium to own the assets. I'd guess
that at some point or other that balance will change and FF.v becomes an
attractive proposition that's filled with land at a discount, but the mere fact it
is out there paying a premium for COD.v compared to current May 2015
prices means that in May 2015 we too can and should do the same thing and
look for the deep bargains, not buy into the stock that's paying extra for those
bargains. All while it burns its (our) cash and dilutes its (our) share count on
dubious third party PR campaigns and contracts that pay for the "promotion"
from treasury and options, too.
Here in mid-2015 only a fool chases the pump prices up, hotpot FF.v or anything else. Time and
again, we've seen stocks move up only to run out of promotional steam and re-trace. FF.v will
do the same in the days and weeks ahead so if you like it more than I do, wait until the 35c
window comes round again. It will.
Almaden (AAU) (AMM.to): Coming back to its field
20

It's one of the better looking stock opportunities on the back of its May 15th spin-out
announcement (that was ratified by vote a few days ago (14)) and it's one I've been
considering as a new position, but as noted in a couple of recent editions the idea here is to
wait and see if the stock comes off its recent news-driven pop. Last week it went a long way in
doing just that, with the slightly better volume traded US listed AAU (seen here) back at U$0.82
and the Canadian listed AMM.to closing under a Loonie for the first time since mid-May. Here's
the 2015 year-to-date AAU chart as your example:
As for the way I'm looking at AMM as a trade, rather
than make up something different here's an excerpt
from a mail I sent as reply to reader "C" last week,
who shares my interest in the company (as an
outsider looking in, I hasten to add).
I think Almaden is interesting. BUT, it's only
interesting for Ixtaca. There's a good reason the
other assets have been priced to zero up to now,
that's because they're worth zero. The way I see it,
AMM is right to spin them out into a new vehicle,
add the cash (+Au bullion) and create a little value. But I don't see a sparkling future for
Almadex once it's IPO'd, you're going to get a lot of immediate sellers of that and a
crushed PPS. Meanwhile, AMM mothership will drop and we'll find out where the mkt is
pricing the real asset without so much cash in the vehicle.
And somewhere around there is when the potential buying opportunity may show up (i
say "may", not "will", it's on the shopping list as a potential but I haven't convinced
myself yet). I thinki Ixtaca has a good shot at being a mine and once it's stripped from
most of the other AMM clutter, larger miners may be more interested at the right price.
Again, depends on how gold develops into later 2015 as well, but the numbers, as you
point out, aren't bad at all at 1.2k Au. More than acceptable as a development project
in Mexico.
So there you go, that's my sense of AMM today. It's a possible, it's not a probable, but
it is a serious junior with an advanced stage project that can boast reasonable paper
economics that's going cheap.
Also one point "C" raised in our exchange is the lack of cash treasury that will be left in
Almenden once Almadex is spun out and he made a very valid point. We're either seeing AMM
stripping everything out because Ixtaca is going to be sold almost immediately, or we're setting
up for an equity placement to re-fund AMM for further development of Ixtaca and while that
probably won't be a big problem (the AMM people have their own cash, have connections and
have plenty of goodwill) it could cause downside price pressure in the near-term.
So right now and as things stand, as my interest is less about the "free lunch" (no such thing)
Almadex spin-out that will almost certainly be sold down on the IPO. If there's value to be had,
I'm now assuming it's to be had once Ixtaca is (just about) the only thing left in AMM. I like the
fact that AMM the stock is coming back to the pre-May announcement levels and the state of
this gruesome market as it is, see no rush to move in on the first available price. I'm interested
in AMM and the lower it goes the more that interest will be piqued.
Torex Gold (TXG.to) (TXG): May be a trade
Here's another I'm adding to the list of potential purchases over summer (North), one that may
surprise many of you as my position on the risk posed by mining exposure to Guerrero region is
well documented. Considering three items...
1) The Mexico regional elections and its sensitive period is now behind us
2) Guerrero has apparently calmed down and police/vigilante patrols have scared off the narcos
from mining areas.
3) Torex has quietly got on and advanced its build-out
21

...I think Torex Gold (TXG.to) (TXG) is now worthy of consideration as a trade. Note, not a
longer-term investment, but potentially as a trade.
After checking out the material from the company's AGM , including its latest corporate
presentation dated June 23rd (15) the opportunity for a trade shows on the re-rating from the
now highly likely announcement of mine commissioning and first pour, two events the mining
world always like to hear about. Therefore the trade framework would be to buy in the weeks
to come at-or-around this current CAD$1.10 level and not hang around for commercial
production, when the flashy NRs and trumpets sound, we sell into the new interest.
Aside from the construction progress several things seemed to have improved at TXG in the
last quarter. They have community risk battened down, at least until 2016 comes around or
some local narco tried something very very silly. After that it becomes a mystery (I'm also
allowed to wonder how much "discretionary G&A" will go up in 2015 may go to keep things
quiet) and there's also the talent issue (will the best mining talent want to work in a notoriously
dangerous neck of the woods), but to at least some extent TXG can separate from the nasty
Guerrero world and make the 2015 and 2016 headline milestones without a worry.
As for potential upside, with 785,371,918 shares outstanding upside could be crimped. I'm
currently considering whether a CAD$1.50 target is too much to ask, as that would imply a
U$1Bn mkt cap (excuse me for mixing my currencies). There are many ways of cutting and
slicing the economic analysis, but the bottom line
comes back time and again. It's also a fairly
simple question (and I like them simple); What
would a Tier 1 major be prepared to pay a
reasonable price for 4m ounces of very profitable
(on paper) in-situ gold? For sure they'd all be
happy to pay A price, but would they be happy
paying around U$250/oz in this current bear
market for gold and mining assets, which is the
global number that translates to a rough
CAD$1.50 rough price target today, the type of
target I'd be comfortable with on a near-term (3
to 6 months) trade. And not only would they
have to be prepared to pay U$250/oz for those
ounces, but they'd be prepared to stay in a tough location like Guerrero for perhaps 20 years in
order to mine them out.
If the answer's yes, CAD$1.50's a reasonable target, I'll take a piece of this pie. And there in a
nutshell you have the reasons why I think TXG is a decent potential trade at the moment,
though I must be clear and admit that it's still only a possible at this point.
Conclusion
IKN320 is done, we end with bullet points:
• My analytical life seems to be comprised of saying no, no, no, possible, not right
now...anything except a definite yes to any idea. As I write these words Sunday
evening Greece is making tomorrow's open look more fun than a normal Monday, S&P
futures are down and gold's popped a little in overnight trades, though it remains to be
seen how much follow-through we get from the crisis (that isn't a crisis, except for
Greece). I don't think I'm underestimating The Grexit Effect here and I'm pretty sure
that a day of turbulence is all the world will suffer (Greece the country gets more of
course) at this point in time. The real trouble, the glad-we-hold-gold trouble, comes
22

further down the road. Aside from 2017 or whenever and back to the moment, we'll
check in on my "looks largely contained" call, right or wrong, this time next week.
• I still say own B2Gold above all else, but Minera IRL is cheap and offers a good
advantage while this low price collection period remains thorugh the Northern summer.
As for my best and most optimistic near-term thought, if there's a minor rush to own
gold (and hey, even silver, why not?) there may be that opportunity to hit my TGZ
target or even find an out for my AG stocks.
• Today's 'Market Watching' also, and deliberately, lists TON.v, AMM.to and TXG.to as
potential trades or investments that I'm actively considering. On the one hand I admit
that like keeping the cards close to my chest on potentials, on the other there's not that
much to worry about by way of massive pre-moves in this bearish environment for
juniors. What's more, the cagey thing I think is for others, in the end the only yardstick
I have is what happens to my own money. And you pay me for information, so even a
small headsup of the "Hey, check out TON.v" is only fair towards you all. If they
deserve a detailed call and full analysis further down the line, they'll get it and you'll
see all that, too. At the moment I own none of those stocks, but that might change.
• In Regional Risk, the region is about its party and national politics at the moment, more
than its mining specifics. This is usually a good thing for the sector.
• Torex Gold (TXG.to) (TXG) may be about to go through a sweet spot as it re-rates into
first pour and early production. I believe it's the biggest single gold mine held by a
junior at the moment, so when production day one comes around the talk of takeover
is all-but guaranteed, even if one doesn't eventually come to pass. Therein is the trade
potential, and a short holding period is bearable for a Guerrero-hater such as I.
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://www.calculatedriskblog.com/
(2) http://dailyreckoning.com/chinas-gold-hoard-will-slay-the-mighty-dollar-heres-why/
(3) http://www.thestreet.com/story/13199812/1/chinese-gold-standard-could-create-fireworks--bloomberg-
intelligence.html
(4) http://www.bloomberg.com/news/articles/2015-01-21/silver-poised-for-bull-market-as-economic-woes-spur-haven-
demand
(5) http://www.jsmineset.com/2015/06/26/dont-push-a-bad-position/
(6) http://incakolanews.blogspot.com/2014/12/ten-ikn-random-predictions-for-2015.html
(7) http://finance.yahoo.com/news/lake-shore-gold-announces-second-181506178.html
(8) http://finance.yahoo.com/news/mcewen-mining-inc-production-133245986.html
(9) http://www.cochilco.cl/Archivos/destacados/20150625085846_Anuario2015web.pdf
(10) http://incakolanews.blogspot.com/2015/06/wanna-know-whats-looking-like-trading.html
23

(11) http://gestion.pe/empresas/ancash-milpo-invertira-us-480-millones-proyecto-minero-magistral-2135775
(12) http://www.s21.com.gt/nacionales/2015/05/02/partidos-politicos-tienen-luz-verde-para-iniciar-campana-electoral
(13) http://www.s21.com.gt/nacionales/2015/05/02/binomio-presidencial-no-asiste-convocatoria-para-elecciones
(14) http://www.torexgold.com/i/pdf/Presentation-AGM-Final.pdf
(15) http://finance.yahoo.com/news/almaden-shareholders-approve-spinout-almadex-160129855.html
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
24

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
25

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.
26