IKN #321Premium

The IKN Weekly
Week 321, July 5th 2015
Contents
This Week: Travel plans, Dog days and CEO Chat, Greece is the word.
Fundamental Analysis: NOBS report on New Gold (NGD) (NGD.to).
Stocks to Follow: Overview, Minera IRL (IRL.to) (MIRL.L), Teranga Gold (TGZ.to) (TGZ.ax),
Lake Shore Gold (LSG.to), B2Gold (BTG) (BTO.to), First Majestic (AG) (FR.to), McEwen Mining
(MUX) (MUX.to), Starcore Intl (SAM.to).
Copper Basket: Overview, Nevada Copper (NCU.to), Reservoir Minerals (RMC.v).
Low Cost Producer Basket: Overview, Pan American Silver (PAAS) (PAA.to).
Regional Politics: Argentina: The Buenos Aires vote today, Colombia: Red Eagle (RD.v) wins
community plaudits for San Ramón, Chile's stock market making progress on mining, Colombia:
That mining law annulment.
Market Watching: Gray Rock (GRK.v) shows the way it is, Standard Tolling (TON.v) closes its
financing.
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
Travel plans
I'm on the road for the latter half of next week, so expect the blog to be quiet Wednesday
onwards. Meetings with mining companies planned, plus I get to pick the brains of one of the
smartest political scientists around.
So aside from the blog being quiet for a few days next week I'm hoping to have something of
more interest for you come IKN322 next weekend. Crappy boring market or not, there are
some interesting stories and stocks out there and even if I'm not a new buyer of things at the
moment, the fallow period gives the chance to prepare for better times. Which means I'm just
going to keep on plugging away and pounding and maybe just maybe, something comes of it.
Dog days and CEO Chat
Hello July! IKN320 laid out last week how the summer doldrums are early this year. And here at
The IKN Weekly you don't get the sugar-coated version, you get the way it is; it's going to be a
slow few weeks, folks. Personally and during the Southern hemisphere winter (though it never
gets that cold where I live and it's sunny virtually every day) I'm going to keep myself busy,
there are always plenty of numbers to crunch and there's also time to do the type of
background done on New Gold (NGD) today that can stand us in good stead if this market for
miners turns and becomes more dynamic.
[Sidebar: The phrase Dog Days comes from Roman times, some say even further back during the
Greek dominance era, when people noticed that the hottest period of the year coincided with the
arrival of Sirius, the 'dog star', in the night sky. That timing is no longer true due to the effects of
precession (if you don't know look it up, it's not for us today) but the phrase has stayed with us
all this time. That's a good thing.]
1

Semi-on the subject and by way of an experiment, for at least a couple of weeks (before
deciding whether to make it permanent and while doldrums allow downtime during desktime),
I'm going to hang around the chatroom at CEO CA (1) to see if it's worthwhile. My virginity day
was last Thursday and though I won't be online there all day every day, I'm going to give it a
go for at least an hour a day for the next couple of weeks when I'm in-office (i.e. not while on
the road next weds-Fri) so if you feel like chatting, tearing a strip off me realtime, chewing the
cud over this-or-that, come over and say hi. And if I'm not online you can always mail and
nudge me (if I'm around and not too busy I can quickly log on).
Greece is the word
This was so funny I had to stick it on the blog Friday evening (2):
But economists at Oxford Economics Ltd. and Citigroup Inc. this week gave voice to the question
of what would happen if Greece dusted itself down within a couple of years and rode a falling
currency back to economic growth.
That would challenge the theory that leaving the euro was economic suicide. And it could
encourage other members to consider devaluation and default more appealing than life within the
euro and so pose an even bigger threat to the currency bloc’s sustainability than if Greece stayed.
In other words, the theme of last week's IKN320's intro. Fools seldom differ, they say. So
anyway, today Greece votes in its snap referendum and maybe by the time this Weekly goes
out we'll know the result. I'll say here and now on this cool and slightly cloudy Saturday
morning as I write these words that I think the "too close to call" surveys that have been
reported all week about the referendum in the world's media and pressrooms are a very large
crock of excrement and Greece will vote 'No' on the EU/Troika/IMF offer by a handy margin. I
said as much last weekend in this line from IKN320...
"The next week through to Sunday's referendum (which will vote not to
accept the ECB/Troika/IMF deal, be clear on that) will provide lots of
headlines."
...and that hasn't changed because if there's one thing you develop after living a while in
LatAm, it's the ability to spot a BS pollster survey. After that, let's watch and see how the chips
fall.
UPDATE Sunday afternoon local time: Voting is now closed in Greece and early counting points
to a very clear 'No' victory (60/40 or so looks likely and is being considered a landslide, though
I'm sure you'll know more than that by the time you read these words, I won't be editing
again). Colour me unsurprised. I wouldn't have changed a word of the above even if it turned
out to be wrong. And while thinking about it again, it's been interesting to watch how the
German-led EU contingent started the week by talking about the referendum as a straight
up/down vote on Eurozone membership for Greece and spent the rest of the week
backpedalling from that stance. In the game of chicken we outlined last weekend, consider
Syriza the clear winner.
2

Fundamental Analysis of Mining Stocks
This week we take a look at New Gold (NGD) (NGD.to).
NOBS report dated July 5th, 2015
New Gold Inc. (NGD) (NGD.to)
Company Overview
New Gold Inc. (Canada: NGD.to, USA: NGD, Frankfurt 32N.f) is a mid-tier producing gold
mining company operating in several countries. It has four mines currently in production, plus a
pipeline of advanced-stage development projects. Current share structure is as follows:
Shares out: 509.08m
Options: 14.63m
Warrants: 27.25m
Fully diluted shares: 550.96m
Current share price: U$2.69
Market Cap: U$1.37Bn
Approx working cap per S/O: $1.00
All prices are in US Dollars unless stated. Forex U$0.80=CAD$1
NB: As NGD 1) reports in US Dollars, 2) mines things that are sold in US Dollars and 3) its USA ticker does
more volume than its Canadian ticker, unless other stated all prices are un US Dollars in today's analysis.
Today's NGD analysis
The idea here is to run numbers on a stock that fits many of the criteria I've been looking at for
the sector of the mining world that most appeals in a rebound scenario:
• Gold producer
• Free cash flow positive at current prices
• Growth pipeline
• Widely held and liquid volume
• Beaten down stock price
And there's little doubt that in that last
category, New Gold (NGD) fits the bill
very nicely. Here come three price
charts instead of just one, starting with
the standard 12 monther on NGD
alone. Rocket scientists are not
required to see the message delivered
by NGD. The second chart below is
also over 12 months, but adds in
context by comparing NGD with gold
(GLD proxy), precious metals miners
(GDX) and the juniors (GDXJ), as
NGD is now in something of a Twilight
Zone between the two groups of
companies. Officially is a mid-tier
3

precious metals miner, knocking out around 400k oz gold per year, but the dragging stock price
has brought its market cap back to U$1.37Bn (at the start of 2013 this was a U$4.7Bn market
capper and counting back to just one year ago it was a U$3Bn market cap company, my how
times change).
What the above shows is that even in the drudgery of the precious metals sector, NGD has
underperformed by quite a way. Even compared to the smaller GDXJ-level inhabitants doesn't
come off well, but stacked against the
bigger boys (what it wants to be...what it
was for a while, arguably) it's had a
wretched time. The final price chart
below is the same dataset, but we zoom
in on the last three months because this
in essence is why NGD has caught my
attention to the point where it gets
featured here in The IKN Weekly:
A couple of comments received last
week after noting on the blog my
interested in NGD included the phrase
"...catch a falling knife..." or variant, to
which I plead absolutely and totally
guilty. One of my weaknesses as an
investor is the value trap and one of the main entries to those is to get interested in a stock that
was Price X in the past and now represents supposed value because it's now down to Price X-
1. Which is why today's analysis exists, because it's one thing to be attracted towards what is
suddenly (and finally) looking like a "cheap" stock and another to consider it as an investment
after staring at its numbers for a few days.
I've made no bones about the type of stock I'm most keen to consider. NGD fits on all those
categories listed above, not just the beaten down stock price, as it's a gold producer (mainly)
that's (modestly) profitable in its operations at current metals prices, has a (reasonable but very
clear) growth pipeline thanks mainly to the big and long mine life Rainy River project, plus its
high profile management team and full-court sellside push for many years means it's one of the
better traded and more widely held gold stocks in the sector.
Going 80/20
The only thing that sets it apart from most of the companies covered by The IKN Weekly is its
size, because apart from B2Gold (BTG) (BTO.to) we don't usually cover and recommend on
stocks this size. There's no real rule against them, but over the years we've focussed mainly on
the smaller end of the junior mining market and for three main reasons:
1) Better potential returns. With risk comes reward, so the theory goes that by sifting
through the mud, slop and detritus of the tinycap/smallcaps we can occasionally find
some diamond in the rough with which to make hay. And if that doesn't mix enough
4

metaphors for your taste I can come back next week and throw in a few dozen more.
However at the moment the bigger ones offer a good entry for the simple reason that
they've been so nastily beaten down. There's more room to fly now, y'see.
2) Less coverage. Corollary to point one, the smaller stocks tend to be less covered by
what we can lump as the mainstream of market analysts. On the other hand, larger
caps such as NGD or the aforementioned B2Gold get plenty of institutional, sellside and
newsletter coverage as well as often generating their own businesswire and trade
headlines (e.g. the CEO gets interviewed regularly and their views on X, Y or Z are
sought out). Again, IKN taking on a more widely covered stock isn't illegal, immoral or a
particular issue, but it normally means that there's less chance of getting a (one of the)
first mover(s) advantage on the company. Unless of course we manage to catch the
share price at the bottom while the rest of the industry predicts it down further.
3) More difficult to cover thoroughly. Seriously, and it's not just a case of me being
lazy. Well, perhaps a little. In a typical situation a smallcap junior producer or exploreco
will have just one mine or flagship project, perhaps two. Whereas NGD is a fairly typical
mid-sized stock with four working mines and at least three projects that you the analyst
need to investigate in order to get a decent handle on the company and what makes it
tick. And yes, that means more work.
If you're covering juniors it's a case of filtering through quantity in order to find the one in a
hundred that is quality. That means processing through plenty of different stocks, let alone
covering and following the few dozen that interest on a regular basis. So when a "bigger" stock
becomes of interest there's a balance that needs to be struck between the amount of time you
can dedicate to it and the amount of time you need to keep all the other balls that are regularly
juggled in the air. A simple example for you: As you may have noticed I've recently been far
more interested in what Goldcorp (GG) is doing and its potential as a trade, but to date I've just
stayed away because that's a many-headed hydra and in order to feel personally comfortable
with analysis and the amount of DD I'd need in order to get a good handle on the stock, I know
how much time it would take away from other areas of my professional life. And it's a tough call,
because I know at some level there is a bit of lazy in the decision not to delve deeper on the
larger stocks, but there's more realism about the decision to stay away as well. Covering GG via
reading a TA chart takes five minutes, covering GG via its financials would take a few hours but
the workload wouldn't be that much greater than for a junior producer (just more zeros on the
end of numbers). But covering and understanding GG to the point where I'd be confident about
taking a longer-term investment position in the stock, that's one which would take a long long
time and strip me away from the things I do on a daily basis.
So in the case of NGD I decided to go the 80/20 route (get 80% or the information down by
dedicating 20% of the time you need to fully get it). That means considering each of its four
working mines and its main development project, but leaving aside the deep and dirty on each
one, for the time bieng at least. Today's note is a reflection of where I've got to so far on NGD,
which for the record has been more work and more hours than I normally dedicate to the mining
company but it's also been a lot of fun this week, too.
You get the following:
1) A consideration of its main operations
2) What Rainy River means to the stock
3) What Cerro Morro/Blackwater doesn't mean to the stock
4) A financials overview
5) A discussion and conclusion
You don't get blow-by-blow on the directors' CVs, the major holders or other things of that ilk
and detail. What this analysis aims to do is frame NGD in the "Potential investment or not" field.
get the major points in place so we know where we stand.
Operations
A quick overview of the four main mining operations at NGD. First up, let's note that although a
5

gold miner, NGD isn't strictly all gold as around 35% of its revenues over the last two years
came from copper (mainly New Afton) and a small kicker from silver, too.
NGD: Consolidated Metals revenue mix
2013 and 2014 aggregate
Ag, 4.10%
Au, 61.10%
Cu, 34.70%
Here's the breakdown of the same metals mix in table form, if you prefer numbers to visuals.
NGD: Metals revenues by type (U$m)
Year Au Cu Ag Total
2013 493.8 249.9 36 779.7
2014 426.5 273.3 26.2 726
total 920.3 523.2 62.2 1505.7
source: company filings
Consolidated, NGD logged over U$1.5Bn in sales during the two years of 2013 and 2014, with
less than a billion of that in gold. But if we take just gold as our mine benchmark and line up the
consolidated production, it's also notable how NGD doesn't have anything even close to a mega
or large-scale working mine on its books. In fact over the years it's churned out gold at around
100k oz per quarter, with each of its four mines accounting for roughly a quarter of that
production. These are not big gold operations, at best they're medium sized things and by
standards out there this is a mid-tier that's truly made up of small gold operations.
NGD: Consolidated quarterly gold production
Oz Au
120000 New Afton Mesquite Peak Mines C/San Pedro
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings
So that's a quick overview, now a whistle-stop tour of the company's four operations and then a
note or two on its main development project, Rainy River.
New Afton
This is NGD's star asset as stands today, a copper/gold mine located in Kamloops BC Canada.
As well as the current 2.6m oz Au and 2.2Bn lbs copper in reserves and resources, it's also
close to the "Afton C Zone" development project which has a ticket price of around $350m for
development and would extend the mine's life by around five years.
One of the things NGD keeps at least a little quiet is that New Afton is really a copper operation
with a gold kicker, not the other way around. Here for example is the percentage breakdown of
revenues at the mine during the two years 2013 and 2014, which shows that 65.6% of revenues
at New Afton came from copper, 33.3% from gold and a small 1.1% from silver.
6

NGD: Metals revenue mix at New Afton mine
2013 and 2014 aggregate
Ag, 1.10%
Au, 33.30%
Cu, 65.60%
To that end, here are the quarterly production charts for both gold and copper at the mine and
the thing that stands out is regularity of production, this is a mine that runs on rails. It had a
small downturn in 1q15, but it's on track to improve production as from the second half of 2015..
NGD New Afton: Gold production, per qtr NGD New Afton: Copper production, per qtr
Oz Au
30000 Mlbs Cu Au
25
25000
20
20000
15
15000
10000 10
5000 5
0 0
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15 1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings source: company filings
...when the mine's mill expansion project is complete and comes online. NGD expects New
Afton to produce 5% more this year than in 2014 and to improve again in 2016. As for the
financials, this is where the mine really shines because it's a low cost operation that's remained
nicely profitable throughout the metals downturn, even in the latest Q1 with lowered copper
prices and slightly lower production (and remember, that's temporary):
Revs
NGD at New Afton: Financials overview Op Ex
U$m
Deprec/Deplet
100 Mine Op Earn.
90
80
70
60
50
40
30
20
10
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings, IKN calcs
It's not an exaggeration to say that New Afton has carried the NGD consolidated financials
during the last few quarters. New Afton kicks out good operating earnings every quarter and will
continue to do so, even under $2.60/lb copper. Great little mine, this one.
Mesquite
The Mesquite mine is is an all gold open pit heap leach operation located at the Southern end of
California USA. It became the company's central asset when NGD was formed by the purchase
of then owner Western Goldfields back in 2009. With 1.7m oz gold in proven and probable
reserve, plus another 1.2m oz in measured and indicated resource ounces, there's plenty of
7

mine life left in this operation at current run rates.
Oz Au NGD Mesquite: Gold production
This quarterly production chart shows that production 40000
got a little patchy in 2014 (set aside the Q4 pop, now 35000
part of the mine's traditional cycle) but NGD expects the 30000
mine to improve this year and deliver around 8% more 25000
gold thanks to better expected grades. Also, as diesel 20000
15000
fuel is a big component of costs the recent drop in oil
10000
prices should help Mesquite remain profitable.
5000
0
Here below is the overview of financials at Mesquite,
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
which show how its patchy 2014 translated into overall
source: company filings
operation losses. But 1q15 came in better and there's
reason to believe Mesquite will become part of the solution in the quarters to come, rather than
be part of any problem. NGD's relaible backbone mine.
Revenues
NGD at Mesquite: Financials overview Op Ex
U$m
Deprec/Deplet
50 Mine Op Earn.
45
40
35
30
25
20
15
10
5
0
-5
-10
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings, IKN calcs
Peak Mines
This is NGD's Australian operation, an underground gold/copper mine (this time more revenues
come from gold, unlike New Afton) that's become one
of those "breakeven at best" mines in today's low price NGD Peak Mines: Gold production
Oz Au
environment, thanks mainly to higher than average 30000
cash costs. With 0.8m oz gold and 166m lbs copper in
25000
reserves and resources as at December 31st 2014
20000
(P+P+M+I), it's still a few years left in it at current
15000
operating rates but it's another reason why NGD
needs to move on its pipeline of growth projects, too. 10000
5000
Here's the last couple of years' worth of quarterly
0
production for gold only (we assume copper as a
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
byproduct kicker here) and according to NGD
source: company filings
guidance, this type of production rate is what we
expect for the quarters to come, too.
Financially, Peak Mines has become a small drag on the NGD books and I'm expecting things
to stay that way if gold doesn't pick up. It's not a terrible drag, but Peak isn't going to be a net
contributor to the company's wellbeing in 2q15
8

Total Revenues
NGD at Peak Mines: Financials overview Op Ex
U$m
Deprec/Deplet
60 Mine Op Earn.
55
50
45
40
35
30
25
20
15
10
5
0
-5
-10
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings, IKN calcs
Cerro San Pedro
The final operating mine at NMGD is Cerro San Pedro, located in the San Luis Potosí Sate of
North-Central Mexico. This is a gold/silver heap-
leacher and it's now coming to the end of its active life, Oz Au NGD Cerro San Pedro Gold production
35000
with 2015 scheduled to be its last full year of
30000
production. In this year we can expect CSP to provide
a bit of a swan song, as gold production is expected to 25000
leap by some 35% compared to 2014. From then, the 20000
gradual closure will see production winding down in 15000
2016 and 2017 when the mine will go on care and 10000
maintenance and costs covered by residual silver 5000
production from the leach pads (cheaper than closing 0
the thing, see below for more). 1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings
Financially, we should get a bit of positive operating
profits from CSP this year, but it won't be to live or die by either way and the cash flow from this
one in its last full year isn't going to move the stock price of a $1,4Bn company.
NGD at Cerro San Pedro: Financials overview Revenues
Op Ex
U$m
Deprec/Deplet
60 Mine Op Earn.
50
40
30
20
10
0
-10
-20
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings, IKN calcs
Summing up the four NGD mining operations, it's the sum-of-parts that makes the company
a 400k mid-tier producer, rather than any single mine. However when it comes to the financial
side, New Afton is far and away its greatest working asset at the moment. At least until Rainy
River comes online.
Rainy River
Located in Northern Ontario Canada, Rainy River is NGD's biggest and most important pipeline
project. Even though the company has dragged its heels a little in 2015 and now aims to bring
the mine into operation mid-2017, some six months later than the original development timeline,
it still has $300m in capex budegeted for the project this year and is obviously taking it very
9

seriously. As at end 2014, NGD said it needed to spend just over $800m to bring Rainy River on
line, which means that its current financial position (treasury plus line of credit) can cover
around 3/4 of the total bill. For that money you get this in the way of contained gold and silver
(ripped from the YE 2014 MD&A)...
...that's scheduled to produce at a life of mine average of 325,000 oz gold and 480,000 oz silver
over a 14 year mine life, with reasonable (not great) economics at U$1,300/oz gold. But with
cash sunk here already and the obvious 'company builder project due to its size and scope (as
wel as having plenty of exploration upside potential, the slightly skinny 13.8% IRR isn't going to
put these guys off.
Rainy River is the future of NGD and deserves more space than it's getting in this "do I like
NGD?" analysis today. Come the more proactive decision on ownership there will be a lot more
on this asset.
El Morro and Blackwater
A word needed about the other main pipeline projects held by NGD, Blackwater and El Morro,
the joint venture NGD has with Goldcorp in Chile that's based on the copper/gold deposit there.
In essence NGD has a free rise on this project as GG is required to fund 100% of the project to
production and in return NGD gets 20% of the mine. Which is all good, but sadly (and probably
known to you already, it's a pretty famous case) El Morro has fallen foul of the tightened
environmental rules in Chile coupled with community activism that's stopped the project cold in
the Chilean courtrooms. At this current point we may or may not see El Morro come out of deep
freeze but even if it does, the way of the metals market in 2015 makes me think that GG won't
be in a big hurry to move it forward the day they get a positive ruling from the Chilean courts.
Therefore and for the time being, it's a project I assign no value to for NGD. Maybe in the future
we get a bonues from its free ride 20%, maybe we don't But it's not one to bank on.
As for Blackwater, it's a marginal dog. Big deposit (8.2m oz gold, big tonnage (344m tonnes),
low grade (0.74 g/t gold with a small silver kicker in BC Canada) and a high capex ticket that
goes with it all, it's one of those "marginal at best" things that are now way out of fashion in the
sector. On the subject, it still confounds me me how NovaGold get away with the market cap
that they have.
That wraps up the mine and project overview at NGD, time for some numbers.
Financials overview
NGD is one of those miners on which we can get a useful handle just by studying the 'usual
suspect' charts. Today we first look at its operations via the P+L, then an extended look at
balance sheet items, because for me that's where NGD's attraction shines brightest. Then
comes the discussion of how the two sides fit together (because stuck somewhere in between
those two there's its share price and potential to improve, I'd venture).
Operational results
This first chart offered, that of quarterly revenues, operating expenses and mine operating
earnings (otherwise known as gross profits) sets the scene. What you don't have here is the
10

depreciation/depletion line item (revs minus op-ex minus deprec/deplet = Mine Op Earnings)
NGD: Depreciation/Depletion, per quarter
70
60
50
40
30
20
10
0
11
31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3
U$m
source: company filings
but as they're fairly constant (see above) and the big chart got cluttered with them in, they're not
there:
NGD: Quarterly Earnings Overview
240
220
200
180
160
140
120
100
80
60
40
20
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3
$m revenues
op-ex
Mine Op Earnings
source: company filings/IKN ests
The point to be made here, and it's a simple one in essence, is that NGD has stayed profitable
on its operations all this time. Its revenues per quarter
have seen some decadence as lower gold (and copper)
prices have kicked in through the downturn (right) but
the one that matters, the short red columns have
stayed on the right side of zero and there's every
reason to expect that to continue.
Here below is a closer look at mine operating earnings
and I'd be the first to agree that quarters revolving
around the $10m or $20m in profits aren't much for a
$1.4Bn market cap company, but the takeaway is that
there's no losses and no pressure added to the
corporate structure by overall loss-making mines.
NGD: Mine Op. Earnings, per qtr
60
50
40
30
20
10
0
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3
NGD: Revenues, per quarter
220
200
180
160
140
120
100
80
60
40
20
0
$m
source: company filings, IKN ests
Thanks New Afton for that. Moving on, another view is the adjusted operating earnings which
takes into account G&A, exploration, business development (whatever that might mean) and
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3
U$m
source: company filings

share-based payments, but backs out the two large impairments taken by NGD in the 4q13 and
4q14 periods, too. We again see how in all but one period, the company held its own despite
the dropping metals prices.
NGD: Adjusted Op. Earnings, per qtr
35 (impairments backed out)
30
25
20
15
10
5
0
-5
12
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3
$m
source: company filings, IKN ests
When it comes to bottom line/bottom line, the last few quarters have been lossmakers because
NGD has taken some financial charges, as well as forex negatives. In this shart I've left the
numbers raw and not backed out the two big impairments (which shouldn't be hard to spot) in
order to give the full picture.
We can expect the net/net losses to continue for the rest of the year, though their overall weight
won't be big and don't affect the cash generating capacities of the mines. For more on that, let's
move to balance sheet matters.
Balance sheet items
We start in normal fashion with a look at assets and here's how they've have been doing since
the end of the gold bull run in early 2013 until today.
NGD: Assets
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
NGD: Net Earnings
100
50
0
-50
-100
-150
-200
-250
-300
-350
-400
-450
-500
$m fixed
other current
cash & eq
source: company filings
The bulk of the assets at NGD are its fixed assets and the bulk of those, as this next table
shows, are the asset values carried by its seven major operations or projects. Chief among
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3
source: company filings/IKN ests
srallod
fo
snoillim
NGD: Shares Out
600
550
500
450
400
350
300
250
200
150
100
50
0
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
source: company filings/IKN ests
serahs
fo
snoillim

those is New Afton, then Blackwater still comes in second spot even after seeing a chunky
$340m+ impairment at the end of last year.
In fact, the two large impairments taken by NGD recently are worthy of consideration. In 4q13 it
took a $272.5m impairment, mostly on its Cerro San Pedro mine. Then in 4q14 it took a
$395.8m impairment, with the big hit taken on Blackwater (total drop in book value $358.8m).
For what it's worth I think NGD has been sensible about taking those asset write downs, you
could argue they could have cut a little deeper but we can also say that things will stay this way
until the 4q15 quarter and year-end results come around, minimum. Overall NGD has
recognized the need to cut the carrying value of at least some of its assets, New Afton's
operational profitability to date shows that it's fairly valued at a billion-and-bits, while other
working mines are already carried quite low and there's not that much left to shave. Maybe
Rainy River will need to be marked down, but only if the construction decision is deferred.
NGD: Book value of seven major mining assets
U$m
3500
3000
El Morro
2500
Blackwater
2000 Rainy River
Cerro San Pedro
1500 Peak
Mesquite
1000
New Afton
500
0
2012 2013 2014
source: company filings
What NGD has is properties, but it's not short
of a penny or two in treasury either as this
next chart demonstrates. We're factoring in a
drop in cash for 2q15 but even so, this is a
company that has more than enough money to
get it through an extended dead period for the
sector.
Liabilities look like this on the overview chart
but we need to look more closely at this item,
as there's more to NGD's balance sheet than
meets the eye (better than you might think, in
fact).
NGD: Liabilities per qtr
2000
1800
1600
1400
1200
1000
800
600
400
200
0
13
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
source: company filings
srallod
fo
snoillim
NGD: Cash treasury per qtr
800
700
600
500
400
300
200
100
0
other LT liabilities
LT debt
current liabilities
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
source: company filings/IKN ests
srallod
fo
snoillim

There are three main parts to NGD's liabilities which are:
1) Current liabilities, which have been kept admirably light for just about all its corporate life.
That's true today as well, which points us towards its strong liquidity position even under this
current low gold price. We like this and we also like how there's still nearly U$500m in working
capital at the company, that goes a long way towards the bill for building Rainy River, for
example.
1000 NGD: Working Capital per qtr
900
800
700
600
500
400
300
200
100
0
14
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
source company filings/IKN ests
srallod
fo
snoillim
2) Long-term financial debt. This is pretty heavy, and with another untapped facility for up to
U$300m waiting in the wings in order to help pay for Rainy River, it could get bigger quickly.
Most of this debt is held in unsecured notes. This table ripped form the 1q15 financials shows
the current breakdown of the $876.9m in long-term financial debt, with a little under U$300m
due in 2020, then a touch under $500m maturing in 2022. That's the good news here, there's a
long time (and new mines to build) before any of that cash needs to be given back.
The El Morro funding loan is a financing device that doesn't weigh on NGD at all in real terms, it
represents the pro-rata part of the funds forwarded to the El Morro project held by NGD, but the
reality is that GG is funding the whole thing to production and NGD gets a free ride on 20% of
the mine when (if), at which time that El Morro liability will disappear, as if by accountancy
magic. The final line of that table is the $300m revolver, as yet untouched and waiting in the
wings. Expect that to come fully into play when a final decision is made on Rainy River.
3) Other long-term financial. As you can see on that chart, this is also a hefty amount in
absolute terms and makes up a big portion of what NGD owes to the world, but this isn't one we
should be overly concerned about. In fact most of it is long-term tax deferral that's mainly book-
keeping in nature ($545m) plus closure costs ($63m). Yes there are things that the company
owes, I'm not trying to sugar-coat or change the narrative here, but on a scale of urgency to be
re-paid or covered, theyr'e also the things that come well down the list of priorities for a mining
company. Anyone who knows the way old mines get put on indefinite care & maintenance will
understand that.
Which brings us to this:
Assets minus liabilities equals book value
And that's true. So to begin, here's a chart that shows the development of Book Value (BV) at
NGD as per the quarterly filings and with our best guess for 2q15. To that we add a market cap
tracker, taking the quarter end share price as our marker rather than any daily changes or
quarterly averages; a snapshot, if you like:

NGD: Market cap versus book value
4000
3500
3000
2500
2000
1500
1000
500
0
15
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
U$m
mkt cap at qtr end
book value
source: company filings, NYSE data
In that above you see the big change in NGD's
valuation, as despite taking those sensible (maybe
too modest, maybe not) impairments at the end of
the last two years, the equity value of NGD has
moved significantly below its balance sheet value.
Or if you like, after a couple of years in which
NGD's valuation of itself largely coincided with the
market's valuation of NGD, a big gap has suddenly
appeared and Mr. Market doesn't agree any more.
This chart shows those two in ratio form:
Back when the world loved gold and miners could
do what they wanted, NGD was priced at 2X BV.
These days it's less than a third of that, at 0.62X (IKN ests for 2q15).
But even that may be underestimated the drop we've seen in asset valuation at NGD. As noted
above, there's a large chunk of NGD liabilities that aren't of great effect or concern, so if we
back those out and create am artificial, made-up, debatable but (for me at least) realistic
alternative version of that price/BV chart above it would end up looking like this for the last few
quarters.
1 NGD: Adjusted (i.e. artificial) Price/Book ratio
0.95
0.9
0.85
0.8
0.75
0.7
0.65
0.6
0.55
0.5
0.45
0.4
0.35
0.3
41q1 41q2 41q3 41q4 51q1 tse51q2
2 NGD: Price/Book ratio
1.75
1.5
1.25
1
0.75
0.5
0.25
0
source: company data, NYSE, IKN calcs
For me, NGD has been discounted to less than half (0.48X) its value and aside the potential to
impair a little further its current level doesn't only look cheap, it looks as though there really isn't
much lower it can go.
Famous last words? Maybe for a company that's in financial trouble, but NGD isn't fracturing
cash or making heavy financial losses per quarter. Nor is it under any balance sheet pressure,
nor has it any looming debt repayments in its near future (we're good until 2020 minimum here,
and even then it would take a worst-of-worst case scenario to stop NGD from being able to re-
finance at the very least.
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 tse51q2
source: company data, NYSE, IKN calcs

Discussion and conclusion
NGD is an interesting case among the companies that are currently underperforming the mean
in the mining sector. Its production footprint at-or-around 400k oz AuEq per annum isn't
particularly big for a this size of company and what's more that production schedule is made up
(at the moment anyway) of four smaller end operations. Yanacocha this is not. However, NGD
also has a great looking pipeline of growth projects, headed by Rainy River. At face value and
checking the 2014 feas study on Rainy River, it may not look like the most economically robust
thing out there, but NGD is pushing ahead (slight foot dragging but developing all the same) and
the chance are that the company changer/company maker project that all by itself will nearly
double NGD's annual gold output, is in better shape economically thanks to the changes in input
costs than it looks at the moment. There's also the decent funds position at NGD, which can
cover most of the initial capex as stands. Meanwhile, the unprofitable and marginal mining
operations such as Cerro San Pedro, now on its last legs, are about to fall off its books.
So operationally NGD is now in the process of changing, but what really appeals at the moment
is what you get for each share on an asset basis. It's no coincidence that I wrapped up the
analysis section of NGD not with a target price for the stock, but with a consideration of its
Price/Book ratio because from where I'm sitting, even if NGD hasn't written down asset values
quite as far as it could have done and has left some cuts for the end of this year, it's not being
crazy about its own valuations at the moment and for each share you buy, you're getting double
the "value" in overall assets once the unimportant end of the liabilities is backed away. The only
downside to its books, as far as I can see, is the still distant maturity on its financial debt due in
2020 and 2022 because apart form that NGD's current operations are holding together just fine
and even if they hit the green light on Rainy River, the revolving credit facility means they're not
in any sort of financial crunch. Not for this year or next, anyway. There is a modest amount of
cash to raise to get Rainy River past the finish line (it would seem $200m is in the ballpark, it
may turn out to be less) and that may be why the stock is being marked down in these last few
weeks. I'd consider that a overreaction if so, because NGD isn't in any rush to raise and can
pick its moment carefully. I'd be very surprised in Randall Oliphant thought the time was now.
To sum up, what NGDS offers today is an interesting way to play leverage on gold, because its
current share price level is no reflection on a solid reputation and structure, good operations (or
in New Afton very good), strong project pipeline and amore than reasonable looking corporate
financial position. As should be clear by now I'm not charging out and buying anything on a
whim right now, things have to pick up in the sector before I deploy any new money (outside of
additions to IRL.to at least) so I'm no buyer of NGD, not yet anyway. But it has the makings of a
rebound play and would surely be one of the first to make a move back up if the market decided
to perk. In one sentence, NGD offers good assets at a cut price, but when that price changes for
the better is unknown.
Stocks to Follow
Nothing happened last week. Well, not exactly true because our list of open positions saw two
risers (MUX, REG.v), four unchanged stocks (FOS.to, LGN.v, LRA.v, FCV.v) and nine losers (not
listing them all) but all the moves were small and on light volume, with the single exception of
the 18.5% gain made by Regulus (REG.v), but even that was on featherlight volumes and
inside its (admittedly wide) trading range. Seriously, nothing of note happened last week.
Lather, rinse, repeat. Al the losers that made a theoretical dent in my back pocket will be made
back up in nanoseconds once gold rebounds, and the rest is noise.
We currently have 15 open positions in our 'Stocks to Follow' list, our self-imposed maximum
number. Of the 15, five are in positive territory overall, ten are in the red.
16

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$1.90 -11.9% 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$1.24 19.2% Will be bot out soon, bullish
Teranga Gold TGZ.to hold C$0.55 15-feb-15 C$0.70 27.3% Good prod. 83c tgt
McEwen Mining MUX str buy U$1.09 25-jan-15 U$0.969 -11.1% Leverage value, cheap now
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.115 -4.2% Also "land grab", tgt 19c
First Majestic AG hold/sell? U$10.51 10-aug-14 U$4.72 55.1% 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$0.18 -5.3% 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/sell C$1.05 09-apr-14 C$0.62 -41.0% 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$0.96 50.0% Nov'14 tgt $1.25, top Au expl
Minera IRL IRL.to adding C$0.23 22-jul-12 C$0.11 -52.2% 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$0.385 28.3% 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
Now for some notes on current basket stocks. But same as last week, there's little to report and
so this section remains on the light side.
Minera IRL (IRL.to): I didn't add any last week, though as noted in IKN320 I consider there
is room for more here. We've settled into a 11c and 11.5c trading band, which I think is pretty
low but hey, that's just me.
One of my meetings this week is with Diego Benavides, CEO of IRL. If you have any questions
you'd like put to him, you know the address. For my part, I'll be asking him his opinion of the
analysis in IKN318 and how things are progressing with the financing package centred around
COFIDE.
Teranga Gold (TGZ.to) (TGZ.ax): It's a little frustrating to see TGZ sitting at this low 70s
number while recallingl how it topped out recently at 82c, just a penny shy of my fixed plan to
sell the holsing at 83. Ah well, the best laid plans of mice, men and capital markets.
TGZ doesn't normally provide a production report for a recently finished quarter, rather it comes
up with all the production and financial returns at the same time, around four weeks after the
quarter end. That means we probably have another three weeks before the 2q15 fundies are
known to us.
17

Lake Shore Gold (LSG.to): Rarely for this now firmly established Canadian market favourite,
LSG traded softly last week. I'm sticking a
single "?" mark next to its name and will
watch it a little more closely and the next day
or three, as what we saw last week may be
connected to the broken trading days pattern
(no Wednesday in Canada, no Friday in USA)
and not much more than that. Also a check of
the three month chart shows a stock that
hasn't done any technical breaking down of
any type or form.
Still, I prefer up to down and would be more
concerned if we went under CAD$1.20.
B2Gold (BTG) (BTO.to): In some minor BTO news, the company's 49% owned Gramalote
project in Colombia is under fire from a Colombian Senator (3) on Friday. His main target is the
51% owners AngloGold Ashanti (also owners of the big prize this Senator wants to stop the La
Colosa project) but it's worth a mention here all the same, because the Senator in question
says that four of the 47 land packages that make up the Gramalote surface area are or were
owned by two members of a family called Gallón Henao, who have been identified as one of the
main narcotrafficking families in the country. The senator wants to know why AngloGold Ashanti
is doing business with narcos and kicking up as much political fuss as he can (because for
another thing this narco family is connected with the family of ex-President Álvaro Uribe). For
what it's worth AngloGold Ashanti has already come out and denied any connection with the
narco people. It's unclear whether B2Gold as a minority partner in the project will feel obliged
to do the same.
In trading, BTO was soft again. We have another couple of weeks before we're likely to get the
2q15 production numbers frmo the company, but as we also get a few outlines of revenues and
maybe some idea of operating costs, the BTO "pre-release" is usually one of the more
informative out there and can move the stock.
First Majestic (AG) (FR.to): FR.to is usually one of the first producers to come out with its
quarterly production numbers and if previous quarters are to go by they come within two weeks
of the quarter end. That means we may get 2q15 numbers from FR.to this week coming, but
they're mostly likely the week after next.
That's a good thing, because a dose of fundies may be what I need to pluck up the courage
and dump this lossmaking trade. For sure FR could surprise us all with a blowout quarter, but
the way in which the stock's been trading into the start of Q3 suggests that there's not a lot of
love for the company's results.
If we review the 2015 guidance published by FR.to as part of its year-end financials...
...and consider that 1q15 brought 2,776,855 oz Ag and 3,905,270 oz AgEq...
18

FR.to: Consolidated production, per qtr
4500000
4000000
3500000
3000000
2500000
2000000
1500000
1000000
500000
0
19
21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1
Ag +AgEq prod
other AgEq prod
total silver prod
source: company data
...that Q1 results puts the company on track for guidance on a straight line basis, but the
extrapolation of 15.8m oz AgEq is at the low end of affairs and the 11.1m oz of pure silver
would be a big fat miss on 2015 if Q1 turns out to be typical. In other words, we're looking for
a better performance from FR.to in 2q15 than we saw last quarter. In fact, I'd class it as
essential for further holding. If the result's under 4m oz AgEq, I'm out of here.
McEwen Mining (MUX) (MUX.to): Once trading had closed on the NYSE for the holiday
shortened week on Thursday, MUX dropped the news on the USA (4) that its stock was now in
default of the exchange rules and may have to be delisted from the exchange at some point in
the future. The skinny is that shares under U$1 in value aren't allowed, MUX has been under a
Buck for too long and it now has six months in which to get its act together, get back above the
U$1 minimum else face the wrath of the exchange. Things to note:
1) As alluded on the blog that day (5) this event will hurt Rob McEwen grand illusions and self-
esteem more than it will MUX. The company. For one thing, there's six months between us and
any fixed date with NYSE destiny for MUX, what we had last week wasn't much more than a
warning shot. For another (and I know I get into trouble for saying this, but the fundies guy in
me can't avoid) in the end it makes no difference where or how your company is quoted, what
matters is the corporation itself, what it does and how much money it makes.
2) However, pragmatically speaking it's clear that Rob McEwen cares about this and will want
his stock higher. That might come from a straight sector pick-up and rebound, but there are
ways to make this happen without gold shooting to $1,300/oz overnight. MUX could raise that
dividend, it could reverse split its shares, it could go on a buyback spree, or (hell's bells how
about this for innovation) it could start returning
decent profits every quarter.
3) The news got quite a bit of play in the press
last week, but overall it's one of those that's
more sound than fury (and for once I think a
company was right to wait to reveal its news).
Also of note, once the late-Thursday (tape-
painting) spike was worked away, there was no
change in price for the MUX.to Canadian stock in
Friday trading, though admittedly it was light
volume stuff.
Bottom line: No biggie. I'm far more concerned
about MUX returning a decent 2q15 worth of financials than its US Listed stock a couple of
pennies under a designated barrier.
Starcore Intl (SAM.to): SAM managed to scrape a total volume for the week of just over
100,000 shares, which is smallstuff even for this semi-backwater junior. It's where we stand

today with SAM, there's plenty to like about the company and what it's gathering together, but
the market just doesn't care about tinysmall miners at the moment. Up to you to decide
whether that's a problem or an advantage.
The Copper Basket
After twenty-seven weeks of 2015 The Copper Basket is showing a 13.82% 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 47.55 212.07 4.46 12.6%
3 NGEx Resources NGQ.to 1.17 187.71 157.68 0.84 -28.2%
4 Nevada Copper NCU.to 1.65 80.5 115.92 1.44 -12.7%
5 Amerigo Res ARG.to 0.27 173.65 75.54 0.435 61.1%
6 Copper Fox CUU.v 0.135 402.96 72.53 0.18 33.3%
7 Western Copper WRN.to 0.68 93.68 51.52 0.55 -19.1%
8 NovaCopper NCQ.to 0.58 60.15 37.29 0.62 6.9%
9 Panoro Minerals PML.v 0.295 220.64 30.89 0.14 -52.5%
10 Hot Chili Ltd HCH.ax 0.16 333.11 30.65 0.092 -42.5%
11 Regulus Res REG.v 0.35 56.39 21.71 0.385 10.0%
12 Metminco MNC.ax 0.008 2410.5 9.64 0.004 -50.0%
13 AQM Copper AQM.v 0.06 141 7.76 0.055 -8.3%
14 Catalyst Copper CCY.v 0.305 31.41 6.28 0.20 -34.4%
15 Coro Mining COP.to 0.045 159.37 3.98 0.025 -44.4%
NB: HCH.ax & MNC.ax priced in AUD$, rest CAD$ Portfolio avg -13.82%
The overall basket average lost 3.08% on the shortened week and in turn we hit a new low for
2015 on our list. Isn't that pleasant?
4% The Copper Basket 2015, weekly evolution
Of our 15 names, four returned gains on the 2%
week (RMC.v, ARG.to, REG.v, CCY.v) and two 0%
-2%
others remained unchanged (CS.to, AQM.v).
-4%
Which means nine were losers (not listing
-6%
them all) with the biggest percentage losses -8%
rung up by Metminco (MNC.ax down 20.0%), -10%
-12%
Copper Fox (CUU.v down 18.2%), Coro Mining
-14%
(COP.to down 16.7%), and Nevada Copper
-16%
(NCU.to down 8.9%). All horrid stocks getting
what they deserve. Of the winners, REG.v up
18.5% and CCY.v up 11.1% stood out in
percentage terms, but trading was very thin in both of those and the moves don't mean much.
Here's an hourly chart of our preferred copper futures price trackers, the most reliable contract
to follow for the metal. Even the spike down on Tuesday wasn't much of one and soon
recovered, we're in a clear holding pattern around our new and lower price while Dr. Copper
decides whether it wants to put the $2.50/lb level under pressure or not. That may turn out to
be a question that only gets addressed post-Labor Day.
20
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 ht5luj
source: IKN calcs

For more copper commentary, I'll leave it to un-named trader in this Reuters note (6)who told
us something that we should already understand, but if it's not crystal clear yet it's about time
you took the hint:
"Base metals are following equities; there isn't very much liquidity," one trader
said. "But Greece really isn't an issue for metals. It's what happens in China
that's important."
And equities are following bonds, and bonds are following the dollar and it's turtles, turtles,
turtles all the way down. Ok, facetious me, so to be constructive I make clear that I fully agree
with "one trader's" statement. I'd add that we even saw the US BLD jobs number come past
without making much of a ripple in the fabric. Yes , the whole story is China, don't forget it.
It's the end of another month and before moving to the bullet points, here are the monthly
inventory tracker charts:
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
The story is the Shanghai downturn over the last two quarters, which really shows up on the
percentage chart. LME's total grasp of world copper stocks is back over 70% for the first time
since mid-2013 (when the big finance houses were in the midst of their don't-let-copper-leave-
the-building scam that held prices higher).
Now for the regular inventory bullet points:
21
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj
Copper inventories, per month 2012-2014
1000000
LME Shanghai Comex
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
source: Cochilco
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj
Mt Cu
LME Shanghai Comex
source: Cochilco

• Total world copper stocks saw a turnaround on aggregate, the first for a while though
we have conflicting signals from Shanghai versus Rest-Of-World. Overall stocks rose by
a small but meaningful 2,647 metric tonnes (mt) (+0.6%) to finish the week at
451,794mt.
• The Shanghai Futures Exchange warehouses saw their usual sized drop, this time down
11,404mt (-10.0%) to finish Friday at 101,517mt. Still in six figures, but only just.
• LME warehouses stocks fully countered that change in the SHFE, up 11,675mt
(+3.8%) to finish at 321,975mt.
• And for the second week running we need to pay closer attention to the smallest of the
three world systems, because Comex warehouse stocks again rose by a significant
number. This week the change was moved up by a significant amount, 2,376mt, up
which is +9.2% in percentage terms and that has added over 5kmt in the last two
weeks. Total Comex stocks stand at 28,302mt
Here's the Shanghai-only chart, which shows again just how regular the de-stocking has been,
clicking down by 10k or 12k a week, time after time. If that smells a little odd to you then
you're not the only one.
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
22
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
Now for some notes on a cuple of basket stocks
Nevada Copper (NCU.to): My single favourite whipping boy stock in the copper exploreco
world continues its nosedive since releasing its updated Feasibility Study (FS) results on May
28th (7) and call me a hateful little soul if you
like, but I've been dead right about this stock
ever since it published the first pass of its FS
back in 2012.
It cannot be mentioned enough times that this
project is economically unworkable at current
copper prices and it's not a coincidence that the
BS-merchants at NCU framed the pre-feas using
U$3.15/lb as "Base Case" for their economic
analysis. Crazy. Let us be clear that even if we
can take all their other numbers and assume
them accurate, the 10.4% IRR at U$2.85 isn't
enough, it's not even close. and while on the
semantics used, note that NCU call their U$2.85/lb Cu project economics their "low case", so
what does that make copper at today's prices? Super-Low? Extra-Special Discount? Perhaps the
"mid season summer sale get on now" price?
It's asinine. But in the meantime the market continues to price in nearly U$100m in equity (aka
"hope") value into this stock price.

Reservoir Minerals (RMC.v): No news isn't always good news, what with people starting to
wonder (to the point of mailing me) whether there's some sort of ehavy delay with the current
Freeport (FCX) drill program at the Timok JV, which is of course ground zero for all the share
price value you see in RMC stock. Eeven before the last official update in March (8) we'd heard
well-sourced talk of 2km deep holes sunk by FCX around the discovery zone as the big
company searches for the game-changer porphyry, but here we are a full quarter later and no
news. I have no answers on this, but I do have a couple of observations:
1) These are deep holes and deep holes take time not only to drill, but to log and to assay.
2) FCX is in charge of the program, not RMC and as such they can decide all sorts of things
about the information gathered. That can include the timing of the releases, when they deign to
inform their minority partner, whether to release information on a hole-by-hole basis or whether
to wait until a whole bunch of holes are good to go, all that and dozens of variations therein.
3) RMC stock has traded just fine, most of the time in its current low-$4s zoneand though
volume's been light, there's evident health and confidence there.
RMC continues to interest me as one of the vanishingly few potentials for investment in the
copper space, but the stated position of not rushing back in stands today. Copper the metal will
exert some influence, as will the exploraiton process. Somewhere between those two I'll have
to make a more proactive yes/no decision on owning some RMC, but until there's some real
news it's easier to wait outside.
The Low Cost Producer Basket
After 27 weeks, the 2015 Low Cost Producer Basket is showing a 2.02% loss to level stakes.
company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 830 13.43 16.18 -10.9%
2 Barrick ABX 10.75 1164.67 12.30 10.56 -1.8%
3 Newmont NEM 18.90 528.08 12.50 23.67 25.2%
4 Franco Nevada FNV 49.19 156.5 7.43 47.49 -3.5%
5 Silver Wheaton SLW 20.33 403.75 7.00 17.34 -14.7%
6 Agnico Eagle AEM 24.89 214.12 6.09 28.43 14.2%
7 Buenaventura BVN 9.56 254.19 2.57 10.10 5.6%
8 Kinross KGC 2.82 1146.2 2.60 2.27 -19.5%
9 B2Gold BTG 1.62 921.27 1.41 1.53 -5.6%
10 Pan American PAAS 9.20 151.64 1.29 8.49 -7.7%
all prices in U$, using NYSE ticker prices Portfolio avg -2.02%
And for the first time in 2015, our low cost basket moves into negative territory. It took a
23

shortened week to do it (we use US
tickers and several of these names saw
The Low Cost Producer Basket: Weekly performance
improvement on Friday on their Canadian and comparative to GDX control
25% listed tickers) as well as a negative
20%
reaction from gold on the Greece hoo-hah
15%
(which was jawboned in the mainstream,
10%
even though it shouldn't have surprised
anyone) but whatever the reason might 5%
be, here we jolly well are. Just three of 0%
out ten names are showing green ink -5%
-10%
these days, which is probably the fairest
way of gauging the fail so far.
It was light trading last week and
although all ten dropped, the typical 2% or
3% loss was nearly across the board which
signals a tidal move, rather than
stockpickers preferring this-or-that. The
only real outlier of the lot was Pan
American Silver (PAAS), which dropped
5.0% on the week and hit low 52 week
lows.
Meanwhile, our basket maintained its rough
2% advantage over the GDX control.
Pan American Silver (PAA.to) (PAAS): On musing on just why PAAS has had a rougher
time than most recently, I don't think it's due to any upcoming nasty surprise in the production
numbers because for one thing PAAS is one of
the latest of the whole bunch to report. So it
has to be a new round of aversion to silver
exposure from the larger instos, what with this
being one of the most widely held silver stocks
out there.
As we noted the last time the stock got
mentioned in a small write up at this point.
PAAS only just qualifies for this basket these
days because a producer it is, but low cost is
up for debate. Last time $17/oz silver made it
a marginal producer, this time around we're
staring U$15.50 and $16 straight in the face.
That can't be good.
Regional politics
Argentina: The Buenos Aires vote today
Today Sunday July 5th sees Buenos Aires city (aka Capital Federal, or BsAs CapFed, or CABA, or
variations thereof) vote for its new city mayor and also-rans aside, it's between three main
contenders. Well in fact it's a shoo-in for one of them but we'll get to that in a second. The
three contenders are:
24
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 ht5luj
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 ht5luj
|
source: ikn calcs, NYSE/Nasdaq data

Horacio Larreta (PRO): Larreta is the dauphin to current mayor Mauricio Macri, who's the head
of the PRO party and running for the job of President this time, of course. He's out in front in
the polling with around 45% of voter intention. That's not enough to win in a first round, as
50%+ 1 vote needed for that and so it looks like he'll go into a seocnd round run-off.
Martín Lousteau (ECO): Lousteau was Cristina Fernandez de Kirchner's very young Minister of
the Economy when she first became President in 2007, but those two have long since fallen
out. He's now 44 years old and running for Buenos Aires mayor on an opposition platform to
the government in a small centre-right wing BsAs city-specialist party. Lousteau is polling
around 25% to 28%, depending on which pollster you believe.
Mariano Recalde (FpV): Recalde is the candidate from the government 'Frente para la Victoria'
(FpV) ranks, a faithful follower of President CFK and is polling around generally accepted 22%
or 23%.
With those three names in place, here's the need-to-know about tomorrow's vote for the next
mayor of Buenos Aires:
• Larreta will win. He'll probably need a run-off (and most likely vs Lousteau) to do it, but
he's a stone-cold cert for the job. The PRO party's brand of reasonably straight and
orthodox right wing politics is the exact recipe for the capital city (that lies inside the
larger province, don't confuse the two
• The capital city of Buenos Aires (CapFed) is different from the rest of the country, always
has been and alays will be. Those from "Peronist" ranks have never done well there,
neither have incumbent government parties (well, rarely). Recalde is set to lose tomorrow
because he never stood a chance. Lousteau's going to get second spot because there are
enough Buenos Aires citizens (porteños) that don't like Larreta but would never dream of
voting for a Peronist.
• Media always make more of election results from CapFed than they're worth and you can
be sure this time won't be any different, because most of the Argentine media is anti-
government and they'll cheer anything that goes against the current administration to the
rafters.
Which means the bottom line is that you can forget about the result of this vote, no matter how
it goes, because for the purposes of those living outside the country and the city it will make no
difference to the outcome of the national election in October or to any national policy positions
in the years to come. Buenos Aires city has been PRO for the last few years and is set to stay
that way, but have you seen anything done by CFK's crew that's been modelled to please or
appease the neoliberals recently? Outsiders to Argentine politics make the mistake of thinking
what happens in Buenos Aires matters for the rest of the country; it doesn't. Buenos Aires
Province (home to at least 40% of all Argentines) is a hundred times more influential than
Buenos Aires city (home to 2.5m people) and it will forever be that way. So when you hear and
read headline about "Cristina's government defeated in Argentina's capital city" next week,
remember that it is of no importance to the real big vote in October when the government
candidate Daniel Scioli will win the election and become the next President of Argentina.
Colombia: Red Eagle (RD.v) wins community plaudits for San Ramón
A good report (9) on the San Ramón mine being developed by Red Eagle (RD.v) in Colombia
came from that country's widely read Semana magazine dated July 1st, specifically in its
Semana Sostenible supplement on environmental affairs. The title (translated) of the piece is a
question...
"Is the San Ramón Project An Example of Responsible Mining"
...and the subhead goes "After two decades and new mining project has been given the green
light in Colombia. the transparency and building of consensus with the community have been
key to the process".
The report wasn't written by an expert in mining affairs (small tells here and there, such as how
25

RD's 50,000 oz per year San Ramón project is classed as a 'large scale' project) but it probably
benefits from not being written up by a trade hand, rather a reporter on the environmental
beat. The tone of the report is positive and RD.v comes out of it very well, with plenty of details
about its positive relationship with the local community and its respect for local environmental
matters.
The company's Director of Social Responsibility, Thyana Álvarez, is featured as one interviewee
in the note and in her opinion there are two main factors for the success of the project. Firstly,
she emphasizes how since its arrival in July 2010 the company hired a team of professionals in
community relations and kept up communication at all times, which allowed the company to
quickly disactivate any negative propaganda about the project. In her words (translated), "The
error made by many companies is not to work face to face with the community, which can
created a lot of suspicion among people. Then later when mistrust is created it's almost
impossible to revert the situaiton and recuperate credibility."
The second reason according ot Ms. Álvarez is that RD.v understood at an early stage that
there were important ecological and environmental locations on its concession that shouldn't be
included in any mining plan. She goes on to explain how RD.v renounced its right to around
5,000 hectares of cloud forest that was part of its property and concession, but also a very
environmentally sensitive area. The company worked with a locval environmentalist to work out
which areas needed special protection and come the right time, handed back the land so that it
was no longer under any threat (active or passive). Accoridng to Ms. Álvarez, this attitude was
the main reason the company managed to secure its "social licence" from locals.
Bottom line: Red Eagle (RD.v) has gone about things in the right way and reaps the rewards by
getting its permits (and now the financing is in place too) for its mine. All good for the
company, which may have you wondering why I haven't mentioned the company much on
these pages (it's had a word on occasion, but minimal stuff). The way I see it, even before RD.v
got itself involved with Santurban by its recent
hostile offer for CB Gold (CBJ.v) its equity didn't
look particularly attractive. When the financing
deal was done I took a good look and there just
doesn't seem to be much meat left on the bone
for retail shareholders who can only benefit from
equity price rises. There's a lot of financial debt
being carried by what it, in the end, a small gold
mining operation (50k oz Au for eight years) and
that's the drag, never mind what look like several
advantages for the debtholders buried in (what
we've been allowed to see of) the smallprint.
And as mentioned in that, my reticence was
before RD.v decided to stick itself into the potentially lucrative but very trappy California
Vetas/Paramo de Santurbán region via its bid for CB Gold (CBJ.v). That's an area I've learned to
avoid and it's going to stay that way.
Chile's stock market making progress on mining
On Tuesday, Chile's copper (and other metals) oversight body Cochilco and the Santiago Stock
Exchange signed (10) an agreement to collaborate in the promotion of the Chilean stock
exchange and capital markets system, with a view to attracting more junior mining companies
to the country. This is a second recent move by the Santiago Stock Exchange to try an attract
juniors, as earlier this year it began offering free listings to any junior mining company that
wanted to quote on its exchange. A handful of companies have already taken up the offer (as
it's 100% free, it's been accepted on a gift horse basis by several Canadian listed juniors) and
with Cochilco now about to sytart promoting the beneifts of Chile, the hope of the locals is that
Chile's bourse becomes a new alternative source for funding, which will put it in direct
competition with Peru's Lima Exchange, currently the go-to for mining stocks in South America.
26

Colombia: That mining law annulment
On Friday I ran a short post on the blog (11) about Colombia's court decision to strike down a
law passed in December 2014 by the national government. That law was designed to prevent
local governments from stopping mining projects, as it took away from them a type of veto they
had on what could be done with surface land rights in their localities. I tried to sum it up in as
few words as possible in that blog post by saying:
Want that in English?
1) Colombia's mining industry was getting pretty fed up with the way local governments would
block projects from going ahead.
2) The national government tried to pass a law on December 23rd last year to say they couldn't
do it any more by stopping the change of land use.
3) The courts have just said that what the Santos national government tried to push through
(while nobody was looking) is inconstitutional and they can't do it.
Oh dear.
IKN321 back and now for more detail on what this court decision is and what it means. To do
this, I'm relying fairly heavily on the best single report I've read on the matter, which is in
Spanish language and found here (12). Those of you versed in Spanish wh'd like to know more
are strongly recommended to visit that link, you'll get to read a fair and balanced piece that
covers all bases and more.
Decree (decreto) 2691, emitted by the relevant government ministries on December 23rd 2014,
was pushed onto the statute via a backdoor method. It allowed the Mining Ministry to decide on
the measures that would be necessary to protect the environment, particularly those related to
water and water supply, in and around mining projects and mining operations. In effect, it took
away the right of veto to mining projects on specific matters related wither to water use or to
land use from local governments and municipalities (particularly when the mining company
wanted to change the land's designated use, e.g. from agriculture to mining) and the idea to
strip away this veto was because a lot of local government bodies were objecting to mining
projects and operations and didn't want them to happen.
Unsurprisingly, the statute was immediately appealed against by environmental groups and
local government bureaux, including the Tolima region government that plays host to the
unloved La Colosa gold project owned by AngloGold Ashanti, one of the highest profile cases in
the country. As of last Teusday July 1st, the high ranking "Consejo de Estado" (Council of State)
court handed down a judgement to suspend the ministerial decree, which is seen as the first
step to annulling the law. The court has (almost certainly) decided that Decree 2691 in
unconstitutional.
The result of all this is that the government's plan to take power away from anti-mining local
government bodies in Colombia has well and truly backfired and those that would deny permits
to mining companies just got their veto powers back. What's more, the way in which the
government went about its backdoor law change is unlikely to be allowed to run again, which
means locals are less likely to lose out to a sneaky law change in the future.
Market Watching
There's not much in market watching this week because the cruel reality is, there's really not
much of a market worth watching at the moment. Still, here come a couple of items of minor
interest, scraped from the bottom of the barrel.
27

Gray Rock (GRK.v) shows the way it is
"Everything that needs to be said
has already been said. But since
no one was listening, everything
must be said again"
André Gide
One of the themes that comes up among the words written by mining market-watchers these
days is the way all the so-called Zombie Companies refuse to die. For the last couple of years
one of the narratives has been "times are hard---> lots of moose pasture peddlers out there---
> got no cash left --> going up against the wall soon---> hundreds of these damned horrid
companies must die". Or similar. And we've surely seen a few deaths and transformation, but
nothing like the droves of hundreds at a time every quarter end when the moose peddles has to
pay the bills.
For me, one of the reasons there haven't been as nearly as many juniors dying as expected is
contained in this short NR (13) out of one Gray Rock Resources (GRK.v and no, I'd never heard
of it before either). Here's what we got form GRK last Thursday evening:
In other words, the head honcho has funded enough to keep the lights on in exchange for a
whole bunch of shares (that will help dilute everybody else away). And the reason the CEO
President honcho guy can do this is that he, like many others, made an absolute mint by
scamming off the retail sheep in the good years of 2005 through 2011 or 2013. These BS
merchants are so full of cash they can afford to keep dribbling small piece of cash into their
structure, keep the lights on and wait for the good times to roll around again. This isn't like the
1998-2001 post Bre-X period when people jumped out of windows, the founders and runners of
these empty shells are still dining high class and they'll be aorund when gold makes its upturn.
Beware history because it doesn't repeat, it rhymes.
Standard Tolling (TON.v) closes its financing
I was interested to read on Thursday (14) that Standard Tolling (TON.v) had closed the final
part of its financing deal and fully completed its $2.25m raising. According to the company's
blurb, this will give it enough seed capital to start the ore buying cycle off and get into business
on its stage one 100tpd operation.
One of the reasons I'm interested is that I like this model, particularly with the geographical
advantage TON looks like having. Another is that I'm due to meet the company CEO Len Clough
28

next week as part of my trip out to the wild wastes of Lima. As noted last week I'm interested
in TON.v at the moment but nothing more, not in a hurry to buy its stock and I want to do
more DD before making a more informed decision. But I also consider that, on paper at least,
the economics of this operation make plenty sense. Expect more on TON.v in IKN322 next
week or maybe even a lot more, depending on how the meeting goes.
Conclusion
IKN321 is done, we end with bullet points:
• There's a lot to get down in a stock like NGD and try as I might (and I do), I can't help
but get sucked in by details. Interesting ones, potentially decision-changing ones, but
details all the same. Today's analysis is a type of scene-setter and I now know that I
like NGD at the current price enough toi pay more attention, even if I'm not a buyer of
this market just yet. Compared to its current share price and the potential, there's a lot
of asset bang for every equity buck at these levels. Books look solid too, this company
isn't going to look shaky even if it signs the cheques and spends the capex.
• Greece is still far more of a political story than an economics or financials story, so feel
free to watch the handwringers but don't worry too much about its potential influence
on your portfolio. If anything, you should be wathcing the Shanghai stock exchange for
that.
• Not only am looking forward to the several business meetings set up for next week, I
also get to hang with a couple of friends in the evenings there. So that will be fun.
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://chat.ceo.ca/index.html
(2) http://incakolanews.blogspot.com/2015/07/greece-contagion-where-do-these-people.html
(3) http://www.elespectador.com/noticias/medio-ambiente/piden-suspender-titulos-mineros-de-anglogold-colombia-r-
articulo-570145
(4) http://finance.yahoo.com/news/mcewen-mining-addresses-york-stock-203000338.html
(5) http://incakolanews.blogspot.com/2015/07/this-must-really-hurt-his-ego.html
(6) http://www.reuters.com/article/2015/07/03/markets-metals-idUSL3N0ZJ2UH20150703
(7) http://finance.yahoo.com/news/nevada-copper-announces-positive-feasibility-120000028.html
(8) http://finance.yahoo.com/news/reservoir-minerals-executes-joint-venture-100000479.html
(9) http://sostenibilidad.semana.com/medio-ambiente/articulo/mina-san-ramon-nuevo-proyecto-minero-gran-escala-
colombia/33309
(10)
http://www.cochilco.cl/Archivos/destacados/20150630151801_Comunicado%20de%20prensa%20Cochilco%20Bolsa%
29

20de%20Santiago.pdf
(11) http://incakolanews.blogspot.com/2015/07/colombia-court-suspension-of-decree-2691.html
(12) http://sostenibilidad.semana.com/medio-ambiente/articulo/consejo-estado-suspende-decreto-navideno-sobre-
mineria/33318
(13) http://finance.yahoo.com/news/gray-rock-closes-non-brokered-212100415.html
(14) http://finance.yahoo.com/news/standard-tolling-closes-final-tranche-210000833.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
30

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
31

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.
32