IKN #325Premium

The IKN Weekly
Week 325, August 2nd 2015
Contents
This Week: US BLS headsup, Travelling this week, Revisiting an albatross.
Fundamental Analysis: Lake Shore Gold (LSG.to) (LSG) and Teranga Gold (TGZ.to) TGZ.ax).
Stocks to Follow: Overview, McEwen Mining (MUX) (MUX.to), Minera IRL (IRL.to) (MIRL.L),
B2Gold (BTG) (BTO.to), Teranga Gold (TGZ.to) (TGZ.ax), Dalradian Resources (DNA.to),
Phoscan (FOS.to), Lake Shore Gold (LSG.to).
Copper Basket: Overview, Metminco (MNC.ax).
Low Cost Producer Basket: Overview, Five stocks file earnings, Barrick (ABX)
Regional Politics: Two more from Tia Maria, Argentina: An interview with Carlos Espinoza of
the TSX, Ecuador Loma Larga update, Peru: The Matarani port upgrading its copper
concentrates capacity.
Market Watching: Midas Gold (MAX.to): September 18th 2015 is a date for the diary,
Dealflow: First Majestic (AG) (FR.to) and Silvercrest (SVLC) (SVL.to) Oceanagold (OGC.to) and
Romarco (R.to), Endeavour Mining (EDV.to): A good 2q15, Standard Tolling (TON.v) updates,
Almaden (AAU) (AMM.to): The spin out is now with us, New Oroperu (ORO.v) redux.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
US BLS headsup
Coming around again, Friday brings the latest installment of the most-watched dataset in the
USA, the BLS employment report. Current consensus is +223k and 5.3% for the two headline
numbers you know so well. Therefore the standard drill is advised, keep an eye on Calculated
Risk (1) or your preferred source for reliable and independent macro USA for refinements and
results over the week.
Travelling this week
Brief reminder: Your author is visiting the Tinka (TK.v) Ayawilca property in the days ahead,
with the trip starting before dawn Thursday August 6th and finishing after dark Saturday August
8th. This means two things:
1) There will be little or no posting on the blog those three days. Probably none.
2) As noted previously on these pages, next Sunday's IKN Weekly edition may turn out to be
next Monday's edition. I'll try to get it out Sunday as normal, but depending on how much there
is to be done and written I may claim Monday August 10th as well and send it that evening.
But whatever happens, expect a report on what TK.v has up there.
Revisiting an albatross
The intro to IKN319 on June 21st, 'Regarding albatrosses and necks' contained these words as
just part of the rant that day:
1

"...the real message I want to get across is this:
A) Nothing is going to happen in the metals market until gold takes off.
B) Gold may do something in 2015, but it's unlikely to happen before the end
of the Northern summer. That's post-Labor Day, that's 3q15, that's going to
feel like a loooong time from today in late June.
C) Don't waste your money on mining sector commentary.
We've now seen the back of the last days of June and all of July, we're into our 2015 globally
warmed August, red in tooth and claw. And I wasn't joking when I wrote those words in June.
Fundamental Analysis of Mining Stocks
This week we consider the 2q15 financials filed last week by two of our gold producer positions,
Teranga Gold (TGZ.to) (TGZ.ax) and Lake Shore Gold (LSG.to) (LSG).
Lake Shore Gold (LSG.to) (LSG)
Let's do the easy one first. LSG came in with a quarter (2) that was generally regarding as "in
line" by just about all those anal ysts covering the stock (this is one of the few names we hold
that's widely covered, only B2Gold beats it) and rightly so. The TL:DR on LSG this weekend is
that the company's in shipshape condition, you get profitable ops and the interesting growth
and exploration side as well (and according to Friday's other newsflow (3) they've also snagged
the Temex merger deal too, that's not a surprise as noted in previous editions).
NB: Please remember that as LSG.to operates and reports in
Canadian Dollars, that's the default currency in this LSG analysis.
So to the charts, starting with balance sheet items. Here's the main assets chart which shows
that very slight upwards incline that's been the
story since the 4q13 impairments. LSG.to: Assets
900
800
700
The fixed asset value has been reasonably 600
steady-state, what matters is the current assets 500
and as these two charts below show (would you 400
prefer cash or working cap, sir/madam?) 300
liquidity is ever improving. We're now over 200
$81m in cash treasury and $68.4m in working 100
0
cap, more than enough for the needs of this
company.
2
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
$m fixed
other current
cash & eq
source: LSG filings
80 LSG.to: Working Capital per qtr
70
60
50
40
30
20
10
0
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
source company filings/IKN ests
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LSG.to: Cash treasury per qtr
100
90
80
70
60
50
40
30
20
10
0
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
source: company filings/IKN ests
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If only to nitpick and try and find a little fault in what was otherwise a solid balance, here's the
inventory evolution which shows something of a drawdown in 2q15. Nothing wowsers and
we're still over $20m total, but there's been a little move from gold in the system to cash in the
coffers during the quarter.
LSG.to: Inventory holdings mat.supply inventory
bullion
$m
stockpiled ore
30 gold in circuit
25
20
15
10
5
0
4q12 1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15 2q15
source: company filings
That makes sense because LSG sold more than it produced in Q2 (42,600oz production,
45,9000 oz sales, a 3,300oz difference). While noting production, grade at 4.2 g/t was lower
than I (and others) expected and is the reason for a slight miss, maybe 1,200 oz lower than the
expected.
Lake Shore Gold: Gold production vs sales, per qtr
60000
55000
50000
45000
40000
35000
30000
25000
20000
3
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
oz Au
Au prod
Au sold
source: company filings
Here's liabilities and the main chart. Little has changed and it's not likely to budge much in 3q15
either. A manageable position.
LSG.to: liabilities per qtr
200
180
160
140
120
100
80
60
40
20
0
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
source: company filings
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LT debt
current debt
Moving on to operational results, here's the main overview chart:

LSG.to: Quarterly Earnings Overview
90
80
70
60
50
40
30
20
10
0
4
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
$m
revenues Prod Costs
deplet/deprec gross profit
source: company filings/IKN ests
We see how revenues dropped compared to 1q15, that from the 6,700 oz difference in gold
sales plus the minor drop in gold price
(CAD$34/oz average). with costs in line, it
means gross profit dropped by $9.1m to
$14.205m. Nothing out of the ordinary there.
For 3q15 we're modelling the same type of
production and costs, but gold selling for
U$1,100/oz (converted to Canadian). Here's
a better look at how gross profits are
evolving, the same dataset isolated:
What that tell us is that LSG is in shape to
survive through a low gold price period if
need be.
Here's the overall costs breakdown. LSG
continues to spend around on exploration
thanks to all that drilling in the 144 Gap zone
and environs, in 2q15 the bill was $6.8m and
that's serious exploration. I hope they continue
spending there too, what with the very decent
success they've had so far. Other production
costs were in line.
Operating cash costs per oz crept up slightly,
due to the slightly lower production schedule
(that grade thing again). Still decent enough
though, we're handily profitable.
LSG.to: Op Cash costs, per qtr
1100
1000
900
800
700
600
500
400
300
200
100
0
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2
LSG.to: Gross profits, per qtr
25
20
15
10
5
0
C$/oz
source: company filings
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
$m
source: company filings, IKN ests
LSG.to: Global costs breakdown
70
60
50
40
30
20
10
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
$m
Prod Costs deplet/deprec G&A Exploration other
source: company filings, IKN ests

That brings us to operating earnings (where unlike gross profits we subtract G&A and
exploration costs). Those dug into revenues as seen, and we're even modelling for a small
operating loss in 3q15 if LSG keeps drilling the way it's been doing and gold doesn't recover.
Bottom line: The soft gold prices are hurting LSG.to: Op. Earnings
26 (with 4q12 and 4q13 impairments backed out)
them all (and let's not play cute, if gold drops
22
to Goldman Sach's U$1k/oz they all go down 18
more), but what you want from your producer 14
is financial and operational strength that will 10
see it through a rough price period. That's what 6
LSG offers with a strong and improving balance 2
-2
sheet, Canadian dollar-based operations that
-6
still return a profit at current gold levels, plus all
-10
its exciting exploration and development arm
that's adding real asset value to the company.
The 2q15 numbers came in as expected and I
still say this is the most obvious thing for Goldcorp to spend its new cash pile on. Easy hold.
Teranga Gold (TGZ.to) (TGZ.ax)
TGZ reported Thursday July 30th (4) and below in 'Market Watching' there's a comment on how
the stock traded and reacted to the numbers. Here we're all about the effect on our model and
its assumptions so if you don't like the numbery charty bits of The IKN Weekly here's the TL:DR
version: TGZ is in fine shape, we're holding this one and if you're braver than I or want a place
to park risk cash in the sector, you could do a lot worse than this one. I'm keeping the formal
83c target price in place but in the very-near-term I expect TGZ to return to the 70c level soon.
Those of you allergic to numbers, feel free to skip a few pages as of now.
So let's get down to it and this is how we're doing today's Q2 analysis; We look at the
production in 2q15 and make new guesses for the quarters to come, we then move to the costs
profile, then stick those together for the P+L results and new guidances using some more
realistic gold prices for the second half of 2015, then wrap up the charts with the balance sheet
items (and once again, they're the most important even if they're the most boring). Finally a
quick price sensitivity check on our new model and then a conclusion.
NB: We're done with LSG and now back to US Dollars as our default currency
5
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
source: company filings/IKN ests
srallod
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Production and operations
We start with the amount of rock moved here and there by TGZ and 2q15 saw a slight
reduction in total tonnages, but overall strip
rate increased (from 2.9X in 1q15 to 3.4X in
2q15) because there was less capitalized
waste mined than in 1q15 (a reminder: that's
the low-grading stuff that TGZ is saving for a
later date and hopes to run a cheap dump
leach operation one day, so it's stockpiled and
added to the fixed assets...personally I think
it's a crock, but it does no great harm these
days on a quarterly basis).
As for the stuff that matters, mined ore
dropped to just under 1.8 million metric
tonnes, while the rock selected for milling
came in at 0.951mmt. We expect "just under 1m tonnes through the machine" to continue into
the next quarters.
TGZ: Ore mined vs ore milled
3.0
2.5
2.0
1.5
1.0
0.5
0.0
6
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse41q4
source: TGZ filings, IKN ests from TGZ guidance
TM
snoilliM
TGZ: Tonnages mined, per qtr
10
9
8
7
6
5
4
3
2
1
0
ore mined
ore milled
We move to the second part of the production
equation, that of gold grades and this shows
grades dropped in 2q15, with mined grade
down to 1.17 g/t Au and milled grade at 1.9 g/t
Au. That was lower than expected but not a
disaster either (it's not easy to work out the
mine sequence at TGZ, the mineralization isn't
very uniform) and we expect that to recover
slightly in 3q15 then improve significantly as
the new higher grading Gora zone comes on
line in 4q15 and boosts overall grade.
For the record, as I'm modelling on 4q15 for
financial purposes later down this analysis today I'm
going to discount the potential for an anomalously
high milled grade at TGZ of the type seen in 4q14. At
this point I'd say it's perfectly possible that the
company gives us another flourishing finish to the year
in the same style as 2014, but by ignoring it we leave
all surprises as good ones, the way we prefer.
With recovery rates still nicely above 90% in 2q15 and
expected to stay that way, we now have the three
ingredients we need in place to gauge production in
21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse41q4
source: company filings, IKN ests from TGZ guidance
TM
snoilliM
cap. waste mined op. waste mined
ore mined
TZG: Mined grade to head grade, per qtr
3.00
2.50
2.00
1.50
1.00
0.50
0.00
31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse41q4
g/t Au
head grade total
grade mined
source: TGZ filings, IKN ests from TGZ guidance
100% TGZ: Gold recovery rates
98%
96%
94%
92%
90%
88%
86%
84%
82%
80%
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse41q4
source: TGZ filings, IKN ests

2q15 and estimate the quarters to come. That's here and the numbers above the bars are for
production figures only (it got too busy otherwise)
TGZ: gold produced vs gold sold, per qtr
80000 71278
70000
60000 57350
50000 52368 52090 48598 48643 49392 53049
40000 39857
30000
20000
10000
0
7
31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse41q4
Oz Au
reported Au prod
Au sold
source: company filings, IKN ests from TGZ guidance
TGZ produced 49,392 oz gold in 2q15 and sold a little more than that (50,074 oz). The
company also reaffirmed its guidance for 2015 to between 200k and 230k oz gold. As the first
two quarters have brought 98k of production and the guidance is reaffirmed it means the
company is factoring in better production for the seond half of the year. You get no argument
from these pages on that, what with Gora about to come on line, so we're assuming production
to improve to slightly over 53k in 3q15 and then 57.4k in 4q15, which if spot on (it won't be)
means an annual rate of 208,435 oz, at the lower end of the guidance range but still inside it.
Bottom line: We're going to get more gold from TGZ in the second half of 2015 (and 2016 for
that matter) and as the main difference will be grades, costs aren't going to rise much in
absolute terms and they're very likely to drop on a per-ounce basis. And on that subject...
Costs
Here's the first chart, which tots up the P+L items that are filed under the general term of
costs. COGS dropped nicely in 2q15, that will
TGZ.to: Costs profile
increase slightly in the two quarters ahead as 80
Gora starts up (it's further from the mill, so 70
more fuel per tonne) but we're modelling for 60
G&A and finance costs to stay as per. 50
40
Here's how mine production costs and total 30
costs have got on in the last seven quarters, as 20
filed by TGZ (the difference between the two is 10
basically inventory adjustments). TGZ is doing a 0
great job of controlling the costs on the job
which bodes very well.
TGZ: mine production costs vs total reported COGS
$m
Mine prod costs
60 Total COGS
50
40
30
20
10
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15
source: company filings
31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m Finance costs
G&A
COGS
Source: TGZ filings, IKN ests

To round off this linking section, here's the cash cost per ounce evolution, with best guesses for
the quarters to come.
TGZ: Total Cash Costs vs All In Sustaining Costs per Oz Au
1200
1100 1060
1000 954 948 940 920
900 850 813 815 781 841
800
711 696 711
700
598 609 602 610 600
600
500
400
300
200
100
0
8
31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse41q4
tot cash cost
AISC
source: TGZ filings, IKN ests
Quarterly P+L results plus forecasts for the two quarters to come
We start looking at the financial results via this chart below, because rather than take another
round of flak about potentially generous gold price assumptions going forward we're going to
bow our head, tip our hat to cruel reality and factor in a lower price for the two quarters to
come:
TGZ Realized price for gold vs LME fix avg, per qtr
1350
1300
1250
1200
1150
1100
1050
1000
950
900
31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse41q4
U$/oz Au
realized price
LME avg
source: TGZ filings, IKN ests
please note cut-down Y-axis on the above chart
As above in the LSG piece, we're assuming gold priced at U$1,100/oz in our current quarter for
what follows in this TGZ analysis. We then use U$1,150/oz gold for 4q15. The idea is twofold,
firstly to show realism to today's market and also to show you something that came as a bit of
a surprise to me fro the Q2 numbers; that TGZ has done a good job in cutting its costs in both
relative and absolute terms so when the increase in gold production comes on line later this
year it's still going to be profitable at the new lower prices. As mentioned a few times, including
last weekend in IKN324, my investment thesis for TGZ was based on a company with a profit
"tipping point" of between U$1,150/oz and $1,200/oz gold (and the 83c target on U$1,250/oz
gold). That now looks too conservative and that's a good thing.
So to the earnings overview chart (below) which I've cut to the last eight quarters to make it
more readble this time. Revenues of $60.064m in 2q15 was fine and when you check that
COGS number of $43.094m, look back again at the small separate section on COGS above
because this is a key for the next quarters as well. With costs controlled, 3q15 and its
assumption of U$1,100/oz (on 53k oz gold produced) brings in more than enough to cover
costs. Then as production expands in 4q15 (plus $50/oz extra for each ounce) margins get
good again. In short, the costs profile now at TGZ means that either production has to be very

bad in a given quarter or the gold price willhave to slump badly for TGZ to operate at a loss.
TGZ.to: Quarterly Earnings Overview
90
80
70
60
50
40
30
20
10
0
-10
9
41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m revenues
COGS
gross profit
source: company filings/IKN ests
And that above is the most important thing from TGZ's 2q15 numbers. As for operating
earnings, here's those plus guidance for the next two quarters in cash and in per share terms
TGZ.to: op. earnings per share
0.10
0.08
0.06
0.04
0.02
0.00
-0.02
-0.04
We're forecasting TGZ to finish with operating earnings of 13c/share in 2015, making the
current 61c share price (aka U$0.465) look crazycheap. Or if you prefer your EPS with bottom
line net here's that chart (right):
Though it's not the best straight line
comparative as TGZ has only recently started to
pay corporate tax in the last quarter and a bit.
Still, it's forecasting 10c/share and that's a P/E
of less than 5X for a producing profitable mine.
Seriously, what do you need to hear to own this
stock? That they're giving away soft toys with
every 1,000 share block you buy?
One final table before checking the balance
sheet items, this one which (by request) shows
the price senstivity of TGZ to gold. I've picked the forecast 4q15 quarter as the most
representative and therefore the baseline is U$1,150/oz gold. As you can see, operating profit
disappears at $950/oz gold and I'd say that TGZ would be good for better-than-breakeven at
U$1,050/oz.
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
cents TGZ.to: operating profits, per qtr
35
30
25
20
15
10
5
0
-5
-10
-15
source: company financials/IKN calcs
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m
source: company filings, IKN ests
TGZ.to: Net earnings per share
0.10
0.08
0.06
0.04
0.02
0.00
-0.02
-0.04
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
cents
|
source: company financials/IKN calcs

4q15 metrics at different gold prices (all U$)
Gold price Revenues Gross profit Operating profit
$950 $54.5m $5.5m $-1.0m
$1000 $57.4m $8.4m $1.9m
$1050 $60.2m $11.2m $4.7m
$1100 $63.1m $14.1m $7.6m
$1150 $66.0m $17.0m $10.5m
$1200 $68.8m $19.8m $13.3m
$1250 $71.7m $22.7m $16.2m
$1300 $74.6m $25.6m $19.1m
assuming IKN 4q15 production forecast of 57,350 oz gold
Balance sheet items
What I care about here is to see whether TGZ is maintaining cash liquidity. So a quick nod in
passing towards the main assets and liabilities charts which show the majority of "things" at
TGZ are in the long-term fixed columns.
TGZ.to: Assets
800
700
600
500
400
300
200
100
0
This chart (right) with market cap at
end each quarter compared to the
company's book value shows how
the two have been wildly out of kilter
for at least two years. TGZ hasn't
taken any impairments and it's high
time they got round to doing so, in
order to make the books more
honest. Today is not 2013 and gold
plus the machinery to dig it out the
ground simply isn't worth as much.
Market cap shows that.
Here's a close-up of the fixed assets,
$m TZG: Non-current assets
700 other non-current assets
goodwill 600 l/t ore stockpile
500
400
300
200
100
0
4q12 1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15
source: company filings
10
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m TGZ.to: Liabilities per qtr
fixed 250
other current 225
cash & eq
200
175
150
125
100
75
50
25
0
source: TGZ filings
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
source: company filings
srallod
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LT debt
current debt
TGZ.to: Market cap versus book value
600
550
500
450
400
350
300
250
200
150
100
50
0
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 WON
$m
mkt cap at qtr end
book value
source: company filings, TSX data
$m TGZ: Ore stockpile value, per qtr
120
l/t ore stockpile 110 n/t ore stockpile
100
90
80
70
60
50
40
30
20
10
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15
source: company filings

which include the "long-term ore stockpile" (another reminder about that low-grading stuff that
TGZ is saving for a later date) which helps pad out those assets and carrying value. Ho hum.
This below is more interesting to us, the current assets and a little on how the totals break
down. As you can see cash is a solid part of the mix, as is bullion inventory. TGZ tends to keep
fuel inventory high due to its remote location and the resulting logistics.
TGZ: Current asset breakdown
other current
other inventory (fuel/supplies/etc)
$m gold inventory (bullion, in circuit, n/t stockpile)
cash & eq
120
110
100
90
80
70
60
50
40
30
20
10
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15
source: company filings
Here's the same dataset with forecasts for the next two quarters. Cash treasury stood at
$38.7m at end 2q15 and our model forecasts that to rise, what with profits in the future even at
the new lower gold prices we're seeing today (see above)
TGZ.to: Current Assets
160
140
120
100
80
60
40
20
0
11
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m other current
cash & eq
source: TGZ filings
Moving to the other side of the equation and current liabilities, most of the total (eg $76.359m
as at end 2q15) is made up of trade payables (e.g. $49.493m as at end 2q15)...
TGZ.to: Current Liabilities per qtr
140
120
100
80
60
40
20
0
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
source: company filings
srallod
fo
snoillim
...so looking at those more closely (below) gives us an idea of the potential for liduidity drain.
What we have is a company that pays its dues in a regimented order (eg 1q15 the suppliers of
fuel, then 2q15 the government royalty) and the whole is kept nicely under control. All good.

TGZ: Trade and other payables
(i.e. near-term run-of-mine financial liabilities)
70
60
50
40
30
20
10
0
12
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2
$m A/cs payable to Senegal
Govt royalties
source: TGZ filings
sundry creditors
trade payables
The other "big one" on the current liabilities is the money owed on the stream to Franco
Nevada (FNV) and you can see how that works on this chart:
Booking the stream: How the Franco Nevada (FNV)
liability sits in the TGZ balance sheet
140
120
100
80
60
40
20
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2
U$m
deferred revenue (l/t)
deferred revenue (n/t)
source: TGZ filings, IKN ests
As the stream gets paid down little by little, there's always a $21m (and bits) current liability
carried, while the long-term debt on this shrinks. That's exactly how it should be, but means
that $21m liability is going to be a part of this balance sheet for many moons into the future.
The takeaway? TGZ is in very good financial shape. All the cash it needs and operationally very
sound. It wouldn't like to work under a gold
price of $950/oz but if that negative came to 50 TGZ.to: Working Capital per qtr
pass this mine wouldn't shut up shop, it could 40
continue to operate for literally years without 30
cash being crunched.
20
10
Working capital? Yep we're cool but it's best to
0
check and show the chart as well.
-10
-20
Conclusion: I've gone on much longer than I
expected to with this TGZ analysis, but in the
end for good reason. This is a better and more
efficient operation than even I suspected and
its 2q15 numbers show that clearly. With the production growth coming soon it will be able to
stand current (or even lower) gold prices and still remain profitable and the current market cap
makes it look a snip.
If you want a first-line stock that will benefit from a rebound in gold, look no further. Rock solid
financials and a lot going for it operaitonally. And darned cheap.
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
source company filings/IKN ests
srallod
fo
snoillim

Stocks to Follow
Six of our fourteen open positions put in gains on the week (TGZ.to, SAM.to, ATM.v, DNA.to,
IRL.to, REG.v) and one other stayed unchanged (LGN.v). that means seven registered a weekly
loss (BTO.to, LSG.to, MUX, MUX trade, FOS.to, LRA.v, FCV.v) and of those the biggest downer
in percentage terms was Lara Exploration (LRA.v down 14.0%), though the continued
weakness in B2Gold (BTO.to down 5.3%) was the one that hurt the most where it really
matters. On the bright side, best percentage wins came from Starcore (SAM.to up 15.0%),
Minera IRL (IRL.to up 14.3%), Teranga Gold (TGZ.to up 13.0%) and Atacama Pacific (ATM.v up
12.9%) and while most of those were sharp rebounds from oversold pennyplays with low
volumes, the move in Teranga was particularly pleasing to witness.
We have 14 open positions in our 'Stocks to Follow' list, one less than our self-imposed
maximum number. A paltry four are in the green, one is unchanged, nine are in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICK
B2Gold BTO.to STR BUY C$2.17 12-sep-14 C$1.42 -34.6% 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$1.10 5.8% Will be bot out, bullish
Teranga Gold TGZ.to buy C$0.55 15-feb-15 C$0.61 10.9% Good prod. 83c tgt
McEwen Mining MUX hold U$1.09 25-jan-15 U$0.73 -33.0% Brave/foolhardy trade buy
McEwen Mining MUX SPEC BUY U$0.695 21-jul-15 U$0.73 5.0% Separate nearterm flip
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.115 -4.2% Also "land grab", tgt 19c
Land Grab Stocks (in current order of preference)
Phoscan Chem FOS.to hold C$0.28 29-mar-15 C$0.28 0.0% 36c/share of cash, can add
Atacama Pacific ATM.v spec buy C$0.19 26-apr-15 C$0.175 -7.9% Spec buy, cheap adv proj
Legend Gold LGN.v hold C$0.085 01-mar-15 C$0.035 -58.9% Spec buy but v small trade
Lara Expl. LRA.v spec buy C$1.15 08-apr-12 C$0.215 -81.3% 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$0.86 34.4% Nov'14 tgt $1.25, top Au expl
Minera IRL IRL.to hold C$0.21 22-jul-12 C$0.08 -61.9% Tgt jun'15 23c, avged down
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.20 -13.0% tgt 50c, 3q15 PEA
Regulus Res REG.v spec buy C$0.30 06-apr-15 C$0.27 -10.0% 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
First Majestic AG jul'15 U$10.51 10-aug-14 U$4.55 56.7% horrible failed trade
NovaCopper NCQ.to jul'15 C$1.05 09-apr-14 C$0.50 -52.4% no more Cu exposure, sm sell
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
Now for some notes on current basket stocks though not so much to say this weekend, we're
still in the grip of the moves in gold on a weekly basis.
McEwen Mining (MUX) (MUX.to): Yeah I thought I was clever on Monday morning as MUX
shot off into the 80s, fortunately the smugness soon wore off. MUX then settled to trade at-or-
13

around 75c (a reasonable base under the circumstances) but then came downside shenanigans
late Wednesday and Thursday with somebody keen on dumping the stock at the closing bells
(and the attacks coming on the NYSE
listed stock, not the TSX list).
By the time Friday was done the stock
was at 73c, which means we're still lightly
in the green on our new near-term trade,
still deeply in the red on the larger
investment position.
In other news, on Wednesday July 29th
Rob McEwen gave a ten minute Skype
interview with Australia's biz newswire
channel ABN, which you can see on this
link (5). It was one of those pumpy
interviews with mostly puffball questions
that are designed to allow the CEO to extol the virtues of his company and as McEwen both
likes those and is good at them, love and hearts were all around. But there was solid content as
well which means it wasn't a waste of my time watching it. First CEO McEwen confirmed that
the two feas studies (Gallo 2 and Gold Bar) were underway and coming out in next six months.
Then came the "yes we're operating at a profit at El Gallo I" opportunity and other nice things.
But to his credit, the intereviewer dis ask (and insist) on an interesting tack of questioning, as
to whether MUX (like GG did when it was run by McEwen) would stockpile its production rather
than sell it. It took a couple of shots to get Rob McEwen to address the issue directly, so let's
credit the interviewer with more gumption than most in these circumstances. When he
answered, CEO McEwen said that though he'd like to stockpile in the same way he (they) did at
Goldcorp during his tenure there, current circumstances at MUX mean that holding bullion isn't
on, it's better to put money into projects. He went on to explain the company is aiming to
develop smaller sized and smaller capex projects (and that's Gold Bar over Gallo 2, folks).
Aside from that, which was probably the main event, other items mentioned (bullet points):
• He goes on about his own valuation thesis for gold and silver (much higher), using the
samo samo he always trots out about fiat doom and suchlike.
• Some mention made of the robbery and how that's now resolved. Fair enough
• McEwen says investors will come back to miners (and juniors) when there's a chance to
make money, which is obvious enough but it's also true. There's no need for "non miners"
to be interested in this setcor today.
• He says he's very close to the bottom of the market, which for one thing is book talking
(he makes a pitch for MUX and its high beta later) and for another is hardly the first time
McEwen's said this over the last two years.
• When asked about the risk of losing the MUX NYSE listing, he said, "I think we'll be able to
preserve our listing there". He then gives it the jam tomorrow talk, not very convincing
• McEwen thinks MUX is worth $1.50/share in current environment. That may be on the
optimistic side, but I can't moan too badly about that call as I see $1.20 to $1.30 myself.
• There was quite a bit of talk about MUX's 100% owned Los Azules copper project. He
compared it to Taca Taca (saying Taca Taca went for nearly half a billion and Loz Azules is
probably worth 2/3rds that, he then goes on to say that uncertainty about the argentina
presidential election is probably affecting its valuation, which is nonsense. He then Los
Azules is worth $200m. which is no surprise because that's its current carrying value on
14

the balance sheet. But he does also say they'd like to monetize Los Azules in order to pay
for MUX's other projects, which is confirmation of the logic but interesting to hear so
directly. I'll stick with my own $100m tag on this asset.
Overall, ten minutes of insight into the mind of McEwen, useful though not essential viewing for
shareholders of the company.
Minera IRL (IRL.to) (MIRL.L): A quiet week for the stock with very little trading, so that
nominal percentage bounce means little.
B2Gold (BTG) (BTO.to): BTO continues to be beaten up badly and it was by far the biggest
drag on my portfolio last week. With the company not reporting its quarter until Friday August
14th (pre-open) we still have what amounts
to two weeks to go before the numbers and
I feel this is part of the problem. As usual in
its June 23rd production report (6) BTO gave
us its preliminary revenues number and
some reasonably ballpark guidance on its
costs, both of which I added to the adjusted
model in last week's update report. Thing is,
everybody else has done that too, it's clear
that BTO's executing to its plan and 2015
production is back-loaded to the last quarter
or two of the year. The result is a junior
that's unlikely to wow its audience with the
Q2 numbers alone and what amounts to a
near-term sitting duck in the three weeks
between the production numbers and the financials (with guidance).
Risking ad nauseam repetition, I added to my BTO and made it Top Pick here at the Weekly
due to what it's going to do in the last quarters of 2015. Darnit I added too early and the sector
weakness has hurt me, but the stock-specific thesis remains intact so see no reason to alter
course.
Teranga Gold (TGZ.to) (TGZ.ax): We do TGZ above, here a small note on how it traded last
week. TGZ reported on time early morning Thursday July 30th (7) and you can gauge the
reaction to its quarter on the ten day chart.
Yep, the market liked what it saw and in my humble opinion the Friday rally was fully deserved
(and said as much in on this post on Thursday (8)).
15

Dalradian Resources (DNA.to): Adding another chart-plus-quick-comment to this week's
edition via DNA, but at least in this case it's positive stuff as DNA rebounded well from the 75c
and 80c level it had dumped to and buyers came in for the perceived bargain. The type of
move you'd want to see from a market willing to buy the quality end of offerings first.
Phoscan Chemicals (FOS.to): An interesting development. On Wednesday 29th July FOS.to
reported (9) the results of the voting at its AGM and here's the table the company included in
the NR (with my red ink scribbled on top):
That's what's called a real live old-fahsioned shot across the bows. One director, Gordon
McKinnon, didn't get to 50% and has submitted his resignation but it's the vote count for the
FOS.to head honcho, president & CEO Stephen Case, that really catches the eye as he hardly
survived either. Compare that to the AGM vote in 2014 when Pres/CEO Case got 94.96% of
votes in favour (63.36m that day) and you'll see why I wrote on the table above that he's not
going to survive a similar vote if he doesn't do anything to wake the company up from its long
slumber.
First in March-ish we had strong jungledrum rumours of action at FOS, which is why I got
interested enough in it to buy some when I did. Then we had the start of the strategic review,
recently the hiring of Cormark as deal advisors and now this "now or never" message from
shareholders (led by the Sprott people, owners of 20.6% of shares out and the main dissenters
last week) to the board. Make no mistake, FOS is about to make its move and deploy that tasty
cash pile somewhere.
Lake Shore Gold (LSG.to): In the same style as TGZ above, as we've done this stock in
detail in 'Fundamentals...' today, a quick word on the week of trading and we're done. LSG
reported pre-open on Thursday July 30th (10) and as the chart suggests, the contents of the
financials were swallowed up by the market as "in line" and didn't have much of an effect on its
trading price (the late Friday slight drop aside, which looks more like flippers closing out
positions before the weekend than anything else), something your author concurred with in
broad terms via his quick comment post on the numbers Thursday morning pre-bell (11). The
main takeaway from the price action is that despite the nerves over gold during the week, LSG
held its support at $1.10 pretty easily and looks solid from here.
16

The Copper Basket
After thirty-one weeks of 2015 The Copper Basket is showing a 27.34% loss to level stakes.
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 351.39 0.92 -54.7%
2 Reservoir Min. RMC.v 3.96 47.55 190.20 4.00 1.0%
3 NGEx Resources NGQ.to 1.17 187.71 140.78 0.75 -35.9%
4 Nevada Copper NCU.to 1.65 80.5 88.55 1.10 -33.3%
5 Copper Fox CUU.v 0.135 402.96 68.50 0.17 25.9%
6 Amerigo Res ARG.to 0.27 173.65 46.89 0.27 0.0%
7 Western Copper WRN.to 0.68 93.68 43.09 0.46 -32.4%
8 Hot Chili Ltd HCH.ax 0.16 333.11 32.31 0.097 -39.4%
9 NovaCopper NCQ.to 0.58 60.15 28.27 0.47 -19.0%
10 Panoro Minerals PML.v 0.295 220.64 26.48 0.12 -59.3%
11 Regulus Res REG.v 0.35 56.39 15.23 0.27 -22.9%
12 Metminco MNC.ax 0.008 2650 10.60 0.004 -50.0%
13 AQM Copper AQM.v 0.06 141 9.17 0.065 8.3%
14 Catalyst Copper CCY.v 0.305 31.41 4.40 0.14 -54.1%
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 -27.34%
The overall basket average actually put in a gain this week, albeit a small one at 0.64%, despite
there being just four weekly winners
(CUU.v, REG.v, AQM.v, COP.to). That's 5% The Copper Basket 2015, weekly evolution
because two of those winners were
0%
outsized percentage pops put in by tinycaps
-5%
on low volumes (COP.to up 25.0% and
-10%
AQM.v up 18.2%) which made things look
-15%
better than they are.
-20%
-25%
Then there were two other UNCH on the
-30%
week (ARG.to, MNC.ax) which leaves nine -35%
stocks that put in losses, but as the worst
of them all was NCQ.to at -9.6% and most
of thoem were pennies here and there, the
damage wasn't too bad...certainly better
than the previous few weeks.
As for copper prices, they tried to rally during the
week on the back of positive China vibes
(Shanghai stock exchange showed some
backbone), only to dive again late week as the
Shanghai casino dumped again. Notably, there
was a lot of rah-rah about the improvement in
copper prices Tuesday and Wednesday on the
newswires, but the drop was barely covered. That
suggests to me there's more bad news to come.
This hourly chart shows how copper got on last
week but I've again added here below the daily
chart, because it gives a much better visual of the
real state of play...there's no change in that
downshift.
17
ht4naj ht11 ht81 ht52 ts1bef ht8 ht51 dn22 ts1ram ht8 ht51 dr32 ht92 ht5rpa ht21 ht91 ht62 dr3yam ht01 ht71 ht42 ts13 ht7nuj ht41 ts12 ht82 ht5luj ht21 ht91 ht62 dn2gua
source: IKN calcs

In fundies news, does the following mean the copper price drop is over? On July 28th this
Bloomberg report (12) talked almost exactly the same talk as these pages in the last few
editions by stating that because the large miners were still making money, the price of copper
hasn't finished its drop yet.
Even with prices near a six-year low, about 90 percent of copper mines are profitable,
meaning most producers have little incentive to reduce output, according to Standard
Chartered Plc. Prices need to fall another 24 percent before major companies begin
cutting back, Bloomberg Intelligence estimates.
“You want miners to throw in the towel, start shutting down some mines,” Kenneth
Hoffman, an analyst at Bloomberg Intelligence, said by telephone. “They keep forging
ahead with all their plans. They’re still bringing new stuff on.”
Ring any bells? This is how we closed this section in IKN319 dated June 21st:
"... also be clear that BHP, FreePort, Codelco, Anglo, Antofagasta and all the
other big players with their big mines aren't about to slow down on their
production rates at their profitable massive mines, because they can afford to
keep the pipes fully opened at $2.00/lb copper and make money. The smaller
guys, the new boys, those under debt constraint, they're all going away if
copper hits new lows."
There was plenty more like that in that section of IKN319 entitled "Time to get out of copper"
and on that weekend, our basket average stood at negative 8.04%. Today it's -27.34% and
check the above weekly tracker chart to see how the sector fell off its own particular cliff.
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
18
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 luj
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 luj
Mt Cu
LME Shanghai Comex
source: Cochilco

Moving to inventories coverage. It's the end of another month (it must be my advancing years,
they're coming around faster and faster) so here above are the regular feature inventory
tracker charts updated for end July 2015. Not that much to report as changing this month, LME
is bossing the field as stocks are depleted from Shanghai.
We take in the regular weekly inventory bullet points:
• Total world copper stocks rose by the almost exactly the same small amount by which
they dropped the week before. The message is clear, hello summer doldrums. Total
world stocks added 3,753 metric tonnes (mt) (+0.8%) to finish Friday at 482,415mt.
• Shanghai Futures Exchange warehouse stocks rose slightly, up 1,866mt (+1.8%) to
finish at 103,117mt. Trading was reportedly light.
• Same story at the LME, where warehoused copper moved up by 2,225mt (+0.6%) to
finish at 345,475mt.
• Comex warehouse stocks dropped a small 338mt (-1.0%) to finish the week at
33,823mt. Nothing special.
Here's the Shanghai-only chart, which is indeed showing more signs of the anticipated flatline.
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
19
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 ht21 ht62
Mt Cu
source: Cochilco
If I were Chinese I'd forget about copper, the stock market and all things financial and go find
a beach to enjoy summer on, too.
Metminco (MNC.ax): Bizarrely, we actually had some real fundamentals news from a copper
junior exploreco last week. That company was Metminco and the news was the unveiling of the
economic study (PEA-level in Australia) for its Los Calatos copper (with moly kicker) project in
Moquegua region, South Peru (that as the crow flies is not that far away from this very desk,
for what it's worth). Less surprising was the way in which it was ignored by the market,
considering the state of the juniors market at the moment and the blown-out nature of this
company's share structure.
You can check out the project and the new corporate presentation on these links (13) (14) and
there's enough to like as well, especially for a A$10.6m market cap company that owns 100%
of the project. MNC has zeroed in on the higher grading material at Los Calatos for its study
which means it's potentially more economic, so the main points for the study are:
• Resource 94Mt at 0.88% Cu and 0.051% Mo (plenty of that is still inferred category)
• A 17k tpd block cave underground mine.
• Capex of U$650m with a two year build-out from construction green light
• Life of mine 17 years, average annual production 45,000 tonnes copper.
• Operating cash costs of U$1.20/lb
• NPV 8% U$285m
• Capital payback 5.3 years

• Project economics use copper at $3.00/lb and moly at $11.16/lb
That last point is the sticker at the moment. Basing a reasonable (but not wonderful) economic
study on $3/lb copper isn't going to form a queue of prospective buyers at the door of any
copper junior. MNC has gone about its job diligently and the Los Calatos project big enough to
interest the mid-tier players, so if the cost inputs or the copper price improves it may be one to
consider. At the moment, MNC.ax with its 2.65Bn shares outstanding (!!) looks like just another
"leverage play on metal" and there are a whole bunch of those to choose from. I pass.
The Low Cost Producer Basket
After 31 weeks, the 2015 Low Cost Producer Basket is showing a 26.3% loss to level stakes.
company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 830 11.05 13.31 -28.1%
2 Newmont NEM 18.90 528.08 9.06 17.16 -9.2%
3 Barrick ABX 10.75 1164.67 8.23 7.07 -34.2%
4 Franco Nevada FNV 49.19 156.5 6.34 40.54 -17.6%
5 Silver Wheaton SLW 20.33 403.75 5.28 13.08 -35.7%
6 Agnico Eagle AEM 24.89 214.12 4.74 22.13 -11.1%
7 Kinross KGC 2.82 1146.2 2.09 1.82 -35.5%
8 Buenaventura BVN 9.56 254.19 1.81 7.12 -19.7%
9 B2Gold BTG 1.62 921.27 0.99 1.07 -34.0%
10 Pan American PAAS 9.20 151.64 0.95 6.24 -32.2%
all prices in U$, using NYSE ticker prices Portfolio avg -26.30%
Despite another overall drop, there's cheer to be taken from this weekend's results here
because indications are that the worst
of the waterfall is now behind us. We The Low Cost Producer Basket: Weekly performance
even managed to log three week-on- 30% and comparative to GDX control
week gains among our ten (GG, SLW, 20%
KGC) with the most notable being
10%
Kinross's big 7.7% rebound, though
admittedly from an extremely oversold 0%
level. The other seven lost ground, -10%
with the biggest hits taken by B2Gold
-20%
(BTG down 7.7%), Agnico Eagle (AEM
-30%
down 7.3%) and Buenaventura (BVN
down 7.3%).
The visual from the tracking chart
shows the reason to like things a little more now; the two or three weeks of steep drops are
behind us, there's cautious reason to believe a rebound can come now.
20
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 ht21 ht91 ht62 dn2gua
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 ht21 ht91 ht62 dn2gua
|
source: ikn calcs, NYSE/Nasdaq data

Buenaventura (BVN), Goldcorp (GG), Agnico Eagle (AEM), Newmont (NEM) and
Kinross (KGC) are all members of our low cost producer basket and they all reported last
week as well. I'm not going to go into great detail about each set of financials because I simply
can't do justice to that amount of multimine companies in the limited space here. What we can
do is consider this five day chart that considers all those stocks against our benchmark GDX and
note that while the sector in general dropped around 2%, the 4+% added by Kinross (KGC)
was a particularly eyecatching performance.
Meanwhile Agnico Eagle (AEM yellow line) and Buenaventura (BVN brown line) clearly
underperformed after returned soft quarterly results.
Barrick (ABX): Zaldívar and earnings next week
First the news from last week and ABX announced on Thursday (15) it had agreed to sell 50%
of its Zaldívar copper mine in Chile to Chile's Antofagasta (ANTO.L) for U$1.01Bn. This kind-of-
but-not-really jived with the information received and passed on by your author the week
before that China Moly was buying 100% for between $2Bn and $2.2Bn.
Though as Bloomie noted that afternoon (16) our intel wasn't so far out because, "...the
process for the joint venture was competitive throughout with China Molybdenum Co. and BHP
Billiton Ltd. among the bidders in the final round, people familiar with the matter said earlier
this month". What wouldn't surprise me in the least would be ABX using the unofficial
jungledrum system to spread misinformation and get the deal it wanted with ANTO closed.
Overall, selling 50% to the Chile miner instead of 100% to the China operator is a politically
smarter move and a little bolder by ABX as well (instead of taking $2bn of cash to pay down
debt it keeps exposure to copper higher). That impression was backed up by comments made
by Diego Hernández, CEO of ANTO at the weekends in an interview with Chile's newspaper of
record La Tercera. Hernández said (17):
"Chile has always been and will always be attractive for the Antofagasta Group of
Companies (ANTO.L). We're from here and here is where we have our production
base. It's here that, with investments of this type, we can enjoy (cost) synergies. We
have the know-how and we know how to work. You need to adapt to the good and the
bad (economic) cycles, with the purchase of Zaldívar we're sending a signal: we're
ready to improve the current nervous business climate, we're making a large
investment in the country."
And if all that sounds as political as economic to you, you're not the only one. It makes one
reflect that Barrick teaming up with a Chilean company makes for better headlines, better
country acceptance and is the politically correct thing to do. After all, we need to consider ABX's
larger exposure to Chile and all that Pascua Lama thing in the background at some point. By
selling to ANTO, I'd wager that Mr Thornton has just picked up some useful local bonus points.
21

In other news, next week ABX reports (post-close Aug 5th) and on that subject, reader LA
writes to ask whether there's a "Thornton Bounce" trade in the offing, as she's noticed the
stock has been heavily pumped by its ex-Goldman CEO at the quarterly announcements. As I
had a feeling that was true too, a little investigation was in order so here's how ABX has traded
around the last five financials filings:
• 1q15: Pre-report U$12.75 / 24 hours later U$13.24 change +3.8%
• 4q14: Pre-report U$12.13 / 24 hours later U$12.71 change +4.8%
• 3q14: Pre-report U$12.68 / 24 hours later U$12.14 change -4.3%
• 2q14: Pre-report U$18.20 / 24 hours later U$17.81 change -2.1%
• 1q14: Pre-report U$17.02 / 24 hours later U$17.29 change +1.6%
Overall, a mixed bag but 1) the last two quarters were positively received and 2) this time
Thornton has a lot to crow about, including
being able to tackle head-on the big sticking
point of debt and liabilities thanks to the sale
of Zaldívar and the Cowal mine too. There's
also the Zijin link up to play on (again, latent
Pascua Lama potential there). Overall I think
there's a decent chance of seeing ABX rally
form its now (near historic) low level and I
may even partake in a little 24 hour flip
myself. You need to be on before the close of
play Weds August 5th if so.
Regional politics
Two more from Tia Maria
There are some signs that the militant protests by locals against the Southern Copper (SCCO)
Tia Maria project in coastal Arequipa are about to ratchet up again. On Friday (18) the
president of the main Tambo Valley residents group, said that he would ask the government for
more dialogue but on one condition; that the government voiced its opposition to the project as
stands! So much for the Aristotelian principles of dialogue and what the word really means...
In other news, according to Bloomberg last week (19) Southern Copper (SCCO) deferred
production growth for the years ahead, with the company now aiming for 1m tonnes copper
production in 2017 (was 1.15m), which compares to this year's target of 742,000 tonnes. It
wasn't said out loud, but the inference is that SCCO is now putting back its timeline on Tia
Maria until 2018.
Argentina: An interview with Carlos Espinoza of the TSX
Carlos Espinosa is Director Business and Corporate Development for the Toronto Stock
Exchange (TSX), in charge of creating new and better opportunities for the TSX and TSXV. He's
lived in Canada for many years but is originally from Mexico. Last week he visited the pro-
mining province of San Juan in Argentina as part of his business agenda, meeting with mining
industry people and the region's main politicos, including San Juan governor José Luis Gioja.
This interview last Tuesday (20) in the regional newspaper "Tiempo de San Juan" with Señor
Espinosa shed some light on his visit and the corporate view the TSX takes towards investment
in Argentina as a whole. For those versed in Spanish it's worth reading the whole thing (it's
longish), but here are a few representative quotes:
22

Carlos Espinosa: "Something that needs to be worked on is the relationship
between companies, capital markets, government and communities, because
if you don't get all the pieces together no project advances. Whatever
happens, you need the support of local and national administrations, financial
resources and community. Because of this, the message is to invite
Argentines to Toronto (PDAC etc) and also to educate the Argentine
government a little more about the importance of how these projects are
financed."
Interview question: On a worldwide scale, how attractive is Argentina for
mining investments?
Carlos Espinosa: "It's complicated to categorize any country because there
are many factors. On the one hand the type of minerals, if there's gold, silver,
rare earths or other base metals, makes variations. One of the most important
aspects that investors look at before deciding whether to invest is the deposit,
whether it's geologically viable and how (economically) effective it can be.
Then also the country's legal and regulatory aspect (is important). If I'm a
foreign investor and come to in this case Argentina, I want to see how easy it
is to come and do business, to remit profits and pay dividends to my
investors."
"But I think Argentina has spectacular potential, if you look from a geological
perspective. Argentina is similar to Chile all along the Andean Cordillera, Chile
has been mining for 500 years and Argentina for 50 years, or in other words
there's any amount of mineral in Argentina that hasn't been mined yet. In a
perfect world and the best government, the best economic situation, the best
workers but with poor geology mining doesn't work. Argentina has geology
that very few countries have, the rest can be arranged by Argentines. It
depends on Argentina itself to create or not ideal conditions for the mining
industry but what can't be created is already in place, the geology.
Interview question: The support for mining from presidential candidate
Daniel Scioli is important?
Carlos Espinosa: "It's a very positive signal."
IKN325 back. Last week was the first time I'd heard of Carlos Espinoza, I certainly hope it's not
the last. The examples above and the full interview show exactly the right man for the job, in
this case Argentina but I'd bet money on him making good impressions most anywhere. You'll
note the diplomacy in his statements that imply Argentina's poor governmental image but focus
on the positives and what can be done to improve things, rather than complaints and brickbats.
He also shows that touch of being able to "talk mining" with non-specialist people, something
else sorely lacking in the industry.
Ecuador Loma Larga update
Last week the anti-mine organizations trying to stop the Loma Larga gold project owned by INV
Metals (INV.to) (previously name Quimsacocha when owned by IAMGOLD) handed in the
signatures they needed in order to call a binding referendum on whether the mine should be
given its social licence. They needed to collect 1,500 signatures, they in fact handed over 2,000
(seems they wanted to be on the safe side) (21). The petition will now go through a revision
process by the nation's electoral body and if it all checks out, the local referendum will happen.
There were also reports from the same locality (the canton of Girón, home to Loma Larga) that
another petition with over 3,000 names who were in favour of the mine was handed over just a
day or so later by supporters of the project. It was quite a good publicity stunt and shows clear
support by at least some locals for the project, but the petition is not legally binding in the
same way as it hasn't gone through the rigorous pre-petition process that's necessary for the
subsequent binding vote.
23

Peru: The Matarani port upgrading its copper concentrates capacity
Matarani port, located on the coast of Arequipa in South Peru, currently has a capacity to ship
out copper concentrates to the tune of 1.8 million tonnes per year. That will soon move up to
2.5m tpy as the U$200m upgrade of port facilities that was begun last in 2014 is due complete
by the beginning of 2016, slightly behind schedule but no cause for alarm. The three main
clients for the new capacity are Cerro Verde (currently finishing its own capex expansion
project), Antapaccay and Las Bambas, which is due to begin production in 2017. Portside, Cerro
Verde has a warehouse with capacity for 150,000 tonnes of concentrate, Las Bambas has a
100,000 tonne warehouse and Antapaccay has a 50,000 tonne warehouse (22).
Market Watching
Midas Gold (MAX.to): September 18th 2015 is a date for the diary
The effective date of distribution for the big (well, in 2015 terms at least) CAD$8m placement
ran by Midas Gold (MAX.to) earlier this year at 42c was May 20th (23) which means that the
19.1m shares, along with their 9.56m half warrants (priced at 60c, valid for two years) printed
in the deal become free trading on Friday September 18th. That's now less than six weeks
away, so this is your first headsup on a likelihood of a Vancouver promo pump job in the
making. What's particularly interesting about this set-up:
1) The size: The $8m placement run by MAX.to is chunkier than most, the right size for the
promotion world to be interested.
2) The timing: The shares and warrants come out of escrow just a couple of weeks after US
Labor Day, traditionally the point where people in the North turn away from vacation life and
get back to serious work. The end of the doldrum period, in other words.
3) The recent newsflow. Or lack of, because there has been virtually nothing from MAX.to.
News releases since May 20th have been minor and we haven't even had an update of the
corporate presentation since April (24). This is a company deliberately in hibernation.
4) Price support. Yes we're down from the 42c placement price, but the 34c we see in MAX.to
this weekend isn't that much of a drop compared to the carnage we've seen in other junior
mining issues in the June and July period (no need to remind this audience about that).
5) The project and company. Unlike many other pump jobs, we can at least look at Midas
and its main Stibnite project and say there's plenty of substance there, it's a fairly decent junior
prospect that has received thumbs up from several serious mining professionals that I trust
(e.g. Brent Cook likes the thing's chances of becoming a profitable mine one day). Today's
headsup isn't really the place for a detailed look (we're about the pumpo here) but I'd direct
24

you to that April 2015 corporate placement again (24) for a decent overview of what it's all
about. What also plays to the promo pump set-up is the estimated timeline to construction and
production because this Idaho-located project still has plenty of permitting hoops to jump
through in order to become an operation, which leaves a relaxed timeline to pump it up at the
moment without treading on the toes of a real mine and its objectives.
6) The people who bought the placement. There were a total of 83 persons (natural or
judicial) who took parts of the placement and in among them are many that are involved in the
typical Canadian pump job. There are more promo and insto names on the list of placement
takers (23) than you can shake a stick at, but by way of a sample...
• M&G Investment Management of the UK ($1m of the placement)
• Sun Valley Gold Master Fund ($412k of placement)
• Jeff Phillips of Global Market Development ($126k of the placement), who also earned
$91k in finder's fees so there are plenty inside his sphere also in this deal
• Casey Research via its KCR LLC fund (25) ($420k of the placement), run in cahoots with
Rick Rule and his entourage.
• Marin Katusa ($42k of the placement)
• Plethora Precious Metals of The Netherlands ($84k of the placement)
• Sprott Funds via Exploration Capital Partners fund ($840,000 of placement)
• Kitco Gibson ($21,000 of placement)
All those and more with most of those less interested in the long-term wellbeing of the Stibnite
property and more interested in the near-term lining of their back pockets. Between them,
noise is bound to be made and we also note with interest that MAX.to was one of the lunch
sponsors at last week's Sprott/Stansberry conference, where those present got a plate of food
while they watched the company present and pitch.
It's never easy to guess when the promo pitch artists will hit the green light on a pump. It may
come before the September 18th/19th escrow date, it may come afterwards. If I had to bet I'd
say slightly before (the timing with Labor Day is unlikely to be a coincidence) and the other
matter here is what gold the metal will do in the meantime.
I think there's a trade on the back of these people at some point, though. If MAX is hanging
around at its current sub-40c levels come the end of August, stealing some of the pump's fire
for ourselves may turn out to be a profitable trade over the course of three or four weeks.
Dealflow: First Majestic (AG) (FR.to) and Silvercrest (SVLC) (SVL.to), Oceanagold
(OGC.to) and Romarco (R.to)
Two interesting deals last week and although I don't like either of them very much we can at
least acknowledge the small uptick in dealflow in the sector, a welcome development. I'm not
going to spend long on these today because none of the stocks involved interest me much at
the moment.
The first deal was Monday morning (26) pre-open between FR.to and SVL.to. Regarding First
Majestic (FR.to) (AG) there's no way I'd go back simply because I've recently managed to sell,
it's down nearly a third from my low selling price, it's an unprofitable silver producer and its
balance sheet looks weak. As for its quarry, Silvercrest (SVL.to) (SVLC) for the first time in
literally years, when it crossed under CAD$1 recently, I thought it wasn't overpriced for what it
is (FR's Neumeyer probably thought the same). Decent assets and has been managed well, but
at current silver prices it's simply not profitable either.
The merger of these two was greeted as seen in this 10 day chart by the market. After its drop
and sharp marger premium rebound, SVLC is now 5% higher from where it was two weekends
ago, big deal. AG's price was obviously propped into the deal late Friday to make the
percentages look more palatable (and in hindsight there's a suspicion that SVLC enjoyed a
bounce on whispers too) but it soon reverted to the slide that was already its trend.
25

Since the deal was announced and disregarding the Monday opening pop, SVLC is 6% down.
This is an unattractive deal, it's Empire Building using somebody else's coin and is hampered by
FR.to continuing weak financial position, with or without the $10m cash that SVLC brings to the
new structure. At current silver prices that will be gone in a quarter and this company sorely
needs liquidity, not assets-for-shares. If you want a bet on a silver rebound it could do as a
vehicle but the bloated aspect to the new proposed company would make other silver producer
companies better bets now (PAAS or even FVI now they've dropped some).
As for the other deal announced Thursday (27) I didn't really understand why Oceanagold
(OGC.to) wanted to pay that much for Romarco (R.to) and still don't, as a look at the ten day
chart (below left) for both shows a big winner and an obvious loser.
However, a wider timescale of 2015 to date (above right) shows that the deal has more-or-less
brought tham back to level pegging on a comparative scale, which is what R.to may have
insisted upon (roughly). OGC has been riding positive feeling and results from its good Didipio
mine (which I liked enough to buy and hold OGC you may remember, though my timing on the
investment sucked) and is one of the rare few juniors that's up on the year. They've cashed in
on that equity by buying the project they most like and adding serious length to its corporate
production mine life.
So yes, on prima facie OGC paid too much but management there is obviously looking at a
miner's timescale, not a trader's.
26

Of the two, OGC+R is more interesting and that's mainly because it's a gold story and a
profitable company (with clear growth intentions too). However, at this point I'm more
interested in the fact that deals are getting done than about the deals in question.
Endeavour Mining (EDV.to): A good 2q15
I'm going to address this company's 2q15 financials on Thursday evening (28) because they put
in good numbers and I've again received several mails from readers (at least three of them
subscribers) asking after a thought. Fair enough, so three things to say:
1) Yes, it was a good quarter for EDV whichever way you look at it. Production of 131,165 oz
for the quarter was strong and puts the company on course to beat the upper end of 2015
annual guidance of 500k oz (255k in first half of the year). Cash costs (AISC at U$898/oz) were
good. Bottom line earnings of $33m (EPS 6c) is very good, though it did benefit from non-ops
items such as tax rebates and that $33m is also before government royalties are paid out (this
quarter $6.32m). Overall liabilities have dropped by $48m in the first two quarters of 2015 and
as most of that is financial debt, that's also good.
2) The reaction to the number on Friday morning was unsurprising (chart left) and EDV.to
kicked back above 50c again. As the 12 month chart suggests (right) there's a reasonable
chance it will float back to 60c, or a near-certainty if gold regains U$1,120 to $1,140/oz or so.
3) This stock is not for me. Wasn't before, isn't today, won't be tomorrow. For one thing it's
been paying down its debt all right, but there's still a hefty $260m on the revolver and that's
true blood financial debt; I'll be the first to say that EDV is addressing that welter burden, but
it's far from addressed. For another I don't trust the management at all (Woodyer is/was the
Giustra partner at Endeavour Financial and they go back a long way), these people are fine
when everything's fine but don't think twice about pulling the plug and leaving mugs like you
and I holding the bag if things go wrong, they're not going to put shareholders first, ever. For
yet another and as pointed out before, I'm reasonably okay with my position in Teranga Gold
(TGZ.to) because they get glowing community and political risk reviews from all and sundry
(including the locals), but it still doesn't mask the fact that I'm plug dumb stupid about West
Africa risk. Here at EDV.to you're exposed to West africa via four operations in Ivory Coast,
Mali, Burkina Faso and Ghana and for me that's a lot of unknowns.
If you like this stock then fine. If you have a better (not difficult) or much better read on the
panorama of political risk it's exposed to then that's fine too. If you can handle (or maybe even
like) being on board with the Giustra gang then that's good too. I'm not the person to ask
about EDV.to and permanently pass, I see too many potential traps and prefer other stocks.
Standard Tolling (TON.v) updates
Last week we had an update (29) from the start-up that we've zeroed in on as the best of the
bunch in the newly mushrooming Peru toll mine scene and as such, a potential trade in the
making. The main takeaways are:
27

• Initial sales are now set for 4q15 (slightly later than anticipated)
• The company is in the final stages of the build-out.
• Capex estimates have moved up slightly, partly due to extra equipment being brought in
and partly due to modest cost creep.
• $1m of the financial debt that was due repaid on December 31st this year has its due date
put back by six months, presumably to allow time for the operation to go cash flow
positive before the money is repaid. This implies we won't see TON.v FCF+ before 1q16.
• TON.v also said in its NR that, "..., the Company is reviewing its working capital needs
over the upcoming months until positive cash flow is achieved " and a bigger hint of "we're
going to raise more cash folks" is difficult to imagine from a junior.
• The company seems to be building up its inventory of ore and getting more deals done
with local vendors of ore, which is good.
Bottom line: In any start-up there are always teething problems and TON.v is no exception.
There seems to have been a few minor permit delays and the perfect-world timelines the
company has had so far are set back a bit. Seriously, for me these things are not a problem.
Finances are tight but they obviously have a decent relationship with the financial backer (the
debt deal adjustment) and they've managed to raise cash via share sales so far, no reason why
they can't go back to the well for a small top-up if needed (very unlikely to be a big one, put
me down for a best-guess $500k).
And yet again I'm impressed with the transparency
here. They've updated and although there's spin and
implication, rather than direct "we're delayed", those
who are following the stock know where TON.v is on
its development track thanks to last week's NR. This
coupled with the good impression garnered from
meeting the people running the thing a couple of
weeks ago (serious and experienced mine people who
have been there and done that in the Andean region
beat out any manner of other teams) adds confidence
to my decision to watch this one carefully.
So far we've been right to like but not buy and the chances of it needing to raise more cash
means we're going to stay that way for the moment. Let's see what TON.v decides to do
financials-wise, then watch for first circuit runs and first pour perhaps in September.
Almaden (AAU) (AMM.to): The spin out is now with us
After announcing our interest and for a while considering a purchase in pre-spinout AMM in May
and June without ever pulling the trigger, we've watched from the outside as this Almaden
Minerals (AM.to) (AAU) deal has taken place. As things have turned out waiting on the sidelines
has been the right call (another one) though let's also state clearly that missing the loser here
was mostly about macro background, less about company (soon companies) per se. AKA luck.
On Friday AMM announced (30) that the deal to spin out nearly everything it has except for the
main Ixtaca development project was now in motion and here's the key section of the Friday
NR:
Almaden anticipates that New Almaden Shares will commence trading on the
Toronto Stock Exchange (the "TSX") and the NYSE MKT on Monday August
10, 2015. In order to benefit from the Spin-Out and receive Almadex Shares,
an investor must hold, or execute a trade to purchase, Almaden Shares on the
TSX or the NYSE MKT before the close of trading on Friday August 7, 2015.
In short, the message from AMM is that if you want the "free shares" of Almadex, be a holder
28

of AMM by the end of this week. As for the contents of the two new entities, by way of
reminder here's how we summarized things the first time this spin-out was mentioned on these
pages, in IKN314 dated May 17th:
The deal is basically to leave Almaden as we know it with its most advanced Ixtaca
project, while spin out just about everything else it owns, including 21 exploration
projects, a suite of 22 NSR royalties, $3m in cash, 1,597 oz of gold bullion and a bunch
of equities held in other companies into the newco, to be named Almadex. For every
share of AMM today the company plans to issue 0.6 shares of Almadex, which means
that with the current count of 73.15m shares out in AMM Almadex would have 43.9m
shares out at conception.
Which is where we stand today, and as the Almaden/Almadex spin out confirmation came post-
close on Frida the intention for a promo on the back of these "free shares" from all the usual
channels is clear enough (IKN reminds you at this point that AMM has a lot of the promo
newsletter and brokerage usual suspects as active participants and cheerleaders, all of whom
having a vested interest in seeing this stock higher). Expect Moriarty et al to publish.
Unfortunately there's no such thing as a free lunch. That's also true for shares.
Back in IKN314, here's how I set out my interest in the potential trade, though while reading
please take into account that my view has now changed somewhat. More on that below:
The basic concept behind the spin-out deal is that AMM isn't getting any sort of value
added for its other properties and assets and in this way they can realize more value
from the current corporate structure. I agree. This looks like an attractive deal that will
add value and it fits right in with my personal 'land grab' thesis that suggests fixed
assets currently priced close to or at zero will appreciate in the months to come. The
downside is that by largely vacating AMM expect for minimal cash and Ixtaca, directors
are obviously planning to run an equity financing to re-fill the treasury of the mother
company and that might weigh on the valuation. However, that's the minor concern
right now and I'm going to watch how this trades very closely in the week ahead, with
a view to possibly taking a position in AMM before the spin-out occurs.
IKN325 back, that was then and this is now. As this 12 month chart shows, the original interest
came when AMM was around $1 and the next week after IKN314 it popped to the
C$1.10/C$1.15 range, which too much for my blood. Since then it's dropped sharply, touching
75c last week and closing at C$0.80.
Here are my concerns with the deal as stands:
29

1) I'm certain that when the new spin-out Almadex starts trading, it's going to be dumped by
those new owners of "free shares". Its projects aren't worth anything inside the current AMM
structure it's true, but they're not worth much anyway. As for liquid assets, those are going to
come to perhaps 12c/share. I see this thing dumping very quickly down to that level, or not far
above.
2) Of everything held by AMM today Ixtaca is the only part I like and to be sure, it's a decent
project. I'm interested, in theory at least, in holding "new AMM" because of that project as long
as the price is right (i.e. cheap). But once this spin-out is done Ixtaca is the only thing that will
be left inside AMM and...
3) ...it's the cash element of this spin-out that concerns me the most. A few weeks ago lumping
"everything but the project" inside Almadex, then new-AMM (Ixtaca only) raising some cash to
continue a modest development program while it waited to be bought out made sense. But the
way things are today, AMM may have painted itself into a corner by taking all the cash away
from the mothership company. Raising today = weakness, simple as that.
That's all the background in place, now for thoughts on a possible trade here and I see two
options.
A) The speculators among this readership may be interested in buying AMM first thing
tomorrow Monday morning and playing the "free shares" psychological interest that could well
develop next week. Personally it's not the type of trade for me and I'll desist but the
opportunity to flip in and out is there, theoretically at least.
B) The one I'm more interested in now is to wait. I wait until the spin-out is done, all assets are
bar Ixtaca are taken away from AMM and the price drops (because it will) to a new level. I then
continue to wait until AMM raises working capital in some shape or form (I'd guess an equity
placement but you never know) because it's going to need some cash to operate on a day-to-
day basis. Once that's announced and the stock finds its price level, I'll revisit AMM and decide
whether it offers value.
The bottom line: Aside from the cash, what's going into Almadex isn't great shakes and we're
going to see that sold down once it starts trading. However, a bit of patience and watching may
enable us to pick up shares in old AMM down the line at a significant discount to current levels.
That will get us a piece of the decent Ixtaca project at a cut price. The other potential trade is
to flip in and out next week and take advantage of the promo that's very likely to come from
the mine chattering class about the "free shares", but you'd need to sell into the buying late
next week and not hold through until the spin-out becomes active. Personally, that quickflip
trade isn't for me, I'm not good enough at trading very-near-term (and I'm on the road next
week). I'll keep my eyes on the real prize of Ixtaca and see if there's a cheap purchase window
in a couple of weeks or months.
New Oroperu (ORO.v) redux
Further to the feature last week, which wasn't much more than a headsup, two items to add:
1) Volumes were admittedly very light, but ORO.v was up 10% last week.
2) Reader JK wrote in with this feedback...
Regarding ORO.v, you wrote...
"...has a 43-101 resource of around 1.2m oz gold at a 0.6 g/t cut off."
Actually, 1.2 is the grade at 0.6 g/t cut off. The resource is 2.6m oz at that cut off, not
1.2m. Almost a million ounces net to Oroperu.
And they have a 2% NSR as well. All academic, sadly, since Barrick is advancing the
project on a geologic time scale.
...to which I readily agreed and admitted that I'd written that headsup note a little too quickly
for my own good. JK was kind enough to add a couple of extra thoughts on ORO.v and Tres
30

Cruces as we exchanged mails (he has held a small position for a while, always a good way of
following an exploreco's (non)progress). He noted that ORO.v has lived off the small amounts
of cash it has and gets paid by ABX for the JV deal for a long time and has managed to keep
the share count tight and reasonably undiluted. That's a good thing. However he confirmed the
dormant nature of the company, as ORO.v waits for ABX to decide to do something with the
asset. That's the type of quiet time that can continue for years, especially in this current
market. On my side of the conversation I mentioned to him that at a approx $2m market cap
and sponsors such as PAAS that are allowing it to remain ticking over it's not a bad "Land Grab"
potential stock.
Overall, this one really isn't out of the question. It's not the type of stock that will ever move up
with the first flush of a rebound/recovery, you'd also need to ride roughshod over moments
when an illiquid stock might dump hard as just one or two people decide to leave a modest
position and dump into the non-existent bids. In other words, all "Land Grab" play caveats
would apply, but it's also exactly the type of tinycap exploreco that gets to survive a prolonged
period of market stagnation and at some point will come out the other end with its deal and its
reasonably prospective project intact.
Conclusion
IKN325 is done, we end with bullet points:
• Teranga (TGZ.to) (TGZ.ax) stuck in a great quarter and though production was slightly
low, it's now a company which has its costs profile by the scruff of the neck and that's
great news in this current market. With higher production levels about to start flowing
through, this is a place to bet on a recovery and I'd go as far to say that it could rally
back to over 70c even with gold where it is. Will go higher if gold behaves, period.
• LSG gave us an in-line quarter, which is all we really require at this point. The idea now
is to watch as LSG makes itself irrestible to Goldcorp and that's going to be via the
exploration upside of 144. Very happy holder here.
• Midas Gold (MAX.to) is setting up for a trade, on the back of the inevitable promo that
will come from the sectors cruddy band of usual suspects. If I could guarantee a steady
or even improving gold price from now to Tuesday September 1st I'd buy some now at
34c and 35c, but I can't do that. Therefore I'll watch through August. Decent chance of
a trade flip though.
• Aside from MAX.to, there are several interesting potential trades now coming through.
Alongside the watching briefs on Almaden and Standard Tolling, New Gold (NGD) is one
I'm still interested in as a topline leverage play if gold starts moving up. We've
discussed others on these pages recently too, the point is that there's value out there
and deals that aren't just cheap, but backed up by real business fundies and profit
plans.
• Next Sunday sees Argentina run its PASO election, which to simplify is basically a dry
run for the October big vote. All eyes there and I'll be back in the office that day to
watch proceedings as I write up on the TK.v trip. That and the US BLS Friday, of
course.
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
31

Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/2015/08/schedule-for-week-of-august-2-2015.html
(2) http://finance.yahoo.com/news/lake-shore-gold-reports-first-103000637.html
(3) http://finance.yahoo.com/news/lake-shore-gold-enters-arrangement-154500933.html
(4) http://finance.yahoo.com/news/teranga-gold-reports-significant-improvement-100500766.html
(5) http://www.abnnewswire.net/press/en/80468/mcewen
(6) http://finance.yahoo.com/news/b2gold-corp-achieves-record-second-073000651.html
(7) http://finance.yahoo.com/news/teranga-gold-reports-significant-improvement-100500766.html
(8) http://incakolanews.blogspot.de/2015/07/the-best-quarter-ive-seen-from-junior.html
(9) http://finance.yahoo.com/news/phoscan-chemical-announces-results-annual-123923823.html
(10) http://finance.yahoo.com/news/lake-shore-gold-reports-first-103000637.html
(11) http://incakolanews.blogspot.com/2015/07/lake-shore-gold-lsgto-2q15-numbers.html
(12) http://www.bloomberg.com/news/articles/2015-07-28/copper-s-tumble-not-yet-over-with-most-miners-still-making-
money
(13) http://www.metminco.com.au/IRM/Company/ShowPage.aspx/PDFs/1999-
10000000/LosCalatosMiningStudyPresentation
(14) http://www.metminco.com.au/IRM/Company/ShowPage.aspx/PDFs/1997-
10000000/MajorPositiveReRatingforLosCalatos
(15) http://www.barrick.com/investors/news/news-details/2015/Barrick-Announces-Sale-of-50-Percent-of-Zaldvar-
Mine/default.aspx
(16) http://www.bloomberg.com/news/articles/2015-07-30/barrick-to-sell-half-of-chilean-copper-mine-for-1-01-
billion?cmpid=yhoo
(17) http://www.aminera.com/index.php/component/k2/item/12549-con-la-compra-de-zald%C3%ADvar-estamos-
mandando-una-se%C3%B1al-queremos-mejorar-el-clima-de-crispaci%C3%B3n-del-pa%C3%ADs.html
(18) http://www.snmpe.org.pe/prensa-y-multimedia-snmpe/sintesis-de-noticias/mineria/%C2%BFqu%C3%A9-se-alista-
en-islay.html
(19) http://gestion.pe/empresas/southern-copper-reduce-previsiones-produccion-cobre-2138704
(20) http://www.tiempodesanjuan.com/economia/2015/7/28/carlos-espinosa-san-juan-solo-habla-mineria-sino-ejecuta-
97657.html
(21) http://www.ecuadorinmediato.com/index.php?module=Noticias&func=news_user_view&id=2818785616
(22) http://larepublica.pe/impresa/economia/19325-puerto-de-matarani-duplicara-capacidad-para-exportar-cobre
(23) http://www.bcsc.bc.ca/ViewDocument.aspx?DocNum=J7S5C6G0C7V4F7T8Y6U2M7R9H7B3
(24) http://www.midasgoldcorp.com/s/presentations.asp
(25) http://www.sec.gov/Archives/edgar/data/1496577/000104216710000198/xslFormDX01/primary_doc.xml
(26) http://finance.yahoo.com/news/first-majestic-announces-friendly-acquisition-110000672.html
(27) http://finance.yahoo.com/news/oceanagold-acquire-romarco-minerals-creating-084000659.html
(28) http://finance.yahoo.com/news/endeavour-mining-q2-2015-aisc-210000760.html
(29) http://www.fscwire.com/newsrelease/standard-tolling-operational-update
(30) http://finance.yahoo.com/news/almaden-updates-spin-timing-sets-200000210.html
32

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
33

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
34

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.
35