IKN #327Premium

The IKN Weekly
Week 327, August 16th 2015
Contents
This Week: The Minera IRL (IRL.to) (MIRL.L) section below, It may be a little brighter but…
Fundamental Analysis: B2Gold (BTG) (BTO.to) 2q15 financials, Dalradian Resources
(DNA.to) 2q15 financials.
Stocks to Follow: Overview, McEwen Mining (MUX) (MUX.to), B2Gold (BTG) (BTO.to),
Teranga Gold (TGZ.to) (TGZ.ax), Dalradian Resources (DNA.to), Lake Shore Gold (LSG.to),
Atacama Pacific (ATM.v), Lara Exploration (LRA.v), Phoscan Chem (FOS.to).
Copper Basket: Overview, Capstone Mining (CS.to), NGEx Res. (NGQ.to), Reservoir (RMC.v).
Low Cost Producer Basket: Overview.
Regional Politics: Nicaragua: Looking to reactivate its mining sector, Peru: HudBay (HBM)
facing community problems, Peru: Another voter intention poll for the 2016 Presidential
election, Two mining stories from Argentina provinces, Dom Rep: A potential issue for Barrick
Pueblo Viejo.
Market Watching: Minera IRL (IRL.to) (MIRL.L): Community protests at Ollachea and
information on the company's internal and financing situation, Peru's stock market dumps hard
Friday, Midas Gold (MAX.to): Still a potential trade.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
The Minera IRL (IRL.to) (MIRL.L) section below
Those of you long Minera IRL, or those of you thinking about going long, should go to the
section at the top of 'Market Watching' today and read it carefully. This weekend brought news
of community unrest and protest around the project and due to that, I've managed to uncover
a lot of things that have been going on in and around the company. However, I also believe this
to be a moment of great opportunity in the stock and if the matter resolves itself as I expect it
will present us with an excellent buying opportunity in the stock. See below for more.
It may be a little brighter but…
In the last six or seven weeks of The IKN Weekly I spent what felt like too much time chewing
over the numbers on McEwen Mining (MUX) while
running a near-term trade parallel to the main
position. Even for my own nerdy taste it got a little
too obsessive to be healthy, but as it happens and
thanks to the luck of a small pop in the price of gold
we get to book a profitable near-term trade. What
was particularly pleasing is that not only did MUX rise
with the rest of the sector of the gold rebound, but it
outperformed nearly all other peers on a percentage
basis and with good traded volumes to boot.
1

As a result the sidelined cash is padded out a little more but aside from the plan to add to IRL
which is on very company specific news, I'm not in a rush to return and buy heavily across the
sector yet because it all rests on whether gold (and/or the metals) can provide further macro-
boost. And if gold drops, even the best companies at deeply discounted prices (e.g. BTO) will
drop further.
I continue to be long the juniors, looking for prices to rise on the longer timescale while
considering opportunity for near or near-ish term trades. I'm even trying to get a little more
optimistic about the next few weeks for gold and join the new round of cheerleading for the
sector, because I'm sure that you too have been tuning into the "get on now!" and "this is it!"
brigade with more frequency as well. However the facts remain that:
1) I don't know what gold's going to do in the next 48 hours, let alone next month.
2) Long I am, but I want to keep cash available.
3) The rah-rah brigade have been wrong so many times it's very easy to tune them out.
4) But if they turn out to be right, I'll jump on a little further down the line.
And as these words are laid down on this bright and pleasant Sunday afternoon I remember the
wisest person I ever met, somebody totally unconnected to the world of finance. One day that
person told me, "You can achieve anything you want in this life, as long as you're willing to let
somebody else take the credit".
Fundamental Analysis of Mining Stocks
In the Fundies section this week we cover the second quarter results published last week by of
two of our most closely watched positions, Dalradian (a so far successful holding) and Top Pick
B2Gold (so far nastily underwater, even on the addition at CAD$2.00-ish that made it into the
Top Pick size of today). To work.
B2Gold (BTG) (BTO.to) 2q15
We last took a close look at BTO in the NOBS update report of IKN324 dated July 26th 2015,
after it had published its 2q15 production numbers and pre-announced a couple of its main
financial numbers. We're not going to cover every single aspect of the company today and
therefore we're leaning on that previous work. Also, we'll spend more time on the things that
are different from my forecasts (guesses) in IKN324 and less time on the things we got right or
close-enough, as that's more instructive
Here's the updated share structure box, with the data as per June 30th 2015 (end Q2):
Shares out: 926.681m
Options: 5.1m
Fully diluted shares: 930.087m
Current share price: U$1.14
Market Cap: U$1.073Bn
Approx cash per S/O: U$0.05
All prices are in United States Dollars unless stated. Forex U$0.80=CAD$1
Last Thursday evening BTO reported its 2q15 numbers (1) and to compare what we expected
with what we got this first little table shows just how pathetic (or not) the IKN guesstimates
turned out to be. What you have are the main financial criteria (top P+L, bottom balance items)
and then the forecasts we made from IKN324 for each item. Next to those we have the real
numbers filed by BTO last week, then come the difference between my guesses and the cruel
reality in both dollar and percentage difference terms. Notes to the table underneath:
2

BTO: Forecasts (from IKN324) compared to reality of 2q15 financials
IKN324 Forecast ($m) 2q15 reality ($m) Difference ($m) % diff
Revenues 136.5 136.506 -0.006 0.00
COGS 122 116.865 5.135 -4.39
Op. Rev 14.5 19.641 -5.141 26.17
Fin.Expenses 19.5 43.08 -23.58 54.74
Net -5 -23.439 18.439 78.67
Current Assets 230 221.33 8.67 -3.92
Cash & ST 120 109.718 10.282 -9.37
Other Current 110 111.612 -1.612 1.44
Fixed Assets 1840 1852.548 -12.548 0.68
Total Assets 2070 2073.878 -3.878 0.19
Current Debt 90 84.559 5.441 -6.43
Long Term Debt 510 547.205 -37.205 6.80
Working Cap 600 631.764 -31.764 5.03
source: IKN ests, BTO filings
Overall I was pretty close on most balance sheet matters, with just two estimates that were too
far out for my comfort, but as it happens neither are major market-movers. The first biggish
miss on the balance sheet was in the amount of cash and ST investments being held by BTO,
because they spent more on the early-stage development at the nee Fekola project than I'd
budgeted. But as that's now capitalized, what you see is a little less cash and a little higher
fixed assets.
The other biggish balance sheet difference was the extra $37.205m in long-term liabilities taken
on. That's because BTO signed a new revolving credit facility (revolver, or RCF) deal, paid off
the other and immediately drew $150m on the new facility, which was slightly more than I
expected. However it does fit in with the company's accelerated plan for Fekola.
On the P+L items, two things were distinctly different from my guesstimates:
1) COGS at $116.865m was a good $5m lower than I'd budgeted, and that's a good thing.
2) Financial expenses were a lot higher than I'd estimated. this was my only big mistake of the
model and the main reason was a series of one-time expenses connected to the closing of
BTO's old revolver and the opening of the new, expanded one. This is the section of the
financials for 2q15 ripped from the document and I've scribbled a few notes in red.
About $15m is connected to the change in status and size of the revolving credit facility, but for
what it's worth all the adjustments are "accountancy only", are non-cash and don't affect the
reality of BTO. Perhaps the most important thing is that the revolver charges are one-time.
So to reiterate, things such as this main operations forecast table from the IKN324 analysis…
3

BTO: operating revenues and costs
200
181.0
180
154.0
160
140 129.0 120.3 114.9 122.4 138.9 115.6 136.5 122.0 125.0 135.0
1 1 0 2 0 0 91.9 98.3 99.0 103.5
80
60 46.0
37.1
2 4 0 0 22.0 15.9 18.9 23.3 14.5 29.0
0
4
41q1 41q2 41q3 41q4 51q1 tse51q2 tse51q3 tse51q4
$m
revenues COGS Op. Rev
source: company filings, IKN ests for FY15
…look very similar in 2q15. However I am cutting the revenues for 3q15 and 4q15 by assuming
U$1,150/oz gold and U$1.200/oz gold for those quarters respectively (the previous forecast
used U$50/oz higher in each case), while costs get trimmed slightly as well
BTO: operating revenues and costs
200
177.0 180
154.9 154.0
160
138.1 138.9 136.5
140 128.7 129.0
120.9 122.6 120.3 114.9 122.4 115.6 116.9 118.0 121.0
120 102.0 98.3 99.0 103.5
100 86.9 87.5 91.9
80
56.0
60
40 34.0 35.7 41.2 36.0 37.1 22.0 15.9 18.9 23.3 19.6 36.0
20
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m
revenues COGS Op. Rev
source: company filings, IKN ests for FY15
The result is an operating earnings per share chart that looks like this:
BTO: Operating Revenue per share, per qtr
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0.00
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$/share
source: company filings, IKN ests
And that's still in line with previous expectations.
Bottom line: It's the same story here after a largely in-line quarter from BTO in which the
bottom line was hit by those one-time non-cash items but the things that matter (production,
revenues, free cash flow, organic growth) all came in just fine.
Because of that there's no change to the 'Top Pick' call on BTO and its price target as stands.
I've said it half a dozen times already but I'm going to say it again; BTO's investment thesis is
all about the performance it's set to put in during the last two quarters of 2015, not the first
two. I'm still kind of kicking myself for buying in too early and taking a hit on my position and
addition, but that thesis remains wholly intact. This company isn't to be judged by this
reasonable quarter, it's time will come first in 3q15 and then the real showtime in 4q15 and

DNA: Share count
180
160
140
120
100
80
60
40
20
0
5
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
beyond. The model still points to a company that will be able to kick out free cash flow, build its
Fekola mine and have money left over. On what it's becoming, BTO is hugely overvalued today
and a deserved Top Pick.
Dalradian Resources (DNA.to) 2q15
Late Friday evening saw our favourite pure exploreco (and my biggest personal position in such
a stock) Dalradian Resources (DNA.to) report its 2q15 financials. Despite the late hour and the
lack of NR to go with the numbers, the contents were very much in line with expectations.
Though with a change in focus at the company as it moves to complete a full feasibility study
(FS) in 2016 instead of a pre-feasibility (PFS) by the end of this year, it's time to consider how
this development might change the company's financial outlook.
It's been quite a while since we looked at DNA's numbers closely, so today you get a handful of
the more indicative charts, all updated and shiny for the occasion, plus a bunch of words next
to each one. Let's start with the basics and here's the up to date share structure top-box:
Shares out: 163.147m
Warrants: 23.656m (avg $1.35)
Options: 8.64m (avg $0.86)
Fully diluted shares: 195.443m
Current share price: C$0.97
Market Cap: C$162.18m
Approx cash per S/O: C$0.22
All prices are in Canadian Dollars unless stated. Forex U$0.80=CAD$1
NB: DNA.to reports in Canadian dollars, therefore it is our default currency in this analysis
Considering the share situation first, the current 163.147m S/O is a decent percentage jump
since we started coverage of DNA.to in 4q13
(and I started owning the thing), back then
the count was around the 90m level. As this
chart (right) shows pretty clearly, DNA has
run three rounds of equity financing since
then, the last one coming in 1q15 when that
Ross Beaty guy bought in and $11.3m was
raised via the sale of 12.556m units a 90c
(share + 1/2 warrant at $1.15). At nearly
the same time, around 10.5m warrants
were exercised which made up the rest of
source: company filings, IKN ests
the S/O change.

3 DNA: Net Loss, per qtr
2.75
2.5
2.25
2
1.75
1.5
1.25
1
0.75
0.5
0.25
0
6
11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2
source: DNA filings **= w/o $16.349m write down
srallod
fo
snoillim
So the share count moves up, but then again so has this:
DNA: Cash treasury
50
45
40
35
30
25
20
15
10
5
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
CAD$
source: DNA filings, IKN ests
Today DNA (unlike literally hundreds of exploreco peers) finds itself in a comfortable funding
position and able to move forward with its very active (even aggressive) development plans.
Cash stood at $36.134m as at end 2q15 and the above chart shows out forecast that DNA will
leave 2015 still with around $20m in the bank. Useful money.
As for other balance sheet matters, nothing out of the ordinary here in the assets chart where
exploration is capitalized and the cash injections at DNA show up in the same pattern as the
shares-out chart.
120 DNA: Assets Breakdown per qtr
110
100
90
80
70
60
50
40
30
20
10
0
The only difference of note is in the current liabilities (I label it "debt" here just to be
controversial, it's not really) where there's a new normal level of $4m to $5m owed out. This
coincides with the ramp-up of development and drilling activity (e.g. drill rigs to pay, EIA
permits to fund, FS permit work to fund) and makes sense, what with DNA now working with
third party contractors as the project accelerates. There's nothing here out of the ordinary, a
standard situation for an active company that's really doing exploration and permitting work.
Moving to quarterly operating results, there's not
much to say about an exploration stage company
that's putting most of its cash straight into the
ground. Here's the ostensible net earnings chart
that shows the "office burn" typically around
$1.2m to $1.4m per quarter.
But that's not really even half the story, as this
composite chart that shows the above as
"corporate expenses" while the line item from the
Statement of Cash Flows "Expenditures on
exploration and evaluation assets" is assumed to be a fair proxy to "field expenses".
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
source: company filings, IKN ests
srallod
fo
snoillim
DNA: Liabilities position 8
fixed 7
other current 6
cash
5
4
3
2
1
0
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m
LT debt
current debt
source: company filings

DNA.to: "corporate vs field" expenses
9
8
7
6
5
4
3
2
1
0
7
21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse41q3 tse51q4
$m
corporate field
source: company filings
That's a better idea of the real burn rate at DNA today, as there's a lot of drilling and such
going on.
This chart presents the same type of information in a different way and it's one I like because it
shows the tight and focused nature of things at DNA.
DNA.to: Your dollars at work
10
8
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
-16
-18
-20
-22
-24
21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse41q3 tse51q4
Net change in cash treasury per quarter
$m Expenditures on exploration/evaluation assets + op. expenses, per qtr
source: company filings, IKN calcs
The green bars note the net drop in cash treasury per quarter. That means as you can see,
when DNA raises a lot of money by a share sale and/or warrants exercise (1q14, 3q14, 1q15)
we get a negative drop in cash, i.e. more money in the bank at the end of the quarter.
Meanwhile in a normal quarter we see the cash burn rate clearly.
The orange bars note the aggregate of the "corporate and field" expenses as per the previous
chart. What we see is a tight correlation between the money spent at DNA and the cash drop,
which is of course how it should be. If we then consider that most of the money is going
directly into Curraghinalt (drilling, community programs, EIA work, FS work etc) it smacks of a
company giving the right bang for your buck. This is of course how it should be at any junior
exploreco worth its salt should operate, sadly it's not always the case but here we're good.
50 DNA: Working Capital per qtr
This brings us to our last chart, working
45
capital, which gets combined with the most
40
informative part of the DNA filings on 35
Friday, the "Going Forward" section of the 30
MD&A. I'm tempted to quote the whole 25
20
block because it's all pretty important, but
15
I'm going to go with a few specific sections
10
instead, if only for brevity. However, 5
anyone long the stock should get down to 0
SEDAR, download their own copy and read
it all.
01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4 tse61q1 tse61q2
source company filings, IKN ests
srallod
fo
snoillim

So the last chart is working capital, and in this case I've stretched out the forecasts for the next
four quarters until end 2q16 (a year from now). At that point we expect working capital to
stand at $7m, assuming no further placement rounds or derivative exercises. We now combine
the information provided by that chart with this first excerpt of the aforementioned MD&A:
GOING FORWARD
Originally, the Company planned to release the results of a Pre-feasibility Study (“PFS”) in late
2015. The PFS is now being transitioned to a more advanced Feasibility Study (“FS”) supported
by an expanded infill drilling program and underground exploration (the “Underground Program”).
Assuming positive results from the EIA and FS, submission of the planning application is now
scheduled for Q3 2016 and the Company is already engaged with the relevant government
agencies in preparation for this.
Translated: There isn't going to be a PFS, there's going to be a FS and it's happening in 3q16
rather than the end of this year. Next, this part:
By the end of 2015, the Company expects the following progress on the main deliverables for the
work program:
• Underground Program – 85% complete, with only the two test stopes remaining
• Infill drilling – 80% complete (24,000 metres)
• Resource update – postponed to 2016, when infill drilling will be complete
• FS – 50% complete
• EIA – 50% complete
This is included here in IKN327 because it gives us a good idea of the burn rhythm DNA is
planning at the project. For example, with 11,000 metres of drilling already completed (it's
mentioned in the MD&A), between August 2016 and December 2015 they plan to drill 13,000
metres, then the final 6,000m needed for the FS in 2016. Finally, this part:
The original budget for completion of the PFS and Underground Program (including 20,000
metres of infill drilling) and partial completion of the EIA was £16.9 million ($31 million) and
spanned the period from September 2014 to December 2015. The revised budget for completion
of the FS, Underground Program (including a minimum of 30,000 metres of infill drilling), EIA and
submission of the planning application is £22.6-£25.6 million ($45.2-$51.2 million) spanning the
period from July 2015 to December 2016. The Company’s ability to fund currently planned
exploration, evaluation and development planning activities, maintain operations and meet its
existing obligations is conditional on its ability to secure financing when required.
And that's as clear as they come. According to company filings and IKN forecasts, if we take
3q14 as the start point and 4q15 as the finish, the expenditure to get to the previously planned
PFS would have been $40.1m and as that includes the corporate side, it fits in well with the
DNA budget and plans (as highlighted, these people are pretty good and reasonably
trustworthy about their development plans). And according to the burn registered plus the
treasury position today, we would have got to end 4q15 with a little under $20 in working
capital.
Here's the thing(cid:1)(cid:1)(cid:1)(cid:1) The new plan means spending an extra $20m and wrapping it all up by
end 3q16 instead of 4q15, which means according to the forecast, unless DNA goes back to
market and raises again between now and 3q16, it's going to get to the end of that quarter
with virtually zero in the treasury.
Put simply: DNA needs to raise more cash.
It won't be right now (unless they decide to do so strategically) and they're not under the gun,
but the numbers don't lie here; unless DNA gets its buyout offer before the FS and the EIA are
complete (remember, we're jumping over the PFS stage now) there's going to be another round
of financing at this stock and as time goes on, that may turn into a significant headwind to its
share price
I'm not a seller of DNA on the information contained in the 2q15 report Friday and
I'm also eyes-wide-open that if gold pops upwards, this one will move up too (and likely in the
front rank of junior movers, if history is our guide. But what I've read and seen this weekend
8

via the financials, the MD&A and my own Excel sheet tells me that the current strategy of "Hits
$1.25 and sell" is the right one. However, all strategies can be revised if necessary and if gold
goes in the opposite direction and fades again, DNA may be one to cull and take profits on. A
lower gold price with negative trending, plus a $1-or-so DNA stock price would probably be the
combo that gets me to sell (too) early.
Stocks to Follow
Thanks to the action in gold, it was a good week for holdings in the 'Stocks to Follow' list. Of
our 12 stocks, nine made gains on the week (BTO.to, LSG.to, TGZ.to, MUX, SAM.to, LRA.v,
DNA.to, IRL.to, REG.v), one was unchanged (LGN.v) and three lost ground (FOS.to, ATM.v,
FCV.v). The biggest percentage winner was McEwen Mining (MUX up 32.5%) which is a good
thing, because it gave me chance to sell the near-term flip position for a tidy profit. Other big
percentage moves were registered by Lara Exploration (LRA.v up 16.3%), Dalradian (DNA.to up
15.5%), Lake Shore Gold (LSG.to up 10.0%), Teranga Gold (TGZ.to up 9.1%) and B2Gold
(BTO.to up 8.0%). The single big percentage loser was Atacama Pacific (ATM.v down 18.9%).
With the sale of the MUX near-term trading position (see appendix 1) we now have 13 open
positions in our 'Stocks to Follow' list, two less than our self-imposed maximum number. A
miserable three are in the green, ten are in the red. That still sucks.
9

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$1.48 -31.8% 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$0.60 9.1% Good prod. 83c tgt
McEwen Mining MUX hold U$1.09 25-jan-15 U$0.93 -14.7% Recovering from lows
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.11 -8.3% 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$0.265 -5.4% 36c/share of cash, can add
Atacama Pacific ATM.v hold C$0.19 26-apr-15 C$0.145 -23.7% 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$0.25 -78.3% 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$0.97 51.6% Nov'14 tgt $1.25, top Au expl
Minera IRL IRL.to hold C$0.21 22-jul-12 C$0.075 -64.3% Tgt jun'15 23c, avged down
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.195 -15.2% tgt 50c, 3q15 PEA
Regulus Res REG.v spec buy C$0.30 06-apr-15 C$0.26 -13.3% Bet on 2016 drill prog.
Closed in 2015 closed close price
Argonaut Gold AR.to jan'14 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'14 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'14 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'14 C$0.075 26-jan-14 C$0.035 -53.3% sm, sold on Cu downturn
Fortuna Silver FSM mar'15 U$4.12 10-nov-14 U$3.75 9.0% Short used as hedge
GoldQuest Min. GQC.v mar'15 C$0.26 27-oct-13 C$0.085 -67.3% given up ghost
Rio Alto Mining RIO.to apr'15 C$2.30 07-apr-11 C$3.57 55.2% Top pick, bot out, big win
Timmins Gold TGD jun'15 U$0.60 19-apr-15 U$0.62 3.3% near-term trade, out of time
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
McEwen Mining MUX aug'15 U$0.695 21-jul-15 U$0.92 32.4% Closed nearterm flip for win
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
Now for some notes on current basket stocks.
McEwen Mining (MUX) (MUX.to): Trading position sold. As per the Flash update
Wednesday evening (see Appendix 1) I cashed in on the near-term trading position taken a
little less than a month ago and booked a neat little profit on the trade. A pleasant development
which means the sidelines have a little more cash to play with come the day.
B2Gold (BTG) (BTO.to): We do BTO
and its 2q15 numbers above. Fundies-wise
the company's doing just fine. As for
trading last week as this ten day chart
that maps BTO.to against the PM and
junior PM ETFs (GDX and GDXJ), it did
just fine and held its own up to Friday,
when it sagged compared to others.
That's a normal-type reaction on reporting
day, people like an excuse to sell in a bear
market and I'd fully expect BTO to make
up that difference next week when it
opens for business.
10

Teranga Gold (TGZ.to) (TGZ.ax): For a while during the peak of the rebound it looked as
though TGZ was going to escape and reach the 70c-or-so level that I consider its current fair
value while gold is where it is. We saw 65c for a while, but it dropped back harder than I would
have liked on Thursday and Friday and closed "just" 9.1% up at 60c (and back in the green).
This looks great fundamental value and I wouldn't bat an eyelid to see it adding another 15%
from here even without any extra upmove from gold. Though the risk is obviously with gold,
because if it goes down again so do they all, TGZ no exception.
Dalradian Resources (DNA.to): We do the 2q15 numbers for DNA in 'Fundamentals…'
above, here pure trade-talk and it was a no-
holds-barred excellent week for the stock. The
three main upmove days saw reasonable
volumes return to the stock for the first time in
a while (to the buying side at least, with 210k
on Thursday the best. The stock found a
natural ceiling at C$1.00 (not the first time it's
stalled there) but I'm not complaining, it was
great to see buyers come for this quality
exploreco and its project as quickly as for any
of the beaten down producers, plus the bonus
of little consolidation selling Friday.
Lake Shore Gold (LSG.to): Frankly, despite its 10% final score I thought that LSG lagged last
week and it sold a little too easily for my
comfort on Thursday and Friday. There are
signs of weak hands and there shouldn't be in
a stock with as much going for it as I think it
has. Rather than the five day chart, this ten
day shows that we're nothing more than back
to where we started two weeks ago
(beginning of August).
Atacama Pacific (ATM.v): Somebody
decided they needed to dump 3,000 shares
late on Friday and decided to do so at any
price. As this three month chart amply
demonstrates, the "you wanna dump this be
my guest" price is 14c and 15c. With the ATM
finished the week as our single big percentage
loser and a blot on the copybook, but its
wafer-thin volume is going to do this to us on
occasion and with the small amount of money
being traded through the name, it's of minor
consequence.
Lara Exploration (LRA.v): It was a big
move up for LRA in percentage terms, but
volumes were very light once again and we're
down at such a low level these days that it
doesn't take much to pop the thing 10% or
20%.
It may be masochism but I still like this stock, having held it all the way down and suffered as a
result I still see no reason to sell the shares (even if there were a healthy market to sell into).
As land-grab stocks go it's one of the best value out there, holding large chunks of very
11

prospective Peru and Brazil land and being valued at next to nothing as a result. With Miles
Thompson heading the company it's in good hands and it's sure to be one of the survivors once
we get out the other end of this tunnel. And that's all I have to say, apart from the inkling I'm
starting to get about adding a few more and averaging down a bit (yes I know, tell me it's a
mug's game it won't be the first time I've heard that).
Phoscan Chem (FOS.to): Not only did FOS drop, but it dropped on volume. The main hit
came on Monday and Tuesday when
875,000 shares were dropped onto the bid
and did this to the shape of the wriggly line.
all the hallmarks of a single holder
liquidating for their own reasons. The rest of
the week saw thin trading at this level and
that's not a surprise. With the type of
springy rebound market we saw. a defensive
position like FOS would have been very low
on the list of most people's choice for alpha.
Mine too frankly, the 26.5c level didn't tempt
me to add in the slightest.
What FOS has is fundamentally strong and
sound value. That's a slower moving current,
but I expect it will bounce back to the 28c and 30c level even without news on the current
strategic review.
The Copper Basket
After thirty-three weeks of 2015 The Copper Basket is showing a 28.35% loss to level stakes.
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 290.28 0.76 -62.6%
2 Reservoir Min. RMC.v 3.96 47.55 197.33 4.15 4.8%
3 NGEx Resources NGQ.to 1.17 187.71 108.87 0.58 -50.4%
4 Nevada Copper NCU.to 1.65 80.5 96.60 1.20 -27.3%
5 Copper Fox CUU.v 0.135 402.96 64.47 0.16 18.5%
6 Amerigo Res ARG.to 0.27 173.65 43.41 0.25 -7.4%
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 39.97 0.12 -25.0%
9 NovaCopper NCQ.to 0.58 60.15 31.28 0.52 -10.3%
10 Panoro Minerals PML.v 0.295 220.64 26.48 0.12 -59.3%
11 Regulus Res REG.v 0.35 56.39 14.66 0.26 -25.7%
12 Metminco MNC.ax 0.008 2650 13.25 0.005 -37.5%
13 AQM Copper AQM.v 0.06 141 7.05 0.05 -16.7%
14 Coro Mining COP.to 0.045 159.37 4.78 0.03 -33.3%
15 Catalyst Copper CCY.v 0.305 31.41 3.77 0.12 -60.7%
NB: HCH.ax & MNC.ax priced in AUD$, rest CAD$ Portfolio avg -28.35%
12

5% The Copper Basket 2015, weekly evolution
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
13
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 ht9 ht61
The overall basket dropped 1.15% to report a new 2015 low as at this weekend, the IKN
decision to get the hell out of the junior copper space six or seven weeks ago is being
confirmed as the right one with every week
that passes. Seven of the basket stocks put
in weekly losses (CS.to, NGQ.to, NCU.to,
WRN.to, CUU.v, ARG.to, NCQ.to) and most
notable among those were the big
percentage losses in Capstone (CS.to down
8.4%) and NGEx Resources (NGQ.to down
13.4%), the biggest market cap stocks on
there and a signal as to how most anything
source: IKN calcs
coppery with tradable volumes worth even
residual cash for instos looking to liquidate
first, ask questions later. We may be seeing
a little cheer creep back into the gold space,
but copper's quite a different matter.
There were two weekly winners (RMC.v, REG.v)
and Reservoir (RMC.v) remains the clear
exception that proves the rule of the copper
junior sub-sector. That bodes well for its
chances.
The other six stocks remained unchanged
(PML.v, HCH.ax, MNC.ax, AQM.v, COP.to,
CCY.v), testament to the complete market
apathy for tinycap copper plays.
Moving to the market for the metal, overnight
Tues/Weds copper dropped below U$2.30/lb
for the first time since the Lehman/subprime
crisis and recovery in 2009, all due to that
"nerves in China" thing again. The nominal
price recovered and traded tightly around
$2.35/lb on the main futures contract
afterwards, but the pattern looks pretty
"managed" and I wouldn't like to be betting
heavily on long coming into the Labor Day
period. The hourly chart above has it's story,
but the main driver is still better seen if we
widen out the timeline. There's a case to be
made for a relief rally I suppose, but until that
longer-term trend is broken there's no need to
go long on this metal, unless you prefer
roulette to investment advice.
Now for the regular weekly inventory bullet
points with data as usual from the excellent
Cochilco site (2):
• Total world copper stocks went up by a
small 3,285 metric tonnes (mt)
(+0.6%), but that was still enough to
pop the total over 500kt for the first
time since May. The total this weekend stands at 502,318mt.
• Shanghai Futures Exchange warehouse stocks put in another rise, up 7,258mt (+6.4%)
to finish at exactly 121,258mt. That's bearish confirmation from last week (more below)

• At the LME, copper stocks dropped slightly to counter that Shanghai shift a little, with
the number settling Friday at 350,325mt, down exactly 2,000mt or 0.6%.
• Comex warehouse stocks slid for the second time in as many weekends, down 1,973mt
(-6.0%) to 30,735mt.
NB: Please note there was a typo in last week's edition. Although the percentage changes and
the Shanghai-only tracker chart were marked correctly, I managed to write "144,000" instead of
the correct "114,000" for the warehouse tonnage at Shanghai in the bullet point. Apologies for
the mistake. And talking of the Shanghai-only chart, here it is:
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
14
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 ht9
Mt Cu
source: Cochilco
We're now up to 121,258mt and this is beginning to look like an demand signal for copper in
China, even before the world gets back to work in September. So, throw another bearish
indicator on the growing pile.
Comments on a couple:
Capstone Mining (CS.to): In IKN319 the call was to get out of the copper space, with part of
that piece saying " the big players happy to run their big mines at full speed because they're
still highly profitable at the current copper prices, but the small players, the medium-sized and
those left holding exploration projects are now being priced out".
In IKN324 we zeroed in on CS.to as a prime candidate for real share price pressure going
forward as copper's price drop started to bite:
"If my scenario plays out, we're not just going to see a few stocks come
under share price pressure, we're going to see companies with weak balance
sheets get overrun by their debt positions and call for bankruptcy protection
and from the state the 1q15 balance out of Capstone (CS.to), this company is
a candidate for such a fate.
"The problem CS has is with its Senior Secured debt, which stood at $298m
as at 1q15. According to the terms of the financing deal, CS has to keep ratio
of debt-minus-pledged-cash to rolling EBITDA to 3:1. In real terms, CS has to
show rolling EBITDA of over $50m or so (debt minus cash at 3 to 1) over its
quarters in order to be in good stead, and as it has some decent quarters in
the bag (in EBITDA terms at least) it's currently in compliance. But as the last
quarter's EBITDA was negative $11m, it's not going to take many more of
those to drag the ratio over 3:1, at which point CS is in non-compliance with
its covenant and could be called into receivership by its creditors."
And indeed the scenario is playing out. Here's a two month price chart which illustrates to
40.6% drop in the share price of CS.to between IKN319 and today:

That's pretty hairy and unlike the precious metals plays, there's been little relief in the last few
days. It's my contention that things have to get worse in the copper space before they get any
better and that probably means a few headline-making corporate casualties before the market
turns around. One of the prime candidates for bankruptcy protection is the highly leveraged
CS.to so you may think this weekend's 76c price is wildly cheap. I think the cheap is going to
get a lot cheaper.
For another example of a distressed mid-sized copper player check 'Market Watching' below
and the piece on HudBay (HBM).
NGEx Resources (NGQ.to): Here's a thought; On June 17th 2014 First Quantum (FM.to)
announced (3) it was paying CAD$470m for Lumina (LCC.v) and its Taca Taca copper project in
Argentina. Now for sure projects are never apples-to-apples, but there's enough to connect
these two projects (high Andes, Argentina, porphyry copper, large capex) to allow some
general comparatives
The day before that deal was struck, NGQ.to had a market cap of CAD$325.5m (CAD$1.93 x
168.654m shares out ). So in rough terms, worth 2/3rds of the buyout price of Taca Taca.
Today NGQ.to has a market cap of CAD$109m, which tells me a few things:
1) First Quantum severely overpaid for Taca Taca.
2) Ross Beaty, David Strang and friends at Lumina are very, but very good at what they do.
3) If Rob McEwen thinks his Los Azules project is worth $200m+, he needs a reality check.
Reservoir Minerals (RMC.v): We're still waiting patiently for news from FCX of those big
long holes they're sticking into the JV, the impression is that Freeport is sitting on the results for
their own sweet reasons. Meanwhile, more than once I've considered that the final capitulation
selling event in the copper universe can't come before RMC cracks under $4 and down to (even
through) $3 again. a better towel throwing moment would be difficult to imagine.
The Low Cost Producer Basket
After 33 weeks, the 2015 Low Cost Producer Basket is showing a 22.09% loss to level stakes.
15

company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 830 11.86 14.29 -22.8%
2 Newmont NEM 18.90 528.08 9.16 17.35 -8.2%
3 Barrick ABX 10.75 1164.67 8.94 7.68 -28.6%
4 Franco Nevada FNV 49.19 156.5 6.90 44.11 -10.3%
5 Silver Wheaton SLW 20.33 403.75 5.49 13.59 -33.2%
6 Agnico Eagle AEM 24.89 214.12 5.08 23.71 -4.7%
7 Kinross KGC 2.82 1146.2 2.27 1.98 -29.8%
8 Buenaventura BVN 9.56 254.19 1.73 6.80 -28.9%
9 B2Gold BTG 1.62 926.681 1.06 1.14 -29.6%
10 Pan American PAAS 9.20 151.64 1.05 6.92 -24.8%
all prices in U$, using NYSE ticker prices Portfolio avg -22.09%
Winners all round. Ten out of the ten basket components rose on the week thanks to the new
rise in the tide of gold and apart from the outperforming outlier Pan American (PAAS up
15.33%) it was remarkable how uniform the upmoves were. Aside PAAS, of the other nine
names the lowest upmove was in Goldcorp (GG up 6.3%), the biggest move Barrick (ABX up
8.8%), that's impressively uniform. This isn't stockpick-special time, this is gold and the gold
miners' reaction to the move, no more or less.
The Low Cost Producer Basket: Weekly performance
30% and comparative to GDX control
20%
10%
0%
-10%
-20%
-30%
-40%
16
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 ht9 ht61
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 ht9 ht61
|
source: ikn calcs, NYSE/Nasdaq data
There's no stock-specific commentary this week as the market doesn't seem to care much
about individual fundies developments in the large-caps. Barrick got its debt rating lowered and
rose just like all the others, BTG put in a good quarter and did the same as the others, Silver
Wheaton matched street expectations on its quarter, got downgraded by CIBC, continues to be
hit by class action suits over its drop on tax assessment in Canada…and did the same as all the
others as well.

Regional politics
Nicaragua: Looking to reactivate its mining sector
This report from Friday (4) made for interesting reading on a country that we haven't
mentioned much in recent weeks, even though it's one of the better places to go mining in all
of LatAm and arguably the single best of all the Central American states.
The Vice-President of the Nicaragua Chamber of Mining (Cámara Minera de Nicaragua, or
Caminic), Señor Pablo Venturo, was interviewed by Nica's decent daily paper 'La Prensa' on the
state of play in the country's mining sector. his message was upbeat, saying that the country
was looking to improve its mining in two main aspects, cost efficiency in production and better
exploration in concessions and projects. Here's a quote from the man (translated):
"The first (investment) is to improve efficiency in the productive processes and the second is
directed at the exploration of deposits". He went on to say that there are nine new companies
entering the exploration field between 2016 and 2017 and, "At this moment they are preparing
pre-feasibility studies and environmental impact studies".
Further on in the 'La Prensa' report we got a comment or two from Felipe Esparza, who is
country manager for B2Gold (BTG) (BTO.to) in Nicaragua and in charge of the running of the
Libertad and Limón mines, as well as all the exploration projects on the company's books.
Though most of his section was about job creation and the benefits thereof (e.g. BTO plans to
employ another 100 to 200 truck drivers once their latest training program has done with the
new recruits and they'd add to the currant 3,617 full time jobs in the formal mining sector in
Nica today), he did mention that he expected the price of gold to move back up through
U$1,150/oz to U$1,200/oz by the end of this year. It was presented as a personal opinion and
maybe his guess is just as good (i.e. useless) as yours or mine, but it also sounded like a
corporate -type position being relayed as well (or put another way, it was unlikely he was
shooting his mouht off the cuff).
Peru: HudBay (HBM) facing community problems
HudBay (HBM.to) (HBM) has a lot riding on the success or failure of its new Constancia mine in
Peru and so far this year, things aren't going as well as they'd like. Things to consider:
1) Copper prices have dumped through the floor. Natch.
2) Production has started well, but logistics are letting the company's new mine down badly.
According to the company's 2q15 results NR (and MD&A) dated July 29th (5):
At quarter end, Hudbay had approximately 73,100 tonnes of unsold copper concentrate
containing 19,200 tonnes of copper, 30,300 ounces of gold and 579,300 ounces of silver.
Shipments from the Constancia mine to the port in Matarani were constrained during May and
June by several factors including truck availability, protests along the lower part of the trucking
route, unrelated to Constancia, and road refurbishment activities along the route that increased
cycle times for concentrate trucks. Steps have been taken to increase the size of the trucking
fleet, and the excess inventory is expected to be drawn down over the second half of 2015.
That's a big cash flow bottleneck.
3) We also know that part of that logistics problem is accidents occurring to trucks out of
Constancia, as on August 5th on the blog we reported (6) on the fourth overturned Constancia
truck since production began. This is less a supply problem and more a community relations
problem, because locals are now thoroughly fed up with the constant accidents.
4) Which brings us to our fourth point, as on August 13th the district of Coporaque near the
mine (where at least three of the truck accidents have occurred, therefore it's on the main
trucking route out of the mine) asked (7) that HBM ratify an unofficial agreement it had with
the mine to be considered as in the "area of direct influence" of the mine. If ratified this would
mean the locals benefited from extra community and social support. HBM refused the petition
17

at the Assembly Meeting. According to the news report linked above (translated):
"Coporaque's petition is based on the serious impact produced on the road
that joins Espinar and Chumbivilcas, damage to bridges, accelerated
deterioration to the asphalt road, frequent accidents by minerals transport
vehicles, emission of gases, transportation of toxic substances, proximity to
the Constancia mine, etc. They also denounced that the Constancia
Environmental Impact Study did not consider the Constancia-Espinar road as
an area of direct influence, even though it did consider other routes such as
between Espinar and Imata and to Matarani."
HBM spent a reported U$1.71Bn in capex (not including working capital needs in the ramp-up
period) just to build Constancia. This weekend the whole company's market cap is U$1.28Bn.
Peru: Another voter intention poll for the 2016 Presidential election
Although we're at least three months away from the start of real campaigning, due to its
significance in the mining world we're keeping half an eye on the early moves in the Peru 2016
race for President.
By way of reminder we're not a million miles away from the main vote day, with the election
slated for 10th April 2016 (to be exact seven months and twenty-five days) plus the virtually
certain second round run-off between the top two candidates scheduled for June 12th.
To the point: On Tuesday the reasonable Peru pollster company Datum published (8) their
latest voter intention poll for the big day and here's how they stack up:
• Keiko Fujimori: 34%
• Pedro Pablo Kuczynski: 17%
• Alan García: 6%
• Daniel Urresti: 5%
• Cesar Acuña: 4%
• Alejandro Toledo: 3%
• Humberto Lay: 1%
• Gregorio Santos: 1%
• Undecided: 20%
• Will spoil ballot: 6%
Today I've run down the larger list of mentioned candidates (count to 97% there, I've left a few
sub-1% candidates off) to make the following points:
• In round one, Keiko (daughter of jailed Alberto) of the (surprise surprise) Fujimorista
political section is a point up from 33% in the previous month's poll, is well ahead and as
we mentioned a few weeks ago, is a virtual certainty to make the second round run-off.
It's also a virtual cert that she won't gather enough votes to win in round one.
• Pedro Pablo Kuczynski, known to the world as 'PPK' (pe-pe-ka) is clear second right now,
with his voter intention holding pretty steady for the last three months. His soft campaign
has already started, with his team and made-to-measure new political party beginning to
form around him and capturing news time inside Peru (TV, newspapers etc).
• Alan García is down three points from a month ago but don't be fooled, it's not close
between him and people like Daniel Urresti (the likely candidate from Ollanta's party),
Cesar Acuña (APP), Toledo (Peru Posible) and others. The APRA party is a national scale
political machine, it won't wake up until Alan starts formally campaigning in November, his
real position is in a close fight for second with PPK.
• There are a lot of undecided voters, which means there's still plenty in play. What's more,
18

you're likely to get plenty of floaters between the candidates (even Keiko can't be
guaranteed anything above 30% from the Fujimorista faithful)
We'll now leave this subject and come back to it at the end of the year, but the bottom line is
roughly the same as the one we sketched out a few weeks ago in our first coverage (can't
remember offhand on which edition, not going to look). Keiko and either Alan or PPK will make
it to the second round and from there, it's going to be very close. For what it's worth, I think
Keiko loses (again) but it's really way too early to make that kind of call.
Until November.
Two mining stories from Argentina provinces
In Mendoza last week, the Provincial Court of Appeals refused (9) a petition from lawyers
representing mining companies to review the current strict laws against mining in the province.
The specific appeal is against the somewhat infamous law 7722, which bans the use of toxic
substances such as mercury and cyanide in mining operations in the region and was the law
that did for the San Jorge project when it was owned by Coro Mining (COP.to) way back when.
Now that project is under Russian ownership (Aterra Group) there's a political push to get the
current laws reviewed, but the judges are having none of it.
Meanwhile in Cordoba, another appeals court the week before last (10) upheld the current ban
on all open pit mining activity in the province of Cordoba, via ratification of the current law that
was enacted in 2008. Although set to the East of the main Andes Cordillera and not prime
hunting ground for most metals, Cordoba is been the location for some uranium discoveries. On
the other hand, its provincial anti-mining credentials are already well-established and the ruling
early in August only underscores that.
The proximity of these announcements to the main Presidential election coming up in October
is unlikely to be coincidental. We seem to have both sides of the mining argument in Argentina
positioning mining as a potential debate issue between the two main candidates (Macri and
Scioli), but also as a definite issue for the regional governor elections that will take place at the
same time. So far at least the courtrooms seem to be favouring the current administrative
power (again, unlikely to be coincidental).
Dom Rep: A potential issue for Barrick Pueblo Viejo
This is a story that may be worth watching. Last week (11) there was a demonstration outside
the official presidential residence of President Danilo Medina by a group of people who claim to
be owners of land being used by the Barrick Pueblo Viejo (ABX 60%, GG 40%) mine as part of
their operations. The self-proclaimed landowners want President Medina to meet with them so
they can explain their situation. They claim that the land is either being used by Pueblo Viejo
without permission or payment given, or that it's been illegally taken from them by the mining
company. They say that the situation has been going on for decades and their claims fall on
deaf ears at the mining company, even though they say they have title deeds to the land
packages in question. This report (12) runs a photo of the protests and says there are 124
families who claim to have been illegally dislodged from the property and are demanding fair
compensation after years of getting nothing from company or State.
Pueblo Viejo is one of the cheapest and most profitable mines run by ABX at the moment and a
key part of the company's overall consolidated cash costs mix.
19

Market Watching
Minera IRL (IRL.to) (MIRL.L): Community protests at Ollachea and information on
the company's internal and financing situation
It is as sure as you are Roderigo,
Were I the Moor, I would not be Iago.
In following him, I follow but myself;
Heaven is my judge, not I for love and duty,
But seeming so, for my peculiar end;
For when my outward action doth demonstrate
The native act and figure of my heart
In complement extern, 'tis not long after
But I will wear my heart upon my sleeve
For daws to peck at. I am not what I am.
Othello, Act1, Sc1, ll56–65
There are three main sections to this piece:
1) We start with the news from Ollachea last week, which was relayed on the blog this Sunday
via the direct translation of the brief but mainly accurate report shown.
2) We consider what's been going on inside Minera IRL recently, as there's a heap of internal
politics to sift through.
3) We put it together and make a call on the future of the company, its officers and the
ultimate fate of the Ollachea mine project in Puno, Peru.
The news last week
To begin, both for the record and for those of you who didn't see the post on the blog this
Sunday morning, here's the translation of the news report (13) dated the evening of Friday
August 14th. I'm repeating it here because it gives a good overview of the facts as stand in just
a few lines:
Puno: Ollachea Paralysed in Protest Against Mining Company IRL
By Juan Choquetocro, from Macusani
The community of Ollachea has decided to indefinitely block development activities at
the Ollachea gold project in protest against the new president of Minera IRL, Daryl
Hodges. The company executive announced changes for the company that are
considered to show a lack of respect to the agreements the community has had for the
last eight years with the founding executives of the company, Diego Benavides and
Courtney Chamberlain, who died last April.
The member of the Ollachea community say they feel deceived by the new director,
because he presented himself to them as the person who had obtained a series of
benefits (for the company and community), including the recent debt financing deal
with COFIDE for the start of the project. However, the Ollachea community says that
Mr Hodges has never participated in any of the agreements with the company and is
now looking to take community property.
The Ollachea community member communicated their decision to the company via a
letter that also included several queries. Among them were the question as to why the
company had given maximum authority on an interim basis to Mr. Hodges and not to
Mr. Benavides. According to the community members, Benavides, who was a few
years ago awarded the title of 'Honorary Community Member' by them, is the person
who should be in charge.
This weekend the community is holding a meeting to decide on other courses of action
they might take, according to the president of the community.
Since that news report came out I've been active in gathering as much information as possible
from all sides. Some have been willing to talk to me, others have refused to talk, others have
20

supplied information on-record and others would only speak off-record but in the end I have at
least the views and opinions of just about all sides in this saga. A synthesis of all that is what
you get today.
Since the untimely death of Courtney Chamberlain, Daryl Hodges has been in charge at the
company as executive chairman. To cut to the chase, after reaching the $70m initial credit deal
with COFIDE in June Hodges decided to go to Ollachea, present himself to the community with
the IRL team and, along with the presentation of some overdue social community agreement
money that was now available to hand over thanks to the COFIDE deal, explain the state of
play to the stakeholders there. So on July 15th 2015 the top management of Minera IRL went
to Ollachea and had a town hall meeting with the community. There were around 500 people
present. First the community president welcomed their guests, then Diego Benavides spoke (he
also handed over the cheques) and then came the central point of the meeting, a speech of
approximately 10 to 15 minutes given to the hall by IRL executive chair Daryl Hodges, the man
now in charge. After the presentations, there was a question and answer session (as is normal
at this type of meeting) with the floor able to voice its concerns.
In his talk, Daryl Hodges, who spoke in English with his message translated into Spanish for the
audience by VP Exploration Don McIver, used his time to introduce himself to those present. He
said that he hoped the good relationship enjoyed between the company and the community
would continue. He then told those present that there would be changes in the way IRL
operates and does business. He was polite and good mannered in his speech, but that doesn't
hide the fact that the message of "there are going to be changes" went down like a lead
balloon with the community of Ollachea. When I asked Daryl Hodges about this, he replied, "I
said we are still adding a lot of new people and the company is going through changes" (quote
unquote). In his opinion the meeting was not fractious and in general terms, although being
nervous about having to give a speech, he thought it went quite well. He also told me (quote),
"Last thing I expected from that night was bad press."
Unfortunately that's not how someone in Ollachea I spoke with this weekend put it, not even
close. Also present at the meeting, my contact told me that when Hodges spoke, he spoke in
English and his words were translated (true). In the question and answer session he was asked
on many occasions by those present (often different people were repeating the same question)
a combination of "why was he head of the company", "why wasn't Diego Benavides head of the
company" "why was Diego Benavides only "interim CEO" and not ratified as CEO" etc. Daryl
Hodges claims he was asked that question three times and that the questions sounded scripted,
my eyewitness said he was asked many times over, far more than three. His answer was to
smile and say that Diego Benavides was very important to the company and he hoped that he'd
decide to stay with the company. This, quite rightly as you'll see later, was interpreted by the
assembly as "Diego's not getting the CEO job". He was also asked repeatedly for details on the
"changes", as he was in effect being asked by the community who had been used to working
with Benavides and Courtney Chamberlain for eight years. At one point when receiving one of
these questions he threw his hands up in the air and laughed, not with the people but at them.
The message from a non-Spanish speaker with apparent control over the destiny over the
project on the community's territory could not have been worse. According to the eyewitness,
he showed no respect for the people present and though he said he wanted to remain on good
terms with the community his talk about wanting to change the way the company operates
showed no respect at all to the recently deceased Courtney Chamberlain, with whom the people
in Ollachea had an excellent relationship. He made no mention about why he had been made
head of the company and not Diego Benavides, who in the opinion of the community was and is
the obvious successor to Courtney Chamberlain. To sum up the attitude of the community,
here's a direct translation of the letter sent to Daryl Hodges by the community of Ollachea,
dated August 10th 2015, as their words are better than mine (I'm just the translator). I was
supplied a copy of this letter by my Ollachea contact:
21

Sr. Daryl Hodges
The rural community of Ollachea is very proud of its territory and its riches and
because of that, we have always defended them against anyone who has wanted to
deceive us in order to appropriate that which we consider our principal resource and
the most valuable asset from our previous generations for our children.
When the company (IRL) first came (to Ollachea) we conversed with them and
reached agreements based on trust with the people who came as representatives of
the company such as Mr. Courtney Chamberlain, who we always remember with much
appreciation and Dr. Benavides, who we named an Honorary Member of the
Community due to his laudable social leadership and who we elected as the only
person authorized for agreements between the community and the company.
This good relationship of trust has lasted over eight years, with total respect for our
customs and particularly our territory, which is why we gave our territory as guarantee
via a contract and the our support to the company so that it could obtain financing with
COFIDE.
However, we now see that nothing is being respected, which is why the General
Assembly which took place yesterday agreed on the necessity to get a clear answer
regarding the announcements of changes in the company that you, in an arrogant
manner, spoke of in the Assembly of July 15th.
Our territory and agreements are to be respected and with you we have no trust that
this will occur because we feel that you have lied to us and that you do not respect the
relationship that the community and the company have built.
You said that you had worked in the company for the last eleven years and that you
had achieved the deal for the credit agreement with COFIDE. We have never seen you
before, nor do we agree with you.
You have treated us badly because you have taken Mr. Courtney's position, we don't
know how, and you have ignored he who we named honorary community member,
which represents a direct affront to us.
You mocked us when we said that you (i.e. the company) should give the position to
Dr. Benavides, who deserves to occupy the main position at the company and not to
be an interim.
You said that there will be a new company, ignoring the good relationship forged
between community and company for eight years.
Until we have your answer, we will not grant any permission for the development of the
drilling campaign or any activity (at the Ollachea project). If not, we will have to take
further action. We await your immediate answer.
Sincerely,
Juan Luis Valeriano Gutierrez
President of the Ollachea Rural Community Directive
IKN327 back. To sum up so far, Daryl Hodges said the meeting wasn't fractious, seemed to go
okay and he didn't expect any bad press. My eyewitness said it was an unmitigated disaster.
Then on August 10th the community sends that letter to Daryl Hodges. You be the judge on
how that meeting really went.
You'll also note how many times the word "respect" has come up in the last few hundred
words, both in the narration of my eyewitness and the letter sent to Daryl Hodges by the
community. I cannot overstress the importance of this, plus the element of trust and it leads
me in a slightly abstract way to a point I want to make before moving on: The Assembly
Meeting on July 15th should never have taken place. Knowing what I know about the way Peru
works (a quick reminder, I'm married to a Puno girl, I've lived in the country for 13 years and
counting) it was in my opinion a gross error to call a meeting and go to the community. The rub
22

here is that it was Daryl Hodges who insisted on going to Ollachea and introducing himself to
the community, despite receiving advice not to do it from several quarters. I've been on the
receiving end of that type of situation personally and know they're difficult to manage, and I'm
a fluent Spanish speaker with a wife and in-laws from the region and a decent notion of the
cultural codes and suchlike. For a gringo (no other word) like me it's not easy, for one that
doesn't speak Spanish, doesn’t have a clue about the culture and then not only proclaiming
himself boss but ignoring the achievements of a highly respected person such as Courtney
Chamberlain and telling those present that the company is changing the way it does
business….the phrase "recipe for disaster" only scratches the surface.
Which brings us to this week. On receiving the letter from the Ollachea community on August
10th, Daryl Hodges dispatched the head of his community team to Ollachea with a letter (that I
haven't seen…yet) and directives to explain the situation, say that the company has no plans to
change any of the social programs and that it remained fully committed to the community. In
other word to calm the waters, which was the right thing to do (though a little too late, I fear).
After that was when the community talked to the News Ser reporter who published his report
seen above on Friday evening (the news also appeared in other media sources such as Peru's El
Correo, by-lined to other reporters, so I'm assuming without knowing that the community
president held a small press conference of some sort).
This weekend the Ollachea community has again been meeting to decide on their response to
the message delivered by Daryl Hodges. Today Sunday they resolved to maintain the current
freeze on the Ollachea mine development until such time as Diego Benavides is ratified as CEO
and put in charge of the project.
On Minera IRL internal politics
If you managed to get through all that lot (and I apologize for the length of the piece, but this
time it's unavoidable) it's not going to come as much of a surprise when I tell you that there's
friction inside IRL at an officer level. There are plenty of anecdotal comments I could bombard
you with to back up that statement as I've heard no end of negative comments about person or
persons X about person or persons Y recently, sometimes veiled comments and sometimes
starkly unveiled. But I'm not going to go there, I've learned from experience to keep out as
much as possible of the personal ego-driven side of internal corporate politics, especially when
I'm a mere third-party outsider looking in.
What we know, or can easily deduce, is another matter:
• There is bad blood between Interim CEO Diego Benavides and Executive Chair Daryl
Hodges.
• Hodges does not want to ratify Benavides as CEO. That's clear from his answers to me, to
the community and it's a glaringly obvious omission from the agenda of the company's
AGM coming up on August 27th.
• This implies that he wants the job himself. In fact I'd bet large amounts of money on that
one.
• If this came to pass and then Diego Benavides decided to stay with the company, it means
Benavides would be in a subordinate role to Hodges. With Hodges recently arrived at the
company (made director in early 2014) and Benavides a founder of Minera IRL, the
tensions would be obvious to anyone.
• However Hodges seems to enjoy the tacit support of the corporate backers of IRL (to
generalize, "the London people") as witnessed in May 2014 when he received the highest
number of ratification votes as director (around 51m) of all the board.
• Hodges has also made it clear he wants to "change" the company and the way it does
business. We've yet to see what that means.
If it were just a type of Venn Diagram of politics, with Daryl Hodges and his camp one side,
then Diego Benavides and his camp on the other side, then the company, the Ollachea project
and its community in the middle, then it would be difficult to make a truly objective call on what
23

was going on, who was in the right, who was in the wrong.
Hodges says this, Benavides says that.
Benavides wants IRL to do business in manner X (that one we basically know,
status quo), Hodges wants IRL to do business in manner Y (changes).
The community says it's against Hodges as company head (that's a fact), but
while Camp Benavides says it's the way Hodges has treated them
(implication: permanent mess), Camp Hodges says that Benavides has turned
the community against him for his own nefarious reasons (implication:
situation can be repaired).
Camp Hodges says it's changing and renovating IRL into a better company,
Camp Benavides says Hodges&Co is ruining the company for its own
nefarious reasons right at the point when the company was about to secure
the financing deal and build the mine.
We could continue. And after hearing from all sides, or at least all the sides that wanted to talk
with me, I sat back and tried to consider things as a third-party onlooker. After all, this is
capital markets and not kiddies play-date friendly-time, the ultimate objective for us the retail
shareholder is to buy low sell high and if that means getting onside with a new broom that
comes into a company, ruffles feathers, shakes things up and gets things moving forward in
better shape, then it could be a perfectly acceptable situation that improves the company's
stock price and with that, there are only questions of personal style and taste left to consider.
However, when I found out about the position of the main lender COFIDE in all this, the whole
thing changed.
The COFIDE position: The canary in the coalmine
Let's start with a clear statement: I believe the deal done by Minera IRL with COFIDE to be a
good one. Good for the company, for the Ollachea project and all its stakeholders, good for
shareholders such as you and I and said as much in the NOBS report we ran on IRL in IKN318
dated June 14th 2015, just after the announcement was made. I liked the deal, I stuck a 23c
target price on the stock (assuming the current $70m deal solidifies into the full debt financing
deal of up to $240m). I also added more to my position afterwards and averaged down.
Since then and even taking into account the new wave of abject negativity in the wider gold
sector through the end of June, all July and into early August (you know all about that) I've
been at a loss to understand why the stock has been trading so poorly. Yes they've all gone
down but we're now back at 7.5c and that's AFTER the financing deal has been struck, not
before! The other big mystery connected to that is the lack of traded volume in the stock, as
even at these basement levels people are not interested in the equity that should be interested
(by whom I mean switched on people, particularly in Lima and London, who know the project
and its robustness…there are a few of you reading these words right now).
But this weekend I now understand why. And this is the part that starts to explain the prime
buying opportunity for IRL shares that I think is about to present itself. To mix metaphors, it
took the news from the community in Ollachea to rip the lid off this can of worms and get the
canary in the coalmine to sing for its supper. But before getting there I want to highlight the
weak point in this section so that you see it clearly, I'm not hiding anything or playing sleight of
hand: Sources for this part are off-record and will stay that way. However they're also
trustworthy to the point where I'll stake my reputation as an analyst of LatAm mining matters
on their word. If the following doesn't pan out the way it's presented don't ever listen to me
again or take anything I say seriously. Enough 'the lady doth protest too much methinks' stuff:
• I now know that the COFIDE people aren't annoyed at Daryl Hodges, they're absolutely
24

livid. In several ways, COFIDE has been treated with absolute disrespect by Hodges ever
since the initial $70m deal was closed.
• For just one example, I know that the deal liaison man between COFIDE and IRL, who
happens to be a Peruvian financial person of good standing in its business community, was
accused being a thief by Daryl Hodges and unceremoniously kicked out of his office.
• I know that despite his representing otherwise, Daryl Hodges had very little to do with the
thrashing out of the deal. The agreement between COFIDE and IRL was finalized in a
process lasting over a year and a half and the only reason Courtney Chamberlain wasn't
there at the end to sign the papers is that he passed away before the process closed.
• I know that COFIDE has voiced its grave concerns directly to Hodges over the direction the
company is going and asked for a conference meeting with the IRL board of directors, but
was refused that opportunity by Hodges.
• I know that once COFIDE sensed problems it sent its own team to the town of Ollachea to
investigate the situation for itself (not stupid, there are millions in play here). I know that
their own independent findings coincided very closely to the position taken by both Diego
Benavides and the community leaders as regards Daryl Hodges and "new" IRL.
• I know that if Daryl Hodges remains as head of Minera IRL the company isn't going to get
another penny from COFIDE.
Those are things I know and because of that I'm sharing them with you. I also know that I've
just trodden on a lot of people's toes by doing so, but at this point I care more about the equal
distribution of knowledge than political correctness or interpersonal niceties. You, the IKN
Weekly reader and/or IRL shareholder, need to know about this in order to fully understand
what Daryl Hodges has done to this company since he took over after Courtney Chamberlain's
death, to what degree he's wrecked the company's good standing in Peru. What I suspect but
don't know is that Daryl Hodges wants it that way because he's found a different source of
financing, one that's going to be very shareholder-unfriendly but serve his personal purposes
more readily. That's a maybe, just a personal suspicion.
Conclusion, discussion, recommendation
To round this off we need to get down to the baseline of this wild and weird saga. There are
three points to take in:
Without the support of the community, Minera IRL will not be able to build its mine.
Period. As I put it to Daryl Hodges in a mail yesterday Saturday, "The community is a key
stakeholder. Without the community Minera IRL has nothing, zip, zero. You cannot force a
project onto a community in Peru, as any number of recent examples will amply show". Just by
reeling off names like Santa Ana, Conga, Cañariaco, Majaz, Tia Maria I make my point to the
casual observer of the Peru mining scene but it doesn't end there: Not only is the town of
Ollachea consummately easy to physically defend (one road in, one road out, high mountains
all around) but the access from the town to the mine is even easier to blockade successfully. It
matters not if a bunch of lawyers walk into town waving pieces of paper saying that the
community has broken its agreement with IRL and now has to pay. It won't matter a jot if the
government is stupid enough to send in police to break up protest barricades, either. Without
Ollachea the town onside, Ollachea the mine doesn't happen. Very simple.
With Daryl Hodges at the helm of Minera IRL, the company will not get the support
of the community. Period. The community of Ollachea has made its position crystal clear in
this regard. You may agree or disagree with their decision, you may find it objective, subjective,
smart, biased, influenced, understandable, political, reasonable or otherwise. In fact I haven't
gone much into the thorny issues of cultural empathy and the value systems of provincial
communities in Andean Peru, but I for one see exactly where they're coming from and respect
25

their decision. But be clear, what matters to us is the result, not the reasoning and once a
decision like this is taken those people don't back down, it's not about money.
And semi-on-topic, one thing that Hodges told me is that his community team was at fault, as
they haven't handled the situation correctly. This beggars belief, because it's exactly the same
community team that built the strong relationship with Minera IRL. Even if I hadn't done all the
digging that I've done on this story, it's plain as day that the only thing that's changed is the
person running the company and that the only question would be how directly or indirectly that
had affected the sudden deterioration in community relations. And even discounting something
that obvious, the executive chair of any company is the person responsible for its actions and
the buck must stop there.
With Daryl Hodges at the helm of Minera IRL, there's no deal with COFIDE. Period.
And you better get used to the idea.
To sum up the three main points, on the one hand you have the stakeholders of the community
of Ollachea, who for eight years built a relationship with a mining company under the tenure of
Courtney Chamberlain that was the best in all Peru (that, as you may know, is one of the
reasons I've stuck with this company through the downturn), who are now blocking the project
due to the way they've been treated by IRL's new head. On the other hand you have the chief
financing body that's now blocking the project due to the way they've been treated by IRL's
new head. See the common denominator? Yep, me too.
Tomorrow Monday we can expect a news release from Minera IRL. It won't have even a tenth
of the information you've just read and I'd expect it to be spun hard to make the company's top
man look in as good a position as possible. Be clear, he's not, and until he either resigns or is
fired it's not going to get any better. That's where the upcoming AGM may become a factor
because on August 27th we the shareholders get to vote on the ten point agenda put forward
by the IRL board. The points include the ratification of Daryl Hodges as director of IRL, plus the
voting on-board of at least one of his close allies. I'd advise all shareholders of IRL (and I know
there are many who read The IKN Weekly, be that good or bad) to get their proxies in early
(we're close to the deadline date) and to use their votes wisely.
But even if Hodges survives the vote on August 27th his days are numbered at IRL and that's
where the real investment opportunity lies, ladies and gentlemen. He may try to deflect blame
for the soured community relations onto the leaders of Ollachea, the IRL team or even (and in
the circumstances very likely) the Interim CEO Diego Benavides. I'm likely to come in for my
own quota of flak too after writing this exposé on his incredibly poor handling of IRL affairs
(and guess how much I'll care about that? Yup, you got it). But when the facts emerge about
COFIDE's position, he's toast. This is something Daryl Hodges doesn't seem to understand yet,
but he will. It's not if, it's when.
I expect that IRL will trade lower next week on news of the community unrest. If so I'm a
buyer of this stock and will average down my position further because when Hodges
leaves and Diego Benavides is ratified as CEO (and by the way, I'd like an independent insto
person is chosen as eventual company chair to oversee good financial housekeeping), the
community relationship will be restored immediately and COFIDE will be good about returning
to the deal at hand. It will be like waking up from a bad dream and with that, the share price
should start recovering on decent traded volumes to where it deserves to be. And that for me is
at least a double on the day when COFIDE and IRL close the main debt financing deal.
I could add more, but this had gone on long enough already and you should have the picture
by now. So I'm going to wrap this up, clean up the copy, PDF and send it out. IKN327 main
feature, Sunday August 16th, signing off.
26

Peru's stock market dumps hard Friday
The lowest level since April 2009 (post-subprime crisis) due to the news on Friday from MSCI
Inc, owners of the MSCI World Index (it used to be owned by Morgan Stanley, it's now a
separate entity), that it was reviewing Peru's status as an official 'emerging market' and may
downgrade the country to "frontier market'. Here's how Bloomberg carried the news (14):
MSCI Inc. proposed reclassifying Peru as a frontier market after a drop in liquidity left
the country with too few actively traded stocks to be classified as an emerging market.
MSCI said in a statement it will consult investors on the change and announce the
results Sept. 30. Phoenix-based Southern Copper Corp. could be moved from its Peru
index to its USA indexes as part of the change, MSCI said.
Only three Peruvian securities meet the investability criteria of MSCI’s emerging-
market category. As a smaller frontier market, eligible Peruvian stocks would need a 5
percent annualized trade value ratio, used to measure liquidity, compared with 15
percent for the emerging-market category.
Peru would follow Morocco, which was downgraded to a frontier market in 2013,
according to MSCI’s website.
Whatever "investability" means, dear
reporter. And here's how the Peru Stock
Market (Bolsa de Valores de Lima or BVL)
via its "top 25 stocks" index reacted:
What was interesting is how stocks such as
the highly liquid shares in zinc/polymetal
miner Volcan (VOLCABC1) dropped 12.5%
on the news. Local issues of dual-listing US
quoted stocks such as Buenaventura (down
7.53%) and civil engineer Graña y Montero
(down 16.9%) also saw big hits on the BVL.
Those of you looking for a distress-sale
bargain may want to check the list of stocks
that will probably see more selling on the BVL next week
Midas Gold (MAX.to): Still a potential trade
Aside from Minera IRL and the punctual opportunity I believe we're about to get in the stock,
there's nothing out there this week that tempts me to re-invest cash. Apart from this one. If
you remember back two issues ago in IKN325 I
put together a six-point article to explain why I
think MAX.to is about to be pumped by a whole
band of usual-suspect Vancouver promo artists.
As we're now approaching what I believe to be
the time window for any promotion (Labor Day
and environs) and the stock has started a
tentative looking technical rebound, this may be
the time to take a small chunk and see what
happens in the next month
I can't convince myself enough right now,
though. It may be me being too cute for my own
good (hardly the first time) and the envisaged pump doesn’t appear. I'm going to sit on the
idea for another week, but be clear that MAX.to is at the top of my list for a near-term flip idea
at the moment.
Conclusion
IKN327 is done, we end with bullet points:
27

• It's good to have closed a winning trade for a change. What's more, McEwen Mining
(MUX) performed very much along the lines that were envisaged when the trading slug
of the stock was bought. now I only hope it makes me look like a fool for selling so
early and shoots even higher, because I still own plenty
• B2Gold (BTG) (BTO.to) put in a decent quarter and it's now setting up for the period
when it will show its true growth potential. If the price of gold gives us a fair break, this
Top Pick is the one to be on large as 2015 turns to 2016.
• It's a sorry can of worms at Minera IRL (MIRL.L) (IRL.to)and testament to the old
adage that you need local knowledge. Daryl Hodges has none and has done nothing
but antagonize the other players in the Ollachea mine story since his arrival. As soon as
he's gone, the share price will improve. And he'll go.
• Once you combine the change in Dalradian's (DNA.to) exploration profile with its
financials, it becomes clear that it will need to finance again before we see the 43-101
compliant FS and the filing of its EIA application. That's not a bad thing, but it's another
place where we could see headwind in the stock. I like it, I like the project and I'¿m
sure that one of these days it's going to be a mine. Hopefully it will get bought out
while I still own it too, but be clear that the day my $1.25 price target comes around,
I'm a seller. Also now, if gold weakens I may also take profits too.
I thank you in advance for any feedback. Our Top Pick stock is B2Gold (BTG) (BTO.to). Flash
updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
Footnotes, appendices, references, disclaimer
(1) http://finance.yahoo.com/news/b2gold-reports-second-quarter-2015-215803872.html
(2) http://www.cochilco.cl/Archivos/destacados/20150814114133_MERC%202015%2008%2014.pdf
(3) http://business.financialpost.com/investing/first-quantum-to-buy-lumina-copper-for-470-million?__lsa=d2f0-86c4
(4) http://www.portalminero.com/pages/viewpage.action?pageId=99722597
(5) http://finance.yahoo.com/news/hudbay-releases-second-quarter-2015-205211850.html
(6) http://incakolanews.blogspot.com/2015/08/hudbady-hbm-hbmto-suffers-its-fourth.html
(7) http://www.conflictosmineros.org.pe/alertas/14/08/2015/se-rompe-mesa-de-di-logo-entre-la-comunidad-de-
coporaque-y-la-minera-hudbay-en
(8) http://diariouno.pe/2015/08/11/indecisos-blancos-y-viciados-son-26-y-urresti-a-punto-de-pasar-a-garcia/
(9) http://www.portalminero.com/pages/viewpage.action?pageId=99722551
(10) http://www.portalminero.com/pages/viewpage.action?pageId=99722366
(11) http://www.noticiassin.com/2015/08/supuestos-propietarios-terrenos-en-pueblo-viejo-reclaman-pago/
(12) http://www.entornointeligente.com/articulo/6691790/REPUBLICA-DOMINICANA-Piden-al-Gobierno-que-obligue-a-
Barrick-Gold-pagar-terrenos-en-Cotuinbsp;
(13) http://noticiasser.pe/14/08/2015/puno/puno-ollachea-paraliza-en-protesta-contra-empresa-minera-irl
(14) http://www.bloomberg.com/news/articles/2015-08-13/msci-proposes-reclassifying-peru-as-frontier-market-on-
liquidity
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Appendix 1: Flash update dated August 12th 2015
Good Wednesday evening, 10pm local time.
After noting the share price action today and then the Asia overnight trading in gold (steady), this is a quick note to say
that I'm looking to take profits on the McEwen Mining (MUX) near-term trade tomorrow, or perhaps Friday latest.
It all depends on how things trade tomorrow in this very volatile market, but as we're close to my skteched-in U$1.00
level and the MUX move was capped by late buying today, if I sell a little lower than the plan tomorrow that's just fine.
And please be clear that I hope I'm leaving lots of money on the table for somebody else, as the sale of my near-term
trading position doesn't affect the larger investment position in MUX.
Anyway, nice to relay some positive news for a change. Hope you all sleep well.
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
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Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
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Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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