IKN #331Premium

The IKN Weekly
Week 331, September 13th 2015
Contents
This Week: Fed September showtime, Still bullish no matter what Janet does, Regarding the
IKN blog.
Fundamental Analysis: NOBS report on Standard Tolling (TON.v).
Stocks to Follow: Overview, B2Gold (BTO.to) (BTG), Focus Ventures (FCV.v), Lake Shore
Gold (LSG.to) (LSG), Teranga Gold (TGZ.to) (TGZ.ax), Midas Gold (MAX.to), True Gold (TGM.v),
Dalradian Resources (DNA.to), New Gold (NGD) (NGD.to).
Copper Basket: Overview, Capstone Mining (CS.to), Nevada Copper (NCU.to).
Low Cost Producer Basket: Overview, Goldcorp (GG).
Regional Politics: Chile: Codelco protests and third-party workers, Guatemala: Morales versus
Torres, Argentina and the other big October 25th election, More Chilean government subsidies
for small copper miners, Peru: Volcan (VOLCABC1) evaluating the sale of non-core assets.
Market Watching: A Minera IRL (MIRL.L) (IRL.to) update, CB Gold (CBJ.v), Batero Gold
(BAT.v) and Red Eagle (RD.v): A buried lede.
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
Fed September showtime
Next week has a macroeconomic event in the USA that nobody who plays with stocks on any
level can afford to ignore. Thursday September 17th at 2pm (unusually for the Fed, not a
Wednesday) we will get the FOMC meeting announcement, which this time is followed up by
the presser with Janet Yellen at 2:30pm (worth remembering that the press conference has
moved the market as much as the standard FOMC release on a few occasions).
As always, follow a decent independent source for US macro news for the latest on the Fed,
pre- or post-announcement. And as always I recommend Calculated Risk (1), which already has
a couple of decent posts up on next week’s key financial event including blog owner Bill
McBride’s take on what will happen on Thursday (he thinks the Fed will raise) plus the Goldman
Sachs call and that particular squid-like entity thinks the Fed isn’t going to raise rates.
Regarding the IKN blog
A short note to you, the highly appreciated subscribers of The IKN Weekly, regarding the free
public access IKN blog. I’ve found over the years that my enthusiasm to stick half a dozen posts
on the open blog per day can wax and wane and I’ve noticed that I’ve been going through one
of these phases over the last couple of weeks. It could be the continued drudge of the bear
market for miners, it could be things outside my cyber life, it could be that I find myself
travelling a little more in the last few weeks or it could even be that my concentration on the
IRL soap opera is distracting me away from the wider market view. All I want to say is that as
the phases have come and gone before I’m sure this one will as well. The blog isn’t going away,
it may go through a period of light-ish posting rhythm but that’s all. Thanks for the mails
received on this subject, people. Fret not.
1

Still bullish no matter what Janet does
Gold! Gold! Gold! Gold!
Bright and yellow, hard and cold
Molten, graven, hammered and rolled,
Heavy to get and light to hold,
Hoarded, bartered, bought and sold,
Stolen, borrowed, squandered, doled,
Spurned by young, but hung by old
To the verge of a church yard mold;
Price of many a crime untold.
Gold! Gold! Gold! Gold!
Good or bad a thousand fold!
How widely it agencies vary,
To save - to ruin - to curse - to bless -
As even its minted coins express:
Now stamped with the image of Queen Bess,
And now of a bloody Mary.
Thomas Hood, 1789 - 1845
That Thomas Hood poem, written nearly 200 years ago, is one of the things I’ve found and
stored over the years on the IKN hard drives. With the computer problems I’ve been having this
week and the resulting repairs, it came back into view as a happy accident and I thought it
would make a nice little opening ditty in this week’s edition, if only to remind us all that the
travails around the most fascinating of all metals are nothing new to our current era.
And neither are the frustrations. I for one will state openly that I was looking for a lot more
from our sector of focus, junior miners, in the Labor Day week that’s just passed. After looking
forward to its arrival over the summer months, its arrival was a classic damp squib and the
quick note made on the blog about the lack of volumes in mining stocks is the heart of it all.
People in the wider financial community still don’t care about the mining companies, there’s a
moribund atmosphere and a cloud of complete
apathy hanging over the stocks, nobody can
see a catalyst or a reason to buy in. Plus of
course any measure of negative news is the
best reason possible for a new round of
selling, as those long Goldcorp (GG) found to
their cost last week.
But then Friday came and Friday I’m in love.
Once again we hit a level at which bargain
hunters stepped in and showed there was
some interest, at least form those inside the
sector. Selling met by immediate buying, as
seen on that GDX (blue) line above, is the
right signal for those of us that think there’s
no more downside, the capitulation’s done, the only way is up. Include me in on that.
The mining sector consensus isn’t that much different from mine; ask around enough and you
will find the occasional out-and-out bear, plus others who propound a “one more dip to come”
scenario, but for the most part and if you listen to the most experienced people (who’ll often be
the people most willing to ride out short-term squalls) they’ll tell you that the bottom is now in.
As for the rest of the investment world (and there’s a whole bunch of people with more money
than idea about mining) they seem to be waiting on the Fed’s cue before placing their next
round of bets on any sector, mining included. Frankly I don’t care, because I’m now seeing
operating miners making operating profits and being priced as though they’re bankruptcy cases.
I’m seeing explorecos with decent assets being priced at deep discounts to a real and logical
buyout price. If I knew when the upside would start I’d be a rich guy very quickly, so I’ll stick to
my fundamentals and ride through the ongoing angst and frustration. Being long and with
newly added positions is the right place to be in this juniors market.
2

Fundamental Analysis of Mining Stocks
Standard Tolling (TON.v): an update and preliminary analysis
I know I say this all too often in the intros, but this time I’m going to try and keep this analysis
simple, focused and above all concise. In this case I toyed with the idea of making today's look
at Standard Tolling (TON.v) a full NOBS report with deeper looks at the financial structure and
even a projected target, but in the end I've decided to go with an overview and more op-ed to
keep it lighter. However, what I will take from the more formal analysis style is a topbox with
the updated structure of TON.v today:
Shares out: 54.45m
Options: 3.68m
Warrants: 44.27m
Fully diluted shares: 102.4m
Current share price: $0.065
Market Cap: C$3.54m
Approx working cap per S/O: 1c
All prices are in US Dollars unless stated. Forex U$0.80=CAD$1
It's a stock I’ve been interested in for a while and to date, the closest look I’ve taken on it was
In IKN322 dated July 12th 2015 (over two months, how time flies), which was a write-up of the
meeting I had in Lima with company CEO Len Clough and his impressive advisor on the project,
Carlos Mirabal. Go see the report in that edition if you want, but as a reminder here’s how it
wrapped up:
As things stand today, I'm not buying anything new which includes TON.v... (b)ut TON.v isn't
just a candidate any longer, it's high on the list. What I need to do from here is:
• Check out the mill myself on an eventual visit
• Work the numbers (and I'm going to ask the company for more guidance on a few
inputs that I'm still not sure about).
• Consider further the limitations that its lack of size can bring to a company such as
this. After all, even at 350tpd and fully functioning, it's never going to be the biggest
thing in the world and the pool of potential investors is never going to be large.
• Watch the wires for development news.
IKN331 back. When it comes to that list, I'm apparently on the list of those to be invited up for
a site visit and tour (we'll see if they still like me enough when they read today's piece). I've
been working on the numbers and today I won't go into everything, but I want to frame the
things I want to see from the initial results of eventual operations. As for the small size, I'm
more comfortable than before about that because at its current share price, any moderately
successful operation would see strong upside no matter its size. And as for watching the wires,
that's really why I've decided to tackle TON.v today and get my position nice and clear because
last week brought some bad-looking news (2), which reported to the market an incident at its
Huamachuco mill facility and how a neighbour of the mill has apparently become angry enough
to set his machinery on the plant entrance. As TON.v used the word "traumatic" to describe the
situation and told the world it was going to press charges, that seemed more than enough to
post on the blog about it. The next day company CEO Len Clough dropped me a line to say that
the event covered in the NR in itself wasn't as bad as it might have sounded on the outside and
real damage was minimal. For me after hearing about it from TON and finally getting round to
reading about it in the local news, reading between the lines it smells as though it wasn't that
bad and the company decided to announce the incident to cover their backsides in the now
critical period leading up to commissioning and first pour. So overall that single event (what
amounted to an angry neighbour) isn't a biggie, but the precedent it potentially sets isn't so
great. It's one of those situations where if it happens once we can shrug it off, if another
incident that could be classed as "upset locals" happens in the near future (i.e. in this key
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commissioning/ramp-up/teething period) we'd need to pay very close attention. Three or more
and the project becomes toxic.
I then took advantage of the open channel and exchanged a couple of short mails with CEO
Clough and found out that the municipality of Huamachuco had just awarded its operating
licence to the company (that's a big step, people) and that thanks to that the national
government operating licence would almost certainly be emitted very soon (which is the one
that TON.v will be able to show off to the market). This is a good thing. I also took the
opportunity to ask about the latest estimates on timeline to free cash flow and how the final
small round of financing was going.
Regarding the timeline, TON.v now expects to be free cash flow positive (FCF+) in 1q16. In
other words and in general terms we're now a quarter behind the previous timeline. I'm not
going to embarrass those at TON.v by showing the projected timeline from the corporate
presentation back in April (in that they were annualizing a 15c EPS in December 2015) because
those delays are now understood. Instead, this excerpt from the August corp-pres (right) shows
how TON.v was expecting to be
running at 100tpd by "late Q4"
and that's just not going to
happen. And check out the latest
presentation for yourself, right
here (3).
But all is not lost, especially for
people like me who preferred to
wait on the sidelines for a while.
Assuming 1q16 sees TON.v go FCF+ it's going to have a decent project on its hands, a quarter
late or not. But of course there's a wrinkle to this late arrival and the next couple of paragraphs
consider that.
Regarding the second, the cash raise, right now he said they're working hard on a debt-based
deal that will cover what they need to get there. I didn't get hard numbers form CEO Clough
(quite correct too) but on hearing that the company needs to cover the last pieces of capex
(purchases of reagents, fuel, steel balls), general working cap and then consider the $300,000
portion of the debt repayment that's due at end December 2015 (you may recall that TON.v
had $1.3m to pay back, but the creditors have deferred $1m of that to July 2016 to give the
company more breathing space) I'm best-guessing they'll need to raise something in the order
of $1.2m in order to cover bases.
That's not such a big number of course, but it's still the case of a small start-up mining
company trying to raise cash that it needs (not wants, but needs) in the tightest and most
difficult of market circumstances. It's also worth remembering that from the start TON.v always
set itself a very tight construction schedule that was planned on a relative shoestring compared
to many other projects of this type. The company has been largely successful too (a look at the
latest corporate presentation on its website will see how they extol their achievements) but it
also means that there was is and will be very little margin for error. As things have turned out
they've hit delays and that means the cash they raised to get to operating status and FCF+ isn't
going to be enough. Which means they're scrambling for a final debt raise deal. Which adds
uncertainty at the wrong time and in a tough market. It also means that the people who lend
the money will take away at least some of the initial upside and profit potential from the
equities (and that's us folks).
What the debt position looks like
This simple table has the main components of what the debt should look like at TON.v
assuming the latest round closes:
4

TON.v: Debt position ($m)
Trade payables as at 2q15 0.162
Debt as at 2q15 1.325
Ore notes as at 2q15 1.399
July 2 ore notes 0.634
est. new debt financing 1.2
Total $4.72
source: company filings, IKN ests
The total of $4.72m in that above chart starts by taking the 2q15 financials and then adding:
• The last round of 'Ore Notes' closed by TON.v on July 2nd, just after the end of the last
quarter
• The assumption (see above) that TON.v is about to raise around $1.2m in debt in order to
finish off its build and go into production.
As for main debt repayment obligations, there are two on the horizon:
• Payback of $300k in December 2015. This should be covered as part of the package of
cash being raised right now.
• Payback of $1.025m in July 2016. This is the rest of the financial debt, deferred from
December and it's the single most pressing obligation TON.v has on its books. By then it
has to be free cash flow positive and churning out both ounces and profit from its mill
operation, because if not that debt won't get paid.
To the liquid assets side, we need to note that TON.v has $1.75m of restricted cash on its
books. That's the so-called 'Ore Account', the cash that the company model sets aside for
immediate payment to any supplier of ore to the mill. In TON's opinion (and in mine) having
this piggy bank account that allows it immediate payment to rock suppliers will be a big
advantage to its model and the plan is to keep it at $1.75m at all times.
What I'm looking for from production and cash flow
Overall the financial balance sheet looks manageable, but it's also clear that aside from the
restricted cash needed to fund ore purchases, corporate cash treasury is tight and will remain
so until the operations go profitable. Therefore, what we need to consider is just how much
TON.v is capable of making and whether it can cover its upcoming repayment obligations,
especially that July $1m hurdle. For that (and keeping it simple today) a couple of tables to
illustrate what the operation is capable of achieving.
This one considers the type of quarterly production we can reasonably expect from TON.v at
different rates of throughput and gold grades. Please consider the notes below that go with this
table:
TON.v: Quarter gold prod. at various tonnage thuputs & Au grades
Gold grade (g/t) (assumes 90% recovery)
TPD 10 15 20 30
50 1,302 1,953 2,605 3,907
100 2,605 3,907 5,209 7,814
350 9,116 13,674 18,232 27,347
source: IKN calcs
Now for the notes and we need to make some global assumptions:
1) TON's mill runs a quarter at the average throughputs seen to the left.
• 50 tonnes per day (tpd) is the company's target for initial production
• 100 tpd is the second intermediate target it's looking to reach within two or three months
of first pour.
5

• 350 tonnes per day is the longer-term objective and the maximum rate its mill will run (if
not it loses the official category of "small miner" and a lot of benefits in Peru, as well as
needing a whole new set of permits). We mentioned in IKN322 that a lot of the
infrastructure to get to 350tpd is already in place, so it's a reasonable target for a year
out, perhaps.
2) Recoveries are at a global average of 90%. This is a typical recovery rate for this type
of operation and although TON.v might not hit it at first, it's the type of number it should be
able to maintain once things are steady.
3) TON's average gold grades are at the levels seen at the top of the table. I've modelled
different production potentials because TON has been clear for a while that it plans to ramp up
using lower grading material, perhaps 10g/t gold, then as confidence in the process improves
and throughputs become more efficient
4) Not credit given for silver. The toll mill model in Peru means that miners are paid for gold
content and not for any silver. As it happens, the ore in the Huamachuco region comes with a
significant amount of silver, TON.v in its literature claiming that 155g/t is typical. To give an
idea of what that might mean, here's a separate table that considers what kind of quarterly
silver production TON.v could get at different tonnage and grade examples (and note that this
time recoveries are assumed at a far lower 60%):
TON.v: Quarter silver prod. at various tonnage thuputs & Au grades
Silver grade (g/t) (assumes 60% recovery)
TPD 75 100 125 150
50 6,511 8,682 10,852 13,023
100 13,023 17,363 21,704 26,045
350 45,579 60,772 75,965 91,158
source: IKN calcs
So to give just one example, if TON gets 100g/t silver rock, recovers at 60% and runs at
100tpd, we're looking at 17,363 oz Ag and as that's "free money" (they don't pay for the silver
content but they do sell it for their own profit) if silver is at $15/oz we're around $260k in extra
revenues. That's not bad money and will surely help with the wage bill, but it's not the type of
money that makes or breaks the business model either. For that reason, we want TON.v's
model to run on gold alone. If the numbers don't add up just with gold, it's not for me.
The bottom line is that we can expect small but reasonable quarterly production from TON at
the beginning of its working life. For its first quarter of ramp-up production (i.e. 4q15) I'll be
looking for something in the 50 tpd line, perhaps 1,300 oz with average grades at 10 g/t gold.
Then in 1q16 we can start moving up the scales and if in 2q16 it's running at a reasonably
gettable 100tpd and 15g/t (at 90% recoveries) we model quarterly production at 3,907 oz gold.
But what does that mean for cash flow?
To repeat, what TON needs to do in its first couple of quarters of working life is to get
operating, get the cash flowing, make a profit on operations and importantly have enough
money in the kitty to pay back $1m in July 2016 (that aside from any new obligations it's taking
on for this latest round of financing. Let's therefore consider the cash flow potential, again in a
simple manner, by assuming that after paying the ore suppliers and the running costs, TON.v
makes a mine gate $100/oz on its gold production, or something less than 10% of the current
gold price (the now stable and producing Dynacor (DNG.to) in South Peru has established a
13% to 20% operating margin, to give some context). So at a $100/oz margin and the same
grade/tonnage assumptions as above, a quarter would look like this:
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TON.v: Qtr gross margin from production at $100/oz
Gold grade (g/t) (assumes 90% recovery)
TPD 10 15 20 30
50 $1.30m $1.95m $2.60m $3.91m
100 $2.60m $3.91m $5.21m $7.81m
350 $9.12m $13.67m $18.23m $27.35m
source: IKN calcs
I think it's fair to say that at 50 tpd and 10g/t gold, TON.v isn't going to be free cash flow
positive. I've scratched in $2m/qtr as the breakeven point for cash flow (once things like G&A,
interest servicing etc are taken into account) so as TON.v is aiming to get FCF+ in 1q16, we'll
need to see it at perhaps 15 g/t average throughput and a little over 50 tpd average, or
perhaps the throughput up at 100tp while grade remains low during the trial period (a lot will
depend on on-site operating decisions, we'll find all this out later). In other words, TON.v
becomes stable financially by making $100/oz on a low level of initial production. This is good.
It'll then have that $1m debt repayment in its sights just after the end of 2q16, so if it's by then
running at a reasonably gettable 100tpd and 15 g/t (90% recoveries), the $2.9m in cash flow
will cover that easily enough. And as the above table suggests, all that's just the start.
If you want to consider what TON.v is capable of achieving once it's up and running smoothly,
check out this alternative to the above chart that sets the average ounce margin at $150/oz
rather than $100 (the type of difference DNG.to makes at current gold prices);
TON.v: Qtr gross margin from production at $150/oz
Gold grade (g/t) (assumes 90% recovery)
TPD 10 15 20 30
50 $1.95m $2.93m $3.91m $5.86m
100 $3.91m $5.86m $7.81m $11.72m
350 $13.67m $20.51m $27.35m $41.02m
source: IKN calcs
Even before TON's operation starts the second stage of ramping up to 350tpd, the type of mine
operations margin it can make at 100tpd makes any stock with 55m shares out and a 6.5c rpice
look very attractive. And this above is the main reason why I'm intereste in TON.v and have
been for a while: At an optimum level its potential EPS is classed in the "too good to be true"
realm, so even if it doesn't hit all the blue sky levels it still has the potential to become a real
moneyspinning operation.
Conclusion
What TON needs today are three things. It needs to close on its debt deal, it needs to move
into operation and ramp up to positive free cash flow levels in 1q16 as it's stated, then it needs
to show it can make a profit and start paying back the loans. If we get those three into
position, this thing is a buy. It may be a buy now at 6.5c for those of you who prefer to stick
necks out a little further, but all three of those variables are a risk here today in September
2015. We've seen TON.v move back its timeline a couple of times and we're now at the put-up-
or-shut-up stage on that score. We know it needs to raise funds in this difficult market, so
blithely assuming it will be able to raise the cash is irresponsible, as is assuming the terms and
conditions of any loan won't be a heavy burden on us, the ones considering shares as the way
in. And then it still needs to show its chops as an operator and make money, that's never a
given in start-up operations and what's more there's a $1m July deadline the company has to
keep, too.
In other words, I'm aware of the risks here. However I wouldn't have got this far and written
two longish pieces on TON.v already if I weren't very interested in the stock. I am very
interested in this stock and think it has the potential to be not just a good buy, but a great one
for myself and for you people reading these words. I'm very keen on getting up there to
7

Huamachuco and seeing things for myself so I hope that trip can happen soon.
I'm already thinking about best windows for an entry point in TON.v, as it strikes me as one
that I'd rather buy at a higher price on the way up than one I'd buy now and take a larger risk.
The key time window may turn out to be 1q16, because when it starts printing operating
numbers and cash flows, I think there could be a spot when small but correct results indicate
great things to come (if they can get it going right, at least). All that's for another day.
I'm not a buyer of TON.v yet, it's still too risky for my blood with key matters such as
commissioning and financing deals to be covered. But yes, I'm interested.
Stocks to Follow
Of the 16 open positions currently in the Stocks to Follow list, last week saw seven weekly
winners (TGZ.to, MUX, FOS.to, ATM.v, LGN.v, MAX.to, REG.v) and five losers (BTO.to, NGD,
SAM.to, DNA.to, FCV.v), with four remaining unchanged (LSG.to, LRA.v, IRL.to, TGM.v). In
other words a mixed bag and plenty of the main names we own with reasonable and liquid
volumes did the type of dip-and-rebound we outlined in the intro today (NGD, LSG, BTO, MUX,
DNA). The only real bummer was B2Gold, which couldn't hold onto its outsized gains of the
previous week. Overall it was one of those weeks in which I felt happy to own decent solid
stocks and have most of my cash in the non-sketchy end of the junior world.
We currently have 16 open positions in our 'Stocks to Follow' list, one more than my usual self-
imposed maximum number and a temporary state of affairs. Four are in the green, the rest are
still firmly stuck in red.
8

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$1.57 -27.6% Top Pick, 1st tgt $2.70
Metals Producers (in current order of preference)
Lake Shore Gold LSG.to buy C$1.07 07-apr-15 C$1.04 -2.8% Added Aug, M&A tgt
Teranga Gold TGZ.to str buy C$0.57 15-feb-15 C$0.59 3.5% Added Aug, 83c tgt v cheap
McEwen Mining MUX hold U$1.09 25-jan-15 U$0.838 -23.1% Recovering from lows
New Gold NGD buy U$2.18 23-aug-15 U$2.28 4.6% Price tgt $3 set Sep 6
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.09 -25.0% Also "land grab", tgt 19c
Land Grab Stocks (in current order of preference)
Phoscan Chem FOS.to hold C$0.28 29-mar-15 C$0.27 -3.6% 36c/share of cash, can add
Atacama Pacific ATM.v hold C$0.19 26-apr-15 C$0.15 -21.1% Spec buy, cheap adv proj
Legend Gold LGN.v hold C$0.085 01-mar-15 C$0.04 -52.9% Spec buy, v small, not working
Lara Expl. LRA.v spec buy C$1.15 08-apr-12 C$0.225 -80.4% solid biz model, LT hold
Other Recommended Stocks (in current order of preference)
Dalradian Res DNA.to hold C$0.64 27-oct-13 C$0.85 32.8% Nov'14 tgt $1.25, top Au expl
Minera IRL IRL.to BUY C$0.195 22-jul-12 C$0.07 -64.1% VERY cheap today
Midas Gold MAX.to spec buy C$0.39 23-aug-15 C$0.395 1.3% new near-term trade flip
True Gold TGM.v spec buy C$0.18 23-aug-15 C$0.18 0.0% improved pol risk, sm trade
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.19 -17.4% tgt 50c, 3q15 PEA
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.29 -6.7% Comm. Rels slow progress
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.
B2Gold (BTG) (BTO.to): The frustrating one and, being the largest personal position, made
sure I finished the week with a paper loss to my junior portfolio. After noting that it had “traded
like a champ” last week, BTO couldn’t follow through, got hit hard by the Thursday/Friday
selling and didn’t react anywhere nearly as well to the rebound push Friday. Which could be a
one-off, people going to other places for their fliptrades, so there’s a reasonable chance BTO
plays catch-up in the days to come.
Focus Ventures (FCV.v): One of the things that come with the thinly traded junior playing
field is the type of action we saw last week in FCV. It’s not a good thing ladies and gentlemen,
but it’s not that much of a bad thing either. It’s just a thing, it comes with the territory and we
all take some sort of portfolio hit of this type every now and again.
After three days in which precious little volume passed in FCV, Friday morning saw an approx
55,000 share sale go through at an average of 16.5c, some 13.2% lower than the typical 19c
price we’ve been seeing in the stock for a while (it’s been 18c, it’s been 20c). And while such a
9

hit is never a pleasant thing for longs such as I, I’d vouch this isn’t one of those we need to
worry about too deeply. People sell stocks for all sorts of reasons and what this looks like is
somebody, somewhere, who needs to
liquidate thier position for their own sweet
reasons but whose patience hs just
snapped and can’t wait any longer to sell.
So the persistent offer at 16.5c in a wafer-
thin market is accepted and a trade that
amounts to little more than $10,000 wipes
a million or so from the company’s market
cap... for a while at least.
In the time between that sale and the small
trade that re-established FCV at 19c, I
received a mail from reader D with the title
line Focus and then this as part of the body
about FCV:
“...Didn't think we'd see that. Probably being shorted ahead of the free-
trading stock that comes in October. At this rate it could go sub 10 to 2013
lows again, so I'm not buying. But there's a possible opportunity coming.”
Well D, I don’t think this is about shorting nor the escrowed shares that are freed up in October
(FCV has tight hands on board this time). And while it could always go “sub-10” as there’s
nothing to stop a full-scale market meltdown, I strongly doubt that. What we saw last week
was one of those things that holders of thinly traded penny stocks have to suffer on occasion; a
small but dedicated seller that gets ripped off by a shark like excuse for a market maker.
Lake Shore Gold (LSG.to): Hit harder than most by the weak period, LSG.to managed to dip
under C$1.00 for a while last week
before rallying to its UNCH finish. I’d
thought those sub-Loonie days were
over and gone, but the same type of
shrug-shoulder philosophy in the FCV
piece above must be applied here.
One thoery floated at me from one
Canadian brokerage trading desk was
that the problems faced by Goldcorp
(GG) last week (see below) were
spilling over onto LSG, what with GG
being the most likely buyer of this
company (and in real terms it’s the
reason I’m long the stock).
As this comparative chart shows, that
theory has some legs
Teranga Gold (TGZ.to): This ten day hourlies of TGZ is good witness as to why I’m feeling a
lot better about this position this weekend than last. Last weekend I voiced my frustration (not
a good sign when it comes to stocks) that TGZ hadn’t been able to hold onto its sector-beating
gains of August. The last week saw much better action from the stock, as it held the 55c/57c
baseline very well, saw active buyers no matter what $10 was being added to or taken away
from gold, and then when the last hours of the week brought the cross-sector buying spree
TGZ was one that was included in the front line.
In the same way as True Gold, the purchase price in this stock has that “bought well” look
about it, right on the long-term baseline resistance (though unlike TGM.v I managed to miss
10

selling for a decent profit when it popped up from the line earlier in the year).
Midas Gold (MAX.to): Much more like it. MAX
did very little during the fist three days of the
shortened Labor Day week but on Friday came
back to life, trading above the key 40c level for a
while as at least one buyer moved in at the open
and bought nearly 300k shares. The clock’s
running on this trade and it has until end-
September latest to make a difference to The
IKN Weekly for the reasons outlined on several
occasions. It might just do something now that
volume is returning.
True Gold (TGM.v): We again finish UNCH on the week, but that’s the bottom of its tight
18c/19c trading range (touched 19.5c on a trade) now and while volume isn’t massive (even les
in real dollar terms) it is at least liquid and tradable. With risk (in my eyes at least) diminishing
and the community relations now at the point of constant contact and dialogue (something that
always greatly reduces the chances of violent, headline-making flare-ups in Latin America so
I’m assuming it’s the same way in West Africa) I’m now at the point where I’m considering
adding to this small position and taking advantage of the asymmetric risk/reward it offers. But if
I do I’ll pay 18c and keep the cost average as per, not a penny more.
Dalradian Resources (DNA.to): DNA on Thursday brought a rare thing to market; a NR from
a junior with results of the latest round from its extensive drilling campaign (4). and as this list
of intersect highlights (ripped straight from the NR) shows...
• 1.24 m grading 100.01 g/t gold from the Crow vein in hole 15-CT-232
• 6.48 m grading 10.85 g/t gold from the Sperrin* vein in hole 15-CT-254
• 0.31 m grading 475.00 g/t gold from the Causeway West* vein in hole 15-CT-223
• 2.53 m grading 19.60 g/t gold from the No.1 vein in hole 15-CT-220
• 0.54 m grading 123.59 g/t gold from the V75 vein in hole 15-CT-224
• 1.98 m grading 34.57 g/t gold from the T17 vein in hole 15-CT-238
• 3.26 m grading 22.68 g/t gold from the Causeway* vein in hole 15-CT-239
• 1.40 m grading 70.24 g/t gold from the Mullan vein in hole 15-CT-240
• 1.69 m grading 43.49 g/t gold from the Mullan vein in hole 15-CT-241
...there were decent results on display, too. The program is part of the extensive infill program
that's converting as much of the inferred resource at Curraghinalt to M+I resource, because the
DNA objective is now to produce a feasibility study in late 2016 and unlike a PEA, you can't
include inferred in the feas or pre-feas and that rock can't be included in the economics if not.
Last week's NR out of DNA was also a reminder on just how expensive it is to run this type of
11

infill program on thin(nish) vein mineralization. The program needs to space closely and if
you're aiming for mineralization just a metre or two in diameter, it takes a lot of holes (i.e.
money) to reach the level of confidence needed for M+I resources. Back when money flowed
freely and it was 'drill baby drill' this aspect of exploration wasn't so high on the list of priorities.
As DNA's corporate cost cutting NR dated September 3rd shows, these days every dollar
counts. The other thing about infill drilling is that it rarely moves the market; we people on the
outside see good results from holes that were sunk near to other good holes and think, "Well,
that's what they were supposed to find, right?", or some-such, there's no out and out discovery
going on. In fact the DNA numbers last week were very good and puts them on track for the
Feas Study, but we're definitely into the nuts and bolts part of the exploration and not the part
where immediate cash value gets added to the share price. That comes later.
New Gold (NGD) (NGD.to): There’s nothing more volatile out there at the moment. This ten
day chart sitting NGD against GDX gives an
idea of the swings, which in real terms saw
NGD move from U$2.42 on Wednesday
morning to U$2.02 just 48 hours later (16.5%
downer) only to recover the major part of that
slump by the end of the same day.
I’m going for the glass-half-full state of mind
and saying this volatility is a good thing. Firstly
because it’s one of the more interesting
trading stocks out there at the moment and
being one of the centres of attention can’t be
all bad. Secondly as after doing the numbers
last week I’m very confident about NGD being
worth substantially more as long as gold holds in place. I’d expect NGD will be one of the stocks
of choice for people trading gold around the FOMC in the week ahead. Expect more volatility.
The Copper Basket
After thirty-seven weeks of 2015, The Copper Basket is showing a 31.03% loss to level stakes.
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 236.81 0.62 -69.5%
2 Reservoir Min. RMC.v 3.96 47.55 194.00 4.08 3.0%
3 NGEx Resources NGQ.to 1.17 187.71 122.01 0.65 -44.4%
4 Nevada Copper NCU.to 1.65 80.5 83.72 1.04 -37.0%
5 Copper Fox CUU.v 0.135 402.96 72.53 0.18 33.3%
6 Amerigo Res ARG.to 0.27 173.65 41.68 0.24 -11.1%
7 Western Copper WRN.to 0.68 93.68 37.94 0.405 -40.4%
8 NovaCopper NCQ.to 0.58 60.15 35.49 0.59 1.7%
9 Hot Chili Ltd HCH.ax 0.16 333.11 34.98 0.105 -34.4%
10 Panoro Minerals PML.v 0.295 220.64 24.27 0.11 -61.0%
11 Regulus Res REG.v 0.35 56.39 16.35 0.29 -17.1%
12 Metminco MNC.ax 0.008 2650 10.60 0.004 -50.0%
13 AQM Copper AQM.v 0.06 141 4.94 0.035 -41.7%
14 Catalyst Copper CCY.v 0.305 31.41 4.71 0.15 -50.8%
15 Coro Mining COP.to 0.045 159.37 3.98 0.025 -44.4%
NB: HCH.ax & MNC.ax priced in AUD$, rest CAD$ Portfolio avg -31.03%
12

There were five weekly winners in our basket of 15 stocks last week (CS.to, NGQ.to, CUU.v,
HCH.ax, REG.v) and two other UNCH stocks (MNC.ax, COP.to). That leaves eight losers (RMC.v,
NCU.to, PML.v, WRN.to, ARG.to, NCQ.to,
AQM.v, CCY.v) with the biggest losers in 5% The Copper Basket 2015, weekly evolution
percentage terms being AQM Copper 0%
(AQM.v down 22.2%) and Catalyst Copper -5%
(CCY.v down 11.8%). The best winner was -10%
NGEx Resources (NGQ.to up 12.1%) after -15%
that one finally managed to catch a bid or -20%
two after its long downward trend. -25%
-30%
To the copper metal price, which saw a -35%
strong rebound last seek as this 90 minute
chart shows. Buyers were in at the first on
Monday, immediately pushing copper back
to the U$2.45/lb level and with fluctuations on
either side that’s where it stayed all week. The
reason behind the move was a double whammy
of flagged supply cuts (with Glencore at the
forefront, announcing several mines would be
shuttered and some 400,000 tonnes of copper
kept away from the market in the next 17
months...not insubstantial) alongside data out
of China of stronger imports than expected. So
a decent week for the copper bulls and
although I’m not one of them I’m still good
about this move, as the copper/gold ratio was
getting very tight back there for a while and
impeding the potential for gold upside. With
copper’s move, the market and its band of TA
lovers will be more relaxed if gold moves higher
(and it will).
However, I’d like to try and throw at least half a
bucket of cold water on those same bulls by
featuring a longer-term chart this week. We see
the recent rally from as low as U$2.20/lb in late
August, but it’s hardly a stock shouting a new
trend or direction change on a deep level, not
yet at least. I can’t see copper rallying much
further, supposed supply crimp or not.
Now for the regular weekly inventory bullet
points:
• Total world copper stocks showed
another modest overall drop on the
week, this time by 2,095 metric tonnes
(mt) (-0.4%) to finish the week at
517,157mt.
• However and for the second week in a row, Shanghai stocks moved up significantly
while the world aggregate dropped. This time the jump was 11,957mt (+9.3%) to
finish the week at 140,844mt. That's no small move.
13
ht4naj ht81 ts1bef ht51 ts1ram ht51 ht92 ht21 ht62 ht01 ht42 ht7nuj ts12 ht5luj ht91 dn2gua ht61 ht03 ht31
source: IKN calcs

• Meanwhile LME stocks fell by another 13,850mt (-3.9%) to finish the week at
342,000mt. LME zags, Shanghai zigs.
• Comex warehouses shift very slightly by 202mt (-0-6%) to 34,313mt. Small stuff.
Here's the key Shanghai-only tracker chart, with the move to 140kt adding to the clear trend.
The question is just how much of that recent import surge into China has been taken by end-
users and how much is now hanging around port warehouses (bonded or unbonded). It looks
early to see such an uptrend and a couple more weeks of 10k adds will not go down well with
those who want copper higher.
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 dr32 ht6pes
Mt Cu
source: Cochilco
Now for notes on a couple of basket stocks.
Capstone Mining (CS.to): We covered CS.to’s NR on the blog last week, with special
attention paid to the decision to halt work on the Feasibility Study at its Santo Domingo
copper/iron ore project in Chile. Quite
right too, the thing’s a total dog and we
should now expect further impairments
from CS in the next set of financials (if
they want to play it correctly, anyway). As
we noted on the blog, the current whole
company market cap is now roughly a
third of the price CS.to paid for Santo
Domingo back when the market was hot
and that’s a lot of money flushed down
the toilet. As for the stock, on news of the
Santo Domingo deferral Wednesday
morning (5) the stock rallied to its highest
price of the week at 71c (it enjoyed the
“Glencore rally” on Monday like many
other stocks) but then sellers appeared who ignored the ongoing improvement in copper the
metals and sold down the stock for the rest of the week. CS managed to eke out a 1c win on
the week, but it was hardly impressive. There’s enough people who’ve worked out that it’s
going to take more than 10c on copper to save this heavily indebted company.
Nevada Copper (NCU.to): Thursday morning saw NCU announce (6) a drill intercept of 462
feet of 0.62% copper at Pumpkin Hollow, numbers that the cringingly bad pump artists at
Scotia (knee deep in this paper) dared to call “splashy”. The rest of the market knew better,
this was a liquidation opportunity:
Average volumes in this stock have been pathetic recently, so the dump on 143k shares traded
is an indication of what really matters here; people grabbing at the chance to get a few more
failed shares sold to somebody else.

The Low Cost Producer Basket
After 37 weeks, the 2015 Low Cost Producer Basket is showing a 29.86% loss to level stakes.
company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Goldcorp GG 18.52 830 10.48 12.63 -31.8%
2 Newmont NEM 18.90 528.08 8.58 16.24 -14.1%
3 Barrick ABX 10.75 1164.67 7.40 6.35 -40.9%
4 Franco Nevada FNV 49.19 156.5 6.32 40.39 -17.9%
5 Agnico Eagle AEM 24.89 214.12 4.74 22.16 -11.0%
6 Silver Wheaton SLW 20.33 403.75 4.69 11.62 -42.8%
7 Kinross KGC 2.82 1146.2 1.73 1.51 -46.5%
8 Buenaventura BVN 9.56 254.19 1.57 6.16 -35.6%
9 B2Gold BTG 1.62 926.68 1.10 1.19 -26.5%
10 Pan American PAAS 9.20 151.64 0.96 6.30 -31.5%
all prices in U$, using NYSE ticker prices Portfolio avg -29.86%
Even though there were three weekly winners on our list (NEM, SLW, BVB) we plumb new
weekly lows this edition, as did the GDX benchmark which registered new multi-year lows last
week. The biggest losses in percentage terms were taken by Kinross (KGC down 9.0%) and
B2Gold (BTG down 7.0%).
The Low Cost Producer Basket: Weekly performance
30% and comparative to GDX control
20%
10%
0%
-10%
-20%
-30%
-40%
15
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 dr32 ht03 ht6peS ht31
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%
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 dr32 ht03 ht6peS ht31
|
source: ikn calcs, NYSE/Nasdaq data
Goldcorp (GG): Monday evening saw Goldcorp publish a NR (7) with the seemingly innocent
title of “Goldcorp Investor Tour to Provide Update on Éléonore Mine Ramp-up”, but come the
third paragraph, the word that nobody wants to read in a NR was ready to hit longs hard:
“However”.
“...however higher than anticipated folding is being encountered. Mining in
these folded veins areas is resulting in higher dilution and therefore lower
than planned mined grades and gold production. The Éléonore team is
working to adjust stope design to minimize these impacts.”
The GG people now estimate mine dilution will run to 25% (others I've read have said 30%)
and that mined tonnages at the stope go
up by as much as 60% because of the
folding they've encountered (slide 16 on
the GG presentation which went with the
NR was nicely schematic and simple
enough for me to grasp the problem.
In the end it's not a mine killer, let alone a
company killer because that area only
accounts for a minority of the mineral at
Eleonore. GG is big and bad enough to get
over this one easily, but it's another
sobering episode in the way that reality is
often different to theoretical geological
models. Risky business, mining.
Regional politics
Chile: Codelco protests and third-party workers
One of the mining headlines of the week was the protests that caused Codelco’s massive (no
other word) Chuquicamata mine in the North of the country to stop production. The protests
were based around plans to cut the workforce there (and in other mines in the country) and the
people who are in the direct line of redundancy fire are the third-party contractors who work
there, as their contracts and general job security is far more precarious than the lucky ones
who are employed directly by the Chilean State-run Codelco. This has been followed up by a
new law bill presented by the Bachelet government (supposedly left wing, in fact centrist, but
definitely under popularity pressure at the moment) which wants to promote better job security
by getting more directly employed workers in mining and less third-party contractors.
None of this is very surprising, nor is the reply from the Chilean business community to the

protests against the rise of third-party subcontracting in the country model. As one example,
this article in Chile’s “Economia y Negocios” (Economy and Business) weekly magazine (8)
counters the recent wave of concern at a population level about the numbers of people
employed in mining on a third party basis (in Chile, for every directly employed person in
mining there are now two employed via third party contracts and that’s roughly the same ratio
as in neighbouring Peru). The business community has been pushing back by noting that the
rise of third-party working contracts gives Chile more flexibility, better productivity and cost
effectiveness and that according the Andrés Aguirre of the Association of Mining Industrial
Suppliers (Asociación de Proveedores Industriales de la Minería (Aprimin)), which is basically a
lobby group for the use of third party contracting, there exists today a “tendency to denigrate
sub-contracting for ideological reasons”, which is Chilean biz-code for “Michelle is a Commie”.
The pro-subcontracting argument runs along strict neoliberal free market lines, using phrase
such as “externalization of costs”, “process efficiency” and “absorbing temporary peaks” etc etc.
Nothing new and in fact, nothing I have any great argument against either. Chile’s mining
industry is aware of its own strengths and weaknesses and one of the latter is its relatively high
operating cost levels, particularly when compared to neighbouring Peru and its growing copper
sector.
Guatemala: Morales versus Torres
This time last week we’d already flagged Jimmy Morales, the outsider candidate who’d come
from nowhere to lead polls in Guatemala, as the
likely winner in round one of the election last
Sunday. However we also assumed Manuel Baldizón
of the LIDER party would claim second place, even
though he’d dropped rapidly in the polls these last
few weeks. As it happens that was a false
assumption and against the odds, Sandra Torres of
the UNE party has pipped him to the post. Here’s a
screenshot form the Prensa Libre election coverage
taken early Saturday (9) with the three colours that
matter being Blue Morales, Green Torres, Red
Baldizón:
In numerical terms, Sandra Torres (UNE) has an
approximate 6,000 vote lead over Baldizón (LIDER)
with a little over 11,000 votes left to be officially
counted. Or in real terms, the chances of her losing
the second place position and the place in the second
round run-off with Jimmy Morales (FCN) is
vanishingly small.
We’re therefore set for a second round run-off between Torres and Morales on October 25th
(and not early November as I’ve written before, the date’s been brought forward a little) and
that means seven weeks of intense politics in Guatemala between the known and the unknown.
And just to wrap up the Baldizón failure, he was the candidate most punished by the people of
Guatemala (who turned out in higher numbers and in active votes than in the last election on a
day that was largely violence and controversy-free) for his image of sticking up for the status
quo in the country. The was in which his support evaporated due to the institutional connection
to the now-proven large-scale political corruption in the country is the lesson the two survivors
must take most closely to heart. Baldizón has made claims that Sunday’s vote was a fraud, but
few outside his party faithful have taken him seriously and he’s now dead meat.
So to the big race to October 25th and in ballpark terms, we can frame the contest like this:
Jimmy Morales: Until recently an unknown entity in the serious political scene in Guatemala.
He runs on generally conservative, right-wing platform. His big selling point has been the way
17

in which he’s latched onto the hot political subject and claims he’ll sweep corruption out of the
country, show no mercy to those who have filled their pockets, will root out the bad apples etc.
This on paper sounds great, but questions already being asked about the people he’s attracted
to his campaign and party during his poll surge. For example, he’s getting backing from the
same type of ex-military-turned-politico section of the Guatemala scene from where Otto Pérez
Molina came. It remains to be seen in the event of his election whether he turns out to be a
puppet of the “more of the same” variety and eventually a weak President with no power to
clean up Guatemala in the way he’s promising.
His job will be to convince Guatemaltecos that he really will bring a new broom to the country’s
political establishment. He’ll also have to defend himself from accusations of political
opportunism from the Torres campaign, who are already using a strategy of doubt as to his
suitability to lead the country. If he manages to defend his position well in the first weeks of
this new round two campaign (and so far his oratory has been convincing the population) he
has to be favourite at this stage to become Guatemala’s next President.
Sandra Torres: In many ways the opposite of Morales, Sandra Torres is a well-known and
well-established figure in Guatemala politics. As well as being the ex-wife of ex-President Álvaro
Colom, she famously divorced her then-husband because she wanted to run for President in the
last election (the one won by the now-disgrace Otto Pérez Molina) but had to get around the
rules that don’t allow spouses of sitting Presidents to run for the office. After the divorce she
was barred from the race anyway.
Her UNE party is ostensibly centre-left wing but in practical terms (and as shown by the Colom
administration) its Lefty-Socialist credentials aren’t much to worry about. Though keen on social
programs, the UNE platform in economic terms very neoliberal and free-market. For reference,
an eventual Torres presidency would be as lefty as Ollanta Humala in Peru or Peña Nieto in
Mexico (i.e. may talk the talk, doesn’t walk the walk).
Torres’s job is to overcome the large contingent of Guatemaltecos who have an ingrained and
wholly negative view of her candidacy (before the first round, the more accurate of the polls
indicated that the number of people who’d never vote for Sandra Torres under any
circumstances was around 35% and double that of Baldizón). She’s considered a political
opportunist, the lefty politics may be diluted but they raise the hackles of many of the
powerful/rich families (who often have media voices and outlets) and there’s also the question
of her gender; like it or not, being a woman in the classically macho culture of Central American
politics is a disadvantage for vote-winning (realpolitik folks, if only it weren’t so).
The bottom line: As things stand today, the combo of Morales’ 24% showing in round one,
the quiet backing he’s been getting from at least some of the country’s oligarchy (the people
with the real power) the stated antipathy held by many Guatemaltecos towards Sandra Torres
mean that with seven weeks to run before Guatemala decides, Jimmy Morales should be
considered as favourite to overcome his lack of credentials and political experience to become
its next President. However I cannot stress too strongly that this race isn’t over yet and Sandra
Torres has every opportunity to make up the gap, convince her fellow citizens that her
opponent would be a disaster and build on the momentum that took her past Baldizón in the
last days of the round one race. The key issue will of course be corruption, so we should watch
out for pledges on what both candidates plan to do in order to clean things up. And again, I
state that if a wide-ranging anti-corruption body gets enough power to start investigating
deeply into “the way the country works” it could mean trouble for businesses who’ve been
doing business there under previous administrations. I’m not going to touch any mining
company that’s Guatemala exposed.
Argentina and the other big October 25th election
As well as round two in Guatemala (above), October 25th is also the big day in the biggest and
most important South American election of the year (arguably years). IKN has stated for the
record enough times that we believe Daniel Scioli (FpV, i.e. current Cristina government) will
18

come out as the winner, with the main question being whether he can make it to the winning
post in the first round of voting or whether it’s going to go to a run-off.
There have been two new polls published in Argentina in September so far by reasonable and
reputable polling companies (10) in which the numbers of the two main players (Scioli and
Macri) concur with tendencies and trends we’ve seen since the early August PASO, but under
those there’s a bit of a surprise showing through.
In the survey run by ‘Gonzáles y Valladeres’ in September the scores are:
Scioli: 35.6%
Macri: 28.2%
Massa: 23.1%
Meanwhile in the survey run by ‘De Angelis’ in September the scores are:
Scioli: 39.5%
Macri: 29.5%
Massa: 23.0%
Both those with industry standard margins of error and confidence levels. We’re seeing
frontrunner Scioli consolidate that position and Mauricio Macri hasn’t managed to make any
inroads as yet. But the semi-surprise is the recovery in Sergio Massa’s numbers. The poll leader
through 2014 faded badly in the first half of the year and was regularly hitting numbers in the
teens just a few weeks ago, but he’s seen a rebound to 23% and suddenly (and very weirdly)
it’s not beyond the realms of the impossible to see a real fight brewing for second spot.
And this is bad news for Macri, primarily for the obvious reason that a late fade in the polls
could see him plain out, but also because it’s understood that Massa would suck votes away
from the Macri candidacy more quickly than it would the Scioli candidacy and that might mean
Scioli gets the lead he needs (40% of valid votes plus a 10%+ lead on the second place) to win
in the first round. As things stand (the polls take into account “voting in white” for no candidate
on the day, the “valid votes” rule in Argentina means that they’re discounted on the final tally)
it’s very likely Daniel Scioli gets more than 40% of the votes. The question has always been
whether Macri can get within 10 points of him and a resurging Massa would make his task that
much more difficult.
More Chilean government subsidies for small copper miners
The Bachelet government of Chile already has a minimum price subsidy in place for small-scale
copper mining companies in its country, under which the government via its State-run Enami
entity pays the equivalent of U$2.73/lb for copper production from the small-scale producers,
thereby protecting sector jobs.
But the sector is still under pressure and that means a new measure was announced last week.
According to Mining Minister Aurora Williams and Enami (11), from the end of September until
year end minimum taxes and duties on sulphuric acid will be reduced to zero for small-scale
oxide miners (this being one of the largest cost inputs for this type of operation). The tariff
reduction to zero will be reviewed on a quarterly basis, with the decision to extend the initiative
based on changes in the market price of copper.
Peru: Volcan (VOLCABC1) evaluating the sale of non-core assets
It’s not just the majors.
Last week Peru zinc/polymetallic miner Volcan (VOLCABC1 on the Lima stock exchange)
announced it was evaluating the sale of non-core assets in its portfolio. The talk was centered
around the near-20% it owns of Chile’s biggest cement company Polpaico (12), majority owned
by Swiss cement giant Holcim. According to its books, Volcan’s 20% of Polpaico is carried at
19

around U$27m. As for the sound bite, here’s what Volcan’s CEO Jorge Murillo said to the world
(translated) when explaining why Volcan was evaluating the sale of Polpaico and potentially
other assets. After framing that the company didn’t want to get rid of good assets and that
there wasn’t any board of director decision made as yet...
“…evaluations are done and it’s an option because the continued deterioration of metals prices,
cost reductions. Investments always have a limit and, on reaching this limit, we have to think in
other possibilities among which are the sale of non-core assets. We don’t consider the
investment in Polpaico inside the core of our business, and though we don’t like leaving this
position...but if the sector fundamentals deteriorate further we will think about looking at these
possibilities”.
Market Watching
A Minera IRL (MIRL.L) (IRL.to) update
Here’s your update to the ongoing Minera IRL saga (which I’m now seriously thinking about
using as the basis for my entry into best-seller novel writing, but that’s another story), which
contains three main sections:
• The Corihuarmi event last week, which was quickly resolved.
• Rumours and hearsay on the streets of Lima.
• The new chapter that started to unfold at the very end of last week, which marks what
may be the start of the necessary change of control at the company.
This won’t be a big long essay and I’m also quick to point out that on a strict stock price level
there’s no news that affects things directly (up or down), but I still think this update is an
important one because the stage is now being set. I’d like to think there’s the possibility of an
amicable ending as well (we’ll get to that below), but the whole nasty way in which Daryl
Hodges and Chuck Higgins have put their own (conflicts of) interest before anyone else tampers
that thought. Seeing will be believing.
Corihuarmi: As IKN330 went to bed last weekend, reports of protests from IRL’s small
producing mine at Corihuarmi began to surface. I stuck a quick post on the blog that afternoon
but didn’t do anything here at the Weekly because news is news and it was too soon for decent
analysis. It was interesting to find out (later on last week) that the pathetic current
management at IRL only decided to release their short NR the next morning after reading the
news was being disseminated in English on IKN. These are the people who apparently care
about transparency, but try to keep shareholders in the dark on their moves at all times. Irony.
Anyway, publish a NR they did (13) and later that day the “Representatives of the Company”
(quote unquote) were on site at Corihuarmi to listen to the locals’ complaints and try to reach a
deal. This points to another one of those dirty little secrets that Team Hodges at IRL has been
trying to keep away from the world, that the “Representative of the Company” was in fact
Diego Benavides, who far from being fired and having no role at all at the company is still very
much part of the day-to-day running of IRL (much to Team Hodges’ chagrin) because he’s still
the President of the two wholly owned subsidiaries of IRL operating in Peru. And as this report
that appeared in Peru’s newspaper of record ‘El Comercio’ later in the week (14) made clear
(photo and all), alongside several other reports (e.g. (15) and (16) it was Diego Benavides who
headed up the negotiating team and reached an agreement with the locals so that come
Wednesday morning IRL could announce the protest was over (17). What seems to have
happened, putting two and two together, is that the locals around Corihuarmi were getting
frustrated that there had been no progress on a renewed community agreement with the last
one running out at the end of 2014. They probably saw the protests and deteriorating
community relations under the new Daryl Hodges disaster rule as an opportunity to make
enough noise and get heard, which they indeed did. So within 48 hours their overdue deal was
20

agreed upon and they get the type of social commitment from the company they wanted until
2018.
Rumour and hearsay: I spent a day in Lima last week checking around with a few contacts
(no, I didn’t speak with Diego Benavides this time, a deliberate decision) in order to get a feel
for what the Lima mining world thinks of the situation. The most interesting repeated word I
heard was the number of disparaging rumours floating around about Diego Benavides. When
you hear from one person, perhaps two and they might have their own particular axe to grind it
can be brushed off, but the amount of times I heard “Well, it’s all about supposed
fraud/corruption and there’s people saying X about Diego Benavides and people saying Y about
him”, it was hardly coincidence. It’s also interesting that in the AGM, Team Hodges made
reference so some 25 calls taken on the whistleblower Line he set up and that “allegations have
been made”, even though they were made anonymously and could easily be somebody with
ulterior motives making up cock and bull stories for their own ends. That AGM was on August
27th, some 18 days ago but even though the “allegations” were the weak excuse used by
Hodges to fire Benavides from the Interim CEO position, we haven’t had a single formal
accusation made from their contents.
Want that little lot put simply? There’s a dirty tricks campaign of rumour-spreading going on in
Lima about Diego Benavides. It’s hitting fertile soil too, because as a couple of the people I
talked with last week put it, Diego will have to clear his name before he can move forward and
put IRL on an even keel. When I protested at that line of thinking and pointed out there were
no formal charges against him and all there was so far was a bunch of whispers doing the
rounds, one of my sources answered (translated), “Maybe, but it’s working!” and in fact he’s
right.
We know from his time of abject failure at Jennings that Hodges will use any and all dirty tricks
in order to gain an advantage (there are lawsuits pending even today from his time there to
bear witness to that). We also know he and his buddy Chuck Higgins at Fasken (the person
who does all the Canadian legal work for IRL) have an enormous conflict of interest due to the
bar they co-own in Toronto. To remind our readership and quote the blog post dated August
20th (18) :
As a matter of fact, Daryl Hodges and Chuck Higgins are joint owners of a bar
in Toronto, The Pilot (N°22 Cumberland St, apparently the best place to sip
your drink is the rooftop patio). Not only that, but they're often seen boozing in
each other's company at their jointly-owned bar. They're friends, business
partners and it just so happens that the place Hodges is now running his
nefarious coup d'etat plans is the very same company that had the misfortune
to have Chuck Higgins as one of its main legals.
Conflict of interest? You better believe it.
And I’ve learned since that time that amazingly, coincidentally, shockingly, every single year of
PDAC the law firm Fasken (partner Chuck Higgins) hosts a get-together dinner party for invited
guests but instead of choosing a bigger and more fitting location it always has its bash at...yes
you’ve guessed it...The Pilot bar.
It shouldn’t come as any surprise to hear of a whispering campaign being used against his new
enemy instead of filing a formal charge against him that wouldn’t stand up in a real courtroom.
But we’re now at he point where Diego Benavides’ name is getting the dirt treatment and as
you’re about to see, it would seem he’s started to fight back.
The control battle begins, first shots fired: On Friday (and I believe after the closing bell
as well) two events happened in quick succession to each other inside Minera IRL. I’ll also say
that it’s important to understand the order.
21

1) Contact was made to Diego Benavides (or his legal representatives) by either new non-
executive chairman Jaime Pinto or the people representing him. The contact is to arrange a
meeting between the two sides and I can only suppose that means Pinto (or his people) will
meet Benavides (or his people) in the next few days. This is interesting because although Pinto
was put on the board by Daryl Hodges, it’s not a given that he’s in his pocket and may turn out
to be a lot smarter than the fools trying to wrest control up in Canada. For one thing he’s
Peruvian so will immediately see how badly Team Hodges has been running things and for
another, he may just be in the right position to broker a truce between the two parties. If he
wants to, at least. If and when the meeting between Pinto and Benavides (or at least their legal
reps) takes place it will be the first time both sides have sat down since the soap-opera began
and if they can manage to talk like adults for a while, that alone will be a good thing. “Jaw jaw
is better than war war” said Churchill.
After considering it all I think there’s a possibility of an amicable settlement but it’s only that,
possible. What we’ll need is for a) Pinto to be smarter than Hodges (not difficult) b) Pinto to
want to find a negotiated deal (by no means a given, he may be fully on Team Hodges) and c)
both sides to be willing to give concessions to the other and therefore take at least a little dent
in their pride-glands, perhaps a big one in order to get to a mutually acceptable agreement
(and that’s another which I can only say “possible”, it’ll depend greatly on individuals and
motives). But I can say that Pinto finally reaching out and asking Benavides to meet (and
Benavides accepting is at least a small step in the right direction. Let’s see what happens in the
days ahead.
2) A short time after Pinto (‘s people) contacted Benavides (‘s people), formal criminal charges
were brought against Carlos Yrigoyen, the supposed “controller” or “country manager” of IRL
(as appointed by Daryl Hodges). The documents are filed and public knowledge and charges
include the attempted usurping of control of the wholly owned subsidiaries of Minera IRL
(president: Diego Benavides) and the illegal procurement of documents and confidential
information. It would seem that Team Hodges, in its desperation to kick Diego Benavides out of
the company, played very fast and loose with the laws of Peru as they failed to remove him as
president of the wholly owned subsidiaries and now that the gloves are off and the battle
joined, Benavides isn’t going to cede a millimetre of control until an equitable deal is done (else
Yrigoyen and perhaps others in the near future will get to enjoy a little custody time at the
pleasure of the country’s police force).
These criminal charges may affect point 1) and the Pinto/Benavides meeting, but then again it
may not because Yrigoyen is a complete dickhead anyway and has rubbed just about
everybody at the company up the wrong way, even those who apparently still sympathize with
Daryl Hodges. The sooner he’s gone the better, before he messes things up the way he did at
Lupaka Gold.
Conclusion: Wrapping up, the IRL soap opera has been through a quiet period but that’s not
going to last much longer. I entertain some hope that Jaime Pinto will be able to hold out an
olive branch or two next week, do what non-executive chairpersons are supposed to do and
bring a little sanity to the madness, but that will of course depend on his own agenda and
objectives. If not there’s going to be fireworks, that’s for sure.
I’ll end this week’s update on IRL with a quick personal note, because I’m fully aware that both
friend and foe inside or close to IRL will be reading these words very soon. I’ve heard from
well-placed sources that the IKN coverage of Minera IRL has really got under the skin of some
people at/close to the company. For sure mostly the Team Hodges side, but there’s also some
annoyance from people who’d consider themselves to be on the side of Diego Benavides as
well. Apparently, some of those people now truly hate me and would wish me physical harm.
That’s a very good thing, ladies and gentlemen readers; getting waves of hate from the type of
greedy, ignorant, boorish, racist, self-serving, uncaring scumbags who don’t give a rat’s hind
quarters about shareholders, stakeholders or even if the Ollachea mine gets built as long as
they get their share of the money is my idea of a strong success. And as long as they’re
22

obsessing on me it might keep them from people who aren’t psychologically equipped to handle
their bullying behaviour and nefarious deeds. So keep the hate coming people, all welcomed.
CB Gold (CBJ.v), Batero Gold (BAT.v) and Red Eagle (RD.v): A buried lede
I like many of you have watched the increasingly antagonistic fight between two (supposedly)
Canadian juniors based in Colombia, Batero Gold (BAT.v) and Red Eagle (RD.v), for fellow
Colombia play CB Gold (CBJ.v) which controls a piece of the Páramo de Santander/California
Vetas gold region that both the others want to pick up for a relative song (certainly true
compared to the peak levels that CBJ reached a few years ago, when that area was hot and
Eike Batista was paying way too much for Ventana Gold).
In essence, CBJ.v and BAT.v have been under the control of the Peruvian Navarro-Grau family
(owners of the privately held, operating and successful Peru gold mining company Consorcio
Horizonte) ever since Felix Navarro-Grau decided he wanted to expand the family reach into
Colombia. His decision saw Consorcio Horizonte and his own direct family money paying way
too much for both CBJ and BAT, so now his sister (and the real power in the family business)
Michelle Navarro-Grau has taken over control of the Colombia mess he made and has (I’d say
smartly and correctly) moved to consolidate the two companies into one. However, the price at
which BAT/CBJ wanted to do the deal looked so cheap that RD.v stepped in and decided to
make its own move for the target company. Ever since then it’s been the fun you’ve witnessed.
Also like many of you, I don’t care a fig about who wins. In fact that’s not entirely true, because
I think RD.v would be a better potential investment if it lost out in the fight and was left as a
clean entity on its San Ramon small gold start-up. But that’s a minor matter and what’s
happening between the RD.v and BAT.v is moved away from simple competitive bidding and is
now a ego-fuelled power fight. But my opinion on exposure to Colombia is well-documented, I
don’t like the place and think it’s to be avoided unless special circumstances prevail. And
exposure to the ecologically and socially difficult Páramo de Santander qualifies as much worse
than the Colombian norm, not better.
So don’t expect me to pick a dog in this fight and don’t expect me to start covering the battle,
the companies or make an investment move into the mess (NB: Again, unless RD.v loses and
becomes clean enough to consider on San Ramon alone). But I am going to add a little piece of
Peru gossip into the mix, just so you have another potential angle to consider if you care
enough and have more interest in the outcome. It just so happens that the latest Lima gossip
has Michelle Navarro-Grau ‘romantically linked’ (I think that’s the phrase they use when being
all diplomatic and stuff) to Roque Benavides, CEO and absolute power at Peru’s gold and silver
mining company Buenaventura (BVN). If true (and though not 100% solid, the sources are right
on the pulse of Peru’s mining underbelly and I’ve now heard it from more than one place as
well), it would be an interesting angle to wonder whether BVN is considering an entry into
Colombia on the back of this ostensibly Consorcio Horizonte takeover and consolidation action.
Conclusion
IKN331 is done, we end with bullet points:
• Standard Tolling (TON.v) at 6.5c is very cheap, but there's also plenty of risk involved
with the stock at this delicate stage and I prefer to wait out a little longer. But be clear,
if this company does what it says it can do it has all the makings of a real money-
spinner. I'm looking forward to getting up to the plant and seeing for myself, the
sooner the better.
• I'm going to be out and about in the week ahead, there's intel to be gathered on
several fronts and I have an interview slated with a mining guy that could become a
real story. The blog is going to be quiet (again).
23

• Don't fight the Fed, but don't fear it either. Gold's going to be just fine and now's the
time to put your long position portfolio into place.
• Guatemala is going to be a show and a half for LatAm political watchers. Even better
than Argentina.
• I'm still bearish copper and unconvinced that last week was anything but a short-lived
relief rally. I continue to avoid the sector.
I thank you in advance for any feedback. Our Top Pick stock is B2Gold (BTG) (BTO.to). Flash
updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/
(2) https://finance.yahoo.com/news/standard-tolling-operational-210000267.html
(3) http://www.standardtolling.com/s/Presentations.asp
(4) http://finance.yahoo.com/news/dalradian-intersects-1-24-metres-060000193.html
(5) https://finance.yahoo.com/news/capstone-mining-announces-spending-cuts-103000786.html
(6) https://finance.yahoo.com/news/nevada-copper-intersects-462-feet-190502390.html
(7) https://finance.yahoo.com/news/goldcorp-investor-tour-l-onore-213000840.html
(8) http://www.economiaynegocios.cl/noticias/noticias.asp?id=182516
(9) http://www.prensalibre.com/Guatemala/decision-libre-2015
(10) http://www.andytow.com/blog/borra/?compe=Presidente%201ra%20Vuelta&pop=Nacional
(11) http://www.aminera.com/index.php/mineria-nacional/item/13449-ministra-williams-anuncia-que-enami-
rebajar%C3%A1-tarifa-de-%C3%A1cido-sulf%C3%BArico-para-peque%C3%B1os-mineros-productores-de-
%C3%B3xido-de-cobre.html
(12) http://www.aminera.com/index.php/construccion-mineria/item/13333-peruana-volcan-analiza-vender-
participaci%C3%B3n-en-polpaico-si-se-profundiza-ca%C3%ADda-de-metales.html
(13) https://finance.yahoo.com/news/minera-irl-limited-announces-temporary-060000117.html
(14) http://elcomercio.pe/economia/peru/mina-corihuarmi-minera-irl-reanuda-actividad-acuerdo-comunidad-noticia-
1839315
(15) http://semanaeconomica.com/article/extractivos/mineria/168864-minera-irl-reanudo-operaciones-en-mina-
corihuarmi-tras-acuerdo-con-pobladores/
(16) http://gestion.pe/economia/minera-irl-reanuda-operaciones-corihuani-al-llegar-acuerdo-pobladores-2142206
(17) https://finance.yahoo.com/news/minera-irl-limited-announces-lifting-060000000.html
(18) http://incakolanews.blogspot.pe/2015/08/daryl-and-chucks-excellent-adventure.html
Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dic-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
24

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
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
25

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
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
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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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