IKN #337Premium

The IKN Weekly
Week 337, October 25th 2015
Contents
This Week: FOMC and US Q3 GDP, Proud of what you own?, Policy statement about Minera
IRL (MIRL.L) (IRL.to).
Fundamental Analysis: B2Gold (BTG) (BTO.to) 3q15 production numbers.
Stocks to Follow: Overview, Sandspring Resources (SSP.v), Timmins Gold (TGD) (TMM.to),
True Gold (TGM.v), McEwen Mining (MUX) (MUX.to), Focus Ventures (FCV.v).
Copper Basket: Overview, NovaCopper (NCQ.to), Hot Chili (HCH.ax), Metminco (MNC.ax).
Low Cost Producer Basket: Overview.
Regional Politics: Argentina Chile: Mining producer prices tick up for the first time in 2015,
Chile: Cochilco estimate 2016 average copper price at U$2.50/lb, Argentina: Exit polls and
Scioli, Guatemala: Jimmy Morales wins.
Market Watching: Minera IRL (MIRL.L) (IRL.to) is run by lawyers, Options exercising snippet.
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
FOMC and US Q3 GDP
The week ahead brings us another FOMC meeting, but it’s already being downgraded by the
market to one of those that won’t surprise or being new news to move things around (that’s all
set for December, if you believe the Fedwatch sages). Still, Janet’s communique is due out
Wednesday afternoon and eyes will invariably be upon it.
But this time around the markets may see more shifting from the US 3q15 GDP report numbers,
which are due out on Thursday. What makes them interesting is that there’s a pretty wide
range of opinions out there on whether they’ll be interpreted as strong or weak (with eyes also
on any adjustment to previous quarter numbers), so somebody’s going to be right and
somebody wrong on this event.
Proud of what you own?
It was a tedious week for we the gold market participants, with gold doing reasonably well but
the jittering nerves are evident each time the metal lost U$10/oz (less than 1%) and no matter
whether the drop gets clawed back later. It’s weeks like these that remind me in no uncertain
terms that the healing process for the metals and mining stocks is going to take time and
there’s no immediate quick fix.
To that end this week I’ve been mulling over the market participants’ phrase, “Be proud of what
you own” and applying it critically to the juniors I currently hold. In general the portfolio passes
the test and even the companies that are showing large percentage losses, such as the long-
term bags in Focus Ventures (FCV.v) or Lara Exploration (LRA.v) are ones run by good people
1

doing the right thing by their shareholders and stakeholders in difficult market circumstances.
But there are two on my list that don’t pass the “be proud of what you hold” smell test today
and as a result, I’m going to sell them both soon. Timmins Gold (TGD) (TMM.to) is one of them
and Legend Gold (LGN.v) is the other. With TGD, the case was always for a near-term pop and
that happened, just a pity I forogt to sell at 30c and we’re now in the red. TGD is a bit of a
trainwreck and the new participation of GG made it a small trade in my view, but its trainwreck
aspect has come back to the fore again and that’s exactly what happens when it’s a “not proud
holding”. Then LGN, it’s one I’ve basically forgotten about. Part of the “Land Grab” plan, it’s
done nothing and looks like it’s going nowhere. I see no reason to hold it any longer and the
only thing stopping a sale tomorrow morning is the lack of market liquidity in the name.
So those two are on the way out (by end November latest), which will leave me holding stocks
that I’m good about owning, companies I’m proud about sponsoring in my own very small way.
I still contend that in this current market and its ongoing bear atmosphere, the best strategy is
to opt towards quality names and companies doing things the right way. They’ll bounce first
and farthest.
A policy statement about Minera IRL (MIRL.L) (IRL.to)
As of Friday October 23rd the Minera IRL Extraordinary General Meeting has been called and is
set to take place in Toronto Canada on November 26th (US Thanksgiving, if you hadn’t noticed,
potentially a strategic call by Team Hodges as even though it’s not Thanksgiving in Canada that
day North America tends to close down, making logistics difficult for visitors etc).
Today’s ‘Market Watching’ section carries an analysis of some of the arguments put forward by
Team Hodges in the Friday NR (see below), but I wanted to dedicate a few lines here to speak
more in general about the near-five weeks in front of us, fellow shareholders of IRL and/or
interested observers on the sidelines. Those lines come in the form of bullet points:
It’s going to be dirty. Be clear, mud-slinging is always part of a proxy battle and this one will
be no exception. Expect personal attacks from side to side and expect them to start as of next
week, because this particular battle has been spleen-ridden since the getgo and I’m quite sure
that the contents of last Friday’s NR is only the opening salvo in Team Hodges’ strategy.
There is only one side of this story that will protect shareholder value. Once the
current board is kicked out, Minera IRL wil get its financing deal ratified by COFIDE, the
company will be welcomed by the local community once Diego Benavides is back in charge,
things will get back to normal and the share price will be able to re-gain the lost ground of
2015. The COFIDE deal is clear cut, we know the terms of the financing, COFIDE is extremely
confident that it will be able to raise the full amount and then the company can build its mine.
The only thing holding IRL back (except of course from this very annoying share trade
suspension) is the nefarious tricks of Team Hodges as they try to strip value away from the
share price and into their own pockets.
All votes are needed. You should be clear by now my personal opinion of the whole sordid
affair, that Team Hodges is poison for this company and Team Benavides must win out on
November 26th. I therefore urge you to get your proxies in and vote FOR each of the
resolutions, no matter how many or few shares you have. If you want help with the formulas
(now available for download on SEDAR) and how to go about voting feel free to send me a
mail, which I’ll pass on to Team Benavides people who’ll be glad help you in any way fit. With
66.67% of votes needed to pass each of the ten resolutions left on the agenda, every vote will
matter. Proxies have to be submitted (and received the other end) by 10am EST (3pm GMT) on
November 24th.
IKN’s role will be as observer. I’m aware that back in August, the light that IKN (via blog
and Weekly) shone upon the whole Minera IRL affair in the original articles and posts at that
time (e.g. see IKN327 dated August 16th for the original big piece) helped in an active way to
2

stop certain things from happening inside the company and also mustered support for the
ouster of Daryl Hodges from the board of directors. This time around it’s up to the two sides in
the proxy fight to make their cases and make the news, not this publication. Of course I retain
all op-ed rights and my opinions will continue to flow and news events get comment and
commentary, but don’t expect news to be broken on the pages of the Weekly or on the blog.
I’m going to be glad when it’s all over. People, in the end I just want the mine to be built
at Ollachea and my shares to go up. That’s the bottom line of all the bottom lines. You may be
less supportive of Diego Benavides than I, but the plain fact is that the community at Ollachea
has made its position crystal clear on this matter and that without Benavides heading up the
project, there’s not going to be a mine built. Period. This aside from all the nefarious activities
we’ve seen coming from the Hodges people, their shady and value destructive past histories,
their asset stripping plans, the people waiting in the wings to snatch the asset’s value from us
the shareholders. I owe nobody any favours in this story and what I want is for IRL to become
a success at its flagship project. As simple as that and it’s glaringly obvious which of these two
sets of directors will be able to achieve that and which will not. Be clear, they wouldn’t be
fighting like this over Ollachea if it weren’t a quality gold asset and ultimately that’s why I
became a shareholder of the company in the first place. Out with the bad, in with the good,
build the mine and let me think about something else than a penny stock with a decent little
gold project in Peru.
Fundamental Analysis of Mining Stocks
B2Gold (BTG) (BTO.to) 3q15 production numbers
Post-close last Wednesday October 21st B2Gold (BTO.to) (BTG) released its 3q15 production
numbers under the NR title line of “B2Gold Corp. Achieves Record Third Quarter and Year-to-
Date 2015 Gold Production” (1) and unspurprisingly, IKN dedicates its main Fundies section
today to examine the numbers and come to a few conclusions.
Production lighter than expected. Oh look at that, I’m all cool and smooth and using all
that anal yst “lighter than expected” talk in the title line of this section. But that’s not what you
get from this publication, what you get is the unvarnished fact that the 3q15 production
number of 124,371 oz was a miss, it was lower than it should be, it sucked, the market reacted
negatively and rightly so. This long-term chart of production for every quarter of BTO’s
corporate life (which stretches back to the time Libertad was still being re-opened) shows that
the last quarter was indeed a record, but there wasn’t much in it and to date, the overall
consolidated company produciton hasn’t been pushed massively higher by the new Otjikoto
mine because other units have underperformed.
3

BTO: Gold produced, per qtr
160000
140000
120000
100000
80000
60000
40000
20000
0
4
90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3
OzAu
source: company data
This breakdown production chart for the more relevant recent years (including the updated
4q14 forecast) shows the ebb and flow. In general terms the Limón mine has been a small,
regular performer, Masbate has the occasional outsized production quarter (typically end-year)
and Otjikoto is only now getting into gear. Meawhile, the drop in production at Libertad from a
couple of years ago is visible.
BTO: gold production by mine
160000
150000
140000
130000
120000
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
oz Au
Otjikoto prod
Masbate prod
Limon prod
Libertad prod
source: company filings, IKN ests
Production guidance: Q4 must come in substantially better...or else. In Wednesday’s
NR BTO also told us that it was still on track to meet its 2015 production guidance of between
500,000 and 540,000 ounces gold for the year, but they pointed us to the low end of the range.
That was pretty interesting and it’s the source of the above 4q15 production estimate as well,
because if BTO isn’t BSing us and does indeed managed to make its 2015 guidance number it’s
going to have to produce at least 140,000 oz gold in 4q15 (well, in fact 139k, but you get the
idea). Check that chart above again, because 140k would be a real stand-out record quarter.
We also got the individual mine guidances checked in the subsequent paragraphs in last week’s
NR so that’s how we continue, checking out the 3q15 and 4q15 from the four producing
mines.I’m going to frame this section, with a close look at the operating units and what we
should expect from them in Q4.
Libertad 3q15 and 4q15 estimates: We start with the poor one of the four. Libertad missed
in 3q15 mainly due to the new high grading Jabali rock not making it into the production mix as
yet, whihc dropped average grde BTO was relying on the Jabali material to improve production
and make its 2015 mine guidance, but that’s not simply not going to happen.

BTO: Libertad gold production, per qtr
40000
36000
35000 31234
27681
30000
25326
25000
20000
15000
10000
5000
0
5
51q1 51q2 51q3 tse51q4
Oz Au
source: company filings, IKN ests
For 4q15, the company has signalled a better quarter and that’s factored into the 36k
guesstimate, which would be close to the type of quarter Libertad churned out in 2014 but still
insufficient to see this mine make its 2015 guidance number. Our new 36k forecast for 4q15
would bring its 2015 production to just over 120k, inside the new guidance of 120 to 125k but
well short of the original 135k to 145k oz.
Limón 3q15 and 4q15 estimates: At El Limón, 3q15 production came in at a everso slightly
light 14,517 oz, but that’s not a problem and we can say in general terms that the quarter was
in line. As we know Limón has lost half a month’s worth of production in 4q15 due to the strike
action and mine blockade, we’re aiming lower for 4q15 at 13k oz Au but that would still be an
okay result and get the mine inside its 2015 guidance number.
BTO: Limón gold production, per qtr
25000
20000
15686
14517
15000 13158 13000
10000
5000
0
51q1 51q2 51q3 tse51q4
Oz Au
source: company filings, IKN ests
Masbate 3q15 and 4q15 estimates: BTO called the 40,368oz produced at Masbate in 3q15
“approximately in-line with expectations”, which means “a miss”. However guidance of 170k to
180k for 2015 was reiterated and along with a big hint that higher grading material is now
running through the machine, it suggests that 47k for 4q15 is a minimum number to expect.
BTO: Masbate gold production, per qtr
50000 46241 47000
45000 41236 40368
40000
35000
30000
25000
20000
15000
10000
5000
0
51q1 51q2 51q3 tse51q4
Oz Au
source: company filings, IKN ests
Otjikoto 3q15 and 4q15 estimates: Another good quarter from the new mine at BTO, with

production now nicely above the expected for 2015 to date and the throughput upgrade (2.5m
tpy rate to 3m tpy) promising better to come as well. We’re pitching for 44k oz Au in 4q15
because that’s where the BTO literature is guiding, and that would also mean Otjikoto beats the
upper range of its 2015 full year guidance by a few hundred ounces. This is a low cash cost
mine as expected as well, it’s quickly turning into the star turn at BTO.
BTO: Otjikoto gold production, per qtr
50000
45000 36963 38252 44000
40000
35000 31134
30000
25000
20000
15000
10000
5000
0
6
51q1 51q2 51q3 tse51q4
Oz Au
source: company filings, IKN ests
Consolidated forecast for 2015: Sticking the mines all together and considering the latest
adjustments, here’s the updated chart that shows the original BTO 2015 low/high guidance
numbers for each operation and the IKN guesstimate in red.
BTO: 2015 guidances and IKN forecasts for each mine
Oz Au BTO low end guidance
200000 BTO high end guidance
180000 IKN forecast
160000
140000
120000
100000
80000
60000
40000
20000
0
Limon 2015 Libertad 2015 Otjikoto 2015 Masbate 2015
source: company filings, IKN ests
As things stand for 2015 full year, we expect Libertad to be a miss, Otjikoto may beat the upper
end, the other two mines come inside the guidances ranges. BUT, it has to be stressed that
these forecasts are squarely based on the BTO guidance in Wednesday’s NR that it will make its
full year 2015 guidance range at the low end.
If you add the three quarters we know to the four forecasts for the four mines in 4q15
(Libertad 36k, Limon 13k, Masbate 47k, Otjikoto 44k) the 2015 grand total would come to
501,796 oz gold produced, thereby scraping in just above the 500k baseline. In other words,
what you see as my 4q15 guidance numbers for each mine are strict minimums, for all
intents and purposes. We could see a thousand fewer ounces from mine X and a thousand
more at mine Y, but apart from that sort of scribbling in the margin we need to see a significant
improvement in production at BTO in 4q15, else it’s going to miss on 2015. As BTO has guided
on its Q3 production numbers s being able to make its guidnce range, which is perhaps ten
weeks away from closing (no more), it’s put-up-or-shut-up time at this miner. Or put as simply
as possible: Either the company has just spun us a bunch of total BS, or 4q15 is going to be a
lot better.
Revenues reasonable considering gold price and production levels. Moving on and as it
its wont, BTO also announced a preliminary revenues number for the quarter of U$139.3m,
which is normally very close indeed to the official number that it files in the financials later on.
Here’s how that shapes up against previous quarters:

BTO: operating revenues
180
154.9
160
138.1 138.9 136.5 139.3
140 128.7 129.0
122.6 120.3 114.9 122.4
120
100
80
60
40
20
0
7
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3
$m
source: company filings, IKN ests for 3q15
In a nutshell it’s the type of story we’ve had from many a gold miner this year, that improving
production numbers have countered the drop in the gold price and kept gross revenues steady.
Not a bad thing, in real terms.
The bright side: Costs shaping up well. The downside to last week’s NR was the news on
production, which although that quarterly record didn’t come up to expectations. The good
news was on costs, because although the information offered up by BTO is more limited, they
do give some indicators and guidance frameworks on costs in their quarterly production NRs
(unlike most other mining company of this size) and from what we can deduce, the news is
good on this score.
Here’s a chart that shows how cash operating costs and All-In Sustaining Costs (AISC) have
evolved in the last eight quarters, plus best guesses for 3q15 and 4q15.
U$/oz
BTO: Cash costs evolution and forecast
1600
cash op costs
1391
1400 AISC
1 1 0 2 0 0 0 0 986 1039 1028 946 1091 1056 977 977
800 638 634 720 732 646 701 677 631 631
600
400
200
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15est 4q15est
source: company filings, IKN calcs for 3q14 and 4q15
As seen over there on the right of the chart, we’re pencilling in U$631/oz for cash operating
costs and U$977/oz for AISC in the next two quarters, with the reasoning is simplicity itself: As
BTO affirmed its 2015 guidance range for both these numbers on Wednesday evening by
stating...
“Consolidated cash operating costs are expected to be between $630 to $660
per ounce, compared to $680 per ounce in 2014, and all-in sustaining costs
are expected to be between $950 to $1,025 per ounce”
...in order to meet the top end of guidance ($660 and $1025) the next two quarters need to
come in at an average of $631/oz and $977/oz respectively. Now that may turn out to be back
loaded on the 4q15 numbers (what with higher expected gold production and the already cost
efficient Otjikoto kicking up another gear), but it does give a clear indication of hat BTO needs
to achieve. Again, as long as we assume that they’re not giving us a large helping male bovine

excrement in last week’s release.
And so to our adjusted earnings forecasts
This is where the rubber hits the road for 3q15. The previous IKN guesstimate was for $154m
in sales and $118m in COGS ($36m in op revs, remembering that BTO includes its amortizations
etc in the COGs number). After this week’s production NR here’s how we look:
BTO: operating margins
180
161.0
160 154.9
138.1 138.9 136.5 139.3
140 128.7 129.0
120 120.9 122.6 120.3 114.9 122.4 115.6 116.9 112.0 117.0
102.0 98.3 99.0 103.5
100 91.9
86.9 87.5
80
60
41.2 44.0
40 34.0 35.7 36.0 37.1
20 22.0 15.9 18.9 23.3 19.6 27.3
0
8
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m
revenues COGS Op. Rev
source: company filings, IKN ests for 3q15
That’s $139.3m in sales for Q3, some $15m lower than the IKN forecast target. Thanks to what
we’re expecting from the reduction in cash costs, COGS is expected at $112m, shaving perhaps
5% off the previous number. That’s not bad but it’s not enough to offset the revenues miss, so
operating revenues are now forecast at $27.3m. There’s a similar downwards adjustment on a
pro-rata level for 4q15, with that number now using an expected $1,150/oz average gold price
(we were expecting $1,200/oz by now...oh well, mice and men...).
To put the operating revenues on a per-share basis, here’s another chart:
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
In the previous model operating revenue for 3q15 was estimated at 3.9c/share. Now it’s
2.9c/share and that’s a pretty hefty difference. As for 4q15, the previous estimate was 6c/share
anbd it’s now down to 4.7c (again, that’s mostly due to the lower gold price estimate now that
we’re in Q4 and are facing the cruel reality of a gold price that hasn’t picked up as quickly as I
thought it might mid-year).
To put that in context, for sure it’s better than any quarter since 2q14 but it’s not as good as
we were expecting. The combo of lower than expected consolidated gold production growth
(despite the decent ramp-up at Otjikoto) and the languishing gold price (which only in the last
few weeks has shown the correct signs of life) has dampened BTO’s profit making potential.
And as for net earnings (which isn’t my fave metric in a fast growing miner, but it’s worth
checking all the same) we were expecting $24m for 3q15, it’s now $13m (with the same type of

pro-rata adjustment as seen above to Q4) or 1.4c EPS.
BTO: Adjusted net earnings
40
30
20
10
0
-10
-20
-30
9
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 tse51q3 tse51q4
$m
source: company filings, IKN ests for FY15
The bottom line to the combo of lower production, lower than preferred gold prices in 3q15
gets some offset from the lower costs profile we’re expecting, but in the end the conclusion is
inescapable: BTO is underperforming.
Discussion and conclusion
Since the publication of the Q3 numbers I’ve been considering several potential changes in the
BTO reco here at The IKN Weekly including the most likely change, reducing the stock from
‘Top Pick’ status and allowing myself the opportunity to take some of the cash off the table of
this outsized personal position (and at a loss, but hey, cash is cash).
In the end and after careful consideration (not just the rote phrase, it’s been the dilemma of
the week) I’m going to keep things the way they are, leave BTO as Top Pick and not lighten
any of my position. But it was a close-run decision and if any of you are just a little bit more
disillusioned with BTO than I am on this warm and cloudy Sunday afternoon and want to
lighten or even sell your whole holding, you’re not going to get many complaints from me.
So I’m staying pat on the position, but I wanted you to know that it wasn’t a simple call. I
expected more from the Q3 numbers, Libertad (mainly) and Masbate (a little) sunk them and
although Otjikoto is turning out to be a great new asset it’s not going to justify the compan’y
market cap on its own. There are two reasons why I’m staying as-is on my BTO trade:
1) If gold goes up they’ll all go up, BTO as well. In fact may bounce harder than most
from its current share price because although I understand the wave of selling we saw
last week, it’s still brought BTO down to an oversold price on fundies.
2) 4q15 is shaping well. You (and I) need to believe that the company will make the
guidance calls it’s just made, but as long as you’re ready to bite it means BTO will stick
in a 140k oz quarter in 4q15 and that’s the type of period that will wow the market.
However, I want to be crystal clear on this next point so it’s getting bold type and underlining:
For my money (literally) 4q15 is BTO’s last chance to impress me. If it doesn’t hit the
500k annual guidance number (i.e. 140k oz Au in 4q15) or it doesn’t make guidance on cash
costs (op cash costs and AISC) I will sell, no ifs or buts. I won’t need both or them to hit to sell
either, just one miss is enough. I’m giving BTO an opportunity that many companies don’t get,
because I still think they’re top tier operators. That view will change if they miss on guidance
given just ten weeks before the end of the year.
Stocks to Follow
I’ll make no bones about it, this week got me down. It got my portfolio down as well, but the
way in which the recent juniors rally got sat upon because gold dropped back a little wasn’t in
the plans (if it were I wouldn’t have bought SSP so quickly and IO would have sold TGD instead

of procrastinating). Of the 16 open positions now on the 'Stocks to Follow' list, only two
managed to register a weekly gain (FOS.to, TGM.v), with another pair unchanged on the week
(ATM.v, IRL.to suspended). That means a sickly twelve returned a weekly loss (not listing them
all), but at least the heavier percentage losses were confined to the tinycaps with little volume
and trading (REG.v down 18.0%), (LGN.v down 12.5%) (LRA.v down 12.5%) (FCV.v down
10.3%).
But the main bummer was B2Gold, down an outsized 10c when other goldies managed to rally
a little (see low cost producer basket below, That came form its light production NR (see above)
and when your Top Pick underperforms the market, no matter what time window, it’s not a
good thing for the self-esteem (or the back pocket).
With the addition of SSP.v and the non-sale of TGD (an error) we now have 16 open positions
in our 'Stocks to Follow' list, one above our normal 15 name maximum. Four stocks are in the
green, twelve are red, ugh.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICK
B2Gold BTO.to hold C$2.17 12-sep-14 C$1.59 -26.7% 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$1.20 12.1% Added Aug, M&A tgt
Teranga Gold TGZ.to str buy C$0.57 15-feb-15 C$0.56 -1.8% Added Aug, 83c tgt v cheap
McEwen Mining MUX hold U$1.09 25-jan-15 U$0.94 -13.8% Recovering from lows
Timmins Gold TGD hold (sell?) U$0.245 20-sep-15 U$0.224 -8.6% Not working may sell
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.10 -16.7% 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$0.285 1.8% 36c/share of cash
Sandspring Res SSP.v buy C$0.195 18-oct-15 C$0.185 -5.1% New buy, 30c 1st tgt
Atacama Pacific ATM.v hold C$0.19 26-apr-15 C$0.14 -26.3% Spec buy, cheap adv proj
Legend Gold LGN.v hold C$0.085 01-mar-15 C$0.035 -58.8% Spec buy, v small, not working
Lara Expl. LRA.v spec buy C$1.15 08-apr-12 C$0.245 -78.7% 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$0.79 23.4% New tgt 95c to $1 Sep 20
Minera IRL IRL.to Susp. C$0.195 22-jul-12 C$0.075 -61.5% Trading suspended
True Gold TGM.v spec buy C$0.18 23-aug-15 C$0.225 25.0% 25c to 30c sell price tgt
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.13 -43.5% tgt 50c, phosphate great value
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.205 -31.7% 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
Midas Gold MAX.to sep'15 C$0.39 21-sep-15 C$0.35 -10.3% Sm. trade idea that didn't work
New Gold NGD oct'15 U$2.18 23-aug-15 U$.3.05 39.9% trade closed, profit taken
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
10

Now for some notes on current basket stocks.
Sandspring Resources (SSP.v): Position opened. I took three bites at this cherry during
the week and got the cost average down to (a tenth over but close enough) 19.5c, which is a
fair place to start this trade. Friday’s lack of volume is the only thing that concerns, apart from
that we’re good to go and the feedback on last week’s note was generally positive (from the
free analysis readers as well).
Timmins Gold (TMM.to) (TGD): May sell, though.... I said that last week, too. Also I’d
love to say today that I was cool and smart and
bailed when TGD shoved its head above 25c on
Tuesday before settling back into the drift
lower, but I didn’t. I hummed and hahed about
it and decided I’d give the stock time until its
3q15 financials are known. That was a mistake.
Anyway, we now know that TMM will release its
3q15 financials pre-bell on November 3rd and
that’s not so very far away now, a week and a
bit. Knowing myself (lover of numbers for
decisions) I’m probably going to hang on until
then, take the risk it goes lower and man up to
my obvious failings as a trader.
True Gold (TGM.v)
A good week, on the back of the NR out Tuesday (2) announcing the start of mining at its
Karma project. As well as the main “we’re mining” news and confirmation that TGM is on tack
to start gold production in 1q16, we got
details such as the approx 1,000 employees
working there (solid opportunities for locals),
the project is approx 73% complete, cash
the company is on track and will need no
extra funding to make it to positive free cash
flow ($19m in cash and $48m in the
financing deals waiting to be deployed), etc.
As for the share price reaction, one couldn’t
have asked for much more from the stock if
we were in the middle of a bullish market
run. The pop from the high teens into the
low 20s came on strong volume and the
price held through three days of consolidation. There’s clearly more to come from the stock
price and though I have a 25c to 30c range on my sale target, I’m starting to feel greedy and
will take aim for the upper end of that range.
McEwen Mining (MUX): News from MUX last week was pretty solid fundies-wise, but
ultimately not something that’s going to move the dial of this company. MUX announced (3) the
SRK-authored feasibility study of its Gold Bar project in the USA, which just about passed Rob
McEwen’s personal barrier of “minimum 20% IRR on any project” by returning exactly that
number at U$1,150/oz gold (was he waiting for gold to reach U$1,150/oz before publishing?
Did SRK wait until they had the spot price they needed before handing in the report?), but
there are three overiding factors about Gold Bar that make it a minor matter for MUX share
price today:
• It may be cheap to build at $60m (with the company claiming that bill could drop) but
it’s still money MUX doesn’t have today.
• Its mine life of five years is short.
11

• Its earliest posible start as a mine is 2018.
However the exploration potential at the mine is good (with its mining permits it can drill and
prove up extra ounces more freely) and the opportunities for project optimization means its
economics could become a lot better. Those make Gold Bar a worthy asset, but today in late
2015 it’s not going to be a catalyst.
Focus Ventures (FCV.v): The basics: FCV last week announced (4) it was raising $2m via a
non-brokered private placement of 16m units (unit = 1 share and a full warrant at basically 15c,
with the second NR that day (5) clarifying precise details of the warrants terms).
The result: The effect on the PPS was very
negative, as the stock which had already
been pushed down to under 15c in the last
couple of weeks (by the mystery seller who
probably isn’t such of a mystery any longer)
was pushed down even further.
This is a “beggars can’t be choosers”
financing; FCV needs the cash for its day to
day operations, the market is tighter than a
ducks’ sphincter and the people backing
this round of financing, headed by Sprott
(Rick Rule) knew that and pushed for very
generous terms on the deal. That 15c warrant looks particularly juicy for them, but it’s a dilutive
round of financing whichever way you look at it. The other thing is how insiders are set to take
a biggish chunk of this placement, which is of course a good sign. But at this price?
On the other hand, we can take some solace in that Sprott/Rule, who’s already participated in
several of the FCV financings connected with the Bayovar 12 project and at higher prices than
last week’s numbers, is still obviously interested in this project and knows a good thing when he
sees it. It’s a case of pure capitalism that he’s able to demand and get Shylock-level terms for
his cash this time around. So be it, but I’m going to have to revisit my model and consider the
company and its price target in light of the now dilutive share count.
The Copper Basket
After forty-three weeks of 2015, The Copper Basket is showing a 29.05% loss to level stakes.
12

company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Capstone Min. CS.to 2.03 381.95 244.45 0.64 -68.5%
2 Reservoir Min. RMC.v 3.96 47.55 209.70 4.41 11.4%
3 NGEx Resources NGQ.to 1.17 187.71 95.73 0.51 -56.4%
4 Nevada Copper NCU.to 1.65 80.5 78.89 0.98 -40.6%
5 Copper Fox CUU.v 0.135 402.96 68.50 0.17 25.9%
6 Hot Chili Ltd HCH.ax 0.16 333.11 56.63 0.17 6.3%
7 Amerigo Res ARG.to 0.27 173.65 48.62 0.28 3.7%
8 Western Copper WRN.to 0.68 93.68 39.35 0.42 -38.2%
9 NovaCopper NCQ.to 0.58 60.15 30.08 0.50 -13.8%
10 Panoro Minerals PML.v 0.295 220.64 26.48 0.12 -59.3%
11 Metminco MNC.ax 0.008 2650 15.90 0.006 -25.0%
12 Regulus Res REG.v 0.35 56.39 11.56 0.205 -41.4%
13 AQM Copper AQM.v 0.06 141 5.64 0.04 -33.3%
14 Catalyst Copper CCY.v 0.305 31.41 4.71 0.15 -50.8%
15 Coro Mining COP.to 0.045 159.37 3.19 0.02 -55.6%
NB: HCH.ax & MNC.ax priced in AUD$, rest CAD$ Portfolio avg -29.05%
The overall basket aveage was virtually unchanged, down just eight splits from last week, but
inside the average there were big moves on
5% The Copper Basket 2015, weekly evolution
either side. The raw count is six risers (CS.to,
0%
NGQ.to, WRN.to, HCH.ax, MNC.ax, AQM.v)
-5%
two unchanged stocks (RMC.v, COP.to) and
-10%
seven fallers (NCU.to, PML.v, CUU.v, ARG.to,
-15%
NCQ.to, REG.v, CCY.v), while big moves to
-20%
the upside came from Metminco (MNC.ax up
-25%
50.0%), Hot Chili (HCH.ax up 21.4%), AQM
-30%
Copper (AQM.v up 14.3%) and the double
-35%
figure percentage losers include Regulus
(REG.v down 18.0%), Amerigo (ARG.to down
15.2%) and Copper Fox (CUU.v down
10.2%).
Copper the metal didn’t do much pricewise, but a new round of China Fear (TM) dropped prices
into the weekend. We’re still in the $2.40/lb range, so not that much to conclude this time.
13
ht4naj ht81 ts1bef ht51 ts1ram ht51 ht92 ht21 ht62 ht01 ht42 ht7nuj ts12 ht5luj ht91 dn2gua ht61 ht03 ht31 ht72 ht11 ht52
source: IKN calcs

We move to our regular warehouse tracking section:
• Total world copper stocks rose last week but only by a tiny amount. Tonnages went up
233 metric tonnes (mt) (+0.005%) to finish at 503,090mt. In a word, unchanged.
• But there was movement of stocks between the houses. Shanghai again saw a big
upmove of 11,387mt (+6.7%) to 170,349mt. Same weak end demand, same players
playing at arb. As you were.
• LME stocks dropped by 15,350mt (-5.2%) to stand at 277,600mt this weekend.
• And yet another big percentage move from the Comex system, up 4,196mt (+11.5%)
to 43,754mt. As Comex closes in on 10% of the warehouse stocks worldwide, ignoring
it as an influence becomes impossible.
Here's the Shanghai-only tracker chart and the trend stays in place. China’s end user demand is
weak and I defy you to reach a different conclusion on that evidence.
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 ht02 ht4tco ht81
Mt Cu
source: Cochilco
NovaCopper (NCQ.to): First on October 21st NCQ announced (6) A new set of high grade drill
assays from its Arctic project way up North. The grades were good, but the most relevant
sphrase in the whole NR was “Results are consistent with previous drilling conducted within the
resource area on the property” because there was nothing in the NR that was out of place
compared to previous exploration work. Then a day later NCQ announced (7) that the
permitting and environmental feasibility work needed for the (goverment to pay) road that
would eventually connect its region to the rest of the world was now going ahead. The shares
didn’t do anything much all week, which is about right.
Hot Chili (HCH.ax): This one put in another strong percentage upmove but it again looks
deceiving, being mostly on a Friday move and on little volume. I’m sticking to my guns here, it’s
looks pumped to the gills.
Metminco (MNC.ax): However, the other Australia stock on our list moved up strongly on
good volume for good reason. It flagship Los Calatos (fair translation “the naked men”) project
in Peru has been given a re-work, the resource is now smaller but with an eyecatching 0.73%
average copper grade, then last week they brought on board a strategic advisor which was
interpreted by the market as an overture to a sale to the highest bidder.
London brokerage RF Abrian wrote a decent analysis of the company last week and called it a
spec buy, which help the share price along as well. You can see that report on this link (8).
The Low Cost Producer Basket
After 43 weeks, the 2015 Low Cost Producer Basket is showing a 11.52% 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 12.90 15.54 -16.1%
2 Newmont NEM 18.90 528.08 10.32 19.54 0.5%
3 Barrick ABX 10.75 1164.67 9.03 7.75 -27.9%
4 Franco Nevada FNV 49.19 156.5 8.31 53.13 8.0%
5 Agnico Eagle AEM 24.89 214.12 6.22 29.06 16.8%
6 Silver Wheaton SLW 20.33 403.75 5.81 14.39 -29.2%
7 Kinross KGC 2.82 1146.2 2.66 2.32 -17.7%
8 Buenaventura BVN 9.56 254.19 2.02 7.95 -16.8%
9 Pan American PAAS 9.20 151.64 1.25 8.26 -10.2%
10 B2Gold BTG 1.62 926.68 1.12 1.21 -25.3%
all prices in U$, using NYSE ticker prices Portfolio avg -11.52%
This week we saw a split decision with four stocks down (ABX, AEN, PAAS, BTG) and six stocks
up (GG, NEM, FNV, SLW, KGC, BVN). Biggest upper Kinross (+7.9% and a very decent move on
volume), biggest downer B2Gold (-8.9% and not wonderful at all).
The Low Cost Producer Basket: Weekly performance
30% and comparative to GDX control
20%
10%
0%
-10%
-20%
-30%
-40%
15
ts13ceD ht11 ht52 ht8 dr42 ht8 dr32 ht5rpa ht91 dr3yam ht71 ts13 ht41 ht82 ht21 ht62 ht9 dr32 ht6peS ht02 ht4tco ht81
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 ht11 ht52 ht8 dr42 ht8 dr32 ht5rpa ht91 dr3yam ht71 ts13 ht41 ht82 ht21 ht62 ht9 dr32 ht6peS ht02 ht4tco ht81
|
source: ikn calcs, NYSE/Nasdaq data
More next week.
Regional politics
Chile: Mining producer prices tick up for the first time in 2015
We’ve used Chile’s mining sector as a useful benchmark for cost pressures before, because it’s
a carefully covered sector and the data tends to be pretty reliable. When it comes to 2015,
we’ve already seen cost pressure drop significantly as according to the Chile stats people IPP,
Mining producer costs are down 17.3% 2015 year to date and 23.1% over the last 12 months.
Quite a drop, with plenty of articles (eg this one (9)) pointing at the new US Dollar strength as

the reason it’s getting that much cheaper to build and run mine in LatAm this year).
But this week the IPP (10) reported a 2% growth in monthly mining producer prices, which may
be the big deflationary drop of last eya now working its way out of the stats but it’s still the first
rise in 2015 and a change of direction.
Chile: Cochilco estimate 2016 average copper price at U$2.50/lb
In separate news, Chile’s copper (and other metals beancounter people Cochilco last week set
their price prediction for copper in 2016 at U$2.50/lb. They also estimated world copper
production growth rate at +2.2% for 2016. Interestingly Chile wants a lion’s share of that it
seems,and posted Chile’s supply growth of +3.8%.
Argentina: Exit polls and Scioli
Polls have closed in the Argentina election and according to the early exit polls there, Daniel
Scioli is set to win the first round over main rival Mauricio Macri. The big question now is
whether Scioli can win by enough margin to be called the winner in this round one, as he needs
either 45% or votes outright, or 40% +1 vote and his nearest challenger more than ten
percentage points away.
Right now a range of exit polls have Scioli on between 39% and 41%, with Macri on between
28% and 31%. Sergio Massa is a distant third and won’t be a player in any run-off, barring his
potential kingmaker position (and that in itself is doubtful).
For Scioli and the direct win, it’s going to be close tonight. However, be clear than in a straight
Scioli vs Macri second round, Scioli will be overwhelming favourite to win through and become
the next President of Argentina. I think this one can be put to bed now, personally.
Guatemala: Jimmy Morales wins
The other big election in LatAm tonight is in Guatemala, where the run-off between the
unknown Jimmy Morales and the well-known Sandra Torres wasn’t even close. Morales has won
with over 73% of the votes, according to Reuters tonight. Your new President, so see IKNs
passim for what this might mean for FDI working there. We will continue to call Avoid on
exposure here, the chance of a black swan event for miner in Guatemala is high.
Market Watching
Minera IRL (MIRL.L) (IRL.to) is run by lawyers
Friday morning Toronto time brought the awaited NR from Minera IRL (11), setting the date for
the EGM for November 26th, venue Toronto Canada (Thanksgiving Day USA, as noted above).
The EGM NR made the announcement of the meeting venue and then, in time-honoured
fashion, set out the current board’s reasonings as to why the proxy slate and its ten points
voted down. Of course, it was my preferred reading material last Friday morning. The first pass
you see them making their case, the seocnd pass you start to note their stornger and weaker
arguments. It was around half way through the third pass that the penny dropped; that this
document hasn’t been written by miner, it’s been written by a bunch of lawyers.
One thing we know about the current band of usurpers at Minera IRL, collectively known as
Team Hodges, is that they might not know much about the act of mining and have precious
little idea about how to conduct community relations, but we know people such as chair Jaime
Pinto and Daryl’s friend, business partner Chuck Higgins and chief motor behind this are
lawyers. And what we know about lawyers is that they’re great at bending and twisting
language to suit their ends and means. So what we get, all the way through this so-called
“robust” defence of the board of directors, doesn’t stand up to much scrutiny once the critical
eye is applied.
So today I’m going to point out a few of the things that this band of sophists wrote in order to
try and pull the wool over your eyes, kind reader and/or shareholder of Minera IRL. We’re not
16

going into the ful list (which is in fact long) because, quite frankly, I’m not going to hand over
defence ideas to this band of scumballs so early in the process. But a sample or three of how
lawyer-speak is being used to fool you is due because these master baiters of the truth have
obviously burned plenty of midnight oil getting the phraseology juuuust right
Example one: Team Hodges makes it sound like Courtney Chamberlain approved of Daryl
Hodges’ move to executive chairman by writing this in the NR:
On March 6, 2015, the Company's Executive Chairman, Mr. Courtney
Chamberlain, took a medical leave of absence and asked a non-executive
Director, Mr. Daryl Hodges, to assume the role of Executive Chairman with
immediate effect, a recommendation which the Board approved. Mr.
Chamberlain sadly passed away the following month. In May 2015 Mr. Hodges
recommended, and the Board approved, the appointment of Mr. Diego
Benavides, the president of the operating subsidiaries in Peru, as Interim
CEO.
In fact Courtney Chamberlain (RIP) did not approve of that at all. The minutes of that meeting
make no mention at all of Chamberlain’s approval. And in fact Chamberlain was strongly
opposed to the appointment of Hodges in an executive role, but his views, made to the meeting
via telephone from his hospital in Australia while already very infirm, were roundly ignored as
Hodges (who was chairing the meeting) pushed through his idea.
What did happen is that a meeting at which Chamberlain was present (by phone) eventually
approved Hodges as Executive Chair and the double-speaking lawyers trying to stela this
company have twisted that into “Courtney approved of Hodges”. It’s total BS.
Example two: Team Hodges is against the appointment to the board of Armando Lema, which
is unsurprising because he’s one of the people on the proxy slate. But the reason they manage
to squeeze from his past is a classic of lawyer doubletalk:
Mr. Lema was formerly a Partner at Lema, Solari & Santivañez Law Firm (LSS
S.A.C.). LSS S.A.C currently has an outstanding tax debt for approximately
US$1 million (including principal, interest and penalties), a debt that is owed
to the Peruvian Tax Authority, SUNAT, and is under enforced collection, as
shown in SUNAT's public registry.
In other words, a place at which Mr. Lema used to work has a tax debt with the Peru taxman of
around $1m. He doesn’t work there any longer, but apparently he’s responsible for the debt
that buffet of lawyers owes. That’s a bit like blaming a footballer for the relegation of a team he
played for three seasons ago. But even if Lema could be linked, however tenuously to the tax
debt owed by a place at which he worked, what Team Hodges fails to mention is that another
lawyer we’ve heard of also worked at LSS S.A.C. at the same time as Lema. His name is Jaime
Pinto and he’s the current chair of Minera IRL! Yes indeed, every word of that argument Team
Hodges spun against Lema also applies directly and fully to Jaime Pinto.
Remember: This news release was written by lawyers, not human beings.
And that’s not even mentioning the wonderful argument they cooked up against the
appointment of Jorge Ramos of COFIDE, which we ran on the blog on Friday. Here’s a paste-
out of that post:
Let's start with just one snippet from today's NR...
The Board is of the opinion that, as a Peruvian and an
official of COFIDE, Mr. Ramos would be unsuitable as a
member of the Board because of provisions of Peruvian
17

law.
...and then compare it to what the same board, but at the time headed up by
the ringleader Daryl Hodges as executive chair (voted off by over 90% at the
AGM), said earlier this year when welcoming the COFIDE deal:
The Company has agreed to COFIDE's participation on the
Minera IRL board of directors, subject to the required
approvals.
That’s just wonderful. I couldn’t stop laughing.
Example three: Here’s the part when they accuse Diego Benavides of trying to fire people
who he considers enemies, or on the Team Hodges side of Minera IRL
Commencing proceedings to terminate without cause the employment of
several key senior employees of the subsidiaries regarded as being
sympathetic to the current Board, including the Vice-President Exploration and
Environmental Manager.
Which sounds pretty nasty and vindictive on the part of Benavides. But what isn’t explained
brings a different light on proceedings:
1) The process to dismiss a contracted full-time employee person in Peru is often long-
winded. In fact, the people mentioned in the NR on Friday still work at Minera IRL, still
draw their pay, still turn up at the office where Deigo Benavides works (unlike Jaime
Pinto, who hasn’t even set foot on the IRL offices yet, let alone one of their mining
property)
2) While the process drags on, one side can claim it’s “without cause” while the other can
equally claim it’s “with cause” and the dispute is only resolved when a definitive
judgement gets handed down from a third party (typically a courtroom in hotly
contested cases). Therefore the “terminate without cause” you see in that NR segment
is mere opinion.
3) It’s very biased and incorrect opinion, too. That’s something I’m not going into here,
but very shortly more light will get shed on the case and it’s going to be great fun to
see how far Team Hodges will be willing to defend at least one of those people when
the facts emerge.
Example four: Here’s a bit where it sounds as though Benavides, as President of Peru
subsidiary Minera IRL S.A., was obstructing Team Hodges (unfortunately still referred to as The
Company in this news release, fortunately that won’t be for much longer):
Failing to call a shareholder meeting of Minera IRL S.A. when asked to do so
by the Company as the controlling shareholder of Minera IRL S.A.
What they don’t mention is that the shareholder meeting was called in a way that was against
the company by-laws and that Diego Benavides HAD to deny the call for a meeting, else be in
contravention of his company’s own rules! What Team Hodges tried to do is akin to a
shareholder of IRL.to who turns up at the company’s head office and starts telling the board of
directors to Do This Do That Do This. For sure if you’re a majority shareholder you have more
rights, but there’s a clear protocol and procedure that shareholders have to go through in order
to call a meeting and Team Hodges (above ‘The Company’) refused to go through the correct
channels for their own reasons.
That’s how lawyers speak to you, people. They think you’re stupid.
18

Example five: This is a classic, where Team Hodges try to get people to think that if they lose
the company’s going to be de-listed from AIM:
Canaccord Genuity has informed the Company that in the event that it is
unable to fulfil these obligations in its absolute discretion, it would have no
choice but to resign as the Company's Nominated Adviser with immediate
effect. In this instance, under the AIM Rules for Companies, the Company's
shares will remain suspended from trading on AIM and if a new Nominated
Adviser is not appointed within one month of the previous Nominated Adviser
ceasing to act, then the admission to trading on AIM will be cancelled.
It’s difficult to know where to start with this one, so convoluted is their argument, but rather
than go into detail we’ll just keep it practical. If Canaccord Genuity decides to resign as IRL’s
Nomad, there would quickly form a queue of other brokers wanting the job. The chances of IRL
not having a Nomad after one month are precisely zero.
Example six: I’m going to make this the last one today but I assure you that there are many
more “facts” and “statements” that don’t stand up to the most cursory of critical examination.
I’m not even going to mention the arch-stupidities they’ve written trying to justify Team
Hodges’s trainwreck attempts at community relations, which undid eight years of hard work in a
matter of weeks (frankly that part’s too easy to dismantle). But I want to add one more,
because it’s one I’ve already received feedback on from a couple of readers out there. It’s this
part, when Team Hodges begins to question the deal Minera IRL did with COFIDE via the third
party company, Sherpa:
The Board is also reviewing the bridge financing obtained by Minera IRL S.A.
in June 2015 in the amount of US$ 70 million, and the way the transaction
was structured, which included the participation of Inversiones y Asesorias
Sherpa S.C.R.L ("Sherpa") as advisor to the company in return for fees,
options, and royalties. The board had been advised by Mr. Benavides that
Sherpa was an exclusive agent of COFIDE, and their role was demanded by
COFIDE. It was subsequently determined by Mr. Hodges, as Executive
Chairman, that Mr. Benavides' assertion was not true.
The inferences here are clear. There is multi-million dollar deal in the offing, there is an
apparently mysterious third party, Sherpa, between the two dealing parties, there’s an
inference of a cosy relationship between the parties and there’s an executive chair in Daryl
Hodges who thinks he smells corruption and then says that Benavides lied when he confronted
him. Sadly for Team Hodges the reality is different from the spin, this is a classic of lawyers
wordsmithing along with an executive chair who at that point was looking for any excuse to fire
the only person stopping him from getting his asset-stripping way with the company.
This is a point that’s going to play out in the public sphere between the two sides, so I’m not
going to spoil it for anyone (or give ammo to Team Hodges), so let’s just stay in the world of
hypotheticals for today.
• Let’s imagine you’re Sherpa and you sign a contract to be the intermediary in this
COFIDE/IRL deal (a position that’s completely normal in the world of Peruvian finances
in fact, plus Sherpa isn’t some fly-by-night company but is well-established and run by
a respected local businessman).
• In such a situation, you sign a contract with both parties and one of the things you
want is to have an exclusive right on the deal, so that’s in the contract too.
• Now let’s imagine you’re Hodges and you ask Benavides “Does Sherpa have an
exclusivity contract with COFIDE”? The answer is, of course, yes.
19

• Then you as Hodges go to COFIDE and ask whether Sherpa was an exclusive agent of
COFIDE. You know the answer already of course. COFIDE tells you that “No, we don’t
have exclusive agents”. What you don’t ask is whether in this specific contract and deal
there’s an exclusive agent, because you don’t want the answer to that question.
• You then get to write that paragraph in an EGM proxy NR, a few months later, after
being very careful with wording and agreeing on what you want to suggest to the world
in late night meetings with your lawyer friends.
But like I say, my little scenario is purely hypothetical, just offering a potential alternate
scenario in which the events took place. And this one could become very interesting next week,
so watch out.
To sum up today: The EGM is now called and we have a date on which IRL’s fate will be setled.
I trust that once the Hodges company-wreckers are gone IRL can put its annus horribilis behind
it and get on with the job in hand, building a mine at Ollachea. As for the week ahead, we’re
going to get news from either side of the now unleashed proxy battle. The advice is to wtach
and read but jump to no conclusions about what’s said because this battle is best approached
as a debate, let both sides have their say about the issues.
Options exercising snippet
On Thursday I ran a short post (12) that noted some reasonably heavy exercising of options by
insiders in Pretium Resources (PVG), with the insiders immediately selling the full shares into
the market and keeping the cahs difference between exercise and market prices. The post was
in the typically snarky style of the blog, but despite that I got some interesting feedback from a
well-placed market professional (no names no packdrill).
He told me that due to changes in the Canadian tax code that come into effect soon, there’s
going to be a lot of good reasons for executives who are lucky enough to be sitting on in-the-
money options/warrants to exercise them and cash them out. We should be clear that those
holding in-money derivative shares are the exception rather than the rule this year, but all the
same they exist and my contact said that he’d already been given a few “discreet warnings”
from people who run companies and want to cash out on options that they’re going to do just
that and it won’t be a direct reflection of what they think of their own company’s chances.
In short, there are going to be tax advantages for insider sellers and as I’m all for keeping petty
amounts away from the clutchs of that particular body, I’m not going to complain too hard this
Q4 if/when more sellers show up. I thank my contact for the heads up, you know who you are .
Conclusion
IKN337 is done, we end with bullet points:
• The jury is out on B2Gold (BTO.to) (BTG) as a Top Pick. Its Q3 wasn’t as good as I’d
wanted and though it’s going to return perfectly reasonable financials and its costs
profile is looking a lot better, it needs to do more. It has 4q15 to impress me, else I’ll
say goodbye.
• The stage is now set for the Minera IRL saga to find resolution in November. It’s going
to be a rough few weeks for those in the story, though.
• Congrats to Jimmy Morales, new President of Guatemala. Cautious applause for Daniel
Scioli, who isn’t far away from the finishing line in Argentina. Hearty cheers for the
Argentina rugby team who played very well against a better Australia today. To lose
20

with dignity is a great honour.
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-corp-achieves-record-third-210127555.html
(2) http://finance.yahoo.com/news/true-gold-begins-mining-karma-103000338.html
(3) http://finance.yahoo.com/news/mcewen-mining-announces-positive-feasibility-104026883.html
(4) http://www.focusventuresltd.com/s/NewsReleases.asp?ReportID=726449&_Type=News-Releases&_Title=Focus-
Proposes-2.0-Million-Private-Placement
(5) http://www.focusventuresltd.com/s/NewsReleases.asp?ReportID=726529&_Type=News-Releases&_Title=Focus-
Clarifies-Private-Placement-Warrant-Terms
(6) http://finance.yahoo.com/news/novacopper-reports-significant-high-grade-120000397.html
(7) http://finance.yahoo.com/news/state-alaska-approves-funding-ambler-120000659.html
(8) http://www.rfcambrian.com/system/files/equity_publications/RFC_Ambrian_Metminco_October_2015_web_0.pdf
(9) http://mineriasustentable.com.mx/el-alza-del-dolar-financia-la-expansion-de-las-mineras-globales/
(10) http://www.entornointeligente.com/articulo/7203309/CHILE-Indice-de-Precios-de-Productor-%28IPP%29-de-
Industrias-registro-una-variacion-mensual-de-15
(11) http://finance.yahoo.com/news/minera-irl-limited-notice-egm-133000691.html
(12) http://incakolanews.blogspot.pe/2015/10/pretium-pvg-inside-selling.html
Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dic-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
Network Expl. NET.v feb'14 C$0.01 22-jul-12 C$0.005 -50.0% position closed, did nothing
Tahoe Resources TAHO feb'14 U$13.10 08-abr-13 U$21.72 -65.8% short closed due to reality
Darwin Res DAR.v mar'14 C$0.10 14-jul-12 C$0.045 -55.0% tiny risk play dropped
B2Gold BTO.to mar'14 C$3.07 28-nov-12 C$3.35 9.1% closed to free up capital
Pretium Res PVG mar'14 U$5.38 22-nov-13 U$6.50 -20.8% short closed as port longer
Gold Res Corp GORO may'14 U$5.07 26-ene-14 U$4.12 16.7% took profit
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Took profit, sm near-term win
Eco Oro Min. EOM.to aug'14 C$0.48 22-sep-13 C$0.26 -45.8% sold small loser to make room
True Gold TGM.v sep'14 C$0.395 02-feb-14 C$0.41 3.8% M&A won't happen, sold
Santacruz Silver SCZ.v sep'14 C$1.04 26-ene-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-abr-14 U$0.99 -28.3% failed trade, sell, raise cash
Kinross Gold KGC nov'14 U$2.90 20-oct-14 U$2.15 -25.9% V small trade, didn't work, chau
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.145 -48.2% lost China sponsor
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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
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
22

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
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
23

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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