IKN #344Premium

The IKN Weekly
Week 344, December 13th 2015
Contents
This Week: The Janet Show, Tax loss selling theory, Dumb money and gold.
Fundamental Analysis: NOBS report on Almaden Minerals (AMM.to) (AAU).
Stocks to Follow: Overview, B2Gold (BTG) (BTO.to), Lake Shore Gold (LSG.to) (LSG),
Teranga Gold (TGZ.to) (TGZ.ax), Sandspring (SSP.v), Dalradian (DNA.to), Phoscan (FOS.to).
Copper Basket: Overview, NGEx Resources (NGQ.to), Nevada Copper (NCU.to).
Low Cost Producer Basket: Overview, Buenaventura (BVN).
Regional Politics: Colombia: More on the Gramalote permit, Dom Rep: Barrick Pueblo Viejo
gets a gong, China: Zijin going big, Ecuador: Codelco and Enami create the Llurimagua JV,
Chile: Productivity and mining in 2016, More Chile: “Tramitology” a problem here too, Good
Argentina: The San Juan pro-mining stance is ratified, Bad Argentina: The Santa Cruz “mining
tax” downvote vetoed, Guatemala: Jimmy Morales’ anti-corruption stance under question.
Market Watching: Minera IRL (IRL.to) (MIRL.L): Saturday’s NR and next week’s EGM, Rob
McEwen does The Gold Report, HudBay Minerals (HBM.to) (HBM): Garofalo at Goldcorp redux,
Gold production’s non-drop and Economics 101.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
The Janet Show
Everything we hear is an opinion, not a fact.
Everything we see is a perspective, not a truth.
Marcus Aurelius, 121AD - 180AD
This week coming sees two meetings of interest, so aside from the reconvening of the Minera
IRL EGM on Wednesday 16th (see ‘Market Watching’ below) that should decide the future of the
company once and for all, the real gig happens in the USA with the FOMC that’s widely
expected to be “lift off” time (buzzwords come and buzzwords go). We get the announcement
Wednesday 2pm EDT, we then get the Janet presser at 2:30pm, both are likely to be market
movers in the short-term at least. Regarding the FOMC December show and gold, this
publication’s position has been clear for weeks: Although not a necessary part of the mix, a
violent spike (either way) in the price of gold is a possibility as jocks do their thing and play on
people’s emotions for fun and profit.
Sidebar: Does that mean “Gold! Under! 1k!” is a possibility, however ephemeral? Well I wouldn’t
put anything past these special and wonderful market people, even though that kind of stretch
down from where we are this weekend looks a big ask.
But once it’s all settled, I expect gold to be within its current range this time next weekend.
Over $1.1k would be nice of course, but not necessary either.
Anyway, back to the FOMC and as usual the house advice is to follow a place that really knows
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its US Macro bananas at key policy moments in the world’s most important economy, that
means Calculated Risk (1).
PS: And as reader ‘R’ pointed out to me this Sunday morning, just to add to the pot Friday is a
Quadruple Witching day in the US markets. The simultaneous expiry of index/stock
futures/options only happens four times a year and brings its own dose of volatility and volume
as big money with vested interest tried to land numbers in places that best suit them. All good
clean fun.
Tax loss selling theory
A small reminder: According to the pattern we’ve seen in recent years (see IKN342 for the
charts), this week is the week in which to buy the juniors, as tax loss selling has seen the
stocks bottoming at the end of week two of December for the last three years.
Do with this snippet of information what you will. In the end and in my view, we’re all beholden
to the price of gold so if that jags $50/oz either way, all bets are off.
Dumb money and gold
Reader PMK sends along the link to a piece written by one Dana Lyons, who is somebody I’ve
never heard of before but that’s normal, I
know very little of the scene. Anyway, Lyons is
a financial professional, seems to have his
head screwed on correctly and his piece is
entitled, “Good News: Gold Speculators
Haven’t Been This Gloomy In 13 Years” (2).
the crux of Lyons’ argument is in the chart he
offers up:
He notes that Non-Commercial Speculators in
gold futures, a.k.a. “Dumb Money” are the
least net long that they have been in 13 years
and quite correctly goes on to say that it’s this
type of washout mentality that we need to see
in gold to form a real bottom. As it happens,
Dumb Money vs. Smart Money (in gold and in
other things) is one of the relationships Gary Tanashian over at BiiWii/NFTRH follows carefully,
so the highlighting of this resonates with me (Gary’s smarter than me and I read smart people
to try to get a little smarter than I am).
Fundamental Analysis of Mining Stocks
This week we take a look at Almaden Minerals (AMM.to) (AAU)
NOBS report dated December 13th, 2015
Almaden Minerals Ltd (AMM.to) (AAU)
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Company Overview
Almaden Minerals Ltd (Canada: AMM.to, USA AAU , Germany A4E1.sg) is an exploration stage
junior mining company operating in Mexico. Its flagship property is the Ixtaca gold/silver project
in Puebla State, East of Mexico City. Current share structure is as follows:
Shares out: 78.068m
Options: 6.285m
Warrants: 8.895m
Fully diluted shares: 93.248m
Current share price: C$0.75
Market Cap: C$66.05m
Approx working cap per S/O: C$0.08
All prices are in US Dollars unless stated. Forex U$0.80=CAD$1
Today's AMM analysis
Feaured on several occasions in recent editions of The IKN Weekly, with a feature in IKN340
and a longer overview piece in IKN341 dated November 22nd, Almaden Minerals (AMM) is one
of the very few exploration stage junior mining companies I care about these days (and nearly
unique among the ones I don’t already own). It’s had my attention for a while, what with its
corporate re-structuring and moves around moving its Ixtaca project forward, so when last week
on Wednesday December 9th Almaden Minerals (AMM.to) (AAU) published a NR (3) to
announce a newly modified PEA for its Ixtaca project in Puebla State, Mexico, I paid particular
attention. In short, I liked what I saw in the NR, so although we don’t have access to the 43-101
compliant PEA yet on the back of the new plan it’s already worth taking a closer look at AMM
and what you get for your new money. Hence today’s NOBS report.
A re-cap on recent AMM news
The PEA is the culmination of a series of events at AMM that have either changed the corporate
structure or have added to the Ixtaca development story. Here’s a quick rundown of the things I
think matter the most:
1) On August 14th the spin-out of Almadex (AMZ.v) was completed (4). We’ve considered this in
previous editions so just the quick and dirty here that the move in essence strips out all other
assets from AMM and has left the mothership AMM with Ixtaca, plus some cash to go about
business. The bottom line is that AMM is now a clean structure and theoretically easier to sell to
a third party.
2) On September 16th AMM published its first Corporate Social Responsibility (CSR) report that
covers community relations and environmental responsibility matters. Dated to end 2014 it’s in
English and Spanish and covers company activities to the end of last year. You can download a
PDF copy from this link (5). The company also has its dedicated page to community activities
here (6) which has nice photos of children, etc.
Cynicism about the samo samo stereotype photos aside, the main CSM report is a valid and
positive contribution to the AMM story. Once upon a year or two ago I picked up on community
grief stories around the Ixtaca project and published about them on the blog. It was therefore
interesting to get feedback almost immediately from company president Morgan Poliquin, as
well as his corp relations people, that told another side to the story. I could go into details (I
won’t) but to sum up, what was going on was a fairly typical NGO anti-mining exercise, which
had picked up a number of supporters in Ixtaca neighbourhood but was still very much in a
minority. Meanwhile, the company had clearly been doing its community relations in the right
way and that shows in the contents of the CSM report as well. When it comes to community
relations you can never expect 100% support from locals but what AMM has is clear majority
support, which is what you want at this stage.
Bottom line to community relations matters: AMM is transparent, doing community relations the
right way and has local support. It’s not a done deal on the permitting front and there is minority
opposition to the project, but the way things are going it should be manageable. I’m keeping an
eye on this aspect but unlike (many) other juniors it’s a situation I cautiously approve of and it
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wouldn’t stop me from buying a slug of AMM tomorrow morning if I so desired.
On October 19th AMM announced (7) it had bought the mill and other machinery from the Rock
Creek mill in Alaska. Once upon a time Rock Creek was put into production by NovaGold (NG)
and produced for a few months back in 2007 and 2008 until the world worked out that NG were
idiots and that the mine was a waste of time. Since then and after changing hands in the
process, Rock Creek was put on Care and Maintenance and the machinery kept in good order
What AMM has bought is a 7,000 tonnes per day (tpd) mill facility which includes all the bits and
bobs that go with a mill (e.g. three-stage crushing plant, gravity circuit, ball mill, flotation cells,
leaching facilities, conveyors, metallurgical and chemical fire assay labs, water treatment plant,
electrical circuitry generators, and spare parts for the ball mill and crushers). A nice package at
a nice price, because AMM is paying U$6.5m for the whole caboodle and that on easy terms
too (U$500k up front, U$250k in 2016, balance on delivery plus 407,997 shares of AMM). As
AMM estimates that this has shaved around U$70m from capex that’s one hell of a deal and
indicative of the type of bargains out there for those with wherewithall and projects to ramp.
On November 17th AMM announced (8) it had raised gross proceeds of $3.38m in an equity
placement (one of the things we dealt with in IKN341). This changed the share count to the new
totals seen in the topbox above. To all this we now add the revised plans for Ixtaca, as outlined
in the PEA of last week. Time to take a closer look at that.
What’s changed in the project economics
To cut a long story short, the PEA announcement of last week (we get the full document within
45 days on SEDAR) is designed to replace the September 2014 PEA, which envisaged a larger
mine, with a bigger capex and used a different set of economic assumptions for metals prices.
In general terms, what AMM seems to be aiming for is a smaller, easier (and cheaper) to build
mine that runs on the type of margins we need in the pressent lower gold and silver price
environment.
There are a lot comparatives available between the 2014 and 2015 PEAs available and I could
fill up a page of this report if I really wanted to bore you (more than normal), so instead just a
couple of lines and done:
• The September 2014 PEA ran a 17% post-tax IRR at U$1,200/oz gold and
U$18/oz silver, with a capex bill estimated at U$246m. The Life of Mine (LoM)
average annual production was set at 202k oz AuEq.
• The new December 2015 PEA runs a 30% post-tax IRR at U$1,150/oz gold
and U$16/oz silver, with a capex bill estimated at U$100.2m. The Life of Mine
(LoM) average annual production was set at 108k oz AuEq.
In short, leaner meaner and more profitable, but it’s smaller too (though putting $0.2m on the
new PEA capex instead of rounding it to $100m made me smile...this is a PEA after all, there’s
a long way to go yet). Here’s the relevant table, ripped from last week’s NR, that shows the
bottom-line economics of the new PEA.
I’ve scribbled on it a
bit in red because not
only do I like the Base
Case parameters, but
the lower, Alternate
Case stacks up very
well too. This is the
kind of backstop
economics the world
(and any potential
buyer of Ixtaca/AMM)
wants to see in these
margin-constrained
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times. I’m not saying that a post-tax IRR of 18% is good, I am saying it’s enough in a bad case
scenario for gold (and silver, though it’s worth noting we’re already at U$14/oz Ag today) if your
mine is already built and running. Get past the capex hurdle and Ixtaca will be able to support a
low price deck.
But enough of broadstroke economics of the new Ixtaca PEA, more interesting for me is the
way the project has been downsized by AMM. Smaller, cheaper and higher margins are what
the market wants today, this is smart from AMM and highlights a couple of advantages AMM at
Ixtaca brings to the table:
1) A company that can adapt quickly, has a flexible mindset and offers what the market is
looking for from its precious metals projects, version 2015/2016.
2) A project that allows AMM to be flexible. To expand on that thought a little it’s worth a slight
revisit tothe 2014 PEA as the September 2014 Ixtaca resource comes to 4.226m oz AuEq (gold
and silver) if we add together measured, indicated and inferred (M+I+I) using a cut-off of 0.5 g/t
Au (and of course the company can’t add inferred in due to the rules, but we can).
To put that another way, the new PEA plans to produce just 0.724m oz Au and 0.677m AuEq
from silver (at a 72:1 ratio) for a total of 1.4m oz AuEq over a 13 year mine life. Even taking into
account the expected recovery rate, the new AMM plan means the company will only mine
1.614m ounces of the previously announced 4.226m oz resource (M+I+I). That’s a big
difference and shows how AMM has focused in on the “sweet spots” on Ixtaca in order to come
up with an econmic plan that works at today’s price levels. To that end they’ve cut down the
throughput rate, they’ve already put their cash down on a mill and saved a whole bunch of
money and they expect to work the mine using contract miners and leaseback plant. In other
words, all the tricks available to drop the capex hurdle.
All this is good, but it also means that any potential purchaser of AMM (the obvious exit strategy
is a buyout) will also get the lower grading ounces that were previously included in the 43-101
study in September. Those ounces in-situ haven’t suddenly disappeared, they’ve simply been
either ignored in the new smaller-footprint plan or they’ve been classed as waste. Indeed AMM
made a small provision for this in its NR (it’ll be interesting the see the full document on this
when it’s available) because it notes that some of the waste will be low grading material and
under a mine plan could be stockpiled for future processing. If so, the overall strip rate at Ixtaca
would drop from 5:1 over life of mine (LoM) to 3:1. It could also give the eventual operator the
chance to register “capitalized stockpile” in the way Teranga does at its ops (financial bods like
accounting tricks).
Financials
This is going to be very short today, because the recent upheaval changes in AMM (mostly the
spin-out of Almadex) means there’s little point in running the ‘usual suspect’ charts. What I
mostly care about here is the liquidity position and with an IKN estimated $6.5m at bank (carried
cash plus the recent placement) and nothing of note on the liabilities side, as mentioned in
IKN341 this is a company that has enough ‘tick over’ funds to get through 2016 if it so desires.
That’s not a bad position and gives AMM at least some breathing space,
Over at the balance sheet (and as noted in IKN340) the main Ixtaca asset is carried at approx
$30m, which is more than reasonable. AMM won’t have to impair and the current market cap
indicates that the market considers the project to be worth more. How much more it could be
worth in the future is the subject for the next section (trying hard to be concise today).
What’s Ixtaca (and therefore AMM) worth?
As we currently wade through fixed asset value hell for juniors, it’s not just Ixtaca that’s been
marked down heavily by the market. However this project has stayed above the Moose Pasture
level of so many other projects out there (the Ixtaca carry is $30m, while AMM’s market cap
minus cash basically double that) which tells us that Ixtaca really is worth something, not just
pretend Howe Street worth something. That’s Mr. Market’s message.
But how much? In order to keep things simple (I like simple) I’m going to run a few in-situ
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valuations past you today to get a handle on the company because even though I’m not a big
fan of the metric in this case AMM, with a PEA and a reduced and now-economic resource, has
basically all its market cap valued on the gold in the ground there. So here we go, but we have
to make quite a few assumptions before we get to a table of numbers. They include:
• We go with the current 78.068m shares outstanding
• Forex at CAD$1 = U$0.80
• State burdens and royalties as per, including corporate tax at 30%, a 5% royalty to the
State, a 2% NSR to Almadex
• We ignore treasury (assuming AMM burns its cash in development)
• We value Ixtaca on its 1.4m oz AuEq (with the gold about 60% of the revenues mix and
the silver worked on the company’s preferred 72/1 ratio to gold. It’ll do.
• We have to assume the PEA is a decent quality 43-101, not one of the PEAs
specifically designed to scam the market. In this case I think we’re on safe ground
because the Poliquins are the serious end of the scene and the deposit has seen plenty
of work (including a decent level of metallurgy study). But this assumption, aside from
the general serious quality of the work, also means we assume the following:
• Capex of U$100.2m, as per the NR.
• Operating costs as per the NR (U$26.99/tonne)
• Grades as per the NR, i.e. average mill feed grade of 0.76 g/t Au, 47.5 g/t Ag.
• Recoveries as per the NR (84% Au, 90% Ag)
• Life of Mine as per the NR, averaging out the LoM production on a per tonne basis.
That’s quite a list and as we’re only at PEA stage, some easier to call than others with some at
best ballpark, we can’t be too confident. But AMM isn’t a fly-by-night company and it deserves
respect, which now comes in the shape of a bunch of numbers in the chart below. It’s worthy of
effort, which is something I can’t say about many junior projects these days.
The first line gives us the in-situ valution of AMM at Ixtaca. For example, at this weekend’s close
of CAD$0.75, the 1.4m oz AuEq are valued at U$33.46 apiece. At CAD$1.00, it’s U$44.61.
Ixtaca: The economics of mining an ounce of gold, at U$1,000/oz Au gold
AMM share price (CAD$) 0.50 0.60 0.70 0.75 0.80 0.90 1.00 1.10 1.25
in situ AuEq per ounce (U$) 22.31 26.77 31.23 33.46 35.69 40.15 44.61 49.07 55.76
LoM capex per ounce produced (U$) 71.57 71.57 71.57 71.57 71.57 71.57 71.57 71.57 71.57
AuEq op costs per ounce prod (U$) 703.71 703.71 703.71 703.71 703.71 703.71 703.71 703.71 703.71
5% Mex royalty, 2% AMZ NSR (U$) 70.00 70.00 70.00 70.00 70.00 70.00 70.00 70.00 70.00
Costs subtotal (U$) 867.59 872.05 876.51 878.74 880.97 885.43 889.89 894.36 901.05
Corp tax (30%) (U$) 39.72 38.38 37.05 36.38 35.71 34.37 33.03 31.69 29.69
Net margin at Au U$1000/oz (U$) 92.69 89.56 86.44 84.88 83.32 80.20 77.07 73.95 69.27
assumptions: 78.068m shares out, CAD$1 = U$0.80, 1.4m oz gold, GSR 1:72, op costs, recoveries, grades as per PEA NR
Staying with the above table we then run per ounce costs for a range of inputs, including capex
per ounce produced, opex per ounce, the royalty and finally corp tax. We then assume that gold
is at a low U$1,000/oz and that gives us the estimated net margin per ounce of gold. For
example, if somebody comes and buys out AMM at 75c, then builds the mine and then sells all
the gold eq at U$1,000/oz, according to our model they’ll make U$84.88 per ounce.
I’ve gone to these lengths and overegged the table to highlight just one thing; that the share
price of AMM is a minor part of the overall cost of producing an ounce of gold (equivalent) for
any company that buys AMM and puts Ixtaca into production. And as that’s by far the most
likely exit strategy, it’s worth considering not just the project IRR (as per the NR last week) but
the total-total costs, including that acquisition cost. As you can see above, at U$1,000/oz gold
the net margin model is a bit skinny (and it’s not even discounted), but on the other hand there’s
still skinny profits to be made if AMM gets bought out at CAD$1.25 a pop.
But we don’t have to stick with U$1k/oz bad case gold prices, here’s the same calc using a
more interesting U$1,200/oz gold price (with silver still run at 72/1):
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Ixtaca: The economics of mining an ounce of gold, at U$1,200/oz Au gold
AMM share price (CAD$) 0.50 0.60 0.70 0.75 0.80 0.90 1.00 1.10 1.20
in situ AuEq per ounce (U$) 22.31 26.77 31.23 33.46 35.69 40.15 44.61 49.07 53.53
LoM capex per ounce (U$) 71.57 71.57 71.57 71.57 71.57 71.57 71.57 71.57 71.57
AuEq op costs per ounce (U$) 703.71 703.71 703.71 703.71 703.71 703.71 703.71 703.71 703.71
5% Mex royalty, 2% AMZ NSR (U$) 70.00 70.00 70.00 70.00 70.00 70.00 70.00 70.00 70.00
Costs subtotal (U$) 867.59 872.05 876.51 878.74 880.97 885.43 889.89 894.36 898.82
Corp tax (30%) (U$) 99.72 98.38 97.05 96.38 95.71 94.37 93.03 91.69 90.35
Net margin at Au U$1100/oz (U$) 232.69 229.56 226.44 224.88 223.32 220.20 217.07 213.95 210.83
assumptions: 78.068m shares out, CAD$1 = U$0.80, 1.4m oz gold, GSR 1:72, op costs, recoveries, grades as per PEA NR
Suddenly, the acquirer and mine owner is making a decent wedge per ounce of gold, above
U$200/oz in each share price buyout case. Again we note the project’s low sensitivity to the
AMM (buyout?) share price, which means the stock has room to run if interest in acquiring it
picks up. It might also suggest the first offer wouldn’t be the winning offer.
I could run a dozen variations of that table past you but the model also condenses them down
and can spit out a net percentage margin chart to give a better overview:
Ixtaca: Net % margin estimate Incl. buyout cost of AMM for 3rd party
AMM pps (CAD$) 0.50 0.75 1.00 1.25
At U$1,000/oz Au 9.27% 8.49% 7.71% 6.93%
At U$1,100/oz Au 14.79% 14.08% 13.37% 12.66%
At U$1,200/oz Au 19.39% 18.74% 18.09% 17.44%
At U$1,300/oz Au 23.28% 22.68% 22.08% 21.48%
source: AMM data, IKN ests, IKN calcs
Here we again see that at $1k gold, AMM won’t win many friends but at $1.2k and above,
there’s tasty returns for any mining company who’d like to take this project on. To reiterate the
simplified message used in the first chart what we’re saying here is that, for example, if
company X buys out AMM tomorrow at CAD$0.75 a share, then puts Ixtaca into production and
sells all the gold it produces at an average of U$1,100/oz, ceteris paribus it will make an
undiscounted net/net (after tax and everything) of 14.08% on the deal. But if AMM sells for
CAD$1 and the gold is sold at U$1.2k, net net margin (tax and all) is 18.09%. And I put in the
U$1,300/oz line just to tempt you.
Discussion and conclusion
In IKN341 dated November 22nd, one of the main conclusions drawn about AMM the stock was
a two-way approach. It was in my opinion (and I quote myself)...
a) A stock you could buy today and forget about for a while if necessary be
prepared for any near-term weakness in order to win in the long-run, or...
b) ...a stock that should get perky once gold makes a more decisive rally (let’s
pencil in a number North of U$1,200/oz, for rough argument’s sake).
At that time I said I was in the b) camp and that’s
been confirmed with the release of last week’s
PEA. However, I don’t think AMM needs
U$1,200/oz gold to be an interesting trade any
longer, what we should be looking for is an uptick
in interest and volume.
This ten year chart provides a visual on that
thought. AMM is now back at the price point it had
before the Ixtaca discovery was announced, a
news event that shot the stock frmo under a
Loonie to over $5. Since then it’s been downhill all
the way, and aside from a burst or two volume has
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died a quiet death. What I’d now expect from an AMM “in play” is a move back away from what
looks like a long-term bottom, plus an uptick in volume (because los Poliquin aren’t going to let
it go quietly).
The new PEA out from AMM is a positive development, but it’s only going to be reflected in the
share price under two circumstances (or a combo thereof). Either a) gold goes up, which would
see AMM rise on the general tide of sector recovery or b) AMM gets bought out by a serious bid
(it’s probably already fielded and refused informal all-paper offers from FF.v or similar), by
which I’d mean a company such as Agnico Eagle stepping up and adding to its Mexico asset
book. Or Tahoe Resources swooping in to dilute its horrid Guatemala risk profile. Or Fortuna
Silver taking another step away from silver. Something like that, but I’d be off-scale surprised if
anything happens before buzz, volume and price improvement in AMM kicks in first so while it
remains a quiet backwater stock, that’s unlikely.
AMM is worth following and if it offers a low entry point in the next couple of weeks (you never
know how these Tax Loss seasons play out) it could throw out a bargain. But overall and until
the macro scene for gold assets picks up, I don’t feel like adding to my portfolio exposure when
all the others I own will rbound with gold in the same way. This is a call that could change in
days, and the main reason that it might change is a sudden return of volume traded that would
augur well. But for the moment I’m staying neutral on AMM and I’m not a buyer. A good
stock, well run, nice project, on my watchlist, definitely a possible purchase in the future but the
bottom line is there’s no real reason to own as yet.
End of Report
Stocks to Follow
Of our 14 names currently open in the ‘Stocks to Follow’ list, last week three made gains
(LSG.to, LRA.v, DNA.to), five made losses (BTO.to, TGZ.to, SAM.to, FOS.to, TGM.v) and a full
six were unchanged (MUX, SSP.v, ATM.v, IRL.to suspended, FCV.v, REG.v). And apart from the
12.5% loss in Starcore (which was in truth a penny off, hardly a collapse) all the moves were
modest and mostly on cautious volumes. In short, a week in which precious little happened.
We currently have 14 open positions in our 'Stocks to Follow' list, one below our self-imposed
15 name maximum. Three trades are green, eleven are red.
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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$1.65 -24.0% Top Pick, 4q15 shaping v well
Metals Producers (in current order of preference)
Lake Shore Gold LSG.to STR buy C$1.07 07-apr-15 C$1.10 2.8% M&A tgt 1.50 tgt
Teranga Gold TGZ.to STR buy C$0.55 15-feb-15 C$0.495 -10.0% v cheap under under 60c
McEwen Mining MUX hold U$1.09 25-jan-15 U$0.95 -12.8% looking cheap again
Starcore Intl SAM.to spec buy C$0.12 10-jan-15 C$0.07 -41.7% Also "land grab", tgt 19c
Land Grab Stocks (in current order of preference)
Phoscan Chem FOS.to hold/sell C$0.28 29-mar-15 C$0.275 -1.8% Under offer, may sell
Sandspring Res SSP.v spec buy C$0.195 18-oct-15 C$0.15 -23.7% Risky small play, 30c tgt
Atacama Pacific ATM.v hold C$0.19 26-apr-15 C$0.145 -23.7% Spec buy, cheap adv proj
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.24 -79.1% solid biz model, LT hold
Other Recommended Stocks (in current order of preference)
Dalradian Res DNA.to STR buy C$0.64 27-oct-13 C$0.70 9.4% 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$0.24 33.3% 25c to 30c sell price tgt
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.12 -47.8% tgt 50c, phosphate great value
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.19 -36.7% 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
Legend Gold LGN.v nov'15 C$0.085 01-mar-15 C$0.035 -58.8% tiny "land grab" idea, failed
Timmins Gold TGD nov'15 U$0.245 20-sep-15 U$0.15 -38.8% small near-term loser
2009, 2010, 2011, 2012, 2013 and 2014 closed positions in appendices below
Now for some notes on current basket stocks.
B2Gold (BTG) (BTO.to): A late Friday NR from BTO (9), which is rarely a good sign for the
near-term future of a stock and this case isn’t an exception, though it’s unlikely to be a big
drag. The paydirt part is here:
“The Shelf Prospectus and Registration Statement, when made final or effective, will
allow the Company to offer up to US$300,000,000 of debt securities, warrants,
subscription receipts, units or common shares, or any combination thereof, from time
to time during the 25-month period that the Shelf Prospectus is effective. The
Company filed this Shelf Prospectus in order to maintain financial strength and
flexibility going forward”.
What we have here is BTO doing the pre-paperwork which makes any eventual placement
announcement go through easily. What it means is that yes, BTO is looking to fund the
9

construction of Fekola via equity placement but it doesn’t mean tomorrow or next week, either.
I’d expect The Clive and company will make their timing strategic and as they don’t have any
big bills to pay on Fekola for a few quarters they do have real flexibility in timing.
But it’s also a statement of intent and I’d expect BTO’s brass will soon be fielding offers and
thoughts from financiers on the back of
Friday’s filing. As for it being a price drag, it
could be in the short-term but it’s always
been assumed that BTO would make up the
capex deficit for the Fekola build-out using
equity placement (it’s their M.O.) so i don’t
think it’s going to make any real difference
longer-term. The terms of the capex raise
will be more important and if it turns out to
be pure equity, that may dilute near-term
but longer term it’s the way that has the
least friction on the balance sheet.
As for trading, BTO has done very nicely in
December to date as shown by this chart, which sticks it up against the precious metals ETF
(GDX), the PM juniors ETF (GDXJ) and gold (GLD). Getting to within 2c of UNCH in a week
where most big-cappers dropped between 4% and 6% is good enough for me by way of
consolidation.
Lake Shore Gold (LSG.to): Real news from LSG last week (announced Monday, then
approved by the TSX on Friday (10)) and the
type of news that the fundies
numbercruncher in me likes. Not only does
the decision by LSG management to buy
back $10.35m in debt and improve its
liabilities position make financial sense (less
servicing on the outstanding), but it sends a
clear message to the world that LSG feels it
doesn’t need the cash that’s accumulating in
treasury and is in a position of financial
flexibility. That’s not something many juniors
out there can claim and as a result, LSG
managed to buck the trend and finish up on
the week. This chart, with the same stock-
plus-GLD-GDX-GDXJ lines you saw in the
BTO piece above, shows the outperformance of LSG clearly. Good to be on board this one, it
brings a dose of steadiness to my creaking portfolio.
Strong traded volumes too, especially on Monday and that may have been for a different
reason, as mooted on the blog that day (11). The whole Garofalo taking over from Jeannes
thing at Goldcorp (GG) caused a round of rumours and speculation to emanate from trading
desks everywhere, the main ones captured by this desk and relayed in good ol’fashion’d gossip-
monger style (they talk like that all the time, so I don’t see why the insto jocks can’t share). An
excerpt from that:
1) That GG is interested in buying out LSG has been an open secret for many months
(and hey, full disclosure, it's one of the basic reasons I'm long LSG).
2) Chuck leaving and Garofalo entering means that Chuck will want to seal his deal
before exit.
3) Chuck leaving and Garofalo entering means the other possible deal, that of the
much larger Detour acquisition, is now off the table because the new boy won't want to
10

bite at that big a cherry early in his tenure.
Make of that what you will. Personally, I fully agree that the DGC deal is now off the table. And
yes, I’d like to believe GG will move for LSG sooner rather than later, but then again I’d also like
to believe CA River Plate has a chance against FC Barcelona in the World Club Championship in
Japan next week. Or that a non-corrupt politico will become the next President of Peru. Etc.
Teranga Gold (TGZ.to) (TGZ.ax): After that “oh aren’t I just wonderful” love-in with the
charts of LSG and BTO compared to the benchmarker ETFs, back to reality by comparing the
underperforming TGZ against the same squiggly lines.
TGZ at a touch under breakeven over the last ten days has performed worse than the market
by at least 4% (arguably six) and that’s not good, nor is it going to be hidden from view. I don’t
have much light to shine on why TGZ might be falling behind the pack, its financials look solid
enough, though the perception may be that due to its US Dollar exposure and stickier-then-
most fuel prices that don’t drop as readily as in other countries, TGZ needs a higher gold price
for breakeven.
Sandspring Resources (SSP.v): A couple of mails received about the to-date poor
performance of this new position, which is fair enough because it’s true. By way of a blanket
reply, I’d state that this position is still a small one, it’s no particularly inconvenient weight on
my personal portfolio and that’s not likely to change. Secondly, this one isn’t alone in suffering
from the total apathy of the market towards junior explorecos, there are no asks and anyone
who wants to sell even the smallest amount is nigh-on forced to dump into a “stink bid” (and
much as I hate that phrase due to its corruption in recent times by the Casey charlatans, it’s
accurate in this case). Third, there’s nothing wrong at the company aside from it being in the
financial control of Fiore, which means Frank Giustra will be after his own bargain basement
deal for the next round of financing.
If gold goes up so will SSP, what’s more I’d vouch that its reversal and rebound back to the
previous 20c range would be pretty rapid. But for the time being, this is a high risk spec buy
only, no need to pay up if you want in. I’m holding, no more no less.
Dalradian Resources (DNA.to): Real news from DNA last week, the type that explorecos are
supposed to provide on a regular basis. Drilling numbers from Curraghinalt (12) released on
Thursday showed the type of results you’d want from the infill drilling campaign currently
underway that is designed to get as much rock as possible into reserve/resource category for
the late 2016 feasibility study. CEO/Chair Patrick Anderson put it nicely in the NR...
"Curraghinalt continues to deliver in predictability and uniformity of high grade gold
distribution over the breadth of the system. These are exactly the sort of results you
want to see from an infill drilling program, repeatable high grade intercepts."
...and no dissent on that from this quarter. Thing is, infill drilling isn’t the type of news that will
11

ever move a market price upwards because it’s of the “that’s what you were supposed to
do/say/find anyway, wasn’t it?” variety. Plus,
DNA’s course is now set on serious
development work (we’re not used to that in
our world), which is the type of thing that
takes time and doesn’t align with flashy NRs.
That may be a good thing or a bad thing, but
it’s definitely a thing and DNA didn’t manage
to shift any more after its decent early week
move back up into the 7-handle world (it
deserves a nine handle, but let’s not run
before we walk).
Volumes still aren’t great, you’d reasonably
expect a higher-profile exploreco like this to
get more market liquidity (it’s “a Beaty play”
after all) but there were at least a few people biting at the ask (especially early week) and in
the end, it was good to see DNA rebound from a level it’s rebounded from before, the chartists
will like that and provide more support.
Phoscan Chemicals (FOS.to): Further to last week’s extended piece on the FOS decision to
put its cash into O&G, if we consider what the price of oil’s been doing this last week (or three)
it may turn out to be the “snatch defeat from jaws of victory” option that’s most in play here.
I’m going to hold a while longer, but I’ve also stuck “may sell” on the chart above which covers
my back if FOS decides to pop to 30c next week because I’ll dump them there and then if it
does. Equally, if I end up taking a small loss on this deal it’s not going to break me into pieces.
Right now, the most likely scenario is to see how it comes out of Christmas and do something
more active then, perhaps the whole tax-loss thing is part of the reason it’s staying low.
The Copper Basket
After fifty weeks of 2015, The Copper Basket is showing a 44.01% loss to level stakes.
company ticker price 1/1/15 Shares out Market Cap current pps gain/loss%
1 Reservoir Min. RMC.v 3.96 47.55 194.96 4.10 3.5%
2 Capstone Min. CS.to 2.03 381.95 133.68 0.35 -82.8%
3 NGEx Resources NGQ.to 1.17 187.71 112.63 0.60 -48.7%
4 Copper Fox CUU.v 0.135 402.96 50.37 0.125 -7.4%
5 Nevada Copper NCU.to 1.65 80.5 46.69 0.58 -64.8%
6 Hot Chili Ltd HCH.ax 0.16 333.11 36.64 0.11 -31.3%
7 Amerigo Res ARG.to 0.27 173.65 33.86 0.195 -27.8%
8 Western Copper WRN.to 0.68 93.68 29.98 0.32 -52.9%
9 Panoro Minerals PML.v 0.295 220.64 26.48 0.12 -59.3%
10 NovaCopper NCQ.to 0.58 60.15 25.86 0.43 -25.9%
11 Regulus Res REG.v 0.35 56.39 10.71 0.19 -45.7%
12 Metminco MNC.ax 0.008 2650 7.95 0.003 -62.5%
13 AQM Copper AQM.v 0.06 141 4.94 0.035 -41.7%
14 Catalyst Copper CCY.v 0.305 31.41 4.08 0.13 -57.4%
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 -44.01%
12

The unremitting destruction of wealth in the junior copper space continues unabated. Another
drop for the basket, down 2.83% this week (similar to the 2.74% drop of the week before) and
with few exceptions, the stocks ignored the
copper price pop on Friday. They’re already 5% The Copper Basket 2015, weekly evolution
way out of their economic window for their 0%
-5%
projects, five cents per pound here or there on -10%
copper seems to make no difference now. -15%
-20%
-25%
Just two stocks registered gains on the week -30%
(RMC.v, ARG.to) and another four were -35%
-40%
unchanged (CUU.v, REG.v, AQM.v, COP.to) -45%
which means nine droppers and I’m not listing -50%
them all, just the heaviest percentage losses
from Metminco (MNC.ax down 25.0%), NGEx
Resources (NGQ.to down 13.3%), Catalyst
Copper (CCY.v down 13.3%), Nevada Copper (NCU.to down 12.1%) and Hot Chili (HCH.ax
down 12.0%). More than enough to be getting on with, I’d say.
As for copper at market, the late week rise to over U$2.10/lb caught plenty of market attention,
but in the end it didn’t managed to break any further upwards. So a case of...
Elle dit qu'elle partira
Elle dit qu'elle me suivra
Alors pour un instant
Pour un instant seulement
Alors moi je la crois Monsieur
Pour un instant
Pour un instant seulement
Parce que chez ces gens-là
Monsieur on ne s'en va pas
Jacques Brel, Ces Gens-là
...until otherwise proven and I’m sticking firmly to the
bearish call on the metal and its underlying stocks. It
looks as though we’re going to need to headline-making
bankruptcies in the copper space (HBM?, CS.to? CUM.to?,
TCM.to?, and dare I say FM.to in polite company?) before
we see the real bottom show.
Now our regular weekly warehouse comment section:
• Last week overall world copper stocks in the
official warehouses dropped by a modest 8,421
metric tonnes (MT) (-1.8%) to finish at
468,632mt.
• Shanghai SHFE stocks dropped again, but this
time a small 2,115mt (-1.2%) to close at
170,407mt as the trading world starts to wind
down for the end-year holiday season. One thing that’s fair to say is that there wasn’t
much follow-through from the supposed Chinese government buyers, perhaps they
think they’ve made their point already.
• LME also dropped in a modest manner, down 4,950mt (-2.1%) to finish Friday at a
close of 232,675mt.
• Comex stocks finally registered a drop after their record run, down 1,356mt (-2.0%), to
stand at 65,550mt this weekend.
13
ht4naj ht81 ts1bef ht51 ts1ram ht51 ht92 ht21 ht62 ht01 ht42 ht7nuj ts12 ht5luj ht91 dn2gua ht61 ht03 ht31 ht72 ht11 ht52 ht8 dn22 ht6ceD
source: IKN calcs

Here's the Shanghai-only tracker chart, which shows the slowdown of the drop from 200k but
that’s about all I can muster this weekend. When there’s nothing to say, say nothing.
Shanghai Futures Exchange Warehouse Stocks, 2014/2015
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
14
31'13ceD ht91 ht9 dn2ram dr32 ht31 ht4yam ht52 ht51 ht6yluj ht72 ht71 ht7 ht82 ht91 ht9 ht03 ts12 ht11 ts1bef dn22 ht51 ht5rpa ht62 ht71 ht7nuj ht82 ht91 ht9 ht03 ht02 ht11 ts1von dn22 ht31
Mt Cu
source: Cochilco
Now for notes on a couple of basket stocks:
NGEx Resources (NGQ.to): On Wednesday NGQ wheeled out another NR (13) this time one
of those “Our news is that we’re going to have
news soon” releases that were popular a couple of
years ago when people cared about juniors. This
one was about laying the path to the upcoming
PEA that will cover the Josemaria (on Argentine
side of border) and the Los Helados (on Chilean
side of border) projects and demonstrate how
they can be lumped together into one big
binational copper project. What could possibly go
wrong? ☺.
They told us that the “integrated project” is nearly
ready and will be with us in the New Year, which
is a polite way of saying “please don’t tax loss sell us”. As the price chart shows, it din’t work.
Nothing else to add that wasn’t said last week.
Nevada Copper (NCU.to): Just keeps on sucking. Balance sheet debt and a project that
doesn’t have a hope in hell of working at current copper prices beats out “we got a permit”
every day of the week.
The Low Cost Producer Basket
After 50 weeks, the 2015 Low Cost Producer Basket is showing a 21.53% loss to level stakes.
company ticker price 1/1/15 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Newmont NEM 18.90 528.08 10.10 19.13 1.2%
2 Goldcorp GG 18.52 830 9.98 12.02 -35.1%
3 Barrick ABX 10.75 1164.67 9.03 7.75 -27.9%
4 Franco Nevada FNV 49.19 156.5 7.59 48.52 -1.4%
5 Agnico Eagle AEM 24.89 214.12 5.97 27.86 11.9%
6 Silver Wheaton SLW 20.33 403.75 5.37 13.31 -34.5%
7 Kinross KGC 2.82 1146.2 2.32 2.02 -28.4%
8 Buenaventura BVN 9.56 254.19 1.15 4.51 -52.8%
9 B2Gold BTG 1.62 926.68 1.11 1.20 -25.9%
10 Pan American PAAS 9.20 151.64 1.08 7.14 -22.4%
all prices in U$, using NYSE ticker prices Portfolio avg -21.53%

Compared to the juniors in our Stocks to Follow list, the bigger caps had a haeder time last
week. All our ten lost ground, the minimum loss was 4.0%, the typical swung around 5% and
the worst was Buenaventura (BVN down 10.0%) yet again. Newmont is still new leader of the
market cap pack. Somebody please tell Garofalo.
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 ts1von ht51 ht92 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%
ts13ceD ht11 ht52 ht8 dr42 ht8 dr32 ht5rpa ht91 dr3yam ht71 ts13 ht41 ht82 ht21 ht62 ht9 dr32 ht6peS ht02 ht4tco ht81 ts1von ht51 ht92 ht31
|
source: ikn calcs, NYSE/Nasdaq data
Buenaventura (BVN): As this five day chart shows, at the end of Thursday there was a
rought 2% gap between BVN and the GDX benchmark, but come the end of Friday that gap
was up to nearly 8%.
The reason may be that BVN just sucks, but it’s more likely that the negative news from its San
Gabriel project (13a) was already filtering through. The simple equation is...
Community known to be difficult + company with poor community
relations record = accident waiting to happen
... so in a nutshell, last week BVN was due to hold its Environmental/Social Impact Presentation

to the comunity of Ichuña regarding its San Gabriel (previously known as Chucapaca) gold
project in the Southern Moquegua region of Peru.
The day arrived, as did the local authorities, representatives of the national government and the
mining ministry (MEM), the BVN team and an estimated 1,000 members of the local population
to attend to presentation, but before it could start the local authorities and BVN got into a
“strong discussion” and after a prolonged discussion (that apparently happened in the police
station) the meeting was eventually called off before it could begin. Adding to the mess, the
locals who were to attend weren’t let into the meeting hall at any point (doors blocked by
guards touting guns) and had to mill around in the main square, waiting for a yea or nay
decision on the meeting happening for a few hours (until the nay was announced). Also, adding
insult to injury the MEM representative, one Abel Díaz Berrios, told the local authorities that
they could be subject to criminal prosecution if they continued to block the meeting from
happening. That message went down like a lead balloon and hilarity ensued (though no
meeting). In the words of regional council member Máximo Ramos Apaza who was part of the
local authority group, “You don’t enter somebody’s else house and then treat them with a lack
of respect. But the most important is that the people’s decision is respected”. According to
reports, locals were upset about the lack of social outreach and communication from BVN up to
last week and considered the company was trying to push through its obligatory Environment
and Social meeting on the sly without having done enough beforehand.
It’s fair to call BVN’s track record in community relations as “patchy at best”, for example it has
some of its non-core assets up for sale because locals want the mines to go back into
operation, but not under the command of BVN. For another example, Conga. It has got to
decent agreements and cordial relationships with some of its communities, for one example it
manages to keep working at Tantahuatay in Cajamarca which is no mean feat, for another the
word from its new Tambomayo project is positive. But you never you with this Roque Benavides
guy (who could do with a lesson or two from his cousin, I think). Then again, it’s also fair to
call the population of Ichuña difficult, as even a company with a strong track record of
community relations success such as Rio Alto made no progress there (when it took the option
on a different Ichuña property held by Duran Ventures at the time, only to hand it back with no
progress made).
The upshot is that BVN, once again, has a community problem on its hands that could be
serious enough to block a key development project. The share price drop of Friday probably
doesn’t reflect all of that yet. I still like the idea of buying into BVN due to its leverage to gold,
but I’m also glad that I haven’t bit at it yet.
Regional politics
Colombia: More on the Gramalote permit
We made mention of the EIA permit awarded to the Gramalote project (51% AngloGold
Ashanti, 49% B2Gold) last week and even though it’s gained very little attention in the English-
spekaing North, in Colombia the news has been strong enough to see a round of follow-up
reports on the event. Of them, this Q&A (14) between Colombia’s biz news media “El
Espectador” (the spectator) and Felipe Márquez, VP Corporate Affairs at AngloGold Ashanti, was
the best I saw. In it Márquez explained a little more about the EIA permit, what it means and
the type of commitment the JV would make to the region around Gramalote in the next couple
of years, including village relocation programs, agricultural development programs and the
construction of a mine for the use of local artisanal miners currently on the Gramalote property.
Aside that, here are a couple of the parts of the full interview (your author’s translation) as they
contain interesting insights into different aspects of Gramalote and what AngloGold Ashanti is
hoping to achieve in Colombia (which includes of course La Colosa):
El Espectador: Why were you awarded the permit?
16

Felipe Márquez, AngloGold Ashanti: We focused on a study that had all the
necessary technical, environmental and community support so that the government felt
comfortable and understood that we know the region. From the beginning we’ve said
that we weren’t going to base our project on Colombian regulatory standards but on
world standards.
EE: The construction at Quimbo was another example of how badly things are
working between regional and national authorities. How are things with you (on
this aspect)?
FM: We don’t have this problem because the regional authority, Comare, has always
worked with us, we’ve always had good relations with them, to the point where they
worked with us in the licencing process as in interested party. They knew that due to
the size of Gramalote its permits would be national level, but they’ve always kept us
inside their permitting schedules. Even though they (the regional authority) didn’t
participate in the EIA process, they worked with us.
EE: If Gramalote hadn’t been declared a “Strategic Project of National Interest”
(aka a “PINES” project, standing for “Proyecto Estratégico de Interés Nacional”) would
it have been permitted in the same way by now?
FM: In the case of Gramalote, the fact it was declared a PINES project didn’t influence
in the timeline, but it did in the need to take functionaries to the project in the
established time window. It wasn’t a shortened process, but a process that developed
on time.
.....
EE: And how much will Gramlote pay in royalties?
FM: The royalty on gold is 4% of gross proceeds. Just in royalties this project will be
worth around U$180m (to the State). We make the biggest payment to the State via
corporate taxes, explosives, gasoline etc. The government take is around 80% (in
total).
EE: Is the tax burden very high?
FM: Yes it’s very high and we’ve told that to the face of the government. We’ve
presented studies which show that Colombia, compared to other countries, is non-
competitive in this aspect.
...
EE: How is the La Colosa project going?
FM: We still need at least two or three years to start the permitting process. Colosa is
different to Gramalote in that its construction won’t take two years, but four. In the best
case scenario it will be built in nine or ten years time from now, there’s a lot of social
processes and environmental investigation left to be done.
IKN 344 back and I’m still somewhat mystified as to why this hasn’t made bigger news in the
mining trade papers. One of the big red crosses against Colombia’s name as a mining
jurisdiction has always been the quagmire bureaucracy, here we have an example of a
successful permitting process which counters that accusation with hard facts, but nobody’s
talking about it. Go figure.
Dominican Republic: Barrick Pueblo Viejo gets a gong
The church and social organizations may not like Barrick Pueblo Viejo (60% ABX, 40% GG) but
the government and the business community of Dominican Republic sure does, and a show of
that came last week when the mine was awarded the “Dominican Exporter of the Year 2015”
award by the Association of Dominican Exporters (ADOEXPO) (15). Barrick Pueblo Viejo’s local
president, Manuel Rocha, picked up the gong and said (quote), “With this award we renew our
interest in adding to the economic and social growth of the Dominican Republic via our
sustainable operations with high standard of security that respect the environment and
maintain constant dialogue with local communities.”
China: Zijin going big
I read the Scotia Daily Mining Scoop mainly because it provides a glimpse into what sellside is
pushing at its clientele and the way in which the marketing is being worked on them (you poor
17

things under full service accounts, you) but every so often the mailer comes out with a really
interesting snippet. So it was with this piece on Wednesday December 9th, pasted as-is with no
editing:
Zijin Mining: More Deals Planned – Next One Could be As Big as $5.0B;
& Further Cooperation with ABX Going ForwardV: Zijin Mining Group Co.
Ltd. may have raised eyebrows with its string of gold and copper acquisitions
outside China this year, but President Wang Jianhua hinted that even bigger
deals are yet to come. "We have invested more than 13 billion Chinese yuan
in the overseas market, but this is just a preliminary foray into the global
market. Frankly speaking, we are now planning for bigger transactions," he
said the sidelines of the 10th China Gold & Precious Metals Summit in
Shanghai on Dec. 9. "Next time, a deal could be as big as US$5 billion," he
added. Wang told delegates at the summit that Zijin Mining will also further
advance its cooperation with Barrick Gold Corp., from which it bought a 50%
stake in the Porgera gold mine in Papua New Guinea for US$298 million in
May. "Chairman Chen Jinghe has been in charge of the negotiations with
Barrick Gold. He and Barrick Gold chief [John Thornton] almost meet every
week as the two companies have many cooperation opportunities," Wang
said. The gold producer previously said it is targeting to become a world-class
gold and copper company by 2020.
http://www.chinagoldsummit.com/speakers.php
IKN 344 back and the obvious link-up is Pascua Lama. Right size, the connection between the
two companies is established, Zijin has made its intentions 100% clear rgarding this big project
so if Chile manages to get the project’s permits straightened and ABX pays its fines, the JV will
be on. Meanwhile, Zijin may be looking to other places (e.g. I’ve heard “Pretium” (PVG) “buy
out” and “Zijin” mentioned in the same breath too many times to mention).
Ecuador: Codelco and Enami create the Llurimagua JV company
The plan for Chile’s State owned mining company Codelco and Ecuador’s State owned mining
company Enami to create a joint venture (51% Enami, 49% Codelco) in order to explore and
eventually develop the Llurimagua copper project in the Intag region of northern Ecuador was
first presented to the world back in August 2013. Since then it’s seen local opposition and stop-
start progress, but last week the two companies finally signed the official JV deal, in presence
of their respective mining ministers and to general fanfare (16). It also comes after the
Llurimagua JV has managed to move forward (at last) on an initial deep drill campaign it
planned for this year. According to information at the presser last week, of the 14 holes
planned, eight are complete and another four are in progress, with a total of 13,000 metres
sunk (they’re after a big porphyry, pretty clear). We know there is decently grading material
there due to the work done by Ascendant Copper back in the 2000´s before that company got
kicked out.
Chile: Productivity and mining in 2016
Chile’s Finance Minister Luis Felipe Céspedes was the top guest at the “Chile Mining Exporter”
forum in Iquique Chile last week. During his presentation there was a gap between the
advances made in technological innovation and human resources, the gap was growing and in
the next 12 months, what with Chile’s President Bachelet naming 2016 “Year of Productivity”
last week, the country had an opportunity, “to move from being exporters of copper to being
exporters of mining”, which is a snappy idea if you ask me. He went on (your author’s
translation) (17): “Productivity is key for the development of the country. In 2016 we are going
to create spaces for dialogue and analysis which will allow us to construct consensuses and
joint action in order to achieve the integrated development of small and medium sized
companies”. All that lot is far more politik-speak and less snappy, but clearly the idea in Chile in
2016 is to get better and more efficient at what it does. If it then manages to be a source of
mining excellence that exports its know-how to the world, so much the better, which brings me
to the translation of his last soundbite.
18

“We have seen a big rise in mining investment, recall that in this case the announced non-
conventional renewable power generation projects are very significant, as seventeen have been
approved. This is a high growth sector, and one in which Chile has a unique potential in the
world”.
More Chile: “Tramitology” a problem here too
After that chunk of shiny future from Chile’s FinMin, time for a dose of reality. One of the
bugbears of mining companies in Peru (Roque Benavides of Buenaventura goes on non-stop
about this one, therefore so does the rest of the mining world) is the overly long periods of
time it takes to get permits (exploration, environmental, construction, operating, etc) out of its
government which, according to Roque and pals, puts Peru at a disadvantage to “serious
countries” like Chile (Peru’s inferiority complex towards Chile and envious glances South are
permanent, it’s part of the national psyche). They call it “tramitologia” (i.e. “tramitology” with
the Spanish word “tramite” used for the process of paperwork through an institution).
It was therefore interesting to note last week that according to a study compiled by The Chilean
Chamber of Construction (CChC) (18) the time taken to get permits out of Chile’s government
have risen sharply too. Examples given include permits for port and harbour civil works, which
took an average of 7.8 months to be awarded in 2013 nd now take 33.6 months on average.
And in energy related projects permits took an average of 10 months to be approved and now
take 18 months on average. The CChC complains that the longer it takes to build project due to
permitting delays the more expensive it becomes and notes that in port/harbour projects it now
fears losing business to Peru (of all places).
Good Argentina: The San Juan Province pro-mining stance is ratified
You know that I’m negative as a whole on the Argentina mining scene (particularly for juniors),
but on the other hand I’ve always been crystal clear that the province in which you operate is
the most important factor and some places are much much better than others. One of the
shining examples of pro-mining in Argentina over the last few years has been San Juan, run by
governor (and CFK supporter) José Luis Gioja who stepped aside in this year’s election to allow
his dauphin, Sergio Uñac, to take over as governor. Uñac won his vote and in his inaugural
speech last week (19) said the following about the mining industry in San Juan (translated via a
Portal Minero report):
Friday December 11th 2015: The new governor of the Argentine province of San Juan,
Sergio Uñac, stated that metals mining and non-metals mining, “are a pillar of San
Juan development and will continue to be that way”, while defining that ““Mining Yes or
Mining No” is a unworkable dichotomy and belongs in the past”.
A clearer statement of effect impossible. Good news from San Juan, which is set to remain
strongly pro-mining and with a little luck can provide an example during the Macri era for other
provinces that are either anti-mining or fence-sitters.
Bad Argentina: The Santa Cruz “mining tax” downvote is vetoed
Back last week we told of how the Santa Cruz “mining tax” (i.e. 1% per annum levy on in-situ
reserves) had been voted down by its outgoing parliament. This week we read via regional
newspaper TiempoSur (20) that governor Peralta has decided to veto the throwing out of the
law. This means it’s going to become a political football in the weeks ahead and though neither
side will be able to claim victory for a while, it shows that for every San Juan type governor in
Argentina, there’s one like Peralta hell bent on ruining its provincial mining industry.
Guatemala: Jimmy Morales’ anti-corruption stance already under question
Last week saw a decent insight article published in Global Voices Online (21) regarding Jimmy
Morales and what we might expect from the upcoming government. The author, who knows his
Guatemala well, is sceptical of the announced corruption purge strategy that Morales used to
sweep into power and highlights several of the CVs of key members of the Morales team, who
are old-school right wing politicos or military figures (often exactly the same thing there) in
Guatemala and will likely sway things to favour the old guard and status quo. Here’s an excerpt
19

as the piece wraps up:
“The Morales victory will not change that situation. Under its new President-
elect, Guatemala is likely to see not only the further disruption of human
rights trials of former military leaders, but a deepening criminalization of
indigenous movements who seek to defend their lands against the expansion
of extractive projects in the areas of mining, hydro-electricity development,
and monoculture agriculture.
“The Morales administration will come under intense scrutiny both by civil
society who participated in the nearly five months of protests leading to Peréz
Molina’s resignation, and multilateral anti-corruption bodies such as the
International Commission against Impunity in Guatemala (CICIG), who have
uncovered multi-million dollar corruption cases involving the highest seats of
government. The massive mobilization of civil society signals that the
population will not hesitate to return to the streets in protest at the first signs
of corruption in the new administration.”
In other news, CALAS is the environmental group in Guatemala that fights against mining etc
via the courtrooms. It’s been at the forefront of the campaign against Tahoe Resources at
Escobal (town of San Rafael Las Flores) but it’s also active in other action groups against
extractive businesses in Guatemala. One of the cases is against French oil company Perenco
and its operations there and with the change of government, CALAS has been demanding that
the government looks again at the (they say) suspiciously awarded environmental permit for its
operations. Last week it was revealed that all documentation on the Perenco EIA has
“disappeared” from the government archives (22). Perhaps the shape of things to come in
Guatemala. If so, TAHO has an ally.
Market Watching
Minera IRL (IRL.to) (MIRL.L): Saturday’s NR and next week’s EGM
This is what Minera IRL Ltd (Team Hodges) published yesterday Saturday:
LIMA, PERU--(Marketwired - Dec. 12, 2015) - Minera IRL Limited ("Minera IRL"
or the "Company") (AIM:MIRL)(BVLAC:MIRL) announces that it has been advised
that the Company's registrar has received a proxy revocation in respect of the votes
whose validity came into question at the Company's Extraordinary General Meeting
of shareholders (the "EGM") on November 26, 2015, resulting in the adjournment of
the EGM and the commencement by the board of directors of Minera (the "Board") of
an investigation into the validity of such votes. In light of such proxy revocation, the
Board has determined that any potential issue with such votes has been resolved to its
satisfaction and therefore the investigation has terminated. In his capacity as Chair of
the EGM, Mr. Jaime Pinto confirms that, following such proxy revocation, he
presently knows of no reason that any proxies submitted for the EGM cannot be
validated.
The adjourned EGM will be re-convened on the 24th Floor at 333 Bay Street,
Toronto, Ontario M5H 2T6, on December 16, 2015 at 10:00 a.m. EST (3:00 p.m.
GMT).
And what it means in practical terms is simple: Rio Tinto has withdrawn its proxy submission
and will vote its block at the EGM meeting on Wednesday 16th (10am Toronto). It means that
some Pinto shenanigans aside we’re almost certain to get a final resolution on Wednesday and
just that is a good thing, but we should also be clear that the Rio Tinto block of votes has the
power to sway the EGM one way or another. Sketch time.
How this may go down: Scenarios
Here follows a best-guess on numbers and what the Rio Tinto block might mean. Please be
20

clear that we don’t have accurate numbers, but we do have SP Angel having said on November
27th that in the EGM more than 90% of shareholders with votes that were accepted, i.e. the
non-Rio Tinto votes, voted for the Team Benavides side. We also know that 141m votes in total
were counted, because Jaime Pinto said so at the EGM (one of the very few firm numbers we
have. Then if the last count is correct Rio Tinto has around 44.3m votes.
Therefore if we assume it was indeed 9-to-1 in favour of Team Benavides:
• Total votes minus Rio Tinto: 96.7m
• Team Benavides votes (minus Rio Tinto): 87m
• Team Hodges Votes (minus Rio Tinto): 9.7m
There are ten agenda items on which to vote and they’re all separate, but if we take just one
and assume it to be typical:
Scenario One: If Rio Tinto and its 44.3m shares votes for Team Benavides:
Team Benavides: 131.3m votes (93.1%)
Team Hodges: 9.7m votes (6.9%)
Result: Team Benavides wins.
Scenario Two: If Rio Tinto and its 44.3m shares abstains:
Team Benavides: 87m votes (90%)
Team Hodges: 9.7m votes (10%)
Result: Team Benavides wins. Interesting to note the similarity between these first two
scenario outcomes whether Rio Tinto votes actively or not.
Scenario Three: If Rio Tinto and its 44.3m shares votes for Team Hodges:
Team Benavides: 87m votes (62%)
Team Hodges: 54m votes (38%)
Result: Team Hodges wins because even though Team Benavides wins the popular vote,
these special items need 66.67% approval to be passed. At 62% Team Benavides falls short.
And that’s your rough and ready guide to Wednesday morning in the offices of Fasken. It’s now
up to Rio Tinto to decide whether it’s going to vote against the views of (anecdotally reported
by SP Angel, though no reason to doubt it) around 90% of shareholders and support Team
Hodges, or whether it will do the right thing.
See you on Wednesday and don’t expect any substantive IRL commentary on the blog before
that date.
Rob McEwen does The Gold Report
This interview in The Gold Report (23) (though that link is to a re-print as I’d rather give
Lawrence Williams my click) which contains the usual brainmix of McEwen. Some things are
populist, others ego-driven but I’ve always given him credit for the real world basic insights and
focus he brings and will continue to do so. The example passage today is this, because I can
say it a thousand times and get ignored but McEwen deserves and gets a more attentive
audience.
TGR: You’ve been a mining executive for decades, but you’re also an investor. What
do you look for in a mining company when you’re thinking about making an
investment?
RM: First, I listen to management’s pitch and if it sounds interesting; second, I ask
about their share ownership and if I find they are talking a big story without having a
large investment in their firm, then my interest starts to fade. But, third, I look at how
the market is pricing the company. If its shares appear to be selling at a large discount
my interest can return. I tend to take large positions in explorers and small producers
that I feel have big upside potential.
21

TGR: What do you look for in the resource itself? Are you focused on country risk? Are
there countries you won’t invest in, or do you have a short list of favorite countries?
RM: The location of a resource is very important. There are definitely countries that are
unattractive to me, especially where there is no rule of law, high crime rates and
greedy governments. Experience has narrowed my focus to the Americas and perhaps
Europe. I have no interest in putting my staff’s lives at risk. In addition, I wish to avoid
exposure to regions where corrupt practices are commonplace and the potential for us
to get ensnared inadvertently in the new foreign corrupt practice laws that have been
enacted here at home.
You get no argument from me on any of those points.
HudBay Minerals (HBM.to) (HBM): Garofalo at Goldcorp redux
I’ve been asked to expand on my “HBM going further South” comment last week regarding the
move of Garofalo to Goldcorp and the
subsequent handing of the CEO reins to Alan
Hair, currently COO of HBM.
Firstly, here’s a five day chart of HBM versus
the GDX ETF and to make it a bit fairer (as
HBM is largely a copper stock and copper
stocks had a worse time of it than gold
stocks last week) we stick in the COPX
copper producer’s ETF (even though it’s not
that liquid). As you can make out, GDX
dropped just under 2%, COPX by just over
6% and HBM by nearly 15%, with the big
gap opening up on Monday morning as the
market digested the news of Garofalo’s exit and promptly sold the stock hard. Zero surprise
there, even if Garofalo is hardly my idea of an ideal CEO and shining member of the mining
community.
So I’ll give it to you straight. HBM is under investigation at the SEC for insider trading activities
that went on around the time of the Augusta Resource buyout and though David Garofalo may
have been one step away from being directly mixed up in that story, Alan Hair was not. If the
SEC investigation finishes with charges being brought, it’s not going to look great for HBM to
have one of the protagonists sitting in the CEO’s chair. That’s putting it mildly.
Disclosure: No position in HBM, no links to offer you to back up my statement and there’s no
way I can reveal sources on this either.
Gold production’s non-drop and Economics 101
It’s easy to fall into the trap of thinking a body of people are far more intelligent than they
actually are, especially if they have access to a thesaurus and can put their written thoughts
pats a professional copy editor before it’s published. Yes, I’m talking about gold bullion and gold
stock anal ysts. Lawrie Williams (one of the better ones out there and not target of these
words) did the honours on a subject last week. It’s one of those ones I tend to ignore, not
because it’s uninteresting or tedious, just because the debate becomes so darned stupid I
wonder where one side of it is coming from, or where they went to school, or whether they
went to school.
I digress, back to the point and Lawrie Williams started this piece (24) with the following words:
“What has been vexing many analysts is that global new mined gold
production has so far not been falling, despite the much lower gold price. This
has been put down to a number of factors...”
22

Williams then goes on to list things like Mark Bristow’s opinion that the vast majority of gold
miners aren’t making any money, depletion of reserves, plus the other arguments about the
systemic weaknesses in precious metals mining goldbugs use to declare that supply is going to
fall off a cliff so “Buy Gold!” because it’s all going to disappear into Indian Temples or Swiss
vaults, et cetera.
In fact, the real thing that’s been vexing “many analysts” is their ignorance of basic economics.
I’ve been dumbfounded by all this “miners not making a profit so production will drop”
argument for quite a time, because of something I learned when 16 years old in my first
economics class. Economics 101 states that a business, any business, will find it advantageous
to stay in business as long as its variable costs are covered. That means of course its fixed
costs will drag it into bottom-line losses (e.g. mining companies run with amortization,
depletion, depreciation, debt servicing, residual tax etc etc) but as long as you can “cover your
ops”, it makes sense to trudge on in the hope/belief/stone cold certainty that your market
prices will improve and being you back into profitability. When mining companies go Care &
Maintenance, it means that the mine is making a loss, not the larger company. When mining
companies close mines they have a lot to pay out in closure costs. The last thing a loss-making
miner needs is to move the weaknesses of long-term liabilities it holds on its balance sheet into
the current liabilities column, its share price would be crushed (and if you don’t believe me,
take a good look at what Timmins Gold has done in the last few weeks).
But you don’t need to take my word for this, instead you can listen to Ricardo Palma, who is no
less than president of Chilean copper giant Codelco’s Andina division. His main metal may be
copper rather than gold, but the talk of the economcs of mining is exactly the same. Here
translated is what he had to say on the matter last week to trade media Area Minera (25). I’ve
translated a longer section of the Q&A because there’s interesting information included in the
longer piece, but the moneylines come in the bold-type section:
“Today we are effectively in a cyclical process of very strong price fall and I
hope that copper stays above U$2/lb”.
However, he (Ricardo Palma) said that six months ago a group of Swiss
banks said that the price would reach U$1,80/lb in 2016. “I also read that
Morgan (Stanley or JP, unclear) was expecting prices similar to that.
Obviously if the price drops to those levels the scenario for mining in Chile will
be complicated and it will get all of us who work in mining to make extra
efforts in order to cut costs. It will also affect the national economy, as today
mining accounts for 54% of all exports and a lower price will impoverish us all.
The situation looks complicated”, said Ricardo Palma.
Area Minera asked him for the lowest price that a mining operation could
support and the President of the Andina Division of Codelco replied that,
“It depends on each operation. The lowest price that a mining operation
can support is when (positive free) cash flow reaches zero. That’s to
say, when there’s no new capital injection, when the owners need to add
new money in order to support the mine. Because as long as normal
operating costs and financial obligations can be covered the operation
can continue. But from the moment the owner has to start adding new
cash in order to maintain what we in mining call C1, which in Chile today
must be around U$1.40/lb to U$1.60/lb (the mine may close).”
The C1 of the Codelco Andina division is around U$1.40/lb, says Palma, who
added that the division still has a lot of resistance (to low prices). “But when
only C1 is covered, it means that the company is making a loss and that
means the national economic scenario is being strongly negatively affected. I
don’t think that in the history of Codelco there’s been a year in which the
company didn’t hand over profits to the State and it seems that in 2016 it will
23

depend on the evolution of market prices for copper”.
Some of this is a slight reflection on the comments and thoughts seen on these pages recently
about All In Sustaining Costs (AISC) in mining and the way in which a mining company can
claim to have a low “all in” sustaining number but ultimately register net losses. Part of that is
about the increasingly useless metric that is AISC, which has been quickly skewed from a
potential industry standard to something that each individual mining company uses in its own
special way, nothing more or less than a marketing tool to wow the unsuspecting. But buried in
the AISC theme is the way in which a low “All In” number will help a company weather a period
of low prices for metals, be that metal gold, copper or any other you’d care to mention. The
trend in 2015 has been for precious metals miners to post lower and lower AISC, which means
they’re managing to cover their variables, or “C1” as Palma and his fellow miners will say. That
in turn means that the supply of new gold to market isn’t about to drop off suddenly, no matter
what the straw-grasping end of the goldbug community might want you to believe.
Conclusion
IKN344 is done, we end with a few bullet points:
• By Wednesday lunch time we should have resolution on the whole Minera IRL affair
and its year to forget in 2015. It’s now simple too; Rio Tinto has the up/down vote. I’ll
be clear and state that without Diego Benavides on boad the shares will be worthless,
the dilution enormous, the COFIDE position impossible and the Ollachea community
situation will spiral into outright conflict. But I’ll also say that I’ll be glad when this
disruptive chapter in mining is all over, no matter who wins. It’s been a learning
esxperience too, I’ve learned just how greedy, ugly and deceitful people can be just to
gets their hands on money. The depths these Hodge people have gone to is impressive
and what’s more, they seem to take geat enjoyment from screwing over other people,
to the point of glee. One of these fine days I’ll be able to tell you about the background
and some of the things that have gone on; I’m planning a “fictional” novel, you see.
• Almaden Minerals (AMM.to) (AAU) new Ixtaca economic study is a PEA and after all
we’ve been through, we should be leery of that most basic level of economic study. But
it’s better than most, there’s already been a lot of real exploration and development
work done on the project. The resource has all the signals of “it works”, the grade of
gold and silver combined bring robust economics, there’s a mine in the making here.
I’ve talked with the company on previous occasions about the community relations
program and the signals are okay there too, though I’d need to know more before
committing deeply (especially as there is a small but vociferous anti campaign). The
recent placement means AMM will be able to tick over in 2016 and that’s probably what
we have here, a project and a company that will now rise and fall with the price of
gold. The upside would come from a buyout and for that, we’d need a volume signal.
• Buenaventura (BVN) suddenly looks cheap for a reason.
• In this section last week I called Lake Shore Gold (LSG.to) “a kind of quasi-top pick”,
which is true for today as well. Much as I like B2Gold (BTO.to) (BTG) and even though
the vibes coming from that one have been much better in December, it still needs to
deliver on its guidance for the year and that will mean a record breaking quarter,
because if not it’s a share-price breaking quarter. Meanwhile, LSG is going about its
business quietly and efficiently, enjoying the influence cheap Canadian dollar
(compared to the US Dollar) and is now confident enough to use treasury to pay down
liabilities early. All the right signals, time for Chuck to move in.
24

• Of my open positions, the one that concerns me most at the moment (aside from IRL)
is Teranga, which should have moved but didn’t. Maybe it’s a sleeper, maybe there’s
heavier than average tax loss selling going on there, but it’s one I have in the centre of
my radar for next week.
• As for Phoscan, it’s just disappointing. It looks like I’m going emerge form that one at
breakeven (plus of minus a penny) due to the “smart” decison to move into O&G.
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) http://jlfmi.tumblr.com/post/134773935600/good-news-gold-speculators-havent-been-this
(3) http://finance.yahoo.com/news/almaden-announces-ixtaca-gold-silver-211409008.html
(4) www.almadenminerals.com/NEWSROOM/2015/AlmadenNR_Aug13-15.pdf
(5) www.almadenminerals.com/RESPONSIBILITY/Documents/Almaden_CSR.pdf
(6) http://www.almadenminerals.com/RESPONSIBILITY/Community.html
(7) www.almadenminerals.com/NEWSROOM/2015/AlmadenNR_Oct19-15.pdf
(8) www.almadenminerals.com/NEWSROOM/2015/AlmadenNR_Nov17_15.pdf
(9) http://www.b2gold.com/news/display/index.php?news=2010390
(10) http://finance.yahoo.com/news/lake-shore-gold-announces-normal-221000429.html
(11) http://incakolanews.blogspot.pe/2015/12/strong-traded-volume-in-lake-shore-gold.html
(12) http://finance.yahoo.com/news/dalradian-intersects-2-01-m-070000004.html
(13) http://finance.yahoo.com/news/ngex-preliminary-economic-assessment-combined-070000616.html
(13a) http://www.aminera.com/index.php/mineria-internacional/item/15125-moquegua-per%C3%BA-buenaventura-
cancela-audiencia-de-eia-en-ichu%C3%B1a.html
(14) http://www.americaeconomia.com/negocios-industrias/anglogold-aumentara-seis-veces-la-produccion-de-oro-de-
colombia
(15) http://www.elnuevodiario.com.do/app/article.aspx?id=456080
(16) http://www.eleconomistaamerica.cl/empresas-eAm-chile/noticias/7206651/12/15/Ecuador-y-Chile-firman-acuerdo-
para-desarrollar-proyecto-minero-Llurimagua.html
(17) http://www.aminera.com/index.php/component/k2/item/15079-c%C3%A9spedes-%E2%80%9Cdebemos-pasar-de-
ser-exportadores-de-cobre-a-exportadores-de-miner%C3%ADa%E2%80%9D.html
(18) http://aminera.com/index.php/construccion-mineria/item/14664-proyectos-en-el-seia-esperan-14-meses-en-
promedio-para-ser-aprobados.html
(19) http://www.portalminero.com/pages/viewpage.action?pageId=106431444
(20) http://www.portalminero.com/pages/viewpage.action?pageId=106431170
(21) https://globalvoices.org/2015/12/04/jimmy-morales-the-new-face-of-guatemalas-military-old-guard/
(22) http://elperiodico.com.gt/2015/12/12/pais/desaparece-de-conap-informe-de-impacto-ambiental-de-perenco/
25

(23) http://lawrieongold.com/2015/12/11/rob-mcewen-on-gold-silver-and-investing-in-precious-metals-stocks/
(24) http://lawrieongold.com/2015/12/10/new-mined-gold-output-still-not-falling/
(25) http://www.aminera.com/index.php/mineria-nacional/item/15098-%E2%80%9Csi-el-precio-del-cobre-sigue-
bajando-la-situaci%C3%B3n-se-ve-compleja%E2%80%9D.html
Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dic-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
Network Expl. NET.v feb'14 C$0.01 22-jul-12 C$0.005 -50.0% position closed, did nothing
Tahoe Resources TAHO feb'14 U$13.10 08-abr-13 U$21.72 -65.8% short closed due to reality
Darwin Res DAR.v mar'14 C$0.10 14-jul-12 C$0.045 -55.0% tiny risk play dropped
B2Gold BTO.to mar'14 C$3.07 28-nov-12 C$3.35 9.1% closed to free up capital
Pretium Res PVG mar'14 U$5.38 22-nov-13 U$6.50 -20.8% short closed as port longer
Gold Res Corp GORO may'14 U$5.07 26-ene-14 U$4.12 16.7% took profit
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Took profit, sm near-term win
Eco Oro Min. EOM.to aug'14 C$0.48 22-sep-13 C$0.26 -45.8% sold small loser to make room
True Gold TGM.v sep'14 C$0.395 02-feb-14 C$0.41 3.8% M&A won't happen, sold
Santacruz Silver SCZ.v sep'14 C$1.04 26-ene-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-abr-14 U$0.99 -28.3% failed trade, sell, raise cash
Kinross Gold KGC nov'14 U$2.90 20-oct-14 U$2.15 -25.9% V small trade, didn't work, chau
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.145 -48.2% lost China sponsor
Stocks To Follow Closed Positions 2013
Closed in 2013 closed close price
USA Graphite USGT feb'13 U$0.93 08-ene-13 U$0.17 81.7% short tgt made/trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
United Silver USC.to mar'13 C$0.21 28-oct-12 C$0.095 -54.8% small Ag sector trade, failed
Aurcana Corp AUN.v apr'13 C$1.07 11-nov-12 C$0.55 -48.6% closed on poor YE results
Gold Res Corp GORO apr'13 U$14.11 25-ene-13 U$9.38 33.5% short tgt made/trade closed
Marlin Gold MLN.v apr'13 C$0.075 10-feb-13 C$0.065 -13.3% closed trade
Bear Creek BCM.v may'13 C$2.58 01-abr-13 C$2.40 -7.0% near-term, time ran out
Lupaka Gold LPK.to may'13 C$1.12 23-oct-11 C$0.32 -71.4% towel thrown in
Tahoe Resources TAHO may'13 U$18.62 08-abr-13 U$14.70 21.1% took profit on ST short
OceanaGold OGC.to jun'13 C$3.03 16-sep-12 C$1.18 -61.1% sold on gold drop
IMPACT Silver IPT.v jun'13 C$1.14 13-ene-13 C$0.62 -45.6% sold on silver drop
Duran Ventures DRV.v jun'13 C$0.045 10-may-13 C$0.025 -44.4% ST trade never worked
Plata Latina PLA.v jun'13 C$0.79 10-abr-12 C$0.13 -83.5% closed
Bellhaven BHV.v jun'13 C$0.065 03-jun-13 C$0.12 84.6% closed ST trade
B2Gold BTO.to aug'13 C$3.07 28-nov-12 C$3.44 12.1% sold 1/2 to raise cash
Colossus Min. CSI.to aug'13 C$0.72 24-jul-13 C$0.79 9.7% closed thru nerves on future
Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% closed to raise cash
Bear Creek BCM.v sep'13 C$2.06 30-may-13 C$2.20 6.8% sold on pol risk decision
MAG Silver MVG oct'13 U$7.00 12-sep-13 U$5.62 19.6% near-term short
Gold Res Corp GORO oct'13 U$9.52 03-may-13 U$4.98 47.7% short tgt made, covered
AQM Copper AQM.v oct'13 C$0.31 16-oct-11 C$0.125 -59.7% closed failed trade
First Majestic AG nov'13 U$11.51 07-nov-13 U$10.50 8.8% v near term short, closed
Fortuna Silver FSM nov'13 U$4.00 07-nov-13 U$3.68 8.0% v near term short, closed
Primero PPP nov'13 U$5.70 07-nov-13 U$5.75 -0.9% v near term short, closed
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work, sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
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Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
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Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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