IKN #350Premium

The IKN Weekly
Week 350, January 24th 2016
Contents
This Week: In today’s issue, Sticking with U$0.80/CAD$1 forex, Gold the safe haven part 93.
Fundamental Analysis: NOBS report on New Gold (NGD) (NGD.to).
Stocks to Follow: Overview, Lake Shore Gold (LSG.to) (LSG), True Gold (TGM.v), McEwen
Mining (MUX), B2Gold (BTG) (BTO.to), Teranga Gold (TGZ.to) (TGZ.ax), Focus Ventures
(FCV.v), Lara Exploration (LRA.v), Starcore Intl (SAM.to).
Copper Basket: Overview, Ivanhoe Mines (IVN.to), NovaCopper (NCQ.to), Nevada Copper
(NCU.to), HudBay Minerals (HBM) (HBM.to), Capstone Mining (CS.to).
Low Cost Producer Basket: Overview, Buenaventura (BVN), Sibanye (SBGL).
Regional Politics: Guatemala: Interpol re-captures Alberto Rotondo, Peru: Las Bambas
begins, Moody’s revision of LatAm mining companies, Colombia: The opposition to La Colosa,
Ecuador: Annals of ‘can’t make this stuff up’ Javier Cordova edition.
Market Watching: Regarding Minera IRL (IRL.to) (MIRL.L), My idea of an entry price for
Almaden Minerals (AAU) (AMM.to), Sunridge (SGC.v) gets its deal approved.
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
In today’s issue
I plan to buy an opening position in New Gold (NGD) (NGD.to) this week. See below in the
main Fundies section for more.
Sticking with U$0.80/CAD$1 forex
I too have watched the Loonie dive sharply against the all-conquering US Dollar (well, all except
for gold anyway) and its current CAD$ = U$0.707 forex is well below the IKN House forex rate
of 1/0.8 that we’ve been using for quite a while. I’m mulled over changing it, but for the
moment I’m not going to ratchet down the assumed forex because adds an extra layer of
conservative into the mix at a time when it’s too easy to point at extravagant potential
percentage gains in mining stock prices in Loonies, simply because the whole sector is
depressed anyway. If it goes on for much longer I won’t have much choice, but for a few more
weeks at least I’m stick where I am.
Gold the safe haven, part 93
Thursday morning saw those “Worried Broker Head In Hand Stares At Screen” photographs
making it to the front pages of newspapers and media channel (below the line). But lo and
behold, by Friday they had gone:
• If it bleeds, it leads
• If no news is good news, then good news is no news
1

Delete as required. Meanwhile here’s the five day chart of gold (GLD, black line) versus the
latest market whipping boy, the S&P500 (brown line), plus the precious metals miners via GDX
and GDXJ (blue and red). Please note that this week’s five-dayer includes the last two Fridays,
as the US markets were closed for MLK day last Monday. But no matter, it’s still eloquent:
Wednesday’s action was interesting because for a full day gold did indeed manage to fulfill its
classic role as safe haven against broad market weakness. Perhaps Thursday too (up for
debate). But on considering those four lines above, not just two, it occurs to me that gold is
acting more as a safe haven against mining stocks, less against stocks in general.
Let’s frame this another way: If you’re a Wall (rather than Bay or Howe) Street fund manager
with a large amount of dollars under your control, where are you going to look as a good place
to park cash at the moment, the very discounted mining stocks (which people like me insisted
were dirt cheap last weekend, they’re 4% or 5% cheaper now) or GLD, the entry level bullion
drug? Are you looking for extra alpha in rough times, or are you looking to de-risk?
On that subject, I used to watch GLD inflows fairly closely for a while but that’s now farmed out
to a third party, because when you find somebody who’s a reliable voice following a interesting-
but-not-exactly-your-patch dataset closely it means you can get on with concentrating on your
own patch and just read the results. You say laziness, I say work efficiency. Anyway, I’m
rambling and the point is to get you to follow and read Lawrence Williams over at Sharps Pixley,
as he’s following GLD money flows carefully and reports this weekend (1) that for 2016, “...the
total gold holding in GLD stood at 664.2 tonnes, a rise of 21.8 tonnes over the three week
period. While this is still only around half the peak holding of 1,351.5 tonnes reached back in
2012, it does demonstrate that perhaps gold is indeed coming back into favour as a safe haven
asset. This has been due to the relatively steady gold price performance post-Fed rate rise last
month (when most analysts seemed to expect gold to fall sharply) coupled with some severe
nervousness over the performance of general equities markets so far this year”.
For the record I think GLD in/outflows are an important dataset to follow. You can have the “Is
GLD Real Gold?” debate with somebody else, mine is predicated on three criteria:
1) The GLD outflow trend all through 2013, 2014 and at least half of 2015 matched the
gold price weakness very closely. Or put in a flipside way, gold bullion prices didn’t
(couldn’t?) bottom before GLD outflows had stopped.
2) GLD is easy entry, it allows quick and efficient exposure to gold for large money, it
gives the potential client that infamous ‘optionality’ on gold that only miners could offer
them previously. It means that it’s used by the people who trade in and out quickly,
people like Wall St suits in fact, so if they’re looking for that fabled safe haven it’s going
to be their first stop.
3) You can follow the bullion out to China for the rest of the decade if you like, the plain
2

fact is that the USA is still the most important financial centre of the world and what it
does with its money will always set the tone for the world. China likes to hold heavy
lumps of metal in its collective hands and Wall St likes GLD? Well that’s the way it is,
they’re both buyer right now and that’s what really matters.
As Williams notes in his piece, it’s too early to definitively call a tide change in gold from just a
few weeks of GLD data. But it’s going the right way and it’s the type of signal that’s 100%
necessary for gold to have a sustained rally, instead of just watching it go through its current
bottoming pattern.
Fundamental Analysis of Mining Stocks
This week look at New Gold (NGD) (NGD.to).
NOBS report dated January 24th, 2015
New Gold Inc. (NGD) (NGD.to)
Company Overview
New Gold Inc. (Canada: NGD.to, USA: NGD, Frankfurt 32N.f) is a mid-tier producing gold
mining company operating in several countries. It has four mines currently in production, plus a
pipeline of advanced-stage development projects. Current share structure is as follows:
Shares out: 509.16m
Options: 14.0m
Warrants: 28.1m
Fully diluted shares: 551.26m
Current share price: U$2.02
Market Cap: U$1.03Bn
Approx working cap per S/O: $1.03
All prices are in US Dollars unless stated. Forex U$0.80=CAD$1
NB: As NGD 1) reports in US Dollars, 2) mines things that are sold in US Dollars and 3) its USA ticker does
more volume than its Canadian ticker, unless other stated all prices are in US Dollars, just like IKN321.
Today's NGD analysis
The last time we tackled New Gold (NGD) fully was the NOBS report of IKN321 dated July 5th
2015, at which point we identified NGD as a
potential way to play a gold rebound, but didn’t
buy in. After a few hesitations I eventually did buy
some NGD last year, announcing the purchase on
August 23rd 2015, then buying at a personal
average of U$2.18 (which could have been lower if
I’d timed it better by a few days) and selling in
October at U$3.05 for a 39.9% gain (on the pop
you see in the above chart, a reasonably well
timed sale), one of the few successful trades in a
2015 that was easy to forget. In other words we
did quite well on NGD and I’ve been watching the
stock ever since with the view to moving in and
trading it again (to the point of including it in this
3

years ‘Low Cost Producer Basket’, to keep closer tabs on a weekly basis).
Which brings us to today and the combo of three things makes NGD attractive enough to write it
up in a full analysis and make to move to buy next week:
a) The recent price sag to (and below) U$2/share. Good entry points are important, this is one.
b) The 4q15 production results announced last week by NGD (2) as well as its 2016 guidance,
particularly on costs. NGD is looking to create free cash flow in order to help pay its Rainy River
build-out.
c) It has the capex of Rainy River fully covered. Budget is assigned for 2016, it’s moving
forward, the mine will become a reality.
The risk as always is in the gold price, if that sinks then so do we all. Another longer-term, latent
risk to the company would be cost overrun on the Rainy River project but that’s one I’m willing
to take, because it looks as though Mr. Oliphant and his team are going to conservative route
and not trying to promise a cost number they can’t deliver. Also, I’m looking to this one as a
trade and expect NGD to be able to assure when the financials come out that they will build on
time and in-budget. So given a level playing field and an average U$1,100/oz gold price until the
day of the year-end financials (which last year came out on February 19th), I’m a buyer today
and a seller down the road.
For the TL:DR readers among this audience, I plan to buy some NGD next week as a near-
term trade, with a view to selling the stock after it reports its 2015 year-end financials. For the
rest of you, what follows is:
1) An update on its main operations
2) Where we are with Rainy River
3) A financials overview
4) A discussion and conclusion
Operations update
One of the key factors in my new active interest in NGD is last week’s NR that included the
4q15 production numbers plus 2016 guidance. The last time we’d heard from NGD was in its
3q15 MD&A, in which the company had guided for “toward the high end of the original guidance
range of 390,000 to 430,000 ounces.
Consolidated copper production is expected to
NGD: Consolidated Metals revenue mix
be at the low end of the guidance range of 100 to
(eleven qtrs 1q13 to 3q15 average)
112 million pounds and consolidated silver
production is expected to be in line with guidance Ag, 4.1%
at 1.75 to 1.95 million ounces”. So said NGD.
Cu, 33.5% Au, 62.4%
As gold is the one that matters at NGD as this
chart shows (and with the drop in copper prices
that’s now 65% of revenues from gold and 30%
from copper in the last quarter), the
announcement that NGD had produced 435,718
in 2015 and beaten upper end guidance was a
clear positive. Meanwhile copper at 100m lbs
and silver at 1.9m oz were both in range. In short, NGD had a good Q4 so here comes a mine-
by-mine breakdown of the numbers.
Consolidated Operations
Here’s the chart that shows the four operating mines together and builds the corporate gold
production total:
4

Oz Au NGD: Consolidated quarterly gold production
140000 New Afton Mesquite Peak Mines C/San Pedro
130000
120000
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15
source: company filings
The 131,700 oz total (133k sold) makes for a multi-year record, with much better numbers from
Peak Mines and Mesquite confirming its new production rate thanks to the capital investment on
leach pads earlier in 2015. We’ll come back to an adaptation of this chart later when 2016
guidance is the subject, now for the individual mines, but it’s going to be brief this time around. If
you want more on each operation, check back at IKN321.
New Afton: NGD's mine in Kamloops BC Canada is also the location for the "Afton C Zone"
development project which will extend the already reasonable mine life further. The issue NGD
has is that this is really a copper mine with a gold kicker, as even in Q4 and the copper slump,
some 62% of revenues are estimated to have come from copper.
The good news is that with 30,200 oz gold and 25.1m lbs Cu, New Afton stuck in an excellent
4q15 as these charts show:
NGD New Afton: Copper production, per qtr
30
25
20
15
10
5
0
The reason is the mine’s mill expansion project is now fully online, and Q4 showed what it was
capable of. What was interesting here is NGD’s guidance for New Afton in 2016, which was
expected to be a continuation of 4q15 but they’ve guided production lower and at much lower
costs than previously posted. We’ll add to that idea below, but NGD is clearly aiming for
profitable ounces in 2016, not just ounces. The
mining sector fashion continues here.
Mesquite: The Mesquite open pit heap leacher in
California USA had another strong quarter in Q4,
adding to the 3q15 result and confirming that its
heap leach expansion project undertaken in late
2014 and early 2015 is paying dividends. The 43.4k
oz Au produced was a fine result, though again we
note that in 2016 NGD will be looking for lower
production and lower costs here.
5
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4
NGD New Afton: Gold production, per qtr
Mlbs Cu Au
35000
30000
25000
20000
15000
10000
5000
0
source: company filings
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4
Au Oz
source: company filings
NGD Mesquite: Gold production
50000
40000
30000
20000
10000
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4
Oz Au
source: company filings

Peak Mines: We were expecting improved numbers from NGD's Australian underground
gold/copper mine this quarter but all the same, Peak Mines was the surprise package of Q4, its
34,798 oz gold (and 3.7m lbs Cu) not just higher but
much higher than recent quarters. NGD told us it NGD Peak Mines: Gold production
was due to, “...the combined benefit of a 12%
40000
increase in ore availability and a 43% increase in 35000
gold grade”, which is fair enough. 30000
25000
This much-improved production saw cash costs per 20000
15000
ounce plummet, too. Peak Mines has been one of
10000
those higher cost “breakeven at best” mines in 5000
recent quarters, Here’s an individual mine 0
breakdown of Peak Mines over the last seven
quarters, including our estimates for 4q15 and the
production difference here, plus the tight rein on
costs, is set to return it to profitability in Q4. That’s a
good thing.
NGD at Peak Mines: Financials overview
U$m Total Revenues
50 Op Ex
45 Deprec/Deplet
40 Mine Op Earn.
35
30
25
20
15
10
5
0
-5
-10
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15est
source: company filings, IKN calcs
Cerro San Pedro: Located in San Luis Potosí Mexico,
CSP has just finished its last year of full production and
will now wind down. We can expect reasonable
production numbers from the mine in FY16 as the leach
pad delivers gold (then later the longer-leach cycle
silver in 2017) but production will decline as from now.
The upside in 2016 is that production costs are set to be
a lot lower, which will keep things comparatively
profitable on an absolute level, not just on per-ounce
margin. In 4q15 CSP produced 23,302 oz Au, which
compares to previous quarters as per the chart.
2016 guidance
The other main part of last week’s NR from NGD was its announcement of 2016 production
guidance, which included this table:
6
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4
Oz Au
source: company filings
NGD Cerro San Pedro Gold production
35000
30000
25000
20000
15000
10000
5000
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4
Oz Au
source: company filings

The main takeaway is “360k to 400k oz Au”,
which if we take the median is 380k for the year
ahead. That compares to previous years in this
way (right). Clearly lower than 2015, NGD
unsurprisingly points to the closure of Cerro
San Pedro as the main reason for the drop off
in expected production. Here below is a
breakdown chart I’ve put together as a best
guess on how NGD will make that 380k
average production number, including the
decline in CSP and a few adjustments after
reading the individual mine guidance:
NGD: Consolidated quarterly gold production
140000
130000
120000
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
7
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 tse61q1 tse61q2 tse61q3 tse61q4
NGD: Annual Au production, 2016 guidance avg
500000
435699 450000
400000 397688 380136 380000
350000
300000
250000
200000
150000
100000
50000
0
2013 2014 2015 2016est
source: company filings
Oz Au
New Afton Mesquite Peak Mines C/San Pedro
source: company filings
What this tells me, above all, is that NGD is pitching low on its guidance of 360k minimum and
380k average, because mines like Mesquite should be able to put in better numbers than the
averages I’ve stuck to in my calculations. As usual I’m happy about keeping to the conservative
side while modelling, but it’s clear to me that NGD will be aiming to beat the upper level this
year, not just meet guidance or gold. As for costs, the AISC of between U$830/oz and U$870/oz
is comparable to 2015, even with the drop off in byproduct credits for copper production due to
the new low price deck (NGD choosing to base assumptions on U$2.00/lb Cu and U$14/oz Ag).
The bottom line to 2016 is that NGD will be profitable at current metals prices. Maybe not wildly
profitable, but profits all the same and that will be able to chip into the capex costs for Rainy
River. That could turn out to be important, as you’re about to see.
Rainy River development update
There’s a lot we could run by way of details on this section about NGD’s “company maker
project Rainy River (RR), which is set to produce an average of 325,000 low cost ounces of
gold when it’s up and running, but what we really need to know is that development continues
apace and the project is on course for first production in “mid-2017” However there’s a big
question that needs answering, “Can NGD afford to build it?”, as there’s doubts in the anal
yst world these days. I think this is a big advantage in taking a position in the stock today
because those doubts aren’t going to last long.
There were three important bullet point lines about Rainy River in in last week’s NR:
• New Gold plans to spend approximately $375 million in 2016 on the continued construction of
Rainy River
• Total Rainy River capital cost remains in line with previously announced $877 million estimate
• Depreciation of Canadian dollar has offset projected cost increases related to earthworks, tailings
dam construction and installation of mechanical equipment, piping and electrical in the processing
plant
Those three were met with some slight consternation by the anal yst community. What seems to

be the problem is that they’d assumed the drop in the Canadian dollar would reduce capex and
were expecting NGD to come out with lower capex number for RR. When last week NGD said
that capex remains in line with its previous U$877m estimates because the forex has helped but
(to quote the NR) “...(t)here have been some projected increases in the Canadian dollar
denominated development costs related to earthworks, tailings dam construction and the
installation of mechanical equipment, piping and electrical in the processing plant”, anal ysts felt
disappointed and proceeded to cast doubt on whether NGD will be able to meet all costs until
RR is free cash flow positive. So let’s do a dollar count.
The total capex number is U$877m, that’s what we need to cover:
• As at 3q15 (the last published financials) NGD had spent U$167m on Rainy River
capex.
• In that quarter’s filings, it announced it had U$384.6m in cash.
• Last week it announced cash at U$335m. As I believe 4q15 operating profits were
strong (see below) there’s reason to believe it ploughed $90m into RR in 4q15.
So far we have U$257m covered, which means U$620m in balance (of which U$375m is
budgeted to be invested in 2016, the rest presumably in 2017). So, to cover $620m...
• NGD gets U$75m from its streaming deal (with Royal Gold (RGLD), see the July 5th
NOBS report for more) that it expects freed up in mid-2016.
• According to last week’s NR, it has U$184m left to draw on its revolving credit facility.
• It has cash of U$335m as at December 31st 2015
Those three add up to U$594m, which leaves U$26m to cover.
• If we assume NGD produces 380,000 oz gold in 2016 at the high end of its AISC range
(U$870m) and sells it at an average of U$1,100/oz, that’s $87.4m in cash.
And Rainy River is covered at the end of 2016 with U$61m to spare. Hoorah. Now for sure we
need to make some assumptions in that little lot. We need to assume NGD’s operations deliver
in 2016 and we need to assume the gold price maintains a reasonable level and doesn’t cave in
on us. We also need to assume that the treasury gets uncomfortably low for a while and that the
final capex number doesn’t bust over the forecast U$877m. I’m also making a best guess on
how much it spent during 4q15 (my $90m), we’ll get to know that when the financials are
published in February. Those are the risks and I’d also be the first to agree that it’s not the most
comfortable position, it could become tight, but there’s also cushioning in the above because...
• I think NGD will do better in 2016 than 380k production at $870/oz AISC, I’m just being
conservative there.
• Gold could do much better than an U$1,100/oz average. Me myself I think we’re going
to see a recovery to U$1,200/oz this year so if NGD gets an extra $50/oz for its ounces
in 2016 that’s another $19m.
• And we haven’t even considered the profitability of the first two quarters of 2017, which
could help out in the same ratio as 2016 before the “game changer” RR comes on line.
Let’s add in $40m of leeway there.
• There’s reason to suppose NGD is slow-playing capex reductions for Rainy River. It
might get cheaper especially if the Loonie stays where it is now instead of 0.8/1
assumption to the greenback.
• NGD’s revolver could be expanded slightly, there’s no specific need to finance via a
new equity sale (especially at these low prices). This is where having a guy like
Oliphant, good corporate citizen and all that, as your boss pays dividends.
• But even in a “reasonable worst case” where NGD does raise some more by equity,
selling for example 50m new papers at $2 would cover everything forever and would
add less than 10% to the shares out count. It wouldn’t be a wanted dilution, but it
wouldn’t be the end of the earth either.
So here’s my bottom line on Rainy River:
8

• It’s going to get built and move into production, period. When it does you remove the
sunk costs from the project economics and are left with a mine that would be very
profitable at current gold prices. It’s one thing worrying about a mediocre IRR before a
project is green-lighted, quite another when the capex is paid and you watch very
decent free cash flow move through and pay off the financial debts quickly.
• As things stand today, NGD covers all costs and RR happens with no further share
dilution or financial burden placed on the company.
• The risk from here is a 2016 of low gold prices and a capex bust for the project. If those
happen, NGD may not be able to cover the capex.
• I think that risk is low, but admit that it may look tight for a while. Even so, NGD won’t
have any trouble in bridging any near-term liquidity issue as it has various options that
could cover the final hurdle before commercial production is declared.
Notably February 18th is NGD’s “Investor Day”, when it will announce its year-end financial
results and talk in more detail about the RR development. That’s the day when I expect the anal
yst community to be far more comfortable about the future of Rainy River and will then tell the
world that the stock is cheap. I’ll be long by then and with luck, in position to sell people my
shares for a decent profit a day or three afterwards. And on the subject of financials...
Operational results forecast for
4q15
Thanks to last week’s NR out of NGD
we know the sales numbers and
average prices for gold, copper and
silver. We also know the preliminary
cash cost estimates. And as seen
above we’re keen on knowing how
much cash NGD may have spent on
Rainy River during 4q15 so we put all
that lot together in a few P+L “usual
suspects” charts here, starting with
the overview chart:
That’s a projected $214.6m in revenues
NGD: Operating Earnings, last eight quarters
(thanks to the extra ounces and lbs of copper), 60
op-ex of $96m, deprec/deplet/amort at an in- 50
line $54 and mine operating earnings of
40
$64.6m. And as the chart shows, that would
30
be the best quarterly margin on operations in
the last three years. 20
10
Mine operating earnings doesn’t include G&A, 0
exploration and others, so when those are
-10
backed out we’re still at $54.6m, over
10c/share. However, it’s not all good news as
I’m expecting NGD to announce some hefty
impairments (probably the last batch they
need to offer the market). It’s always difficult to
know how the CFO will wield the axe on such
matters and on looking at the asset book,
there’s a case to be made for up to $500m or so
in my view. Hey they might go for zero, we’ll
have to see, but my best guess is for $300m
and once tax recoveries are backed out, that
would leave NGD announcing a net loss of
around $10m, same as 3q15.
I stress that second-guessing impairments is
9
41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
$m
source: company filings, IKN ests
NGD: Net Earnings
100
50
0
-50
-100
-150
-200
-250
-300
-350
-400
-450
-500
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
source: company filings/IKN ests
srallod
fo
snoillim
NGD: Quarterly Earnings Overview
240
220
200
180
160
140
120
100
80
60
40
20
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
$m revenues
op-ex
Mine Op Earnings
source: company filings/IKN ests

exactly that, guessing, both on whether and on how much. But the bottom line figure may well
take some shine away from an otherwise excellent quarter so be prepared for that.
Balance sheet items
As for the balance sheet, we’ve already de facto chewed over the important bits in the Rainy
River discussion above (i.e. “Do they have cash to build it?” “Yup, almost certain”) so here are a
couple of charts to back those thoughts up and be done.
Assets look like this, with the dip on fixed assets due to my assumption on the impairments
(we’ll see on that).
NGD: Assets
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
10
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
$m fixed
other current
cash & eq
source: company filings
Equally liabilities drop slightly in total due to the same reason, but the one that really matters
here is the long-term financial debt. With
maturities in 2020 and 2022 on the main
segments, NGD has time to get Rainy River
working profitably before those start looming.
Its financial debt on the balance sheet isn’t
something to ignore at the moment, but it’s still
low on my list of concerns about the stock (this
is no Capstone).
Which gives us working capital, like this. NGD
has no liquidity problems, as you’d fully expect
from a company that has just confirmed plans
to sink $375m into a build-out this year alone.
800 NGD: Working Capital per qtr
700
600
500
400
300
200
100
0
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
source company filings/IKN ests
srallod
fo
snoillim
NGD: Liabilities per qtr
2000
1800
1600
1400
1200
1000
800
600
400
200
0
Asset valuation of NGD: Back in IKN321 dated July 5th the baseline price assumption and an
eventual price targets were made on asset values and price/book ratios, which made sense
then and makes sense now (hey, it worked last time) so here are the same updated charts.
Here we see how the gap between market cap and book has roughly maintained, even with my
assumed impairments coming up.
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
source: company filings
srallod
fo
snoillim
current liabilities LT debt other LT liabilities

NGD: Market cap versus book value
4000
3500
3000
2500
2000
1500
1000
500
0
11
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4 won
U$m
mkt cap at qtr end
book value
source: company filings, NYSE data
And here’s the price book ratio chart, which pegs NGD at
0.51X this weekend and for me, that’s way too cheap for a
1.5 NGD: Price/Book ratio
company like this. Again I contend that the doubts
surrounding NGD at the moment revolve around whether it 1.25
will be able to afford the Rainy River capex, so if and when
1
that’s resolved (and I say it will) we can pick a reasonable
0.75
level to which these assets will be re-assessed in value.
As in last week’s piece on B2Gold I’m not going to pretend 0.5
wonderfulness and a 1x P/BV, NGD is still in a less than 0.25
optimal situation and its ratio should reflect that, but I see
0
now reason why the stock can’t regain a 0.7X price to
book ratio and that would imply a 40% upside to market
cap. If we also assume the share count remains undiluted,
that’s 40% higher too. That’s why I’m a buyer of NGD.
Discussion and conclusion
I think we have have up to four weeks to get positioned in NGD for the re-rating it’s going to
enjoy once its financials are published but personally I’m not waiting that long and I’ll be long
this time next weekend at the very latest. What’s coming up are:
• A vastly improved Q4 quarter compared to recent quarters, with strong operating profits
that will go down well with the numbercrunchers (once any bottom line impairment loss
is discarded, though ABX getting a green light last week on its assumed $3bn hit is a
good sign that those things are no palatable).
• A company ploughing ahead with its big ticket capex project and on course to “change
the company” in mid-2017. Assuming success, a re-rating at that point is a virtual
certainty so there’s every reason to give it some credit earlier if the risks are currently
overestimated
• A company that will almost certainly be able to pay for its project via its current
corporate situation and even if it can’t, will have no problem bridging any minor gap
that’s left.
• A highly discounted share price level that reflects doubts that will disperse once the
“investor day” is done on February 18th and the brokerage anal ysts get in line.
Due to that, I’m a buyer of NGD next week and plan a near-term trade that, in the best of
worlds, will offer a decent return in the space of just a month. I’m exposing myself to the
vagaries of the gold price once again of course, plus it remains to be seen whether Rainy River
is built on time and in budget. However those risks look low level in the timescale I envisage on
this trade therefore The IKN Weekly recommends New Gold (NGD) (NGD.to) as a near-term
buy and sets a target of $2.80, representing a 38.6% upside to Friday’s close, the target
assuming a 0.7X price book ratio re-rating and NGD getting in line with its peers. In a perfect
world, this trade will close out before the end of February.
End Of Report
31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4 won
source: company data, NYSE, IKN calcs

Stocks to Follow
If it weren’t for B2Gold I would have been able to stomach last week at the market. But there’s
no ignoring the big hole that’s opened up around the long-standing IKN Top Pick, even with last
week’s rationale for keeping it where it is for the time being before lightening down the line, it’s
a painful thing.
Of the 12 stocks open on our list, five made gains (LSG.to, MUX, SAM.to, LRA.v, DNA.to) and
seven made losses (BTO.to, BTG trading position, TGZ.to, SSP.v, ATM.v, FCV.v, REG.v) on the
week. Top upper was Lara Exploration (LRA.v up 25.0%), biggest downers were Sandspring
(SSP.v down 25.8%), Focus Ventures (FCV.v down 16.7%) and B2Gold (BTO.to down 12.3%,
but the US listed BTG “only” dropped 7.2%).
With the sale of True Gold (TGM.v) there are now 12 open positions in the list, three below our
self-imposed 15 name maximum. Or eleven if you don’t count the two B2Gold trades separately
(I do). Just two of the trades are in the green, one is unchanged, the other nine suck and some
of those really, really suck.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICK
B2Gold BTO.to Buy C$2.17 12-sep-14 C$0.93 -57.1% Trading as if Ch11 case, horrid
Lake Shore Gold LSG.to STR Buy C$1.10 07-apr-15 C$1.21 10.0% New Top Pick, M+A tgt
Metals Producers (in current order of preference)
B2Gold BTG Buy U$0.85 13-jan-16 U$0.666 -21.6% separate new trading tranche
Teranga Gold TGZ.to STR buy C$0.55 15-feb-15 C$0.40 -27.3% Cheap sub-60c: new momo?
McEwen Mining MUX hold U$1.09 25-jan-15 U$1.09 0.0% Trading above U$1 (at last)
Starcore Intl SAM.to hold C$0.48 10-jan-15 C$0.28 -41.7% Target under review
Land Grab Stocks (in current order of preference)
Sandspring Res SSP.v hold C$0.195 18-oct-15 C$0.115 -20.5% Risky small play, 30c tgt
Atacama Pacific ATM.v hold C$0.19 26-apr-15 C$0.15 -41.0% Spec buy, cheap adv proj
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.30 -73.9% solid biz model, LT hold
Other Recommended Stocks (in current order of preference)
Dalradian Res DNA.to Buy C$0.64 27-oct-13 C$0.70 9.4% New tgt 95c to $1 Sep 20
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.05 -78.3% Hit hard by PFS news
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.19 -36.7% Comm. Rels slow progress
Closed in 2016 closed close price
Phoscan Chem FOS.to jan16 C$0.28 29-mar-15 C$0.265 -5.4% Buyout trade, bot but poor deal
True Gold TGM.v jan16 C$0.18 23-aug-15 C$0.25 38.9% okay trade, sold on pol risk
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
Lake Shore Gold (LSG.to) (LSG): Added. The house cost average clicked up three pennies
and is now at $1.10 after adding to my position last week and making it Top Pick-sized as due.
LSG traded well enough and has obvious support under $1.20 nowadays. It’ll be bought out,
my only question is when because in a volatile market such as ours, it takes a CEO with cojones
to step up and make offers.
In fundies news, LSG gave preliminary costs numbers for its 4q15 production on January 19th
(3) that were right in line with expectations. Well mine at least, as on Saturday morning one
reader sent me a really stupid analysis of LSG written by Steve Saville (4) that confirmed my
view of the guy as a blowhard, as he cherrypicked facts to “prove” his point. I know Gary
Tanashian over at Biiwii like Saville’s work and maybe he is better on macro issue like gold
12

prices etc, but I’ve been consistently underwhelmed on his lack of knowledge about mining
matters.
I digress. Here’s a chart with op costs and AISC per ounce in Canadian Dollars, with the market
taking the numbers in its stride and allowing LSG to register a weekly win of 6.1%
LSG.to: Op Cash costs and AISC, per qtr
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
13
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 tse51q4
C$/oz
op costs C$ AISC C$
source: company filings
True Gold (TGM.v): Sold. As noted last week, due to the increase in political risk in Burkina
Faso I sold my portion of TGM early last week and took the profits at the low end of my selling
range. Overall an aceptable result on a smallish trade, but it could have been better and I don’t
mind admitting that I was spooked out at the end of it.
We’ve seen two similar attacks in Burkina now, one in November and one in January. Both in
the capital, both Islamist extremists, both targeting luxury hotels favoured by foreign visitors,
both large scale loss of blood. We also have a country President who’s warning his people that
more attacks are likely, so working on a ‘three strikes and out’ principle I don’t want to be
exposed as directly as I was until last week when the third one comes along.
Yes I still have some exposure to Burkina via B2Gold at Kiaka, but that’s a very minor part of its
overall asset book and I’d be far more concerned about B2’s political risk profile if something
terrorist-y happened in Mali (also West Africa, also majority Muslim, also past French rule)
where Fekola is located.
McEwen Mining (MUX): Thinking about that sale. Summing up its 4q15 production numbers
last week, I commented that MUX should be able to hold a U$1+ share price, that a spike to
U$1.20 or so was a perfectly reasonable expectation, that I’m a possible seller at that price
because MUX isn’t offering much value to peers in 2016 on what it’s just achieved and what it’s
likely to do in the year ahead.
That was borne out by last week’s trading action, aside from a brief dip under U$1 on
Wednesday at the peak of selling pressure in mining names. MUX recovered well and closed the
week at highs, so if the rally continues next week I may even have the chance to make that
selling decision. I have nothing against MUX at today’s prices, I see better places to deploy the
cash here, that’s all.
B2Gold (BTG) (BTO.to): The pain continues. For a day or so I thought (but didn’t say out
loud to anyone) that it had bottomed out on Wednesday, what with Thursday’s action seeing
BTO move up and against the grain of the day’s trading, but the selling reappeared on Friday
and there’s some sort of poetry in the way the US listed stock closed out the week at U$0.666.
The company’s beastly performance came around reasonably positive news from its exploration
projects too, a NR on the 20th (5) that had the air of The Clive in combative mood and looking
to fight back against the sellers. We had a bundle of news from Fekola (the next mine in line,
Mali) Kiaka (in Burkina Faso) as well as results of further exploration work at Otjikoto (Namibia
) and Limon/Libertad in Nicaragua.

For me the best numbers came from Fekola and Otjikoto. At Fekola we got a bunch of drill
results that show mineralization continues as further depth,which isn’t going to change its start-
up and opertions plans in the next few years (nor the capex bill that B2Gold still needs to
cover), but will add eventual asset value to the mine and reserve count to the corporation. At
Otjikoto the good news was about Wolfshag, the high grading discovery that’s now growing
thanks to a step-out discovery, let’s call it Wolfshag Eastm about 850m from the main Wolfshag
zone. With Wolfshag now set to come online and improve head grades as from 4q16 onwards,
this gives B2 time to define this new zone and potentially add to the mine life of higher grading
feed. All good, all positive for mine economics.
I said my piece on B2Gold last week in the extended note, that argument doesn’t change in five
short days nor does it change to the negative when positive news has come along in the
meantime. The thing about wildly oversold stocks is that they can stay that way for a long time,
or at least longer than “logic” or even comfort would dictate. The only pro-active thing I could
do on a personal level is buy some more at these sub-70c prices and I’ll be clear, I am quite
tempted, but I also need to be practical as I’ve bought a handful of things recently, I’m finally
biting the bullet and opening a position on New Gold (NGD) next week (see above) and my
cash levels in the portfolio have moved from “padded” to “a bit thin”. On this personal level I’m
now at the point where, after the NGD purchase, I won’t feel comfortable about adding or
buying until something else has gone (potentially MUX, see below).
Teranga Gold (TGZ.to) (TGZ.ax): A key week ahead for this underperforming stock, with
the company set to publish its 4q15 numbers, including production and financials, on Friday.
This may be a rebound purchase on the report news as TGZ looks heavily oversold (though I
said the same when it dipped under 50c, so WTFDIK?) and ready for a catalyst to pop it back
up. Where we are today is a level that could see a decent near-term gain just on in-line results,
as TGZ seems to have baked in very bad news where I see none happening.
Expect a full report on TGZ next weekend. Until then I’m a holder (not a seller or a buyer) but
for those of you looking for a catch-up bargain, it sure fits the bill at these levels.
Focus Ventures (FCV.v): We’ve already mentioned that company main man Simon Ridgway
has added to his shareholding since the PFS and its negative reception and last week he added
more to his pile by fling the purchase of 46,000 shares at 6c (6). And this time he was joined at
the trough by his sidekick Mario Szotlender who on January 21st picked up 166,000 FCV’s at
5.5c. (they say averaging down never fails, right?...Right?).
Lara Exploration (LRA.v): LRA was sharply up in percentage terms, but that only happened
on a single 1,500 share trade on Friday....it could just as easily drop by the same amount next
week. However, it’s worth noting that 24,500 of the 33k shares traded Wednesday was a
purchase at 25c by company boss Miles Thompson, who knows a bargain when he sees one.
Starcore Intl (SAM.to): Up for the second
week running, but volumes are very thin and as
this ten day chart amply demonstrates, it only
takes one person wanting to rid themselves of
100k shares or so and pressured into accepting
any old crappy bid for the price to swing
violently.
Nothing to read into these penny-here-penny-
there changes until sizable volumes return.
14

The Copper Basket
After three weeks of 2016, The Copper Basket shows a 19.95% loss to level stakes.
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 HudBay Min. HBM.to 0.35 235.23 616.30 2.62 -50.7%
2 Ivanhoe Mines IVN.to 0.61 778.96 420.64 0.54 -11.5%
3 Reservoir Min. RMC.v 4.08 48.46 174.46 3.60 -11.8%
4 Capstone Min. CS.to 0.44 382.04 124.16 0.325 -26.1%
5 NGEx Resources NGQ.to 0.65 187.71 120.13 0.64 -1.5%
6 Copper Fox CUU.v 0.125 417.64 52.21 0.125 0.0%
7 Nevada Copper NCU.to 0.66 80.5 48.30 0.60 -9.1%
8 Copper Mtn CUM.to 0.445 118.8 47.52 0.400 -10.1%
9 Hot Chili Ltd HCH.ax 0.09 420.12 30.25 0.072 -20.0%
10 Western Copper WRN.to 0.38 94.19 28.26 0.30 21.1%
11 NovaCopper NCQ.to 0.395 104.33 27.13 0.26 -34.2%
12 Amerigo Res ARG.to 0.205 173.61 20.83 0.120 -41.5%
13 Atico Mining ATY.v 0.28 97.59 18.05 0.185 -33.9%
14 Cordoba Min. CDB.v 0.16 79.45 10.33 0.13 -18.8%
15 Revelo Res. RVL.v 0.055 99.19 4.96 0.05 -9.1%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg -19.95%
I wasn’t planning on showing the normal weekly evolution chart of the Copper Basket until we’d
collected five or six weeks of data minimum,
but here we are today after just three The Copper Basket 2016, weekly evolution
because I feel the need to underscore how 5%
the basket average has dropped by a mighty
0%
20% in such a short time. Not one name
-5%
with green ink next to it, either.
-10%
There was an even spread of uppers as well
-15%
as downers last week though, with five
-20%
positive weekly contributions (CS.to, NGQ.to,
CUM.to, NCU.to, ATY.v), five unchanged -25% source: IKN calcs
names (CUU.v, NCQ.to, ARG.to, CDB.v, jan3rd 10th 17th 24th 31st feb7th
RVL.v) and five losers (HBM.to, IVN.to,
RMC.v, HCH.ax, WRN.to). Best of the winners was
Nevada Copper (NCU.to up 25.0%, see below),
worst losers Hot Chili (HCH.ax down 24.2%) and
HudBay (HBM.to down 10.9%). The beatings will
continue until morale improves.
In the copper pit, the metal managed to make a
few headlines by scraping back over the $2.00/lb
level and staying there until Friday’s close. Which
is more than I expected, frankly. This seems to
have helped a few of the stocks above, for
example Capstone (CS.to) has already signalled to
the market that $2/lb is a key level for its cash
flow and debt covenant purposes. It was
unsurprising to see it rally a little as copper broke
back up.
Following on from one of last week’s rants, that of
the concentration of copper production into the
hands of the large players with mega-mines, as the week wore on I stuck that piece on the blog
15

and got into a few exchanges with people on the subject. One of the things that’s now clear is
that the industry as a whole isn’t going to cut down on copper production, the supply spigot is
going to be left wide open. Yes, we did see announcements by players such as Freeport (FCX)
and Glencore in 4q15, saying they would phase down production which was for a time at least
interpreted by the market as a bullish signal for copper. My how those days passed quickly.
What was really going on back then was two companies phasing out their high cost copper
production, because there are a lot of mines that simply cannot compete with the copper
megamines that are now becoming the norm. Chile’s copper production as reported last
weekend, normally around 6m tonnes per year, dropped to 5.6m tonnes in 2015 on a
temporary dip but is now forecast up another 300k tonnes to 5.9m in 2016. So much the for
40ktGlencore is taking away. Not only that, but projects now coming online in Peru such as Las
Bambas and the Cerro Verde expansion, plus the ramping of Constancia, Toromocho etc will
see that country move from a 1.2m tonne annual producer to 2.5m tonnes by 2017 and that’s a
big jump.
It’s not the demand that’s the problem, ladies and gentlemen. In fact even in these days of
apparent inertia copper demand is expected to rise moderately compared to 2015, its own
record year. But supply continues to ramp and it’s all about cheap cost copper, too (e.g. even if
HudBay goes under Constancia is likely to continue without missing a day’s worth of production,
it would just be a mine under new and better management). Why should this be so? Well I
point an accusing finger at the “way it is these days”, the type of copper project that comes
online and makes a difference in the 21st century isn’t the same as in the 20th, it’s a very long
lead time project that takes years to get off the ground, even under optimum market
circumstances, is very expensive and has to ignore, by its own economic parameters, the
cyclical price nature of its main product.
• EG1: It’s a no-brainer for BHP to invest several more billions of dollars into La
Escondida, because that mine is profitable at $1/lb copper.
• EG2: Nevada Copper’s Pumpkin Hollow is not going to happen because the minimum
copper price to sustain the project economically is too high, it cannot ignore the price
cycle the way the massive cheap mines can. Pumpkin Hollow isn’t going to get bought
by a major, because there’s not a single board of directors that will be able to green
light that build decision without putting their own jobs at risk.
Finally, one mailer pointed out to me that it’s not just the companies that are about raking up
production and pushing forward on supply growth, the countries that host their projects are just
as keen. Take for example Peru, where Finance Minister Segura has forecast a GDP growth of
3% for the country in 2016, with at least half of that based on the expansion in the mining
industry. Yes that’s right, they don’t acare so much about the value of product, what they want
to see is the extra activity from the new mines and higher levels of production. As they say in
tailoring circles, ‘never mind the quality, feel the width’.
Now for the regular weekly warehouse comment section:
• Total world copper stocks in the three official warehouse systems rose by 9,473 metric
tonnes (MT) (+2.0%) to stand this weekend at 4991,400mt.
• Shanghai stocks were the biggest component of that moderate rise, up 8,011mt
(+4.3%) to finish at 186,231mt. That the type of rise we’re expecting from this end of
the system on a weekly basis for the next few weeks.
• LME stocks added a small 3,175mt (+1.4%) to finish Friday at 237,350mt. Movements
of physical metals through the LME remain subdued.
• Comex copper warehouse stocks dipped under 60k for the first time since early
December, down to 59,738mt, down by 1,783mt (-2.9%)
16

Here's the Shanghai-only chart, which shows how the level is starting to click up towards 200k
again. It won’t stop there, take that to the bank.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
260000
240000
220000
200000
180000
160000
140000
120000
100000
80000
60000
17
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 dr3naj ht42
Mt Cu
source: Cochilco
And that’s about all, watching brief only on stocks at the moment, the real action is being
driven by other matters.
Now for comments on a few of our basket stocks:
Ivanhoe Mines (IVN.to): Friday saw Robert Friedland getting vocal and actice on IVN (he’s
been getting pumpy on a number of his charges recently) by publishing a NR (7) to highlight
the last tranche of escrowed shares about
to go free trading, thanking shareholders
for their patience, saying nice things about
the stock and its assets. I’m also seeing
commentaries and anal ysis on this stock
starting to appear the that have singled
out IVN as one of the best value
opportunities out there. There’s no doubt
that Friedland is a mega-successful mining
promoter and there’s no doubt that he has
a lot of influential friends who move
markets through their opinions on
companies, as noted in this chart:
In other words, you can sum up IVN’s
2016 to date as “If you liked it at 61c you’re gonna LOVE it at 54!!!” (three exclamations being
the necessary irony).
In fact I think IVN is cheap here too, but I’m not an owner of anything copper, not yet. Another
factor is the aversion I have to owning DRC exposure, so it was interesting to read Randgold’s
Mark Bristow on the country while making comments focused on his company’s 600k/annum
Kibali mine last week (8): “...we trust the country’s government will partner us in our drive to
develop a major gold mining frontier there, among other things by ensuring that the current
negotiations about a new mining code result in one that will justify the capital already spent
and attract further investment”. The type of CEO comment that’s half-friendly and half warning
to a government (“let’s be friends, but no screwing us around guys”) but overall a reasonable
positive for the country.
NovaCopper (NCQ.to): Another one to have fallen sharply recently is NovaCopper (NCQ.to),
in which I owned a small stake in 2014 and 2015 on its future prospects until giving up the
ghost and selling for a loss in 2015. For those of you still watching this one more closely, this
website (9) is run by those in Alaska opposed to the Ambler region project, with plenty
emphasis on the contentious road that the State/regional government would need to build

before the NCQ assets are economically viable. Its contents certainly give a more negative
(perhaps realistic) angle on the airbrushed version that NCQ projects to the world.
Nevada Copper (NCU.to): After being under pressure and trading under 50c for a few days
on bitty numbers, NCU found a buyer on Friday that popped the stock back up to 60c and made
its week look a lot better (than the reality?). Looks a bit like tape-painting to me, but then again
I’m horribly biased against this uneconomic white elephant of a company that’s really worth a
lot less.
HudBay Minerals (HBM) (HBM.to): In trading, another week to forget for the debt-laden
HBM. In other news the truck accident at Constancia we reported on the blog on Friday (10),
the fifth since the mine opened, is a symptom of the chronic infrastructure problem the mine
has and will continue to have until real money in invested there. Once upon a time there was a
grand plan for a sluice pipeline from the South Central highlands of Peru that would carry the
conc from Las Bambas, Antapaccay and Constancia, but due to permitting and costs issues it
was shelved and each separate mine fell back on the obvious alternative, move the stuff by
road. The problem is that the roadways in the South of Peru are already congested by heavy
goods traffic and the new loads are making it that much worse, not only that but (as seen by
the state of that supposed “30 tonne” truck that spilled its load last week) the plant is not up to
the necessary standards and companies such as HBM are knowingly cutting corners and
standards.
It will only get worse, too. For example Constancia has been refused a corner of the brand new
Matarani port expansion for metals exports as the bigger customers, namely Las Bambas, The
Cerro Verde expansion and current heavy users Southern Copper, have taken every inch of the
yet to be commissioned facility. Constancia may be producing just fine, but its logistics are the
essence of improvisation and a sorry commentary on how the company is run on a day-to-day
basis. Expect more truck accidents and spills until the day when the government gets fed up
and suspends the mine’s operating licence until it sorts itself out.
Capstone Mining (CS.to): I’m going to try hard not to feature CS.to and HBM.to every week
in this section, but these last three weeks have been filled with too much morbid fascination to
be ignored. This time with CS.to it was the company’s on Monday (11), which we commented
upon on the blog in numbers (12) that despite being basic and a simplified scenario, still hold
plenty of grains of truth. CS just can’t work at current copper levels and doesn’t stand a hope of
covering its large debt position unless market prices improve substantially. That looks unlikely
and where we stand today, CS.to is going to have problems in covering the covenants on the
debt financing and that means near-term trouble, the creditors will be able to call in the loan
and if that happens, CS goes the way of the dinosaur.
The Low Cost Producer Basket
After 3 weeks of 2016, the Low Cost Producer Basket shows a gain of 1.61% to level stakes.
company ticker price 1/1/16 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Barrick ABX 7.38 1164.67 10.00 8.59 16.4%
2 Newmont NEM 17.98 529.12 8.83 16.68 -7.2%
3 Goldcorp GG 11.56 830.22 8.43 10.15 -12.2%
4 Franco Nevada FNV 45.75 157.07 6.67 42.46 -7.2%
5 Agnico Eagle AEM 26.28 217.67 5.94 27.28 3.8%
6 Ang/Ashanti AU 7.10 405.27 3.18 7.85 10.6%
7 Detour Gold DGC.to 14.41 170.85 2.58 15.12 4.9%
8 Sibanye Gold SBGL 6.09 228.71 1.88 8.20 34.6%
9 New Gold NGD 2.32 509.16 1.03 2.02 -12.9%
10 Buenaventura BVN 4.28 254.19 0.93 3.65 -14.7%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 1.61%
18

Our basket lost a small 0.19% last week, which means it did better than the GDX benchmark
once again over the four days of US trading. Four of the basket stocks registered gains (ABX,
AU, NGD, SGBL), the other six were losers (GG, NEM, FNV, DGC.to, AEM, BVN). The best
performance came from Barrick (ABX up 8.6%), the worst from Detour (DGC.to down 7.0%).
It’s a bit early, but here’s the first view in
The Low Cost Producer Basket: Weekly performance
2016 of the chart that tracks the basket’s 8.0% and comparative to GDX control
comparative performance to the GDX
6.0%
benchmark. We’ve managed to open up
4.0%
a 6.64% lead in the first three weeks of
2.0%
the year (which, for the first time, is an
0.0%
active objective of the Low Cost
-2.0%
Producer Basket in 2016) thanks to the
-4.0%
exposure to the South Africa Rand
-6.0%
(Sibanye first, but AngloGold Ashanti
-8.0%
started showing that effect last week
too), plus having Barrick as an equal
weight player on the list. Getting rid of
BTG and PAAS before the year started has helped a lot, too.
A lot of talk in mining circles about the fall from the top spot of Goldcorp (GG), with all sorts of
theories being bandied about. Mine isn’t a theory, just a simple observation. GG was the market
cap number one for years, taking over the mantle from Barrick, and stayed that way until David
Garofalo was named as Chuck Jeannes’ successor, the first week December 2015. That very
weekend it slipped to number two, behind Newmont (NEM). Now, the first month of 2016 with
Garofalo close to taking over the reins, it’s down to number three.
Barrick (ABX): It’s suddenly becoming very fashionable to be long ABX in fund management
circles and from seemingly not being able to do any right in 2015, even in-line production
results on Thursday (13), along with
guidance for a further U$3Bn
impairment at mostly Pascua Lama
(which if all PL would bring the total
impairment taken to just about every
penny ABX wasted there over the
years, U$5.8Bn) is greeted by a rally
in the stock.
Yes, this is the one I picked out at the
start of 2016 as the major I’d most
like to own. Yet again, I fail to take
my own advice and hold BTO instead.
Recently financials results days have
seen ABX rally on the Thornton rah-
rah and funds diving in, so February 17th should be a date noted in your diaries, daytraders.
Buenaventura (BVN): Roque Benavides has been seen in mining circles in Lima this last
week exuding calm, confidence and seemingly without a care in the world, which sits against
the weak and volatile recent share price performance and again suggests that his company’s
big debt boot forward deal is near completion. The whispered number is still U$500m.
NGD just about gets the nod over BVN right now, but risk capital could pay off very well here
too. BVN isn’t under much financial pressure, it’s not like the other indebted monsters out there
and has plenty of financial backing.
19
dr3naj ht01 ht71 ht42 ts13 ht7bef
basket
gdx control
source: Google Finance, IKN calcs

Regional politics
Guatemala: Interpol re-captures Alberto Rotondo
Ex-military officer Alberto Rotondo was the man in charge of Tahoe Resources’ (TAHO)
(THO.to) security detail at the time of the violent episodes at its Escobal mine that left sic anti-
mining protesters with gunshot wounds. He was eventually arrested and was under house
arrest in Guatemala and due to face the courts this month of January 2016, but in November he
escaped and made his way back to his native Peru.
On Friday Interpol informed the world (14) that it had re-captured Rotondo on petition of the
Guatemala government and the extradition process to send him back to Guatemala in order to
face trial has begun.
Peru: Las Bambas begins
On Monday, China’s MMG announced (15) that its Las Bambas operation had exported its first
10,000 tonnes of copper concentrate to China. This is the equivalent of a ‘first pour’ for this
massive operation and it’s going to be a while still until Las Bambas declares commercial
production, but it’s still a big moment and another signal that the world’s supply of copper isn’t
slowing down anytime soon, it’s increasing.
Moody’s revision of LatAm mining companies
On Thursday, ratings company Moody’s announced (16) it was putting no fewer than 55 mining
and O&G companies in the Latin America region under ratings revision, with the names
including the biggest companies operating here such as Vale, Codelco, La Escondida, Fresnillo,
Peñoles, Southern Copper, Grupo Mexico, Hochschild, Ares, Minsur Volcan, etc (note that some
of those are single entity companies, others are subsidiaries of larger groups (eg La Escondida).
Here’s the quote (17) from the nice Moody’s person:
"Slowing growth in China, which consumes and produces at least half of base metals,
and is a material player in the precious metals, iron ore and metallurgical coal markets
is weakening demand for these commodities and driving prices to multi-year lows,"
said Barbara Mattos, Moody's Vice President and Senior Credit Officer. "China's
outsized influence on the commodities market, coupled with the need for significant
recalibration of supply to bring the industry back into balance indicates that this is not a
normal cyclical downturn, but a fundamental shift that will place an unprecedented
level of stress on mining companies."
I included the quote mostly for that last sentence from Barbara Mattos, which I thought
sidebar-type interesting. As for the news, the Moody’s decision (on the back of the revision it
already announced for Buenaventura (BVN) before Christmas) was met with headlines such as
“The Mining World Trembles” (that first link above, pretty typical) in regional business press,
but as specialist press should have worked out already, this isn’t a ratings company at the
leading edge but a situation where the agencies ae playing catch-up to the market reality. This
is the difference between those (of us) that watch mining carefully and the wider world of biz,
that will only notice when things aren’t good with headlines about wholesale sector-wide
downgrades hitting the air. Another part of the bottoming process I’d vouch.
Colombia: The opposition to La Colosa
Here’s what locals and communities are hearing, seeing reading about the owners of the La
Colosa project (18):
January 22nd: “I come from your future”. That’s how David Van Wyck, investigator at
the Bench Marks Foundation, concluded his speech during his tour of Colombia. The
South African investigator has spent the last ten years of his life documenting and
reporting the actions of mining companies, among them the South African company
Anglo American and its sister company AngloGold Ashanti, the same ones that
Colombian communities are opposing in order to stop them from entering, thereby
avoiding an environmental disaster similar to that left behind by the company in Africa.
20

A dystopian nightmare
Presenting to an audience of students at the environmental committee of the University
of Tolima, Susan Moraba, one of 138 young people in charge of social and
environmental monitoring of South African communities, said that, “There is no water,
sometimes for 15 days and on occasion a month goes by without water and you need
to go and find some in the wells of abandoned coal mines close to the towns, then let it
settle, and boil it to remove as much of the contamination as possible.”
Photos presented during the event allowed those present to see the terrifying images
left by the multinational Glencore in one of the towns with the highest levels of air
contamination in the world. These images aren’t very different to the reality of town in
the Colombian Guajira region after 30 years of coal mining operations.
“There are 6,000 abandoned mines in South Africa, despite there being strict
legislation. There are 600 just around where I live, in Johannesburg, and they’ve left us
60,000 tonnes of uranium residues, there are neighbourhoods that are more
radioactive than Chernobyl”, added David and explained that the real rate of
unemployment is 40% and it’s not a surprise that gangs and local mafia groups are in a
turf war for the control of the abandoned mines. “We will be the first ever water
refugees. The rivers and underground water table is already radioactive, we import our
water via a tunnel from the Katse dam, some 600km away in the neighbouring country
of Lesotho, a dam constructed thanks to an agreement with the World Bank.”
Bottom line: Expect local opposition to La Colosa and to mining in general to continue in
Colombia.
Ecuador: Annals of ‘can’t make this stuff up’ Javier Cordova edition
The point when marketing moves from the highly promotional, through the obvious spin phase
and into the world of the ridiculous came with a video interview done with Ecuador’s Minister of
Mining, Javier Córdova, by Ecuador’s State news agency Andes last week. Watch the segment
on this link (19) as well as a written report on its contents, but it can be neatly summed up with
a translation of the first paragraph of the note:
Quito, January 21st (Andes): Ecuador’s Minister of Mining, Javier Córdova,
highlighted the great advantages that the Andean country offers for mining
development, among them judicial security, tax incentives, favourable energy
costs, access to water and the potential of its little-explored terrain.
I will grant Ecuador an advantage in favourable energy costs (electricity in particular is cheap)
and access to water, also the potential of its little-explored terrain because nobody until now
has wanted to do much exploration, but judicial security? Are these people on drugs? And how
does he manage to get “tax incentives” as an advantage when according to the constitution at
least 50% of cash flow in any given mining operation must go to the country? This not even
mentioning the fact that Ecuador uses the US Dollar as its official currency and the recent rise
in the greenback brings zero cost advantage to companies working there, unlike any other
LatAm nation you’d care to mention.
Market Watching
Regarding Minera IRL (IRL.to) (MIRL.L)
The relative silence on these pages regarding Minera IRL (IRL.to) (MIRL.L). 2015 ‘s soap opera
stock par excellence, has got too much for some of you who are now writing in with “what’s
going on?” mails after The Weekly appears without a mention of the stock. That’s fair enough
so here’s a round-up of what what’s recently:
• First things first and to my continued amazement, Jaime Pinto still has power of
attorney over the company even though he was kicked out with 91% of votes against
him in the EGM.
• Secondly, January is always a quiet month in South American business circles, the
equivalent summer month of August in the North when vacations take priority and the
21

rhythm of business ratchets down a notch or two. In this IRL has been no exception.
• For the last few weeks there has been a court issued quasi-freezing order on Minera
IRL SA (the local subsidiary), put in place by the judiciary for the State’s benefit (rather
than anyone inside SA or Ltd) while the local investigators went about their audit of IRL
SA (which I hear anecdotally has shown the company to be clean, not some hotbed of
corruption as the Team Hodges liars would have you think). A by-product of this wholly
and purely legal administrative freeze (e.g. operations at Corihuarmi are totally
unaffected) is that the two sides in this conflict have had little reason to continue with
the attacks because there’s nothing that could come of them. This has been useful, it’s
allowed both Team Hodges and Team Benavides to cool off to some extent and I
understand there’s been at least some rapprochement between them and an attempt or
two to work out a roadmap that can get the company moving again.
• It’s also likely Team Benavides is waiting for Jaime Pinto’s powers of attorney to be
revoked (along with those of his sidekick Carlos Yrigoyen, who still regularly meets with
Pinto at the Bottega de Dasso café in San Isidro Lima).
• As for the bomb that Pinto dropped as his last act as idiot chairman, that of rubbing the
Minister of Energy and Mines up the wrong way and accusing her bureau staff of
accepting bribes, the fallout has included the resignation of Jorge Ramos of Cofide, who
is rightly disgusted with the way in which the matter has been handled by the Team
Hodges people who are blocking any sort of apology from being issued. As head of a
quasi-State body in Cofide, Ramos has the political ramifications of the 2016 elections
to consider first and foremost, sadly his priorities cannot and do not lay at the relatively
minor sized world of IRL.
• I’ve been contacted by two or three readers, who tell me that due to the stock being
de-listed in Canada they’ve been notified that they may have to remove their shares
from their brokerage accounts, an operation that comes with a not-insubstantial
financial penalty. I’ve checked as far as I can on this (plus have notified Minera IRL SA
people) but the situation still seems unclear, it’s not a cut and dried matter apparently.
One thing I can tell you is that the people to talk to on this are the board of directors at
Minera IRL ltd, specifically the two directors who were also on the board when the
decision was made to de-list in Canada instead of merely suspending the stock. This
was done by Minera IRL Ltd on a purely voluntarily basis and at the time the board
stated it was the best and cheapest solution. That might be true for the company, but if
their actions result in a substantial financial liability for shareholders it’s just another of
their gross derelictions of duty towards the people whose will they continue to totally
ignore. I strongly suggest that anyone potentially affected by the delisting of IRL shares
get in contact with Doug Jones and Robin Fryer, the responsible parties for the de-
listing.
However, the bottom line to IRL at the moment is there’s not really that much to report. I will
be keeping close tabs on the story and you’ll get developments in 2016 as they happen on
these pages. However, I will also freely admit that I’ve welcomed this quiet period personally,
as the IRL soap opera was taking up a lot of my time professionally and personally, especially
as a stock that’s either suspended or de-listed and without any opportunity to buy, sell or make
money with until it gets back into trading.
My idea of an entry price for Almaden
Minerals (AAU) (AMM.to)
I’ve been asked, so I’ll say it here. I’d be
interested in AMM at CAD$0.70 or less, easy as
that. For a little more (but not much) here’s a 12
month chart of Canadian listed AMM.to which
shows it’s been under 70c before and by the
looks of things, is going back there again. No
rush, I’ll let my price come to me on this one.
22

Sunridge (SGC.v) gets its deal approved
On Friday, our small side-bet on arbitrage, Sunridge Gold (SGC.v), announced (20)
overwhelming approval for its plan to sell its 60% of
its sole asset, Asmara Mining, to the Chinese buyers
and then distribute the cash and wind up. Also in the
NR SGC confirmed its previous message that,
“...management currently expects that the aggregate
amount of the Distributions to shareholders will be not
less than C$0.35 per share, payable in two
distributions”. On the news SGC popped to 29c, a
penny under my idea of a minimum sale price.
Yes I could wait around for the full distribution but I
don’t think I will. I’ll be putting my shares up for sale
next week at 30c and if they’re taken it’ll mean a
22.4% (pre-commish) win on a trade that was always going to be aside from our main ‘Stocks
to Follow’ list, due to its arbitrage nature, small size and near-term duration. And that’ll be that.
Conclusion
IKN350 is done, we end with bullet points as usual:
• I’m buying New Gold (NGD) (NGD.to) as a near-term trade this week, if all goes well
(and what could possibly go wrong?) I’ll be out long before people start thinking about
Easter eggs and with a 40% profit to boot. Hey, isn’t this investing lark easy?
• However, I like virtually anybody am not a bottomless pit of money. I’ve been adding
here and there and the cash cushion isn’t what it was, so until there’s a sale or two
done there won’t be any more purchases for me once NGD is bought.
• On that subject, if Sunridge gives me my 30c price I’ll take it next week. I’ll also be
following McEwen Mining (MUX) more closely than usual because a pop to a potentially
sellable U$1.20 isn’t out of the question.
• Next week I’ll be crunching numbers on Teranga Gold (TGZ.to), I can’t quite fathom
why it’s gone as cheap as it has. Maybe Jan 28th will reveal why, or maybe it’ll show
why I was right to hold through near-term weakness. Time will tell.
• Be long Lake Shore Gold (LSG.to) (LSG).
I thank you in advance for any feedback. Our Top Pick stocks are B2Gold (BTG) (BTO.to) and
Lake Shore Gold (LSG.to) (LSG). Flash updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen.
Otto
23

Footnotes, appendices, references, disclaimer
(1) http://news.sharpspixley.com/article/do-gld-etf-gold-inflows-suggest-a-positive-sentiment-change/244350/
(2) http://finance.yahoo.com/news/gold-exceeds-guidance-record-2015-124500572.html
(3) http://finance.yahoo.com/news/lake-shore-gold-reports-strong-210500031.html
(4) http://tsi-blog.com/2016/01/gold-miners-hiding-poor-cost-control/
(5) http://finance.yahoo.com/news/b2gold-2015-exploration-high-grade-110000241.html
(6) https://www.canadianinsider.com/company?menu_tickersearch=Focus%20Ventures%20Ltd.%20|%20FCV
(7) http://finance.yahoo.com/news/ivanhoe-mines-release-final-tranche-154543208.html
(8) http://www.mining.com/web/booming-kibali-boosts-exploration-investment-in-drc/
(9) http://www.brooksrange.org/
(10) http://incakolanews.blogspot.pe/2016/01/hudbay-hbm-hbmto-yet-another-truck.html
(11) http://finance.yahoo.com/news/capstone-mining-2016-operating-capital-113200310.html
(12) http://incakolanews.blogspot.pe/2016/01/capstone-mining-csto-dont-look-at.html
(13) http://finance.yahoo.com/news/barrick-achieves-2015-production-guidance-220300816.html
(14) http://peru21.pe/multimedia/imagen/t-348816
(15) http://www.americaeconomia.com/negocios-industrias/mmg-dice-realiza-primer-envio-de-cobre-desde-mina-
peruana-las-bambas-hacia-china
(16) http://www.americaeconomia.com/negocios-industrias/tiembla-la-mineria-mundial-moodys-revisa-posible-
calificacion-la-baja-de-55-empr
(17)
http://www.streetinsider.com/Credit+Ratings/Vale+S.A.+%28VALE%29+Placed+on+Review+for+Downgrade+by+Mood
ys/11239627.html
(18) http://www.colombiainforma.info/internacional/3021-distopia-minera-en-sudafrica
(19) http://www.andes.info.ec/es/noticias/ecuador-ofrece-grandes-ventajas-inversion-minera-destaca-ministro-javier-
cordova.html
(20) http://www.sunridgegold.com/i/pdf/2016-01-22_NR_SGC_cZZQ69.pdf
Stocks To Follow Closed Positions 2015
Closed in 2015 closed close price
Argonaut Gold AR.to jan'15 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'15 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'15 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'15 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
24

Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dec-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-apr-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-jan-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-jan-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-apr-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-jan-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-jan-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-apr-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-apr-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-jan-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-apr-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
25

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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