IKN #360Premium

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The IKN Weekly
Week 360, April 3rd 2016
Contents
This Week: Trade heads-up, In today’s issue, Gold bulls living in the past.
Fundamental Analysis: HudBay Minerals (HBM.to) (HBM): Shorting next week.
Stocks to Follow: Overview, INV Metals (INV.to), Silver Range (SNG.v), B2Gold (BTG)
(BTO.to), Starcore International (SAM.to), Focus Ventures (FCV.v).
Copper Basket: Overview, Reservoir Minerals (RMC.v), Copper Fox (CUU.v).
Low Cost Producer Basket: Overview, Sibanye Gold (SBGL).
Regional Politics: Regional Risk Review.
Market Watching: Regarding Dynasty Metals & Mining (DMM.to) debt and misconceptions (a
rant), Minera IRL (IRL.to) (MIRL.L): The resurrection underway.
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
Trade heads-up
This week coming I plan two trades:
• The small purchase of Silver Range (SNG.v), left over from last week because I didn’t
get any at or under 8c. See ‘Stocks to Follow’ and last week’s note on this very small
planned long position.
• A short on HudBay (HBM), I’ve finally convinced myself. This outline is in the Fundies
section.
Heads-up complete, on with the show.
In today’s issue
• Gold pulls back a little more, still waiting on my unicorn entry point. Sandstorm (SAND)
is still a target, but it along with many others look fully valued right now. However I am
going to add a few SAM.to because I don’t think it swims with the bigger tide and 40c
looks attractive now. Plus a short in HudBay (HBM), let’s see how that works.
• B2Gold (BTO.to) (BTG) continues to please trading-wise, but last week’s filings from the
company included an new negative. Interesting how it shrugged off the potential
headwind and traded higher, though. Staying long, happy with the C$2.50 target.
• The feedback I received on the INV Metals (INV.to) piece last week tells me I’m on the
right track.
• Today with the Regional Risk Review, I’m laying out a trade map for Argentina
exposure this year. I think there’s a good macro trade to be had via the country in the
1

,
second half of 2016, the trick will be to identify the exact vehicle(s). There’s a lot of
crud pretending to be opportunities in the Argentina junior sub-sector.
Gold bulls living in the past
The end of the first quarter brought a whole bunch of “Gold’s the most wonderful thing”
columns and op-eds to the market, every one of them lapped up by the industry permabulls
and regurgitated to my inbox via numerous channels. So many examples to choose from, but
I’ve chosen just three headlines to give the flavour starting with the Sydney Morning Herald’s
take (1):
“Gold's record first quarter even surprises the bulls”
Here’s the Marketwatch (2) headline:
“Gold scores biggest quarterly gain in nearly 30 years”
Here’s Associated Press via ABC News (3) which is little less effusive but makes the same point:
“Investor Derby: Gold Won First Quarter, Stocks Win Long Term”
You may also note those are straight business news and wire sources, that’s not even venturing
into the hard money/goldbug commentary world (if you want those, start at Kitco and get all
the vociferous commentary you could ever wish).
So guess what? Yup, your author the ornery contrarian isn’t buying into this lazy boilerplate
journalism for a single minute. At the risk of becoming rather boring after weeks of the same
message in the intro section, here’s a chart comparing gold (proxy GLD) and the precious
metals miners (proxy GDX) in the first three months of 2016:
Unusually, it’s also possible to split up the three phases of gold (and its miners’) action for the
year to date into the three calendar months, so for simplicity’s sake that’s what you have and
rocket scientists are not needed to register that “gold’s big first quarter” was in fact gold in the
month of February.
I’m not so concerned about the way January performed any longer, being stuck as it is firmly
behind the big move, but we need to pay close attention to the performance of gold in March.
Or perhaps better said the lack of performance, because as noted on the blog last week (4)
gold registered a 0.6% decline in US Dollar terms last month. Not only that, but in Canadian
Dollars gold was down 4%, in Euros it was down 5%, in Swissies down 3%, Brexit Pound
Sterling down 2.5% and we haven’t even started on the larger second tier currencies, such as
the way gold dropped 8.5% in Brazilian Real terms during March.
2

,
While on the subject and having featured the chart below in a couple of recent editions, we
should note that gold bullion holdings at the biggest gold ETF (GLD) are now off their highs. I
really don’t want to read too much into this (my bias confirmation genes are active enough
already, they get far too buzzy about small sample data that tell me what I want to hear when I
want to hear it), yes the sample is still small and yes we’ve seen single-day drops along the way
in 2016, such as March 14th when GLD holdings dropped over eight tonnes. But the week just
gone was the first time we’ve had successive drops in gold holdings at GLD this year (March
28th was 823.74mt, it then went 802.47mt(cid:1) 819.28mt(cid:1)818.09mt) for a total reduction of 5.65
metric tonnes...call it U$222m worth of shiny metal at this weekend’s spot price.
GLD gold holdings 2016 (metric tonnes)
840
820
800
780
760
740
720
700
680
660
640
620
600
3
61/4/1 61/6/1 61/8/1 61/21/1 61/41/1 61/91/1 61/02/1 61/52/1 61/72/1 61/92/1 61/2/2 61/4/2 61/8/2 61/01/2 61/21/2 61/71/2 61/91/2 61/32/2 61/52/2 61/92/2 61/2/3 61/4/3 61/8/3 61/01/3 61/41/3 61/61/3 61/81/3 61/22/3 61/42/3 61/92/3 61/13/3
mt
source: SPDR GLD data
Gold is not a Risk On trade. The type of hot money that moved into the easily tradeable ETF in
March has seen no return by parking itself in the world’s historic store of value and those Wall
St movers shakers and thrusters don’t like that. It’s why I predicted gold ETF holdings to drop
as part of the retrace period for gold and sure enough, the tentative conclusion we can draw
from the above is that it’s started to happen. We the gold investors should not be concerned by
the ebb and flow of hot money, not least because it’s dumb money to the Nth degree, but we
need to be aware that gold isn’t going to shoot straight up, the non-stop arrow of riches and
love, as this new long-term bull phase gets going. It needs to shake out at least some over-
confident neophytes. That’s what markets do, after all.
As for the other side of the coin, the people I currently
oppose who promote the current near-term gold bull
thesis, the ones that say gold will move up now and
break U$1,300/oz in days and then to da moon Alice,
from what I’ve seen their thesis boils down to perceived
weakness in the US Dollar and how the Greenback’s set
to go lower so let’s tackle that one while I’m in full flow
rant. Here’s a list of reasons why I’m not buying the
Death Of The Dollar (again) argument:
• It's now a crowded trade. And when the
message is being sent to me by the goldbug end
of the commentariat, it’s also a trade idea
getting long in the tooth.
• I’ve noticed it being rather stubborn at its current
94/95 level. Here right is your USD chart, we’ve
been bouncing off these levels since the start of 2015, what’s so different now? The
current level isn’t out of the ordinary for the dollar’s recent trading range.
• This lower entry dollar is now more attractive as the potential flight to quality than it
was in February. Back then the dollar was bouncing around the 100 level and too rich

,
for people’s blood, our new April level allows purchasers to chase modest gains if
they’re early through the door.
• Then there's the small matter of needing USDs to play in the peppy US stock market.
And it’s not just a “recovering market” either, as the Dow is now less then 3% away
from its all-time high.
• Which reminds, me, how's that Casey Research mid-January "double down on shorting
the S&P" call coming along (5)? Looks like it bottom-ticked the broad markets very
accurately*.
• And to add a personal perspective, from a South American point of view the dollar got
very overbought in all freely traded currencies down this way early year and has
subsequently and has dumped violently. The best example is the 8% the USD lost
against the Brazilian Real in March, the anecdotal one is how I got 3.52 Soles for my
dollars six weeks ago and 3.37 this week. They tell me it’s 3.31 this weekend (and I am
literally not buying that). From experience I have a lot of respect for the collective
wisdom of South America towards the dollar, for my taste we've witnessed the knee-
jerk against the dollar’s fast rise, the spike and fall, it won't deteriorate anywhere nearly
as badly from now on.
Being a non dollar bear right now is a contrarian position, the market chatter is clear and even
people like Greenspan are dollar bears today (we’ll get that on Thursday when he participates
in the Biege Book round table). To round off today’s intro and underscore my continued belief
that we need to see gold retrace further in the near-term before it gets its mojo back in the
second half of this year, let’s recall just why gold made its move in February.
It was the fear trade.
Remember the breathless traders in Jan/Feb and their “If Janet raises again we CRAAAASH!”
stuff? Well now, look at what the nice lady did early last week, jawboning the Fed’s new “let’s
wait and see” position right on schedule. The result is that fear is leaving the scene, replaced by
its age-old sparring partner greed. Or to remind you of the call in Feb 7th 2016 IKN352’s main
piece “Fighting the Fed” which laid out the current house strategy...
“Gold is going up due to its classic role as a fear trade. At other points in the
cycle the flight to safety can be to the US Dollar because other things are
spooking the market, but when it’s fear of jurisdiction deflation and dollar
weakness itself (the spectre of negative rates in the background, jigging it
along nicely) that is suddenly less attractive. So people are finally piling into
gold.
THIS IS NOT GOING TO LAST FOREVER, SORRY TO BREAK THE BAD NEWS.
Gold’s appreciation on the Fear Trade will last as long as the Fed says nothing
about the change in direction which it will first jawbone, then announce
formally. There is no way in the world that Janet ignores shouts of “One more
raise and the market crashes” because the Fed never ignores these things,
ever.
• The new jawbone will come.
• Then the subtle change of wording in a Fed presser will come.
• Then the policy will be formalized.
• Same as it ever was.
It’s why the microphone is given to the Doves and the Hawks in turn, it’s the
reason Gary Tanashian over at Biiwii/NFTRH refers to it as the Kabuki
Theater. When it does, the fear will subside and you’ll get those annoying
4

,
“gold losing its lustre” headlines in the semi-comatose bizpress channels.”
It’s taken until now for the Fed to turn its position around, gently gently, a little at a time, no
shocks or abruptness, but in the space of one single financial quarter the market expectation
isn’t four raises, it’s probably two maximum and one of those is already in. That which Martin
Murenbeeld at Dundee calls, “A Fed policy best described as “lower for longer”” has come away
from the fringes and is now the mainstream market’s view. Fear has dissipated, the markets
have rallied and for my money, quite literally, the next piece in the puzzle is a gold price that
disappoints its hardcore supporters and dips under the U$1,200/oz level for a while (they do
enjoy a chance of shaking their fists at the world, though). That will be our cue to fill up on
quality precious metals equities because as day follows night, we’re staring at a whole sector
that will be worth a lot more this time next year.
Don’t fight the Fed.
And do not feed the animals.
*saucer of milk for table nine
Fundamental Analysis of Mining Stocks
HudBay Minerals (HBM.to) (HBM): Shorting next week
NB: Previously to 3q15 HBM reported its financials in Canadian Dollars. From 3q15 onwards it
has switched to reporting in US Dollars. Where applicable, I have made the necessary forex
adjustments to previous financials in CAD and today’s anal ysis is presented in default USD.
Overview
As noted in several previous Weeklies this year, most recently last week, I’ve been mulling over
a short trade in HudBay (HBM) for I’ve done a lot of numbery legwork to get myself to a
position where I feel comfortable about running a short. What you’re not going to get here is a
big and detailed anal ysis of HBM the company. It’s a big story with lots of moving parts and a
lot of the financials would need pages of explanations. I’m not going there today, most of those
are staying in my computer memory and have been for my personal perusal, what you get here
is the distilling of the short case and why I think it’s the right stock at the right time.
This trade is a combination of three factors
• I’m bearish on copper
• HBM has rallied and there’s new room for it to drop
• Near-term HBM results won’t sparkle, longer-term it has big debts on its back
.
I’m also aware that in the end (like all trades) it’s a subjective call and there’s risk involved, it’s
one I’ll be monitoring carefully once opened and if it starts going the wrong way (e.g. if copper
goes up instead of down) I won’t have any problem about cutting losses. You need to go into a
short position with eyes wide open, here comes the rationale.
I’m bearish on Copper
First up, going short on a copper producer must always be a call not only on the miner, but the
metal too. I’m 100% aware that I can pick a weak company out of the pack and make a case
against it, but if I get the macro call wrong and market prices for copper the metal go higher,
I’m going to get my short handed back to me along with my own rear-end, on a shiny silver
platter with fine vegetables as garnish.
I’m increasingly bearish about the near-term prospects for copper and think it will revisit the
U$2.00/lb level. To begin, we have seen the start of copper inventory draw-downs from the
SHFE (see Copper Basket below) but stocks are at record high levels and it will take an almighty
5

,
adjustment, not just the normal seasonal draw-down, to get them back to normal. In the
meantime there’s more evidence that the buying in China is merely State stockpiling, end user
demand remains asthenic, and oversupply is still the major theme of the market. In its monthly
bulletin Arubis this week reported (6) trading in scrap has dropped due to lack of interest and
the latest round of TC/RC talks in China have seen prices once again set high, a signal of plenty
of sellers to refineries (i.e. oversupply, the refiners can charge more for their work).
As noted above in today’s intro, I’m not one of the new legion of automatic dollar bear. If I’m
right on that call the dollar will put pressure on the copper price, but even then I don’t have to
be so; on plenty of opportunities copper drops during a weak dollar period, the real driver will
be the supply/demand equation and Chinese stockpiling or not, supply crimping from Glencore
and FCX or not, this market in 2016 is still in oversupply.
This is a story that I follow carefully on a weekly basis in “The Copper Basket” below, charts
and all, so I refer you down there and to previous editions for further details. Suffice to say that
having been resolutely bearish early year, then more considerate of the bullish argument, I’m
back calling bear on the metal and don’t see the type of upside that many copper stocks seem
to have baked into their price now, a comment that includes my short target. It is however the
big unknown of this new short position and a risk I’m taking on by calling HBM to the downside.
Pennies either side won’t hurt, but if copper starts running away on me I won’t have a second
thought about covering the short and taking my loss on the chin. Caveat complete, eyes wide
open.
HudBay share have rallied
Here’s the 2016 year-to-date chart that pits HBM against price of copper. In a nutshell, things
hit a low for HBM after copper briefly
dropped under U$2.00/lb in mid January.
We then got a period of low low prices for
the stock (flirting above and below U$2),
before copper started to claw back some of
its losses and go even on the year by the
end of February. Coinciding with the copper
rebound, HBM published its year-end
numbers on February 24th which went down
well with the market, positive cash flow and
cost cutting measures for the year ahead
being the main messages. HBM rallied, then
rallied hard and got back up to the copper
line. In the last week or so it’s been
somewhat softer, probably due to copper
dropping from the U$2.30/lb level and braking back under U$2.20/lb. As the RSI line on this
chart indicates, copper doesn’t look so strong all of a sudden.
HudBay company specifics: It’s all about Constancia
When it comes down to the company, I go 80/20 on you.
No Rosemont. We ignore the effect of the delayed Augusta/Rosemont project. Permitting has
been a long slog and it looks as though there are plenty of hurdles left to overcome, copper
prices are currently no conducive to raising the necessary capital for the build-out, local
environmental opposition is still strongly against the project and trying to close it down once
and for all (wild cats and all) although one person’s golden opportunity for the future is another
person’s white elephant, it’s highly unlikely that Rosemont will have any great effect on the next
few weeks at HBM.
6

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No Manitoba. We also largely ignore its Manitoba operations (except in the cases where we
chew over consolidated balance
numbers) because Manitoba can be
HBM Manitoba ops only: Gross Profits
summed up in three word right $m (i.e. post mine op costs and deprec/amort)
now, “breakeven at best” and 30
HBM’s financial success or failure is
25
dependent on the numbers posted
20
by Constancia.
15
To hack this issue here’s a chart 10
tracking the last eight quarters of
5
gross profits at the Manitoba end of
0
HBM. Back when copper traded
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15
over $3/lb it made reasonable cash source: HBM
flow, but when copper turned
down, it became non-competitive. We can expect the same in the near future, cost cutting
efforts or not (plus the “winter quarter” up there is traditionally the most expensive on a cash
cost/Lb basis). This simplifies our short thesis, it becomes all about Constancia in Peru.
Financial review of 4q15
Its 4q15 financials were much improved and as the price chart shows, the market liked the
numbers, but that improvement was largely
due to the sale of inventory that was
previous backlogged out of Constancia. It
was a one-off, HBM won’t get that effect in
the quarters to come and in fact,
production in 1q15 and probably 2q15 is set
to come in low.
During 4q15 HBM managed to shift the rest
of the inventory backlog at Constancia
(though it paid a price in higher per/Lb
transport costs and sold 11,163 tonnes of
copper conc more than it produced. Do the
math and it works out at approx 24.6 mlbs
of copper at $2.19/lb, which is $53.9m (if
my Casio correlates with reality, if not we’re not going to be far out). That, within a spit and a
whistle ladies and gentlemen, is the whole of the 4q15 gross profit number of U$52m posted by
HBM in 4q15. It’s also over half of the impressive looking (but non-accountancy standard)
“operating cash flow per share”, a number HBM
promoted in its 4q15 presentation literature as
HBM: Operating cash flow per share
evidence it was making good money, but which 0.5 0.45
doesn’t take into account the stream deposits or
0.4 0.34
changes in non-cash working capital, such as
0.3
depreciation/amortization/depletion and suchlike.
Sorry folks, I’ve said it before and I’ll say it 0.2
again, you can collect cash if you like, but you 0.1 0.05 0.05 0.08 0.07
can’t mine a piece of rock then pretend it still
0
exists afterwards.
-0.01 -0.01
-0.1
So yes, HBM registered decent cash flow in 4q15, 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15
source: HBM data
around $106m in fact. But even if we back out
the impairment taken in the quarter, operating
results were $38m and then there’s the niceties of having to service the loan book (around
$24m to $26m per quarters). Then tax. But hey, details, HBM wanted you to look at raw cash
flow so that’s what the market did and the stock rallied.
7
erahs/$

,
But 1q16 at Constancia won’t sparkle
Part of this short thesis therefore states “4q15 was a one-off” (and wasn’t nearly as good as it
sounded, either), something we can reinforce with this next part. Constancia is in the middle of
a production bottleneck period. I’ll let the relevant section of the 4q15 MD&A tell more:
Constancia's production in the first quarter of 2016 is expected to be affected by the planned
replacement of the trunnions on both the SAG and ball mills on one of the two grinding circuits.
The trunnions were damaged due to a lubrication failure during the commissioning period, and the
affected line is expected to be shut down at the end of February to begin an estimated six to eight
week outage to replace the trunnions, during which the second grinding circuit should continue to
operate normally.
Previously, this replacement was set to happen inside 1q16, it’s now spread between the first
two quarters. Although the company has clearly flagged this event, the way in which HBM has
traded recently, bouncing back hard from its very low lows, suggests collective amnesia in
action. I’m figuring in a bucket-of-cold-water
event for the market when the 1q16 HBM: Commercial production of copper at Constancia
production numbers are revealed. Here’s Mlb Cu 2015 and estimates to 2q16
100
how I’m modelling the production from
Constancia, with post 2q16 a return to 80m 80
lbs per quarter expected. So not only will we 60
see the difference made by the extra $50m+
40
in lagging sales in 4q15, we’re looking at a
Constancia that produces less too. 20
0
On the costs side of operations, HBM has 2q15 3q15 4q15 1q16est 2q16est
promised cost cutting across the board in source: HBM, IKN ests
2016, with an earmarked $100m to come off
operations and G&A. That’s one of the things that got the share price rallying as from late
February but it’s worth noting we saw costs rising for the company in 4q15, specifically in
TC/RC and transport line items (both per Lb cash cost, which takes out the effect of extra
production from Constancia). As the copper market remains weak and HudBay’s logistics
solution was of a stop-gap level there’s reason to suppose these cost hikes continue into 1q16.
Things like G&A are easier to deal with and everyone knows that oil prices have dropped (but
not by that much in Peru, it’s cause for public complaint and has become an election issue in
fact) so I’m not saying HBM can’t deliver on costs. I am expecting it won’t give as much as
models want, especially in 1q16 with lower production and higher per/Lb cash costs as a result.
The debt load
This brings us to the number one point of choosing HBM as our short vehicle. Its cash
generation abilities wouldn’t be
under so much scrutiny if it
weren’t heavy indebted, but this U$m HBM: Interest expense on long-term debt
35
company today has borrowed to
30
the gills in order to build out
Constancia. Its problem now is 25
payback, so with around U$25m 20
to find per quarter just to service
15
its long-term debt and be clear,
10
that servicing doesn’t cover the
dues needed on the big payback 5
date of October 2020 beginning to 0
loom, when a cool U$917m of 1q15 2q15 3q15 4q15 1q16est 2q16est
notes are due (as well as the
source: HBM data, IKN ests for 2016
revolver dates, a little earlier in
2019) HBM needs to show the world it can make the money it needs, not just to get from
quarter to quarter, but to build for what it will need in five years’ time.
The company’s debt position remains onerous.
8

,
U$m
other LT HBM: Liabilities Breakdown
3500 LT fin. debt
Other current
3000
Trade & Pay
2500
2000
1500
1000
500
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15
source: company filings
That above is the whole mix, which as at 4q15 is U$377m in current liabilities (around half of
that trade payables) and the rest long-term. That $377m current liabilities stacks up against
current assets that have evolved this way...
U$m HBM: Current Assets Breakdown
1200
other current
1000 Inventories
Trade & Rec
800 cash & eq
600
400
200
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15
source: company filings
...and leaves the working capital position looking like this.
700 HBM: Working Capital per qtr
600
500
400
300
200
100
0
9
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4
source company filings/
srallod
fo
snoillim
And just so we’re clear, that thin working capital position is very close to the $53.852m in cash
treasury on the same date. HBM tells us its “liquidity” is $288m, but that number would include
drawing down further on its open revolving credit facilities. In effect they’re saying “Don’t
worry, if we don’t make any money we can always borrow some more!”.
And to repeat here, HBM can point to the $106m in “operating cash flow” it produced in 4q15
but that’s non-GAAP stuff: Do you see the entry of $106m in 4q15 on that working capital chart
above? Or half that number? Or even a quarter? This is why it’s such a target for shorting,
because if copper doesn’t move up further and allow more revenues, HBM is running to stand
still at best, worst case sliding into a larger debt position before imploding on us all. If that
happens I’m unlikely to still be short (it would be 2017 minimum I’d guess, I’m planning a near-
term trade) because I would have taken my profits already, but it would mean a share price at

,
precisely zero dollars and zero cents. U$m HBM: Long-term financial debt
1400
Before I wrap this short call up, here’s the
1200
long term financial debt position isolated
1000
from the data used in that previous chart.
The main lump is $917m in senior unsecured 800
notes (interest 9.5% per annum) the rest is
600
mainly revolving and standby credit facilities
400
(that HBM have just expanded to a
maximum of $550m...they seem to think 200
they may need money).
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15
And here’s a price/book chart, to give you an source: HBM filings, IKN adjusts to U$
idea of where HBM has gone since the days
when copper traded at or around $3/lb. This chart HBM: End Qtr Price/Book Value Ratio
doesn’t even include the mid-1q16 price slump 1.20
that took the P/BV down as low as 0.2X.
1.00
0.80
Conclusion and trade call
I believe HudBay Minerals (HBM) (HBM.to) here 0.60
and today, early April 2016, is ripe to short. The
0.40
combination of three items, namely a forecast for
0.20
weak copper price in the near future, a 1q16
production and eventual financial quarter that will 0.00
not compare well to the flashier 4q15 numbers
posted in late February (the trigger for the relief
rally in HBM) and the long shadow of its debt
position, will combine to crimp the stock in the next few weeks.
And that’s my trade plan time window, too. This won’t be a longer-term position in which I, in
the manner of the most annoying type of shorter, starts whooping and hollering at any
misfortune the company suffers as it eventually spirals into Chapter 11 years later. No, this is
another one of those punctual opportunities, a play on copper weakness NOW and a forecast
weak quarter from HudBay NOW that can make a difference to a trade NOW.
We should get HBM’s 1q15 financial in the first week of May. That gives this stock trade a
month to position (and hopefully by then copper is softening) and then comes the financials,
which I expect to disappoint and as a result push the share price down further. After that I sell,
so I’m talking about a two month maximum window, a near-term trade. As for a price target,
it’s not easy at all because so much depends on the price of copper at market, but I do have
U$2.50 pencilled in the back of my mind somewhere, which represents a 30% upside to this
weekend’s U$3.62. Therefore as of next week I’m short HBM and the trade will appear in the
‘Stocks to Follow’ list next weekend.
Stocks to Follow
There are now seven open positions on the ‘Stocks to Follow’ list and last week, just two of
them registered gains (BTO.to, NEV.v) while the other five were weekly losers (SAM.to, INV.to,
LRA.v, FCV.v, REG.v) but as one of the two winners was my very outsized position in BTO it
was a winning week for my back pocket. The worst losers were Starcore SAM.to down 14.7%)
and Lara (LRA.v down 7.7%) but that SAM change looks like opportunity to me (see below).
With the addition of INV Metals (INV.to) to the list we now have seven open trades, eight less
than our self-imposed maximum and leaving a lot of space for additions in the near future. Two
positions are green, five are red. The night is young.
10
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 tse61q1 WON
P/BV
source: HBM filings, IKN ests

,
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICK
B2Gold BTO.to Buy C$2.11 12-sep-14 C$2.18 3.3% New tgt C$2.50, trading well
Metals Producers (in current order of preference)
Starcore Intl SAM.to ADDING C$0.48 10-jan-15 C$0.405 -15.6% Adding at around 40c this wk
Land Grab Stocks (in current order of preference)
INV Metals INV.to buy C$0.24 27-apr-16 C$0.23 -4.2% new near-term trade
Lara Expl. LRA.v spec add? C$1.15 08-apr-12 C$0.36 -68.7% solid biz model, waking up
Other Recommended Stocks (in current order of preference)
Focus Ventures FCV.v spec buy? C$0.23 01-jul-12 C$0.065 -73.9% Hit hard by PFS news
Nevada Sunrise NEV.v spec buy? C$0.185 28-feb-16 C$0.18 -2.7% V small Li spec play
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.32 6.7% 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
McEwen Mining MUX jan16 U$1.09 25-jan-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-apr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-apr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-jan-16 U$2.96 43.7% closed good near-term trade
Sandspring Res SSP.v mar-16 C$0.195 18-oct-15 C$0.32 64.1% Hit tgt, took profit
Teranga Gold TGZ.to mar-16 C$0.54 15-feb-15 C$0.60 11.1% disappointing trade
B2Gold BTG mar-16 U$0.85 13-jan-16 U$1.30 52.9% Separate trade on B2, hit tgt
Dalradian Res DNA.to mar-16 C$0.67 27-oct-13 C$1.00 49.3% Hit target, sold, good win
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
INV Metals (INV.to): Position opened. So far it’s about 50% of what I have in mind as my
full position at the moment and I paid an average of 24c for the privilege (want more at 22c or
below if possible). Time enough to position, trade opened, see last week’s anal ysis for all the
details.
After reading the feedback received from several corners, a couple of extra comments here.
1) A lot of you like seeing the name MacGibbon involved in this company, particularly father
Terry (though having her daughter heading INV is a proxy to him too). I read the phrase “class
act” in more than one mail last week connected to him.
2) Don’t be under any illusions about the framing of this trade. Loma Larga may or may not
become a mine at some point in the future, that’s for somebody else to decide, the sponsor and
to cheer on. Mine is a trade based on pros and cons as things stand today, I’m fully aware the
project has its issues, this is a near-term timeframe trade and get down to brass tack and it’s
one framed around a specific news event, the update PFS). Four months max, the PFS comes
out, INV promotes, I find an exit point.
3) One subscriber sent in a mail that started like this.
“Mark. You are wrong. We have seen this movie before. So what if mkt cap=cash?
Meaningless. The bozos will spend all the cash.”
It went on to tell me that INV should liquidate and distribute but they won’t (and in fact I agree
but that’s beside the point), all these juniors are a waste of time, that “Mining companies
destroy capital”, that, “In the long run, their shares all go to zero”. Which is fair enough I
11

,
suppose, but it did make me wonder why he’s spending his money every month on a
subscription to a service that covers junior mining companies. It’s also why I went into the
current treasury position, the past history of INV’s parsimonious burn rate, its 2016 budget and
how INV is forecast to leave this year with at least 15c/share still in the coffers. At the risk of
repeating myself, I’ll be long gone come December.
Silver Range Resources (SNG.v): Trade NOT opened yet. That’s because of the simplest
reason of all; I didn’t get my price. In fact SNG traded three times at 8c (the max I was going
to pay) but as the only time it really traded at that was Monday (when I wasn’t buying) and the
other two were downspikes on tiny volumes, there wasn’t a real chance for entry. I still want
some, I’m not sticking in any bids (because the wonderful guys on the ask will try to mindfark
me), I’ll see if there’s anything doing this week coming. Remember; a very small trade planned,
more of a list stocking-filler than anything of great import at this time.
B2Gold (BTO.to) (BTG): BTO continues its run, continues to out-perform peers, continues to
catch-up. I had lunch with A. Reader last week who had been smart enough to snag some BTG
at U$0.69 (he paid for the pizza ☺) and one of
his questions was the key one; where to sell.
It’s good to meet and swap information like
that, because it makes it a lot easier to get the
person’s view of things and what they’re
looking for in any given trade or investment. I
know I’m boring but I’ll never be able to say it
enough times, my circumstances are always
going to be different from yours so it’s vital you
understand that and filter The IKN Weekly for
your own use. Anyway, the blunt question came
from a person who is paid to do mining things
(no more than that), knows a lot about mining
and uses the market for entertainment and
profit rather than having it at the centre of his life. My answer was that I see BTG floating up
towards U$2.00 given a bump-free ride from here, at some point it will stop its outperformance
and ride the general tide with no added beta. So if you fancy U$1,500/oz gold by September,
just ignore that U$2.00 call.
In other news, the BTO 2016 Annual Information Form came out last week and there was a
clear negative therein. Part of the AIF gives the updated mineral reserves and resources for the
BTO mines and if we compare the 2015 numbers to the 2016 numbers, there’s a weak point
emerging among the company assets. Here’s a table, notes underneath:
B2Gold Reserve and Resource Counts per Mine, 2015 and 2016
2015 2016 Difference Percentage Loss
MINE Reserve M+I Resource Reserve M+I Resource Reserve M+I Resource Reserve M+I Resource
La Libertad 424,000 650,000 213,000 415,000 211,000 235,000 49.7% 36.1%
Limón 216,000 453,000 173,000 424,000 43,000 29,000 19.9% 6.4%
Otjikoto 1,196,000 1,435,000 1,065,000 1,455,000 131,000 -20,000 10.9% -1.4%
Masbate 3,004,000 3,893,000 2,660,000 3,833,000 344,000 60,000 11.4% 1.5%
Fekola 0 1,387,000 3,347,000 3,853,000 -3347,000 -2,466,000 n/a -177.8%
NB: Reserves are included in the M+I totals
source: BTO data, IKN calcs
• There’s no problem with the new boys, Otjikoto (recently online) and Fekola (now
under construction). In fact Otjikoto’s increase in M+I is a nice bonus prize, the higher
grading Wolfshag zone may not be massive but it moves the dial.
• Masbate’s resource is holding up well enough, even though the reserve number slipped
a little. Those resources have been a fairly reliable number over the years and often its
the drilling sequence that stops them from becoming reserves straight away, it’s not
12

,
the one I’m worried about.
• I’m not that worried about Limón, either. It’s the small one of the family, yes reserves
have dropped a lot but the mine has always been of of those “gifts that keep on giving”
vein systems. The way it’s mined means they’re never going to prove up many ounces
beforehand, they tend to keep just two or three years future rock on hand.
• Which leaves the problem, La Libertad in Nicaragua. Its reserves have dropped nigh on
50% over one year, the resource by 36% and reserves currently cover just a year and
a half of mining at current rates. It’s looking tired and that’s not so very good, Libertad
needs to get that Jabalí satellite deposit online quickly, else the company is facing a
hole in its production schedule that the market isn’t expecting.
This isn’t an immediate worry and won’t affect the 2016 production schedule, which may
explain why the market decided to ignore this new weak spot in the BTO story and just keep on
trading it up. Or maybe nobody reads AIFs any longer. However, further delays to Jabalí or a
lack of new resource discovery at La Libertad would mean the mine isn’t going to last many
more years into the future.
Starcore Intl (SAM.to): I’ve been toying with the idea of adding to SAM and I nearly called it
as such this weekend, but I just can’t convince
myself enough to hit the trigger while gold stays
over $1,200/oz. However the 40c-ish price this
weekend sure looks tempting.
Therefore I’ll stick to a quick comment on trading
action and the new price deck. SAM dropped to
40c-or-thereabouts on Friday on exactly the type
of “no bid and one person wants to sell” type of
action that’s typical in this stock and other low
liquidity juniors. I think this price is an
opportunity, the last time I was fishing for an
addition was back in February, but that was
before SAM announced the Real Estate deal that’s
looking to add U$7m or so to treasury (gross 16c/share). If I’m right about its earnings
potential this price is even more of a bargain, it’s tough to second guess these tiny producers
but at current gold prices I can see SAM returning quarterly net profits of around $1m. Not
much like that, but it’s also 2c/share per quarter. For a 40c stock.
Focus Ventures (FCV.v): First a piece of news I forgot to mention last week (it simply slipped
my mind, no excuses). On March 22nd FCV gave us (7) an update of corporate activity and in
the same NR announced that, due to the covenant stipulations of its loan with Sprott and the
need to keep capex at a certain level, it was running a small round of financing to raise $250k
by selling 3.85m units at 6.5c apiece (1 unit = 1 share + a full warrant at 6.5c). Luckily it’s a
small round of raising, because those terms with a full warrant at the same price would be
seriously dilutive if it were any larger. Even at this size it isn’t very welcome, though at least the
recipients are stronger hands as over 50% is an insto that took a position in the last round and
the rest is mainly insiders (un-named to this point, but I would bet on last names Szotlender
and Ridgway). The upshot is that we now have a bunch of warrants at 6.5c sitting on the share
price and causing instant overhang. So what we’ll need is good newsflow to break out of the
current level, which is why I exchanged a couple of mails with FCV management last week in
order to get a better handle on the rest of the NR.
We know that FCV has contracted IMC as a 3rd party consultant to re-work the hastily delivered
Pre-Feas of late last year, the one that impressed nobody but its delivery allowed FCV to miss
out on a large penalty payment. We also know that due to the rushed delivery of the PFS last
year, there should be plenty of room for improvement when the revised PFS is delivered. That’s
where FCV (and IMG) are now, they’re working on new and more accurate cost profiles, they’ve
re-done the mine schedule from basically zero to get a more efficient (i.e. cheaper waste
13

,
haulage model, cutting down distances and allowing backfilling earlier in the mine life project
(which will be a big op-ex cost saver). The NR also mentioned they’re going to work on one
plant line, which streamlines the operation and the payoff of this work will be a significantly
improved IRR (the number that caused the main thus of pain last time).
On the flipside, FCV is looking to bring forward more capitalized work straight to the
construction phase. That will mean a higher capex ticket, but much improved op-ex
parameters. The higher entry hurdle is one I approve of in this case, the eventual customer for
Bayovar12 won’t be a small or mid-sized operator looking for a cheap capex project, the
customer will be a large mining concern (of the Vale type) that can write big cheques in order
to fund a profitable long-term mine.
Overall, there’s no way of knowing for sure until the PFS arrives and FCV don’t give numbers
away to the likes of little me, but reading between the lines on my exchange with the company
last week I think we can expect something in the order of a 20 year mine life operation, an IRR
of perhaps 23% (handily above the benchmark 20% and far more attractive than of the skinny
17.2% announced on January 5th (8)), capex loaded up at $200m which gets nearly all the
necessary heavy lifting out the way, a payback of less than five years instead of nearly seven in
the current plan. As for when we might see the PFS, I fished quite hard for a timeframe from
the company and without them serving me up a date, the feeling is that it happens in 2q16 but
not before the end of this month, so June is the most likely month for the PFA in my personal
opinion. All those things are good. What we’ll
need to see after the PFS arrives is how FCV
manages to fund itself in order to keep ticking
over (or move into FS study mode). That’s
supposedly a case of cutting a new deal with
Sprott USA (aka Rick Rule), which may be a
full/part payoff from newly raised funds or may
be a booting forward of the current liability.
Either way, unless FCV finds its major sponsor
between now and September I fear another
round of dilutive corporate action.
The last time we looked closely at FCV was in
IKN348 dated January 10th, just a few days after
its share price had been hammered by the market on the numbers in the rushed PFS. That anal
ysis was wrapped up this way:
“...it’s been very unfairly treated in the last few days by a market that hasn’t
appreciated that the current PFS doesn’t represent the true value that’s out
there to be unlocked at Bayovar12. And because of that, debt risk or not, I’m
a solid holder of Focus Ventures. Come the “updated” or “optimized” PFA in a
few months’ time, I’d like to see more capex, less opex per tonne, cheap
transport and earth-moving logistics and, above all, a flashier IRR. All those
are well within our grasp as the project gets better developed and
understood.”
And since then, nothing, hardly a pulse. Ugh. FCV has been one of the most frustrating rides of
my junior mining life. However, it does have its up and down phases and right now, with the
December PFS and now this small but dilutive financing, it’s definitely in a downer. However up
is a possible sequel and we should get at least some up phase around the revised PFS delivery.
It’s not an easy stock to fliptrade, with moments of good liquidity which suddenly dry to a
trickle. But the nimble and patient could be rewarded...buy low sell high they say, no?
The Copper Basket
After thirteen weeks of 2016, The Copper Basket shows a 30.15% gain to level stakes.
14

,
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 HudBay Min. HBM.to 0.35 235.23 1100.88 4.68 -11.9%
2 Ivanhoe Mines IVN.to 0.61 778.96 654.33 0.84 37.7%
3 Reservoir Min. RMC.v 4.08 48.69 343.26 7.05 72.8%
4 Capstone Min. CS.to 0.44 382.04 191.02 0.50 13.6%
5 NGEx Resources NGQ.to 0.65 205.06 141.49 0.69 6.2%
6 Nevada Copper NCU.to 0.66 80.5 77.28 0.96 45.5%
7 Copper Mtn CUM.to 0.445 118.8 62.96 0.53 19.1%
8 Western Copper WRN.to 0.38 94.19 60.28 0.64 68.4%
9 NovaCopper NCQ.to 0.395 104.33 50.60 0.485 22.8%
10 Copper Fox CUU.v 0.125 417.64 50.12 0.12 -4.0%
11 Cordoba Min. CDB.v 0.16 86.86 42.56 0.49 206.3%
12 Hot Chili Ltd HCH.ax 0.09 445.723 31.20 0.07 -22.2%
13 Atico Mining ATY.v 0.28 97.59 29.28 0.30 7.1%
14 Amerigo Res ARG.to 0.205 173.61 21.70 0.125 -39.0%
15 Revelo Res. RVL.v 0.055 99.19 6.94 0.07 27.3%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 30.15%
A 4.51% drop for The Copper Basket last week, with just five winners (IVN.to, RMC.v, NCU.to,
HCH.ax, WRN.to) to report, tow
unchanged stocks on the week (ATY.v,
CDB.v) and eight losers (HBM.to, CS.to,
NGQ.to, CUM.to, CUU.v, MCQ.to, ARG.to,
RVL.v) including the only two double
figure percentage movers Copper Fox
(CUU.v down 27.3%) and Revelo
Resources (RVL.v down 12.5%). Of the
larger copper players, the 5.7% loss in
HudBay and the way in which Ivanhoe
IVN.to) is being market managed to stay
at its low-80s level are not good signs for
sector health in the next week.
My how time flies, it’s the end of the first quarter of 2016 already so as is our wont, here’s a
league table of basket components and their performance in the period, best to worst:
The 2016 Copper Basket Components after 13 weeks
225%
200%
175%
150%
125%
100%
75%
50%
25%
0%
-25%
-50%
15
v.BDC v.CMR ot.NRW ot.UCN ot.NVI v.LVR ot.QCN ot.MUC ot.SC v.YTA ot.QGN v.UUC ot.MBH xa.HCH ot.GRA
The Copper Basket 2016, weekly evolution
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
Top of the shop is the excellent 200% plus performance put in by Cordoba Minerals (and yes,
I’m still kicking myself for having picked it out and not backed it with my own cash), but the
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa
source: IKN calcs

,
numbers put in by Reservoir (RMC.v) and Western (WRN.to) thanks to their recent runs are
nothing shabby either. Much of the sector has
managed to benefit from the rebound in the last six
weeks and of our group, just four of the 15 are in the
red, with Amerigo (ARG.to) the only one that’s a true
duffer so far.
Back to the weekly reporting and the main reason for
the soft equities was the soft metals action, with
copper dropping under U$2.20/lb, trying to rally back
above it and failing. That’s straight bearish and it’s one
of the reasons why I’m shorting HudBay as of this
week coming.
It’s also the end of another fun month in the
inventories world and here are the monthly tracker
charts for the three official warehouse systems. The
flip-flop of importance between Shanghai and the LME
is now confirmed, and in no uncertain terms, with the
LME warehouse numbers dropping to levels rarely seen by its participants. Shanghai’s stocking
cycle has been historically strong, we’re now seeing tonnages leave in net terms (two weeks
running) but it still holds nearly 2/3rd of all world stocks at the end of this month.
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
Moving on to the weekly copper warehouse inventory bullet points:
• Total world copper stocks in the three official warehouse systems dropped last week in
thin holiday trading, down 27,741 metric tonnes (-4.1%) to close Friday at 577,434mt,
the 600k barrier didn’t last.
• Shanghai inventories dropped last week, down 17,274mt (-4.5%) to 368,725mt and is
the confirmation of the data last week; SHFE is now de-stocking.
• LME stocks dropped by exactly 7,875mt (-5.2%) to finish at 151,275mt. The now well-
documented Arbitrage Effect is wearing off and movements in absolute tonnage terms
are dropping.
• Comex rose a small 408mt (+6.3%) to finish at 65,309mt. We again note that the
Comex tonnages are the traditional small ones of the three, but we’re now at the point
where the LME is just a little over double. We need to give more respect to the
movements of the Comex.
The Shanghai-only chart now, data from source (9), the reversal of fortunes is literally graphic.
We can now expect warehouse stocks to drop until the end of the year, the big question will be
the rhythm of the drop. Somewhere around June or July we’ll have a better idea.
16
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram
Copper inventories, per month, 2012 to date
1000000
LME Shanghai Comex source: Cochilco 900000
800000
700000
600000
500000
400000
300000
200000
100000
0
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram
Mt Cu
LME Shanghai Comex
source: Cochilco

,
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
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 ht41 ht6ram ht72
Mt Cu
source: Cochilco
Now for brief comments on a couple of our basket stocks:
Reservoir Minerals (RMC.v): My personal worst stock analysis and call of the year so far
(don’t worry, there will be more of those ☺) goes from
strength to strength. Back in IKN356 when the Lundin
Mining/Freeport deal had hit the wires I was “I
wouldn’t be a buyer of RMC today on this news...”, in
IKN 357 I was, “I was wrong. Sometimes you just
have to hold up your hands and say it out loud, no ifs
or buts, RMC in IKN356 was contained a
monumentally bad call made by me.”
RMC hasn’t stopped since then. The rumour picked up
and noted in IKN358 about BHP sniffing around wasn’t
just noted by this desk, the assumption that Rio Tinto
is talking with RMC is also a thing. What that means in
money terms is on this chart, RMC.v is up another 10% in the last two trading weeks and has
breached $7 for the first time.
Copper Fox (CUU.v): The double blast of news from CUU last week, with its 2016 Schaft
Creek work program on Wednesday (10) and its 1q16 financials on Thursday (11), must have
caused one larger holder of this stock who was
previously suckered into the moose pasture peddler to
give up the ghost. The stock dropped hard on a
sudden burst of volume, only accelerating through
Friday to finish 27.3% down on the week. It deserves
to be a lot lower, but I’d expect it gets the usual
propping at some point if (repeat if) that seller (or
sellers) are done.
The likely reason for the drop is the Schaft Creek NR,
rather than the financials which brought no surprises.
CUU and its salary-gobbling boss Elmer Stewart are
past masters of spinning a message to the maximum
and you need to filter the info carefully, when you do and get to the substance we see that the
whole program, a JV with Teck, is getting the sum total of $0.7m spent on it this year. That
pays for a park ranger, three geols, a tent and some bear food. A better indication of the
priority being given to this project by Teck (who have their own financial problems of course) is
impossible to imagine and at least one person got the message. At last.
There’s minor level fun in watching this stock’s ticker, but definitely not one to get involved in.

,
The Low Cost Producer Basket
After 13 weeks of 2016, the Low Cost Producer Basket shows a gain of 67.10% 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 15.90 13.65 85.0%
2 Newmont NEM 17.98 529.12 14.09 26.62 48.1%
3 Goldcorp GG 11.56 830.22 13.35 16.08 39.1%
4 Franco Nevada FNV 45.75 176.298 10.75 60.99 33.3%
5 Agnico Eagle AEM 26.28 217.67 7.95 36.53 39.0%
6 Ang/Ashanti AU 7.10 405.27 5.57 13.74 93.5%
7 Sibanye Gold SBGL 6.09 228.71 3.47 15.16 148.9%
8 Detour Gold DGC.to 14.41 170.85 3.56 20.82 44.5%
9 Buenaventura BVN 4.28 254.19 1.93 7.58 77.1%
10 New Gold NGD 2.32 509.89 1.92 3.77 53.0%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 67.10%
Franco Nevada (FNV) dropped 36c on The Low Cost Producer Basket: Weekly performance
the week, so even though it managed to 80% and comparative to GDX control
stay above the U$60 level (a bit more on 70%
that below) it was still a loser. But it was 60%
50%
the only one, all the other nine basket
40%
components registered gains with the
30%
best numbers returned by Buenaventura 20%
(BVN up 17.2%), Detour (DGC.to up 10%
8.4%), New Gold (NGD up 6.2%). 0%
-10%
Franco Nevada (FNV): I had this
whole thing going about FNV and the
way it couldn’t seem to hold over U$60
recently, so when it did break through in
some style last month it was my idea of
leading indicator. Since then FNV has
tracked back and is now re-testing the 60
line, but as I stared at the squiggly line on
Friday evening, the level that had looked
technically important to my eye seemed to
be less important. There was something
about the way FNV has been acting that
made me think it might have changed. So
being the charting dumbo that I am I
decided to phone a friend and ask Gary
Tanashian this weekend for a technical call on the
stock. Yesterday Saturday afternoon, while busy
with his own letter, the nice man came back with
“Mark, U$57.50 and U$55 are the key support
levels. Above those it's fine.”
So now you know. Thanks Gary, as usual looking
forward to reading your weekly report.
18
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa
basket
gdx control
source: Google Finance, IKN calcs
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
0%
-5%
-10%
-15%
-20%
-25%
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa
source: ikn calcs, NYSE/Nasdaq data

,
Regional politics
Regional Risk Review
It’s quarter-end and time for the review of regional political risk for junior mining. This is the
12th edition of the revised format, the latest having come in IKN347. The standard reminder of
how the categories are considered with their score out of ten: The 6 categories are:
a) National Government Miner Friendly: The country on its national stance towards
mining activity.
b) Community/Social Miner Friendly: The overall attitude of locals towards mining,
either in specific zones or in country regions.
c) Foreign Direct Investment (FDI) Friendly: The openness towards FDI and the
safeguards it gives to foreign capital looking for a home.
d) Mining Culture: Countries or regions with generational traditions in mining are easier
places in which to operate than those which have little previous exposure to formal
mining operations.
e) Geopolitical Optics: The way in which the outside world sees this country, an
important factor, no matter if the perception be right or wrong.
f) Internal/National Political Stability: A gauge of how stable the place is politically.
We concentrate on nine countries with the potential to host companies, rather than try to offer
a comprehensive LatAm-wide view that takes in countries with little or no appeal for investment
or speculation in juniors. Here’s this quarter’s table, below the country-specific notes.
March 2016 Latin American Country Risk For Foreign Mining Companies
Nat. Govt Community/Social Geopolitical Internal Nat.
Country FDI Friendly Mining Culture Total
Miner Friendly Miner Friendly Optics Political Stability
LatAm countries under active consideration for junior mining project location
Chile 9 7 8 10 7 8 49
Peru 9 6 9 9 7 5 45
Mexico 8 7 7 9 6 6 43
Nicaragua 8 4 7 7 6 6 38
Guyana 8 7 7 6 6 5 39
Brazil 7 5 7 8 5 5 37
Argentina 8 6 7 6 7 6 40
Dom Rep 8 5 7 5 5 8 38
Colombia 7 4 8 6 6 5 36
Potentially relevant LatAm countries for junior mining
Panama 6 5 9 4 8 6 38
Ecuador 7 5 5 4 8 7 36
Guatemala 7 4 4 5 3 4 27
Countries of little or no interest for junior mining exposure
Bolivia 4 6 2 9 6 9 36
Uruguay 5 5 7 3 6 7 33
Paraguay 7 5 6 3 4 6 31
Honduras 7 3 4 5 3 3 25
Costa Rica 1 1 5 1 6 7 21
Haiti 6 3 4 1 3 4 21
El Salvador 1 1 4 1 6 4 17
Venezuela 3 5 1 3 1 2 15
source: The IKN Weekly house estimates
Overview
We made some focus adjustments in IKN347, with the Regional Review now aimed at covering
19

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the nine most interesting countries for mining in the region. Those continue today and I’m also
going to concentrate on the most interesting political (and mining political) stories around the
region this edition. Those in order of appearance are Chile, Peru, Brazil and Argentina.
Chile: Unchanged
This wasn’t an easy call and there have been both positives and negatives for Chile in the last
quarter, but on the whole there was no single issue that moves the dial enough in either
direction so I’m going to stand pat.
Politically, mining has been taking public opinion flak due to the SQM scandal, in which it’s been
revealed (or at least enough evidence has appeared to start pointing serious fingers) that the
previous Sebastian Piñera government rigged new royalty laws in order to favour the non-metal
mining producer (let’s pretend lithium carbonate isn’t made of lithium) in return for large
kickbacks to the legislators who let them slip through the net. The scandal has brought arrests,
resignations and has even seen ex-President Piñera himself take the stand (though I highly
doubt he’s involved, being rich already and pretty naive in some ways).
On the subject of lithium, the current Bachelet government has moved to make the world’s
hottest commodity a strategic product and will separate it from the bulk of country mining
policy in order to allow faster development of the sector. This is a good thing (if you’re not
invested in any Clayton Valley Li plays at least), though the plans for a State-run Li company in
the style of Codelco for copper are already put at three years from now. The wheels of
government turn slowly, but Chile’s Li sector has been getting firm offers from private
companies and its permitting track should be fast.
Moving to the big one and copper, an existentialist debate has broken out in Chile about the
fate of the country’s (overwhelmingly) major export. Codelco and Cochilco talking heads have
been out in force warning of a long period to come of current (or lower) prices. The whole
rationale is about costs and competitivity, in other words the politically correct way of justifying
the wholesale job losses we’ve seen in public and private companies alike. An indicative stat is
the unemployment rate in Antofagasta, which is up 0.8% in one year and stand at 6.2%. For
sure 6.2% may not sound like much, but it’s in a place that lives and breathes mining and (put
put it as nicely as possible) it’s also the type of town that you wouldn’t hang around in if it
weren’t for having a decently paying job in a mining company. Atacama region at 7.5%
unemployment and Calamá region at 9.1% unemployment are numbers telling the same tale.
Chile as a country has battened down and is firmly on-message about austerity now, the type
of scenario from the world’s biggest copper producer (a third just from here) which allows the
rebound to begin...if it’s there.
Socially, there have been a few more cases of community and social protests against mining
projects registered (the latest a community against the Los Andes Copper (LA.v) Vizcachitas
project). Taken on an individual basis it’s one thing, but the trend in Chile of more communities
standing up for their rights and moving their protests to the courtroom is a trend that’s now
established. Once upon a time Chile was easy permitting and happy hunting for miners, but
emancipation of the region has even reached here.
The other major issue in Chile’s mining sector is now water, be it the way in which it’s trying to
close down Kinross at Maricunga for depleting the water table and causing “irreparable
damage” to the local ecosystem, or the nearly complete multi-billion dollar La Escondida
desalinization plant and pipeline, or Chile “stealing” water from a river that runs on the Bolivia
side of the border by drilling and channeling its flow to Chile and its mines (Bolivia is taking
them to the world courts, apparently). Particularly in the major mine zones of Northern Chile,
water is now a big issue and capex bills are set to rise as de-sal becomes the default option.
Peru: Community/Social Miner Friendly up one point, Geopolitical Optics up 1 point
Internal National Political Stability down 1 point
Three moves in the score chart for Peru with an overall net gain of one point. The only negative
20

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is because we’re now in the deep shadow of the country’s first round Presidential election vote,
just seven days to go and it0’s at times like this that anything can happen, therefore a point is
docked as a precautionary measure.
Come the evening of April 10th the most likely scenario at this point is:
• Keiko Fujimori wins the first round with over 30% of the vote (it could be as high as
38%), which won’t be enough to win outright.
• Pedro Pablo Kuczynski comes second with around 18% to 20% of the vote and runs off
against Keiko in the ballotage set for June.
We can consider the potential outcome of a PPK vs Keiko run-off in due course, let’s make sure
it happens that way first though I can say at this point that voter intention polls have it very
close between those two in the run-off, with some pollsters giving a slight edge to PPK, others
an edge to Keiko (12). The potential fly in the ointment of this scenario is Veronika Mendoza,
the only true left wing candidate who has made late strides in the intention polls and in some
surveys is now in a technical dead heat with PPK. There are two things to say on that:
1) Veronika Mendoza will not win against Keiko in round two. All voter intention polls show that
clearly, the country collective is scared of “lefties” (it’s very easy to conjure images of lefty
Commie terrorists in the mind of the average Peruvian). So even if she makes it, you up there
will get your miner-friendly administration.
2) As round two is going to be all about Keiko Fujimori vs “No Keiko” (or perhaps better said
“No Fujimori”), I expect many “No Keikos” to switch from similar candidates such as
Barbanchea and García to PPK, in order to keep Veronika out and give the “No Keiko” option a
real chance at victory.
As regards mining policy etc, there are some shades of difference between Keiko and PPK, but
nothing extravagant and viewed form the outside both will be considered “good for mining” by
the world business community. This gives you the extra point added to the geopolitical score.
That also counts for the near-term effects a Keiko or PPK win would have on the social fabric of
mining. In the medium-term I see problems arising, but for this year at least as the new
government (whoever it may be) enacts its chosen policies, we’ll get a honeymoon period and
one in which the country will be looking to please everyone.
Mexico: Community/Social Miner Friendly up one point
Never an easy call to blanket a large and populous country with a single judgment such as this.
Detractors can point to plenty of social problems for Mexican mining companies (e.g. last week
for Torex in Guerrero), or protests against planned mines (Baja California Sur has a couple of
hot ticket projects that get public noise), all that even without the latest round of “drug lords
and mining companies working together” reports. We should also note the Mexico tax people’s
latest claim against Primero Mining (P.to) (PPP), but that does seem to be a one-off and for
some specific reasons (the first time Mexico has assessed a precious metals stream, the penny
finally dropped on P’s tax loophole and they want to get their money).
But on the whole it’s difficult to be too critical of Mexico’s mining scene today. Take for example
the latest problems faced by Torex at Guerrero. Last year they were serious red flag moments,
such as the kidnapping of workers by narco gangs. This year it’s a community who want their
money deal (maybe 50 families want the 50,000 Pesos (U$2,900) they say the company
promised them) and these things tend to get sorted our peacefully. Mexico will always have its
anti-mining hotspots (BCS, Chiapas) and its specific zones that stop unpopular projects, but it’s
also a realistic and serious mining country that looks to the industry to fill some of the gap left
by the drop in the price of oil.
Nicaragua: Community/Social Miner Friendly down one point
It’s not making big headlines, not even nationally, but there’s been rise in anti-mining feeling in
21

,
Nica and we need to watch it carefully. There are two major fronts to this, with first local
communities who have mining operations showing more willingness to protest when things
aren’t to their liking. Examples include BTO at Libertad, who still haven’t permitted the Jabali
satellite deposit as the locals are causing problems. Also Hemco, where plans at the Bonanza
mine were for expansion last year that didn’t happen due to employee complaints (better
wages) so the owners, Colombia’s Mineros S.A., have come right back with the same plans for
this year.
The other side is the quiet rise of the NGO, with inroads being made into wider public opinion
(of the classic “water yes gold no” variety), especially in the North of Nica. The Daniel Ortega
government has been famously pro-mining through the years but is now getting push back
from its grass-roots members.
Guyana: Geopolitical Optics up 1 point
Largely thanks to the smooth commissioning and initial production period at Guyana Gold Fields
(GUY.to) and its Aurora operation, the word “Guyana” is getting plenty of feelgood factor form
the formal mining industry these days (and I’m happy about that, having bought a few
Sandspring (SSP.v) at under 20c and sold them over 30c recently).
Guyana the country has shown the most important thing a new mining country (or at last new
for larger-scale formal mining) can show the world: It’s perfectly possible to do business inside
its borders. GUY.to has become a pathfinder story and a successful one at that. Guyana now
also has the Karouni mine of Troy Resources in commercial production, which is good but that
one has been plagued by problems and delays before finally making it over the finish line in late
February. So in effect Guyana has two winners to boast about, Karouni problems were of the
company’s making rather than the jurisdiction.
Brazil: Internal National Political Stability down 1 point
I almost brought this segment of Brazil’s overall score down two points, but on quiet reflection
and considering that the headlines that scream about Dilma, Lula and the PT (coalition)
government are now getting hyperbolic, it’s just the point docked. The basic point: Whatever
happens in Brasilia in the next few days or weeks, Brazil the country will continue on its way.
First, we’ve already factored a lot of this trouble into the country score in previous editions.
Second yes, there is an escalating corruption scandal in Brazil and yes, we’ve seen enormous
pressure put on Dilma by her opponents as well as a handful of ministerial resignations. The
“Impeach Dilma” and “Dilma Out” marches have been big, organized and have capture
international news. Last week’s events have accelerated things with the party in coalition with
Dilma’s PT, the PMDB, apparently withdrawing support for the government (we’re due
confirmation of that this week coming) and many pointing to the PMDB head man and current
country Veep, Michel Temer, as the man who could take over from Dilma in the top job if her
head rolls.
It is possible that the PT government falls in the near future and then we’ll either have a new
coalition formed or a call for a new Presidential election. It’ll be wild and hairy on a pure politics
level, but we must also be clear about the causes of the scandal. Corruption isn’t a new thing in
Brazil, it’s definitely not a new thing in Brazilian politics. What’s new is that the PT Worker Party
has been (just about) caught with its hand in the till, after basing much of its rhetoric before
Lula swept to power on just this type of corruption. Socially it’s a big thing in Brazil to have a
quasi-proven case as big as this, but it’s not going to affect the fabric of the country, there’s
nothing really new on a practical level except that a bunch of people have been found out.
In mining news it’s sad, it’s not unexpected, but it’s true that the biggest story in the mining
world this year (not just the region), the Samarco tailings failure that’s basically laid waste to a
large river, has become yesterday’s news in Brazil as well. As for mining activity, there’s been a
notable wake-up call in the region, perhaps nudged into action by the newly weak Brazilian Real
(though that’s rallied strongly in the last four weeks). Operating is always tricky in the country,
22

,
but the ones who know how to move and shake are now getting deals done. Lara Exploration is
a good example, three Brazil-specific deals in as many months and all at low cost.
Argentina: FDI Friendly up 1 point, Geopolitical Optics up 1 point
Mauricio Macri clocked up his first 100 days, the bold holdouts have their deal, mining
companies have been making all the right noises about what they see (so far). On the surface
things are getting better for Argentina and I’m beginning to think there’s a 2016 trade potential
on the country brewing, but we’ll have to be selective about the specific vehicle.
Last quarter I docked a point from Argentina’s “Internal national political stability” score due to
the “be careful what you wish for” theory, something I expanded upon slightly in IKN348 dated
January 10th. Here comes a chunk of that prose from that day, not because I want to fill space
but because the way Argentina’s political scene has developed from this point would do well to
have this as a reference, to compare the things that have gone as expected and things that
have taken surprise turns.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
“Anyone who thinks Peronism has just been dealt a mortal blow via
the election of Mauricio Macri and believes that Argentina is about to
change its course of history in some immediate and definitive manner in order
to join the club of “acceptable developing nations” (or whatever else you’d
like to label them) is in for a rude awakening.
For sure we’ll get a Macri honeymoon period in just the same way as any
other new government in any other democratically run country. Some are
longer than others, but when this one in Argentina comes to an end the
backlash will be bigtime. Argentina is set for a rough ride at best in 2016 and
2017, a VERY rough ride most likely. I believe Macri is sincere with his desire
to drag Argentina kicking and screaming into the 21st century and that he also
firmly believes he’ll be doing right by his country to enact the type of policies
to do that. Of course he’s part of the very rich elite and a central figure in the
Club Of Business People, but he’s not a corrupt guy either and I do wish him
the best, if only for the good of a country which has a special place in my
heart. But I’m under no illusions either, it’s going to be rough and when it
comes right down to it, his win at less than 52%/48% difference was by no
means a landslide (against a candidate in Scioli who ran a poor campaign and
couldn’t unite the Kirchnerist base anywhere as well as Cristina).
It’s not easy to pinpoint the moment at which the honeymoon period might
end, but one of the more obvious ones at this point will be the eventual deal
struck between the “bond holdouts” (if you feel generous) , a.k.a. “vulture
funds” (if you don’t) led by Paul Singer and Elliott Associates. I’d guess a deal
gets done at some point this year and if it does, Macri can try to frame it any
way he likes but it’s going to go down like a lead balloon with Argentina’s rank
and file. It could be that one but as admitted it’s a really obvious call, so it
might turn out to be another matter such as the recent devaluation spinning
inflation further out of control, or the general macro downturn for commodity
producing countries, or law and order matters. Another factor will be Cristina
Fernández de Kirchner herself, who’s obviously in kickback mode at this point
but another foolhardy thing to do by any political analyst is to write her off or
consider her a spent force. As things stand today she’s still the best political
animal in Argentina (and I’d call that by quite a distance), plus her desire to
set up a family dynasty (son Maximo, sister-in-law Alicia) is well set.
In today’s piece we need to cover the general country political scene as well as the optics for
mining, so from here two chapters starting with the national.
23

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We have seen Macri begin well, on a personal Presidential level. His image is positive in the
eyes of Argentina and abroad with the recent visit of Barack Obama to the country a real fillip.
The country’s new macro direction is getting all the support and approval that you’d expect
from abroad. Lots of “At Last!” commentaries and “Open For Business” op-eds about the
country, the Very Serious Economists telling us how the reforms being enacted are the right
ones for the long run, etc etc.
Inside the country, supporters are saying the same thing (and this is one of the most educated
countries in LatAm, with a deep pool of political and economic debate on a daily basis.
Argentina). The debate about the country’s proposed direction has been sincere.
The reaction from the Kirchnerist section of the political spectrum has been muted so far, manly
because of a couple of high-profile corruption cases which have either come to light or have
been investigated more actively since the change of government. The pro-Macri people have
done a good PR job on this, the result being that very few high level CFK-supporters have been
willing to make a lot of noise (else perhaps become the next target of deep investigation).
Also, the debates that got the laws changed in Argentina to allow the bond holdouts/vulture
funds deal included a couple of clear wins for Macri. The main one was to see previous
supporters of CFK in parliament and congress change their position and vote FOR the deal. It
was a minority but they did flip-flop and they got called all the traitor words under the sun by
the CFK people as a result. Their argument boiled down to “We have no choice, something has
to be done even if we don’t like it”. Nestor turned in his grave.
Plus it may also (nearly) go without saying, but the majority of media companies and news
channels in Argentina have done a 180° and are now fervent supporters of nearly everything
the government does, instead of being the anti-everything entities of the last ten years. This
comment goes up to and includes the “Oh my gawd! What is she wearing? Ugh!” reports CFK
would get written about her attire now swapped for “Our elegant and stylish first lady”
regarding Macri’s wife. Even for one as jaded as I, it’s raised my levels of cynicism about “free
press” even higher.
However, it’s not all good news and the very latest events are clear negatives for Macri. The
first is the bond holdouts deal hasn’t quite become the rallying point against the new
government, but it is the polemic nation-splitter it was always going to be. “Sold out to the
gringos again” is the basic message of the CFK people, but I suspect they’re going to play the
long game.
Second bad one: Inflation hasn’t come down yet, in fact if anything it’s accelerating. This
wouldn’t be so bad under the old government, because they fed salary increases to match the
rise in prices, but the Macri neolib agenda means that suddenly the middle class in Argentina
can’t buy as much as they could. It will be up to the FinMin, who has promised that from the
second half of this year inflation will come under control, to deliver. If not, there’s a serious
problem brewing.
And on the subject of prices, there has been a series of “tarifazos”, i.e. big price rises in
services, with the latest round being train and subway tickets up 100%, water up as much as
500%, others too all on the back of the previous big increases in annual property taxes and
electricity. The rank and file Argentines are now getting a full dose of what they voted for (and
recall, Macri only squeaked it 52%/48%).
Moving on to mining-specific news and views, the main event this quarter has been the
confirmation that export taxes for mining have been eliminated. This is a good thing.
Here’s another thing (chart below), the forex rate. Hey, can you see any place when
24

,
government policy changed significantly? Yeah me too ☺. What we’ve seen since the Argentina
Peso (ARS) came out of its government-set
official rate is a forex to the dollar that’s
moved up to roughly match where the old
“Dolar Blue” street rate used to ride. The
difference now of course is that companies
working in Argentina also get this forex, so
paying salaries, buying things etc in dollar
terms is now a lot cheaper. We should look
out for the effects of this in the upcoming
1q16 financials of miners operating in
Argentina (I’d venture that the first place to
look will be McEwen Mining (MUX), a
company with a boss that’s not shy of
shouting, as it announces its 1q16
production numbers and may give extra
information on its quarter).
However, the most important thing about the Argentina mining scene hasn’t changed (and isn’t
going to anytime soon). All the national laws and goodwill towards the sector in the world does
NOT trump the policies and laws in place at a provincial level. The provinces are pro and anti
mining, you need to know where you are and who you are dealing with in the regions. Go San
Juan, don’t go Mendoza, others on request.
Finally, perhaps the most important point. From a strict investment point of view I think there
could (not will, but could) be a good window for a trade coming soon. The big tell will be the
inflation rate, watch that number like a hawk because if the Macri government can get
inflation ticking down (real down, not make-believe down) it’s the classic world signal for FDI to
start flooding into a country. If it’s going to happen it should start happening as from the third
quarter of this year and if so, we’re going to be long a few mining names by then because the
re-valuation could be strong and fast. The trick, as always, will be avoiding the rubbish and
being long the quality companies. And before you ask. Goldrock at Lindero is not quality, it’s a
Vancouver pump and should be avoided like the plague. I learned my lesson on that dog
project years ago when the company was Mansfield.
Colombia: National Government Miner Friendly up 1, Geopolitical Optics down 1,
Internal National Political Stability down 1 point
Colombia is always a wild ride, the last quarter no different to that. This time the mix includes:
• The Constitution Court, which has ruled in favour of the Páramo protection laws and
against companies such as Eco Oro at Angostura. In the same ruling the court also said
that the country’s PINES program for fast-tracking specific projects was all well and
good, but the projects will also need permits from regional enviro people. This part
didn’t go down well in the offices of Continental Gold (CNL.to).
• A bunch of companies have decided to take the country to international arbitration due
to the way they can’t develop their projects. The aforementioned Eco Oro wants
U$220m, some zero-visibility O&G pump/dump outfit called Tobie is claiming U$16.5Bn
(with a B), with the exploreco Cosigo adding its name to that case. Just the kind of
signal you don’t want to send a government keen on handing out exploration permits,
the one of “Yeah but if you mess us around later you’ll owe us half a billion”.
• Colombia’s tax authority is claiming a back tax payment from Atico Mining (ATY.v),
which is no biggie in monetary terms but does ad another layer of uncertainty about
the rules of the game in the country.
• But on the plus side Red Eagle (RD.v) has been developing its San Ramon mine on time
25

,
and in-budget (I swapped with Slater and his team just after PDAC, all is well) and
Cordoba Mining (CDB.v) has been making waves with a big price rise and expectations
for its drill program results, supposedly coming soon.
• In national news the dragging on of the Peace Talks (capitalized these days) beyond
the March 23rd deadline has brought a new round of unease. In 2015 Santos told
everyone it was a firm deadline, non-negotiable, come the day and he’s suddenly
flexible again. This decision has seen the right wing political groups (led by ex-President
Alvaro Uribe) on the streets in protest marches this week. The chances of the talks
collapsing have risen, this isn’t good for the country or for people who want to dig for
rocks there.
Colombia is weird and it’s losing protagonism in the region due to its messy rules, constant
changing of goalposts and macro-political quagmires. Guyana is one of the places that has most
benefitted from the Colombian mining inertia.
Potentially relevant countries
Ecuador: Unchanged
Ecuador’s mining sector put on the big show for the world at PDAC and has been trying to
make the headlines pre/post that event, the frame being “The New Frontier For Mining” and the
contents include how the laws are now clear (debatable), the country wants mining FDI (macro
scale true, tell the people at ground zero that though), there’s a new clear precedent thanks to
Lundin Gold at Fruta Del Norte (absolutely true, but that deposit is so rich that if it can’t be
mined successfully, nothing in Ecuador can). I have my small bet on the country now via INV, I
don’t trust this place very much though, bureaucracy of the wading-through-molasses variety.
Conclusion
And that wraps up this quarter’s edition of the Regional Risk Review. Argentina is the most
interesting jurisdiction because it’s showing real change, Peru will be fine whoever gets to be
the next President, Chile’s being all serious because they’re like that, Brazil’s woes are
overcooked when it comes to mining risk, I’m beginning to like it there for bargain hunting.
Market Watching
Regarding Dynasty Metals & Mining (DMM.to) debt and misconceptions (a rant)
Reader ‘FS’ sent the following in after reading my succinct appraisal of the fast-deteriorating
situation at DMM.to last week (13), one that even came before the company’s second NR Friday
afternoon (14) that told us of its employee walk-out (reason is simple: don’t pay people and
people don’t work for you). Here’s FS:
“Hi Otto. I read your note about Dynasty being insolvent and no longer a viable
economic entity. But I would like to know why you don't think there is at least some
value in its 3 projects with 6 million oz of gold and the Zaruma plant, equipment and
mine development plus all the technical work that's been done over the past 10 to 15
years.
“I would have thought competitors would be willing to pay say $10 per ounce in the
ground for the whole company. That would be 60 million dollars and would leave some
money for shareholders. What is wrong with this rationale?”
And here’s what I wrote back to FS:
Shares are better understood by their formal name 'equities' and they get
crushed to death by financial debt, it doesn't matter what price is put on the
supposed and apparent fixed assets. Look at what happened to Jaguar Mining
(JAG.v) shares during the re-structuring there. Or look at Colossus. Or Atna.
26

,
Or Allied Nevada (aka Hycroft). A company like Vertex One will not play cute
and pay their money to third parties when they can get the assets for no
money. Equities are behind in the queue, debt creditors are first.
Also, DMM has no money, 2700oz Au shipped or not. No money is very very
not good.
Many many years ago, somebody much smarter than I gave me a wonderful definition of
company shares, i.e. equities: “The small sliver of hope that sits between assets and liabilities
on a balance sheet”. To expand a little on that, I understand where reader FS is coming from
on certain levels, he sees the potential for a third party to move into DMM, pick up “cheap
assets” by “only” paying $10/oz, paying off the debtors, injecting capital, getting the company
running on a positive cash flow basis, reaping the rewards of acting on a “bargain basement
opportunity”.
Which may be so but first we need to ask questions. Who knows more about the DMM assets, a
third party or the people developing this company for over a decade? We need to consider the
never-ending delays, screw-ups and broken promises delivered by Robert Washer and his team.
We need to wonder about the high cash cost, the succession of operating losses and the way
the company can never seem to deliver on its development programs. And why workers have
had enough and walked out. And Ecuador (let’s not even go there today). To cut to the chase
we need to consider the word “value”, the one used by FS in his mail, a little more carefully.
When it comes to balance sheets and fixed assets, within reason a company can claim the asset
value it likes and if it decides not to cut the value of the thing it owns from time to time (i.e.
impairment or write-down) it’ll stay that way. Examples:
• If Argonaut Gold (AR.to) thinks its Magino project is worth the same (in fact more) than
the $341m it paid in October 2012 for the property, when gold was at over U$1,700/oz,
and doesn’t write down a bean of its value because it claims that if gold stays at
U$1,142/oz over the long-term it will be able to re-coup all the price paid...well, they
can do just that if they want (and my stars, they have).
• Topically (15), if Kaizen Discovery (KZD.v) magically makes its $4m purchase into a
$12.5m asset without adding a single drill hole to Pinaya then we can sit back and
applaud (or laugh).
Two examples, we could play around with dozens but the point should be clear: Just because a
company says it has an asset, it doesn’t mean that it is an asset. An asset that does nothing for
your company apart from level charges and lose money isn’t one, it’s a liability (or at best a
non-performing asset). Or as stated in IKN351:
A billion ounces of uneconomic gold is worth zero dollars and zero cents because if it costs more
to get out the ground than you can sell it for, it’s worthless. But hey let’s up the ante because
according to USA’s oceanic people NOAA, there are around 20 million tonnes of gold in the
world’s seawater (3). In old money, that’s 643 billion ounces (yeah, with a B). Not only that, but
about twenty seconds on Google will show you that people have spent time working out
successful methods for extracting that gold (4).* But despite there being oodles and oodles of
ounces of gold, out there, identified and available, they’re all worth nothing.
Combine the misconceptions of “in-situ gold value” and the magical accountancy so prevalent in
the junior mining world and I find myself naturally circling back to DMM to wrap this rant up.
After making decent money in a DMM trade way back when, then losing about the quarter of
the profits in a bad second trade afterwards, it just so happens to be a company I’ve studied
carefully watched over the years and...yup I’ve never been back. But rather than me again,
here’s what A. Mining Professional told me just a couple of weeks ago because he nailed it so
well. He’d met with Washer at PDAC, was on the receiving end of a romancing, knew I knew a
bit about DMM and asked me for an opinion which I gave in no uncertain terms. He looked
more carefully and...
27

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“... I downloaded the three 43.101 reports on Friday (and) had a glance through the
attached on their operating Zaruma mine this evening. Shocked, gobsmacked,
appalledD take your pickD there are so many deficiencies in this report I wouldn’t
know where to begin. That this is the basis for the mine plan and business is
shockingD.
BTW, the Dynasty Goldfield vein target, there great hope is comprised of 110 veins in
a polygonal resource. Yikes!
There are sometimes interesting fights that go on when a company implodes on debt but has
an asset hanging around. A few examples that come are San Gold, Rubicon, Gran Colombia,
and even Pacific (PRE.to) in the O&G sector. People swoop in on the distressed, pick over the
asset book and try to find value. More often than not they don’t and that’s largely because of
something of the utmost simplicity; If the assets it has are (or ar still) good ones, the company
wouldn’t have got into financial trouble in the first place!
Bottom line: DMM is going bankrupt because its assets are not assets, nobody will jump in to
save them from their creditors, those creditors will hit the non-compliance button and people
holding equities that day will get a sharp lesson in why balance sheets are the single most
important financial documents for companies. Perhaps they’ll end up selling the mill to INV
Metals, or perhaps somewhere down the line after a restructuring a newco rises but if it does,
you can bet any money you like that the current equity holders will have been diluted to a
Pacific Ocean scale.
Minera IRL (IRL.to) (MIRL.L): The resurrection underway
With a news release from IRL last week (16) that named Frank O’Kelly as a new director (Daryl
Hodges in particular must have choked on his cornflakes seeing that name and new position, oh
how very sad...not) and the decision from Eric Olson “to be resigned” from his post of COO (in
which he did big fat nothing), you don’t need me to tell you that the situation in our 2015
trainwreck company Minera IRL is improving. I’m happy to report that I’ve started to field a few
mails from subbers and nonsubbers alike on the subject again, which is anecdotal for sure but
another indication of the de-frosting going on. Last week I promised more information, I’m still
going to dose things carefully but I can add a few background bits and pieces to the jigsaw
puzzle. The bottom line, however, is simple: I wasn’t joking when I said a couple of weeks ago
that I’m very optimistic about the future of Minera IRL from a retail shareholder’s point of view.
Let’s start with marketing trip news and it’s no big secret that new director Frank O’Kelly and
Diego Benavides were in Canada Monday through Friday last week, marketing the IRL story in
some specific places in Toronto and Vancouver. For what it’s worth They were also tackling in-
situ some of the remaining problems caused by the Canadian usurpers and and wannabe asset
strippers led by the disgusting pairing of Chuck Higgins (Fasken) and Daryl Hodges (nowhere,
and let it remain so), but what we should care about are the potential positives from the trip
and I heard from three non-IRL sources who talked to O’Kelly and/or Benavides that the
message was well received and there’s a lot of positive vibes for “New IRL” once things are
formalized and the company is re-listed.
That should be soon and the latest off-record from the company (17) is that they want to be up
and listed in Canada again this month, but I urge caution on that timeline. I have reason to
believe it will take just a little longer than one calendar month to get the insides of IRL officially
sorted out and rubber-stamped, so don’t start fretting if news doesn’t come quite as fast as
we’d prefer. I don’t know exactly what exchange will take the new listing (IRL is keeping that
one very close to its corporate chest) and if I had to guess I’d expect it to re-surface on the
TSXV, but rest assured that the process is underway.
At one point last week I grabbed a coffee with a couple of the team members there and got to
hear that the combination of new optimism and the weeding out of many of the problem
members of the company (let’s leave it at that) means that the atmosphere in IRL Lima has
improved immeasurably. Not only that (and despite the best efforts of scum such as Jaime
28

,
Pinto to suggest otherwise) the vast majority of local investors were always and continue to be
wholly supportive of Team Benavides (largely due to the strong financing deal secured with
Cofide) and are happy that his side is apparently coming out as winners after this long and
sordid corporate battle.
I will add one more thing, a personal comment that won’t be repeated. I knew Diego Benavides
before this problem blew up in our faces in mid-2015, but up to that point he was always the
second person in-line at the company for my contacts and so-forth, my direct point of contact
was always Courtney Chamberlain (RIP) who I also considered a friend. Over the course of
2015 I got to know Diego more and in the time of the IRL troubles I make no bones about it,
he’s become a personal friend too. That’s necessary background for the personal comment
coming up now. For one reason or another I haven’t seen Diego since early 2016 (and then it
was only a fleeting visit) and we’ve both been busy doing our own things for the last few
weeks, we haven’t even exchanged over the phone recently (though we swapped a non-
business mail last week). But all the same, I’ve been able to watch carefully the way he’s
conducted the company so far in 2016 and I’ve been mightily impressed with his leadership of
the company this year. Yes 2015 was hellish and most of the time the good guys were running
around trying to put out the fires set by the bad guys, but this year I’ve witnessed an excellent
business leader in action and it’s added even more confidence to my call that IRL is going to
rise again and will create value for us, the retail shareholders.
With the filing of the delayed financials, I’ve been asked by a couple of you whether I’m going
to re-start coverage of the stock. The answer to that is “not yet” but I will as soon as it’s re-
listed and available for active trading. I’ve also been asked for an estimate on what price range
it might trade come the day of the re-listing, but that’s going to wait too (I don’t know all the
details, there can be devils in those things, there’s no need to play cute guessy-guessy until
trades are available).
Conclusion
IKN360 is done, we end with bullet points:
• A long edition today, it’s run to over 18,000 words so I’m not going to fill up much
more space. The two takeaways from this week are that 1) I still think gold has some
more to drop and as a result I’m keeping the majority of my powder dry and 2) I’m
shorting some HudBay (HBM), for the reasons outlined in the fundies section.
• And B2Gold traded well again last week, which is good.
• As for the regional risk, Argentina now has my attention but I’m not in a rush to get
over-long there yet. Inflation data will be key and if the Macri team are true to their
plan that should start indicating the right things in the second half of this year.
• Recall that I’m not a gold bear, I’m only calling it modestly lower in the near-term.
That’s because I’m not a goldbug either, it’s not against my religion to see downside in
gold on occasion. A gold bull isn’t necessarily a goldbug, beware religious extremism.
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
29

,
Footnotes, appendices, references, disclaimer
(1) http://www.smh.com.au/business/markets/golds-record-first-quarter-even-surprises-the-bulls-20160331-gnvsiu.html
(2) http://www.marketwatch.com/story/gold-headed-for-best-quarter-in-nearly-30-years-2016-03-31
(3) http://abcnews.go.com/Business/wireStory/investor-derby-gold-won-quarter-stocks-win-long-38086166
(4) http://incakolanews.blogspot.pe/2016/03/the-massive-headline-grabbing-march.html
(5) http://incakolanews.blogspot.pe/2016/04/louis-lobito-little-wolf-james-of-casey.html
(6) https://www.aurubis.com/en/en/corp/copper-mail/text-copper-mail
(7) http://finance.yahoo.com/news/focus-provides-bayovar12-phosphate-project-130726975.html
(8) http://finance.yahoo.com/news/focus-announces-positive-prefeasibility-study-133000662.html
(9) http://www.shfe.com.cn/en/MarketData/dataview.html?paramid=weeklystock
(10) http://finance.yahoo.com/news/copper-fox-annnounces-2016-schaft-100000408.html
(11) http://finance.yahoo.com/news/copper-fox-announces-2016-first-180000992.html
(12) http://elcomercio.pe/politica/elecciones/gfk-cuales-son-escenarios-eventual-segunda-vuelta-noticia-1891188
(13) http://incakolanews.blogspot.pe/2016/03/the-amazing-thing-about-dynasty-metals.html
(14) http://finance.yahoo.com/news/dynasty-announces-temporary-delay-zaruma-023755034.html
(15) http://incakolanews.blogspot.pe/2016/04/kaizen-discovery-kzdv-and-power-of.html
(16) http://incakolanews.blogspot.pe/2016/03/the-two-best-bits-from-todays-minera.html
(17) http://incakolanews.blogspot.pe/2016/03/minera-irl-irlto-report-in-todays-peru.html
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
30

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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
31

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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
32

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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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