IKN #363Premium

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The IKN Weekly
Week 363, April 24th 2016
Contents
This Week: In today’s issue, FOMC week and gold in the crosshairs, Ten days of metals and
miners.
Fundamental Analysis: NOBS report on Tinka Resources (TK.v).
Stocks to Follow: Overview, Sandstorm Gold (SAND) (SSL.to), Tinka Resources (TK.v),
Starcore International (SAM.to), INV Metals (INV.to), HudBay (HBM), B2Gold (BTG) (BTO.to),
Regulus (REG.v), Focus (FCV.v), Nevada Sunrise (NEV.v).
Copper Basket: Overview, Copper Fox (CUU.v), Cordoba Minerals (CDB.v), NGEx Resources
(NGQ.to), Reservoir Minerals (RMC.v).
Low Cost Producer Basket: Overview, Goldcorp (GG).
Regional Politics: Chile: The Mining Council of Chile criticizes current government policy,
Colombia: A ministerial re-shuffle, Peru: Polls suggest a tight vote in round two, Peru: Gregorio
Santos gets his congress members, Argentina out of default, Argentina: Chubut is as FUBAR as
ever for mining, Nicaragua: The desire to promote its mining sector.
Market Watching: Belo Sun (BSX.to): This week’s short, B2Gold (BTO.to) (BTG) reaches
target, dropped to ‘Hold’.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
In today’s issue
• We consider Tinka Resources (TK.v) and its diamond in the rough status in today’s
main section, the NOBS report.
• The beat goes on in the mining sector bull run, but signs of fatigue are coming through
too. A potentially important FOMC this week, so watch that Wednesday statement for
the carefully crafted wording.
• We note Belo Sun’s (BSX.to) problems this weekend and the chances it’s going to drop
tomorrow. Also this weekend, the person who manages Nevsun’s website is probably
out of a job.
• We drop B2Gold to “hold”, but it remains a Top Pick. If that sounds like a paradox,
check ‘Market Watching’ for more
• We run our eyes over the political world, including the first moves in the Peru run-off
between Keiko and PPK.
FOMC week and gold in the crosshairs
This week’s edition of The Janet Show is one of those where we all know there’s not going to
be any rate hikes, so the devil will be in the details and the statement will be combed for the
1

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hawk/dove phraseology and clues for the next round of meetings. We’ve been through the
psychology side of what the Fed does in recent editions (see the central “Fighting the Fed”
piece in IKN352 if you care enough) and this round isn’t going to be much different but we do
have a clear split of opinion on what the Fed is shaping to do in 2016 now. For simplicity’s sake
and focusing in on our sector of interesting, the camps can be classed as the “They’re done for
the year and that’s good for gold” people who that expect Janet & Co to obfuscate and
procrastinate its way past election day without touching the rates again, then the, “They’re
going to hike and that’s bad for gold” camp, arguably led by Goldman Sachs. The debate is now
crystallized and each has its supporters (who bet cash on the outcomes too) so this week’s Fed
meet may turn out to be more important for the price of gold than many assume.
As for trading, I expect things to be quiet coming into Wednesday, volatility to rule that
afternoon (which could go either way, depending on the commas or words they choose) but the
post-Fed Day action could turn out to be just as indicative. For example, gold getting hit
Wednesday afternoon wouldn’t surprise me much (assuming the statement message supports
that) but if buyers move in the hours and days afterwards you couldn’t want for a more bullish
real signal. For another example (and again we assume the statement supports such a move) a
gold pop to $1,300/oz next week is perfectly feasible, but a lack of follow-up buyers would
indicate that gold just isn’t ready to take it to another level and we’d need to dial back earnings
expectations in the mining sector.
We shall see on that. In the meantime and as often recommended at these moments, make
Calculated Risk (1) your port of call for all things FOMC next week. Independent, straight-
talking and with correct forecasts on the future that far outnumber the very occasional missed
interpretation.
Ten days of metals and miners
Here’s a chart of the last ten days in gold (GLD proxy), silver (SLV proxy), precious metals
miners (GDX proxy) and junior miners
(GDXJ proxy) and while gold has flatlined
over the period (you can argue it’s down
after that late Friday whack attack, that
doesn’t matter much) the stocks and the
Jekyll/Hyde metals have been enjoying
themslves all the same.
Though as noted in “Low Cost Producer
Basket”, the bullish run has transferred
successfully to the riskier end of the
mining sector and that’s good, but the
majors are now looking tired which means
they’re going to need gold to pick up
again if want the bullish atmosphere to
continue in the short-term. Another check
GLD gold holdings, March/April 2016 (metric tonnes)
of GLD holdings shows that we’re now 835
nearly 20 tonnes off the peak holding 830
825
moment. That’s about U$800m worth of 820
815
shiny metals and that’s not to be sniffed at. 810
805
800
No big conclusion or deep thoughts for the 795
790
end of today’s intro, I’m of the same 785
opinion as last week’s note. The near-term 780
775
volatility will play out but in the meantime 770
I’m a buyer and accumulator of precious
metals stocks because my eyes are now
fixed on longer-term horizons. My greed
glands want gold to hit a pothole and drop for a while, drag down the whole metals/mining
2
61/1/3 61/3/3 61.7.3 61/9/3 61/11/3 61/51/3 61/71/3 61/12/3 61/32/3 61/82/3 61/03/3 61/1/4 61/5/4 61.7.4 61/11/4 61/31/4 61/51/4 61/91/4 61/12/4
mt
source: SPDR GLD data

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complex and give me a window to buy more cheaply, but that’s about all I have. The main
message is simple, clear and it’s not going to change: Buy. Hold. Win.
Fundamental Analysis of Mining Stocks
This week we look at Tinka Resources (TK.v).
NOBS report dated April 24th, 2016
Tinka Resources Ltd. (TK.v)
Company Overview
Tinka Resources Ltd. (Canada: TK.v, USA: TKRFF, Frankfurt TLD.f) is an exploration stage
junior mining company operating in Peru. Its flagship project is the Ayawilca zinc/tin deposit in
the Pasco region of central Peru, located close to its second string Colquipucro silver deposit.
Current share structure is as follows:
Shares out: 149.807m
Options & Restr.Shares: 11.585m
Warrants: 39.801m
Fully diluted shares: 201.294m
Current share price: $0.185
Market Cap: $27.71m
Approx working cap per S/O: $0.025
All prices are in Canadian Dollars unless stated. Forex U$0.80=CAD$1
Today's TK analysis
No surprises in this one, at the end of the piece you’re going to read a buy reco because it was
called that way on Tuesday morning pre-open (see appendix 1). What you get below are the
main reasons for my buy call and for the TL:DR among you they are:
• TK is a well-run company, its management are in line with the shareholder base,
community relations are strong-
• We already have a 43-101 resource from Ayawilca that more than justifies current
valuations, plus the silver resource at Colquipucro that was discounted to oblivion by
the drop in silver but may be on the way back above residual value levels again.
• Upcoming newsflow is strong and contains catalysts, not least the new resource coming
soon that should see contained metal increas and a new tin resource added
• Zinc’s on the way back, getting fashionable in metals circles. TK hasn’t moved with the
others yet and offers tremendous near-term value if only for that
• The timing looks right. As long as zinc the metal maintains its mojo, it’s a winner in the
near-term and could add substantial value in the medium-term.
Management and major holders
Operations are headed by director, President and CEO Graham Carman, a straight-shooting
high reputaion geologist and mine man who got the job in July 2014 when TK and cousin
company Darwin Resources merged. No problems with him or the officer team and, as a check
of the financials below will show, Carman runs a tight and efficient ship with very little in the way
of excess spending on show. The board is a solid one, the backing of IFC and Sentient means
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something and in the newest director Mary Little (who replaced very recently the deceased
William Lee, RIP) TK showed it can attract a peer-leading mining executive (check Ms Little’s
CV for more details, it’s an impressive one).
The biggest shareholders are The Sentient Group who hold 32,144,223 shares, or 21.46% of
shares out, then the investment arm of the World Bank, the IFC, with 20,930,232 share or
13.97% of shares out. Those are pretty big chunks of shares kept away from the float and that’s
a good thing, on the other hand it’s an impediment for more liquid trade which is something this
stock would benefit from greatly. Another negative on the share structure is the officer/director
holding that come to just over 2.8m shares, less than 2% of shares out. That’s not much skin in
their own game.
Previous coverage of TK.v in The IKN Weekly
We’ve mentioned the company on a couple of occasions since then (maiy in small pieces in the
‘Market Watching’ section of The IKN Weekly), but the last time we took a close look at TK.v
was in the supplement of IKN326 dated August 9th 2015, which was the site visit report filed
after I’d gone up to the company’s Ayawilca/Colquipucro project. I’m not going over all that note
here (and if you don’t have it just mail me and ask, I’ll send you a copy over) but here below is
an exceprt and how the conclusion section began on that day:
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
FROM IKN326
Conclusion
I like Tinka Resources (TK.v) and after visiting its project last week I like it even more.
What you have is the following:
Pros
• A serious junior doing professional exploration work.
• Upside to the resource virtually guaranteed from the current drill program.
• A resource that's already at a reasonably big and interesting level, in the right
address in the right country.
• Decent community relations
• Plenty of potential blue-sky upside from further exploration potential, particularly
if and when TK.v gets to stick a few drill holes in that "Colquipucro East" area of
its concession.
However, we also need to face cruel reality at the moment.
Cons
• Nobody likes mining stocks today, let alone explorecos, let alone base metals
explorecos.
• The zinc price is in the dumpster and trending lower
• For my taste, the bare minimum market price you'd want for zinc is U$0.90/lb
and in reality U$1/lb is my real world cut-off level as things stand.
• There's not going to be a rush to own this stock in 2015.
And because of that I'm not a buyer of Tinka Resources (TK.v) today. I prefer to keep
money sidelined and if there's anything that's going to tempt me in, it's very likely to
be a gold/PM play rather than an industrial metal dependent on robust Chinese
economic growth.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
IKN363 back. It’s notable that the four “cons” in that list have seen their arguments diluted in
the last three months or so. People suddenly like mining stocks, zinc is trending higher, we’re
not at 90c/lb for Zn yet but it’s getting close, up from 70c to 84c or so, finally 2015 is gone
(and indeed, there was no rush to own the stock. Something else that went in the conclusion
section of that piece in IKN326 was this: “...if zinc and/or the industrial metals turn around, this
stock at these price levels is one of the best ways you could play the rebound.” As it happens
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and as pure coincidence, TK.v was priced at 18.5c that weekend, exactly the same as today.
Macro matters: A thought or two on the zinc price
And as it happens, Zn the metal is showing reasonable signals of turning around after a long
period in the dumpster. Here’s a zinc price chart (courtesy Kitco) that shows just how low this
metal’s price dropped before finally finding a bottom in the first days of 2016. As for
fundamentals, the second chart stolen from Scotia last week (I make no apology for that,
they’ve stolen my stuff from the blog too many times to be able to complain) shows how world
inventories for zinc have continued to drop.
Current world inventory, including the semi-shadow bonded warehouse scene, is 748,000mt
which works out as 18.5 days of world consumption, that’s tight-ish without being at crisis levels
for any end-user who’d want to galvanize some steel in quick order. On this score Zn does have
an image problem, it’s become the Boy Who Cried Wolf metal over the years with industry
sellside brokerages in particular seemingly warning us every year that “next year will be the
year” for Zn prices without a big price pop ever materializing. However this time could well be
different and there are plenty of large Zn (or Zn component) mines that have gone offline for
good in the last couple of years, as well as other in mothballs because they’re uneconomic at
current levels. I personally am not convinced of zinc as “This Year’s Metal” but there’ little doubt
that the selling into the end of last year was very overcooked and the metal has at least got
5

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back to what can be considered a reasonable baseline. It wouldn’t take much of a speculation to
push it over $1/lb from here, even if it didn’t turn out to be a sustainable move.
Enough macro, time focus on TK and explain why it’s knockdown value at these prices
Updating on Ayawilca (and Colquipucro)
In 2015, including while I was there in August, TK got busy on a drilling program at its main
Ayawilca project that looked to expand the resource and get more contained metal under 43-
101 compliance. We haven’t had the resource update
yet (and I can’t blame the company for that, the awful
way the market’s been) but TK now tells us that the
resource update is out soon and will be with us in the
current quarter (i.e. between now and the end of
June 2016). That’s a good thing and on revisiting my
site visit notes, the interesting by about the 9,000
metres they drilled (the plan was for 10k, they came
up a little short) will likely be results of the “Central
Ayawilca” zone you see on this site map (right, ripped
from the latest corporate presentation (2)). That’s
because TK was drilling that zone to see if they could
hit the same type of mineralization they found in the
other zone (the pink lined areas) that make up the
currently published resource and as it happens,
results from that freshly drilled core I saw on the visit
clearly showed mineralization coming out of that
middle zone. Now for sure it’s way too sketchy to get
a dumbo like me saying, on the basis of two days on
site, that yes the’ve definitely managed to join up the
dots and connect the resource. But evidence was of
the right type and what we certainly can expect from
the resource update, out soon, is an expanded
number for the zinc resource.
We can also expect a first pass number for a tin
resource at Ayawilca too. The discovery of tin
mineralization at depth was a surprise for most
concerned but as time has gone on, the potential economics of a tin component have become
clear. It would need a second circuit (tin would report to the minor copper mineralization found
in that part of the deposit, not to the zinc/silver (indium?) circuit and the depth of the tin-bearing
rock means it might be developed at a later stage than any zinc operation, but it’s there and as
from this current quarter, with the new resource update, we’ll get a better handle on how much
TK thinks is there and what it can being to the project economics.
On the subject, here’s the current overview table of the 43-101 compliant resource at Ayawilca
(not Colquipucro, which is the separate silver target 2km away and has its own 43-101). This is
about to go out of date so it’s the last time we’re going to care about these numbers, but it does
show what the four known zones at Ayawilca are assumed to hold on an inferred basis.
That’s rock for an 18 year mine life at 2,000 tonnes per day, it’s good zinc grade (to give a
rough comparative, add the zinc and the lead at Trevali’s operating Santander mine in Peru and
you have the same as the zinc at Ayawilca), a bit of lead and smallish silver (Trevali’s
6

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Santander gets perhaps 42 g/t Ag) and the potential to add to things nicely with the indium
component (but it’s a risk to rely on a b-yproduct like that as an integral part of project
economics). Those are the right ingredients and be clear, those numbers are about to get
bigger this quarter.
As for project economics, it’s a tough one to nail down at this early stage and even TK isn’t
expecting to deliver a PEA before the end of 2017, but we can do a “what’s that rock worth?”
type of calculation and that’s this table here. Notes below
TK.v at Ayawilca: Estimated Zinc Equivalent (ZnEq) value per tonne (All USD)
Zn price (U$ Lb), assumed 90% Zn recovery, 70% by-product recovery, mine owner paid 95% of spot
% Zn 0.70 0.75 0.80 0.85 0.90 0.95 1.00 1.05 1.10 1.15 1.20
4.00% 52.78 56.55 60.32 64.09 67.86 71.63 75.40 79.17 82.94 86.71 90.48
4.50% 59.38 63.62 67.86 72.10 76.34 80.58 84.82 89.06 93.31 97.55 101.79
5.00% 65.97 70.69 75.40 80.11 84.82 89.54 94.25 98.96 103.67 108.38 113.10
5.50% 72.57 77.75 82.94 88.12 93.31 98.49 103.67 108.86 114.04 119.22 124.41
6.00% 79.17 84.82 90.48 96.13 101.79 107.44 113.10 118.75 124.41 130.06 135.72
6.50% 85.77 91.89 98.02 104.14 110.27 116.40 122.52 128.65 134.77 140.90 147.03
7.00% 92.36 98.96 105.56 112.15 118.75 125.35 131.95 138.54 145.14 151.74 158.34
7.50% 98.96 106.03 113.10 120.17 127.23 134.30 141.37 148.44 155.51 162.58 169.65
8.00% 105.56 113.10 120.64 128.18 135.72 143.26 150.80 158.34 165.88 173.42 180.96
8.50% 112.15 120.17 128.18 136.19 144.20 152.21 160.22 168.23 176.24 184.25 192.26
9.00% 118.75 127.23 135.72 144.20 152.68 161.16 169.65 178.13 186.61 195.09 203.57
source: IKN calcs
Notes:
• I’ve decided to run with the current resource’s 7.7% Zinc Equivalent (ZnEq) grade, even
though a lot of that is indium. This is really early stage stuff, I want to get a handle on
what is possible, there are plenty of pricing options to help compensate if you prefer and
I’ve also adjusted down the Equivalent parts to 70% recoveries, another compensation.
Also and perhaps most importantly, we’re about to get tin (and a little copper) thrown
into the metals mix and that’s going to be more valuable than indium.
• By choosing the 7.0% and 7.5% ZnEq bands as best fit, mine dilution is roughly
accounted for in the model.
• The different price bands are represented by ZnEq per pound. I’ve highlighted a couple
of the boxes, such as the 7.0% ZnEq at an 85c/lb market price that would make
average tonne of rock at the known Ayawilca deposit worth just over U$112. With mine
operating costs certainly a lot lower than that, it makes the project economically viable.
• Regarding cost assumptions, production cash costs of equivalent mines such as
Fortuna Silver Caylloma in Peru (U$81.77/tonne in 4q15, $U$85/tonne over the hwole
of last year) and Trevali Santander (which claims a low U$40/tonne cost but hides that
nearly the same amount is paid to operator Glencore as a mine operating charge) as
examples of the typical cost band for the type of mine size opertion that would
eventually be built at Ayawilca. In sum, total operating cash costs of around $80/tonne
are feasible for Ayawilca which makes even 7.0% ZnEq and 85c/lb a feasible economic
scenario (do the math, it’s around $23m in annual free cash flow for a 2,000tpd
opertaion). Needless to say, ZnEq at $1.00/lb turns any mine at Ayawilca into a cash
cow (Approx $36m FCF under similar above circumstances).
• The point I want to make with this part of the anal ysis isn’t to build a mine plan and
intricate economic model, it’s to show that a zinc mine at Ayawilca passes the smell test
with flying colours. Those colours will get even better soon when tin and the expansion
of the zinc resource are factored in this quarter.
But that’s far from the only catalyst awaiting TK.v this year.
7

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Exploration upside
TK’s current efforts have been on getting permits to drill in key targets in and around Ayawilca.
This map from the same recent corporate
presentation does a good job in explaining
things.
TK is after two separate permits and CEO
Carman told me last week that with luck, the
first one that covers the large area inside the
red border and then the second separate one
that covers the area inside the black border
should be awarded in the third quarter of this
year (with one before the other, perhaps as
early as July but that’s not something the
company can ever guarantee, this is Peru
bureaucracy and not anywhere in the world
of the logical, plus the govevrnment
changeover about the happen may slow
things down). Inside those larger areas are
eight targets TK is keen to drill, due to the
tpye of geological detective work that
managed to find the original blind deposit of
Ayawilca. I’m led to understand that areas 3,
75 and 7 are up on the list of the ones they’d
like to drill first.
A lot of the work has been community
related, with plenty of meetings with the
small outliying population clusters to make
sure everyone is onside, locals are all aware
of who TK is and what they want, building trust and not getting pushy in their ambitions. All that
takes time and if the result is indeed two new and larger EIA permits as seen above, it will be a
real feather in the cap of the TK community relations teams. And then more drilling happens.
Colquipucro: Revaluing at last?
And so far I haven’t even mentioned Colquipucro. Once upon a time the at-surface 43-101
compliant silver resource located just 2km from Ayawilca was the flagship asset of the
company. This table from its February 2015 43-101 technical report gives an idea of the
resource at this part of the system:
We need to note the weaknesses in this, starting with the $24/oz Ag price cut-off which is still a
mile above where we are today. The cut-off grade of 15g/t is indicative too, because although
it’s not as simple a calculation as that we can infer that TK and the 43-101 compilers believed
8

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an operating cost of around U$12/tonne was feasible. If so, that cut off would have to be at 24
g/t or so now, the rest goes to waste. But still, what Colquipucro has is nearly 19m oz Ag
(indicated and inferred put together) in the higher grading lenses that run at around 3½
oz/tonne. It’s also an exposed deposit, it’d be open-pit mined from surface at a very low strip
rate and a low cost machine for sure. While silver was in the dumpster resources such as
Colquipucro were basically worthless and priced to market that way too, but with silver on the
way back, there may be life yet in this part of the TK portfolio. We should also remember that it’s
just 2km from the main Ayawilca project and it’s not beyond the realms of fantasy to consider
these two as a single district or polymetallic play because with the upcoming resource, TK will
boast significant levels of zinc, silver, tin, indium as well as smaller kickers in lead and copper.
But that’s not all either, because even the upcoming permitted areas for drilling are but a small
part of the overall TK land package. If you check the company literature you’ll see that the
abovemap is in itself just scratching the surface of TK’s full land package includes other newly
discovered target areas that could yield more resource in the years ahead. This is a very
prospective zone and on meeting CEO Carman last week it was notable to hear how the
company now considers itself not just as a resource at Ayawilca, or even a silver resource at
Colquipucro, but a district-scale play with an increasingly valuable total land package.
Financials overview
NB: Please note that, as TK.v reports in Canadian Dollars, that is the default
currency unless otherwise stated in this and other parts of today’s report. Also
note that TK’s financial year ends September 30th so I’ve labelled charts with
quarter-end months to avoid confusion.
This is a tightly-run ship, something that main sponsors Sentient and IFC probably insist upon
when coming in as big sponsors of small juniors but less common is to see the junior keep to
the script in such a way.It’s also a pretty simple story so I don’t need to whack you over the
head with a dozen charts today, five or six
TK: Expenditures breakdown
is more than enough to make the main
1.2
points. Main point, in fact. 1.1
1
0.9
Starting with operations and the 0.8
expenditures breakdown chart here right. 0.7
0.6
As you can see from the Y-axis scale
0.5
these aren’t multi-million dollars numbers, 0.4
TK is small and is doing things the low 0.3
0.2
cost way. The two anomalies are
0.1
September 2014 and June 2015. The 0
column in 2014 is explained by 1) the
costs involved in merging Tinka with
Darwin in that quarter ended and 2) a non-
cash share based payment of $546k in the
“other” section, which is an official sounding way of saying they gve out incentive options that
quarter. As for June 2015 that was also an options incentive, also non-cash, for $448k booked.
Apart from that you can see just how tightly this ship is run. It’s worth noting that TK has
recently moved its head office in Lima to a cheaper rent property and on the site visit last year,
one notable was the lack of frills or specials at the company. Everything was fine and correct
and quality levels weren’t being skimped, but there was a clear eye on budgets at all times and
this shows when the financials comes out. Running a junior on expense burn of less than $100k
a month, which includes most officer salaries, is no mean achievement. For another example, in
the last five quarters TK.v has spent $17,000 on investor relations and by that I mean total over
the 15 month period, not $17k per quarter. A little over $1k a month on investor relations is as
tight as it gets and we can safely say this company has not been throwing lavish parties to wow
the brokerage or commentary world (though I will say I managed to get Graham Carman to buy
me a Starbucks coffee early last week during our chat ☺).
9
31.ceD 41.raM 41.nuJ EY_41.peS 41.ceD 51.raM 51.nuJ EY_51.peS 51.ceD
$m
office
professional fees
other
mgmt fees
source: TK filings, IKN ests

,
However and obviously, that’s not all the cash that gets burned at TK. The majority goes into
exploration of its properties (chiefly
Ayawilca) so here’s another chart that TK: Cash burn per quarter (proxy)
gives us a better idea of the total cash 3.5
burn on a quarterly basis (which is 3
non-exact becasue there are always a 2.5
few extras, but tallies closely with
2
balance sheet items for what it’s
1.5
worth). What we do is three things, 1)
1
take the total expanses number then
0.5
2) subtract the non-cash share based
awards (basically incentive options for 0
management) then 3) add in the
change in the “expenditures on
exploration and evaluation assets” line
item from the statement of cash flows.
Together, these give a very close representation of where and how much real cash gets burned
per quarter at TK.v and as the chart demonstrates, the company is seasonal with most
expenditures coming the the second half of the calendar years. This fits with the rainy season in
that part of the Andean Cordillera (January to April) and it also fits with the way TK.v goes about
its permitting applications, set to be approved as from July onwards in 2016 (all things being
well with the process at least). We can expect it to burn around $1m per quarter in the next two
quarters and then, assuming the next round
of permits come through on time (July or
August for the first one will be enough to get
going) something over $2m/qtr for the
following quarters until the rainy season
comes around again.
Which brings us to the balance sheet and its
story. Here are assets and liabilities and the
easy one here is the liabilities chart, TK runs
no financial debt in near or long term and
there’s only simple run-of-company stuff to
show. It’s the optimum situation, no more
needs to be said.
So to the assets chart. We see how the
cash injections into the company are
gradually capitalized into fixed asset
value, also how the cash burn trails the
current assets away (it’s nearly all
treasury) which shows up better in the
working capital position chart (below next
page).
I’ve strung out the 2016 projections on
working cap a little further because I want
to show how the current treasury is set to
be used. Burn is low in this company but
assuming the drill permits turn up in the
quarter to end September (4q on the TK financial calendar) they’re going to need more funds at
some point. Current treasury this weekend is around $4m and at a limit, they could make it out
the other end of 2016 but that’s pushing things, I’d expect TK would want to finance before then.
The logical time to do so would be once the permits for the next drill program are signed off and
in-hand, or perhaps if things suddenly go very well and the 36.5c warrants go in the money
before the end of May (see below for more). The company has so far used straight equity to
raise its cash and although there are other ways to get development money in these modern
times, it’s still the most likely route. But be clear, TK will need to raise cash in 2016 at some
10
31.ceD 41.raM 41.nuJ EY_41.peS 41.ceD 51.raM 51.nuJ EY_51.peS 51.ceD
$m expenses minus non-cash
share awards
Expenditures on exploration
and evaluation assets
source: TK data, IKN calcs
TK: Liabilities
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
31.ceD 41.raM 41.nuJ EY_41.peS 41.ceD 51.raM 51.nuJ EY_51.peS 51.ceD tse61.raM tse61.nuJ
$m
source: TK, IKN ests
TK: assets
30
25
20
15
10
5
0
EY_31.peS 31.ceD 41.raM 41.nuJ EY_41.peS 41.ceD 51.raM 51.nuJ EY_51.peS 51.ceD tse61.raM tse61.nuJ
$m
fixed
other current
cash&ST
TK filings, IKN ests

,
point and we the retail investor/trader need to have that clearly in mind.
TK: Working capital
10
9
8
7
6
5
4
3
2
1
0
-1
11
EY_31.peS 31.ceD 41.raM 41.nuJ EY_41.peS 41.ceD 51.raM 51.nuJ EY_51.peS 51.ceD tse61.raM tse61.nuJ tse61.peS
$m
TK filings, IKN ests
Here right is the evolution of the share count. We’re now at just under 150m shares out and just
over 200m fully diluted. On the F/D side of
the coin, the most interesting bit is the TK: Shares outstanding
160
13.55m warrants priced at 36.5c which
have a limit date of July 24th 2016. That’s 140
120
not so far away and I know that TK hasn’t
100
given up hope that they get back in the
80
money before they die. If they did and if
60
they were then all exercised (couple of big
40
ifs, but at least follow me on the line)
20
they’d bring in just under $5m to treasury
0
without all the fuss and bother of raising
via a placement. As around 70% of the
warrants are held by Sentient, it’s a fair
guess to say that if they make it to the
magic number (or perhaps even “close”
would be enough) most will become fully paid up shares with the treasury boost that goes with
such an operation.
The bottom line to the financials story is simple enough: You see a well run company with clean
and tidy nooks that puts the vast majority of its cash into its project, but it’s going to need
financing again, probably in the next six months or so. It shouldn’t have any problem tapping the
market for the small-ish raise it would need, the question is at what price it happens (or perhaps
it gets those warrants to do the work for by trading above 37c by this time next month).
Discussion and conclusion
This weekend TK.v has a market cap of just under CAD$28m. For that you get:
• A 43-101 compliant resource of 1.7Bn lbs zinc at economic grades, plus by-product
kicker metals, at its flagship Ayawilca project in Peru.
• The 27.5m oz Colquipucro silver deposit nearby which is low grade and currently best
considered uneconomic as a project, but the way in which silver is catching people’s
attention now may give this part of TK a new value.
• An soon to be released resource update on Ayawilca which we expect will both
considerably improve the resource count for zinc and also give us a first resource for
the potentially important tin resource.
• A new round of exploration and drilling set for the second half of 2016 with defined
targets to try and expand Ayawilca further. On top of that, the district play size of its
concession leaves a whole lot left to be explored. Consider that Ayawilca was a
completely blind discovery.
• A solid community relations program that is working well, to the point where the
company can put together multi-year access agreements and get large area under EIA
permit. I know this kind of thing doesn’t move markets up there, but down here we know
how important these matters are and TK is doing things the right way.
EY_31.peS 31.ceD 41.raM 41.nuJ EY_41.peS 41.ceD 51.raM 51.nuJ EY_51.peS 51.ceD tse61.raM tse61.nuJ
m S/O
source: TK, IKN ests

,
• A tightly-run structure that makes the most of its money. With $4m at bank today it will
need to raise later in the year in order to continue with its development plans, but it will
also be able to pick its moment strategically and the strong backing of Sentient and the
IFC isn’t lost on the sector, either.
All those are good things. As for valuations, I could run the cash flow model I have put together
on TK this weekend (it assumes TK builds a 2000tpd mine, sells Zn at 90c, ends up with 300m
shares out and values the company at 41c) but really, it’s way too early for that. I could also
wow you with the fact that TK today can be valued at 1.7c/lb for the zinc, all other metals for
free. That’s cheap. I could even put this comparative chart in front of you...
...and note that even after last week’s pop TK.v is behind the GDXJ benchmark and way behind
other Zn exploration plays in 2016 such as Arizona Mining (AZ.to, ex-Kerr Mines) or GPM
Metals (GPM.v) and its Australian Zn project. It’s ahead of Zn producer Trevali (TV.to) but then
again, that’s a dog with fleas and desperately needs a new project. Such as TK.v perhaps?
But the thing I REALLY like about TK.v are the catalysts to share price that haven’t been price
din yet, not even after last week’s rise. Back in August 2015 on the weekend of my site visit to
Ayawilca/Colquipucro, the stock stood at 18.5c. Today it’s at 18.5c. But the differences are
enormous:
• Then the junior market was chronically bearish and ignored, today it’s trending up and
rebounding fast.
• Then and give or take a penny, zinc the metal was at the same market price as it was
today but it was on the way down, and down further, finally bottoming out at under
70c/lb. Today it’s on the way back and the move has grabbed people’s attention
enough to move GPM by 100% and AZ by 200%. Why not TK.v?
• Since then TK.v has put another 9,000m of drills into the ground and has precisely zero
market cap boost to show for that.
• Coming very soon, month or two at the most, TK gives us a new resource estimate and
it’s highly likely we’re going to see significant growth in metal numbers at Ayawilca, not
least because they hit what they were looking for (when I was there) in the Ayawilca
Central zone and chances are they can link up the so-far disparate areas of
mineralization.
• Also in that new resource number we get TK’s first pass at the tin resource which is
likely to be a significant asset upside.
• Not forgetting the rebound in silver that is covered by Colquipucro.
• Since then TK has negotiated new areas to drill with the communities and will be able to
expand its footprint later this year. The comapny is pushing itself as a district play, the
next set of licences will underscore that.
So this isn’t a careful-economic-fundies play at the moment, it’s first and foremost a momentum
12

,
play on zinc because it does look as though, finally, that metals is going to put in an overdue
rally on price-friendly supply/demand fundamentals. It’s also a play on a company that should
not have been left behind in the recent upturn but, until last Tuesday at least, had been. It’s also
a trade with timing, because TK is about to deliver a resource update that hasn’t been baked
into its price at all, not yet anyway.
The IKN Weekly recommends Tinka Resources (TK.v) as a speculative buy and sets a 12
month target of 35c on the stock, representing an 89.2% upside from Friday’s close. Right
country, right timing and potentially the right metal (and don’t forget the tin bonus coming soon)
TK is also one of those rare explorecos that’s run well by experienced management that might
not hold a whole bunch of stock, but remain in line with shareholders wishes (Sentient and the
IFC help them remain in focus on that, but Carman and his team do it right anyway. The main
risk to the trade is a reversal in the price of zinc, but getting in at under 20c negates a lot of that
risk by simple pricing.
Want a cheap junior exploreco speculation with a live asset, a growth story, a good team and
upcoming newsflow that’s been unfairly ignored by the market. Want a stock worthy of a quick
and justifiable double in a suddenly rampant bull market for juniors? Look no further.
End of Report
Stocks to Follow
Two new stocks, so the benchmark this week is to take their prices as of last weekend, on list
or not. Of our ten open positions just the short in HudBay (HBM) was a loser. However it’s
worth pointing out that it was a big loser, down 29.8% on a week that saw copper go against
my call and move to the U$2.30/lb-ish range. All others put in gains, including the biggest
percentage moves in Tinka (TK.v up 27.6%) and Regulus (REG.v up 18.2%), as well as the
pleasant gains in absolute cash terms from Top Picks B2Gold (BTO.to up 5.6%) and Starcore
(SAM.to up 6.9%). Both of those beat out the GDX’s upmove and that’ll do for me.
With the additions of Sandstorm and Tinka last week we’re now up to ten open positions, five
less less than our self-imposed maximum of fifteen at any given time and getting back to a
more reasonable state of affairs. Seven are in the green three are in the red. So be it.
13

,
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to hold C$2.11 12-sep-14 C$2.45 16.1% Hit tgt C$2.50, holding thru
Starcore Intl SAM.to buy C$0.50 10-jan-15 C$0.62 24.0% Top Pick’16, Adding, 81c tgt
Long positions (in current order of preference)
Sandstorm Gold INV.to buy U$3.92 17-apr-16 U$3.98 1.5% StreamCo, now solid, new trade
Tinka Res TK.v buy C$0.18 19-apr-16 C$0.185 2.8% Top value Zn/Sn/Ag stock
INV Metals INV.to buy C$0.25 03-apr-16 C$0.495 98.0% Near-term trade for 2q16
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.08 -65.2% Now re-grouping
Nevada Sunrise NEV.v spec buy C$0.185 28-feb-16 C$0.285 54.1% V small Li spec play
Lara Expl. LRA.v spec buy C$1.15 08-apr-12 C$0.46 -60.0% solid biz model, waking up
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.44 46.7% 2016 looking better
Short positions
HudBay Min. HBM short U$3.60 03-apr-16 U$4.31 -19.7% new short, near-term trade
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.
Sandstorm Gold (SAND) (SSL.to): Position opened. I bought my chunks Monday, SAND
then traded above and below U$4 for the rest of the week. I was heartened to see a
downgrade on the stock come out of RBC (from outperform to perform) as its argument fails to
take into account the “new serious” aspect of SAND. I’m happy to have got in at my price and
as this one is a longer-term set-up it will be given the necessary time to evolve. I’ll be happy to
add on weak gold days.
Tinka Resources (TK.v): Position opened. As per the Flash update of last Tuesday
morning, this is the newest trade on the list. Lots more about TK.v in the NOBS report above,
here we note the reasonably brisk trading seen in the stock last week. I’ve had plenty of
feedback about the 2m shares traded on Tuesday, the day of the reco, and for what it’s worth I
looked back at the trading data to see that the last time TK.v did 2m volume in a day was 2012
and for good measure, the last 1m+ volume day was in April 2014. All a long time ago. But
what pleased me more was to see TK.v trade over 100k on the subsequent days (Weds k,
Thurs k and Friday 463k), all in the 18.5c to 21.5c trading range we saw on Tuesday. This
company’s stock has been painfully illiquid for far too long and just getting a bit of semi-
tradable volume running through it on a daily basis is, in my considered opinion, far more
important than a single 2m share day. If it continues it make TK.v a viable option for people
looking to the Zn space and seeing the obvious limitations of the Dilute-O-Matic Glencore slave
Trevali.
Starcore Intl (SAM.to): Added a few. On Monday I added a small tranche, enough to click
the IKN Weekly cost average up to 50c. As for the stock and the way it’s trading in general, it’s
not massive volume but over 500k traded over the five days is a 100k or so average on a daily
14

,
basis and a vast improvement on how things were until very recently, so I like that. It’s being
bid up too, good in some respects
because I get to use green ink on the
above table but truly it’s irking me,
because I’d like SAM to drop back a bit
so I can buy another tranche at a better
value level. Let’s see what happens with
the Fed this week coming because if the
news comes out gold-bearish, it would
only take one or two skittish sellers to
get this stock tumbling back...at which
point I will add more without a second
thought. My general idea is to add in a
small and calm manner, time to time, as
the fruits of this labour will come in the
longer-term.
In other news, several of you have written in to note that SAM has no US OTC/pinksheet listing
available. Yes, that’s true.
INV Metals (INV.to): Real strength here and it might not be just INV that’s getting the love
these days. This shows four Ecuador-exposed Canadian junior stocks over the last ten days,
which covers the time since the first big promo pump ran on Lundin Gold (LUG.to) by that
Stansberry person. Since that time LUG has
managed to hold onto its gains but what we
may have been seeing is a move by market
followers to find the next thing in the country.
I’d agree INV has been a bit of a star of the
show (and happy about that) and I’d also be
the first one to point out that stocks like
Salazar (SRL.v) have very little to get hot and
sweaty about, but even that one has found a
bid or two to catch in the last few days. That’s
not even mentioning Dynasty (DMM.to), which
for some reason unknown to sane human
beings got bought up to double its share price
last week before losing most of those gains in
the last couple of days of the week, the selling most probably due to the simple fact that the
company is an utter piece of crud and is basically bankrupt.
There may be a whole “let’s find the next Ecuador thing” going on and that suits me, the INV
long, down to the ground. INV has hit and now gone through my 48c target price but I see no
reason to take profit before it comes out with its PFS update; we’re likely to get a round of
pumpo on the back of that which is when I’ll sell. Even if things go badly I think I’m in at a nice
price from here. Holding until the updated PFS shows, then we’ll see.
HudBay Minerals (HBM): As also noted in “The Copper Basket” below, I’m right at my stress
test limit for this short position now. If copper moves meaningfully above U$2.30/lb I will
gracefully admit defeat and cover at a loss (always part of the plan) but I’ll also be clear with
you that I’m stubborn enough to wait out the last couple of days before HBM reports and that
happened the evening of the 28th (i.e. this Thursday coming) because another part of the plan
is the assumption that its 1q16 numbers won’t please the parts of the market that don’t pay
enough attention and just buy across the board. Those who watch HBM carefully know 1q16 is
scheduled to be soft, just how soft we’ll see (and watch those costs, too). As for the 1q16
numbers, market consensus is a wide ranging -12c to +8c EPS with the median at -2c, which is
a numerical way of saying that nearly all the anal ysts who cover this stock are going to be
wrong. Which is another way of saying that nobody has a clue. No change there.
15

,
Bottom line: This Thursday is D-Day for my short position and pride won’t get in the way of my
covering and taking my loss on the chin if necessary. In the meantime, the action in copper
market pricing will determine a lot too.
In other news, this is something that I deliberately did not put up on the open public blog last
week because of my personal short position, I didn’t want to leave myself open to accusations
of shilling. On April 16th (and confirmed (3) by Peru’s OEFA enviro people on April 20th) yet
another 30 tonne truckload of concentrate out of Constancia was spilled in an accident outside
the mine. The area affected was around 200m2 (and to its credit, the company went about
remediation and recovery of the affected area quickly this time) and thanks to the lack of
strong winds, environmental damage was minor. Plenty of different Peru media channels
carried the news (here’s a sample (4) (5) (6) but unsurprisingly, you up North didn’t get to hear
a whisper. By my reckoning this is the seventh (crazy but true) truck spill accident out of
Constancia since the mine started up last year and notably, the last time one happened it
caused the protest by locals that blockaded the mine. HBM’s logistics problems in Constancia
have been previously documented and the series of accidents, using overloaded trucks under
time and performance pressure, is a direct result of this. Another mine-blocking protest may or
may not happen this time but, it wouldn’t take much more for HBM to hit a real Black Swan
event.
B2Gold (BTO.to) (BTG): I’ve dropped BTO down to “Hold” on the near-term sentiment
column as it has pinged the IKN Weekly price target, but I’m NOT selling and will hold the
position. I’ve gone into a little more detail as to why in ‘Market Watching’ below because the
piece took up more room than I prefer to give in this comments section of the Weekly.
Meanwhile and in other news, on Tuesday Scotia’s Ovais Habib reported back form a site visit
to BTO’s Masbate operation. Things are going well at Masbate which is fine and dandy, but this
part of the write up did catch my eye. Lifted verbatim.
6) BONUS La Libertad Update. During the Masbate site tour, B2Gold also provided
an update on the Libertad mine in Nicaragua (9% of his BTO Asset NAV). The company
indicated that issues are continuing with the relocation of local land owners and small
scale miners, therefore Ovais sees the potential for delays in accessing the higher-grade
ore at the Jabali Antenna (originally expected in Q2/16). He currently models 2016E
Libertad production of 130koz Au with cash costs of $679/oz. At this time, he has not
revised his Libertad production estimates but Ovais plans to monitor the situation closely
and revise his estimates accordingly as he gain additional clarity on the status of the
operations there.
That fits right in with the IKN house assumption in place for over a year, that Lbertad faces
stronger headwinds on a community relations level than it’s been admitting and the drop in
reserves reported recently is beginning to force the company’s hand (and I’ll bet any money
you like to a single donut that the locals know that, too). For what it’s worth I’m also assuming
Libertad at 130,000/oz in 2016, but the potential problem will be 2017 and beyond.
Regulus Resources (REG.v): Last Thursday I caught up with three of the main players at
REG, John Black (CEO), Kevin Heather (head of geology) and Fernando Pickmann (legal side of
Peru) who brought me up to date on the company’s current operations and state of affairs. It
was a most interesting three hour meeting that covered a lot of the corners, nooks and
crannies of the company and its main Antakori project in Cajamarca region, Peru. Here comes
the summary and need-to-know stuff:
• The company’s main thrust is currently on relations, both with community and with its
neighbouring mining companies. We went into a lot of the details on this, I came away
happy with what I heard.
• Regarding the community side, things are progressing slowly but positively and after
16

,
asking about the situation from several angles, I’m confident as describing relationships
as good and solid between REG and the main communities. A lot of the work REG is
doing is to get the land owned by individuals formally registered in the Peruvian registry
system. This often takes time and not because of any mistrust or need for delicate
negotiation either, rather that people become owners via deceased people’s wills have
often moved and have to be tracked down individually, not to mention the fractioning
of land ownership that happens if no registry happens for two or three generations.
However it’s also for the common good (good for locals, good for REG) and is important
when key surface rights access deals (or even eventual sales) are on the table.
• Regarding the neighbouring mining company, particularly Buenaventura (BVN) and
Gold Fields (GFI), talks are ongoing about how the companies might be able to work
together. REG is looking to nail down a co-operation deal with at least one of these (or
both) during 2016.
• REG is also looking at ways in which it can make the most of its Argentina assets.
That’s a good thing in my book, they seem to get zero value for them at the moment.
I came away from the meeting happy enough, even though it’s clear the company isn’t going to
get aggressive and start drilling this year at least (perhaps 2017 will be a better window for
that. What I do know is that John Black & Co
are going about things the right way and,
quite correctly, aren’t in a rush to push
things forward when it’s better to remain
calm and holding onto the long-term value of
a potentially very rich and valuable deposit.
As for trading, I wouldn’t expect any big
catalyst to come along in 2016, but certain
news may make this is good buying
opportunity for those with the right amount
of patience. For me, keeping this in the
portfolio and trying to add, slowly but surely,
in 2016 while nothing much happens is the
right way of going about things. I’m looking
to the long-term here, so should you. At REG
you get some of the best geology brains in the business at a rock bottom price.
Focus Ventures (FCV.v): FCV added a new face to the board of directors last week (7) in the
shape of engineer Jeff Franzen. I don’t know the guy but do know that Franzen was a member
of the Fortuna Silver board back in the days that company was cheap and I covered it (mostly
as a Top Pick too). In other words he’s a known person to Gold Group (Ridgway, Szotlender
etc) and the type of appointment you get when a company is working on the engineering of a
pre-feas project and would like extra help and opinions.
In trading news FCV again did very well and I’m beginning to enjoy the way it’s now a regular
daily 100k+ volume stock. Over 700k Wednesday too.
Nevada Sunrise (NEV.v): The only reason this tiny position is still open is that I don’t need
the space on the list for another, more serious company yet. If it blasts higher I might sell, but
for the time being it can sit there and be volatile. No harm will be done.
The Copper Basket
After sixteen weeks of 2016, The Copper Basket shows a 60.57% gain to level stakes.
17

,
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 HudBay Min. HBM.to 0.35 235.23 1277.30 5.43 2.3%
2 Ivanhoe Mines IVN.to 0.61 778.96 802.33 1.03 68.9%
3 Reservoir Min. RMC.v 4.08 48.69 338.88 6.96 70.6%
4 Capstone Min. CS.to 0.44 382.04 294.17 0.77 75.0%
5 NGEx Resources NGQ.to 0.65 205.06 166.10 0.81 24.6%
6 Nevada Copper NCU.to 0.66 80.5 74.87 0.93 40.9%
7 Western Copper WRN.to 0.38 94.19 73.47 0.78 105.3%
8 Cordoba Min. CDB.v 0.16 86.86 71.23 0.82 412.5%
9 Copper Mtn CUM.to 0.445 118.8 68.90 0.58 30.3%
10 Copper Fox CUU.v 0.125 417.64 56.38 0.135 8.0%
11 NovaCopper NCQ.to 0.395 104.33 56.34 0.54 36.7%
12 Atico Mining ATY.v 0.28 97.59 40.01 0.41 46.4%
13 Hot Chili Ltd HCH.ax 0.09 445.723 34.77 0.078 -13.3%
14 Amerigo Res ARG.to 0.205 173.61 26.04 0.15 -26.8%
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 60.57%
Another good overall week for our basket of stocks, up over 10% with ten winners (not listing
them all) two unchanged stocks (CUU.v,
WRN.to) and three losers (RMC.v, CDB.v, The Copper Basket 2016, weekly evolution
100%
RVL.v). Some big percentage winners too,
with outsized gains from Capstone (CS.to up 80%
37.5%), Atico (ATY.v up 28.1%), HudBay 60%
(HBM.to up 27.5%), Amerigo (ARG.to up
40%
25.0%), Copper Mountain (CUM.to up
20%
18.4%), NGEx Resources (NGQ.to up 11.0%)
and Ivanhoe (IVN.to up 10.8%). 0%
-20%
The complex, particularly the big-moving
producers (notable the top five percentage
winners all produce copper in some shape or
form), were driven by the action in the metals market which confounded my personal prediction
in no uncertain style, rallying through the $2.20s and briefly touching through U$2.30/lb on
Friday before closing at $2.26 and bits.
18
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42
source: IKN calcs

,
Perhaps more interesting is the daily chart (right), which shows how copper is revisiting the
same level it managed to reach in March before failing and moving back. As regards my short in
HudBay (HBM) above, my basic line in the sand limit is the U$2.30/lb level so this weekend I’m
living on the edge. If it pops meaningfully above that line it’ll be time to sell, though I’m
secretly obstinate about it and want to get to the April 29th financials date at HBM before taking
the loss if necessary. As is sometimes my wont, here are a couple of excerpts from those
weekly wrap-up reports (8) on copper market action, first one that fits the bear side of the
argument atmosphere (or at least my own bias)
Copper was on track for a weekly gain of 4.2 percent, the largest since early March.
Given the rally in copper is not being followed by strong physical demand, traders are
wary of a correction, said one trader in Singapore.
"It seems the market wants copper higher on the back of the sudden uptick in Chinese
activity, but traders are very nervous that it will reverse quickly ..the market is jumping
at its own shadow."
As for the bullish argument, try these excerpts from this WSJ (9) piece :
Copper prices closed higher on Friday, lifted by rising oil prices and increased
optimism that China’s economy is starting to stabilize.
George Gero, managing director at RBC Wealth Management, said both commodities
benefited Friday from the possibility of more stimulus overseas. On Thursday, the
European Central Bank decided to keep rates unchanged and hinted at implementing
further cuts if necessary.
Yup, China Non-Fear = copper moves up. That’s a sentiment that turns on a sixpence, too.
We move to the weekly copper warehouse inventory bullet points:
• Total world copper stocks in the three official warehouse systems dropped by a small
2,957 metric tonnes (mt) (-0.5%) to 540,567mt.
• Shanghai SHFE stocks dropped a tiny 253mt (-0.1%) to 331,689mt. That’s a bit of a
surprise, it should be moving down more sharply and is potentially another signal to the
weak end-user demand alluded to above. More below on this
• LME stocks dropped very slightly, down 175mt (-0.1%) to finish Friday at 147,800mt.
• Comex stocks were the biggest mover and that doesn’t happen very often. Stocks here
dropped by 2,529mt (-4.0%) to finish the week at 61,078mt.
Here’s the Shanghai-only chart (10) with on the far right, that ostensibly surprising stall in the
downdraft and de-stocking process:
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
19
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 ht71
Mt Cu
source: Cochilco
Down a fraction, the SHFE stocks give out a bearish signal on the copper price. However if you

,
look closely on the chart, the last two years have also had one week when the de-stocking
process took a pause for one week then continued, in other words another salient example as
to why we shouldn’t take one week’s worth of data too seriously. If stocks drop next week we
can discard this potentially bearish signal, if they stay roughly UNCH again it will be worth
making more of a song and dance about the dataset.
Now for brief comments on a couple of our basket stocks:
Copper Fox (CUU.v): Late Friday the majority owned Carmax company announced (11) that
its appeal to the tenure of its concessions had been successful and they’d got them back. This
greatly surprised many in my little world of mine-watching and sets a precedent, because the
rules are normally clear and strictly enforced: You miss the filing date, you lose your land. But
apparently the rules don’t apply to Carmax this time so I can’t help but wonder whether the
opportunists that staked over the lost concessions are going to kick up a legal fuss on this one.
Cordoba Minerals (CDB.v): After the most impressive run of this stock, it had to take a
breather at soe point and CDB finally put in a negative week, losing three cents (after adding
seventy or so since the start of the run in January, I’m sure those on board will forgive ☺).
Last week and this week coming CDB people are doing the rounds and marketing in Toronto,
with much of the pitch to brokerages and their own teams of geols based on geophysics and
the area potential of the CDB property in Colombia. As for news, we can expect the next set of
drill assays from its current perforation campaign in the days ahead (if not next week then
soon).
NGEx Resources (NGQ.to): Eleven percent up last week and one of the best performing
non-producers on the list, NGQ is still the one I like as my potential Argentina play. A lot
depends on copper’s market action, but as my time window for Argentina will open in the
second half of this year (see below) I still have time to play with on this decision.
Reservoir Minerals (RMC.v): According to the leak I picked up on the blog this Sunday
afternoon (11a)) RMC is merging with Nevsun and the new company will trigger the Right of
First Refusal offer on Timok. I highly doubt this is a fake story, it’s most likely a fat finger
mistake inside Nevsun. If the deal is real we’re sure to hear about it tomorrow Monday before
the open.
In theory, this is good news for RMC’s share price but as terms of the deal weren’t shown on
the NSU page, we’ll need to be careful. Devils in details and all that.
The Low Cost Producer Basket
After 16 weeks of 2016, the Low Cost Producer Basket shows a gain of 83.79% 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 18.77 16.12 118.4%
2 Newmont NEM 17.98 529.12 16.52 31.23 73.7%
3 Goldcorp GG 11.56 830.22 14.18 17.08 47.8%
4 Franco Nevada FNV 45.75 176.298 11.77 66.78 46.0%
5 Agnico Eagle AEM 26.28 217.67 9.00 41.34 57.3%
6 Ang/Ashanti AU 7.10 405.27 5.96 14.71 107.2%
7 Sibanye Gold SBGL 6.09 228.71 3.29 14.39 136.3%
8 Detour Gold DGC.to 14.41 170.85 4.13 24.20 67.9%
9 New Gold NGD 2.32 509.89 2.21 4.34 87.1%
10 Buenaventura BVN 4.28 254.19 2.14 8.40 96.3%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 83.79%
20

,
Two losers (GG, SBGL) and eight winners as the producer basket puts in another strong week,
however we should note that for the first time in a long time the GDX ETF significantly
outperformed our basket (by 2.15% on the week) and that might be flashing a signal for the
wider market. In the bullish run to date we’ve seen the majors move first, then the larger
producers and now it’s the turn of the TSXV and the smallfry explorecos. That’s good of course,
it means cash is rotatiing through the sector, but it also means that without new impetus from
the main source (i.e. the price of gold) the run is now looking a little tired.
The Low Cost Producer Basket: Weekly performance
100% and comparative to GDX control
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
-10%
21
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42
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 ht01 ht71 ht42
source: ikn calcs, NYSE/Nasdaq data
Goldcorp (GG): We know that GG is underperforming over the last two weeks, but by how
much? Here’s a chart...
...and it’s fair to say that getting beat out by a basket stock in which your company is a big
component is nothing to be proud about. GG had the problem and the fatality at Marlin, but
even that temporary stoppage isn’t enough to move this dial. It did get a boost when new CEO
Garofalo announced his new-broom strategy to de-centralize the company and make its
individual mines more autonomous (that inane biz-speak phrase “centres of excellence” was in

,
there somewhere) and that may have warn off, causing the recent slump, but overall the signal
being flashed here is most likely “watch out for the 1q16 financials”, jungledrums are not good.
Those 1q16 numbers are due after the close this Wednesday (12) 27th April, with David
Garofalo’s first ConfCall as CEO the next morning. All the cool dudes will tune in.
Regional politics
Chile: The Mining Council of Chile criticizes current government policy
An interesting critique of the mining scene in Chile came from Joaquín Villarino, head of Chile’s
mining body The Mining Council (Consejo Minero), this weekend in the country’s bizmedia
Economia y Negocios (EyN) (13). Plenty to chew over including details, but the main message
comes from this soundbite (translated):
Villarino: “This government has two agendas; a sector-specific one which can be
qualified as positive, proactive, constructive, that thinks in the future of mining....and
another non-sector specific that directly or indirectly affects our industry but
negatively.It’s very difficult to reconcile the two, as they’re in clear collision course.
While the first is concerned about productivity, innovation, technological improvement,
improvement in human capital, new environmental standards and community relations,
all of which going hand in hand with the sector, particularly with the work of The Mining
Council, the second consists of dozens of legislative and regulatory changes that are
making worse productivity, such as the labour reform which is stopping mining
development, as well as the law bill regarding the protection of glaciers that brings
uncertainty, also the reform of water regulations and the reversal of the DL600 law that
simply increases costs in an arbitrary manner, also the new property transfer laws, the
law for mining closures and also the new responsibilities extended to the mine owner.”
“There are two agendas in open contradiction and in practical terms they’re
irreconcilable. The two sides of the coin make it difficult to develop new projects and
we see that Chile there are practically no new relevant (i.e large scale) projects
planned for the short and medium term”.
EyN: “Does this stop things more than the (new low) price of copper?”
Villarino: “No, we have to be honest and say that the price of copper is obviously an
important condition at the moment to make decisions about new projects, but there’s
no doubt that there is a regulatory agenda in Chile, that comes from the government
and parliament, that has made it very difficult to take decisions on new investments.”
Colombia: A ministerial re-shuffle
This weekend President Santos of Colombia called (14) for the “protocol resignation” of all his
ministers, a symbolic move that clears the way for a cabinet re-shuffle. It came after his
Minister of the Presidency and (to that point anyway) right hand person, Maria Lorena
Gutierrez, resigned last week in what Colombian political watchers suspect is against a Santos
decision to name a supreme court judge with whom Gutierrez had previously crossed swords.
All suitably deep-politik intrigue I’m sure, but it comes at a time when Santos is under
increasing pressure from the political right wing (i.e. ex-President Uribe) to put up or shut up
with the FARC peace negotiations and is another moment of institutional weakness in the
country. As for the Ministry of Energy and Mining, it’s unlikely to change things as only last
Tuesday April 19th Santos named his new minister, German Arce (15) to take over from where
the last minister left off (fired for screwing up energy policy and leaving parts of the country
with blackouts due to lack of supply). Arce is a career politico (24 years a functionary) and the
type of person you put in to run an office efficiently without bringing about revolutions (good or
bad (16).
On the issue of ministerial changes and shuffles, it’s always a case of “no news is good news” in
any South American country, as changes in top officials nearly always result in bureaucratic
inertia as the new person gets settled in and tries to impose their own ideas (above the
previous incumbent’s plans). The backdrop in Colombia is much shakier than most outsiders
22

,
believe at this moment, last week’s events only add to the uncertainty.
Peru: Polls suggest a tight vote in round two
After my clear call last week on who I believe will come out as the winner of the 2016
Presidential election in Peru (Keiko Fujimori), we’ve seen three polling companies come out with
their first surveys on the race between Pedro Pablo Kuczynski (PPK) and Keiko Fujimori. Here
you go:
• IPSOS: Keiko 40%, PPK 44%
• CPI: Keiko 43.6%, PPK 41.5%
• Datum: Keiko 40.4%, PPK 41.1%
• IPSOS: Keiko 39%, PPK 43%
For what it’s worth I have doubts about the veracity of the two IPSOS polls (first in that list last
weekend, the second today Sunday), mainly because that pollster is trying to tell us that Keiko ,
who got 39.8% in round one, won’t pick up any of the approx 30% of people that didn’t vote
for her or for PPK, or prefer to spoil their ballot (voting is obligatory on Peru and 16% of the
population registered “non-votes” in round one). I’m aware that the whole Fujimori party thing
is often a polemic, but here in the streets in Peru there is a substantial tranche of society who
don’t reject Keiko on straight ideological grounds due to what happened under her father in the
1990s. The “anti-vote” for Keiko, i.e. people who say they won’t vote for Keiko under any
circumstances, is gauged between 42% and 45% by the pollsters which gives her room to play
(the PPK anti-vote is put at between 37% and 42%, depending on which pollster figures you
believe). The other two polls look reasonable snapshots of the situation today in the country
with six weeks before the run-off vote. In other words, according to the numbers it’s too close
to call.
Both candidates, PPK and Keiko, are out on the campaign trail now and there’s also a head-to-
head presidential debate set for May 29th, the weekend before the decisive vote, which is set to
be a big thing. Meanwhile I’m sticking with my call that Keiko will win the job even though I’d
be happy to be wrong. I personally think PPK is the least worst of the two and the fact the
Fujimori family still has such power in this country is mind-boggling, but my personal opinion on
things counts for naught.
Peru: Gregorio Santos gets his congress members
An interesting story has unfolded late in the vote count game in Peru (17) . Although contested
by some experts in other parties adversely affected by the result, according to the rules, to get
your representation in parliament (and to remain an officially recognized party) you need to get
at least 5% of the popular vote in an election. In the case of Gregorio Santos, he and his
“Democracia Directa” party got 4.09% in the Presidential vote and it looked as though it
wouldn’t get any members of congress. This despite getting over 40% of the popular vote in his
native province of Cajamarca and beating the other parties into a cocked hat. It would have
been a strange situation, with the biggest party in the region unrepresented by its members of
congress.
But then came the wrinkle, as at the same time as the Presidentials, Peru was also voting for its
members of the Andean Parliament (Chile, Peru, Ecuador, Colombia) and in that simultaneous
vote the Democracia Directa party received 5.15% of the votes.
• This means Democracia Directa got over the line. Perhaps on a technicality, but it got
there.
• That means it keeps its official credentials as a party
• That means it gets three members of congress in the national parliament (as well as
representatives in the separate and wholly inconsequential Andean parliament).
This is a big win for Santos and the Cajamarca left wing anti-mining groups. Along with the
strong showing of Veronika Mendoza in the national election, it marks the potential for the left
23

,
wing in Peru to gain ground during the next congressional cycle and potentially move towards
greater power come the next national election in 2021. It’s also another reason as to why we
shouldn’t expect Conga to be advanced further in the years ahead.
Argentina out of default
Much pomp and circumstance last week as Argentina posted a cheque for U$9,300Bn (with a B)
to the bond holdouts/vulture funds and its status of bond defaulted country was officially lifted.
President Macri said (18) (translated), “Today we have begun to recover lost credibility. Today
Argentina has is once again a trustworthy country. Today begins a new era”, and other
nonsense phrases of the same ilk. Interestingly, he decided to use Facebook for the
pronouncements.
I’ve been impressed with the way (and the speed) in which the new Macri government has
closed this particular chapter of its policy story (particularly after the way in which it alluded to
making tough and protracted negotiations with holdouts/vultures before last year’s election,
then after winning the election rolling over like a dog with a penchant for its tummy being
tickled) without massive pushback from its political opposition. Its next big job is to get inflation
under control, because despite its best efforts to date things have got worse rather than better.
If they’re going to make headway on this, we need to look to the third and fourth quarters of
this year for better numbers. It’s at that point I’ll be most interested in positioning cash in the
country’s mining juniors, as getting in before large-scale FDI floods in is a decent theory. In
general terms at least. NGQ.to has my eye on this.
Argentina: Chubut is as FUBAR as ever for mining
Another Macri government pitch on mining last week, with the national government including
Macri himself making noises about Chubut and how mining development there would provide
important and needed economic benefits for the region. It came on the back of a visit to Macri
by executives of Pan American Silver (PAA.to) (PAAS) who are keen to get the company’s
Navidad silver/zinc/lead project (well, in fact if we’re being brutally honest it’d be a base metals
mine with a decent silver by-product kicker) move forward as well as working on the latest
strike over pay and conditions at its Manantial Espejo silver mine, also in Argentina.
The pro-business/pro-mining noises were picked up by national and international wire media
alike and went down well, right up until the moment somebody bothered to ask politicians in
Chubut what they thought about the declarations. Chubut Governor Mario Das Neves said that
his region “Has other priorities” at the moment (19), which was basically saying that he
understands Chubut has to change its provincial laws or even the constitution before Navidad
will be able to get green lighted. His underlings and other province politicos fell into line,
pointing out that the central “meseta” region of Chubut would indeed benefit economically from
Navidad opening but they agreed with the governor that they had more pressing matters first,
that the debate on the mine’s viabiliy may have to go to a referendum on changes to the laws
(20), that the environment and use of non-toxic reagents at any mine was a priority and other
matters which make the whole permitting track of Navidad sound like what it is; an exercise in
cat-herding.
For those of you just tuning in, this is yet another example of how regional politics and agenda
toward mining are far more important than anything the national government might have to
say. Argentina mining investment = Choose your location very carefully. When PAAS bought
Aquiline they didn’t do that and have been regretting the deal ever since.
Nicaragua: The desire to promote its mining sector
We give Nicaragua credit for effort, as last week it announced the dates for its 2016 mining
trade fair, The Second International Mining Congress. Organized by the country’s chamber of
mining, Caminic, its president Sergio Rios last week told a presser (21) that the two day
conference was scheduled for August 16th and 17th and they expected conference participants
and attendees from over 20 countries
24

,
Market Watching
Belo Sun (BSX.to): This week’s short
Smarter people than I have been enjoying the upmove put in by Belo Sun (BSX.to) during the
gold and sector rebound, with plenty of institutional coverage on the stock and an assured way
in which they’ve stated the company will get its permits this year. According to Brazilian press
last weekend that was suddenly a lock, as in multiple outlets (e.g. this one (22)) the ceremony
to award the company’s “installation
licence” for the Volta Grande project in
Xingu, Pará State, Brazil was set for April
26th (i.e. Tuesday). and as news of this
filtered through to the markets quickly,
the reaction in the stock price of BSX.to
was fast and furious, the stock jumped
34.3% on Monday on 14X average traded
volumes and stayed at this new 90c-or-
abouts level all week on elevated trading
levels.
The Pará regional government was also
set to announce a formal letter of intent of
the State of Pará to set up a gold refinery
in the region at the same event and make no mistake on this, the event was set, several of the
necessary business and political bigwigs had been invited and confirmed as attendees, the room
booked the catering planned and all the works. But things haven’t gone quite as the suited
important people imagined because the public outcry against the mine took them by unpleasant
surprise last week, led by locals in the Xingu area. Such was the pushback (in a delicate time
for national politics) that late on Friday evening the previously scheduled ceremony was called
off (23). That report has the Secretary of the Environment for Pará (one of the main people in
charge of signing the piece of paper) saying (translated), “The programmed event has been
delayed, no date has been set for the delivery of the licence”. Which is BS, it was set then it
was taken away again. He continued by stating that, “the solicitation of the licence is under
review” there was no estimated time scheduled for the awarding of the permit.
Let’s be clear here, my track record on this company has been poor in 2016, I’ve been wrong to
ignore the trade in BSX as my aversion to its political risk profile has always trumped its
economic potential. I also stubbornly shook my head as Agnico Eagle doubled down on its
investment in BSX and then watched it fly higher. But the way it traded last week, confidently
expecting one of its major permits to be awarded in the week ahead, will contrast sharply to
the cruel reality of having the ceremony taken away from the company at the last minute due
to the very significant local protests around BXS at Volta Grande. Expect BSX to revisit the 70c
level from whence it came last week, and that at a minimum because the optics of politicos
playing around with the permits like this are perhaps even worse than not having the permit
scheduled in the first place.
B2Gold (BTO.to) (BTG) reaches target, dropped to ‘Hold’
Instead of cluttering up the ‘Stocks to Follow’ comments section this comes here, as I wanted
to add a little extra among with a calcs table from a previous anal ysis of BTO.
This was from coverage in March 2015 here in the Weekly (remember it’s our most closely
covered stock over time, a good dozen pieces to point at) and was the day on which I adjusted
the asset-based valuation tables to take into account the new presence of Fekola (as a separate
entity rather than part of “other”) as well as trimming expectations in light of the continued
drudgy market atmosphere for miners and juniors.
25

,
On operations March 2015
B2Gold (BTO.to): Current asset-based valuation (all in US Dollars except target totals in Canadian Dollars)
operations Pipe project other+cash Target
Au/oz Libertad Limon Masbate Otjikoto Total Prod Fekola other total C$
1000 0.12 0.04 0.11 0.40 0.67 0.30 0.25 1.46
1050 0.15 0.05 0.11 0.42 0.73 0.33 0.25 1.57
1100 0.21 0.06 0.13 0.45 0.85 0.35 0.25 1.74
1150 0.26 0.07 0.22 0.47 1.02 0.37 0.25 1.97
1200 0.32 0.08 0.31 0.50 1.21 0.40 0.25 2.23
1250 0.38 0.10 0.40 0.55 1.43 0.45 0.25 2.56
1300 0.44 0.13 0.50 0.58 1.65 0.50 0.25 2.88
source: BTO data, IKN ests/calcs U$0.80 = CAD$1
I came across that above chart while wading through my Excel sheets on BTO last week, but
rather than delete or update it, I was struck as to how closely the target prices are to today’s
reality. The downside is that this type of fundies analysis fails to take into account market
sentiment and momentum. In BTO’s case in 2015 it failed miserably too, I have the scars to
show it, the stock dumped so low I could hardly believe it myself and my stars, those who
remember my frustration come the end of last year and January 2016 will know that it tested
my patience nearly to its limit, too.
But we’re now out on the other side of the worst of that trough and with miners now getting
reasonable and logical valuations again, it’s notable how the asset-based approach towards
BTO signalled C$2.56 as a 12 month target for the company back in March 2015 as long as gold
was at U$1,250/oz and here, one year and one month later, BTO touching CAD$2.59 with gold
trading around that level last week (before dropping back with gold to Friday’s closing price.
The above table also pencils in CAD$2.23 for BTO at U$1,200/oz which passes the current
market smell test pretty easily. For what it’s worth (and knowing how the calculations work in
each of those Excel boxes) I don’t think it’s a perfect call on today’s BTO; As one example the
32c and 38c given to La Libertad looks heavy compared to its somewhat uncertain future now.
For another, Fekola’s almost certainly worth more than 40c and 45c today. But give-here-take-
there and the model looks close.
Which brings us to today and the IKN Weekly Top Pick B2Gold which last week managed to
ping out CAD$2.50 price target last week (and close very close to it, too). As a result I’ve
decided to reduce the near-term call on the stock to “HOLD” (see table in Stocks to Follow”) but
I want to talk a bit about that decision as well. Bullet points for you:
• In the weird world of sellside brokerages, the “reduce to hold” call is a veiled way of
telling clients to sell. It’s born of the fact that cubicle anal ysts have a tough time
getting past other departments in a large brokerage, such as compliance, legal and
their boss who wants to get more commission work with the mining company the next
time they want to run a bought deal placement, but it’s the way it is. The IKN Weekly
is not like that and “hold” doesn’t have any other subtle or nudge-wink
message behind it; hold is hold, period.
• I’m calling hold on the stock from now on, but I’m also leaving it as a Top Pick. The
reason is simple. BTO is a quality mining company and in my opinion it’s one you
should if you’re into the sector. It also has plenty of growth in its pipeline and will be
able to add value to its shares as that new growth comes online in the longer-term,
starting with Fekola However, it’s now pretty much valued to its potential on a 12
month basis, reflected by its hitting of the last target.
• On the other hand, I personally am not in any hurry to sell BTO and deploy cash in
another place because after going through a big cash raising period in February and
early March, even after the recent purchases I have plenty of dry powder left. As one of
26

,
the cardinal rules of a bull market is not to sell and to let ‘em ride (unless you have
VERY good reasons), I see no rush to cash out of this position.
• Again personally, BTO is my biggest position in cash terms (and by quite a distance) so
I don’t feel the need to top it up. It makes common portfolio management sense for me
to distribute risk and buy other companies over BTO at this point in the cycle.
• There is of course the likelihood that my BTO shares keep moving up any further
upside is going to be mostly driven by moves in the price of gold. Check above and see
that the table (which I think is as good as any other guess I’ve made in the last year on
BTO) indicates a BTO at CAD$2.88 with gold at U$1,300/oz. That will do nicely for me,
better than having that liquidity on the sidelines and as I am bullish about gold in 2016
I’m a living breathing example of a happy holder in BTO. Don’t ask me about gold’s
moves in the next month, but seeing U$1,300/oz before the end of this year looks
extremely likely to me.
Therefore, BTO, the quality play that’s hit my target, will stay on the IKN Weekly list and
remain as a Top Pick, but will probably get called “hold” more often than not in the weeks to
come.
Conclusion
IKN363 is done, we end with bullet points:
• Sandstorm has started well. A decently sized position, I’m happy to give this one as
long as it takes, it now has the right idea to try and emulate FNV, become and
“investment grade” entity. I wonder if Nolan W is considering an equity placement to
pay down that debt a little faster? I for one would welcome one.
• Tinka (TK.v) looks wildly chap as under 20c and you have a month or maybe two to get
positioned before the resource update comes along.
• The short on HudBay has me under pressure. Thursday’s 1q16 financials will kill or cure
this underwater trade.
I thank you in advance for any feedback. Our Top Pick stocks are B2Gold (BTG) (BTO.to) and
Starcore Intl (SAM.to). Flash updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen.
Mark
Footnotes, appendices, references, disclaimer
(1) http://www.calculatedriskblog.com/
(2) http://www.tinkaresources.com/investors/presentations
(3) https://www.oefa.gob.pe/noticias-institucionales/el-oefa-verifico-derrame-de-concentrado-de-mineral-de-cobre-en-la-
carretera-coporaque-espinar
(4) http://rpp.pe/peru/cusco/derrame-de-concentrado-de-cobre-afecto-area-en-espinar-noticia-955521
(5) http://mercadosyregiones.com/verifican-derrame-de-concentrado-de-cobre-tras-vuelco-de-camion-en-cusco/
(6) http://larepublica.pe/impresa/politica/761612-confirman-derrame-de-mineral-de-cobre-en-espinar
(7) http://finance.yahoo.com/news/bayovar-12-project-pending-jeff-123000472.html
(8) http://www.reuters.com/article/global-metals-idUSL3N17P1CK
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(9) http://www.wsj.com/articles/copper-futures-higher-in-london-1461324185
(10) http://www.shfe.com.cn/en/MarketData/dataview.html?paramid=weeklystock
(11) http://www.reuters.com/article/idUSFWN17P0RM
(11a) http://incakolanews.blogspot.pe/2016/04/nevsun-nsuto-and-reservoir-minerals.html
(12) http://www.goldcorp.com/English/Investor-Resources/News/News-Details/2016/Goldcorp-to-Release-2016-First-
Quarter-on-April-27th-Conference-Call-and-Webcast-on-April-28th/default.aspx
(13) http://www.economiaynegocios.cl/noticias/noticias.asp?id=245442
(14) http://www.cronicadelquindio.com/noticia-completa-titulo-presidente_santos_solicit_renuncia_de_los_ministros-
seccion-la_nacin-nota-98362.htm
(15) http://www.elnuevosiglo.com.co/articulos/4-2016-s%C3%A9ptimo-ministro-de-minas-de-santos-fracas%C3%B3-
ara%C3%BAjo.html
(16) http://www.elheraldo.co/economia/santos-nombra-german-arce-como-ministro-de-minas-y-energia-255588
(17) http://diariocorreo.pe/politica/elecciones-2016-partido-de-gregorio-santos-paso-la-valla-electoral-667980/
(18) http://www.diariopinion.com.ar/noticias/2016/04/23/6934-mauricio-macri-celebro-la-salida-del-default-argentina-
vuelve-a-ser-un-pais-confiable
(19) http://lu17.com/chubut/das-neves-sobre-la-mineria-nosotros-tenemos-otras-prioridades
(20) http://lu17.com/destacado/sastre-sobre-la-mineria-lo-mas-democratico-es-que-lo-decidan-los-chubutenses
(21) http://www.laprensa.com.ni/2016/04/19/economia/2020976-mineria-en-nicaragua-se-prepara-para-congreso-
internacional
(22) http://www.portaldoxingu.com.br/belo-sun-assinara-protocolo-para-instalar-refinaria-de-ouro-xingu/
(23) http://www.em.com.br/app/noticia/economia/2016/04/22/internas_economia,755722/garimpo-de-ouro-ao-lado-de-
belo-monte-tem-licenca-adiada.shtml
Appendix 1: Flash update dated Tuesday April 19th April
Good Tuesday morning, just before the open on an overcast day in this corner of the Southern Hemisphere.
New purchase
I plan to buy some Tinka Resources (TK.v) today. This will be a small position, though I'm also aware that its low
liquidity will still be a problem even with relatively minor purchases. I'm willing to pay up to 20c for my shares.
A full report on the stock this weekend, but suffice to say here that at its current share price (or even my 20c limit buy
price) and considering the new direction of our market, this company offers compelling value.
In other news and for what it's worth, I bought all the Sandstorm (SAND) my heart desired yesterday Monday (no
liquidity problems in that one) and added a small extra slice of the new Top Pick Starcore (SAM.to), which I will continue
to buy in small tranches. Best, Mark
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
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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
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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
30

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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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