IKN #364Premium

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The IKN Weekly
Week 364, May 1st 2016
Contents
This Week: Trade heads up, In today’s issue, Overthinking a bull market, FOMC and gold.
Fundamental Analysis: Buying Richmont Mines (RIC) (RIC.to), HudBay Minerals (HBM)
(HBM.to): Summing up a failed short.
Stocks to Follow: Overview, HudBay (HBM), Starcore Intl (SAM.to), Tinka Resources (TK.v),
Sandstorm (SAND) (SSL.to), INV Metals (INV.to), B2Gold (BTG) (BTO.to), Focus (FCV.v).
Copper Basket: Overview, Reservoir Minerals (RMC.v), NGEx Resources (NGQ.to), Ivanhoe
Mines (IVN.to), NovaCopper (NCQ.to).
Low Cost Producer Basket: Overview, Barrick (ABX), Goldcorp (GG).
Regional Politics: Fe erratum: Gregorio Santos and congress, Sea water and mining in Chile,
Peru: Mining as an election issue plus latest polling, Colombia: The Buriticá operation against
illegal miners, Peru: Southern Copper president on Tia Maria permits, Mexico: Torex has its
official opening ceremony, Brazil and the Dilma impeachment process: What happens now.
Market Watching: Minera IRL news, Red Eagle (RD.v) files its quarter, Belo Sun (BSX.to):
Last week’s failed short idea, Zinc: Demand to outstrip supply in 2016.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
Trade heads up
I am going to buy some Richmont Mines (RIC.to) (RIC) this week. I expect it will be a near-
term trade and I expect to sell once a M&A deal is announced, see the note in ‘Fundamentals...’
for more (though not much more). On the other side of the coin I’m covering my short in
HudBay (HBM) this week and taking my loss on the chin. More on this in ‘Fundamentals...’ too.
I’m also continuing to add to positions in Tinka (TK.v), Sandstorm (SAND) (SSL.to) and Starcore
(SAM.to), but you knew that already. Just making sure we’re on the same page and to
underscore, these are all longer-term “Buy. Hold. Win.” positions.
In today’s issue
• We are bullish this market. We remain bullish this market. Even though it would be nice
to have a window of selling to pick up cheaper shares, we are buyers in this market.
• As posited last week, the FOMC meeting turned out to be an important one for gold (as
did the Bank of Japan “we do nothing” decision) because Janet & Co chipped away at
the gold bear position.
• We note errors of judgment, including HudBay and my ill-fated short as well as the call
on Belo Sun (BSX.to) as a potential short. There’s no point trying to play cute with a
rampant bull market, it’s akin to picking up pennies in front of a steamroller. On the
other hand, I did at least call well on B2Gold.
1

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• We have real news from Minera IRL at last. I believe this will be the first of several
pieces of news that, together, will release the company’s logjam and get its
development moving again.
• Next week posting will be light on the IKN blog as your author is travelling and visiting
places.
Overthinking a bull market
“Don’t Just Do Something, Sit There”
Sylvia Boorstein
Let’s examine a couple of the weaknesses in the whole anal yst, commentary and sellside
brokerage and newsletter community world. The ones I want to highlight today are two that
I’ve caught myself doing, the place to talk about them is here in the Weekly, the idea is to point
them out so that you can examine your own decision process and see if they’ve been your
weaknesses too. They can be entitled
• Do Something
• Ghost Hunting
Before we get to talk of those, some necessary context. There are basic things we can set
aside, such as how we the anal yst parasites (i.e. yours truly and a whole bunch of people who
are trying to exchange their thoughts for your money) have to do a good job and keep you the
customer satisfied, else go out of business. That’s exactly how it should be and I personally
wouldn’t want it any other way (keeps me on my toes for one thing). So first and foremost my
job entails giving sound financial advice about the (mostly junior, mostly LatAm) mining sector,
then comes matters such as informative content, entertainment value etc. As it just so happens
that today marks the seventh anniversary of the start of The IKN Weekly (I can hardly believe it
either, the nine year old girl I helped with French homework last week was still in diapers) and
is a publication that’s seen the good and the bad of the commodities cycle and come out the
other side, even though I don’t really understand why this weekly missive seems to have found
its niche and keeps enough of you engaged to be worthwhile for us all.
Do Something!
Okay, that out the way, let’s get to the weaknesses and the first one is the tendency to want to
“do something” at all times else feel redundant. In truth, while I stare at my radar screen of
stocks during this new bullish market phase and compare the atmosphere to that of six months
ago...even four months is enough at a pinch...I can’t help but think that you people out there
don’t need to pay a guy like me any longer. The plain truth is that the absolute best advice I
can give you all right now is the main message of the last two editions...
Buy. Hold. Win.
...but if you do that and (more to the point) if I do that, the Weekly will quickly become a hand-
holding exercise, get boring, have nothing new to say. Enter stage right the market
commentator’s need (be they brokerage suit or newsletter writer in two dollar flip-flops, shorts
and tee-shirt with luminous cow skulls on it*) to feed the neurosis, to Do Something, to bring a
New Idea on a weekly basis, sector-busting alpha-pounding trades all in a row. It’s the classic
feeding of the beast and it’s not a bad thing per se, but it doesn’t sit with the best advice I
have...
Buy. Hold. Win.
...because that’s where the big bucks are going to be made in the next couple of years. You
don’t need me to do that, you have no requirement for the noise once your cash is positioned,
go fishing and come back richer. Hey, are you still reading this tripe?
2

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Another aspect of the same of Do Something mentality is the way in which a publication such
as The IKN Weekly such as this will move out of stocks and into others (or more likely they
consider you have a limitless supply of cash wealth and just keep calling buy on stock after
stock without ever taking a profit). Now for sure I’m happy with the performance of new pick
INV Metals (INV.to), over 200% up in a month or so (and my own personal gain is nearly that
too). Whoop-dee-doo, a big win but:
• I bought Sandspring (SSP.v) ay 19.5c, sold it in March at 32c and I thought I
was cool. It’s now 55c.
• Exeter Resources (XRC.to) (XRA), an unholy dog of a stock is up 175% year-
to-date!
• An even worse dog, International Tower Hill (ITH.to) (THM) has gone from
40c to 92c in April alone!
• Dynasty Metals (DMM.to) doubled last week because somebody lent them
$500k and Robert Washer said something akin to “trust me, this time it’ll work
out” on trucking and toll-milling an as-yet untouched deposit.
• Southern Silver (SSV.v) was a 5c stock at the beginning of March. It’s now a
14c stock.
And for each of those examples there are many others behind them. Examples of stocks I sold
too early, examples of stocks I wouldn’t consider due to my low opinion of their projects but
have flown, stocks with management that I openly laugh about, stocks in a sub-sector of the
market which I’ve ignored or passed on. Frankly, if you’re running a portfolio of ten or a dozen
stocks and you don’t have a 150% or 200% winner in among them you’ve either been unlucky
so far or you’re just not doing it right. Big wins are now the norm, not an exception.
So my wedge of sidelined cash and I get to have fun and buy back into a new bunch of names
(or potentially buy back those sold) and make a new round of noise. Me and my cash get to Do
Something when it would have been more profitable to have sat on my hands and held those
names that are now in the “Closed” column of the ‘Stocks to Follow’ table.
Ghost hunting
The other way of overthinking a market we’re going to consider today, a market like the one
we’re in right now, is to look for ghosts. Part of the make-up of a true bull run is its ability to
climb a wall of worry and this is another trap I’ve fallen into recently, as seen by my decision to
get way too cute and short HudBay (HBM) (see below) or the theoretical short call on Belo Sun
(BSX.to) last week (see below). Part of the problem is being too analytical. Here right is the
updated chart of a dataset I’ve been
following closely recently, looking to it GLD gold holdings, March/April 2016 (metric tonnes)
835
for clues. Back in January and
830
February is was probably a decent 825
leading indicator, but the reason to 820
815
care about GLD bullion holding
810
tonnages has faded away. Yes we’re 805
19.6 tonnes off the recent peak, that 800
hasn’t stopped gold touching new 15 795
790
month highs on Friday. 785
780
775
And here’s another example, one of
770
very many. Last week Canaccord
published a long and detailed quant
analysis on why the Loonie was
getting stronger and what it might
mean for stocks. One of the conclusions was “sell CAD exposed miners, buy USD exposed
miners”. It was a well-written paper and I read it through carefully but in this case at least,
decided not to change my views on stocks I own or were considering (in my mind were Top
Pick SAM.to and the potential purchase of RIC.to this weekend, now a confirmed call). As for
3
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 61/52/4 61/72/4 61/92/4
mt
source: SPDR GLD data

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that nice Mr. Market he duly noted the Canaccord analysis, spat it out, chewed it up and sent
RIC.to (top-level Canada producer
name, Canadian domicile, reports
in Canadian Dollars) 12.2% higher
in the last two days of the week.
Just one example and here’s the
kind of charting one can do if you
want to make yourself worried
about the relative value of gold in
Loonie terms.
In theory at least, the crimping of
margins should send equity values
lower in Loonies. In practice the
bull market tramples over any
vestige of sensible, considered
and balanced logic you’re stupid
enough to put in its way and that
brings me to the last point of this
rant. A key part of the Ghost
Hunting problem is the mentality needed for a bull market is different from that of a bear
market. Back in the deepest reaches of 2015 (for just one example) a junior could announce
the discovery of the lost city of El Dorado and it would be taken as an opportunity to liquidate
holdings. We’re now in a place that lets the Goldcorp, Buenaventura and yes B2Gold and double
yes HudBay get away with mediocre and crappy news that’s taken as the exact opposite, a
chance to “get in quick before it’s too mate because Q2 is going to be a blowout. Et cetera.
What really matters
This(cid:1) GDX went up 14.3% last
week. So did GDXJ. That’s all.
You’d be well-advised to filter out
the noise of the neurotic detail-
pickers such as the author of The
IKN Weekly. Mining stocks are
going up because there are more
buyers than sellers. Any further
questions?
*only joking about the tee-shirt
FOMC and gold
Last week we framed the FOMC meeting in simple terms with the set-up in this section of the
script:
“...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.”
4

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This week we know that the Goldman Sachs side of the argument was dealt a clear blow, that
more people are moving toward the stance that the
Fed is going to delay any rate move, perhaps all
through the year and past the big election day (a
rationale IKN has adhered to since late 2015).
As is the focus of IKN, we mostly watched the effect
of the FOMC on gold, the lumpy heavy thing we most
care about, but the true effect of last week was on
the US Dollar. Up until Friday morning and in this
post (1) I was still being cautious about the
supposed weakness in the Greenback, it was still in
its trading range at that point but as it broke down
through 93 just a couple of hours later, that Devil’s
Advocate position became difficult to maintain. And
importantly, there’s another side to this story this
time, as The USA actually wants its currency lower.
Plus of course we are now facing a likely
Trump/Clinton head-to-head battle and both of those
candidates are on record as stating that a strong
dollar isn’t the best policy for their country today.
Fundamental Analysis of Mining Stocks
Buying Richmont Mines (RIC) (RIC.to)
This is going to be a short note.
Even though I’m the first to admit that I’m late to this trade, I intend to buy some Richmont
(RIC) next week in a near-term trade. I could play cute with you and pretend my decision to
buy is due to the strong production numbers RIC posted in 1q16 and the upcoming financials
from the quarter, due to be released on May 12th (pre-open) (2). I’d even agree with you (and
myself) if you proposed the 1q16 financials as another likely catalyst to the stock price. Then
there’s the neat and compact share structure, with 58.34m shares out, a strong balance sheet
backed up by (as at 4q15) cash treasury of CAD$61m and working capital of CAD$47.3m, both
of which are set to improve strongly when the 1q16 numbers are known (after all, they
produced 32k of gold at an operating cash cost of CAD$674/oz). For sure the fundies in this
stock are fine, but that’s not why I’m a buyer next week. I’m a buyer because RIC is getting
close to being bought out.
Here’s a section from IKN352, the weekend after my Thursday February 4th scoop on the blog
(3) that told of the upcoming merger of Tahoe Resources (TAHO) with Lake Shore Gold amd
the day before TAHO and LSG made that news official. I’m repeating this section for a couple of
good reasons, notes below:
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
1) On January 17th IKN349 closed with these words (typo and all):
“IKN349 is done, we end a long edition with just one bullet point. Get the point.
• I’m buying more Lake Shore Goild (LSG.to) (LSG) and making it a new
Top Pick. I think it’s getting bought out soon. Buy low sell high, folks.”
2) Then IKN350 closed with these words: “Be long Lake Shore Gold (LSG.to) (LSG).”
5

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3) And last week these were the last words in IKN351: “Be long Lake Shore Gold”
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
IKN364 back and the point of repeating this section is straightforward.
• Previously in 2015 thought Goldcorp was sniffing around Lake Shore
• In early 2016 I found out via solid intel that Tahoe was very interested in Lake Shore
and at that point I raised the reco on the stock to Top Pick and bought more.
• But until very late in the game the exact timing eluded me.
• Which is why I was banging on the table about you owning LSG for weeks, instead of
getting the timing surgically correct.
This is where we find ourselves today regarding RIC and TAHO. The last time this issue got a
mention on these pages was in the extended piece in IKN362 in which I wrote that, “I’d put the
chances of it closing at 75% or 80%, not 100%”. At that point I wasn’t a buyer of RIC, today I
am a buyer even though the share price has moved higher in the period. However and to
underscore the reason for including the above section of IKN351 today, timing is a difficult one
to nail down.
As for the reasons behind my change of mind and decision to purchase RIC next week, I need
to be careful and not burn anyone but what I can say is the news (4) last week about Greg
Chamandy stepping down as a director of the company is no coincidence. Chamandy, a non-
miner who ran the company for years, has been strongly opposed to any sell-out or buyout deal
for Richmont and his departure will make it easier for RIC to agree on friendly terms at board
level with suitor, be it TAHO or XYZ
Metals Inc. The board meeting at
which Chamandy bids his graceful
adieu happens on May 12th (1q16
financials day).
Finally a comparative price chart of
RIC.to versus GDX as benchmark and
note how RIC shot higher for a while
starting on April 12th. This came just
before the IKN blog post “Tahoe
Resources (TAHO) (THO.to) in late
stage talks to buy Lake Shore Gold
(LSG.to) (LSG)” (5) the first public
news as far as I can make out though
as the market action suggests, I was
hardly the first person to hear about
this development. This is the right sort of pattern, one in which the market decides it’s not
immediate news and falls back to the median performance.
The bottom line is simple enough, I’m buying RIC as a near-term trade and it will be a member
of the ‘Stocks to Follow’ table as from next weekend. I expect to buy my RIC in the NYSE
market rather than Canada. I’m not setting a target on this trade as the time window is near-
term and it’s all about RIC receiving a buyout offer. If and when that materializes we can check
the lay of the land.
HudBay Minerals (HBM): Summing up a failed short
First things first and in the lead-up to the Thursday financials I sent out a Flash update (see
Appendix 1) that noted I was going to gamble and add to my short position before the end of
Thursday (which I did). Then on Thursday evening and on schedule HudBay (6) reported its
1q16 financials, which got a small acknowledgement post on the blog that same evening (7).
Then things got bad. Overnight Friday copper jetted up by 4c/lb and even before Friday trading
6

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had opened, I knew my goose was cooked on this trade. I didn’t call sell in another update and
I didn’t sell, because chances were that HBM was seeing overbuying that day and I could wait
until this week to cover, so I decided
to wait and make the “cover this HBM: Commercial production of copper at Constancia 2015
Mlb Cu and estimates to 2q16
short” call this weekend, which is
90
what I’m doing now.
80
70
As for the HBM results, I thought
60
they were mediocre as I crunched 50
the numbers Thursday evening but, 40
as noted in today’s intro, my mistake 30
has been a bad read of the macro 20
stock atmosphere rather than the 10
individual company circumstance. 0
The main call of “I’m covering and 2q15 3q15 4q15 1q16 2q16est
source: HBM, IKN ests
taking my loss on this short position”
is now clearly in place and I don’t
HBM Constancia cash cost
think I need to bang you over the head $
(per Lb Cu after credits)
too much with the whys and wherefores, 1.60
but a few charts can show some of the 1.40 1.32
1.23
1.15
process. 1.20
0.96
1.00
With the “Constancia Only” mandate clear, 0.80
as I went through the production numbers 0.60
(64Mlb Cu, lower than expected) and then 0.40
the post credit cash cost number ($1.15, 0.20
roughly in line) then average received 0.00
price, it became clear that the financials 2q15 3q15 4q15 1q16
source: HBM
weren’t going to sparkle. For sure HBM
can promote its “operating cash flow” (in
absolute terms or on a per-share basis)...
HBM: Operating cash flow per share
0.50 0.45
0.40 0.34
0.31
0.30
0.20
0.10 0.05 0.05 0.08 0.07
0.00
-0.01 -0.01
-0.10
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16
source: HBM data
...but that doesn’t take into
account things like its large debt
servicing expense (U$26.618m
and right in line with forecast) or
deprec/deplet/amort (AD+D).
The result is that Operating Cash
flow can get them applauding at
$73m, but once we’re back
under GAAP compliant numbers
the “result from operations” of
7
erahs/$
$m HBM: Operating cash flow
110
100
90
80
70
60
50
40 30
20
10
0
-10
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16
source: HBM data
U$m HBM: Interest expense on long-term debt
35
30
25
20
15
10
5
0
1q15 2q15 3q15 4q15 1q16 2q16est
source: HBM data, IKN ests for 2016

,
$14.159m or “pre-tax loss” of $16.888m can’t justify a
$m HBM: Liquidity
$1Bn market capper, whichever way you cut it. 500
450
400
Which brings me to my main point and criticism of 350 source: HBM filings
HBM, its weakening balance sheet position. In the blog 300
on Thursday I noted how liquidity (right) is dropping 250
fast and though working cap clicked up, that’s because 200
150
the welter burden of its debt is more than 12 months
100
into the future. The total liabilities looks like this... 50
0
2q15 3q15 4q15 1q16
U$m other LT HBM: Liabilities Breakdown
3500 LT fin. debt
Other current
3000
Trade & Pay
2500
2000
1500
1000
500
0
4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16
source: company filings
...and if we isolate the main problem, long-term financial debt, that’s actually moving up.
It will come as no surprise to learn that despite that non-GAAP proclamation of 31c or so of
“operational cash flow per share,
total book value at HBM dropped in
HBM: Long-term financial debt
the quarter by 7c/share. It’s the U$m
1400
difference between style and
substance. 1200
1000
But that is also my mistake and it’s
800
one that dawned on me as I
crunched the numbers that evening 600
while watching Shanghai bid up 400
copper overnight. The influence of
200
a mediocre quarter at HBM gets
trumped time and a again by a 0
bullish macro and come Friday’s 4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16
open, HBM shot higher despite its source: HBM filings, IKN adjusts to U$
financials, not because of them.
I’m the guy that gets anal and cares about balance sheets. Even at the best of times I’m in a
minority but at the moment I feel like an Army Of One. Quite rightly, nobody else cares about
whether HBM is in debt problems in 2019, nobody’s looking further than next week, the object
is to buy the sector and not pick over relative strengths of company X against Y.
The final chart below is the year-to-date of HBM versus GDX and the copper producers’ ETF
(COPX) has the real deal story, everything’s now going up and the best thing is step aside and
let stocks do just that. I therefore throw in the towel on my failed short trade in HBM and will
cover this week, most probably tomorrow Monday. Sometimes you just get them plain wrong
and when you do, the only healthy thing to do is admit it, change the circumstances and move
on. So be it.
8

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Stocks to Follow
Six of our ten open positions registered gains last week (BTO.to, SAND, TK.v, INV.to, FCV.v,
REG.v), one was unchanged (NEV.v), and three were losers (SAM.to, LRA.v, HBM short). Of the
losers, the biggest by far was the 15.5% lost in the HudBay short, while the winner’s circle was
led by INV Metals (INV.to up 39.4%), B2Gold (BTO.to up 13.9%) and Tinka Resouces (TK.v up
13.5%), all solid wins.
We currently have to ten open positions, five less less than our self-imposed maximum of
fifteen at any given time. Seven are in the green three are in the red.
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$2.79 32.2% New tgt C$2.88, holding
Starcore Intl SAM.to STR buy C$0.51 10-jan-15 C$0.60 17.6% Top Pick 2016, Added 81c tgt
Long positions (in current order of preference)
Sandstorm Gold INV.to STRbuy U$3.92 17-apr-16 U$4.27 8.9% StreamCo, now solid, new trade
Tinka Res TK.v STR buy C$0.185 19-apr-16 C$0.21 13.5% Top value Zn/Sn/Ag stock
INV Metals INV.to spec buy C$0.25 03-apr-16 C$0.69 176.0% Near-term trade for 2q16
Lara Expl. LRA.v Buy C$1.15 08-apr-12 C$0.45 -60.9% solid biz model, waking up
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.085 -63.0% 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
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.48 60.0% 2016 looking better
Short positions
HudBay Min. HBM covering U$3.60 03-apr-16 U$4.98 -38.3% Taking loss on 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
9

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Now for some notes on current basket stocks.
HudBay Minerals (HBM): Covering short. Not much more to add to the piece above, just
making an official statement here. I take my loss, I learn something (hopefully), I move on.
Starcore Intl (SAM.to): Added a few, will add more. My cost average clicked up another
notch or two in the table above, I’m trying to be disciplined and adding just small amounts at a
time, but it’s becoming clear that I’m going to have to pay up now. So that’s what I’m doing.
As for newsflow, there’s a distinct advantage in accumulating SAM at the moment. Being a
company that has one of the “odd” financial years, it has already reported its 2q16 numbers (to
end January and published March) and we’re now in a reasonably quiet news period for the
company. The current quarter ended April 30th (i.e. yesterday), we will probably have a
production number from SAM in the second or third week of this month of May, then the
quarterly financials are filed in July. This gives me (us?) time to buy without too much market
noise and that’s good because the premise of raising this stock to a Top Pick is all about its
rapidly improving margins on gold production, as much as the balance sheet strengthening real
estate deal or the appreciation of its asset book. When the penny drops with the market that
SAM’s gold production is producing significant free cash flow, it won’t be a CAD$29.5m market
cap company any longer. This is my idea of a screamingly cheap buy in the gold space today,
and that’s why it’s now at the head of the table.
Tinka Resources (TK.v): Added some more, adding next week I fished a few more and
my cost average notched up by half a penny. Shares in TK.v are now 50% up on the price
when I recommended the stock (pre-open April 19th) and that’s all nice and pretty for sure, but
the thing to really like about the way it’s been trading these last nine days is the volume. Here’s
a chart:
Tinka (TK.v): Nine straight days of 100k+ traded volume
2.2 2.152
2
1.8
1.6
1.4
1.2
1
0.788
0.8 0.679
0.6 0.464 0.413
0.4 0.2 0.231 0.237
0.2 0.102
0
19/4/16 20/4/16 21/4/16 22.4/16 25/4/16 26/4/16 27/4/16 28/4/16 29/4/16
source: TSXV, IKN calcs
10
serahs
fo
snoillim
Pre-April 19th, TK’s three month volume average was just over 40,000. Since the reco, it’s
managed to trade at least 100,000 shares every single day, including the 2.15m shares on the
first day and the eye-catching 788k shares last Thursday. You have to go back to the period
February-April 2013 to see the same amount of trading interest in the stock (though even then
its best run over 100k was eight consecutive days) and that was when the stock was up and
flying at over CAD$1.
This is good. What TK the stock needed, more than anything else, was to stop getting ignored
by investors and traders who occasionally think zinc but when they do, get shepherded by their
sellside brokerages into the awful Trevali (TV.to) as “the only play on zinc”. In TK there’s an
alternative and with the new rotation in shares, there are new holders replacing those that
suffered through the years of inertia and are fed up with the name Tinka. It’s now up to the
company to deliver attractive news that will hopefully start with the resource update. It’s due in
Q2, so if it isn’t this month of May (possible) it’ll be June (more probable).

,
Sandstorm Gold (SAND) (SSL.to): Adding more next week. Although it didn’t announce
the move, IKN found out (8) that SAND was the major buyer of the $5m placement in Marian
Resources (MARL.L), minority owner of the literally “Hot” Hot Maden project (with Sprott US
the minor taker of the project). We should note that SAND already holds a 2% NSR on Hot
Maden, part of its $22m royalty purchase package from Teck announced in January (9) and we
also know the company is keen as mustard on the project, with company Technical Veep Keith
Laskowski saying its a project type he’s only seen three or four times before (during his 35
years of professional life). This is a
cheap way of adding exposure to the
project (we recall SAND is in
consolidation mode in 2016, not that
much cash to spend) and the move
sounds right to me.
In trading SAND moved up with the
market, outperforming the streamers
but underperforming the bigger
miners and the basket ETFs. Along
with plenty of other mining stocks, it
touched its 52 week high on Friday.
The decision to add at this point is an
easy one: SAND is the right type of
stock for my tastes and its added
bonus is the way in which its decision to “go investment grade” and become more like market
leading Franco Nevada (FNV), less like a stock with management who take risks and gamble, is
the reason why I think there’s plenty of upside in this stock in 2016 even if the gold bull run
flattens and the sector starts to consolidate. At U$1,300/oz gold I want less cash and more
market exposure, I’m adding to my SAND position next week and averaging up.
INV Metals (INV.to): Last weekend in IKN363 I started the INV comment with “Real strength
here”, which was underscored by the trading week and another big percentage win in this
speculative trade that’s working out spectacularly well.
When I first recommended this stock as a buy it had an C$11.61m market cap. That was a
mere five weeks ago and since then, with 15m shares added in the 20c “friends’n’family”
placement plus the rocket run-up in the stock price, that market cap is now a cool C$44.45 and
within spitting distance of 4X! With that in mind I’d like to be as clear as possible; if you sit me
down, look me in the eye and ask me whether INV Metals is worth its current share price I’ve
have a bit of a job justifying things (something very easy back in IKN359 when cash nearly
covered market cap) but I’m not a seller yet, the ‘let it ride’ message of IKN362 is the same.
We’re in rampant bullish territory and in this stock at least, we have yet to see the type of
large-scale volume spike that often marks a top.
It’s shot up a tonne and that means yes, it could stall and reverse. But history shows that
stocks such as this one can go from big to massive to crazymad wins before they find large-
scale sellers. I do have a selling point in mind, the PFS update that’s supposed to show up this
quarter. Until that event I’ll let this one run, risk understood and potential reward that gets my
greed glands working overtime.
B2Gold (BTO.to) (BTG): Two things I got right about BTO in the last week
As stated on the blog the evening of the production numbers for 1q16 were released (10) the
numbers sucked. The Wednesday 27th NR (11) had other details and made a lot of the
consolidated gold production of 127,844 oz, which was just a spit away from the IKN house
forecast of 128,000oz Au and as such acceptable, but scratch the surface and things aren’t so
great. Here’s a table of the individual mine results and...
11

,
BTO: IKN prod. ests for 1q16 by mine compared to results
Mine Libertad Limon Masbate Otjikoto
1q16 estimate
30000 13000 45000 40000
1q16 result 29198 10216 52727 35703
difference 802 2784 -7727 4297
source: BTO data, IKN ests
...BTO can thank its stars that Masbate had a blowout quarter, 16% better than its budget and
17% better than the IKN forecast, because without that performance things would have been
dull indeed. Libertad missed by a small
802oz to IKN forecasts and we’ve already BTO: Otjikoto gold production, per qtr
seen the bad news about that mine’s 45000
reserve count come through on the 40000 36963 38252 39374 35703
35000
Annual Information Form. Limon missed 31134
30000
by a big 2,784oz to IKN forecasts
25000
(21.4%!), which BTO put down to “limited 20000
access to higher grade ore from deeper 15000
stopes at Santa Pancha 1” and too much 10000
5000
water flow, which they now say has been
0
solved. But the worst of the lot in my view
was Otjikoto, which at 35,703 oz was the
worst quarter since the mine declared
commercial production, even if BTO says it
made its internal guidance by 50 oz. My house estimates weren’t over-ambitious at all, BTO
pitched its own way low to give itself
leeway and the market, bullish as it
is, decided to give the company a
pass. Here’s the consolidated mine
production chart which gives a visual
on how Masbate stopped the gap.
As for sales, they were lower than
production at 120,899 oz Au and as
a result, BTO reported preliminary
revenues of U$144.3m, U$9.7m
lower than the house forecast for the
quarter. As for costs, the limited
information in the NR last week
(they reaffirmed overall annual cash
cost guidance, nothing else)
suggests that operating revenues (that includes AD+D) will be crimped to $26.3m where I was
12
51q1 51q2 51q3 51q4 61q1
Oz Au
source: company filings, IKN ests
BTO: gold production by mine
160000
150000
140000
130000
120000
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
oz Au Otjikoto prod
Masbate prod
Limon prod
Libertad prod
source: company filings
BTO: operating margins
200 190.0
176.3
180
155.0
160 138.9 136.5 139.3 139.0 144.3
140 128.0 128.0
115.6 116.9 116.3 117.8 118.0 120.0
120
100
80
62.0
60 48.3
35.0
40 23.3 19.6 22.9 21.2 26.3
20
0
51q1 51q2 51q3 51q4 tse61q1 tse61q2 tse61q3 tse61q4
$m
revenues COGS Op. Rev
source: company filings, IKN ests for 2016

,
previously looking for around U$36m. We shall see.
Overall a mediocre production NR from BTO but who cares? Buy this bull and don’t overthink
things. Last week I dropped the near-term stock reco to hold, but the more important part of
the call was not to sell any of these in this market atmosphere. That played out, the market
decided to ignore the mediocre quarter numbers from BTO and just bought the merry devil out
the stock, same as so many others. In cases such as HudBay (see above) and Belo Sun (see
below) I’m guilty as charged of overthinking the situation, on this one (and where there’s real
money in play on a personal level) I got it right. I won’t add to my BTO here, there are better
places to deploy new cash in my opinion (e.g. SAM, TK, SAND, RIC) but it’s a strong hold...we
keep dancing until the music stops.
Final point: I’ve raised the IKN price target for BTO $2.88, an adjustment to take into account
U$1,300/oz gold prices. The “not buying any more but not selling either” is the true message.
Focus Ventures (FCV.v): FCV filed its quarterlies (end Feb ’16) on Friday evening with no
surprises in the numbers, the working cap remains heavily in the negative due to the $4.5m or
so in financial debt (with Sprott US) that matures in September, plus a corporate structure that
has tickover cash in treasury. We await the updated/improved PFS from the company, should
be in the next few weeks.
The Copper Basket
After seventeen weeks of 2016, The Copper Basket shows a 69.87% gain to level stakes.
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 HudBay Min. HBM.to 0.35 235.23 1472.54 6.26 17.9%
2 Ivanhoe Mines IVN.to 0.61 778.96 810.12 1.04 70.5%
3 Reservoir Min. RMC.v 4.08 48.69 447.95 9.20 125.5%
4 Capstone Min. CS.to 0.44 382.04 301.81 0.79 79.5%
5 NGEx Resources NGQ.to 0.65 205.06 174.30 0.85 30.8%
6 Cordoba Min. CDB.v 0.16 86.86 75.57 0.87 443.8%
7 NovaCopper NCQ.to 0.395 104.33 71.99 0.69 74.7%
8 Copper Mtn CUM.to 0.445 118.8 71.28 0.60 34.8%
9 Western Copper WRN.to 0.38 94.19 70.64 0.75 97.4%
10 Nevada Copper NCU.to 0.66 80.5 69.23 0.86 30.3%
11 Copper Fox CUU.v 0.125 417.64 54.29 0.13 4.0%
12 Atico Mining ATY.v 0.28 97.59 40.50 0.415 48.2%
13 Hot Chili Ltd HCH.ax 0.09 445.723 37.89 0.085 -5.6%
14 Amerigo Res ARG.to 0.205 173.61 27.78 0.16 -22.0%
15 Revelo Res. RVL.v 0.055 99.19 6.45 0.065 18.2%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 69.87%
Up 9.3% on the week, our Copper Basket continues to rack up the gains in strong fashion but
there were four losers (NCU.to, CUU.v,
WRN.to, RVL.v) scattered in the mix, too. The Copper Basket 2016, weekly evolution
100%
However the other 11 all moved forward and
leading the charge was Reservoir (RMC.v up 80%
32.2%), now confirmed as our first M&A 60%
take-out of the year (and the first since The 40%
Copper Basket 2014 in fact, as there were no
20%
basket stocks bought out in 2015). There
0%
were four losers. Not far behind in
percentage terms at least came NovaCopper -20%
(NCQ.to up 27.8%) even if its volume is
minuscule next to the serious copper stocks.
HudBay (HBM.to up 15.3%) was the other
13
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam
source: IKN calcs

,
double figure percentage winner, about which I’m all-too aware.
The driving force for the decent gains in the space
was the metal, with copper again threatening
U$2.30/lb at the end of the week and confounding
its bears, your truly included. The copper move
looks like a direct reaction to dollar weakness,
rather than a commentary on improved demand in
China and elsewhere.
Over at last week’s big Expomin conference in
Chile, the mood was reportedly optimistic but more
about the likelihood that copper has found a
bottom, less about an immediate upturn. Cochilco
reiterated its forecast for a U$2.15/lb average for
2016, which means it needs to drop from its
U$2.26/lb this weekend. The reason for move in
copper on Thursday and Friday was almost
unanimously said to be “dollar weakness” by the
trade paper notes, a slight smattering of “China
Hope” for good luck.
It’s the end of another month, here are our monthly stock tracker charts of world copper
inventories in official warehouses (the false bulls like to throw in the bonded warehouse
numbers, they make no sense and are rarely a price discovery influence):
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
Shanghai leads again, but the expected de-stocking period is underway and its share of world
copper storage has dropped slightly to 59.85% as at Friday evening, down from 63.86% this
time last month. Notably Comex is retaining its share, that’s six months of 11% participation
and the last time that happened was 2012. It’s a more difficult set of numbers from which to
draw solid conclusions, but the inference is slack demand in North America. Which fits what we
know about the timid recovery in manufacturing in that region, of course.
We move to the weekly copper warehouse inventory bullet points:
• Total world copper stocks in the three official warehouse systems dropped by 19,399
metric tonnes (mt) (-3.6%) to 521,168mt, a normal type of de-stock for the time of
year.
• Shanghai SHFE stocks dropped by a decent 19,795mt (-6.0%) to 311,894mt, just what
we’d expect and evidence that last week’s non-drop was a blip. Trading was reportedly
moderate volume on the world’s biggest copper market.
• LME stocks continue to show timid signs of recovery. Up again this week by 1,700mt
14
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram rpa
Copper inventories, per month, 2012 to date
1000000
LME Shanghai Comex source: Cochilco 900000
800000
700000
600000
500000
400000
300000
200000
100000
0
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram rpa
Mt Cu
LME Shanghai Comex
source: Cochilco

,
(+1.2%) to finish at 149,500mt, the main change is the disappearance of the arb that
got metal owners to ship their wares from LME to SHFE warehouses early year.
• Comex stocks slipped under the 60k line in the sand, down a modest 1,304mt (-2.1%)
to finish the week at 59,774mt.
Here’s the Shanghai-only chart, which documents more clearly the re-start of the de-stocking
process.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
15
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
We’re down to 311k, but context is necessary. Shanghai needs to lose another 53,000 metric
tonnes of copper from its warehouses just to get back to the previous record high level! That’s
1,325 trucks carrying 40 tonnes apiece on their backs. A lot of copper.
Now for brief comments on a couple of our basket stocks:
Reservoir Minerals (RMC.v): Last weekend’s rumour, strong though it was, became fact late
Sunday evening (it would have been Monday morning but for that NSU website silliness) when
Nevsun (NSU.to) and Reservoir (RMC.v) announced they were combining forces in a deal
pegged at a $365m ticket price. Aling with the deal comes a ready-made financing package for
Timok which means Reservoir will exercise its Right of First Refusal and the property stays with
this newly merged entity and out of the clutches of Lundin Mining (LUN.to), the ones who came
in with the first offer. LUN is now calling its bid “opportunistic” and saying that it wasn’t
surprised to be outbid...but they would say that wouldn’t they?
As for RMC, the best quote I saw was in this Reuters piece Monday (12) That had RMC head
Simon Ingram saying, “There were lots of groups in the data room”. In other words, plenty of
interest in the project and plenty of (potential) bidders, even though NSU was apparently
“talking to them for a year” before sealing the deal.
The inference is clear: Yes RMC owned (a large part of) what was generally considered the
world’s best copper project so you’d expect it to be the first one on the block, but it’s telling us
that M&A in the copper space is only just starting. Which brings me to...
NGEx Resources (NGQ.to): I will tell no lies, having removed my own psychological block by
covering HBM (well, calling the cover and doing it in the next day or two) I’m close to buying
this. The concept behind the purchase is simple enough:
• Big copper deposits (in this case they’re plural and they’re big)
• Improvement in Argentina risk perception, plus Chile
• Top management team stable
• Potential first-foot mining camp with the semi-separate silver deposit
Another thing of note: As this two year chart shows, NGQ is still being ignored on a relative
level in trading (this aside from the heady days of 2012 and 2013 when it traded in the millions-

,
per-day at over $3).
So conceptually that’s the trade idea but you’ll note I’m not a buyer this weekend, so the
conceptual drawbacks need to be voiced and they are:
Copper still looks weak. The view from Chilean experts and industry chattering classes that
we’re not out of the low price environment for copper yet is an influence on my thinking yes,
but it’s more of a backing for my self-attained bearish position.
Argentina is a barrel of monkeys. I note that the key inflation rate is still moving up and to add
to the fun a new round of price increases were announced last week including two things
Argentines adore, car fuel (up 10% (13) and, impressively, the 4th government mandated fuel
price increase since Macri came to power) and cigarettes (up 40%). Public dissatisfaction is
already showing via union marches against the Macri government, with the big one last week
led by people who supported his presidential bid. Yes I’m nervous about committing too early to
country exposure and getting hit by any backlash, in a perfect world I’d wait until 3q16 and
clear signals that inflation is dropping.
This is one of those situations where I’d like to be talked out of my lily-livered yellow-bellied
failure to pull the trigger so, if you feel like convincing me to buy NGQ, you know my mail
address. There’s a lot to like here, the trade is in the right frame and the RMC/NSU deal isn’t
going to be the last M&A in copper this cycle, of that there is little doubt.
Ivanhoe (IVN.to): Notable that despite a lot of public pronouncements , chatter and
huffing/puffing about IVN from the master salesman himself Robert Friedland, the stock only
managed to put on a penny over the week. I’m not drawing any conclusions from that, just
marking it as a potentially interesting item. Let’s see how it trades this week coming.
NovaCopper (NCQ.to): The percentage gain was excellent last week but I’m still
unimpressed. Traded volume remains low and this is an issue, as this stock has seen previous
run-ups on low volumes which then come to an abrupt end with a nasty waterfall drop. Once
again, if you like this type of gambling action I recommend the casino over the stock market,
they bring you free drinks.
Then there’s the promotional aspect. We saw just a couple of weeks ago how the wildly
overpaid Rick Van Alphabet, a person on a base salary of C$400,000 per annum and the happy
recipient of a C$176k cash bonus in 2015 as well as a whole heap of bonus stock options,
manages the promo effort, conjuring a “173% increase” (14) in resource from one of the
project targets without putting a single extra hold in the ground (re-logging and re-
interpretation of data were the magic ingredients). A man who demands and gets the salary of
a profitable operating junior miner for what’s essentially an exploreco in a holding pattern who
then talks about such a re-jig of data as being,”...a huge value-add for shareholders”, well it
16

,
just sticks in the craw. When I buy into a junior I don’t like the feeling of being ripped off by
management even as a latent issue, with NCQ it’s front and centre.
The Low Cost Producer Basket
After 17 weeks of 2016, the Producer Basket shows a gain of 107.54% 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 22.56 19.37 162.5%
2 Newmont NEM 17.98 529.12 18.50 34.97 94.5%
3 Goldcorp GG 11.56 830.22 16.72 20.14 74.2%
4 Franco Nevada FNV 45.75 176.298 12.37 70.16 53.4%
5 Agnico Eagle AEM 26.28 217.67 10.28 47.25 79.8%
6 Ang/Ashanti AU 7.10 405.27 6.67 16.45 131.7%
7 Detour Gold DGC.to 14.41 170.85 4.60 26.91 86.7%
8 Sibanye Gold SBGL 6.09 228.71 3.52 15.40 152.9%
9 Buenaventura BVN 4.28 254.19 2.58 10.15 137.1%
10 New Gold NGD 2.32 509.89 2.40 4.70 102.6%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 107.54%
They all went up last week, the sector getting new impetus from the dovish Fed decision, the
pop in gold, the dollar’s weakness and a new influx of cash into the whole commodity complex
(not just precious metals). Some of the new gains were nothing short of massive too, with BVN
the best in percentage terms (+20.8%) as
it moves from worst to nearly first on our The Low Cost Producer Basket: Weekly performance
list of ten, but the real action was in a big 130% and comparative to GDX control
boys such as Goldcorp (GG up 17.9% and 110%
shrugged off an “in line” quarter with ease) 90%
and Barrick (ABX up 20.2%, real star 70%
quality.
50%
30%
This weekend, this section of The IKN
10%
Weekly serves its purpose very well; we’ve
-10%
seen how the larger caps began to stall in
the second half of April to the point where
the lack of extra oomph was worthy of a
comment in IKN363, but the remedy they
wanted was at hand last week, gold took off
again thanks to Janet and the weak dollar, a
new round of fresh money has entered into
the mining space. This is good and if the
pattern of February/March is repeated, that
money will now rotate into the lower-caps
and bring a new round of sharp price
increases. What could possibly go wrong? ☺.
More seriously, the type of action seen in the
big caps last week is exactly the reason why
we follow them in this section, it and they
provide a necessary clue to the future of the
juniors. What we saw last week was wholly positive for the sector, take that to the bank.
Barrick (ABX): Rather than be cute and re-phrase my thoughts on its 1q16 financials, I’m just
going to re-publish the comment I made on the blog last week (15) on reading the company
NR. Be in no doubt, ABX has “market star” written all over it now. What’s left is a JV deal on
17
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam
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%
ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam
source: ikn calcs, NYSE/Nasdaq data

,
Pascua Lama with the Chinese Zijin get that in and the company’s balance sheet and its political
risk improve again measurably. Shouldn’t be long now. Anyway, here’s that ABX post I
published last week:
Barrick (ABX) identifies its audience, and...
...it ain't you guys up there no more, Toronto.
Reading through the ABX 1q16 financials NR out this morning I was struck by its
superior message, both to the ABX of the Munk era and to any of its Tier 1 rivals today.
The decision to put a GS man in charge is paying off, ABX is now fluent in the
language of Wall St and the fact it happens to be a gold miner with a product that's
been largely alien to the "Very serious Financial People" for so long is now secondary.
The tone, the style, the delivery is the same as you get in quarterly reports from the
people who bring you Barbie dolls, canned tuna, smartphones or household paper
products. The 2016 ABX is a money-making business first, second and third. It just
happens to be a gold mining company as well.
If I were a New York fund manager who has been toying with the idea of adding gold
exposure to their portfolio, on reading this 1q16 NR I'd be on the phone asking my
underlings just why we didn't own ABX already. Today's NR won't go down so well in
Toronto because they're going to feel a little out of joint with the message, the
traditional gold mining investment world isn't the target of this news release. They're
becoming irrelevant.
Goldcorp (GG): Aside from its excellent share price performance, GG made the news last
week when it was reported that the company had become a victim of computer hackers.
According to the Daily Dot when breaking the story on Tuesday (16), hackers had got hold of a
lot of personal information of employees and they were preparing a second data dump that
“...will include 14 months of company wide emails, emails containing some good old fashion
corporate racism, sexism, and greed.”
In other words, GG is victim of an attempted extortion which is why they’ve handed the matter
over to police and authorities. Quite right too. As for “corporate racism, sexism and greed”
claims, what else would you expect from mining company executives?
Regional politics
Fe erratum: Gregorio Santos and congress members
Last week in IKN363 I wrote and reported on news from the Peru election that Gregorio
Santos’s Democracia Directa political party, having gained 5.15% of the vote in the Andean
Parliament part of the election, would remain as an officially sanctioned political party and get
up to three seats in the next national congress (not just the largely ignored Andean
parliament).
It turns out that’s not the case, according to plenty of analysis and reports this week (as well as
a couple of readers who pointed this out to me). It’s now understood that although Democracia
Directa will remain as an officially sanctioned party thanks to it getting above the 5% minimum
barrier, the party won’t have any congress members (17). Perhaps a minor matter in the great
scheme of things, but worth clearing up the factual error in IKN363. The strange part of this is
to consider that the party that got far and a way the most votes in Cajamarca (more than 40%
and that’s a lot in Peru terms) doesn’t get to represent any of its supporters in its parliament.
This may hinder Cajamarca more than it helps, with locals feeling alienated even further by the
political system that continues to ignore their views.
Sea Water and mining in Chile
Last week saw Chile’s Expomin mining conference, its biggest of the year and with all the
industry’s great and good in attendance. The mood was upbeat according to a couple of people
that attended and told me about the fun (including reader SD and his very boozy
18

,
evening...thanks for that sir), but when it came to content the most interesting part, for me at
least, was the way in which Chile is now switching on to the use of seawater for its large-scale
mining projects.
The main presentation on the subject was entitled “Use of Sea Water in Mining”, (“Uso de agua
de mar en minería”), a prosaic name for a very interesting talk on Wednesday 27th headed by
Camila Montes of Cochilco and featuring several big name mining companies in Chile (18).
Featured were overviews of seven new sea water treatment operations in the country, with the
segments delivered by representatives of the companies in question such as:
• La Escondida and its headlining U$3.4Bn desalination and pipeline project that will
begin delivering fresh water to the world’s biggest copper mine in 3q17.
• The Cerro Negro Norte mine, which needs 200 litres per second of fresh water but has
built itself a 500l/second desal/pipeline plant, with the mine deciding to benefit from
economies of scale and planning to sell the excess water production to other mining
operations.
• The newly approved desal/pipeline project for the Spence copper mine which will
deliver 800l/second and implies a U$800m capital investment
Those and others, seven projects in all. In the words of Rodolfo Camancho, in charge of the La
Escondida project (translated); “Seven years ago nobody, myself included, considered the idea
of building desalination plants, it was a bad option. Nobody foresaw the tsunami of desal
operations that have come along. In this short talk we’ve heard about seven desal plants, which
in reality are in real terms sea water pumping operations.”
According to the data presented, currently the water used in mining operations in Chile comes
from 39% surface (lakes, rivers etc), 40% underground (wells etc), 5% third parties (waste
water sales etc) and 16% sea water. By 2026, Chile expects that 50% of the water used in
mining operations will come from sea water sources.
Peru: Mining as an election issue, plus latest polling
Mining is now part of the election agenda, with the Anti-Keiko groups (which include the current
government and led by current First Lady Nadine Heredia) accusing the Fujimoristas of letting
illegal mining off the hook via Keiko’s policy of rolling back the current formalization law.
• The pro-Keiko side says the law as stands is an ass, is unworkable and has been
ineffective. All true. They want to roll back the current law and bring “real formalization
to the sector”. That’s electioneering.
• The anti-Keiko side says that she’s pandering to the black market cash and mafia-type
leaders who run illegal/informal mining and if/when she gets into power she’ll let them
carry on regardless. That’s also probably true. They say Keiko is in the pocket of big
money and point to how illegal mining is supposedly bigger business than cocaine in
Peru these days. That’s electioneering (and the “gold bigger than cocaine” shtick is
complete nonsense).
As for the voter intention polls, just one to add to last week’s list (in italics here), the latest
from CPI (in bold type here) which puts Keiko in a slight lead.
• IPSOS: Keiko 40%, PPK 44%
• CPI: Keiko 43.6%, PPK 41.5%
• Datum: Keiko 40.4%, PPK 41.1%
• IPSOS: Keiko 39%, PPK 43%
• CPI: Keiko 42.3%, PPK 40.1%
Notably, IPSOS has had two polls, both favouring PPK over Keiko and by the same percentage
19

,
amounts. CPI has also had two polls published so far and both favour Keiko over PPK by the
same amounts. In other words take your pick of the pollsters to suit your mood. Or in other
words, the talking heads in Peru are already saying “too close to call”. Or if you fancy a flutter,
sportsbook Betsson (19) is offering 1.7 on PPK and 2.0 on Keiko (making PPK a slight favourite)
and I don’t mind telling you, I think even money on Keiko is a very good price.
In other news, Peru’s INE stats people last week announced (20) that the average monthly
salary in Peru had risen by 30.5% in the six year period 2010 to 2015, rising from S/.987 to
S/.1,305 per month (1,305 Soles is U$401 at today’s forex). Which sounds nice until you factor
in a couple of other datasets. First inflation, which has been reasonably benign in the country
(this isn’t Argentina) but is still an influence. The effect of the annual inflation rates in Peru
during the same period according to the IMF (21) tots up to 19.6%. Second GDP growth which,
again according to IMF figures, has seen Peru improve by 37.1% over the same period.
In other words, GDP has been stronger than the average salary increase, but when inflation is
factored in the purchasing power of the average Peruvian has increased by just 10.9%. People
at ground level rarely feel the direct and immediate effect of such stats, but over time there is
an effect of the “where’s my part of this boom?” variety and the stats make it plain, the
average Peruvian didn’t get the full effect of the country’s prosperous period. And then the
intellectual quarters of its society wonder why populist election promises and pledges are vote-
winners. Sadly and against my preference, I still believe Keiko will win this vote not matter how
tightly the pollsters are framing the contest.
Colombia: The Buriticá operation against illegal miners
The operation in Buriticá to rid the town of illegal/informal/artisanal (choose your preferred
political statement word) gold miners started on Monday and has been called “unprecedented”
in the history of Colombia by those reporting on the clean-up. Around 1,500 officers (police,
army and even air force personnel on the ground) have so far evicted between 700 and 1,000
of the 5,000 illegal miners (depending on what report you read and the stories are full of the
types of data and stats they love at these moments. This one (22) this weekend for example
quotes the police chief in charge and lists the destruction or confiscation of (translated), “...518
ball mills, 150 rotation bands, 729 metres of water tubing, 50 chain link bands, 40 ore transport
vehicles (could be as simple as a wheelbarrow), 29 electric pump motors, 33 grindstones...”,
and they go on. Many (not all) of the informal mine entrances have been blocked off and are
due for demolition as soon as authorities are confident there are no miners left inside (part of
the plan is to starve people out of the underground mines, when they run out of food they’ll
have to come out). The other common factor in the reports is how the illegals are all connected
to the Úsuga Clan of criminals and how Continental Gold is the hard-done by entity that’s finally
managing to recover its legally owned terrains.
In other words, a lot of national scale opinion-formation by government-friendly reporters. Yes,
some of the illegals are connected to the far right wing paramilitary clans for sure. Some of
them are from other parts of Colombia. Some of them use the whorehouses that have sprung
up in the town (reports of how the prostitutes earn more than the miners have been another
common thread in the Colombia media). The local mining leaders aren’t making a big fuss
about the operation yet, but I’d expect they’re biding their time as waiting for the right moment
to present the case for the defence. Meanwhile, CNL is quoted as offering subcontract work for
Buriticá locals who want to work in a formal mining company, which is the same plan that locals
say they were offered previously only to be cheated by the company (23) (24). We shall see on
this. The operation is big and it’s a new departure for Colombia, if it works then it will indeed
clean up a small corner of the country from the plague of illegals. But those of us that know the
way the public is spoon-fed information in Colombia will recognize a pattern of propaganda, the
whole story is far more complicated than the one being presented. As one of the very few
dissenting voices in the Colombian media, León Valiencia of Semana Magazine, said in his
regular weekly op-ed this weekend (25) (translated): “The population of these regions (e.g.
Buriticá) need gold mining to make a living and there is no institutionality or legislation that
allows them to do so in a legal way with acceptable environmental and social controls”. He
20

,
finishes his perceptive op-ed with, “Via repression, with actions such as those in Buriticá this
week, (the government) will only increase the protagonism of illegality and violence”.
Peru: Southern Copper president on Tia Maria permits
Lat week, Óscar Gonzales Rocha, president of Southern Copper (SCCO) said (26) that unlike
Conga, the Tia Maria project is a viable one and hopes that once the second round of election
voting is done the outgoing Ollanta Humala government will grant the project its social licence
and construction licence. He said, “We’re going to repeat our request in the two months left in
the Humala government. We believe that Tia Maria should go ahead for the benefit of
everyone, the workers, local population, districts, province, country and the company”. He also
said that all observations (i.e. official questions) regarding the Project had been answered and
there was no impediment to the permits, which is true enough from a national legal standpoint
but that was also true two and three years ago when locals blocked the project from happening
and protested in the region (for the third time). When asked about a referendum on the
project, he said that any such vote wasn’t legally necessary. Which was nice of him.
Mexico: Torex has its official opening ceremony
Thursday 28th saw the official ribbon-cutting and champagne bottle cracking ceremony at the
new Torex (TXG.to) Media Luna mine in Guerrero Mexico (27). Aside from TXG CEO Fred
Stanford, attendees included Mexico’s Finance Secretary Ildefonso Guajardo Villarreal (who
represented Enrique Peña Nieto and his government, as EPN isn’t stupid enough to travel to
Guerrero) and Canada’s ambassador to Mexico, Pierra Alarie. All dignitaries made the correct
noises about the U$800m investment.
Brazil and the Dilma impeachment process: What happens now
Although not directly related to mining and in my considered opinion not a major factor in
country risk for our sector of focus (see the latest Regional Risk Review in IKN360 dated April
3rd for more) I’ve been getting a smattering of mails asking what’s happening in the media-
grabbing Dilma Rousseff impeachment process, what with things suddenly quiet. So here’s the
need-to-know:
1) Brazil’s lower house of parliament voted for the impeachment process last month, it’s
now up to the upper house Senate to approve the process.
2) That debate and vote is set for May 11th.
3) There are 81 senators, the vote to move forward on the process needs a simple
majority and as political watchers in Brazil concur that there are at least 50 senate
members who will vote for the impeachment process, things look bad for Dilma.
4) Assuming the vote goes against her, Dilma will be immediately suspended from her
duties and her Vice-President Michel Temer takes interim office.
5) The Dilma suspension will be for 180 days. During that time the Senate must vote
again after the investigation is complete on whether Dilma is guilty as charged. That
vote needs a 2/3rds majority to carry (not a simple majority).
6) If that vote goes against her Dilma loses her job and Temer becomes the official
President of Brazil until the end of the current government’s mandate, December 2018.
So now you know. There are some variations possible on that basic scenario, such as the
potential of a dissolving of government and snap elections being called, but what you see above
is now generally regarded as the most likely process and the path of least resistance. No word
on who gets to make the opening speeches at the Rio Olympics and sit in the VVIP box at the
track and field events, the official Prez or the interim one.
Market Watching
Minera IRL news
On April 29th we got the first piece of official news regarding the loosening of the Minera IRL
logjam and its intentions to re-list its shares. In an official NR sent to Peru’s Stock Exchange,
21

,
the Bolsa de Valores de Lima (BVL), IRL stated that it intended to remain listed on the
exchange (28). This is the first step needed to unfreeze trading, it also means we’re close to
the internal resolution of its well-documented problems that will allow that to happen.
However, the most interesting thing about that filing to the BVL is that the minutes of the April
18th IRL board meeting are attached (and they’re in English). As regards the TSX and its Cease
Trade Order and the current suspension of IRL shares, here’s the relevant part:
It then goes to the resolution section, which is mainly about the resolutions to get IRL re-listed
and freely trading again in the BVL but ends with this final paragraph:
22

,
We can therefore state that IRL’s intention is to get re-listed and trading again on the BVL, then
it can go about the job of lifting the CTO, the suspension and re-listing/trading again in Canada.
All this is good news.
I’ve been asked by many of you these last few weeks for news and views on IRL, I’ve been
reticent to talk about the company very much because I know that its internal matters have
needed to be attended and improved first. We’re now getting close to the end of the internal
repair period and the sight of an official release of the nature of last Friday’s (above) is a very
good sign indeed. Hopefully and soon, once a couple more specific issues are completed and
their results made public, we can talk more about the resurrection of IRL but in the meantime,
fear not fellow shareholders, your asset value has been protected (by Diego Benavides) and
your shares will still be worth money come the day. As for a guess on the value of those shares,
I’ve been asked by many of you for a rough estimate but until we know the full shape of the
financing package for Ollachea it’s very difficult to put a number on IRL’s equity value.
Red Eagle (RD.v) files its quarter
Red Eagle (RD.v), the company in the final stages of build-out at its San Ramon mine in
Colombia, filed its 1q16 numbers late Friday night and it was the lateness of the hour that got
me interested (bad news being filed when your average Canadian anal yst is on their third
Friday evening happy hour cocktail, and all that jazz). The part we should care about most is
any change or new details in guidance on the timeline and costs of San Roman, therefore the
news that RD expects first pour in the second half of the year and then commercial production
to be achieved by year’s end was right on schedule and positive. As for the financial side of the
construction, this paragraph from the MD&A was the most revealing:
“Based upon the Company’s projections and estimated construction progress made as
at March 31, 2016, the construction of the Company’s 100% owned San Ramon Gold
Mine and Mill is forecast to be funded through to full production. As at March 31, 2016,
the Company has approximately US $22 million in cash, and has up to US $15 million
available under the credit facility with approximately US $33 million of project cost left
to incur.”
This would suggest that the cash is ok but it’s still tight, as 22 + 15 – 33 = $4m in hand. That
was concerning enough for me to shoot a mail to RD.v CEO Ian Slater, who kindly answered
that very evening (obviously not a happy hour guy). He noted that 1) they hadn’t needed to
use the $7m contingency in the capex budget as yet, that they estimate they’re $4m under
budget at this point and that the recent $11m private placement comes on top of the cash
reported for the quarter. Therefore if you put those into the mix it’s fair to say that RD.v and its
construction team (plus contractors) are delivering well in this crucial phase and that RD.v isn’t
going to need to raise more capital to finish its mine, assuming a fair run for the next eight
months.
Belo Sun (BSX.to): Last week’s failed short idea
In “Belo Sun (BSX.to): This week’s short” from IKN363 last weekend, I set out the short thesis
against a company that had popped hard on the news it was about to get its construction
permits, but at the last minute the Brazilian State and Federal governments had backed out of
the final permit and signing beano because of community rejection, backlash and threats of
23

,
social upheaval against the company’s Volta Grande project. The IKN position was that when
the news of the (indefinitely) postponed signature ceremony got out, BSX would see its stock
price reverse and go back from where it came (roughly 20c, from 70c to 90c in recent trading).
Here’s a five day chart of BSX to show how things went:
Yup, another too-cute-for-own-good IKN bearish call in a rampantly bullish market. Here below
is a second chart of the same five day
period, mapping BSX against GDXJ as a
benchmark. Here we can see that BSX
lagged the market in the first two or
three days and even showed some
nervous selling on Tuesday and
Wednesday (the aborted permitting
event was set for Tuesday afternoon in
Brazil). But come Friday and nobody
cared any more, it was yesterday’s news
and this story was now a laggard waiting
to catch up with a few million ounces of
gold in 43-101 and who cares about
details, buy everything and ask questions
later.
It doesn’t even matter whether I was wrong for the right reasons, plain fact is that I was
wrong. There are two main reasons for this, as far as I can work out:
1) the same bull market rush atmosphere we’ve mentioned in sections above. Just a
couple of quarters ago, even good news from a company would be met by selling. Now
the opposite is true and bad or mediocre news is just an excuse to get in cheaply.
2) BSX managed to successfully keep the news of its postponed signing ceremony away
from the press. The company made no public noise beforehand, even though it told the
right people in the right places that the permitting event was a go. Therefore when the
event was cancelled BSX had no official egg on its face to wipe off.
Of the two, the main influence was the new and strongly bullish market for gold companies, as
seen Friday above all when buying mania really took hold.
Zinc: Demand to outstrip supply in 2016
Yes, shameful but it’s true, your author is going all zinc-pumpy on you after sneering at the “it’s
gonna happen anytime now folks!” perma-pumping of the sellside in zinc for years. This “Get
On Zinc Before It Flies!!!” is a narrative (with obligatory three exclamation marks) that’s been
sold to us for years, but this time it really seems to have some fundamentals to back up the
wishful thinking and that was underscored last week by the International Lead and Zinc Study
24

,
Group (ILZSG) saying this in its latest update, dated April 28th 2016 (29):
“Information recently collected from ILZSG member countries indicates that global demand for
refined zinc metal will exceed supply by 352kt in 2016. This deficit is higher than that indicated
by the Group during its meetings last October with the difference due primarily to additional
cutbacks in mine production announced over the past six months.”
The combination of higher expected demand in China (+4.5%) as well as in other consumer
countries, plus the closure of another
raft of mines, has altered the Zinc supply and demand, annual
15
supply/demand balance significantly
14.33
14.5
and here right is a chart of how the 14 13.745 13.93613.848 13.98
13.509
current 2016 forecasts compare to 13.5 13.065 13.03313.167
previous years: 13 12.726 12.627
12.412
12.5
The result is record demand, only 12
11.5
slight increase in supply, and the only
11
recent year with a comparable deficit
10.5
of total production (mine production is 10
most but not all of the Zn supply to
2011 2012 2013 2014 2015 2016e
market) is 2011 (the last year that source: IZLSG
zinc both went above and stayed
above U$1.00/lb for longer than just a quick spike). But that’s not all, because when you comb
through the details of the ILZSG report we also read that further supply crimps are in the cards.
To quote the bulletin, “...taking into account the predicted decrease in zinc mine supply, zinc
metal production expectations in some countries may be subject to downward revisions later in
the year”.
Overall, a bullish price scenario right at a time when commodity prices across the board are
rallying. The type of oversupply in the copper market is not happening here. That’s another
reason to like Tinka Resources in the weeks to come.
Conclusion
IKN364 is done, we end with bullet points:
• Be long Richmond (RIC) in May.
• As well as a planned purchase in Richmont (RIC), I’m adding to several positions and
getting more of my cash deployed. I particularly like the undiscovered value in Tinka
(TK.v) and Top Pick Starcore (SAM.to) from here.
• Once the short in HudBay (HBM) is covered, I may ignore the doubled-down part of the
treade and book just the original trade as the loss. This is because if I include both
trades, the percentage loss will look better. Leaving the first trade as the benchmark
will shame me more.
• I don’t care what the Lima chattering classes think, in the provinces Keiko will beat PPK
and due to that, become Peru’s next President. Then the fun really begins.
• Buy. Hold. Win.
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
25
sennot
noillim
Zn Prod
Zn Use

,
Footnotes, appendices, references, disclaimer
(1) http://incakolanews.blogspot.pe/2016/04/chart-of-day-is_29.html
(2) http://www.richmont-mines.com/news-events/news/richmont-mines-announces-details-for-the-first-qua-20160415
(3) http://incakolanews.blogspot.pe/2016/02/tahoe-resources-taho-thoto-in-late.html
(4) http://www.richmont-mines.com/news-events/news/richmont-mines-announces-the-resignation-of-greg-c-20160427
(5) http://incakolanews.blogspot.pe/2016/04/tahoe-resources-taho-thoto-close-to.html
(6) http://finance.yahoo.com/news/hudbay-announces-first-quarter-2016-205958053.html
(7) http://incakolanews.blogspot.pe/2016/04/hudbay-hbm-hbmto-1q16-numbers.html
(8) http://incakolanews.blogspot.pe/2016/04/mariana-resources-marll-placement.html
(9) http://www.sandstormgold.com/news/2016/index.php?&content_id=475
(10) http://incakolanews.blogspot.pe/2016/04/b2gold-btoto-btg-1q16-production.html
(11) http://finance.yahoo.com/news/b2gold-corp-reports-quarterly-gold-035408093.html
(12) http://finance.yahoo.com/news/nevsun-reservoir-deal-shows-m-204200925.html
(13) http://www.politicargentina.com/notas/201604/13596-manana-la-nafta-aumenta-otro-10.html
(14) http://finance.yahoo.com/news/novacopper-reports-173-increase-indicated-110000786.html
(15) http://incakolanews.blogspot.pe/2016/04/barrick-abx-identifies-its-audience-and.html
(16) http://www.dailydot.com/politics/goldcorp-hack-data-dump/
(17) http://elcomercio.pe/politica/elecciones/democracia-directa-conservaria-su-inscripcion-analisis-noticia-1897961
(18) http://www.portalminero.com/pages/viewpage.action?pageId=111216170
(19) https://sportsbook.betsson.com/pe/economia-y-politica/peru/elecciones-peru-2016
(20) http://gestion.pe/economia/inei-ingreso-promedio-trabajadores-aumento-mas-30-ultimos-cinco-anos-2159818
(21) http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG?page=1
(22) http://www.minuto30.com/en-buritica-autoridades-desmantelan-minas-ilegales-al-servicio-del-clan-usuga/467134/
(23) http://www.rcnradio.com/locales/mil-quinientos-mineros-ilegales-abandonado-buritica-operativos/
(24) http://www.elcolombiano.com/antioquia/buritica-esta-paralizada-por-operativos-contra-mineros-HE4060292
(25) http://www.semana.com/opinion/articulo/leon-valencia-buritica-y-el-conflicto-de-la-mineria-ilegal/471543
(26) http://elcomercio.pe/peru/arequipa/southern-espera-que-tia-maria-obtenga-licencia-este-gobierno-noticia-
1897905?ref=portada_home
(27) http://www.bolsamania.com/mexico/noticias/politica/minera-media-luna-invierte-800-millones-de-dolares-en-mina-
de-oro-en-cocula-guerrero—1144583.html
(28) http://www.bvl.com.pe/inf_hhii0B1HN_TUlSTA.html
(29) http://www.ilzsg.org/generic/pages/list.aspx?table=document&ff_aa_document_type=R&from=1
Appendix 1: Flash update dated Thursday April 28th
Good Thursday morning, we're ninety minutes into the Thursday trading day and it's cloudy outside.
Adding to HudBay (HBM) (HBM.to) short
Three basic reasons for the addition to this short trade:
1) The move up in HBM this morning allows me plenty of width to average up on my underwater position.
2) Copper looks weak, but HBM is rallying into its 1q16 financial release out post-close today. The fundies reasons for
being short this stock have not changed, in my opinion.
3) I'm willing to gamble on this trade. This is the most important part, I realize the risk of shorting more in the current
market atmosphere. If I'm wrong, expect another Flash update tomorrow that will say I'm covering all the doubled-down
short position.
Enjoy your Thursday. Best, Mark
26

,
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
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
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Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% closed to raise cash
Bear Creek BCM.v sep'13 C$2.06 30-may-13 C$2.20 6.8% sold on pol risk decision
MAG Silver MVG oct'13 U$7.00 12-sep-13 U$5.62 19.6% near-term short
Gold Res Corp GORO oct'13 U$9.52 03-may-13 U$4.98 47.7% short tgt made, covered
AQM Copper AQM.v oct'13 C$0.31 16-oct-11 C$0.125 -59.7% closed failed trade
First Majestic AG nov'13 U$11.51 07-nov-13 U$10.50 8.8% v near term short, closed
Fortuna Silver FSM nov'13 U$4.00 07-nov-13 U$3.68 8.0% v near term short, closed
Primero PPP nov'13 U$5.70 07-nov-13 U$5.75 -0.9% v near term short, closed
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work, sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
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Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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