IKN #366Premium

,
The IKN Weekly
Week 366, May 15th 2016
Contents
This Week: In today’s issue, The new working theory about GLD, Remember this chart at all
times.
Fundamental Analysis: Starcore Intl (SAM.to): Bad, good and game-changing news.
Stocks to Follow: Overview, Starcore Intl (SAM.to), Sandstorm (SAND) (SSL.to), Richmont
Mines (RIC) (RIC.to), Tinka Resources (TK.v), INV Metals (INV.to), B2Gold (BTG) (BTO.to),
Lara Exploration (LRA.v), Nevada Sunrise (NEV.v).
Copper Basket: Overview, HudBay (HBM.to) (HBM), Capstone (CS.to), Copper Mountain
(CUM.to), Amerigo Resources (ARG.to), Western Copper (WRN.to), NGEx Resources (NGQ.to),
Hot Chili (HCH.ax), NovaCopper (NCQ.to) Revelo (RVL.v), Cordoba Minerals (CDB.v) and
Ivanhoe (IVN.to).
Low Cost Producer Basket: Overview, Goldcorp (GG).
Regional Politics: Argentina: The Chamber of mining “promises” growth, Argentina: Pan
American (PAA.to) (PAAS) Navidad’s major opponent, Peru: Keiko‘s slight polling advantage,
Peru: Tia Maria locals protest peacefully and plan to do it again, Venezuela: A 60 day State of
Emergency declared, Colombia: Tolima to hold a referendum on mining in June, Colombia:
Buriticá clean-up operation update, Chile promotes itself in Great Britain.
Market Watching: B2Gold (BTO.to) (BTG) 1q16 financials deferred.
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
• Starcore (SAM.to) is ratified as a Top Pick and gets a new target price on the back of
the potential game-changing news from its San Martin mine last week.
• Our other Top Pick B2Gold (BTG) (BTO.to) puts in a good quarter thanks to lower than
expected costs. We’ll do that next week though, the SAM piece got long.
• Plenty of political news and views across the region as pertains to mining.
• Above all, remember the main directive about mining stocks in 2016. Choose the ones I
like or reject my picks as junks, choose the ones others like, choose your own. I’m not
fussy, all I ask is that you Buy. Hold. Win.
The new working theory about GLD
There has been a sudden and welcome change in the gold bullion inventory levels at GLD, the
world’s biggest gold ETF. From the low of 802.65 metric tonnes (mt) I was moaning and
worried about just a couple of weeks ago, GLD holdings have shot up rapidly in the first two
weeks of May and closed Friday at 851.13mt, an add of 48.48mt worth nearly U$2Bn at current
spot rates. I don’t care whether that’s dwarfed or not by the USA debt pile, that’s serious
1

,
money.
GLD gold holdings, March-May 2016 (metric tonnes)
855
850
845
840
835
830
825
820
815
810
805
800
795
790
785
780
775
770
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 61/52/4 61/72/4 61/92/4 61/3/5 61/5/5 61/9/5 61/11/5 61/31/5
mt
source: SPDR GLD data
Back in February when the gold run was in its infancy, GLD holdings began ticking up before
the first explosive move and it was clearly a leading indicator. That’s not the case any more,
GLD is now a lagging indicator and the cutting edge of price action is in the mining company
stocks. But even though it’s lagging, the action we saw last week is important because it brings
fundamental backbone to the gold sector. U$2Bn of new money in the shiny metal props up a
lot of hot air and opinions, the bullshit may or may not walk in the future, but money talks.
I like what I see in GLD in May, it won’t move the price but it’s confirming the new bull in gold.
Remember this chart at all times
We’re in bullish times and suddenly we’re all geniuses. So remember this chart about newsletter
stockpickers, mining commentators and so-called experts we’ve run it enough times on the blog
(1) and there’s nothing wrong in reminding you all today:
It came to mind when I prepared the short note on Ivanhoe below and stuck in the three year
chart. Not the only example and there are hundreds to choose from, but an apt one all the
same. And before you ask yes, I absolutely include myself in the group or ne’er-do-wells who
manage to extract your cash from your pocket in exchange for purple prose and a few dreams,
see the Lara Exploration price chart for more details (just one of many). What a crazy way of
making a living.

,
Fundamental Analysis of Mining Stocks
There is nothing either good or bad,
but thinking makes it so
Hamlet, Act 2, Sc.2,
Bill Quill 1599
Starcore Intl (SAM.to): Bad, good and game-changing news
The last time we looked carefully at Starcore International (SAM.to) was in IKN361 (and
IKN362) when we promoted the stock to ‘Top Pick’ and upped the target to 81c. We’re five
weeks on from that anal ysis, the stock is 70.2% up and last week the target price was taken
out. All things considered this call can be called a modest success ☺, but I’m also keenly aware
that there’s as much luck as there is judgment in the performance so far. Gold has been kind to
us all of course, but SAM.to has also developed in unexpected ways. So 1) because it’s a Top
Pick and a larger position these days that needs careful coverage, 2) because its price target
has been dinged and 3) because there’s new, potentially company-changing information out
there, we need to look at the
stock again.
Today’s fundies section is
mostly dedicated to the
news release that Starcore
International (SAM.to)
delivered to the market on
Wednesday (2) which did
this to the stock compared
to gold and the mining ETFs
(right). That’s decent alpha
and as you’ll read below, I
believe this move is easily
justified and there’s plenty
more potential upside in
SAM in the weeks to come.
Also, let’s note on a general scale that SAM provides yet another indication that we’re now in a
bull market for mining stocks, no matter what the gold price does or if the market-leading
mining stocks decide to take a few days off to consolidate. This is a market that’s ready and
willing to react quickly to positive fundies news and is a totally different atmosphere to just a
few months ago. This is good.
As for the SAM.to move last week, this price chart breaks down the phases:
3

,
Positive action by anyone’s yardstick and it’s our job to consider why, because the Wednesday
NR didn’t have just one piece of information but two:
1) SAM told us of a new, high grading drill intercept. This is positive.
2) SAM also told us that production for its Q3 period (to end April 2016) was 3,476 oz
AuEq,. This is negative because it’s a miss on previous quarterly production levels.
Clearly, that nice Mr. Market thinks the positive bit is better than the negative bit because the
squiggly line went up instead of down. Natch. But before we consider the two items in detail I
want to cover a subject that’s come up in conversations and exchanges since the Wednesday
NR, that of why SAM decided to release the bad news and the good news in a single NR. The
theory is that SAM may be trying to cover up a bad quarter with a sweetener, a chunk of good
news that deflects the eye away from a fundies negative. That’s fair comment, but if you think
about it from a different direction it becomes more logical:
• What if SAM decided to release ONLY the drill news first, then a few days later the
second piece of negative news about a soft Q3? How would you feel if you’d bought at
a much higher price only to be hit with a nasty, hours later?
• What if SAM decided to release the negative production number first, then later the
very positive drill cut? How would you feel if you’d dumped between the two dates?
• What if SAM withheld either piece of information from the market? Sensu stricto neither
piece of information is material for an operating mine and they could have waited for
the quarterlies to disclose, but I for one would want as much information out there as
possible with which I can make my investment decisions.
The point is, if you think about it all long enough you come to the conclusion that the way in
which SAM presented the positive and negative news together last week was the only way they
could have done so with integrity. I have no issue with the way in which the news was served
last week.
A final sidebar subject before we get to the real stuff, as on Friday we got another NR from
SAM (3) that stated it was changing its auditor (from Deloitte to Davidson) and its financial
year-end (from end July to end April). It’s slightly weird to see a financial year-end change this
way because under normal circumstances you'd get a company rearranging its year end to
December 31st, i.e. getting in line with the modern trend, but it’s not something I’m particularly
worried about. What the company said as part of its explanation was the move would(and I
quote), “...avoid additional audit fees associated with filing the US SEC Form 20F which the
Directors wish to file as soon as possible to allow US citizens to publicly trade Starcore and
access information”, which is basically good news because it addresses a weakness we’ve
already noted in SAM.to, it has no US OTC ticker available. It looks as though under the new
financial year regime and auditor SAM is going to list in the USA. As for that change in auditors,
they're changing from a good one to a good one and there have been a lot of companies
changing auditors recently. Competition among auditors has picked up and Davidson probably
offered a more competitive deal so that bit doesn't concern. I could take a guess and say the
two are connected. Changing the YE gives the new auditor 90 days to deliver on the April 30th
quarter close rather than 45 (it’s a Dot Tee Oh company after all). Or maybe-just maybe SAM
wants to hold back on the next set of a financials for the longer time because it suits them not
to deliver a loss-making quarter so quickly (see below) and gives them time to develop the
manto system, but that's a bit of a stretch and a bigger guess. Hey I don’t really know, but in
the end it’s not a biggie and nothing that really concerns, it won’t affect SAM.to as a going
concern.
Okay, I think the decks are now cleared, what we need to do is the following:
1) Consider the latest production numbers as delivered on Wednesday and adjust the
4

,
model accordingly
2) Consider any developments in the other assets held by SAM.to in the last few weeks.
3) Consider the drill hole news as delivered on Wednesday and consider what it means.
4) Put it all together, adjust the price target, write a wrap-up paragraph, finish the piece.
So here goes, in that order too (get the bad one out the way, leave the best to last).
The 3q16 (to April 2016) production numbers
Let’s say it loud, they sucked. SAM gave us an explanation (excuse) for the low output in 3q16
(which is now 4q16 in a stub year) in the Wednesday NR by saying, “The depletion of the 6-101
stope in January of 2016 resulted in difficulties in February meeting production targets”. The
good news is that the blip in production seems to be only for the one month, as things are back
on schedule and “...the development of the 6-112 stope has enabled the mine to return to
profitability during March and April.” So let’s do the charts.
SAM.to: Gold Equivalent produced
Here right is production and how the
8000
announced 3,476oz of gold equivalent 6900
7000 6315
production (AuEq) stacks up against previous 6000 5749
quarters. That compares to the IKN361 5 6 0 0 0 0 0 0 4800 5100 5338 5381 5130 4429 4686 5194 4544
house assumption that SAM.to would deliver
4000 3476
and sell 4,500/oz gold (and then the AuEq
3000
from silver on top of that). It’s a big hole in
2000
the quarter, no ifs or buts.
1000
Next up, three charts of the tonnage 0
throughput (please note the cut-down Y-
axis), gold head grade and recovery rates
(again take note of the cut-down Y-axis)
taken together. Taken together they tell a story about the Q3 period and the production miss.
As recovery rates were basically in-line with
previous quarters, there was no problem
getting the gold out...when it was there.
Tonnages were off just a little, which to me
smacks of normal production except for a
couple of days when the employees were
saying things like “WTF is happening? Where’s
the gold?” during February and checking
operations to try and solve problems. Finally
the average gold head grade during the
quarter, which was off by a big number (and
so was the silver by-product, at an all-time low of 13g/t). Put those three together along with
the NR detail and it looks as though SAM through a significant portion of February when it
processed rock that it thought would be ore, but turned out to have little or no precious metal
5
31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa
oz AuEq
source: company filings
SAM: tonnes per day throughput
84000
82000
80000 78000 76000
74000
72000
70000
68000
66000
64000
62000
60000
31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa
tpd SAM.to: Avg gold head grade (g/t) per qtr
3.50
3.00
2.812.89
2.50 2.40 2.142.152.032.01 2.23 2.38 2.55 2.342.422.362.22 1.982.00 2.22 1.99
2.00 1.70 1.66
1.50
1.00
0.50
0.00
source: company filings
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa
g/t Au
source: company filings
SAM.to: Gold recovery percentage
100
95
90 89.0 88.2 86.7 86.9
84.6 84.5 84.2
8 8 0 5 89.0 86.0 79.3 86.9 86.3 83.9 85.6 86.6 83.5
81.0
75 78.4
75.0
70
69.5 65
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa
source: company filings

,
content. And here’s where we reiterate one of the big problems in investing in a small mining
operation; the little things count. If it were a larger mine, a higher average production company
or a company with multiple operations, this sort of temporary glitch would not hurt anywhere
near as much. On my reckoning SAM lost perhaps 1,200 oz of AuEq production due to hitting
an unexpectedly barren portion of rock and if you happen to be a 30k/qtr gold producer, that
would imply a 4% dent in your quarter. To SAM.to it’s more like a 25% hit and that makes a big
difference to mine economics.
Be clear: This is one of the risks we take when investing in small mining operations, they’re
inherently prone to this type of volatility in quarter-over-quarter production. It’s one of the
reasons why their share prices can’t command as high a multiple as the bigboy miners, why
these things sell for 6X earnings while
larger gold miners sell for 12X and
14X. The positive here is that the
problem seems to have been solved
and the company reports production
back on track at normal levels. The
bad news is that the quarter just gone
is going to have a financial hole in it,
so let’s model the changes via the
usual suspect charts. Starting with
revenues/costs margins and the best
way of dealing with this at the
moment is via tonnage. If we assume
SAM kept costs to where they were in
the previous quarter ended January, it looks like this (above right):
The gross margin crimp is visual. Plugged into the operations numbers, this chart comes out:
SAM.to: Operations overview
10
9
8
7
6
5
4
3
2
1
0
-1
-2
6
31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
$m revenues
COGS
mine op earnings
source: SAM filings, IKN ests
There on the right, a projected revenue of
SAM.to: Earnings
C$5.4m sets against total COGS of C$6.2m 3
2.5
and that means, yes indeed, unless SAM can
2
pull a financial rabbit out of the hat from 1.5
1
somewhere in the company other than the 0.5
0
San Martin operation we’re heading for a -0.5
quarterly loss. Here’s how the path of least -1
-1.5
resistance is on that, assuming similar -2
-2.5 corporate inputs to other quarters: -3
Net/Net, a C$1.3m loss for the quarter , or
2.6c/share. As it looks like turning out to be
a one-time miss and not about to repeat it’s
ultimately foregivable (in my opinion at least) but it’s a pain all the same, especially as I’d
looked to this quarter as the first one where SAM.to starts to strut its stuff financially and show
31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
SAM.to: Revenues/tonne vs cash cost/tonne
140
120
100
80
60
40
20
0
$m
pre-tax earnings
net earnings
source: SAM filings, IKN ests
21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
$/mt
revs/tonne
cash cost/tonne
source: company filings, IKN ests

,
what it can do under the new gold price circumstances.
We also see its effects on the balance sheet too. We give a passing nod to the overall assets
and liabilities charts...
SAM.to: Assets Breakdown per qtr
90
80
70
60
50
40
30
20
10
0
7
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
$m
cash st inv other current fixed
source: company filings, IKN ests
SAM.to: Liabilities per qtr
50
40
30
20
10
0
11.yluj 11.tco 21.naj 21.rpa 21.yluj 21.tco 31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
source: company filings/IKN ests
srallod
fo
snoillim
LT debt
current debt
...but they’re not for today as we’ve looked in
some details previously (e.g. IKN361). Today we SAM: Cash & short-term investments
12
care about the currents on the balance sheet so
10
here right is the cash position and below that the
working capital chart, which is the key to the 8
game as it’s how we value the company’s financial 6
position on a per-share basis. 4
2
This time in IKN361 I was expecting a $10m
0
number or 20c/share in financial back-up. Due to
the Q3 production miss and knock-on effect that
estimate is now down to just under $9m and
therefore I’m cutting the per-share valuation of
31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
$m
source: SAM filings, IKN ests
SAM.to: Working Capital per qtr
14
12
10
8
6
4
2
0
31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
source company filings
srallod
fo
snoillim
SAM.to: Shares Out
50 (adjusted to 4:1 rollback Dec'2015)
45
40 35
30
25 20
15
10
5
0
41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj tse61.rpa
source: company filings/IKN ests
serahs
fo
snoillim

,
the SAM balance sheet by 2c to 18c/share (see below for more). And to round off this abridged
look, there above is the share count chart which is expected unchanged from January.
Enough financials, they’ve gone on too long.
Catching up on the other parts of SAM, adjusting the price target
Back in IKN361 I rounded out the anal ysis by totting up the component parts of SAM.to on a
per-share basis in order to get to the 81c price target (which I stupidly added to 75c at the time
but that got corrected in IKN362). In that edition, that was presented in this way:
• Real Estate Deal: Assuming correct closure, 17c per share
• Altiplano: If all goes well with the commissioning and ramp up to FCF+ status, we discount to $7m value and
14c/share
• San Martin: Assuming an easily reached $2m annual net profits at current gold prices, then a 6X P/E, San
Martin is valued at 24c/share.
• Asset Book: Currently booked at just over $3m, or 6c/share
• Strong financials: Using the consistent $10m working cap number as guide, 20c/share.
IKN366 back and today the job is to quickly update on the “other parts” of SAM, then adjust
their valuations before getting to today’s main course, that impressive drill hole news from San
Martin. We update the count as follows:
1) Real estate deal now 17c/share, unchanged from IKN361. From the sounds of things
the deal is going through as planned and expected. No reason to change this part of the
valuation.
2) Fixed Asset Book: Valued at $5m or now 10c/share, up 4c from IKN361. This is
subjective, but I’m going to add a modest $2m approx to the value of its assets such as the
Creston suite and Toyaibe as I think they’re beginning to deserve a modest premium. For one
thing, SAM has reportedly signed some CAs on Toyaibe and may be close to getting a JV
partner to move that gold project forward (see IKN361 for more). For another, although we’re
still still in bargain basement territory molybdenum prices have rebounded from the U$5.50/lb
level seen in April to the current approximate U$7/lb, which benefits the Creston properties.
3) Financials now 18c/share (on $9m working cap), down 2c (or $1m working cap) from
IKN361. As seen above, the Q3 production shortfall will hit the operating profits for the quarter
and according to my model, will put a small hole in the balance sheet when I wasn’t expecting
one. That’s why this number gets bumped down by 2c compared to IKN361.
4) Altiplano Toll Mill project now 14c/share (on C$7m value), unchanged from IKN361.
We haven’t had any new news from SAM about the progress at its Altiplano toll mill, now in
commissioning phase, but I’ve received anecdotals from a couple of sources (you know who
you are and I thank you) and from what I’ve picked up, things seem to ramping correctly.
Altiplano is going to “concentrate on concentrate” and plans to buy conc from local vendors at a
more competitive rate than the smelters (who in that region and for small miners typically offer
60% spot. Altiplano’s baseline will be 70% to 75% spot, which give you an idea of the
economics they’re planning. If we assume the 75% end, at U$1,200/oz gold Altiplano works on
the U$300/oz margin. If they spend U$100/oz in producing doré the plant runs an operating
margin of U$200/oz.
From there it depends on the amount of concentrate processed and at what grade, but if we
assume the plant gets to the stage 1 level of 25 tpd, processes 50 g/t gold conc and gets a
95% recovery (all reasonable guesstimates), that’s 3,436 oz of gold per quarter. Assume a
$200/oz margin and Altiplano runs a free cash flow of 687k/qtr. That’s the business plan folks,
my ballpark would have post-tax earnings at around U$2m per year and that type of number
easily justifies our current 14c/share (CAD$7mm) valuation.
As for this early stage, we hear that Altiplano is processing from one supplier, that it’s identified
8

,
another twenty or so potential suppliers but it’s in no hurry to get to full stage one capacity at
this early stage and getting the virtuous circle of cash flow is more important. All this sounds
correct to me (it’s very similar to the Peru toll mill sector model I flirted with in 2015).
The bottom line is that from what I hear, Altiplano is being set up in the right way. All I’ve ever
wanted from it in 2016 is to be able to show it can break even and not become a moneypit.
SAM’s apparent prudent and gradual ramping decision works in our favour on that, they’re
walking before they run and should get to the first stage 25tpd capacity and positive free cash
flow soon enough. If and when the thing starts pumping out half a million dollars net profit per
quarter, our current 14c valuation will look very thin.
San Martin: $??????. Back in IKN361 I valued SAM’s main operation at 24c per share. That’s
now out the window and the next section takes on the task of putting a new valuation on the
mine. Not easy, but a very interesting and potentially profitable exercise.
Valuation sub-total: As things stand so far, our new SAM valuation is:
17c + 10c + 18c + 14c = 59c per share plus San Martin.
In other words, all the “not San Martin” things are worth, in the opinion of your author, 59c per
share and bring a lot of backbone to the current share price. That’s partly due to the way in
which SAM is badly understood by a market that hasn’t looked deeply into the company and
what it owns. It’s also worth recalling that any one of those component parts may turn out to
be worth a lot more than my current valuations. If I wanted to wow you, we could double the
value of Altiplano or assume a much higher fixed asset valuation for the exploration stage
properties and if something is discovered on just Toyaibe, a 30% free carry in a JV on that
could end up being worth more than the current market cap of the whole of Starcore Intl today.
You just never know.
The baseline is 59c, now it’s time for San Martin and to add the final piece. This is the fun part.
Putting a new valuation on the San Martín mine
We now get to the part of the (already over-long) SAM piece that considers the news that
popped the stock by 20% or so last week, drill hole 31-79. To cover the basics, here’s the NR
directly quoted:
“...hole intercepted a zone of limestone breccia followed by manto mineralization. High
grade manto mineralization with visible gold was recovered between 48.65 and 58.9
meters. The weighted average grade of this 10.25 meter wide intercept is 65.17 g/t
gold with 128.26 g/t silver. Prior to the high grade intercept the limestone breccia
contained elevated silver values over 10 meters including a 2 meter section grading
1.60 g/t Au and 105 g/t Ag between 42.25 and 44.25 meters.
The intercept is within 15 meters of existing workings. Mining crews are expected to
arrive at this drill hole intercept some time this week in order to evaluate the
dimensions of the mineralization.”
This part of the NR ended with a quote from company head Robert Eadie, “This is the best drill
hole in our history at the mine”. Note that’s not “history” but “our history” and to fully
understand both that and what’s going on with this drill hole, we need to look into the past.
A brief history of San Martin: This isn’t something we’ve gone into before during our
coverage of SAM, but last week’s news makes it topical. I will add that the rump of the
information was gleaned from the 2009 and 2014 resource reports on San Martin, both 43-101
compliant and both to be found on SEDAR if you care enough. I’ll start by repeating one of the
charts used in the post on SAM over at the blog on Thursday (4) but this time with three boxes
added.
9

,
There are three main phases of operations at San Martin, as denoted on the table above.
• From the start of production until roughly the year 2000, Goldcorp (GG) (G.to) operated
an open pit mining operation at the site. Production steadily increased over the years as
better grading material showed up as depths increased
• From 2000 GG moved the operation underground (U/G) to take advantage of the high
grading mantos and “troncos” (vertical mantos) discovered at the deposit. These years
showed the best production levels, typically around 40k oz gold per year.
• Then came 2006 and by then Goldcorp was a very different entity than just a few years
ago, on its way to becoming the world’s biggest gold miner (it’s now back at number
three in the public trading list). Also, it was the year when the high grading pods ran
out at San Martin as seen in the production numbers. So in March 2006 GG agreed to
sell the property mine (and other assets held by its “Bernal” holding company).
• In February 2007 Starcore closed the U$26m deal (to be anal SAM paid U$24m cash
and issued 4,727,000 shares to GG) and became the owner. The deal made sense, GG
didn’t want a depleting asset on its hands and was happy to accept cash, SAM fulfilled
its desire to become a producer.
That’s the potted history and since then SAM has run its mine in a happy way, most of the time
modestly profitably too. Moving to the next three charts below we get more detail of what goes
in there and see that tonnage throughput at San Martin increased in the 1990’s, hit a plateau
once the U/G operation was established and since SAM has been owner, has slightly increased
thanks to tweaking rather than wholesale changes.
San Martin mine: Tonnes milled per annum
350000
300000
250000
200000
150000
100000
50000
0
10
3991 4991 5991 6991 7991 8991 9991 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102
tonnes
source: SAM.to data
What has changed is metals head grades, as seen in the main gold product head grade and

,
also the silver grades (gold has historically provided between 90% and 95% of mine revenues
so make no mistake, this is a gold mine and gold is the one that counts).
San Martin mine: Average annual gold grade
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Goldcorp sold its mine to SAM when the grade dropped away, it didn’t want a small marginal
gold producer on its books that was at that point unimportant to its corporate whole. What SAM
has done since then is mine “what GG left behind”, the high grading manto/tronco pods that
kept the mill head grade at or over 4 g/t gold were mined out, SAM got to play with what was
left and that’s exactly what it’s done since then. Over the years the average processed grades
of gold and silver have declined, to the point where this year grades have averaged less than 2
g/t gold. Up to this year SAM has fought back against this grade decadence by increasing
mineral throughput where it can and keeping a tight lid on costs. It’s done both of these things
very well (it’s one of the reasons I like the stock and bought it in the first place), but what it
hadn’t managed to do is to find another one of those high-grading manto or troncos that would
provide a big boost to head grades and put San Martin back at the type of production levels
seen in the GG years.
Not until last week, anyway.
Here right a map of the mine,
from page 24 of the 2014
resource report. I strongly
encourage you to go check out
the source material yourself as
what I’m presenting here is
necessarily brief, but the notes
scribbled on the map give the
general idea.
Back when GG sold the mine
to SAM, the bigger company
had found and mined out the
last of its high grading pods in
Area 29. From that point SAM
has developed and mined
down the vein system, always
on the lookout for the next
high grading pocket but not
finding one in the rest of Area
29, Area 30 and until very
recently in Area 31. That’s now
changed, SAM has hit a high
grade area and what remains
to be seen is just how much
high grade material there is to
mine.
11
3991 4991 5991 6991 7991 8991 9991 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102
San Martin mine: Average annual silver grade
g/t Au
100
90
80
70
60
50
40
30
20
10
0
source: SAM.to data
3991 4991 5991 6991 7991 8991 9991 0002 1002 2002 3002 4002 5002 6002 7002 8002 9002 0102 1102 2102 3102 4102 5102
g/t Au
source: SAM.to data

,
Summing up what we know so far about last week’s drill assay
Before we get to the numbercrunching bit and my stab at what the news last week might mean
for the share price of SAM.to, let’s do a quick re-cap of the San Martin story so far:
• For six happy years, previous owners Goldcorp produced an annual average of 40,062
oz of gold and an average grade of 4.04 g/t Au (silver by-product kicker not included).
• They did that by blending the small, high grading manto/tronco pods with the standard
grade available at San Martin.
• The high grade areas ran out and for that and other reasons, GG sold San Martin to
SAM.to.
• Since then SAM has been mining the standard grade and looking for its own high grade
pods to bump up the average head grade. Last week, finally, they found one.
• We don’t know if it’s the only one or the first of a series that might be found in Area 31
or beyond. We don’t know its size. But the potential is there for SAM to meaningfully
increase its average head grade and if things go very well, get average grades back to
where they were before.
I stress that we do not know the size of the high grade structure yet and that’s what SAM mine
crews are working out as I write these words. But a 10m intersect as we’ve seen is at the very
least highly promising and it doesn’t take more than a few basic ballpark calculations to work
out that even a modest manto would improve average grade for plenty of quarters. A large one
would allow years. Find a second or third structure and San Martin is a changed asset.
And one final snippet that underscores the confidence in what SAM may have found. We’ve
learned that SAM has recently paid $2m for a used carbon-in-leach (CIL) circuit including
installation (rack price for such equipment new is around $6m, so a good bargain) because the
company wants (and I quote my contact) “....to be able to mine and process the higher grade
carbonaceous ore”. That alone tells me that SAM expects the new mineralization to last for
more than a few weeks or months, if not why would they suddenly decide to invest $2m in new
equipment?
It’s now time to run some numbers and after thinking on how to present this for a while, I’ve
come up with a bespoke solution via some simplified tables. We start with this one, which
shows the gold production potential of San Martin at its typical 850tpd run rate and at different
gold grades:
SAM:to Production potential
G/t Au Tpd Recovery Prod Au/qtr
2.00 850 84% 4,132
2.25 850 84% 4,649
2.50 850 85% 5,227
2.75 850 86% 5,817
3.00 850 86% 6,346
3.25 850 87% 6,955
3.50 850 88% 7,576
3.75 850 88% 8,117
4.00 850 88% 8,659
source: SAM data, IKN calcs
Please note in the above chart that I adjust recoveries upwards with better grades, as results
from San Martin have shown this tendency previously. However I’m not factoring in any extra
for the new CIL circuit, preferring to remain on the conservative side all the way through the
tables that follow (the first conservative assumption of many).
12

,
Note above that I’ve highlighted the 3.0 g/t gold line as a guide. Yes, I know I could assume 4
g/t as that was the typical rate of the Goldcorp years, but that’s again me being highly
conservative and not jumping to too many conclusions at once.
Now for the next table below and please note how the last column of the previous chart now
becomes the first column of this one, the gold production levels.
SAM.to: Mine Operating earnings/qtr at different gold grades (CAD$)
Prod Au/qtr cash cost/tonne Cash cost/qtr Total COGS/qtr Revenues/qtr mine op earn
4,132 60 4.59 6.79 6.82 0.03
4,649 60 4.59 6.79 7.67 0.88
5,227 63 4.82 7.02 8.62 1.61
5,817 65 4.97 7.17 9.60 2.43
6,346 $67 $5.13m $7.33m $10.47m $3.15m
6,955 68 5.20 7.40 11.48 4.07
7,576 70 5.36 7.56 12.50 4.95
8,,117 72 5.51 7.71 13.39 5.69
8659 75 5.74 7.94 14.29 6.35
source: SAM data, IKN calcs
At the moment, SAM is running at between 2.0 g/t Au and 2.25 g/t Au which shows up on our
model table as between 4,132 oz Au and 4,649 oz Au...in other words the right frame. But look
what happens if head grade pops to 3.0 g/t gold, production soars to 6,346 oz gold per quarter
(and I’ll let you check out the 4.0 g/t line all by yourself, I don’t even want to whisper that blue-
sky upside potential at the moment).
The rest of the above chart runs numbers to get us to a reasonable Mine Operating Earnings
(MOE) number in each gold grade case, based on previous performances of the mine, current
spot prices for gold and all in Canadian Dollars. Notice how cash cost per tonne is assumed to
increase slightly as gold grade goes up, we take into account extra processing/reagent costs
etc. And if we stick with our model 3.0 g/t line, mine operating earnings moves to C$3.15m per
quarter at current gold prices.
The next table below takes the blue MOE and moves the calculations on to get us to a net
earnings per quarter, net earnings per share per quarter and ultimately an annual net EPS, the
green column. In this table I’m trying to be conservative again and I’m probably making SAM
pay more than it normally does because it has a good track record of using its tax credits to
offset State payments (as one example), but doing things by the book like this errs us to the
side of caution once again.
SAM.to: Earnings model at different gold grades (CAD$)
mine op earn corp costs 8% royalty pre-tax net MOE/share Net EPS/qtr Net EPS/year
0.03 0.70 0.00 -0.67 -0.49 0.00 n/a n/a
0.88 0.70 0.07 0.11 0.08 0.02 0.00 0.01
1.61 1.00 0.13 0.48 0.34 0.03 0.01 0.03
2.43 1.00 0.19 1.23 0.89 0.05 0.02 0.07
$3.15m $1.00m $0.25m $1.89m $1.36m $0.06 $0.03 $0.11
4.07 1.00 0.33 2.75 1.98 0.08 0.04 0.16
4.95 1.00 0.40 3.55 2.56 0.10 0.05 0.21
5.69 1.20 0.45 4.03 2.90 0.12 0.06 0.24
6.35 1.20 0.51 4.64 3.34 0.13 0.07 0.27
source: SAM data, IKN calcs
The result for the preferred 3g/t gold line is an annual net earnings per share forecast at 11c.
From here just two more tables. This first one below projects the EPS generated on different
Price/Earnings multiple levels, 4X, 6X and 8X. As mentioned quickly in another place today,
small mines such as these don’t have the ability to command the higher P/E levels that the
NEMs and ABXs of this world can achieve, but my happy medium of 6X is a perfectly reasonable
conservative pitch and 8X is hardly out of the question if the mine starts to become a reliable
13

,
producer (gold the gold price shoots higher).
San Martin only P/E-based targets
Net EPS/year 4X P/E 6X P/E 8X P/E
n/a n/a n/a n/a
0.01 0.03 0.04 0.05
0.03 0.11 0.17 0.22
0.07 0.29 0.43 0.58
$0.11 0.44 $0.67 0.89
0.16 0.64 0.97 1.29
0.21 0.83 1.25 1.66
0.24 0.94 1.42 1.89
0.27 1.09 1.63 2.17
source: SAM data, IKN calcs
By sticking with my 3.0 g/t line as happy medium and rounding the decimals, our spreadsheet
offers a 67c/share valuation for just the San Martin mine at current gold prices and a 6X PE.
The final table puts Starcore Intl all together and gives the final answer to the previous “59c per
share plus San Martin.” valuation sub-total. With our moderate, conservatively pitched 3.0g/t
average head grade thanks to the new high grade discovery bumping up average head grades,
then a 6X PE, then the other parts of SAM added that our final target price is $1.26.
SAM consolidated price target at various P/E ratios
G/t Au 4X P/E 6X P/E 8X P/E
2.00 n/a n/a n/a
2.25 0.62 0.63 0.64
2.50 0.70 0.76 0.81
2.75 0.88 1.02 1.17
3.00 1.03 $1.26 1.48
3.25 1.23 1.56 1.88
3.50 1.42 1.84 2.25
3.75 1.53 2.01 2.48
4.00 1.68 2.22 $2.76
source: SAM data, IKN calcs
That represents a 57.5% upside to this weekend’s 80c price in SAM.to and may look like big
jump in the target price, but quite honestly I think I’m being as conservative as I can under
these circumstances. To underscore that, please note the other box in that final table above
that I highlighted in yellow, the one that assumes a 4.0 g/t gold grade and an 8 PE ratio. That
would bring SAM.to’s target price to a cool $2.76, 245% higher than this weekend’s close and
I’m not joking folks, I think that with just a little fortune that’s a perfectly attainable number if
they find enough of this higher grading rock in the manto (or in a neighbouring manto).
Conclusion and new price target
I’ve been trying to curb my own enthusiasm all weekend about the potential at Starcore
(SAM.to) and tried to be as level-headed as possible about its potential in today’s main section,
but I cannot help but feel excited about its prospects. The drill assay we saw last week is the
stuff that game-changers are made of, if they can find just one other manto like that in Area 31
(or beyond) we’re seriously off the the races. Yes the Q3 production number came in badly and
the quarter just gone is set to make a loss, but if the promise of what they found rolls out as
expected even by my low-pitched scenario, the mine is going to be a different asset soon.
A ten metres interception like that in a mine with a history of high grade pods that bump up
overall head grades is an important discovery. It needs further modelling, my above
calculations can only be considered rough approximations at this time but even by taking the
necessarily conservative route you’ve seen and assuming a modest bump in head grades to 3.0
14

,
g/t Au we’re staring at a significant share price rise for this stock. If we dare to dream and it
turns out that San Martin is about to go back to the type of parameters we saw at the mine ten
years ago, this is now a multi-bagger potential stock on cash flow alone, even if all its other
moving parts and potential value adds on its assets book are discounted. If it weren’t a Top
Pick already it would be as of this weekend, we’re staring at a real opportunity here.
The IKN Weekly reiterates the Top Pick status of Starcore Intl (SAM.to) and moves
the price target up to C$1.26, representing a 57.5% upside to this weekend’s price.
I intend to buy more, even at this new higher price deck, before the rest of the market catches
on to what this drill hole means for SAM. It mean my cost average moves chunkily higher and I
don’t get to show off snazzy percentage increases to the world but I don’t care much about
that, the only thing that matters in the buy-low-sell-high game is the absolute amount of dollars
that comes out at the other end of the pipe. As long as gold doesn’t cave in on us all, even in a
reasonable worst case situation this stock has very little downside from today’s levels, a
moderate increase in head grades at San Martin results in a big increase in cash flow, profits
and share prices. And if things go well, the sky really is the limit. I want you long SAM.
Stocks to Follow
There were seven winners (BTO.to, SAM.to, SAND, TK.v, RIC, LRA.v, REG.v) and three losers
(INV.to, FCV.v, NEV.v) among our ten open positions last week, which is my idea of a great five
days of trading. There were big winners too, not least the impressive 90.5% (not a typo) put on
by Lara Exploration (LRA.v) and the personally lucrative 21.2% increase in Starcore (SAM.to),
plus the handy 8.7% added by Richmont (RIC). To the downside were the big percentage
losses in Nevada Sunrise (NEV.v down 26.3%) and INV Metals (INV.to down 10.0%).
We currently have ten open positions on the list, five less less than our self-imposed maximum
of fifteen at any given time. Seven are in the green three are in the red.
15

,
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$2.80 32.7% New tgt C$2.88, holding
Starcore Intl SAM.to STR buy C$0.54 10-jan-15 C$0.80 48.1% Top Pick 2016, new $1.26 tgt
Long positions (in current order of preference)
Sandstorm Gold INV.to STR buy U$3.90 17-apr-16 U$4.19 7.4% StreamCo, 1q16 strong, buy
Tinka Res TK.v STR buy C$0.195 19-apr-16 C$0.25 28.2% Top value Zn/Sn/Ag stock
Richmont RIC buy U$7.60 01-may-16 U$8.49 11.7% M&A target, near-term trade
INV Metals INV.to spec buy C$0.25 03-apr-16 C$0.63 152.0% Near-term trade for 2q16
Lara Expl. LRA.v spec buy C$1.15 08-apr-12 C$0.80 -30.4% solid biz model, waking up
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$0.21 13.5% V small Li spec play
Regulus Res REG.v hold C$0.30 06-apr-15 C$0.50 66.7% 2016 looking better
Short positions
none at present
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
HudBay Min. HBM may-16 U$4.10 03-apr-16 U$4.36 -6.3% Short trade, poor timing
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
Starcore Intl (SAM.to): Added again. Luck was on my side as I decided to add some more
on Monday and got the week’s cheapest shares, the cost average clicked up another notch as a
result. The rest is covered in the above note. Top Pick stock ratified, new target price.
Sandstorm Gold (SAND) (SSL.to): Added again. Yes I managed to get nearly the lowest
price of the week in this one too, which may start sounding suspicious but in the case of SAND
it’s easily explained; I stuck in an auto-fill at my current cost average and it filled on Tuesday.
SAND is trading well enough without making big headlines, but it should eventually get a boost
from the news, made 100% official last week, that Oyu Tolgoi is going to be a mine as it has a
royalty there via its deal with Entree Gold. But the main reason to own this today is the point
made in the note last week of its turnaround story, because when the wider market latches on
to the way its changing its attitude and becoming a “serious royalty company” the re-rating will
send the multiples and the share price higher. I think this is cracking good value at today’s
market deck.
Richmont Mines (RIC) (RIC.to): The first thing I wrote when opening the position in RIC
just a couple of weeks ago was that I’m keenly aware about being late to this trade. I am not
and never will claim to be clever about RIC, there are a whole bunch of people who recognized
its potential months and years ago at much lower prices. I’m long this stock at this late stage
for its takeover potential and the players circling around (e.g. TAHO) can deny all they like, I
know they’re in advanced talks and that RIC is being marketed.
16

,
Still the decent move in the stock last week is both a good signal for my only intention around
RIC (the M&A trade) and in the meantime gives a nice warm glow about getting on late but not
too late.
Tinka Resources (TK.v): A little more detail on the upcoming resource update:
• It will indeed include a debut tin element in the overall resource and with the Ayawilca
zinc resource coming with lead, tin, silver and indium as potential by-product kicker,
plus the Colquipucro silver deposit just 2km away, there’s a case ot talk up TK.v as a
polymetallic play these days. For the time being and unless the company changes its
own discourse we should consider it a zinc play in essence, but it’s worth thinking about
it.
• We’re unlikely to get any M+I in the resource update, this is still an inferred resource.
The company is more concerned about sticking holes in unknown territories than
running a detailed infill program at this stage of development, there’s an awful lot of
untested areas at Ayawilca and that’s what matters at this point.
• It’s now probably (not definitely) sooner rather than later and the resource update will
probably hit the wires in May (i.e. this month) rather than June.
I don’t know the numbers, because I wasn’t told
because companies who do their jobs correctly
don’t give away that sort of key information to
snotty-nosed parasite anal ysts such as I. What
I am looking for is that TK gets to announce a
resource that adds tonnages in the black area on
this map (from the IKN361 anal ysis), potentially
joining the previously drilled resource areas of
Central Ayawilca and East Ayawilca. If they
manage to do that and as long as the metals
grades hold up, that would likely give a decent
boost to the overall resource size. Plus of course,
a TK that starts connecting the dots between to-
date unconnected areas of mineralization makes
any potential mine a more obvious proposition.
INV Metals (INV.to): INV delivered its 1q16 financials on Tuesday (5) with a corporate
update that told of the upcoming PFS. Both the financial numbers and the contents of the
corporate blurb NR held no surprises and all looks in reasonable shape here. As for trading, INV
took a week off and apart from the 175k it traded Wednesday was a quiet stock that’s now
found its price range and is consolidating. Again we saw buyers step up at the 60c level. I’d
expect things to remain quiet until the updated PFS shows up.
Happy holder, but I will probably stick to the original plan, make this a near-term play and sell
into the PFS news.
B2Gold (BTO.to) (BTG): We do the 1q16 financials in ‘Market Watching’ below, here I want
to note trading and how well BTO did on Friday. That might be connected to The Clive’s
appearance on BNN on Friday morning (6) in which he did a good job of talking up the
company (he is “the f___ing CEO” and “built the f---ing company”, after all). He also dealt
reasonable smoothly with a question regarding his name’s appearance in the Panama Papers
leaks, saying that he’s been involved with many perfectly legit offshore companies over the
years, particularly when connected with Bema.
17

,
Lara Exploration (LRA.v): Why did LRA bounce so violently last week, to the point where the
company was obliged to put out one of those “we dunno” NRs after the market authorities
asked them to comment? Well we don’t know yet and there might well be a deal in the works,
but for me I think it’s a simply case of the universe abhorring a vacuum.
When you have a company such as First Mining Finance (FF.v) with a market cap of over
C$250m and LRA with a market cap of less than a tenth of that, then once you scrape away the
hype and nonsense around FF.v you get
to see that the two companies are
basically doing the same thing, it stands
to reason that something has to give. I’d
even argue that overall the LRA assets
are better quality than just about every
piece of ground FF has picked up (bar
the Coastal Gold project) as they might
all have 43-101 resources, but most of
them are of the Moose Pasture variety
that are created in order to create paper,
not value. Meanwhile LRA’s suite of
largely earlier stage concessions and
holdings in Brazil and Peru (plus
Colombia a bit) are attractive and many
are unspoiled by serious drilling (once
again, my thoughts turn to the Sami high sulphidation project in Peru, which got a corner drilled
by ANTO a couple of years ago but is basically just sitting there waiting for someone to turn it
into the next Yanacocha). LRA zoomed higher because it was due to move higher. That’s all.
Nevada Sunrise (NEV.v): NEV got whacked after local neighbour play Pure Energy released
some poor numbers in a NR. I don’t care much, this thing is a tiny position and will remain that
way. A pure spec punt on the water rights it holds in a place that needs water, I’d sell it in a
heartbeat if I need the space on the list.
The Copper Basket
After nineteen weeks of 2016, The Copper Basket shows a 65.35% 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 1136.16 4.83 -9.0%
2 Ivanhoe Mines IVN.to 0.61 778.96 841.28 1.08 77.0%
3 Reservoir Min. RMC.v 4.08 48.69 433.83 8.91 118.4%
4 Capstone Min. CS.to 0.44 382.04 240.69 0.63 43.2%
5 NGEx Resources NGQ.to 0.65 205.06 170.20 0.83 27.7%
6 NovaCopper NCQ.to 0.395 104.33 99.11 0.95 140.5%
7 Cordoba Min. CDB.v 0.16 86.86 72.09 0.83 418.8%
8 Western Copper WRN.to 0.38 94.19 68.76 0.73 92.1%
9 Nevada Copper NCU.to 0.66 80.5 65.21 0.81 22.7%
10 Copper Mtn CUM.to 0.445 118.8 54.65 0.46 3.4%
11 Copper Fox CUU.v 0.125 417.64 54.29 0.13 4.0%
12 Atico Mining ATY.v 0.28 97.59 41.48 0.425 51.8%
13 Hot Chili Ltd HCH.ax 0.09 445.723 36.10 0.081 -10.0%
14 Amerigo Res ARG.to 0.205 173.61 22.57 0.13 -36.6%
15 Revelo Res. RVL.v 0.055 99.19 7.44 0.075 36.4%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 65.35%
18

,
The basket average hardly changed, down just a couple of tenths despite there being just four
weekly winners (IVN.to, RMC.v, CDB.v, RVL.v)
and a full eleven losers (HBM.to, CS.to,
The Copper Basket 2016, weekly evolution
NGQ.to, CUM.to, CUU.v, NCU.to, NCQ.to, 100%
HCH.ax, WRN.to, ARG.to, ATY.v), because 80%
there were a couple of big percentage winners
60%
in Revelo (RVL.v up 15.4%) and Cordoba
40%
(CDB.v up 10.7%) to counter the effect of the
bigger losers such as Capstone (CS.to down 20%
18.2%), Amerigo (ARG.to down 13.3%) or 0%
Copper Mountain (CUM.to down 9.8%). Again -20%
let’s notice how the marginal operators with
heavy debt loads fared the worst.
The big influence on the producers was the
price of copper. Last week we noted how the
price had failed to break through U$2.30/lb for
the fourth time since March, the days that
followed brought a violent correction and
underscored the failure.
So yes, I covered my HBM short at the wrong
time. It’s what happens when you’re prudent
and have to consider portfolio management
first. I’ll live. Grrrrr...
We move to the weekly copper warehouse
inventory bullet points:
• Total world copper stocks in the three
official warehouse systems dropped by
a hefty 30,276 metric tonnes (mt) (-
5.7%) to end this week at 500,647mt,
just keeping its head above the 500k
line.
• As usual Shanghai was the main mover. The SHFE got back on the de-stocking track
after last week’s surprise rise by cutting a bigtime 26,958mt (-8.6%) from stocks to
close at 286,210mt. However, we need to note that copper market prices took no cue
at all from this drop and lost ground. For me it’s a case of Shanghai warehouse
numbers doing what they were expected to do ths time of year, no more or less. It’s
not a pressing price factor at the moment.
• LME stocks also dropped, which snapped an emerging trend. This set of numbers lost
2,350mt (-1.5%) on the week to finish at 156,675mt. Trading was reportedly light.
• Comex stocks continued their steady drop, a minor de-stocking of its own going on,
down 968mt (-1.6%) to finish the week at 57,762mt.
Here’s the Shanghai-only chart, with that big drop at the end of the line and a level that’s now
approaching the previous high figures. There’s still a long way to go if we want SHFE to return
to its previous 100k baseline, however.
19
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam ht8 ht51
source: IKN calcs

,
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
20
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 ht8
Mt Cu
source: Cochilco
Now for comments on some of our basket stocks and this week I’ve tempted myself into
sticking a few companies into groups and throwing out some general opinions.
HudBay (HBM.to) (HBM), Capstone (CS.to), Copper Mountain (CUM.to), Amerigo
Resources (ARG.to): It’s not a stunning coincidence that the biggest losers on our list last
week were the copper producing companies on our list. These companies are reacting quickly
to the fluctuations in the price of copper, the volatility helped by their ‘tipping point’ exposure to
this level of copper pricing and often, their debt levels. Plenty of outward bravado and brave
faces at CEO level, while the CFOs have sleepless nights. In other words yes, I’m still annoyed
at myself for the bad timing of my HBM short ☺.
Western Copper (WRN.to), NGEx Resources (NGQ.to), Hot Chili (HCH.ax),
NovaCopper (NCQ.to) Revelo (RVL.v): No matter what I personally think about the specific
companies and their assets (NGQ good, others between middling and awful) what we see here
is how the exploreco stories in general (and add in CDB.v too) managed to ignore the big
copper drop and tread water, lose a penny or two, even pop in the case of RVL (by a penny,
which goes a long way if you start at 6.5c). The producers are being hit by copper reality, the
developers are managing to ride the wave of optimism about the longer-term future of copper.
There’s a disconnect in the market and it’s one of the reasons that’s stopping me from buying
into NGQ.to at the moment, the trading in the exploration stage companies is based far too
much on (false?) hope, not enough on the cold hard reality of a world in copper oversupply.
Cordoba Minerals (CDB.v) and Ivanhoe (IVN.to): Both up, both bucking the trend in
copper and the sag in the market price for the metal, both closely connected with Salesman-In-
Chief Robert Friedland. I’ve already
lost count of the number of NRs we’ve
sen out of IVN this year and we had
two more last week too (7) (8) via a
resource update for Platreef (its
platinum project and perhaps the least
interesting of its three main assets)
and a company review on the
publication of its 1q16 financials
(which were in-line). It’s an
understandable strategy; this
company has a lot going on, it’s
burning through serious exploration
and G&A cash and that means it has
plenty of news to bring to market. I
suspected IVN would be in our faces
in 2016 which is why it got included in The Copper Basket to begin with. As for CDB, that name
is now popping up in connection with Friedland quite regularly, for example I note that Chilean

,
connections and business acquaintances are asking me about it, just a week or so after
Friedland was in Santiago as one of the keynote speakers at the CRU copper conference.
Finally, Rick Rule helped IVN by pumping it as one of his top picks during his appearance on
BNN’s Market Call last week (9). Which is not a surprise as he’s been calling the name for years,
all the way down and all the way back up again. Full marks for consistency, at some point he
may be correct, too.
The Low Cost Producer Basket
After 19 weeks of 2016, the Producer Basket shows a gain of 98.78% 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 21.45 18.42 149.6%
2 Newmont NEM 17.98 529.12 18.04 34.09 89.6%
3 Goldcorp GG 11.56 830.22 14.92 17.97 55.4%
4 Franco Nevada FNV 45.75 176.298 11.94 67.75 48.1%
5 Agnico Eagle AEM 26.28 217.67 10.06 46.20 75.8%
6 Ang/Ashanti AU 7.10 405.27 6.14 15.15 113.4%
7 Detour Gold DGC.to 14.41 170.85 4.92 28.77 99.7%
8 Sibanye Gold SBGL 6.09 228.71 3.16 13.80 126.6%
9 Buenaventura BVN 4.28 254.19 2.55 10.03 134.3%
10 New Gold NGD 2.32 509.89 2.31 4.53 95.3%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 98.78%
One stock bucked the trend completely and rose, so three cheers for Agnico Eagle (AEM), then
one cheer for Buenaventura (BVN) that managed finish the week unchanged to the penny and
underscore its recent strong price behaviour. And maybe even half a cheer for socks such as
ABX, NEM and NGD that lost just a few
pennies over the five days. As for the The Low Cost Producer Basket: Weekly performance
other five losers, the biggest hits were 130% and comparative to GDX control
taken by Sibanye (SBGL down 8.7%) 110%
AngloGold (AU down 7.5%) as they felt 90%
the flipside of the forex advantage those 70%
Rand-exposed stocks enjoyed in the first
50%
quarter of 2016. The other big
30%
underperformer was Goldcorp (GG down
10%
6.4%) but that was on real news and at
-10%
least this time understandable.
As for my personal race to get and keep
my little basket of producers ahead of the
GDX benchmark in 2016, that took a bit of
a hit thanks to the ZAR exposure. Still
comfortably out in front of course, but the
18.24% gap between the two squiggly lines
is the smallest since early April.
Goldcorp (GG): This major made the
mining news of the week by agreeing to
buy Kaminak (KAM.v) in an all-share deal
with a ticket price of C$520m (10) in which
one KAM shares gets converted into
0.10896 shares of GG. As the ticket price of
21
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam ht8 ht51
basket
gdx control
source: Google, 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 ht8 ht51
source: ikn calcs, NYSE/Nasdaq data

,
the deal is around 3% of GG’s market cap, the 6.4% it lost on the week looks slightly
exaggerated.
It’s an interesting deal and the first significant move of new CEO Garofalo (aside from the
company’s internal re-organization). Aside from the ticket price which is being handled via stock
dilution, the financial burden of the Coffee project for a company the size of GG is relatively
low. Coffee boasts a good IRR and has been liked by the mining anal yst community since I
can’t remember when, but the other thing about it is its size; at an expected output of around
200koz Au/year it’s not the type of mega-deal that significantly moves the dial of a Tier One
goldie that produces around 3m oz gold per year.
This is, all told, a lightweight deal for GG and fits more into the Agnico Eagle model of doing
things (which reminds me, GG invested in Probe Metals in April, another AEM type of move). As
Garofalo and Boyd are friends as well as ex-colleagues that fts, but this is by no means the
defining deal that sets GG on any new course. That I think will be when the CEO pals get
together and go JV on one of the big projects AEM has on its books (three to choose from).
Final point on the KAM deal: On considering the jurisdiction, one company I’d expect to benefit
from this KAM buyout is Sabina (SBB.to) which ticks a lot of the same boxes.
Regional politics
Argentina: The Chamber of mining “promises” growth
The mining story that got the most headlines in Argentina last week was the rolling-out of the
Argentina Chamber of Mining’s (CAEM) “Desafío 20/21” (20/21 Challenge) campaign (11),
which seeks to bring U$20Bn of investment into mining by the year 2021, as well as raising the
amount of exports in mining by U$5Bn per annum to U$25Bn per annum. This was immediately
changed into “Government Promises U$20Bn in Mining Investment” by the ignorant local press
thereby setting up a cute straw man for the future, but that’s just how it works in Argentina. As
for the plan itself, it’s based around getting these four projects off the ground and running
during the central 2018-2020 period:
• El Pachón (San Juan)
• Taca-Taca (Salta)
• Agua Rica (Catamarca)
• Los Azules (San Juan)
They’re estimated together as investments worth just under U$15Bn. In other words, Argentina
is making a massive bet on the price of copper. To be fair three of those have fair chances as
long as copper puts in the right move, but for my money Los Azules will need a longer timelime
than just five years for a definitive build decision to be made.
Then around that central core come these projects:
• Navidad (Chubut)
• Chinchillas (Jujuy)
• Lindero (Salta)
Knowing what I know about those, particularly Navidad (see below) and the dog-awful Lindero
(sorry folks, but somebody has to tell you) I can only wish the Argentine Chamber of Mining the
very best of luck with its U$20Bn goal because it’s going to need it.
Argentina: Pan American (PAA.to) (PAAS) Navidad’s major opponent
His name is Mario Das Neves and he’s none other than the Governor of Chubut, that’s to say
the Number One political power in the region (that includes all national figures, including
President Mauricio Macri, over the years IKN has tried hard to make the regional political scene
22

,
in Argentina clear and explain how much real power lies in the provinces).
On Friday at a weekly presser, Governor Das Neves responded to overtures regarding the
Navidad silver/zinc/lead project in Central Chubut province owned by Pan American Silver
(PAA.to) (PAAS). We’ve noted these in previous weeks but last week we had around round of
pushing from the pro-mining sector, including the declaration from the Argentina Chamber of
Mining (CAEM) about “U$20Bn of investment in new projects between 2016 and 2021”
(Navidad was one of them, see above) and a body known as Green Cross, which promotes
growth and business activity in balance with the environment, which (12) said that Navidad was
the major growth hope of the central ‘Meseta’ region of Chubut and as long as it was carefully
controlled and run by a responsible mining company it wouldn’t be an enviro risk. So to Friday
and when asked about mining in Chubut, Das Neves said the following (translated) (13):
“Mining companies always roll out the same scenario, that of funds and who knows
how many thousands of job, but they never talk about and never will talk about the
things that interest us, which are water and pollution. The reality is that we’ve been
proven right about each and every one of the mining investments made in the country.
The latest in San Juan, in Jáchal*, is shameful. Therefore, it seems to me that to take
the side of the mining companies in this debate because they have money is not
correct, we have to be careful.”
He finished his presser with, “If anybody believes that the mining companies are going to save
the destiny of Chubut, it seems to me they’re totally out of focus.”
Let’s be clear: If it were anyone else, this would be just another opinion on mining in the
ongoing pro/anti debate that wouldn’t be anything new or particularly worrying. But that just
came form the mouth of the governor of the region, which makes it serious and a major barrier
to the project’s progress in the region. Let’s also be clear and say that Das Neves is no wet-
behind-ears politico, he’s one of the canniest and smartest regional players in the country and
is a master of his (black?) art. There’s always more than meets the eye in such declarations.
*The town of Jáchal, affected by the Barrick Veladero cyanide solution spill last year
Peru: Keiko‘s slight polling advantage
With just three week’s to go before the second round vote that will decide whether Keiko
Fujimori or Pedro Pable Kuczynski is the next President of Peru, as noted on the blog Friday
(14) the latest voter intention polls show a tendency pro-Keiko and anti-PPK. Here’s the CPI and
Datum polls added to our lengthening list
• IPSOS April: Keiko 40%, PPK 44%
• CPI April: Keiko 43.6%, PPK 41.5%
• DATUM April: Keiko 40.4%, PPK 41.1%
• IPSOS April: Keiko 39%, PPK 43%
• CPI May 1st: Keiko 42.3%, PPK 40.1%
• IPSOS May 8th: Keiko 42%, PPK 39%
• DATUM May 12th: Keiko 42.3%, PPK 42.3%
• CPI May 13th: Keiko 45.8%, PPK 40.2%
• IPSOS May 15th: Keiko 44.1%, PPK 43.8%
For what it’s worth. The DATUM poll predicts a 50/50 finish when the spoiled ballot contingent
is discounted, while the CPI poll predicts a 53% to 47% Keiko win (15). But even the DATUM
numbers demonstrate a trend towards Keiko as its previous poll put PPK in the lead. As for the
IPSOS numbers out today, the advantage is slight and lower than the previous IPSOS tally one
week ago, but in the valid vote count Keiko comes out on top with 51.4% over 48.6%.
Aside from the tight-looking race in the official polls, your author maintains his clear call that
Keiko Fujimori will win the round two run-off. In IKN362 the weekend after the round one vote
I even ventured a few numbers and said, “...Keiko getting between 53% and 55% of valid
23

,
votes and PPK coming up short with 45% to 47%”. As things stand today, nearly a month on,
I’ll stick with the low end of that call and call it 52/53 Keiko, 47/48 PPK. The main problem PPK
has is that Keiko, father’s baggage or not, is being viewed as ‘least worst’ by the rural areas of
highland Peru and anecdotal evidence picked up by your author indicates that the people who
voted for the left-wing candidate Veronika Mendoza in round one are moving to Keiko, even
though Mendoza is extremely anti-Keiko (due to her father’s legacy). Hers is the smoother,
more scripted campaign in which every move is weighed against opinion polls and focus groups
(hence her cyncical U-turn on civil union for homosexual couples in a country where the
Catholic church wields great political power). She’s winning the right group of people over
quietly, it’s not showing in many of the polls but with a reported 5.2% of voters not yet decided
on who they’ll vote for, it’s one of those close-looking elections that relatively easy to predict.
Finally, the good news. It’s been said on these pages half a dozen times already but I’ll bother
to repeat that although I believe PPK is least worst of the two candidates and a Keiko
presidency would be a significant step backwards socially for the country, but when it comes to
macroeconomic and monetary policy there’s precious little between the two in real terms and
Peru will still be an attractive destination for mining investment and FDI in general.
Peru: Tia Maria locals protest peacefully, plan to do it again
The scheduled 72 hour protest in the Tambo Valley next to Southern Copper’s (SCCO) Tia Maria
project went ahead, the area ground to a halt, police monitored the strikers, nobody got
attacked by anyone else and the final day saw a march to the nearby (15km) provincial capital
of Mollendo by around 2,000 residents of the valley, a decent turnout from the approx 47,000
total population of that rural area. As nobody got hurt the protest didn’t make headline news
(good) and the organizers (16) plan to do it all again on Monday May 23rd (get one in before
the election, I suppose). As for the candidate, they made neutral noises about it all, blaming
the previous government(s) for the mess and saying that their plans of prior engagement and
discussion will be the way forward, without taking the sides of SCCO or the locals. They know
issues such as Tia Maria are vote losers, so staying neutral and saying a big mouthful of
nothing is the only way forward.
Venezuela: A 60 day State of Emergency declared
One of my “Ten Random Predictions for 2016” back in December 2015 (17) was this:
6) Venezuela's government to implode. Maduro won't be President this time next year. It's likely
to be very messy too. Venezuela has been the butt of annual "teetering on the brink" type of op-
eds and articles every year for the last ten years with the right-wing press getting it wrong every
time, but this time around things are obviously deteriorating and the opposition victory in the
December elections just gone is a telling moment. Oil prices where they are could be straw that
breaks this camel's back as China won't be so quick to bail them out this time. I don't know
whether the PSUV party will fall from government, but the call is "govt implode" and "Maduro out",
that's the thing.
The events in Venezuela this week suggest that I might be right. President Nicolas Maduro has
declared a 60 day State of Emergency (18) shortages for basic consumer goods have increased,
the well-documented queues to buy food etc are getting longer, crime is spiking with inflation
(estimated at 700% per annum).
All very interesting I’m sure, but unless you have a political soapbox it’s not going to affect your
life unless you (or loved ones) live there. The reason it’s mentioned today is for the classic “buy
when blood on streets” principle, because if the Maduro left wing government falls and
Venezuela goes through a period of bigtime political turmoil, we the mining investors may
unfortunately have an opportunity to do just that. Most people know the names Gold Reserve
and Crystallex when it comes to Venezuela exposure in mining projects, Rusoro might come to
mind too. But one I have in mind is Valgold (VAL.v), a totally forgotten dog-with-a-million-fleas
with a 4.5c share price, a C$1.7m market cap and nothing but $0.5m or so of debt on its
balance sheet. It’s a real live mess of a stock and trading is thin, but it has managed to keep
hold of its Venezuela concessions over the years and I recall waaaay back when looking at what
they had and thinking “not bad”. If Venezuela falls to pieces, it may be an alternative to (what I
24

,
believe to be the untouchable and wholly crooked pairing of) Crystallex and Gold Reserve. It’s
certainly cheap enough and could be snapped up by some smart junior looking for a quick way
in to Venezuela mineral acres. Not one to buy today, just a ticker to stick in the back of the
mind if/when Venezuela’s current government goes down the tubes.
Colombia: Tolima to hold a referendum on mining in June
Peru isn’t the only place having a vote on June 5th 2016. The locality of Tolima in the
municipality of Ibagué in Colombia is also scheduled to hold a referendum vote, but this one is
slightly different. This is the town close to and most associated with the AngloGold Ashanti ‘La
Colosa’ gold project. The vote (19) is officially organized by the regional government, is legally
binding in Tolima region if more than 130,000 people vote but will not be recognized by the
national government, because it doesn’t even get close to the requirements of a true
referendum. And that’s a good thing because it’s biased from the outset and you only need to
look at the way the referendum question has been worded (translation)...
“Do you agree or not that the municipality of Ibagué advances mining
projects and activities that imply the contamination of the earth, loss or
contamination of water and affect the work of farming in the municipality?”
(Exact Spanish: “¿Está usted de acuerdo sí o no que en el municipio de Ibagué se ejecuten
proyectos y actividades mineras que impliquen contaminación del suelo, pérdida o contaminación
de las aguas y afectación de la vocación agropecuaria del municipio?”)
...to realize the result is a given. But no matter how rigged this NGO-promoted vote is or will
be, you can bet large money the result will be used as a large pole against the mining sector
piñata in Colombia.
Colombia: Buriticá clean-up operation update
At the beginning of the illegal mining clean-up operation in Buriticá, Colombia, that started on
April 25th, authorities stated (20) that the plan was to evict approximately 3,500 illegal miners
and close down 21 mining operations.
The latest news (21) from the police chief coordinating the operation is that some 2,041 people
have left the area voluntarily, but that figure also around 400 prostitutes and their assorted
entourage who have seen their brothels closed down (plenty of reports out of Colombia had
them making more than the illegal gold miners on a monthly basis). Four of the small-scale
mining companies due to be closed down have been found to be operating legally, another
seven have started the paperwork necessary to become legal operators and one company, the
largest in the area named Hebrón, has presented documents that it says show it is working in a
legal manner and complying with Colombia’s employment laws. That case is currently under
review.
Parsing the information and considering the way the operation has been marketed to the
media, it’s fair to say that a decent proportion of the illegal/informal/artisanal (pick your
preferred word) in the Buriticá area was indeed under the control of the far-right wing
paramilitary gangs (most specifically the Úsuga clan) but the way in which all the small miners
were tarred with the same brush was obviously an exaggeration. We’re now into the fourth
week of the clean-up operation and we’re not likely to get extra mass evictions, the big push is
done and and with roughly 50% of the illegal/informal/artisanal miners gone, it reflects that
maybe half of what was going on was illegal and the other half was above board. That’s not
exactly the way Continental Gold (CNL.to), owners of the big Buriticá project, would have
wanted the situation to have turned out.
Chile promotes itself in Great Britain
Friday saw Chile run its “Chile Day” promotion in London, with ceremonies at the London Stock
Exchange, a meeting between President Bachelet and UK PM David Cameron (22) who made
suitably condescending comments about Chile outside Number 10 Downing St. Then to a gala
meal at London’s Mansion House (23) where Bachelet told a large number of men in suits
25

,
eating food that Chile was open for business, there were plenty of opportunities for investment
not least in mining, the country had recently changed laws to make investment and
bureaucracy easier, but it was also aware as a country that it could no longer depend solely on
the export of raw and primary sector materials. Such as copper, which even despite the recent
drop in price still covers nearly 50% of everything the country exports.
Potentially coincidental, word in Chile is that Freeport is now close to selling its 51% in the El
Abra copper mine (49% owner Codelco) (24), with the U$1Bn that Antofagasta paid for 50% of
Zaldivar likely to set the benchmark. The two mines are relatively similar in size and output, but
the subsequent deterioration in the price of copper since that deal (announced July 2015,
copper was around U$2.40/lb) means that any buyer would look to pay FCX less than that (plus
everyone knows FCX is under debt pressure and trying to re-organize its balance sheet as
quickly as possible). Mick Davis of X2 was spotted in the audience at Mansion House.
Market Watching
B2Gold (BTO.to) (BTG) 1q16 financials deferred
I was going to write up the B2Gold (BTO.to) (BTG) quarter in this section this week, but as the
Starcore (SAM.to) piece became more important to fully explain it took much longer (and more
pages) than I’d planned. As the B2Gold numbers were basically good and with a nice low costs
number too I don’t think it’s a pressing thing and and will defer this analysis until next week,
though as BTO is a Top Pick stock it needs close coverage and we’ll take a look all the same.
Conclusion
IKN366 is done, we end with bullet points:
• Own some Starcore (SAM.to). Even under the worst circumstances, at current gold
prices its share price is fully justified. If things go only moderately well the stock has an
easy 50% upside from here, if things go well it’s a double, if things go really well and
other nice things happen, like moly rebounding Toyaibe becoming a live prospect and
San Martin finding more and more high grade pockets, it has the potential to be one of
those legendary multi-bagger stocks that changes a company from small to a real
player.
• 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
26

,
Footnotes, appendices, references, disclaimer
(1) http://incakolanews.blogspot.pe/2014/01/the-only-chart-you-need-to-understand.html
(2) http://finance.yahoo.com/news/starcore-drills-10-25-metres-150000996.html
(3) http://finance.yahoo.com/news/change-financial-end-appointment-auditors-213625778.html
(4) http://incakolanews.blogspot.pe/2016/05/a-clue-on-starcore-samto.html
(5) http://finance.yahoo.com/news/inv-metals-provides-corporate-reports-210000094.html
(6) http://www.bnn.ca/Video/player.aspx?vid=870193
(7) http://finance.yahoo.com/news/ivanhoe-mines-reports-increase-indicated-113000146.html
(8) http://finance.yahoo.com/news/ivanhoe-mines-announces-financial-results-213000635.html
(9) http://incakolanews.blogspot.pe/2016/05/rick-rule-on-bnns-market-called-tonight.html
(10) http://finance.yahoo.com/news/goldcorp-announces-acquisition-kaminak-gold-123000764.html
(11) http://www.caem.com.ar/
(12) http://www.elpatagonico.com/la-fundacion-green-cross-considero-que-la-mineria-es-la-unica-salida-la-meseta-
n1485595
(13)
http://www.diariojornada.com.ar/159629/politica/Si_alguien_cree_que_las_mineras_van_a_salvar_el_destino_de_Chub
ut_estan_desenfocados
(14) http://incakolanews.blogspot.pe/2016/05/peru-presidential-election-run-off.html
(15) http://elcomercio.pe/politica/elecciones/cpi-keiko-fujimori-533-y-ppk-467-balotaje-noticia-
1901168?ref=grid_home&ft=bajada
(16) http://elcomercio.pe/peru/arequipa/habra-nueva-protesta-contra-proyecto-tia-maria-lunes-23-noticia-1901470
(17) http://incakolanews.blogspot.pe/2015/12/ten-random-predictions-for-2016.html
(18) http://www.theguardian.com/world/2016/may/14/venezuela-maduro-emergency-powers
(19) http://www.conflictosmineros.net/noticias/10-colombia/18908-tribunal-administrativo-del-tolima-avalo-consulta-
minera-en-ibague
(20) http://caracol.com.co/emisora/2016/04/25/medellin/1461584512_699688.html
(21) http://www.kienyke.com/historias/el-municipio-colombiano-que-se-quedo-sin-prostitutas/
(22) http://www.adnradio.cl/noticias/nacional/presidenta-bachelet-se-reunio-con-david-cameron-en-
londres/20160513/nota/3132051.aspx
(23) https://www.df.cl/noticias/economia-y-politica/gobierno/bachelet-llama-a-empresarios-britanicos-a-invertir-en-chile-
y-advierte/2016-05-13/154651.html
(24) http://www.portalminero.com/pages/viewpage.action?pageId=112919611
27

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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
29

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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.
30