IKN #369Premium

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The IKN Weekly
Week 369, June 5th 2016
Contents
This Week: In today’s issue, They took our jerbs, The Weekly did something positive last
week. Probably. For a change.
Fundamental Analysis: Silver and gold.
Stocks to Follow: Overview, Nevada Sunrise (NEV.v), Sandstorm (SAND) (SSL.to), Starcore
Intl (SAM.to), Continental Gold (CNL.to), Regulus Resources (REG.v), INV Metals (INV.to),
B2Gold (BTG) (BTO.to), Tinka Resources (TK.v), Focus Ventures (FCV.v).
Copper Basket: Overview, Cordoba (CDB.v), Ivanhoe (IVN.to), Nevada (NCU.to).
Low Cost Producer Basket: Overview.
Regional Politics: Guatemala: The “Criminal Mafia Structure” of the Otto Pérez Molina
government, Peru: PPK very likely the next President in a tight finish, Mexico: Primero Mining’s
(PPP) (P.to) stupidity.
Market Watching: Minera IRL: This week and no joke, Thinking zinc, Belo Sun (BSX.to)
redux, What I’d buy now.
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
• There’s no compulsion at this end to “Do Something” on these pages and there’s been
a flurry of new trade ideas coming out recently, too. Today marks a change of pace, if
only for a week. Sandstorm, Starcore, B2Gold, Regulus, Tinka are things you should
already have on the radar at least, but there will always be a limit to the number of
good, solid potential companies I’m willing to invest in.
• So no new idea today, instead we go a bit thinkpiece on you in today’s main article and
lay out why IKN’s author (that be me) prefers gold exposure to silver exposure. It’s a
fundies thing.
• Without 100% certainty, the Peru election looks like a win for Pedro Pablo Kuczynski,
which isn’t a bad thing for the country’s mining sector.
• I try to answer a difficult but fair question that’s gets asked about weightings and
preferences of my own portfolio. It’s not easy to frame this issue in a fair way, but I’ve
put together a small thought experiment to have a go.
They took our jerbs*
Short version: Jobs number sucked, dollar dropped, gold popped, miners zoomed, we’re all
geniuses again. End.
Longer: We know a few more things than that little list above. We know that gold rallied in fine
style on the back of an eye-popping BLS jobs numbers miss on Friday morning (+38k when the
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low estimate was +150k), we known that everyone now discounts the mused June rate hike
that was all the rage just one week ago (the 31% probability of ten days ago is now priced in at
4%, which in effect is zero percent), we know the collective market whizzdumb is now saying,
“Only one more this year, maybe July, probably September”. But truly I say unto you, don’t
underestimate the persistence of the hawk argument and don’t underestimate the Fed’s
capacity to mess with your hea....sorry, to keep trying to steer the market along the moderate
long-term course it seems to prefer. I wager we’re about to get the logical line that starts with,
“Jobs data are noisy”, follows with, “This jobs data looks particularly so...after all the 4.7%
headline number was stronger than...etc”, continues with, “We’re now expecting a June dataset
that compensates for the ...etc” and ends up in the vicinity of, “There’s no reason to turn our
backs on the Fed strategy as laid out in the latest minutes just because one report came in a
little...etc”.
Jawbone is jawbone, it’s development into one of the Fed’s principle methods of control is well-
documented, it’s not going away. My case for a summer of quiet gold action is intact, even
though it tested the U$1,200/oz low line more quickly than I expected.
*For those unaware of the South Park joke, go here (1).
The Weekly did something positive last week. Probably. For a change.
In recent weeks I’ve often caught myself wondering just why people pay me for writing this IKN
Weekly thing. Not only that, but it seems to me that the time to listen to a small squeaky voice
such as mine isn’t now. The proposed IKN line of rational, level-headed attitudes attached to a
conservative, risk-adjusted outlook for precious metals stocks and so forth is bear market
fodder rather than bull market, but the precise opposite seems to happen and I lose subscribers
during the bearish periods when stock picking and market reads are difficult, then add
subscription numbers back in a bull market when anyone (up to and including a monkey with a
dartboard) can pick major winning percentage stocks just by jumping on whatever guff trash
nonsense stock is the latest craze.
But! But but but, on the odd occasion something happens at the right time and I kind of think I
might have done something right and helped out in an active way. One of those moments
happened after I’d written this in IKN368 last weekend...
“...be in no doubt the tide has definitely and definitively turned, this is now a
bull market for gold and its stocks. In a bull market be bullish, don’t be
bearish. And you’ll also note that it’s really easy to agree with “Buy. Hold.
Win.” when everything is going up, it sounds snappy and brings a smile to the
collective face of my esteemed and highly respected readership*. When such
catchphrases really matter is when there has been a temporary reversal over
the larger uptrend, the reminder grates more when your position has just lost
10% or 20% but it’s far better to annoy than appease.”
...when a couple of you wrote in to say thanks and that passage at the end of last week’s intro
had shaken out the angst and neurosis that can build when going through one of these typical
day-on-day correction periods in a bull market (particularly a nascent bull, such as the one
we’re in now). What’s more the mails arrived before Friday and the day of all that BLS jobs miss
fun and subsequent U$30/oz gold rally. Which is good.
You know which vehicles I’ve chosen to buy (and to hold through) in order to ride this 2016
market, your choices are almost certainly different and probably very different, perhaps with a
couple of coincidences. That’s fine by me, I don’t have the copyright on truth and what’s more,
when it comes to the near-term fliptrading stuff I tend to be a mediocre-end performer. But at
this stage of the market cycle, getting the big macro call right is the one that really matters
If gold breaks my near-term U$1,200/oz number to the downside or $1,300/oz to the upside
and makes me look like a fool, well that’s a problem for me and my ego, it will not and does not
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change the real underlying call, the one I’ll bang on the table about and shout for all to hear:
This is a bull market for gold stocks, period. Be on, get bought in, then hold as they go
up. And win.
Buy. Hold. Win.
But add to that the patience and discipline required to understand that you won’t be on every
winning trade, you’ll miss out on Person X’s hot tip that turns out to be a winner, you may
wring your hands and not understand somebody elses’ winning trade because, “How can that
dog be 150% up!!!???!!”. These words were a part of IKN362 dated April 10th and they’re worth
a re-airing today:
In this bullish phase, money will be made by many people and stocks of
companies of all stripes and forms get to climb high. Not all of them of course
(Do Not Feed The Animals) but a decent proportion will, that’s for sure. Some
of those people and companies may or may not be deserving of their rewards
according to your own criteria, but they’re going to win all the same. It won’t
matter a jot whether you applaud or begrudge their success, whether you are
in or out of the same stocks. Unlike Bono from U2, mining companies and
their sponsors can indeed live without or without you and as noted on
Saturday (1) it’s really nothing personal, it’s just capitalism baby. To that end,
a small suggestion: Don’t try and participate in every hot trade idea, don’t feel
envy for the success of others, don’t get downhearted when that trade you
passed on nails big wins for somebody else. There’s going to be money to be
made, but pick your own battles and win your own money. Jealousy doesn’t
become anyone.
That’s all, now feel free to unsubscribe because I’ve just told you everything you need to know
for the rest of 2016.
Fundamental Analysis of Mining Stocks
"Don't gain the world and lose your soul,
wisdom is better than silver or gold.”
Bob Marley
Silver and gold
A change of pace this weekend, rather than do numbers or recommend another stock (note to
fairly new arrivals; they don’t normally come up as rapidly as they have been recently) an
extended musing on the main of choice and its mini-me, silver.
Thursday saw an interesting mail arrive in my mailbox from from subscriber KM, the essence
contained in two somewhat related (at first sight anyway) questions. They were presented in
the reverse order you see them today because (for my taste at least) the second one is the
more interesting of the two, but they’re both valid and worthy of consideration. Here’s KM and
the first of his questions
KM: Why are you so certain gold will not fall below $1200/ounce in
the short or intermediate term? Seems close enough now and the ST
technical direction appears to be downward with no apparent ST
catalyst to drive it upwards.
Answer: I’m not certain.
Facetious answer: If I were certain I’d have margined myself to kingdom come, bought every
in-the-money call I could get my hands on of triple-leveraged gold ETFs as gold touched U$1.2k
last week, made a killing, go away and live on a tropical beach island somewhere drinking fruity
rum punches and would never have to write another word on Microsoft Word during any
weekend for the rest of my life.
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Real answer: Seriously, I’m not certain. Nobody can be certain but it’s my considered, evidence
and experience-based call that gold isn’t about to break its solid and clear inverse relationship
with the US Dollar in the near-term or mid-term future and aside from everything else, be it
jobs or geopolitical risk or Brexit or Fed, the relationship that really matters is that of the dollar
and for the life of me, I can’t see why world’s reserve currency should get any stronger than it
is from this point. We’ve tracked DXY vs GLD and the 10 year TIPS yield vs Gold in the charts
over the last couple of weeks, the relationship is obvious between the US macro and the gold
price, we have a dollar that isn’t going to strengthen too far and isn’t going to weaken too
much, either (backed up by its reaction to the BLS report Friday, which tanked it after it had
rallied through the previous weeks). We’re going to get a rate rise and if the market is now
baking that into September instead of July then fine, it’s delayed a while longer but that’s all.
Near-term technicals are all well and good and for sure they’ve been weak, a glance at any
chart shows them slipping from $1.3k to $1.2k, but near-term technicals and exactly that, near-
term, and they change on a sixpence precisely because they’re not good enough to be long-
term technicals. The relationship with the dollar is more fixed than TA and therefore to
understand gold’s fluctuations we first go to the dollar. We saw the close mirror of DXY vs GLD,
we noted last week how that was under pressure by a net 5%, we now have that snapped back
to mirror thanks to the Friday BLS-related rally. We saw it in the TIPS chart as well and rather
than repeat both of those here’s the updated 10 year TIPS yield vs gold chart and in the red
box I’ve added on the right, you see that temporary disconnect that’s now snapped back
My thanks once again to Mike Churchill of www.churchillresearch.com
Meanwhile in the world of gold
GLD gold holdings, April to June 2016 (metric tonnes)
Fundamentals, the metal is out
900
of its bear market and 890
attracting real buyers. Yes to 880
870
central banks and yes to
860
Shanghai but they’re less easily 850
tracked (yeah, even Shanghai, 840
830
all you need for the empiricals
820
of this bullish momentum is the 810
GLD bullion chart we’ve been 800
790
tracking carefully this year 780
(finishing this weekend at 770
881.44mt, another new high
and the best level since
October 2013).
Gold versus silver
Now for the second question posed by KM, which goes like this:
4
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 61.5.11 61/31/5 61/71/5 61/91/5 61/32/5 61/52/5 61/72/5 61/1/6 61/3/6
mt
source: SPDR GLD data

,
KM: Why do you think the gold/silver ratio should be so high? Isn’t
the physical prevalence of silver over gold in the earth reflect a
much lower ratio? Also, my understanding is that the industrial
demand usage will increase over time… I am especially interested in
the increasing usage of silver in purification and medicine.
The more I put thought to it, the more I saw it as a good question that deserves an extended
answer rather than one of my all-too typical and lazy three line specials. It’s one of the issues
we as precious metals investors have in the corner of our eyes but it tends not to be addressed
correctly and can fall prey to hype and soapbox-spouting on either side of the debate. To
answer KM is to explain why gold stocks are, in my considered opinion, a better bet in the near
and long term than anything predominantly silver and for that reason the whole issue expanded
into this rather different main section today; I want to lay my position on the line.
Let’s first consider the counter-arguments that promote silver as a better bet than gold, with
one of the principle ones the “physics arguments” alluded to by KM in his question. They’ve
recently been getting a revival, thanks at least in part to statements made by First Majestic’s
(FR.to) (AG) CEO Keith Neumeyer who seems to be framing himself as a champion of the
silverbug cause. The first ones states that the true silver to gold ratio in the earth’s crust, now
generally accepted by the egghead scientists that study these things, is 16X. That’s to say for
every ounce of gold in the earth’s crust there are sixteen ounces of silver. Therefore the
argument goes that eventually the price of silver will be one sixteenth of the price of gold
because the value will eventually reflect the relative levels of abundance. The logic of this
argument may be simple, but it’s
also sensible enough at first sight. Silver to gold per ounce production ratio, last ten years
The second aspect of the 10 8.84 9.34 9.07 9.15 8.86 9.14 9.15 9.03 9.19
9 8.44
“physical argument” is a less
8
theoretical physics, more of a
7
practical mining thing which 6
states that for every ounce of 5
4
gold mined there are only ten
3
ounces of silver mined (in fact it’s
2
more like 9X, as this chart 1
shows). It then goes on to say 0
that because there are only ten 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
ounces of silver being put on the source: Silver Institute and World Gold Council data, IKN calcs
market for every ounce of gold,
their relative prices should reflect that comparative rarity.
5
oitar
dorp
uA/gA

,
Those 9X or 10X or 16X ratios between gold and silver compare to the above, the 30 year chart
of the silver/gold ratio shows the fluctuation and though the range is quite wide, if we discount
the couple of obvious outlier periods of the early 1990’s and then the 2011 speculative peak on
silver, it’s stayed inside the 46X to 84X range. I’ve even dared to add in what I think is a fair
best-fit average around the 65X level as over time, the ratio seems to revert to that mean. This
46X to 84X range compares with the fundies/physics/geology-based counter-argument we saw
above and, say the most strident promoters of silver over gold (in fact they tend to be silver
over everything), that discrepancy shows the type of bright future that silver has. Buy now,
they say, before that 65X ratio goes to 16X.
By the way, if that 30 year timescale isn’t enough of a sample for your taste and you want a
longer period that includes the US Gold Standard days, be my guest and play with the
macrotrends.net chart right here (2). But if you’re like me (or at least until Doug Casey’s doom
scenario for the USA and the world comes to pass) you’ll probably want to base your anal ysis
on the circumstances of the modern day financial world. So, I go for the 30 year chart
Anyway, back to the debate and with the stage set, the crux of the issue why there should be
such a large gap between the relative prices of metals arguably 9X or 16X less common than
one another, as one gets to enjoy a price that’s 65X or 75X higher than its stablemate. After all,
both are what’s known as “precious metals”, they come from the same general area on the
periodic table, a bucketful of either one is very heavy, they’re both shiny, you can (and do)
make a wear nice things made of them, they’re both connected during human history to the
concept of wealth and money.
So, why should gold be that much more expensive than silver? Darned good question.
At the most basic level we can state that the gold/silver ratio is high because the market says it
is high. After all, 30 years (and longer) of a market willing to pay a 46X and 65X and 84X
multiple for gold over silver isn’t something to be sniffed at, there must be a good reason as to
why gold gets that sort of premium. But that’s not a solid case, it’s ultimately argumentum ad
lapidem (3) because if you adhere tightly to “that’s just the way things are” you don’t ban
slavery, women don’t get the vote, smoking tobacco isn’t seen as the health hazard it is, etc.
One of the things a natural-born contrarian (such as I) always looks for is a market anomaly,
something the world takes as read but ain’t necessarily so, Joe. It is, after all, how the massive
money was made in the 2008 subprime crisis (see the movie The Big Short for more on that).
But sadly I think in this case the market is pricing silver to gold correctly, or at least fairly
correctly inside that wide-looking ratio range over the long-term and that our dear and
esteemed friend Keith Neumeyer is being at best disingenuous, most likely plain ignorant, or
perhaps just perhaps using the Greater Fool theory to his own advantage because hell’s bells,
there are some prize idiots in the silverbug/goldbug world waiting to be harvested.
There are four legs on which I base my argument for gold’s high relative valuation versus silver
compared to its physical availability.
Human beings drool over gold like no other material. First and probably least important
we vertical, near-hairless monkeys like gold. There’s something about its colour, feel and shiny
heavy permanence that gets our animal hearts racing and it’s not for nothing that the vast
majority of the wedding bands in our wild and whacky world are made out of the stuff (though
not all, e.g. mine wasn’t). There’s an emotional attachment to gold that just isn’t present in
silver, even though we like it well enough as a metal. As it can be found in native form, gold
was one of the first metals ever worked by human hand (if not the first), it has a close
connection with religions of all types, our relationship with gold goes back untold years into pre-
history. In short, we the animal and that metal have a lot of collective baggage and that’s not
something to discard lightly.
The rarity premium. Second, as any economist will tell you there’s a rarity premium that we
are willing to pay. Put simply, I can pay U$5 for an ordinary bottle of wine, U$50 for an
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excellent bottle that’s an obviously better drinking experience than the vin ordinaire, then
maybe U$200 for something that scores 100 points and wins “Best Malbec of the Year” in Wine
Magazine or suchlike. That award winner isn’t ten times the experience of the excellent bottle,
but it’s almost certainly “better” and those with the type of disposable income that doesn’t
differentiate much between $50 and $500 will snap them up. This opens the door to the other
way in which items are priced at higher multiples, the “social cachet” or “snob value” for items,
for when people feel the need to impress their peers.
In the case of gold, “rarity premium” also comes with fundamental logic because way back
when, it was far easier to carry a lot of wealth in gold coins than it was in silver coins, pure bulk
determined that. There are still remnants of that today, e.g. the famous occasion when Warren
Buffett bought a very large position in silver, but then sold in on quickly (in 2007 for a modest
profit, but before the big lift-off in the metal) when he realized how much the carry cost was for
storing a large monetary amount of silver. When you lived in 16th century Paris and needed to
pay for something very expensive in Florence, gold made far more sense than silver.
Silver is a quasi-commodity. Thirdly, we can now start to bring things up to date and make
some more progress to solving the GSR puzzle by noting that yes they’re both shiny and make
pretty jewelry, but in our modern world perhaps half of silver produced is used for industrial
purposes. Silver is a bit Jekyll and Hyde in that respect, it’s an industrial commodity and a lot of
it gets used and used up (it’s estimated that a maximum of 10% of silver used in industry is
recycle and even then the cycle time is very long). And the same as any other industrial
commodity, if it gets too expensive demand becomes elastic and drops rapidly as alternatives
are found via innovation. Gold doesn’t have the same quasi-commodity status, there is a slight
market for gold in industry but to the vast majority it’s either the raw material for jewelry (in
itself a form of storage for an inelastic) or it’s the monetary metal, the asset class, the store of
wealth that gets dug up out the ground, purified and then stuck back underground again (in
vaults in Switzerland). I once again bow to Paul van Eeden’s definition of gold when he calls it
“the very essence of money”. And he’s no permabull on the metal, either.
And before we move on, talking about on silver’s industrial metal side reminds me of the last
time I chewed the cud deeply on silver prices, back in IKN320 dated June 28th 2015, when the
subject was more about the supposed manipulation of the silver price market. In the end I
think silver is somewhat manipulated, but only because every single capital market is also
manipulated by big money. The difference with silver is that 1) it’s small enough to see the
manip in action, it becomes pretty freakin’ blatant at times and 2) as I wrote in IKN320, over
half the customers for silver don’t care. Back then I wrote...
“So tell, me, what end user (rather than end-hoarder, big difference) is going to kick
up a fuss and complain about artificially low silver prices? The masochist end of the
silver market, perhaps?”
...and that’s as true now as it was then.
Silver isn’t just cheaper to buy. So far we’ve considered theoreticals, historic and cultural
reasons. We’ve also considered modern-day demand, but the final piece is in my opinion the
most important driver of the modern relationship between silver and gold and it’s from the
supply side of the equation.
Silver isn’t just cheaper to buy, it’s a lot cheaper to produce. It’s a tough call to give an exact
figure for the operating cash cost of producing one ounce of gold or one ounce of silver. Even if
we restrict ourselves to legal formal mines (and eschew all the informal illegals with far lower
costs in pure dollar terms) it’s difficult, because “cash cost per ounce” is a classic of moving
goalposts, there are mining cash costs, operating cash costs, all-in sustaining cash costs, “All
In” cash costs, even “full enchilada” costs for a mining company that needs to spend on
exploration and development of future mines to offset the mined ounces. There are protocols
but there are no set laws and one company will-or-will-not include this or that line item, things
7

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such as financing costs and and taxes muddy the waters, any manner of other things.
So for argument’s sake, let’s go for mine-only costs and let’s say they average at U$10/oz for
silver and U$800/oz for gold, which are the type of figures that stand up to reality over the
breadth of the silver and gold mining sector. You prefer 15 and 750? Or 12 and 600? All good
with me but the point should be clear already, even at the lowest ratio case above we are at a
50/1 cost ratio, 75/1 is easy enough to imagine, 80/1 isn’t out of the question. It’s relatively
very cheap to produce an ounce of silver these days and that’s because the nature of silver
mining has changed radically in the last few decades. And yes, that 75/1 ratio does look familiar
all of a sudden.
The thing with silver is that its supply dynamics have changed radically in the last 50 years or
so. Long gone is the image of the lonesome miner and his pick, left deep in the past are the
slaves of Potosí and veins of crazily high grading metal, these days most of the world’s silver
isn’t a product but a by-product. Or to quote a company that really knows its beans when it
comes to the metal, Silver Wheaton (SLW) (4):
“It is estimated that 70 percent of silver production comes as a by-product
from base metal and gold mines.”
And there are dozens of examples, the 14Moz Ag annual from Antamina to name just one (and
Antamina recently received U$900m by selling a 33.75% stream of that to SLW). Those are just
fourteen million of the approximate 600m oz of silver that come from by-product production of
either base metals such as zinc and lead (with some copper) or mines where yes indeed, it’s
common to find silver atoms sitting close to gold atoms in that 10:1 ratio the natural science
people tell us about. Development decisions, construction decisions and annual budgets at
these mines are not based on the price of silver. Yes silver’s price will help or hinder the year at
the mine in turn, but that’s as far at it goes. As long as Mine X sells its zinc (or whatever) at the
right price, that silver is going to come out of the ground whether it’s wildly profitable or not.
The dedicated silver mining company is a bit of a rarity these days, even more scarce is the
silver miner that gets most of its cash from its nameplate metal. First Majestic get around 80%
of its revenue from silver and that’s as good as they come, most silver miners are a mix of
metals and companies such as Fortuna (FVI.to) (FSM) or Pan American (PAA.to) (PAAS)
wouldn’t last two minutes without the cash that comes from the zinc, lead and gold they sell.
But even the “mixed” dedicated silver mines are a rarity compared to the number of silver mine
projects out there, because they have to be able to run at a profit on silver alone and that
means, above all, they need to be the best end of the market with the highest grade or the
lowest running costs. Or both.
Tahoe Resources at Escobal is one of a kind or, the other side of the coin, why isn’t the silver at
Colquipucro (TK.v) being mined yet and why has Tinka moved its flagship to the Ayawilca zinc
property? What about the 450m+ ounces of silver at the Levon Resources (LVN) Cordero
project in Mexico? For another, it’s under 43-101 compliance there have been technical and
economic reports galore and it has all its major permits and is as “shovel ready” as you can
imagine, so why isn’t Bear Creek Mining’s (BCM.v) Corani project a working mine yet? Why isn’t
it churning out its 8m oz Ag per year? Answer: the silver price is too cheap to make any of
those work. Why so? Because a lot of other places can churn out silver and make good money
from the by-product.
There are literally dozens of low grading silver projects out there in our strange world of junior
mining capital markets and they’d all work if silver were at U$25/oz. In fact, my thought
experiment would be to 1) watch silver spike to $25/oz then 2) buy BCM.v and buy long-dated
calls and puts on silver to collar 8m oz of the metal at exactly U$25/oz for the next 25 years
then 3) finance and build the mine. They’d raise the cash easily once the finance people see the
company had 100% rock-solid guaranteed U$1.3Bn per year of topline revenues. It might
screw the share price totally and leave nothing for equity holders but hey...who cares? The
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executives would get their salaries!
Silliness aside, what gold mining companies bring to the table is specialty, to a large extent the
formal production of the world’s largest mining companies set supply. Gold’s pricing is
complicated because it reacts as a money, but I don’t think it’s much of a coincidence that it
settled at lows just under U$1,100/oz at the bottom of our recently finished bear market where
bottom line profits go to zero for the majority. That doesn’t happen to the dedicated silver
miners because price discovery is totally out of their hands. The ones that make it are the ones
that show they can operate at the price set by the market and they’re the ones that have a
tight rein on costs, or high grade to offer margins, most likely both. In the world of gold, if yor
timing to market is fortunate can get across the capex hurdle and with a 0.5 g/t resource, you
get to be a winner (Rio Alto showed us that) as long as your costs are low. But 15X that grade
would be a 7.5 g/t open pit silver mine...see many of those around you? Even double and a 30X
Gold/Silver ratio at 15g? Or for another example, I’ve always been a fan of the Ollachea gold
project (definitely more than the mess of a company that owns it) that may be only 3.4 g/t gold
for an underground project, but I know the costs parameters and economics work (and so does
Cofide and, dammit and spit, all the nasty scumball people trying to usurp it know too). You
may get a couple of silver mines running at 50X that ratio and 170 g/t Ag, but only as long as
they mine and process and sell enough zinc and lead by-products that come out with the rock
and even then, in today’s price environment they’re not much more than breakeven (example
Fortuna Silver at Caylloma). In the real world, silver mines are limited by their margin because
they don’t set the market price, the near zero cost by-product ounces from the massive
porpyhry, skarn, IOCG etc production facilities around the world.
The bottom line
We the retail mining investor still have a reasonable shot at finding a real winner in the world of
junior gold explorecos and development companies because gold project tend to be masters of
their own fates. Once found and defined, they can stand alone and can hold up to a low cost
scenario but it’s far more difficult in the silver sub-sector to find an equivalent economically
robust project. It’s why the silver market jumps through hoops for the rare ones like Tahoe’s
Escobal, or puts high valuations of the 44% of Valdecañas/Juanicipio development project
owned by MAG Silver, or gets hot and sweaty about discoveries like the recent and promising
Sandra Escobal discovery All three of those have (or are looking like having) the killer combo of
high grade and strong mining width and the silver market goes loopy over them precisely
because they’re very few and far between and will attract the companies looking to be silver-
centric.
At the same time, dedicated silver miners are fighting the price discovery weighting of the
producers of silver as a by-product. They don’t have their livelihood at stake, the metal’s value
is useful without being vital, anything above cost of production is ultimately a reasonable deal.
As we’ve seen, market price of silver can be pushed to levels below cost for the silver miners
and the weight of by-product Ag is to blame. The result is hundreds of millions of ounces of
marginal silver ounces (all supposedly economic if you believe those 43-101 reports) sitting on
the sidelines while their respective company officers light candles and pray to the Market Gods
for higher metal prices that are not going to happen, not in the way they need, because
marginal stays marginal as cost parameters rise with metals prices.
But it’s the combination of four factors, 1) near-religious human attraction for that special
colour of shiny 2) we way we pay extra for rare things 3) silver’s commodity factor 4) the cost
profile of producing silver, that result in a price ratio that’s much higher than the “physical
ratios” so loved by the silver salesmen and women. Yes we can and may get a lower gold/silver
ratio in the intermediate future (in the range of that chart at least, we’re not seeing 15 to 1
ever again), yes the charts have seen this particular squiggly line go up and down in the past
but there are absolutely no guarantees on the line moving down the way it’s done in the past,
not fundamentally-speaking at least. A world awash with by-product keeps silver deposits
sidelined and building up, any higher move releases the Coranis of this world and supply cranks
up quickly. There are far too many marginal silver projects out there (and for that matter,
9

,
precious few producers that rise above the level of marginal or mediocre). When push comes to
shove and I demand quality from my junior exploreco or Rule 1 (make a profit) from my small
or medium-sized producer, gold options always outnumber those in the silver space. And that’s
where I will stay.
Stocks to Follow
A good week to be long the juniors. Tinka Resources (TK.v) was unchanged on the week, all
our other charges were winners and just about all the ground lost by the recent retrace in gold
has been regained in one fell swoop. Plenty of big winners to report as well, led by INV Metals
(INV.to up 25.0%) and followed by Top Pick B2Gold (BTO.to up 14.3%), Top Pick Starcore Intl
(SAM.to up 14.3%), Sandstorm (SAND up 14.3%) Focus Ventures (FCV.v up 13.3%) and
Richmont (RIC up 10.8%).
With the sale of Nevada Sunrise (NEV.v) we’re back to ten open positions on the list, five fewer
than our self-imposed maximum of fifteen at any given time. Seven are in the green, three are
in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to buy C$2.11 12-sep-14 C$2.64 25.1% New tgt C$2.96
Regulus Res REG.v buy C$0.64 06-apr-15 C$0.95 48.4% Long-term exploreco top pick
Starcore Intl SAM.to STR buy C$0.59 10-jan-15 C$0.80 35.6% Top Pick 2016, $1.26 tgt
Long positions (in current order of preference)
Sandstorm Gold SAND STR buy U$3.80 17-apr-16 U$3.99 5.0% A buy on FY16 re-rating
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.22 12.8% Top value Zn/Sn/Ag stock
Richmont RIC buy U$7.60 01-may-16 U$8.18 7.6% M&A target, near-term trade
Continental Gold CNL.to buy C$2.68 22-may-16 C$2.61 -2.6% new near-term trade $4.80 tgt
INV Metals INV.to hold C$0.25 03-apr-16 C$0.65 160.0% Rallied again, close to exit
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.89 -22.6% solid biz model
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.085 -63.0% financing sept next hurdle
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-apr15 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
Nevada Sunrise NEV.v may-16 C$0.185 28-feb-16 C$0.23 24.3% V. small, no big deal either way
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
Nevada Sunrise (NEV.v): Position closed. As advertised last week, I closed out this
anomaly position last week and took very minor profits on a very minor story that I don’t care
10

,
enough about to continue coverage. NEV has some drilling work starting on one of its joint
venture properties and that’s fair enough, I wish them luck. The end.
Sandstorm Gold (SAND) (SSL.to): Added. I’m happy with the fortunate timing of this
addition, getting all I wanted in the $3.50s range and managing to lower my cost average
before Friday came along and SAND, as one would expect of a decent and well-known story
that had been beaten down in the re-trace, bounced very sharply. It’s back knocking on the
door of a 4-handle again and it’ll get it too. Then a 5-handle.
In fundies news, it’s interesting to watch the Hot Maden property and Mariana Resources
(MARL.l) becoming the new flavour of the month and SAND has that very useful 2% NSR on
the mine and that new position in MARL shares that’s looking very good. Mariana is apparently
looking to list in Canada soon, it will be interesting to see if SAND considers that event a
liquidity window in which to take its profits on the equities in the way they’ve done on a couple
of recent share positions. I wouldn’t blame
them, a trade is a a trade after all.
Starcore Intl (SAM.to): Added. The SAM
discount price of 70c and below didn’t last
for very long (unsurprised, it was a
knockdown bargain) and as a result I didn’t
get as many as I wanted, having eventually
to sigh and pay 75c when I’d secretly
dreamed of 65. So be it, but the table’s cost
average still gets to click up a notch.
Volumes were low all week but the lack of
sellers meant that anyone wanting in was
obliged to pay up.
Continental Gold (CNL.to): The shape of the CNL five day price chart matches that of many
others from last week, fiddling around in its range for the first days then rallying hard Friday
thanks to those gold-friendly jobs numbers.
In feedback, it was interesting for me to note
in certain private mail exchanges that even
people with plenty of Colombia mining world
experience haven’t cottoned on to the fact
CNL is going to get its EIA permit this year.
This is a good thing, because it suggests that
the re-rating to come on the news will be
strong and it’s not partly baked in yet. To
that end I’ like to repeat, clearly and for the
record, that I don’t care about the longer-
term future of CNL.to and I’m not backing
this project to eventual construction or
operation, not under CNL or any other
company. The framework of this trade is simple, I’m here for the re-rating that will occur when
CNL is awarded its EIA permit at the end of this year and once the share price has found its
new, higher level on the news I will sell, take profits and wish those left in the best of fortune.
As for fundies news for CNL this week, there was a decent Spanish language report on the
Buriticá situation in one of Colombia’s biggest circulation media, El Espectatador magazine, this
weekend. The piece (5) entitled “El Oro Malidito de Buriticá” (The damned gold of Buriticá)
didn’t contain very much that was new-new for people following the story, but it’s a good
longread article and it’s interesting to see the government’s pro-mine marketing campaign at
work on a large audience for this story.
11

,
The second news report this weekend gave more information about the eviction process of
illegal miners in the town. According to Antioquia’s Mining Secretary Alberto Olano, the first
phase of the Buritic’a clean up operation is now coming to a close and part two is about to
begin. In his words (5a) (translated), “In Buriticá we are practically in the last stage of the
technical closure (of illegal mines). Now comes part two, which is the entrepreneurial, in which
Continental Gold will mine under licence in order to generate employment and to formalize the
mining activity. There are already four small mining companies formalized and we hope there
will be eight”.
Regulus Resources (REG.v): REG traded better than I thought it would, staying inside the
90c to 95c all week after just a couple of drops to 89c on Monday (I started to anticipate my
lower entry point price for the next add, sadly it wasn’t to be). But the reason to show you the
five day chart here is that final trade of
the week, a near-half million share block
that went through on the bell Friday.
That’s again an interesting and positive
development in light of the recent
marketing tour REG conducted up North.
The best thing that can happen to the
stock right now is to see volume
increasing and the name becoming a
reasonably liquid option for traders on a
daily basis. One can live in hope.
In fundies news, word reaches your
author that the first coordination meetings
between REG people and Coimolache
people on both the geology/exploration side and the community relations teams’ side have
taken place and REG people on site in Cajamarca. All this is good.
INV Metals (INV.to): We’re now in the month when the updated pre-feas for INV’s Loma
Larga (ex-Quimsacocha) gold project in Ecuador is scheduled to appear. Recall that the plan
here is to take profits once it’s published, by which I mean not five minutes after the NR
appears but once the price has moved to a new level (I’m assuming up, I’ll take the risk that it’s
not down). We started this trade with a near-term framework, it’s staying that way. Once
liquidated, I expect to re-deploy this cash in another story.
Trading was light in INV last week, barring a 233k day Monday when someone got a decent
amount at 55c. It wasn’t me.
B2Gold (BTG) (BTO.to): BTG wasn’t the
one picked out by Porter Stansberry as his
latest pump (that was Detour) but it still
traded in fine style and popped exactly the
way a go-to gold stock has to pop on Friday’s
news. Back over U$2 where it should be, it’s
still buyable at this level and rated as such in
the near-term sentiment column of the our
tracking table. Easy to Top Pick and the one
I’d invest most in this week (see below).
Tinka Resources (TK.v): The one major
weak point in the TK story is its marketing program, but that’s going to get a bit of a boost in
the week to come as the company is doing the rounds in Canada and marketing to brokerages,
instos etc. That’s all good, what we ALSO need to see from TK is more effort getting the story
12

,
out to retail now, which is another skillset.
In trading, we’re still paying between 22c and 24c for shares in this and that’s starting to look
like a bargain price. There’s buzz beginning to develop around Zn stocks thanks to the rise in
the metal price (see below) and be clear, Ayawilca isn’t some llama pasture BS story that may
be able to coat-tail on “optionality” (my stars I’m beginning to hate that artificially constructed
buzzword). This is a real-deal project and deposit that’s not getting the same traction as other
Zn stories yet, with the emphasis on the word “yet”. This is an opportunity knocking at your
door, kind reader.
Focus Ventures (FCV.v): This is beginning to annoy me. FCV last week announced (6)
another small 6.5c placement (with full warrant priced at 6.5c) that adds a total of 4.62m
papers to the count dilutes us out even further, all to keep compliance with the covenants of
the Sprott loan deal. Why they decided to drip-drip these small financings and not get enough
cash in treasury in one shot to last to September is beyond my ken, they’re now deliberately
sitting on their own share price! Yes I’m aware that I need to keep my eyes on the prize and
consider the strong upmove FCV is bound to get when it nails down a JV or longer-term
financing deal to develop Bayovar12, but all the same this isn’t what shareholder-friendly
companies do to their holders. Darned cheap but I see no point in adding to a dead.money
stock right now, there are far more interesting options in the marketplace (just a few of them
outlined above).
The Copper Basket
After twenty-two weeks of 2016, The Copper Basket shows a 57.13% 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 1267.89 5.39 1.5%
2 Ivanhoe Mines IVN.to 0.61 778.96 778.96 1.00 63.9%
3 Reservoir Min. RMC.v 4.08 48.69 424.58 8.72 113.7%
4 Capstone Min. CS.to 0.44 382.04 259.79 0.68 54.5%
5 NGEx Resources NGQ.to 0.65 205.06 213.26 1.04 60.0%
6 Western Copper WRN.to 0.38 94.19 77.24 0.82 115.8%
7 NovaCopper NCQ.to 0.395 104.33 69.90 0.67 69.6%
8 Copper Mtn CUM.to 0.445 118.8 58.81 0.495 11.2%
9 Nevada Copper NCU.to 0.66 80.5 57.16 0.71 7.6%
10 Cordoba Min. CDB.v 0.16 86.86 54.72 0.63 293.8%
11 Copper Fox CUU.v 0.125 417.64 52.21 0.125 0.0%
12 Atico Mining ATY.v 0.28 97.59 41.96 0.43 53.6%
13 Hot Chili Ltd HCH.ax 0.09 445.723 35.66 0.08 -11.1%
14 Amerigo Res ARG.to 0.205 173.61 24.31 0.14 -31.7%
15 Revelo Res. RVL.v 0.055 99.19 7.79 0.079 54.5%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 57.13%
The basket average added 7% and bits as
The Copper Basket 2016, weekly evolution
just two stocks registered losses (NCQ.to, 100%
HCH.ax) and all the other thirteen put in
80%
weekly wins on the back of the re-float in the
60%
junior sector. Such is our world and the
interconnectedness of all things, a jobs 40%
number in the USA causes a copper junior 20%
trading in canada and woking in Chile to
0%
become that much richer.
-20%
The best percentage wins were seen in
Revelo (RVL.v up 13.3%), NGEx Resources
13
dr3naj ht01 ht71 ht42 ts13 t7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 r3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj
source: IKN calcs

,
(NGQ.to up 10.6%), Cordoba Minerals (CDB.v up 10.6%) and Atico Mining (ATY.v up 10.3%).
Notable that the bigger percentage moves were
concentrated at the bottom of the list, which
isn’t the greatest of signals.
Over in the copper trading pit, the metal
reacted to the US Jerbs report but only to re-
take the levels seen at the beginning of the
week. The atmosphere around this metal is
markedly different to the PMs, copper is all
about relief rallies in bearish sentiment while
gold stretches its newly gained bullish muscles
after few days off from its new training routine.
It’s the end of another month, I add my usual
boring and repetitive “my doesn’t time fly these
days it must be my age?” cliché, you roll your
eyes and we get to the long-term inventories
tracking charts (which I’ve made larger and
now stack one on another because they’re
getting too full of data these days to be small
ones):
Copper inventories, per month, 2012 to date
1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
14
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram rpa yam
Mt Cu
LME Shanghai Comex
source: Cochilco
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram rpa yam
LME Shanghai Comex source: Cochilco
The main news is around the de-stocking of Shanghai SHFE warehouses, but it still holds more
than 50% of the world’s official market stocks and that’s for the fourth month running. We
should see LME close the gap to near-zero this time next month but it remains to be seen
whether LME will ever be able to open up the type of boss-guy gap we saw in the past again.
Interestingly (and a piece I held back from last week for this section today) word is that the

,
CME Group, those behind the Comex warehousing system, are actively trying to expand their
base metals storage network (copper, alu, zinc, lead) and are looking to challenge the current
LME/SHFE status quo in the years to come. This Reuters report (7) dated May 23rd was the first
to break the story and it starts like this:
The CME Group is talking to several warehouse companies to expand its metal storage network
globally, three metal industry sources told Reuters, a move that could further challenge the
London Metal Exchange's (LME) dominance.
The Comex numbers have been fluctuating around the 10% an 12% level since rebounding late
last year, holding their own. I personally would welcome another shake-up in the LME-
controlled status quo, change is healthy for capital markets no matter where it comes from.
We move to the weekly copper warehouse inventory bullet points:
• Total world copper stocks in the three official warehouse systems dropped again, the
de-stock period is doing its thing and this time we saw a net of 11,536 metric tonnes
(mt) (-2.7%) leave the world’s collective official systems.
• Shanghai led the trend once again, no surprise there. SHFE stocks dropped 10,217mt
36,122mt (-4.6%) to close out Friday at 210,995mt, nowhere near as big a drawdown
as the 14% drop of the week before but still significant and the trend is intact as we
approach the next psychological barrier of 200k.
• LME stocks were virtually unchanged, dropping an insignificant 75mt (seventy-five
metric tonnes, i.e. a couple of trucks’ worth) (-0.005%) to finish at 153,675mt.
• Comex stocks dropped by 1,244mt (-2.2%) to this weekend’s 54,542mt number. In-line
with the week’s long trend of gradual de-stocking and zero surprises here, too.
Here’s the Shanghai-only chart which underscores the whole week’s aspect of ‘business as
usual’. At some point the de-stocking will tail off and if that happens on a calendar basis it
would mean things start levelling out in this month of June. If so we don’t see the sub-100k
numbers of the troughs of the last two years.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
15
31'13ceD ht91 ht9 dn2ram dr32 ht31 ht4yam ht52 ht51 ht6yluj ht72 ht71 ht7 ht82 ht91 ht9 ht03 ts12 ht11 ts1bef dn22 ht51 ht5rpa ht62 ht71 ht7nuj ht82 ht91 ht9 ht03 ht02 ht11 ts1von dn22 ht31 dr3naj ht42 ht41 ht6ram ht72 ht71 ht8 ht92
Mt Cu
source: Cochilco
Now for notes on a couple of basket stocks.
Cordoba Minerals (CDB.v): After last week’s extended “Cordoba Minerals (CDB.v) is back at
a buyable price” piece that spoke nicely of the stock without my pulling the trigger (mostly
because of my unease about the copper market) CDB rallied nicely and finished the week
10.5% up, a fatc that has nothing to do with me and my thoughts.
Ivanhoe Mines (IVN.to): What with the full-court bull revival on Friday plus the way zinc
broke over 90c/lb for the first time in nearly a year (see below) I was somewhat surprised to

,
see the lack of reaction from IVN, a stock that’s getting the full market pumpo from all and
sundry these days (on the back of the
Friedland Factor of course, plus its
undoubtedly good looking high grade
copper and zinc deposits. I’ve heard from
several sources that even though its DRC-
based, one part of DRC isn’t necessarily like
another and where IVN is things really
aren’t that bad community/security-wise,
plus infrastructure is good enough for the
purposes of building your mega mine. I
don’t know, I can’t seem to get comfortable
with the combo of exposing (almost
literally) a billion dollars to a TPLAC country
I know precious little about apart from
“risky”. I suppose all that’s a long-winded
way of saying “get better advice from someone else about DRC and IVN, kind reader”. I’ll
remain strictly neutral and watch, at least for the time being.
Nevada Copper (NCU.to): Two bits of news from this one last week, firstly that it has
received zoning approval for its solar power project (8) on its land and secondly that its $10.5m
“keep the lights on” financing with Red
Kite (owners of the onerous debt pile)
and Pala (owners of over 50% of NCU
shares) closed correctly (9). Personally I
think they should combine the two and
invest in the solar business, they have
more chance of running free cash flow in
the long-term future at Pumpkin Hollow
by selling energy than selling copper
concentrate. But that’s just me. The five
year price chart tells you everything you
need to know about this waste of time
and by the way, I don’t begrudge many
people for earning a thousand dollars per
day over an extended period of time
such as 2013 to 2016 but when it comes to Giulio Bonifacio and his C$362,500 cash annual
salary for doing nothing, it kind of sticks in the craw. Then again, we know the world isn’t fair.
The Low Cost Producer Basket
After 22 weeks of 2016, the Producer Basket shows a gain of 103.60% to level stakes.
company ticker price 1/1/16 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Barrick ABX 7.38 1164.67 22.34 19.18 159.9%
2 Newmont NEM 17.98 529.12 18.74 35.41 96.9%
3 Goldcorp GG 11.56 830.22 15.17 18.27 58.0%
4 Franco Nevada FNV 45.75 176.298 12.28 69.65 52.2%
5 Agnico Eagle AEM 26.28 217.67 10.92 50.19 91.0%
6 Ang/Ashanti AU 7.10 405.27 6.46 15.93 124.4%
7 Detour Gold DGC.to 14.41 170.85 5.07 29.69 106.0%
8 Sibanye Gold SBGL 6.09 228.71 2.95 12.89 111.7%
9 Buenaventura BVN 4.28 254.19 2.82 11.11 159.6%
10 New Gold NGD 2.32 509.89 2.09 4.09 76.3%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 103.60%
16

,
A bigtime rebound and to set the tone, note that New Gold (NGD) was the worst performer of
all the ten on our list with its +9.7% week-over-week rise. All the others moved up in double
figure percentages and though of course the fat end of gains came Friday when the whole
sector rocked higher on gold’s $30/oz move, there was a clear recovery already in place betwen
Monday and Thursday. Anyone who was betting on the last three months being a relief rally
inside a bear market had their assumptions handed to them on a silver platter, garnish with
their own hind quarters.
The Low Cost Producer Basket: Weekly performance
130% and comparative to GDX control
110%
90%
70%
50%
30%
10%
-10%
17
dr3naj ht01 ht71 ht42 ts13 t7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 r3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj
basket
gdx control
source: Google, IKN calcs
And in one jump, the larger producers recaptured nearly all the losses sustained through May
(“sell in May and go away but then get back in quick” just doesn’t have the same ring about it).
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 dn22 ht92 ht5nuj
source: ikn calcs, NYSE/Nasdaq data
Regional politics
Guatemala: The “Criminal Mafia Structure” of the Otto Pérez Molina government
Last week saw a major political event in Guatemala, the report and press conference of the
CICIG anti-corruption body in Guatemala (the same people whose investigations caused the
downfall of now jailed ex-President Otto Pérez Molina last year) on their investigation findings.
Fortunately for us Latin America Daily Briefings has an excellent resumé in English (10) and just
by reading this single article you get right up to date on the whole event. The LADB piece starts
this way:
Guatemala's attorney general and CICIG commissioner accused ex-
president Otto Pérez Molina and more than 50 high-level businessmen
and former government officials of being part of a massive money-
laundering and illegal campaign financing scheme, reports Reuters.
According to CICIG commissioner Iván Velásquez, Molina and former
vice-president Roxana Baldetti led a "criminal mafia structure that had
co-opted power through the ballot box," reports Plaza Pública. The
investigation -- which took months according to Thursday's press
conference -- produced evidence of a criminal structure that's even more

,
intricate and tentacled than previously thought, explains InsightCrime.
As usual, LADB provides all the links you’ll ever need to its source material.
The CICIG presser was a major event in Guatemala, with President Jimmy Morales in
attendance, live news coverage and a mountain of debate generated. It talked of paid-off
media channels, banks that were actively colluding with government approved drug money
laundering, large-scale bribery at all levels of government, cash slush funds of very dubious
origins made available for election campaigns. It also got the country’s judiciary to emit another
23 arrest warrants to suspects, some for the already jailed figures such as Pérez Molina and his
Vice President Roxana Baldetti, but others for figures that include wealthy business people and
well-known political figures.
As for what it may mean in the near-term future of Guatemala, LADB sums it up in this way:
On social media and in comments sections, Guatemalans have
expressed disgust at the former ruling party and support for CICIG and
the Public Ministry. An El Periódico editorial warns that explosive
judicial cases like this one won't spark long-lasting change without
accompanying legislative and constitutional reform. CICIG
commissioner Iván Velásquez suggested that proposed constitutional
changes be put to a citizens' referendum, El Periódico reports. The
National Assembly will discuss possible reforms later this month; it will
ultimately need approval from 2/3 of members. If this majority is
achieved -- which will be tough in a fractious Congress -- then the
Supreme Electoral Tribunal, the President, or Congress itself could
convoke a national referendum to seek public approval of the new laws.
That sounds spot on. Guatemala is squaring up for another period of turmoil and we, the
Foreign Direct Investors of this world, need to be aware of that. Guatemaltecos showed last
year that if parliament doesn’t do its job to their satisfaction they will make loud and large
protest outside their doors until they do and the new President Jimmy Morales (who may be a
new face in power but is backed by the old-guard of political powers) is under pressure to do
the right thing without losing key backroom support. And a reminder that from now on, every
deal that was done in the Pérez Molina period will come under close scrutiny and that means
Tahoe Resources isn’t out the woods yet just by having expanded into Canada and Peru to
lighten its political risk exposure.
Peru: PPK very likely the next President in a tight finish
Locally it’s been the big day today as Pedro Pablo Kuczynski faced off against Keiko Fujimori for
the job as country President for the next five years. Those of you who have followed the blog
posts since IKN368 last Sunday would have seen how the gap closed between PPK and Keiko to
the point where he was showing a slight lead this weekend. A week is a long time in politics
and the combo of his better debate performance last Sunday and a concerted effort by all anti-
Keiko groups, left right and centre, to join together in order to try and stop a Fujimori from
coming to power again. It looks like it has worked.
As polling stations closed this afternoon the exit poll surveys from three major polling
companies contracted by different television channels gave us their flash results which went up
on the blog. They showed a tight result and the only pollster edging Keiko, CPI, had shown a
clear tendency to favour the Keiko vote throughout the second round process. But once the
Fast Count result was released a couple of hours later, PPK’s supporters burst into cheers as
they give their candidate a 50.8% to 49.2% victory and the nature of the Fast Count is far
more certain. In a country of 22m registered voters, every tenth of a percentage point
represents approximately 22,000 people which means we’d need a swing of around 180,000
votes to change the result. It’s very unlikely that enough errors are found between the Fast
count and the official result, therefore although it’s a tight result, PPK is almost certainly the
next President of Peru (and as you will know if you’ve been reading these segments over the
18

,
weeks, on a personal level I’m very pleased with this result as the country has definitely chosen
the ‘least worst’.
However and to end this piece, we’re not going to get enough of the official results numbers
until tomorrow to force an official speech from Keiko to concede the election. So nothing official
yet, that needs to be underscored, but between you and me PPK’s got it.
Mexico: Primero Mining’s (PPP) (P.to) stupidity
I might have had a spleen-venting rant at P on the blog last week (11) but that doesn’t stop the
company’s decision (12) to go running to the international courts (under NAFTA rules) and file
against the country of Mexico in its dispute over tax payments as very stupid decision indeed.
Not only may it incur the wrath of a sovereign State and bring all types of regulatory grief upon
P at San Dimas, but it sets an awful image for the whole of the Canadian mining industry at a
time when they should be trying to win hearts and minds, not come across as bullies. Also
notably, the issue has been picked up by the non-trade press already and presented as a
political problem as here’s CBC (13) with its piece this weekend, “Mexican tax demand prompts
NAFTA challenge by mining firm ahead of 3 Amigos summit” and here’s how that kicks off:
A Canadian mining company's NAFTA challenge against Mexico could throw a wrench into the
"Three Amigos" summit on June 29, when the leaders of Canada, the United States and Mexico
will gather in Ottawa.
Primero Mining Corp., which owns the San Dimas gold-silver mine in Durango, Mexico, has
launched the challenge against the Mexican government saying the Mexican tax authorities are
trying to improperly collect more taxes from the company.
CEO Mast is reported in that piece as saying he’d like the issue cleared up before the three
leaders meet, which is another example of his political naivete because that’s simply not going
to happen. The tone-deaf nature of the decision to go to an international tribunal so quickly
beggars belief and casts a lot of doubt on the ability of this company’s board of directors to be
able to operate successfully in Mexico. In fact, the company’s own recent financial results
suggest that too.
Market Watching
Minera IRL: This week and no joke
I was expecting news to start flowing last week and in the end nothing was heard, but that’s
about to change. As from this week expect news to start flowing from the company and that
process has already started, because on Friday afternoon IRL got all its financial reporting back
up to date by publishing its 2015 financials and its 1q16 quarter financials which you can see
right here (14). Regarding those numbers, there was no particular surprise and though liquidity
is obviously tight, it’s managing to keep afloat and meet its financial obligations thanks to the
cash flow from Corihuarmi gold sales.
Aside from the quarterlies that we’ll take a good look at once the stock gets re-listed (it’ll be
Lima first, then Toronto) we should expect the company to give us an update on its corporate
healing process as well. Regarding that, as soon as I’m in a position to give more insight I will
but without going into detail I still need to keep things discreet for the time being. Fellow
shareholders, don’t write off IRL yet, the phoenix will rise yet from the ashes caused by the
idiot Daryl Hodges and the period of darkness is coming to an end.
Thinking zinc
I’ve mentioned this in passing in a couple of places in recent weeks, such as in the analyses of
my preferred zinc play Tinka Resources (TK.v) and on the blog, so here’s a short piece with a
formal word. The market for zinc is starting to look conducive for higher spot metals prices. The
combination of world inventory levels that are dropping...
19

,
...supply that’s not expanding at the rate of demand (this chart from the piece in IKN364 dated
May 1st)...
Zinc supply and demand, annual
15
14.33
14.5
14 13.745
13.93613.848 13.98
13.509
13.5 13.065 13.03313.167
13 12.726 12.627
12.412
12.5
12
11.5
11
10.5
10
2011 2012 2013 2014 2015 2016e
source: IZLSG
20
sennot
noillim
Zn Prod
Zn Use
...and a price that, on technical anal ysis at least, looks strong and going higher now it’s
through 90c/lb for the first time in nearly a year...
...all add up to the same thing, a sub-sector of the mining world ready to go into bullish mode.
As mentioned, my best idea at this point is Tinka (TK.v) as it’s under the radar and a real deal

,
project. You may prefer the hotpot Arizona Mining (AZ.v), access to emerging market bourses
may lead to to a trade in the very liquid and volatile Volcan (VOLCABC1) in the Lima stocks
exchange or even the mediocre producer Trevali (TV.to) that at least gives you direct leverage
to zinc prices being a producer. There are other names too, but whatever your preference may
be the macro call is the thing, Zn’s looking bullish and worth a trade. Zinc hasn’t managed to
beat $1.10/lb for five years but even going back over $1.00/lb would see new market light
shone upon the metal and stocks behest to its movements.
Belo Sun (BSX.to) redux
Am I beating on this one company like a meanie? Yes I probably am being too myopic for my
own good but it needs to be said that it was telling how BSX was one of the very few gold
names that ended in the red on Fed’s special “Gold Pop Friday” event, as it coincided with the
news out of Brazil (15) that there
really is an indefinite delay on the
awarding of the company’s EIA
licence. There seems to be a lot of
private conversations going on in the
backrooms, because we’ve jumped
from a big signing ceremony on April
26 to that ceremony being called off
to news of “maybe second half of the
year” for the EIA in a public meeting a
month later.
BSX got re-rated on the upcoming
EIA, which didn’t appear. It can deft
gravity for a while and might even be
able to simply tread water if gold rises
and covers up the cracks. It’s difficult to outright short anything gold in a gold bull market, even
less a stock sponsored by high-flying Agnico Eagle, but it would be my suggestion as the short
component for anyone looking for a junior pair-trade.
What I’d buy now
I field questions about the make-up and percentage weightings of my portfolio on a regular
basis and they’re to answer without knowing the other person’s financial position and
requirements well (I’m not your financial advisor, after all). I also get questions on what I “like”
on the portfolio list at any given time and the stocks I think have a better chance for immediate
gains, or are showing particularly good value at current prices, also very tough questions to
answer well in a way that’s respectful.
However I’m also clear that your queries are out of idle curiosity, they’re valid questions and
worthy of a good reply. So this week I sat in a quiet corner for a while and tried to come up
with a way to address these issues and here we are, my tentative answer.
It comes in the form of a thought experiment:
1) You give me $50,000
2) You tell me I have to invest every dollar in currently open stocks
3) I’m allowed to allot different dollar amounts to different stock, from zero on up
4) I base my decisions, choices and dollar amounts on what I think today about the
company, the stock price and the current underlying micro and macro fundamentals.
5) You know that I like all the stocks because you know I already own them, we both
understand answers are about how I feel today.
6) I come up with a table that looks like this:
21

,
Mark spends his theoretical $50,000
company ticker current PPS amount I'd invest today
B2Gold BTO.to C$2.64 12000
Sandstorm Gold SAND U$3.99 10000
Tinka Res TK.v C$0.22 8000
Starcore Intl SAM.to C$0.80 7000
Regulus Res REG.v C$0.95 5000
Continental Gold CNL.to C$2.61 5000
Richmont RIC U$8.18 2000
Lara Expl. LRA.v C$0.89 1000
INV Metals INV.to C$0.65 0
Focus Ventures FCV.v C$0.085 0
Total 50000
I decided on the framework of the thought experiment earlier in the week but also decided I
wouldn’t execute until Saturday, once the market week was done. As a result most of those
dollar decisions didn’t surprise me, but I will highlight a couple that did. Sandstorm got more
than I expected because it’s now looking like a great way of playing the gold bounce. Tinka got
more because of the Zn factor and that the company could do good things marketing in
Canadian shops this week coming. On the other hand, Richmont was allocated less than I
expected and so was INV, but that one is more because I’m a seller soon. FCV got on my
nerves with their drip-drip placement and gets nothing.
Conclusion
IKN369 is done, we end with bullet points:
• I’ll stick to gold over silver, metal and miners.
• The Friday action was welcome, especially after having just added to Sandstorm (and a
bit of Starcore), but it’s not going to change my expectations of a relatively flat summer
for gold and its minions.
• Next week I’m looking to Tinka to get a bit of market chatter going, plus we’re now
moving into the month when INV Metals is due to deliver my exit note.
• This is a bull market. It’s easier to believe me this weekend, but the message is exactly
the same as last weekend. Buy. Hold. Win. Put the brokerages and us the chatterers
out of business, stop paying us money, go hit the beach or do some fishing then come
back in three months and see how much richer you are. Do not complicate your life.
I thank you in advance for any feedback. Our Top Pick stocks are Regulus Resources (REG.v),
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. Namaste.
Mark
22

,
Footnotes, appendices, references, disclaimer
(1) https://www.youtube.com/results?search_query=they+took+our+jobs+south+park
(2) http://www.macrotrends.net/1441/gold-to-silver-ratio
(3) https://en.wikipedia.org/wiki/Argumentum_ad_lapidem
(4) http://www.silverwheaton.com/investors/
(5) http://www.elespectador.com/noticias/economia/el-oro-maldito-de-buritica-antioquia-articulo-635916
(5a) http://www.rcnradio.com/locales/mes-terminara-primera-fase-intervencion-la-mineria-ilegal-buritica/
(6) http://finance.yahoo.com/news/focus-announces-proposed-private-placement-123000868.html
(7) http://www.reuters.com/article/us-cme-lme-warehouses-idUSKCN0YE0GS
(8) http://www.nevadacopper.com/s/NewsReleases.asp?ReportID=750949&_Type=News-Releases&_Title=Nevada-
Copper-Solar-Zoning-Approved
(9) http://www.nevadacopper.com/s/NewsReleases.asp?ReportID=751325&_Type=News-Releases&_Title=Nevada-
Copper-Closes-Cdn-10.5-Million-Financing-With-Red-Kite-And-Pala
(10) http://latinamericadailybriefing.blogspot.pe/2016/06/cicig-exposes-guatemalas-partido.html
(11) http://incakolanews.blogspot.pe/2016/06/the-ikn-post-regarding-primeros-ppp-pto.html
(12) http://finance.yahoo.com/news/primero-notifies-mexico-investment-dispute-212706917.html
(13) http://www.cbc.ca/news/politics/nafta-challenge-mining-three-amigos-summit-1.3617377
(14) http://www.minera-irl.com/es/centro-de-inversionistas/estados-financieros-mda-y-aif/2016
(15) http://incakolanews.blogspot.pe/2016/06/belo-sun-bsxto-still-no-permit.html
Stocks To Follow Closed Positions 2015
Closed in 2015 closed close price
Argonaut Gold AR.to jan'15 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'15 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'15 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'15 C$0.075 26-jan-14 C$0.035 -53.3% sm, sold on Cu downturn
Fortuna Silver FSM mar'15 U$4.12 10-nov-14 U$3.75 9.0% Short used as hedge
GoldQuest Min. GQC.v mar'15 C$0.26 27-oct-13 C$0.085 -67.3% given up ghost
Rio Alto Mining RIO.to apr'15 C$2.30 07-apr-11 C$3.57 55.2% Top pick, bot out, big win
Timmins Gold TGD jun'15 U$0.60 19-apr-15 U$0.62 3.3% near-term trade, out of time
First Majestic AG jul'15 U$10.51 10-aug-14 U$4.55 56.7% horrible failed trade
NovaCopper NCQ.to jul'15 C$1.05 09-apr-14 C$0.50 -52.4% no more Cu exposure, sm sell
McEwen Mining MUX aug'15 U$0.695 21-jul-15 U$0.92 32.4% Closed nearterm flip for win
Midas Gold MAX.to sep'15 C$0.39 21-sep-15 C$0.35 -10.3% Sm. trade idea that didn't work
New Gold NGD oct'15 U$2.18 23-aug-15 U$3.05 39.9% trade closed, profit taken
Legend Gold LGN.v nov'15 C$0.085 01-mar-15 C$0.035 -58.8% tiny "land grab" idea, failed
Timmins Gold TGD nov'15 U$0.245 20-sep-15 U$0.15 -38.8% small near-term loser
23

,
Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dec-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
Network Expl. NET.v feb'14 C$0.01 22-jul-12 C$0.005 -50.0% position closed, did nothing
Tahoe Resources TAHO feb'14 U$13.10 08-apr-13 U$21.72 -65.8% short closed due to reality
Darwin Res DAR.v mar'14 C$0.10 14-jul-12 C$0.045 -55.0% tiny risk play dropped
B2Gold BTO.to mar'14 C$3.07 28-nov-12 C$3.35 9.1% closed to free up capital
Pretium Res PVG mar'14 U$5.38 22-nov-13 U$6.50 -20.8% short closed as port longer
Gold Res Corp GORO may'14 U$5.07 26-jan-14 U$4.12 16.7% took profit
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Took profit, sm near-term win
Eco Oro Min. EOM.to aug'14 C$0.48 22-sep-13 C$0.26 -45.8% sold small loser to make room
True Gold TGM.v sep'14 C$0.395 02-feb-14 C$0.41 3.8% M&A won't happen, sold
Santacruz Silver SCZ.v sep'14 C$1.04 26-jan-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-apr-14 U$0.99 -28.3% failed trade, sell, raise cash
Kinross Gold KGC nov'14 U$2.90 20-oct-14 U$2.15 -25.9% V small trade, didn't work, chau
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.145 -48.2% lost China sponsor
Stocks To Follow Closed Positions 2013
Closed in 2013 closed close price
USA Graphite USGT feb'13 U$0.93 08-jan-13 U$0.17 81.7% short tgt made/trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
United Silver USC.to mar'13 C$0.21 28-oct-12 C$0.095 -54.8% small Ag sector trade, failed
Aurcana Corp AUN.v apr'13 C$1.07 11-nov-12 C$0.55 -48.6% closed on poor YE results
Gold Res Corp GORO apr'13 U$14.11 25-jan-13 U$9.38 33.5% short tgt made/trade closed
Marlin Gold MLN.v apr'13 C$0.075 10-feb-13 C$0.065 -13.3% closed trade
Bear Creek BCM.v may'13 C$2.58 01-apr-13 C$2.40 -7.0% near-term, time ran out
Lupaka Gold LPK.to may'13 C$1.12 23-oct-11 C$0.32 -71.4% towel thrown in
Tahoe Resources TAHO may'13 U$18.62 08-apr-13 U$14.70 21.1% took profit on ST short
OceanaGold OGC.to jun'13 C$3.03 16-sep-12 C$1.18 -61.1% sold on gold drop
IMPACT Silver IPT.v jun'13 C$1.14 13-jan-13 C$0.62 -45.6% sold on silver drop
Duran Ventures DRV.v jun'13 C$0.045 10-may-13 C$0.025 -44.4% ST trade never worked
Plata Latina PLA.v jun'13 C$0.79 10-apr-12 C$0.13 -83.5% closed
Bellhaven BHV.v jun'13 C$0.065 03-jun-13 C$0.12 84.6% closed ST trade
B2Gold BTO.to aug'13 C$3.07 28-nov-12 C$3.44 12.1% sold 1/2 to raise cash
Colossus Min. CSI.to aug'13 C$0.72 24-jul-13 C$0.79 9.7% closed thru nerves on future
Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% closed to raise cash
Bear Creek BCM.v sep'13 C$2.06 30-may-13 C$2.20 6.8% sold on pol risk decision
MAG Silver MVG oct'13 U$7.00 12-sep-13 U$5.62 19.6% near-term short
Gold Res Corp GORO oct'13 U$9.52 03-may-13 U$4.98 47.7% short tgt made, covered
AQM Copper AQM.v oct'13 C$0.31 16-oct-11 C$0.125 -59.7% closed failed trade
First Majestic AG nov'13 U$11.51 07-nov-13 U$10.50 8.8% v near term short, closed
Fortuna Silver FSM nov'13 U$4.00 07-nov-13 U$3.68 8.0% v near term short, closed
Primero PPP nov'13 U$5.70 07-nov-13 U$5.75 -0.9% v near term short, closed
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work, sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
24

,
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
25

,
Stocks To Follow Closed Positions, 2010
Closed in 2010 closed close PPS
B2Gold Corp BTO.to Jan'10 C$0.88 08-nov-09 C$1.49 68.2% target made, trade closed
Radius Gold RDU.v Jan'10 C$0.18 23-aug-09 C$0.40 122.2% target made, trade closed
MAG Silver MVG mar'10 U$5.60 23-nov-09 U$7.28 30.0% closed in pdac week
Riverside Res RRI.v mar'10 C$0.435 20-sep-09 C$0.60 37.9% closed in pdac week
Amarillo Gold AGC.v mar'10 C$0.81 31-may-09 C$0.70 -13.6% closed in pdac week
B2Gold Corp BTO.to apr'10 C$1.24 18-feb-10 C$1.50 21.0% target made, trade closed
Lumina Copper LCC.v apr'10 C$0.84 14-jun-09 C$1.55 51.2% total position now sold
Troy Resources TRY.to may'10 C$1.10 03-may-09 C$2.25 104.5% sold on negative results
AuEx Ventures XAU.to may'10 C$2.51 24-may-09 C$3.38 34.7% trade closed
Nevada Copper NCU.to jun'10 C$3.27 14-mar-10 C$2.03 -37.9% need to lower Cu exposure
Carpathian Gold CPN.to jun'10 C$0.39 14-mar-10 C$0.35 -10.3% too exposed to cap raising
Amerix PM Corp APM.v jun'10 C$0.065 08-nov-09 C$0.05 -23.1% victim of macro bear
Antares Minerals ANM.v jun'10 C$1.42 06-dec-09 C$2.10 47.9% sold half
Vena Resources VEM.to jun'10 C$0.37 31-may-09 C$0.23 -37.8% sold half
Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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