IKN #371Premium

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The IKN Weekly
Week 371, June 19th 2016
Contents
This Week: In today’s issue, Last call for Brexit.
Fundamental Analysis: Wesdome Gold Mines (WDO.to): A buy and KGI’s next target.
Stocks to Follow: Overview, Wesdome Gold Mines (WDO.to), Richmont Mines (RIC) (RIC.to),
HudBay Minerals (HBM.to) (HBM), Sandstorm (SAND) (SSL.to), Regulus Resources (REG.v),
Starcore Intl (SAM.to), Continental Gold (CNL.to), INV Metals (INV.to), Lara Exploration
(LRA.v), Tinka Resources (TK.v), B2Gold (BTO.to) (BTG).
Copper Basket: Overview, Reservoir (RMC.v).
Low Cost Producer Basket: Overview, Buenaventura (BVN).
Regional Politics: Chile: Use of sea water in copper mining rising.
Market Watching: On Lithium juniors, Minera IRL: Another big step forward, Zinc stink.
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
• I explain the reasons behind the Flash update on Wednesday (see Appendix 1) calling
the purchase of Wesdome Gold Mines (WDO.to), today’s main event. If you’re into
deep inside mining politics and dealmaking moves, all with a clear path to making us
the puny retailer a profit on a deal, this is the note for you. Researching this story and
putting the pieces together was fun, too. We’re all crazy in our own ways.
• I write more on Brexit than I wanted to write. This is, however and happily, almost
certainly the last time it gets more than a line or two.
• Copper again looks weak.
Last call for Brexit
It’s been a shameful week in UK politics. I’m not going to dwell on the most divisive of
campaigns, the rise of blatant racism, the fear-mongering and vote-winning strategies of all
stripes that makes even the populist jingo-merchants to which I’m routinely exposed in South
America look like a bunch of pikers. Nor do I want to make much mention of the horrific
incident in Yorkshire, but a word is necessary because it may affect trading in stocks covered in
The IKN Weekly. As mentioned in previous editions, I say The UK will vote to remain in the EU.
The consensus among anal ysts to that eventual result is that we can expect the gold price to
take a temporary hit, which sounds logical enough to me and for clear evidence, look at the
way the metal traded last week. I am not proud of publishing the chart below. Quite the
contrary, it feels dirty, I hope you understand I’m focussed on the specific remit of this
publication. The IKN Weekly.
1

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I will keep the tenor of this paragraph as neutral as possible. It was not lost on people who
understand UK politics what this attack means to the
Brexit referendum vote set for Thursday June 23rd, five
days away. Gold didn’t drop because of a potential
suspension of the vote (a silly rumour that didn’t last a
minute among people with real buying power), it
dropped because of an all-too real event that will move
votes to Remain. Serious elections in the UK aren’t won
and lost until the last week of any campaign, this one is
no different and, rather than go on and on, I’ve just
edited out a large piece of script. Enough, point made.
What I will do instead is lay out the basics mechanics of
the vote day. The first results from the are expected just
after midnight UK time (5am to 6am Friday morning East
Americas time, depending on where you are). There
follows nearly 400 declarations from each regional body
with the last numbers expected to come in around 7am
Friday UK time. Unless it’s very close, we should have a
fair idea of the result around 4am UK time, that’s 9am or 10am East Americas time depending
on where you are.
I expect gold will trade soft in the days ahead, be that weakness before the vote as a Remain
win is baked in, or afterwards on the result. I’d expect a little of both, in fact. On the other
hand a Remain win would also mean a rally in both the Euro and the Pound Sterling, which
means the US Dollar would weaken respectively and that may take the edge off the “gold fear
trade” drop as Brexit fears dissipate. In other words the usual collection of wheels within
wheels and the fundamental interconnectedness of all things. As for how much gold might drop
(or gain), I’ve seen guesstimates from many places and in many forms. For sure they’re all just
those, best guesses, but I’ll go with the Dundee gold market guru Martin Murenbeeld and his
“U$1,230/oz to U$1,270/oz” (on the gain side he also calls gold over U$1,400/oz in the event of
a Leave win), a wide range that should catch the bottom without being overly cute.
Finally, I’m not going to trade around the Brexit vote. Or perhaps I should say that I probably
won’t trade around the Brexit vote, but might get tempted into some small side bet. My near-
term positions (e.g. HBM, INV, WDO) are held for company-specific reasons, while I’m less
concerned about my longer-term trades (e.g. Top Picks BTO, SAM, REG) because once Brexit
washes through, even in the unlikely event of a Leave win, gold will be just fine and is going
higher in the future anyway.
PS: Just this Sunday morning I’ve been asked by mail for a personal call on Brexit, what I would
like instead of what I believe will happen. While it’s all in my head here’s your post-script. At
first I was pro-Remain out of political instinct more than anything else, then as the campaign
unfolded and the Remain strategy of fear-mongering and dragging the debate down was rolled
out I questioned that position and, somewhat to my own surprise after thinking things though
more carefully, found I really didn’t care which way The UK votes. In the great scheme of
things it doesn’t really matter much, it’s not fit to tie the shoelaces of Bastille Day, Pearl Harbor,
August 6th 1945 or September 11th 2001. So for many weeks up until last Thursday I was a
complete agnostic, but then this (1) event Thursday morning (not the terrible one of Thursday
midday) changed my mind again and I saw that if I favoured Leave I would be lining up behind
and empowering an overt racist in Nigel Farage and all who sail with him. Therefore my vote is
an anti-vote, it’s to Remain in The EU because if not the ugliest side wins and my stars, they
had to get pretty ugly to out-do the awful Remain people. If it weren’t for the rise of the far-
right racism now driving Leave, I honestly wouldn’t give a damn who wins.
PPS: Dear USA, on re-reading this piece, your impending Clinton/Trump battle springs to mind.
It may turn out to be a long year in politics.
2

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Fundamental Analysis of Mining Stocks
Wesdome Gold Mines (WDO.to): A stock to buy and Kirkland Lake’s next target
As per the Flash update dated Wednesday 15th (see Appendix 1 below) I’m long Wesdome Gold
Mines (WDO.to) (WDOFF), a small gold producer in Canada. Today’s fundies section fleshes out
the reason for this near-term trade decision, but the TL:DR is simple enough; WDO is either
going to be sold to Kirkland Lake (KGI.to) in a friendly deal, or it’s going to come under hostile
offer. As things stand today it’s perhaps more likely to be the hostile route but either way, this
stock is set to move higher on M&A action. That’s why I called buy on Wednesday and added
the position to the ‘Stocks to Follow’ list below.
There are four main parts to today’s analysis:
1) An overview of the company, charts numbers and things, to give context.
2) The fight between WDO management and its major shareholder, Resolute.
3) The situation inside Kirkland Lake.
4) The situation inside Wesdome.
We then mix those elements together to reveal the reasons for this trade.
The company
The story behind the upcoming M&A action in WDO is discussed a little further down this note,
first we’re going to take a look at the prize itself, WDO the company. We start with the basics
and the current corporate structure:
Shares out: 129.166m
Options: 4.236m
Warrants: zero
Fully diluted shares: 133.402m
Current share price: C$1.91
Market Cap: C$246.71m
Approx working cap per S/O: C$0.065
All prices are in Canadian Dollars unless stated. Forex U$0.80=CAD$1
That market cap converts to U$191m and change at current forex prices and in the next part on
operations, we look to see what you can get for that type of cash these days. But before going
on, please be clear that today’s note uses Canadian Dollars unless otherwise stated, as
the Loonie is the reporting currency at WDO.
Operations: Small with recent problems
You can tell by its corporate title that WDO is a gold miner, but it’s all-but exclusively about that
one metal. It has a couple of other
exploration stage assets but as Ozt Au WDO: Gold production vs sales, per qtr
things stand it’s basically valued on 18000 production
15878 16023
its flagship operation, the Eagle 16000 15188 sales
River complex that comprises of 1) 14000
12408
11740
the high grade underground Eagle 12000
River mine, 2) the lower grading 10000 9633
8100
Mishi open pit mine that together 8000
feed 3) its central mill and 6000
production facility, in Wawa, 4000
Ontario. Here are production and 2000
sales figures at WDO, just the sales 0
numbers are added for easier 3q14 4q14 1q15 2q15 3q15 4q15 1q16
reading: source: company filings
3

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Combined production attributed to Eagle River and Mishi has bounced between 10k oz and 14k
oz gold per quarter and frames the company as a 50k/annum type entity. Until that is the latest
1q16, when production was hit by glitches and as a result production from the Eagle River U/G
was lower in grade than expected and the numbers came in at 6,254 oz from Eagle River rock
and 1,782 oz from Mishi rock, a total of 8,036 oz produced. The 8,100 oz reported sold in the
quarter is in line with that.
This chart shows the production rhythm at WDO and adds in the company’s guidance for the
rest of 2016 (which I think is a crock but WTFDIK?):
WDO: Gold prod/qtr, plus COMPANY guidance
20000 parameters for the rest of 2016
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
4
41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
mt WDO: Tonnes milled, per qtr g/t Au WDO: Average gold grade, per qtr
100000 14
90000 Mishi 12 12.5
80000 Eagle River Eagle River
70000 10 10.1 Mishi
60000 8 8.7
50000
6 7.4
40000 7 6.6
4.9
30000 4
20000
2
10000 2.4 1.8 2 2.3 2.6 1.9 1.5
0 0
3q14 4q14 1q15 2q15 3q15 4q15 1q16 3q14 4q14 1q15 2q15 3q15 4q15 1q16
source: company filings source: company filings
Ozt Au
Mishi
Eagle River
source: WDO filings, COMPANY guidance for 2016 (not IKN)
For the record, those 2016 forecast quarters come from the 1q16 MD&A in which WDO states
that 2q16 production is set for 9,000 oz from Eagle River and 3,000 oz from Mishi. They then
guided to the low end of their original 2016 guidance, which means 54,000 total for the year.
That’s how I generate the 3q16 and 4q16 numbers (along with a bit of guessing that 4q16
comes in the best). WDO expects production to pick up in the second half of the year thanks to
improved infrastruture at the mine plus a return to better grading underground material.
But this doesn’t hide the fact that WDO missed on its guidance numbers in 2015 and badly
missed in 1q16 thanks to operational problems. This is one of the reasons it’s fallen foul of its
largest shareholder recently and in fact, as you’ll see, is directly tied to my decision to buy WDO
shares last week. Another reason is the asset’s growth potential; Eagle River has shown itself to
be a long life mine despite typically low reserves levels, drilling and full replacement of
reserve/resource ounces is the normal state of affairs. It’s recently hit two new high grading
zones in its drill program and already has plans to move production up to between 74k and 82k
by 2018 and then see it hit a steady state of over 70k average in subsequent years. But even
that could be lowballing its potential and I’ve had the chance to read at least one analysis
report that posits Eagle as a possible 100k/120k oz/year operation on throughput expansion. It
may be going through a rough patch, but more than one person sees a larger prize at stake.

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Financials overview
This is going to be quick-ish, just enough to get the idea behind the way the company has been
performing recently and please recall that unless otherwise stated all financials are in Canadian
Dollars, the WDO reporting currency. What with just covering the production numbers, let’s do
operations first and P+L items, starting here with the revenues and operating costs overview.
CAD$m WDO.to: Operations overview
25 23.1 22.3 23.6
20.9 21.0
20 17.0 16.0 19.4 18.8 15.8 17.217.6 18.2 16.8 17.5
14.4
15 13.3
12.3
10
5
0
-5 revenues total op expenses Op earnings
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16
source: company filings/IKN ests
The first thing to note is the thin-looking
operations results (which include mine costs, CAD$m WDO.to: Costs overview
depletion, G&A and “other”, but do not 25 mining processing costs depletion
G&A other expenses
include financial expenses or tax) and how in
20
three of the last five quarters, including the
most recent one with that big production 15
miss, WDO has returned an operating loss.
10
Here right is how costs break down and 5
mining processing costs (basically COGS) is
0
the lion’s share as you’d expect. We can also
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16
appreciate that the 1q16 miss in production,
Source: WDO.to filings, IKN ests
due mainly to grade, didn’t result in cheaper
running costs for WDO. No respite, there’s a
solid fixed cost element to this chart.
WDO: Realized gold price vs All-In Sustaining Cost
This chart left puts it another way, showing the
CAD$/oz Au (AISC), per oz Au
realized price per ounce of gold obtained by WDO
3000
per quarter, next to its All-In Sustaining Cost
2500 Realized price
AISC (AISC) per ounce. Even in the relatively good
2000
quarters this company has been running on
1500 mightily thin margins.
1000
500 WDO.to: Net Earnings
10
0
8
3q14 4q14 1q15 2q15 3q15 4q15 1q16
source: company filings 6 4.2
4 2.9 2.2 2.6
1.1
2
There are plenty of ways to cut dice and
0
slice the data, but just one more and I’ll
-2 -0.8 -0.7
move on. Here right are net earnings for the
-4
last couple of years and even in 2014 this -3.3
-6 -4.3
was hardly a massive moneyspinning
machine, but the amount of red on the
screen in recent quarters, topped off with a
painful 1q16, is a neat visual of WDO’s
5
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1
source: company filings/IKN ests
srallod
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underperformance.
Summing up what we know so far about operations at WDO, both production and the P+L point
to a mediocre gold company. It’s small, its costs profile means it’s been running thin margins at
best, it’s one of the companies praying at the altar of the Market Gods for higher prices that will
bring it into true profitability. In other words a leveraged play on gold and not without its
execution risks either, as its poor 1q16 shows. And I know it’s at least twice the production
(arguably three times) but still, how this stock gets to command a CAD$250m market cap while
my Starcore (SAM.to) with its own leveraged-to-gold-price mine but also an excellent growth
profile and book of assets still fiddles around CAD$40m is beyond me.
Moving on to balance sheet items, we start
with assets. This is a pretty typical looking
asset chart, most of its net worth is tied up
in fixed assets and until the latest
placements came along, cash treasury was
looking a little thin. Here’s that sub-sector
data on its own.
The 2q16 estimate on the right comes to just
over CAD$31m and it’s a best guess made
up of the recently closed placement (see the
share count section below for more) plus a
pro-rata on the $7m cash WDO is getting
from Agnico for the recently announced sale
of a couple of non-core properties (2). I’m
assuming that closes before the end of the
quarter (it might not), I’m also aware the
number could be lower if WDO writes more
cheques than I expect for the equipment
upgrades it says it needs. But what the
estimate for 2q16 shows is the type of
liquidity available to WDO at this time.
Here’s the liabilities chart and it’s a pretty
standard show. Currents are mostly trade
payables, the only vaguely interesting thing
on the long-term is $6.6m in convertibles,
strike $2.50. I could get nitty and gritty on that, but today’s isn’t that report.
WDO.to: Debt Breakdown per qtr
35
30
25
20
15
10
5
0
6
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2
source: company filings
srallod
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snoillim
WDO.to: Assets
160
140
120
100
80
60
40
20
0
LT debt
current debt
Which brings up the working capital chart and that bears close resemblance to the cash
treasury position, as you’d expect. Things were tight for over a year, the new cash makes it
different.
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2
$m
fixed
other current
cash
source: WDO.to filings
WDO.to: Cash treasury per qtr
40
35
30
25
20
15
10
5
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2
source: company filings/IKN ests
srallod
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30 WDO.to: Working Capital per qtr
25
20
15
10
5
0
7
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2
source company filings/IKN ests
srallod
fo
snoillim
Finally we get to the share count, which looks like this (below right). WDO has recently run
three placements, adding just under 7m shares during 4q15 in two smaller placements and
then the latest during the current quarter (3), a bought deal of 10.465m shares at CAD$1.65
apiece (no warrant). WDO reports that gross
proceeds from this placement were $17.3m 140 WDO.to: Shares Out
and net proceeds were $16m, meaning that 120
around 7.5% of the gross was spirited away
100
by the middlemen. The chances of this being
80
unrelated to the generally positive write-ups
60
and sellside brokerage analysis notes
40
enjoyed by WDO are roughly zero.
20
However, the dilution was another of the 0
final straws (is the plural a concept?) for the
largest holder of the stock, Resolute
Performance Fund run by one Tom Stanley.
Resolute holds 33.35m shares of WDO (which is up from the declared 29.032m shares it held
on March 3rd, they’ve been collecting) and is the driver of the dissent in the way WDO has been
run, which culminated in the company’s AGM of last week (itself delayed some six weeks
because of the fighting). This is the next part of the story.
The fight between Resolute and WDO
There’s a lot that could be written about this part of the story, but I’m going to try and keep it
as concise as possible and start with the most basic of statements, that in 2016 there has been
an acrimonious battle going on between WDO and its largest shareholder, Resolute. It turns out
that the situation has been rumbling along for some months, with Resolute ignoring calls from
its largest shareholder to shape up (or so Resolute’s Tom Stanley says, WDO denies that), but
first public shots were fired on May 16th when Tom Stanley, in his letter to Resolute Fund
holders, wrote this about the company COO Philip Ng:
“...we don’t have confidence that the new Board will make the necessary operational changes,
particularly since our understanding is that the majority of the proposed new Board supports Philip
Ng’s continued employment as Chief Operating Officer, a view that we do not support, or frankly
understand, given the operating issues at Eagle River.”
Resolute was still obviously very annoyed by the continued glitches at Eagle River, especially
the large miss of 1q16. It’s also clear Tom/Resolute didn’t like the last couple of placements,
designed to upgrade equipment and provide necessary liquidity but also diluting established
holders, none less than he. On the same day May 16th Resolute told WDO that it would not
support the new board. The AGM, set for the next day, was postponed and when the new date
of June 14th latest was announced, WDO took space in the NR (4) to lay into Tom Stanley in no
uncertain terms. Whether right or wrong, it’s rare to see a company publically denigrate its
largest shareholder in such a manner and it was nothing less than a declaration of open war.
Then followed she-says-he-says news releases on either side of the battle, with plenty of dirt
thrown hither and thither, the way these things go. Then on June 9th Resolute gave its final
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2
source: company filings/IKN ests
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public shot across the bows of WDO before the AGM took place last week (5) and aside from
the laying out of operational concerns etc, this was included in the NR:
“At the shareholders meeting, Resolute intends to vote:
FOR the election of Nadine Miller , Rostislav Raykov , Barry Smith and Rowland Uloth;
and
WITHHOLD on the election of Duncan Middlemiss, Charles Page and Bill
Washington.”
Notice the three names on the Withhold list of Resolute/Thomas Stanley. Now look at the way
the votes turned out:
Resolute did indeed vote its 33.35m share block against Charles Page and Bill Washington
(getting close to ousting Mr. Page without being able to reach the magic 50% number), but
notable is the way in which Resolute decided not to vote its 33.35m shares against Duncan
Middlemass, the new and incoming director. An interesting switcheroo at the last minute and
one that ties into our next section but before we leave here, your author was told of the mud-
slinging battle that went on at the AGM on June 14th by three separate sources, all of whom
found it wonderful entertainment (in that special businessy way, at least). No quarter was given
and the two sides laid into each other in classic style. When all was done the votes were as you
see above, the previous board of WDO may have won its battle but Tom Stanley, bloodied and
unbowed, is now out for revenge.
What goes on inside Kirkland Lake (KGI.to)
We’re not investing in KGI, we’re not investing in Tahoe Resources (TAHO) (THO.to) either, but
we need to devote a segment of today’s piece to these to companies as KGI is the company
that’s set to make a move on WDO. We need to understand why that might be.
On the evening of Sunday June 12th (i.e. just after last week’s Weekly went out) KGI announced
(6) that its CEO George Ogilvie had resigned and Tony Makuch would be taking over as CEO as
from July 15th. The news came as a surprise to the market and the sudden way in which Ogilvie
left the company, coupled with the month gap before his successor moves in, has all the
hallmarks of an executive who was pushed rather than one that jumped. In other words,
George Ogilvie “was resigned”. To that surprise we can add the intel I picked up last week
about Tony Makuch’s departure from Tahoe Resources (TAHO) as noted on the blog (7). It was
a complete surprise for Kevin MacArthur too and it’s amusing that the top brass at TAHO only
found out about Makuch leaving on Sunday (considering the way that company treads
roughshod over others, a little shadenwhatnot in the air) but it also clearly indicates that
Makuch jumped, was not pushed, and that he was successfully poached from TAHO to KGI.
Barry Critchley of the Financial Post wrote a strong report published June 14th (8) about the
changes at the top of KGI and, read with hindsight, it’s one of those pieces where the reporter
seems to be bound by the rules of his game but knows more about the situation. I’ve taken the
liberty of pasting the whole of the text here because as a whole it provides plenty of insight:
Intrigue at Kirkland Lake Gold as board and management battle
The news, when it came following a period of differences of view on strategy between the board
and management of Kirkland Lake Gold, was delivered very late Sunday night — a mere half a
day before the company’s annual meeting.
8

,
The news: the company, which last year acquired St. Andrews Gold and which over the past two
years had generated a total return of 252 per cent, or eight times the gain for the gold index over
the same period, had parted ways with its chief executive George Ogilvie. Ogilvie was replaced
by Tony Makuch, currently president of Canadian operations at Tahoe Resources and before that
chief executive at Lake Shore Gold. (He won’t start for about a month.) Tahoe acquired Lake
Shore this year.
Eric Sprott, chairman of Kirkland Lake, said the change was made because it was determined
Makuch “is ideally positioned to lead Kirkland Lake Gold into the next stage of its development.”
Sprott, who became chairman in February 2015, added Makuch’s “track record and his
demonstrated ability to grow and optimize production will be excellent assets,” for Kirkland. Sprott,
a noted gold bug, replaced Harry Dobson as chairman. Dobson and Ogilvie worked together for
about nine years that started with Dobson recruiting Ogilvie to work at Rambler Metals and
Mining. Ogilvie was made Kirkland Lake’s chief executive in late 2013.
So what happened and why was the change made? None of the key players are saying anything.
Messages were left with Sprott’s assistant requesting a comment; we were unable to reach
Ogilvie while messages left with the company were not returned. Kirkland’s three largest
shareholders, according to Bloomberg, are New York-based VanEck Associates, which is largely
a passive investor and has a 10.06 per cent stake; Resolute Funds (7.01 per cent) and Sprott
(6.87 per cent.)
Note the way Critchley, a good journalist, adds on the list of major shareholders at the end and
even takes time to tell the world that the biggest one, Van Eck, “is largely a passive investor”.
In other words the other two are not. Very, very true. We also know that Tony Makuch is the
person seen fit by Chairman Sprott, “...to lead Kirkland Lake Gold into the next stage of its
development” because that’s out there in the public sphere, Eric dixit. And that he was
poached. In sum, Makuch has been brought in for a specific reason and he wouldn’t have
accepted if he weren’t in agreement with the plan. That plan is simple: Buy Wesdome.
We know that Sprott has empire-building plans for KGI, the company having already bought out
St Andrew Goldfields (ex-SAS.to) in an all-share friendly deal in November (9) (closed January
2016) with a CAD$178m ticket price. That deal was supported by then-KGI CEO George Ogilvie,
however for his own reasons (probably because he doesn’t like the WDO asset and I can’t
blame him) your author has been told Ogilvie opposed the Sprott/Resolute plan to move on
WDO. And that’s why he was kicked out by his Chairman and replaced by Makuch late on the
evening of Sunday June 12th, just one day before the company’s AGM (10). And before we
leave this segment note that Duncan Middlemiss was President and CEO of St Andrew
Goldfields (ex-SAS.to) at the time of the friendly deal with KGI. And now Mr. Middlemiss is the
new board member of WDO. Not only that, but Middlemiss was supported by Resolute when
just days before that fund was going to vote against his election. Between those two dates of
course was the sudden move to install Tony Makuch as CEO of KGI. If you think all that is sheer
coincidence I have a bridge to sell you, easy terms, a low-low one-time downpayment secures
your right of first refusal, please form an orderly queue.
Sticking the pieces together, with intel as the glue
Now comes the rump of the intel gathered and checked by your author, the reason for the
Flash update of Wednesday morning. Your author has learned the following:
• Tom Stanley has lost all faith in the board of WDO. “Natch” I hear you say, but as
25%+ holder of the company that means something. Not only that, but he’s been
publically denigrated by the company and isn’t the type of person to take open insults
lying down.
• However, it became clear to Stanley at some point in the month or so between the first
shots and the re-arranged AGM that his move to oust the board, even to oust a few of
them in order to put in his own people, wasn’t going to get enough grassroots support.
• When it became clear that his strategy of taking WDO over from the inside wasn’t
going to work, plan B was hatched by a Stanley out for revenge. That plan was to get
9

,
KGI to make a run at WDO and buy the company out, at which point the WDO board
and officers get their pink slips.
• Tom Stanley put the plan to Eric Sprott who was receptive to the idea, who then put it
to his CEO Ogilvie who wasn’t. This irked Sprott, the 6.87% owner and chairman of KGI
with plans to grow his company into a major mining force via M&A. And it irked 7.01%
KGI owner Resolute as well, but instead of getting frustrated they got busy.
• They approached Tony Makuch and offered him the CEO’s post at KGI (instead of being
third in line behind MacArthur and Clayton at TAHO with little hope of moving up
further, the Alex Black debacle showed the world who wants to play long-term top dog
there) on the condition that he agreed to the plan to buy out WDO. Makuch agreed,
Ogilvie “was resigned”, the stage is now set for KGI to move on WDO.
• Meanwhile, Stanley shifted his position on the election of Middlemiss as a new director
at WDO, as he’d already done a good deal with KGI via the sale of St Andrew Goldfield.
It’s no coincidence that Stanley changed his mind on that appointment between June
9th and the AGM, he now has an ally inside WDO to help push the deal through.
How do I know all this? It’s nowhere to be seen on the record of course, for just one example
Critchley in his FP article gives us the “nobody knows” (before neatly segueing into that
rundown of major shareholders). I know because 1) I was told by a reliable source and then 2)
checked with two other sources who both added frank marks of authenticity. Once the story
had checked out I called buy on the stock via the Flash update on Wednesday (which was why
I was racing to get it out before the open). This situation has not been lost on the market,
either, we’re not the only people to have worked this one out. Check out this five day price
chart of KGI mapped against the sector benchmark junior mining ETF, GDXJ. I’ve scribbled in
my educated guess commentary:
How the buyout will go down
There are a lot of variables for sure, but there are two basic ways in which Tom Stanley/Eric
Sprott get their prize and KGI gets its hands on WDO:
A friendly deal: The first is via a friendly deal and that is surely the one that parties will work on
achieving first, for one thing it’s less risky than going hostile and for another it’s likely to be
somewhere between cheaper and lot cheaper. If a friendly deal is agreed upon we could get
news on it any day, though the dynamic of KGI buying another company while in CEO transition
(Ogilvie is out because he opposed this deal, Makuch doesn’t officially sit in the chair for
10

,
another four weeks) might make that awkward. We’ll see. The other issue with a friendly deal is
that the current board at WDO know who they’re up against and know there’s no love lost after
that acrimonious AGM and preceding campaign of mud-slinging. They know they won’t have
much chance of a job at KGI, so part of any friendly deal will likely involve the thrashing out of
personal deals on change of control. That might make a friendly deal difficult. Again, we’ll see.
The hostile takeover bid: First let me say, backed by sources, that my intel on this deal also
includes the fact that KGI is willing to go hostile to buy out WDO, this one includes a large dose
of Canadian mogul spleen and comes with a “whatever it takes” war cry. If KGI goes hostile it
would presumably be after trying and failing to reach a deal with the WDO board. Also, I
couldn’t imagine this happening before Makuch takes up his position so this route is likely on a
four week minimum timeline. I’m led to understand it would be an all-paper offer and if it
happens, the first thing the current board of WDO would do is search for a White Knight (in fact
I expect they’re already feeling out possibles). This scenario is the preferred one for us, the
retail shareholder, because it implies a WDO share price that might not go merely higher, but a
lot higher as a bidding war develops. However, holding out to the end is a risky proposition as
hostile bids fail more times than they prosper and nothing should be taken for granted. And on
the subject of hostile bids, in the run-up to any offer it’s possible we see the WDO.to share
price come under attack and pushed lower by one side trying to force the hand of the other.
This is something you should be prepared to ride out if you join (have joined) me in this trade,
by no means a certainty but it’s one possible line of attack against the current board.
But be in no doubt, the reason Makuch got Ogilvie’s job is the ambition of KGI’s two top
shareholders, one of them an activist and the other an activist who just so happens to be the
company chair, to buy out Wesdome. Eric Sprott wants to make KGI one of the big games in
town, Tom Stanley is out for revenge, WDO may have kept its board in shape for one AGM but
they’re a long way from being secure in their jobs. It’s up to WDO to decide whether they want
this to be a controlled deal or whether KGI goes hostile, either way when the action starts WDO
is a stock that’s going higher.
How high can WDO go?
And this is the big question for us, the small-timers hitching a ride on large egos to nail down a
winning deal. Let’s start by
considering the latest share price
action and before last week, WDO
had rebounded like most other gold
stocks in late 2015/2016 but hit a
New Normal trading level of around
$1.65 or $1.75. That changed on
Tuesday when volume shot higher
as people clued into what was
going down at the fractious AGM
(and how KGI was now lurking in
the background) started buying the
stock. Your author’s buy call
Wednesday morning probably
helped pop the stock higher that
morning, but it was going to move
more anyway and once the frenzy
had passed, Friday’s steadier trading around the $1.90 level looks like a new level. That looks
buyable to me.
So if we take an educated guess or two, say that CAD$1.90 is a new base level (it might not
be) and then assume that a friendly deal is struck between KGI and WDO, that deal could
assume one of those typical 30% mark-ups to the previous price (it might be higher or lower,
I’m making some broadstroke assumptions here, ballpark stuff). A 30% buyer’s premium on
CAD$1.90, puts us at CAD$2.47, so I’m going to round up and say the parties agree to shake
11

,
hands on an all-paper deal with a CAD$2.50 ticket price on WDO. That looks reasonable for the
friendly offer. That values WDO at CAD$322m, which compares to KGI’s market cap this
weekend of CAD$1272.5m, in other words our mooted deal for WDO would value it at a quarter
of KGI. That’s a manageable, right-sized deal for the bigger company but it also means KGI
shares will sink on the news a little, perhaps 10% or perhaps less but there would be some
adjustment likely so I’ll go conservative and say a 10% loss on the day of the deal for KGI.
In other words and in real terms, if a friendly deal is announced between WDO and KGI
tomorrow morning I’d expect my CAD$1.91 shares to move to CAD$2.25 immediately, an
upside of 17.8%. That’s my minimum level, it could be more or even a lot more depending on
the shape of the deal, but it’s a reasonable, conservative line in the sand at this point but
CAD$2.25 is the starter level, a minimum possible return for us newbies. WDO could go a lot
higher for a whole number of reasons including:
• WDO gets a better deal than my conservative parameters. Likely.
• $2.50 paper isn’t considered an attractive deal and it gets sweetened. Not so likely,
because any friendly deal would have to be good to start with for WDO board approval.
• A counterbid from a third party appears to better the friendly deal. Always a possible.
• There’s no friendly deal and KGI goes hostile. For me the most likely scenario today.
• A White Knight or a non-affiliated counterbid appears and a bidding war kicks off. If
hostilities kick off, this is one of the factors that could turn our trade into a much bigger
win. Seeing WDO move above $3 on this factor wouldn’t surprise me in the least.
All those and more. Added to that, we should note that Resolute has declared itself a
shareholder in WDO since 2010 and a look at the longer-term chart...
...would suggest, to me at least, that a CAD$2.50 level is about the lowest that would be
politically acceptable to the biggest ego in this game. Also for what it’s worth, the highly rated
and reputaable Ron Stewart of Dundee, one of the few sellside voices I regard with the utmost
respect, has recently raised his target price on WDO to CAD$3 on the back of the gold price
hike and the exploration and production growth upside potential at Eagle River. If he says it’s
worth $3.00 then there’s clearly meat on this bone, CAD$2.50 may turn out to be a starting
point for better things.
Discussion and conclusion
The trade announced on Wednesday relies on one main component, that Kirkland Lake (KGI)
makes a run at Wesdome Gold (WDO.to). Fortunately my assumption of upcoming M&A action
isn’t if, as was the case of Tahoe (TAHO) going after Richmont (RIC) which for a while looked
probable but then fizzled and died. This one is a when, as was the case of TAHO buying Lake
Shore Gold (LSG). You can nail this one to the wall, KGI will make its move on WDO, the intel is
rock solid and the reason for the recent moves of Mr. Stanley, along with the invaluable help of
12

,
Mr. Sprott who decided “to resign” Mr. Ogilvie and put Mr. Makuch in his place.
However, there are still questions left to answer, beginning with “when” and followed quickly by
the most important one of all for we fellow capitalists, “how much”. Those depend on how talks
develop, whether a friendly deal can be thrashed out, whether a third party turns up and a
biddng war develops, if KGI eventually throws in a sweetener, all sorts of permutations. There
are also risks involved (just like any other deal or trade), such as for example the potential for a
hostile bid to fail (a common occurrence) or the wannabe buyers starting to manipulate the
WDO stock down in order to pressurize a board with whom no love has been lost recently.
Anyone moving into this trade with me should be aware of the potential downside, but overall I
think the quality of the intel I’ve picked up as well as the way this whole story fits together on
an ostensible, logical basis...
• Sprott’s empire building dream
• The WDO asset’s decent growth potential that could be accelerated in KGI.
• Stanley’s big holding in both companies and desire for value building in what he
percieves as a dysfunctional company, as well as revenge and ego retrieval.
• The sudden departure of Ogilvie and arrival of Makuch.
• The Middlemiss vote factor.
• The WDO board’s generally weakened position.
...gives us a fine advantage at the current share price.
The IKN Weekly recommends Wesdome Gold Mines (WDO.to) (WDOFF) as a near-
term trading buy as it is a target for Kirkland Lake (and perhaps eventually others) in
upcoming merger and acquisition action. This is going to happen and once it does we’ll know
more about its potential profitability but at the moment I’m going to pencil in a C$2.50
price target, representing a 30.9% upside to this weekend’s closing price. It could go a lot
higher, or it may eventually disappoint and be at our basement level CAD$2.25, but $2.50 is a
reasonable place set the clock this weekend. Whatever happens, be clear that KGI is going to
take a run at WDO.
And that’s all for today, apart from noting that on Wednesday morning I plan to post on KGI’s
plans to buy out WDO on the IKN open public blog (if it’s not already a big talking point, that
is). That gives you Monday and Tuesday to position accordingly, if you so desire.
Stocks to Follow
Of the eleven positions open last weekend (i.e. including RIC and excluding the new WDO,
which was also up), five registered gains on the week (BTO.to, SAND, RIC, CNL.to, LRA.v) and
six registered losses (REG.v, SAM.to, TK.v, INV.to, FCV.v, HBM short). Best winners came from
Continental Gold (CNL.to up 14.1%) and Lara Exploration (LRA.v up 11.5%), with decent gains
from BTO (7.9%) and Sandstorm (8.1%) too. There were no double figure losers so overall it
was a decent and winning week for the portfolio.
With the addition of the WDO and the sale of RIC we’re still at eleven open positions on the list,
four fewer than our self-imposed maximum of fifteen at any given time. Eight are in the green
and three are in the red.
13

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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$2.86 35.5% New tgt C$2.96
Regulus Res REG.v hold C$0.64 06-apr-15 C$1.27 98.4% Long-term exploreco top pick
Starcore Intl SAM.to STR buy C$0.59 10-jan-15 C$0.82 39.0% 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$4.55 19.7% A buy on FY16 re-rating
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.24 23.1% Top value Zn/Sn/Ag stock
Wesdome Gold WDO.to STR buy C$1.90 22-may-16 C$1.91 0.5% new trade, M&A target
Continental Gold CNL.to buy C$2.68 22-may-16 C$3.15 17.5% new near-term trade $4.80 tgt
INV Metals INV.to hold C$0.25 03-apr-16 C$0.55 120.0% Close to exit on pfs news
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$0.97 -15.7% solid biz model
Focus Ventures FCV.v hold C$0.23 01-jul-12 C$0.08 -65.2% financing sept next hurdle
Short positions
HudBay Min. HBM short U$4.98 09-jun-16 U$4.99 -0.2% re-shorting, near-term trade
Closed in 2016 closed close price
Phoscan Chem FOS.to jan16 C$0.28 29-mar-15 C$0.265 -5.4% Buyout trade, bot but poor deal
True Gold TGM.v jan16 C$0.18 23-aug-15 C$0.25 38.9% okay trade, sold on pol risk
McEwen Mining MUX jan16 U$1.09 25-jan-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-apr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-apr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-jan-16 U$2.96 43.7% closed good near-term trade
Sandspring Res SSP.v mar-16 C$0.195 18-oct-15 C$0.32 64.1% Hit tgt, took profit
Teranga Gold TGZ.to mar-16 C$0.54 15-feb-15 C$0.60 11.1% disappointing trade
B2Gold BTG mar-16 U$0.85 13-jan-16 U$1.30 52.9% Separate trade on B2, hit tgt
Dalradian Res DNA.to mar-16 C$0.67 27-oct-13 C$1.00 49.3% Hit target, sold, good win
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
Richmont RIC jun-16 U$7.60 01-may-16 U$9.30 22.4% near-term trade, profit taken
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
Wesdome Gold Mines (WDO.to): Position opened. All you can eat on WDO above, here a
quick note to make it official and all that.
Richmont Mines (RIC): Position closed. I didn’t feel the need to send out a Flash update
on Thursday, it was clear from IKN370 last weekend that if gold popped over U$1,300/oz I’d
take profits, and I did. Not the best price of the day, but U$9.30 beats the the Friday close
handily and I claim a small victory. Now to see whether gold corrects on the Brexit result. If it
does I may get way too cute for my own good and buy back in, but really I’m more about WDO
at the moment, that’s where the sport is.
HudBay Minerals (HBM) (HBM.to): HBM spent the week spinning around the U$5.00 level
and followed the copper spike midweek, but not with much conviction. The action underlined
my “bought right this time” feeling about this short position.
The snippet of gossip passed on via the blog early last week (11) was an amusing one.
Apparently ex-CEO David Garofalo (now at the underperforming GG) has been telling larger
shareholders of HBM that the Rosemont project will get all its licenses “soon”. That may be true
or it may be false, but what we can say is:
1) Evidence of the prolonged and problematic permitting track at Rosemont to date, as
14

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well as the strong opposition it faces, suggests that it’s false.
2) What else would the person who put HBM’s future at risk by paying too much for
Rosemont say? That he now thinks it’s a bad deal? Hearing Garofalo talk up Rosemont
is like hearing The Pope say that Catholicism is a good idea.
Sandstorm Gold (SAND) (SSL.to): SAND traded very well and deserved every tenth of its
8.1% week-over-week improvement. In other news, in my piece “When sellside brokerage anal
ysts get it totally wrong, BMO and Sandstorm (SAND) (SSL.to) edition” (12) on the blog last
week, I may have made a snarky shot at the analyst in question but the reasoning behind the
post stands up and is exactly why I’m long
this stock today. The thesis to buy SAND,
right from when I was musing over the
idea early year while it fiddled around
U$2.80 (dammit, didn’t buy), is that SAND
has greatly improved its corporate
structure and moved away from the fast
and loose attitude that got it into trouble
in previous years (e.g. Colossus and
Luna). The stock is under a re-rating
process, but the entrenched views of
brokerage suits covering the stock haven’t
allowed enough for this change as yet.
That’s the advantage and that’s why I’m
long. When a brokerage re-opens coverage on a stock and sets a 12 month target only to see
that taken taken out the very next day after the report is published, it’s difficult to see any
other reason other than “anal yst call wrong”.
While the prevalent market attitude towards SAND is underestimation, I’m going to be long the
stock. The time to take profits may come when our exceptional attitude becomes the rule and
all you hear about “new SAND” is praise and the lionizing of its officers.
Regulus Resources (REG.v): Following on from the extended comments of last week about
the price action in REG, it now looks as though the stock is going to take a well-earned breather
and consolidate its position for a while. This is a good thing, as it also opens up the possibility
that we get a correction and a good addition price shows up.
Starcore Intl (SAM.to): We got news from SAM last week, but not on that Manto discovery.
Instead on Monday the company informed (13) on progress at its Altiplano toll milling start-up
and, in general terms, things reported were in line with comments we made in the NOBS
report of IKN361 dated April 10th (as well as IKN362 and others). This snipper from the NR...
“...the Company has processed over 90 tonnes of concentrate purchased from 3 different
suppliers to produce 40.16 kg of metal doré bars, which included 2.01kg of gold and 38.15kg of
silver.
"We have proven the ability to process various types of concentrate and expect to do this
profitably with a consistent supply of concentrates and production," said Robert Eadie, President
of the Company. "Having tested concentrates received from 14 different suppliers, we are
currently negotiating concentrate purchase agreements for the best quality concentrate that will
bring a consistent supply...”
... along with the overall tone can be fairly translated as “We like the way it’s started, the
process works, but we’re still in early stages and it’s not running at a profit yet”.
Trading in SAM was both light and volatile, with just one day over 100k volume (Monday) and
the stock touching 90c for the first time, then dropping as low as 81c before finishing where it
did. The market seems to have got the measure of the Altiplano end of SAM, it’s a net neutral
as things stand today, unlikely to be a burden on the corporate financials but something that’s
going to need a longer timescale in order to be a significant benefit to the whole. San Martin
and that manto, or the closure of the real-estate deal, are the potential catalysts.
15

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Continental Gold (CNL.to): CNL had a good wek and the stock accelerated into the Friday
close. It’s not the first time CNL has traded like this (though it is the first time I’ve been long
while it does), it’s prone to being pumpy and I don’t read too much into the move.
In other more sober news. here’s a part of the “upcoming milestones” page from the CNL
corporate presentation dated April 26th 2016, with my red highlight added:
As you can see, the company was still confidently predicting its environmental permit for this
year 2016 at that time. And now here’s the equivalent page in the latest corporate presentation
dated June 7th...
...though it’s not officially slipped yet, the addition of a backstop “Q1 2017” isn’t the type of
thing I want to see from a team with a track record of disappointments and deceptions.
INV Metals (INV.to): INV continued to trade weakly as we await the updated PFS due this
month, my line in the sand to sell this near-term trade. It got to under 50c for the first time in a
long time before some hitter finally stepped up and whacked the stock back up to 60c in one
trade, a volume chunk that contrasts to the recent apathetic action.
Lara Exploration (LRA.v): On Thursday, Rick Rule of Sprott US held a webinar telephone
conference with three “prospect generator” companies on the line, EMX, LRA nd a company I’d
never heard of before called Transition. One of the participants was Miles Thompson of LRA and
his views on what a project generator is and what LRA is (and isn’t) were most interesting. You
can listen to the whole 25 conference thing by using this link (14) and those of you long LRA
should do so.
Tinka Resources (TK.v): I had an hour with a TK officer last week (in fact we had lunch, a
decent cebiche) and among the chat on Peru election fallout, Brexit and general Peru mining
gossip, he informed me that plans were on track at the company. The on-site team are working
the geology model in order to generate their drill pad positions and targets for the upcoming
program, permitting is moving forward correctly and the local communities are co-operative
with plans. All good, but the type of essential background stuff that never moves markets.
Meanwhile, CEO Varman was in London all last week marketing to instos and suchlike. Again
this is positive, but it’s not feeding any retail market and that’s where the TK program is at its
weakest, in my opinion.
16

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In trading, TK came off as zinc the metal failed to keep its nine-handle (see below) but things
weren’t that weak and support at 24c is a welcome enough sight.
B2Gold (BTO.to) (BTG): Our Top Pick traded well, caught up from its underperformance of
the previous week and even managed to put its nose over the CAD$3 level for a while, before
falling back in the late Thursday correction.
The Copper Basket
After twenty-four weeks of 2016, The Copper Basket shows a 60.23% gain to level stakes.
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 HudBay Min. HBM.to 5.31 235.23 1514.88 6.44 21.3%
2 Ivanhoe Mines IVN.to 0.61 778.96 747.80 0.96 57.4%
3 Reservoir Min. RMC.v 4.08 48.69 468.88 9.63 136.0%
4 Capstone Min. CS.to 0.44 382.04 248.33 0.65 47.7%
5 NGEx Resources NGQ.to 0.65 205.06 198.91 0.97 49.2%
6 Western Copper WRN.to 0.38 94.19 84.77 0.90 136.8%
7 NovaCopper NCQ.to 0.395 104.33 64.68 0.62 57.0%
8 Cordoba Min. CDB.v 0.16 86.86 56.46 0.65 306.3%
9 Copper Mtn CUM.to 0.445 118.8 55.84 0.47 5.6%
10 Copper Fox CUU.v 0.125 417.64 50.12 0.12 -4.0%
11 Nevada Copper NCU.to 0.66 80.5 49.91 0.62 -6.1%
12 Atico Mining ATY.v 0.28 97.59 45.87 0.47 67.9%
13 Hot Chili Ltd HCH.ax 0.09 445.723 26.74 0.06 -33.3%
14 Amerigo Res ARG.to 0.205 173.61 26.04 0.15 -26.8%
15 Revelo Res. RVL.v 0.055 99.19 9.42 0.095 72.7%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 60.23%
The basket average added under a modest 2.31% to its overall average, with just five
component parts making gains on the week
(HBM.to, RMC.v, WRN.to, ATY.v, CDB.v) and The Copper Basket 2016, weekly evolution
100%
two stocks unchanged (CUU.v, NCQ.to), while
80%
the eight losing stocks (IVN.to, CS.to, NGQ.to,
CUM.to, NCU.to, HCH.ax, ARG.to, RVL.v) 60%
ended to be smaller moves. The biggest 40%
gainer and the one that sealed the basket
20%
average gain was from Reservoir (RMC.v up
0%
11.9%) thanks to the sweetened bid
announced Friday. -20%
Over in the copper trading, the metal once
again tried and failed to rally midweek, this
time it couldn’t hold the U$2.10/lb line. In general terms things were much quieter after the big
fundies-driven short moves of the week before last, but that may turn out to be the calm before
the storm if the information carried by Reuters on Friday (14a) turns out to be true:
Copper stocks held in London Metal Exchange warehouses in Asia are set to jump by
around 50 percent in the next month, as the metal is shifted out or diverted away from
top consumer China, industry sources said.
The rise in warehouse stocks is likely to depress prices in the near term, while the
outlook further out is also weak due to fresh mine supply, said attendees at the LME
Week Asia conference in Hong Kong.
17
dr3naj ht01 ht71 ht42 ts13 t7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 r3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91
source: IKN calcs

,
Three industry sources estimated between 150,000-200,000 tonnes of copper was due
in warehouses in South Korea, Singapore and possibly Taiwan, by early July, minus a
small volume bought when prices fell below $4,500 a ton in the past week.
That’s a report worth reading.
Let’s get the weekly copper warehouse inventory bullet
points done:
• Total world copper stocks in the three official
warehouse systems moved down last week by
31,034 metric tonnes (mt) (-6.9%), a move
that wiped out the previous week’s net world
gain. The LME shorts have either run out of
ammo or are back to biding their time. The
world total stands at 415,871mt.
• Shanghai’s big drops continue unabated, this
time down 16,233mt (-8.9%) to finish Friday at
166,105mt. Whatever fun and games goes on
at the LME, this is now a trend set in stone.
• LME stocks adjusted back after the big kneejerk stock hike of the previous week (of
which we made much on these pages). I called it, “A major trend change moment for
the copper market” and though that may still be true, the lack of action in the last five
days means we should at least put judgment on hold. LME stocks dropped 14,750mt
(-7.0%) to finish the week at 195,925mt, but that at least means the LME is still the
daddy and the location of price discovery. The game’s afoot.
• Comex stocks dropped too, but this time by a mere 51mt by 650mt (-0.1%) to finish
the week at 53,841mt. It’s the first time for a while we haven’t had one of those
“around a thousand tonnes” drawdowns, however.
Here’s the Shanghai-only chart and we know the clear trend of big drops, it’s been that way
every week since the end of March. The question now is “where’s the bottom?”, that might
depend more on the way LME warehouses fill than the SHFE system.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
18
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 ht91
Mt Cu
source: Cochilco
Now for notes on just one basket stock this week.
Reservoir Minerals (RMC.v): Word started circulating early last week that the Asia-investor
led opposition to the merger deal that had started three or four weeks earlier was picking up
significant support and was starting to put the deal into jeopardy. Hasty talks were undoubtedly
part of the working week for both Rnevsun (NSU) and RMC and a compromise deal was
announced Friday (15), Nevsun sweetening its bid by adding $2 cash per share to its offer and

,
handing a very decent little bonus prize for those who hung in there (and hitting those invested
in NSU for a near-10% loss on Friday alone).
The Low Cost Producer Basket
After 24 weeks of 2016, the Producer Basket shows a gain of 102.54% to level stakes.
company ticker price 1/1/16 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Barrick ABX 7.38 1164.67 23.42 20.11 172.5%
2 Newmont NEM 17.98 529.12 18.86 35.65 98.3%
3 Goldcorp GG 11.56 830.22 14.84 17.88 54.7%
4 Franco Nevada FNV 45.75 176.298 12.44 70.54 54.2%
5 Agnico Eagle AEM 26.28 217.67 10.93 50.22 91.1%
6 Ang/Ashanti AU 7.10 405.27 6.50 16.03 125.8%
7 Detour Gold DGC.to 14.41 170.85 5.13 30.03 108.4%
8 Sibanye Gold SBGL 6.09 228.71 2.78 12.16 99.7%
9 Buenaventura BVN 4.28 254.19 2.65 10.43 143.7%
10 New Gold NGD 2.32 509.89 2.10 4.11 77.2%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 102.54%
A most interesting week for the IKN
producer picks, with just one of the ten
managing to eke out a win (ABX) and the
other nine all losers (not listing them all),
this despite the gold bullion ETF (GLD)
rising by 2.2% and our GDX benchmark
only losing 0.7%. Our picks plainly
underperformed the market and the gap to
the benchmark dropped a hefty 2.91% to
stand at 14.57% this weekend. So much for
my crowing about winning last week,
serves me right. It hasn’t been this close
since March.
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
0%
-5%
-10%
-15%
-20%
-25%
19
ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91
The Low Cost Producer Basket: Weekly performance
130% and comparative to GDX control
110%
90%
70%
50%
30%
10%
-10%
source: ikn calcs, NYSE/Nasdaq data
Buenaventura (BVN): Good news from the company as on Friday in the community of Oyo
Oyo in Moquegua, South Peru it held its Environmental Impact Study (EIA) meeting and Q&A
session with local community members for its San Gabriel (ex-Chucapaca) gold project. This
was the event cancelled amid local protests in December last year, it’s also a key event as
holding a meeting such as this is a statutory part of the EIA permitting process.
According to reports (e.g. here (16) things went reasonably smoothly, apart from before the
dr3naj ht01 ht71 ht42 ts13 t7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 r3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91
basket
gdx control
source: Google, IKN calcs

,
meeting kicked off when two politicos from the area affected by the Southern Copper (SCCO)
Tia Maria copper project turned up unannounced and wanted to join in the meeting. They said
they wanted to find out whether the river that runs by San Gabriel and eventually through their
own locality on the coast would be affected by the project, but locals refused them access to
the meeting (rules are that attendees must be locals) and they left unhappy.
The same reports have 750 locals in attendance, a meeting that began at 10am and finished at
1:30pm and covered the main presentation as well and 141 written questions and 19 questions
from the floor. Interestingly, BVN gave its main presentation in Spanish and in the local
Quechua language as well (IKN applauds this move, that’s smart community relations). Those
present included a Peru Ministry of Energy and Mining bigwig, the main Moquegua region
mining public servant.
As for the mood, things were calm and according to the reports I’ve read, the main objections
weren’t about the mine being built or not, but when two village mayors demanded that their
villages be included in the zone of direct influence (which would mean they get a bigger share
of royalties). That’s a good sign. This isn’t the end of the permitting track but it’s a significant
step forward and it’s good to report that the meeting was calm and mostly positive. Now come
ministerial level observations that must be addressed by the company and if that part goes well,
the EIA permit should be awarded.
Regional politics
Either there wasn’t much going on this week, or I’ve been too wrapped up with company news
to pay attention to the LatAm political scene. Probably both.
Chile: Use of sea water in copper mining rising
There’s a lot of interesting and useful information in Cochilco’s presentation of Thursday June
16th on water use in its copper industry and the whole document (17) is recommended for
those who care enough about the subject. Here’s one chart from the whole thing that helps
highlight the growth in use of sea water in Chile’s copper mining industry:
20

,
Market Watching
On Lithium juniors
I was recommended to read this article (18) dated June 18th by none other than Tim Oliver,
who knows his beans about lithium (he’s also a personal friend so stick that in your assessment
as well if you want, I have nothing to hide). Tim added the cover note “Good Li article by Joe
Lowry, who knows what he's talking about.” to his mail and that’s all I need to know; if he says
Joe Lowry is good, he’s good.
In the piece Lowry comments on the state of the Li market, reports on recent interaction with a
few juniors and investors and picks out his three favourite plays. If you’re into lithium plays
more than I (I’ve just dabbled so far via that tiny trade in NEV whihc is now closed, it’s not
really my thing) you’d do well to read this one.
Minera IRL: Another big step forward
The departure of Doug Jones and Robin Fryer as directors of Minera IRL is another key step
forward in the revival of the company. I have no real bone to pick with Doug Jones, as
ultimately he was misguided in his support for Team Hodges rather than wilfully evil, basically
he was duped into believing the Daryl Hodges lies about Diego Benavides and once they were
proven as false, he’d lost credibility with the executive end of IRL and had no real choice but to
resign. Meanwhile, Robin Fryer was appointed by Daryl Hodges and never stopped his support
for the defeated company usurpers. That’s because he was one of them himself, trying to steal
the company away from its shareholders. When the bad guys were defeated he had to go, but
somehow he managed to hold on until last week and all through 2016 he fed the likes of Daryl
Hodges and Jaime Pinto boardroom-level secrets, as well as trying every move in the book to
delay and undermine the healing process. A special place in hell awaits Fryer and I did my
happy dance on the news of his resignation.
As for George Bee’s arrival as a new director, I don’t care much. Anybody is better than the two
just gone and at least Bee knows one end of a mine from another. But the only person left at
the top of IRL who was there one year ago is Diego Benavides, president of the local
subsidiaries. That in itself is telling.
The next step is also a key step, that of re-listing on the Peru stock exchange (BVL) as that will
help greatly in the re-listing in Canada (and as the company also notes, eventually a possible
re-list in London). But one step at a time, first the Lima re-list to get the stock trading at least
on one bourse and get some price discovery on its shares. We also await the long-overdue
moment when Diego Benavides is named a director of the company, another essential piece of
the jigsaw if IRL wants to retain credibility.
Zinc stink
I’ve whooped and hollered the last couple
of weeks as zinc made a decent price
move to above U$0.90/lb, so it’s only right
to mention the flipside we saw in the last
five trading days and this Kitco chart does
the job as well as anywhere else.
However, we did make mention of one of
the caveats to further price rises in last
week’s note, that of the stalling in the zinc
inventories drop, and last week saw that
underscored by reports (19) of new metal
entering the LME system...
21

,
Zinc, the best LME performer this year with gains of 23 percent, went into negative
territory after the LME released data showing a surge of 19,750 tonnes arriving at LME
warehouses in New Orleans.
...and industry watchers talking up “hidden inventories” of the metal. None of this changes my
enthusiasm for Tinka Resources (TK.v), the one picked out the pack for its excellent value
compared to peers and serious junior make-up. We should however acknowledge that without
further upside in zinc the metal, it’s a position that will likely spend time consolidating at its
current levels.
Conclusion
IKN371 is done, we end with bullet points:
• The fast-evolving story behind the new, near-term trade in Wesdome (WDO.to) is a
great example of why one should leave trading width in a portfolio. These types of
specific opportunities don’t come along very often, but come they occasionally do and
when opportunity knocks it’s easier to deploy sidelined cash than go through the
mental hoops of liquidating one position in order to open another, or start exposing
yourself to out-sized risk on margin.
• We ran the usual company updates and such, but this week The IKN Weekly is a bit of
a one-trick pony. Such is the way at times.
• With copper fundies looking weak in the near-term, I’m happy with my short position in
HudBay (HBM).
• This time next week the Brexit vote will be behind us and the financial and political
worlds will be quieter and more pleasant as a result, no matter who wins.
• Buy. Hold. Win. That hasn’t changed. We’re in a bull market for gold stocks, enjoy it.
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) http://incakolanews.blogspot.pe/2016/06/twain-history-never-repeats-itself-but.html
(2) http://finance.yahoo.com/news/wesdome-announces-sale-certain-mining-135300326.html
(3) http://www.wesdome.com/wp-content/uploads/2016/04/04-29-16Final-News-Release-Wesdome-Closing.pdf
(4) http://finance.yahoo.com/news/wesdome-gold-mines-announces-annual-113000640.html
(5) http://finance.yahoo.com/news/resolute-performance-fund-highlights-ongoing-174900067.html
(6)http://finance.yahoo.com/news/kirkland-lake-gold-appoints-chief-024549900.html
(7) http://incakolanews.blogspot.pe/2016/06/ill-tell-you-whats-funny-about-tahoe.html
(8) http://business.financialpost.com/news/fp-street/intrigue-at-kirkland-lake-gold-as-board-and-management-battle
(9) http://www.klgold.com/investors/news-and-events/news-releases/news-release-details/2015/Kirkland-Lake-Gold-
Creates-an-Ontario-Focused-Intermediate-Gold-Producer-With-the-Acquisition-of-St-Andrew-11162015/default.aspx
(10) http://finance.yahoo.com/news/kirkland-lake-gold-appoints-chief-024549900.html
(11) http://incakolanews.blogspot.pe/2016/06/ill-tell-you-whats-funny-about-hudbay.html
(12) http://incakolanews.blogspot.pe/2016/06/when-sellside-brokerage-anal-ysts-get.html
(13) http://finance.yahoo.com/news/starcore-announces-pre-production-results-200000274.html
(14)
https://attendee.gotowebinar.com/recording/viewRecording/1462443198761165059/511398626567032324/otto.rock1@
gmail.com
(14a) http://www.reuters.com/article/us-lmeweek-asia-copper-idUSKCN0Z3219
(15) http://finance.yahoo.com/news/nevsun-reservoir-announce-increased-cash-042730261.html
(16) http://diariocorreo.pe/edicion/moquegua/buenaventura-expone-en-quechua-eia-de-mina-san-gabriel-fotos-679620/
(17)
http://www.cochilco.cl/Archivos/destacados/20160616131300_2016%2006%2016%20Consumo%20de%20agua%20en
%20la%20miner%C3%ADa%20del%20cobre%20al%202015%20-%20pdf.pdf
(18) https://www.linkedin.com/pulse/lithium-juniors-update-joe-lowry
(19) http://af.reuters.com/article/metalsNews/idAFL4N1992P7?sp=true
Appendix 1: Flash update dated Wednesday June 15th
Good Wednesday morning, 08:25am and just before the opening bell, trying to get this out before the open.
Buying Wesdome Gold Mines (WDO.to)
Just a quick update to say that I am buying some Wesdome (WDO.to) this morning. A near-term trade on expected
M&A action and a good example of a punctual trade opportunity we can take advantage of with space on the list and
spare cash to deploy, all will be explained in IKN371 this weekend. WDO will be a part of the 'Stocks to Follow' list.
Best, Mark
Stocks To Follow Closed Positions 2015
Closed in 2015 closed close price
Argonaut Gold AR.to jan'15 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'15 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'15 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'15 C$0.075 26-jan-14 C$0.035 -53.3% sm, sold on Cu downturn
Fortuna Silver FSM mar'15 U$4.12 10-nov-14 U$3.75 9.0% Short used as hedge
GoldQuest Min. GQC.v mar'15 C$0.26 27-oct-13 C$0.085 -67.3% given up ghost
Rio Alto Mining RIO.to apr'15 C$2.30 07-apr-11 C$3.57 55.2% Top pick, bot out, big win
Timmins Gold TGD jun'15 U$0.60 19-apr-15 U$0.62 3.3% near-term trade, out of time
First Majestic AG jul'15 U$10.51 10-aug-14 U$4.55 56.7% horrible failed trade
NovaCopper NCQ.to jul'15 C$1.05 09-apr-14 C$0.50 -52.4% no more Cu exposure, sm sell
McEwen Mining MUX aug'15 U$0.695 21-jul-15 U$0.92 32.4% Closed nearterm flip for win
23

,
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
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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