IKN #375Premium

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The IKN Weekly
Week 375, July 17th 2016
Contents
This Week: Trade heads up, In today’s issue, What gold has been doing and a guess as to
why, Risk management.
Fundamental Analysis: B2Gold 2q16 production numbers.
Stocks to Follow: Overview, INV Metals (INV.to), Tinka Resources (TK.v), Riverside
Resources (RRI.v), Starcore Intl (SAM.to), Miranda Gold (MAD.v), Continental Gold (CNL.to),
Focus Ventures (FCV.v), Wesdome Gold Mines (WDO.to), HudBay Minerals (HBM) (HBM.to),
Sandstorm Gold (SAND) (SSL.to).
Copper Basket: Overview, Atico (ATY.v), Ivanhoe (IVN.to)
Low Cost Producer Basket: Overview, Goldcorp (GG).
Regional Politics: Argentina: Job losses in mining under Macri, Chile: Barrick and Pascua
Lama again (plus a side of Zaldivar), Ecuador: Fruta Del Norte semi-approved, Peru: PPK’s
ministers, Dominican Republic: New mining regulations in place, Nicaragua: November election.
Market Watching: Golden Predator (GPY.v): A pump in the making?, Dalradian Resources
(DNA.to) short redux, Episode three of “What I’d buy now”, Asanko Gold (AKG): Final reminder,
Orla Mining (OLA.v-H): An update.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
Trade heads up
As planned from the start, I will sell my INV Metals (INV.to) into the likely strength we’ll see in
its market action next week. I’ve been fortunate on this trade and it turned out well but I’m not
changing tack at the last minute, if I leave cash on the table for somebody else then so be it.
See ‘Stocks to Follow’ for more details, also the potential for adds to SAM.to and RRI.v.
In today’s issue
• We do B2Gold (BTO.to) (BTG), after the company reported its 2q16 production
numbers and gave details on what we can expect for the rest of 2016, as well as an
update on Fekola for 2017. Even though they tell me it’s a big mistake to get
sentimental about a trade, I’ve fallen madly and deeply in love with my Top Pick stock
again and it gets its price target raised substantially as a result.
• In forthcomng market pump news, check out the piece on Golden Predator (GPY.v) in
‘Market Watching’ below.
• The speculative feel we noted in gold last week turned into the first real correction in its
price since all that Brexit fun popped it over $1,300/oz. I chew the cud and shoot the
breeze on the near-term prospects for gold.
• The sale and taking of profits in INV Metals will cover the addition made to Tinka
1

,
Resources (TK.v) last week, as well as the potential additions to the Starcore (SAM.to)
and Riverside (RRI.v) positions in the week ahead, price action permitting. I’m feeling
greedy and I want bargains.
What gold has been doing and a guess as to why
"As above, so below,
as within, so without,
as the universe, so the soul"
Hermes Trismegistus
First, a basic fact about last week at the market; Our preferred ETFs for following the broad
spectrum of the PM sector and its companies all lost ground last week. The gold ETF GLD
dropped 2.8%, the precious metals miner ETF GDX dropped 2.1% and the junior miner ETF
GLXJ dropped 1.3%. In other words, we’ve seen a correction going on in front of our eyes and
as notd last weekend when musing on its possibility in IKN374, that’s not a bad thing.
Away from the world of gold permabears,
that group of shining individuals that
make even the prepper end of the
goldbug world look intelligent, it would be
tough to find a comment saying that what
we saw last week was The Top and it’s all
going to go wrong for gold from here. But
a correction it was, gold backed off from
the U$1,400/oz level very easily and its
action reminded me strongly of May 2016
and the sentiment at the time. Use charts,
money-flow data, group psychology
studies or whatever you prefer, but the
general consensus in gold back in May
was that gold’s move to $1.3k was “too
much too soon” and the metal needed
another good reason to go higher before it
could. We saw it get oversold back to
U$1,200/oz as well (and I even
remembered a few of those gold bears
trying to raise their squeaky voices again
right down at the bottom, but we
rebounded from that level too. Then came the Brexit event, which was a two stage affair with
sentiment pre-Brexit that showed growing fear of a Leave vote, which waned the week before
the vote took place. Then the big whammy on June 23rd and the result day of June 24th, which
shot gold through the U$1,300/oz level with a vengeance. Since then it’s stayed there but as
we’ve seen in the last few days, it’s also dropped from highs.
Okay, that’s the scenario to date. Now for a few statements mixed with a few working theories
to get us to a gold price forecast for the near future:
1) Gold is bullish, period. It will take a lot more than a retrace from U$1,380/oz to change that,
so the “It didn’t break U$1,400/oz we all gonna die” brigade can stick their whining where the
sun doesn’t shine. This is the single most important point, I urge you not to lose sight of the
forest for the trees and therefore repeat: Gold is bullish, period.
2) The action in the last two months, from mid-May to today mid-July, has been dominated by
Brexit. The pre-vote sentiment that moved from one side to the other and then back again, the
big shock of a result the market wasn’t expecting. And of course while we’re on the subject,
count me in as I got my call 100% wrong and was way too confident about a Remain result all
2

,
the way through the process (and being long the gold sector was one of my all-time best “right
for the wrong reasons” moments).
3) It’s therefore no coincidence to see gold drop from its highs in the same week in which
“Brexit Fear” (or maybe that’s “Brexit Fear!!!”) abated on a worldwide level. There’s plenty of
financial sector evidence for that away from the gold market, just look at the S&P hitting new
highs or the way the British Pound has reverted its drop (people calling “parity with Euro!” less
than a week ago have STFU en masse). The world has vaccinated itself against Bexit fallout,
the EU isn’t facing a new series of referenda (no sitting government leader will be as stupid as
David Cameron was, they tend to value their jobs) and now it’s only a major headache for one
small island sitting off the coast of continental Europe. Over in the UK the appointment of a
new Prime Minister and her big ministerial re-shuffle has brought in a pro-Brexit team to lead
the Brexit talks, but even the top man among them David Davis talks about 2018 as the earliest
date to trigger the Article 50 leaving clause and that’s from the most aggressive end of the pro-
Brexiters in the new government. People, two years is an eternity in the financial markets, it’s
hardly a shadow on the horizon but even then, the
way in which the new PM has played the Scotland
card (1) (quite brilliantly if you ask me) means even
2018 looks too close for any formal Brexit
negotiations to start with the EU. I could go on and
on about this so I won’t, the bottom line is that
Brexit Fear has all-but disappeared under the new
reality of “two years minimum” (and it’s a fair bet
Brexit will never happen).
4) In a bull run in any issue, large or small, asset or
equity, we’d want to see exactly the type of pulse-
retrace-pulse we’ve seen this year. Discount the
trend-breaking moment in February (clear as a bell
in hindsight) and considering March to July 17th, the
way the gold price has moved has been obviously
and clearly bullish, you couldn’t ask for more. Well,
you could if you’re one of those “Wheee To Da
Moon Alice” people but here at The IKN Weekly we
prefer to hold onto our profits after making them.
5) The hot speculative money washing through gold that I mentioned in last week’s opener
showed itself again last week in no uncertain terms. Here’s an update of the GLD bullion
inventory chart of last week, Brexit-to-date, and look how nearly 20 tonnes was taken off the
top of holdings last week, 16
of them in one shot. That’s
GLD gold holdings, Bexit vote to date (metric tonnes)
not the type of action you get
1000
from people wanting to 990 982.7 982.4 978.3 981.3 981.3
protect their asset value with 980
970 965.2 965.2 962.9 962.9
a long-term position in the
960 953.9
world’s historic keystone store 947.4 947.4 950.1 950.1
950
of wealth. 940 934.3
930
920 915.9
In the great scheme of things,
910
20 tonnes of gold is neither 900
here nor there but in the 890
short-term, particularly in the 880
current strnge days, it
matters.
Bottom line: Putting all those bits together, unless a new event comes along to justify a new
move in the price of gold, we’re going to be stuck where we are for a while and will probably
3
61/32/6 61/42/6 61/72/6 61/82/6 61/92/6 61/03/6 61/1/7 61/5/7 61/6/7 61/7/7 61.7.8 61/11/7 61/21/7 61/31/7 61/41/7 61/51/7
mt
source: SPDR GLD data

,
see it move back to U$1,300/oz, too. And before you say anything under your breath, sorry
Turkey and its attempted coup this weekened doesn’t count, we’ve already seen a dozen
geopolitical events come and go (Greece, Cyprus, Ukraine, Israel, ISIS, Syria etc etc) and they
all threaten to destabilize EVERYTHING for a while and then they don’t. The reason Brexit has
been different (or if you like, affected gold for a couple of weeks rather than a couple of days)
is that it had (has?) a direct world-scale financial effect, not just a political one. Summed up,
Brexit shot gold higher because the world was afraid of Brexit. Now the world isn’t afraid any
more. What goes up comes down, Hermes said so. On the other hand, gold stocks have two
mode of impetus not just one. The money now moving into the sector is more than enough to
make for a vibrate bullish market even if gold consolidates for a while, so I fully expect the
good times to keep rolling for the gold stocks, even if the underlying metal treads water a
while. I own gold, I trade stocks. Two different things.
That’s enough for one day but before we move on, please note the use of the word “guess” in
the title line of this intro piece. I’m under no illusions and I’ve been wrong along the way in
2016 too, this may be another one of those moments. I’ve had to keep questioning my attitude
towards gold (market leader it is) and the mining stocks. As an example see my bad Brexit
Remain call above, for another please recall the way I fixated on gold re-tracing back to
U$1,180/oz in March and lost a few good entry points on stocks as a result. I finally got that
out of my system in IKN361 dated April 10th (before too much damage was done). Today’s
piece can be summed up by “near term gold sideways and stocks bullish” but it’s just another
working theory, subject to change and so forth.
Risk management
For what it’s worth I wrote, scrapped, re-wrote and eventually scrapped again a piece for this
weekend called "It's all about risk management". It’s something I’ve wanted to get off my chest
for a while but I’m not happy with the way ithe note came out. I’ll work on it again this week
and go for inclusion in IKN376, however there is something on the subject today because as
coincidence (??) would have it, Gary Tanashian mentioned the subject in his NFTRH 404 this
weekend. Here’s an excerpt from his script:
With the caveat that I am often early in these forward views (which is as it
should be I’d say) I want us to simply be aware that the sector is on a tout
with the usual suspects leading the charge. Personally, I think the odds of
new short-term highs are better than 50/50. But risk vs. reward is not positive
at this time. That is different than price prediction; it is just an equation that
rational investors need to keep in mind.
That’s exactly right (and yet again, I urge you to subscribe to Gary’s letter, it’s as good as they
get, go here (2) for more. One thing I learned early in this wild world of markets is that "bears
see further", i.e. smart people who can see deeper into an issue will see the potential pitfalls of
any given market situation more easily. But that’s only half the story, because smarter market
participants leaven their bearish thoughts by remembering that the market, aka the collective
that includes the stupid end of the market as well as the smart guys like Gary, will stay stupid
longer than the purely analytical bear can imagine. The ghost of Keynes in the background
there, somewhere.
As noted above, I believe we're in a phase where gold consolidates but the gold stocks move
higher anyway, "because markets". So as my inner fundies wimp screamed at me to dump (or
at least lighten) B2Gold for the last 30% of this upmove, my inner trader has kept me in
because FundiesWimp was stuck in the way he was valuing these stocks for the last couple of
years. TraderMark knows BTO is going higher because the world is now looking towards an
optimistic and bright future, not a mediocre or moderate present day.
4

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Fundamental Analysis of Mining Stocks
B2Gold 2q16 production numbers
Wednesday saw B2Gold (BTG) (BTO.to) release its 2q16 production results (3) and today we
take a long-overdue look at the company, what with it being Top Pick at the Weekly (and for
what it’s worth my largest position). So first up the production charts, then thoughts on the
financials for the rest of 2016. We round off with a flourish and a new price target.
Production numbers
In a nutshell, Masbate got BTO out of jail in Q2. The overall production number of 135,242 oz
gold was a company record but only just, and at least two of the other BTO operating assets
suffered production glitches that, without being fatal, took the potential shine off the quarter.
But Masbate has turned into something different these days and it’s time we upgraded our
expectations for the Philippino mine.
Here’s the overview chart:
BTO: Gold produced, per qtr
160000 149000
140000
140000 121566 124371 131469 127844 135242
115859
120000
100000
80000
60000
40000
20000
0
5
51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
OzAu
source: company data
That 135,242oz was slightly better than 4q15, the pace of the first half of 2016 points to the
mid-point of 2016 guidance (510k to 550k oz) but we can and should expect better things from
BTO in the second half of the year and in fact, I’m now expecting BTO to beat its top end
guidance number and give us around 552,000 ounces this year. We go into that below, as we
check out the results of the company’s four operations.
At Masbate
Without doubt the the success story of the BTO quarter, Masbate delivered 57,188 oz Au thanks
to better grades, recoveries and throughput.
BTO: Masbate gold production, per qtr
60000 52727 57188 55000
55000 50000
50000 46241 47958
45000 41236 40368
40000
35000
30000
25000
20000
15000
10000
5000
0
51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Oz Au
source: company filings, IKN ests
• Grades were 1.40 g/t Au against a company budgeted 1.19 g/t. This type of positive
reconciliation isn’t unusual, is always welcome and is only really known when the rock
is dug up and processed. A pleasant surprise and we’d expect follow-through in Q3.

,
• Recoveries were 75% against a company budgeted 71.3% because BTO processed
more oxide material than expected, which makes recoveries quicker and easier than
from the transitional or sulphide ore. BTO says they expect to do the same in Q3, so we
can expect contiued good recoveries too.
• Throughput improved because of previously disclosed plant infrastructure and wasn’t a
surprise, but it’s good to know that the money invested is showing immediate effect.
There are still some upgrades left to complete and everything will be fully on line by the
end of Q3.
So a darned good quarter from Masbate and as you can see in the above chart, we’re now
guiding for the same type of guidance-beating performance from 3q16. The 50k forecast for
4q16 is more your author trying to keep a lid on things more than a confident marker. We
should recall that BTO guided Masbate at a maximum production of 185k for 2016 and though
that guidance is still in place there’s little doubt that will be blown out the water. As 3q16 is
being pitched as very similar to 2q16 by the company, I’m taking the opportunity of adding
some conservatism into the numbers in Q4 but still, if those forecasts become reality Masbate
will ned the year producing almost 215,000 oz and that would be an impressive total.
At Otjikoto
Otjikoto produced 26,172 oz gold in 2q16. As BTO’s own guidance for the quarter was 37,426oz
and the IKN house forecast was 40,000oz, that’s a plain straight miss.
BTO: Otjikoto gold production, per qtr
50000 48000
4 4 0 5 0 0 0 0 0 0 36963 38252 39374 35703 36172 40000
35000
31134
30000
25000
20000
15000
10000
5000
0
6
51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Oz Au
source: company filings, IKN ests
BTO had previously disclosed a pit slope failure that blocked one of its access ramps in April, In
last week’s NR the company reported throughput wasn’t affected but due to the blocked access,
higher grading areas were offline and they resorted to processing lower grading stockpile. The
result was an average grade of 1.29 g/t Au instead of the budgeted 1.43 g/t. Tonnage
throughput of 890,704mt and recoveries of 98.0% were good.
To give you an idea of what that grade miss implies, if we plugged previously budgeted 1.43g/t
into the grade X tonnage X recovery calculation instead of the actual 1.29g/t, the mine would
have produced 3,930 ounces more than it did on the straight calc, which would have put it
(just) over my 40k target number. So there is reason behind the miss and now the access ramp
problem has been solved we can expect better things for Q3 (as you can see, I’m sticking to
40k there). Then in Q4 we can expect the start of production of the high grade satellite
Wolfshag zone that should bump up average head grades and improve production numbers
significantly. The 48k estimate there will drag Otjikoto back to the lower end of its 2016
guidance range and mean 160,000 ounces from the mine.
At Libertad
BTO had guided for over 33k oz from Libertad in 2q16, the IKN house forecast was for 30,000
oz, therefore the result of 30,807oz was better for me than for the company. We expected the
slight shortfall due to the ongoing problems Libertad has in getting access to the Jabali high
grade annex zone (locals protesting and blocking things still).

,
BTO: Libertad gold production, per qtr
40000 37000
35000 31234 35234 30807 33000
30000 27681 29198
25326
25000
20000
15000
10000
5000
0
7
51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Oz Au
source: company filings, IKN ests
BTO says, “...the Jabalí Antena pit will enter the production stream in late 2016, upon
completion of the resettlement activities and receipt of remaining mining permits” but I’m not
holding my breath on that. We are anticipating better production numbers in Q3 and Q4 due to
organic improvements and slightly better grades in the pipeline, but not wildly better and until
Jabali comes on line, things are likely to stay that way (also, remember the reserve numbers at
Libertad have dived this year and it’s starting to show its age). Libertad remains slightly
disappointing, but its overall influence in the stock performance of BTO is now waning as the
big two (above) take control and the Fekola mine project gets ever closer to operational status.
At Limon
Another miss at Limon, with the 11,075 oz gold produced lower than the BTO and IKN
estimates/guidance of 14k for the quarter.
BTO: Limon gold production, per qtr
20000
18000
15686
16000 14517 14000
14000 13158 12000
12000 10216 11075
10000 8903
8000
6000
4000
2000
0
51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Oz Au
source: company filings, IKN ests
Limon had a glitchy quarter, with the mill offline 13 days for repairs and a trucking bottleneck
that’s not expected to be resolved until August. Due to that second one and the series of
disappointing numbers from Limon the last three quarters, I’ve cut my 3q16 estimate to 12,000
oz, but the 14k for Q4 is still in place. That means the IKN house forecast for Limon 2016
production is now 47,291 oz, below the bottom of the BTO guidance number of 50k that BTO
says it can still achieve this year (they say higher grades now being accessed will make the
difference. We’ll see on that, here I prefer to pitch low and be pleasantly surprised later.
Consolidated production
This table shows how the IKN forecasts for the quarter racked up against cruel reality:
BTO: IKN prod. ests for 2q16 by mine compared to results
Mine Libertad Limon Masbate Otjikoto
2q16 estimate 30000 14000 40000 40000
2q16 result 30807 11075 57188 36172
difference 807 -2925 17188 -3828
source: BTO data, IKN ests
It’s clear enough by now that Masbate saved the day.
This next chart consolidates the production and shows what we expect from the company in

,
the next two quarters in a little more detail.
BTO: gold production by mine
160000
150000
140000
130000
120000
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
8
41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
oz Au Otjikoto prod
Masbate prod
Limon prod
Libertad prod
source: company filings
That’s a target of 140k for this quarter, 149k for Q4 and if they hit those numbers there will be
plenty of cheer from a market currently looking for the next wonder goldstock, those suited
types sure love a good growth story. It adds up to a total of just over 552,000 ounces for the
year, which would beat out the BTO top end guidance by 2k and I’m sure The Clive is gunning
for that figure now (there are performance bonuses at stake, after all).
Fekola news
Before moving to the financials, we also got an update on the next big catalyst in the BTO
story, Fekola in Mali that’s due to start producing in 4q17. The segment told us that the build-
out is going according to plan, but the most significant news was at the end. I’ll quote directly
from the NR:
Based on the positive drill results to date (at both surface and underground) and
exploration potential, the Company is constructing the Fekola mine with a +25% design
factor. This means that the throughput of ore at Fekola could reach up to 5 million
tonnes per year in the initial years of production, beyond the optimized feasibility
study's estimated throughput of 4 million tonnes per year. This increase may only
require approximately $15 million to $20 million of additional capital expenditure and
could potentially increase annual production by up to 20% (subject to mine planning),
surpassing initial projections of approximately 350,000 ounces of gold per year.
That’s good. As these final production charts show, we’re still factoring in 350,000 ounces per
year from Fekola when it goes into production but that may now come with extra gravy. BTO
is’t far away from hitting the magic million-per-year number.
BTO: sales and IKN forecast sales, per annum
1000
890 900
800
700 620
600 552 493.265
500 373.4 391.2
400
300
200 108.7 144.5 158
100
0
Financial things
With production and forecasts for the rest of the year now covered, we can plug a few numbers
in and see how the company is looking money-wise. But before getting to the main course I
0102 1102 2102 3102 4102 5102 tse6102 tse7102 tse8102
BTO: annual production and estimates
OzAu
1000
900
800
700
600
500
400
300
200
100
0
source: BTO data, IKN ests
0102 1102 2102 3102 4102 5102 tse6102 tse7102 tse8102
OzAu
Fekola
Otjikoto
Masbate
Limón
Libertad
source: BTO filings, IKN ests

,
want to cover something else from last week’s production report, that BTO has started raising
its gold bullion inventory. It’s not the be-all/end-all reason for owning the stock, but it’s still a
developing trend and worthy of coment for the implications it brings. Here’s the chart but
please note the cut-down Y-axis used to help the eye see the differences, not to fool you.
Oz Au BTO: Gold produced vs gold sold (incl all pre-prod oz)
140000
135000 gold produced (oz)
130000 gold sold (oz)
125000
120000
115000
110000
105000
100000
95000
90000
85000
80000
3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
source: BTO
In the last eight quarters has sold less gold than it has produced and more recently that habit
has accelerated. The chart above shows a difference of
20,233 oz between production and sales in the last eight
U$m BTO: Bullion inventory
quarters at BTO but more interestingly, in the last three 30 26.8
quarters BTO has sold 15,345 oz of gold less than it has 25 21.3
produced. That’s over U$20m worth of implied extra 20 17.5
inventory at current spot prices so you’d expect that type of 15 14.3
inventory build to show up in the financials as well, and as 10
you can see right, it sure looks that way. My bullion 5
inventory forecast for the 2q16 financials implies around 0
U$12.5m in extra inventory in the same period and as BTO 3q15 4q15 1q16 2q16est
seems to carry its inventory gold at U$1,000/oz (reverse- source: company filiings, IKN est for 2q16
engineered estimate from previous filings) that’s close
enough for our purposes. That’s a nice little habit that The Clive has picked up, it points to a
company that is bullish about the future of the gold price and wants to capitalize on it as much
as possible. But more importantly, it’s the type of thing that only a company with a comfortable
liquidity position does. As BTO is currently in full capex spending mode (Fekola et al) it must be
comfortable about covering all costs (and then some) from its recent raisings.
Moving to operational results estimates, here’s the updated overview chart. The U$164.8m in
sales for 2q16 was pre-announced last week and the final figure will be very close to that. As
for costs, we’re pitching slightly higher than in the seemingly very low 1q16 as BTO won’t have
quite as much forex advantage in Q2 than it did back then. This brings up an estimated
operating revenue of U$54.8m for the quarter.
B2Gold: operating margins
$m
220 Revenues Total costs Operating Revs
194.0
176.0
164.8
170
138.9 136.5 139.3 139.0 144.3
120 129.0 91.9 120. 9 3 8.3 114.9 99.0 122. 1 4 03.5 115.6 116.9 116.3 117.8 101.8 110.0 115.0 120.0
74.0
70 54.8 61.0
37.1 42.4
22.0 15.9 18.9 23.3 19.6 22.9 21.2
20
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16est3q16est4q16est
-30
source: company filings
9

,
That’s pretty good and as you can see, things are expected to get even better in Q3 and Q4. By
using the following four criteria...
• An average gold price of U$1,300/oz in 3q16 and U$1,350/oz in 4q16
• Quarterly production as estimated above
• A gradual increase in overall costs
• A BTO that continues to squirrel away 5,000oz per quarter into its bullion inventory
vault
...we end with operating revenue of U$61m and U$74m for the respective quarters. What this
means is that BTO is now turning into a cash
generating machine (at long last) after BTO: Adjusted net earnings
bumping around at breakeven levels for far 50
too long. 40
30
When it comes to net earnings I’m not 20
expecting a sparkling number for 2q16 10
because this is the quarter that gets hit by the 0
large share-based payments taken when the -10
management get their sweet options deals. -20
That will blunt the final figure, but as you’ve -30
probably guessed by now, I think the market
will look beyond that number and to the
future projections BTO will generate.
Discussion and conclusion
BTO shares did well on Wednesday, up an out-sized 5% on a general up day for gold stocks.
But once the dust had settled BTO dropped back and ended the week as an in-line performer to
its peers. We can infer from this that the numbers were initially well-received by the market,
but on further inspection it wasn’t going to rally ahead of the field. Well, that’s what I’m going
to infer from the share price action last week
anyway because it fits nicely with my own bias
confirmation preferences ☺.
On the plain numbers and after its excellent recent
run (see right BTG vs XAU and the way it’s beaten
peers in the last three to four weeks), B2Gold is a
U$2.73Bn company that makes U$10m profit per
quarter. Nothing there to prop up such a rich
valuation, neither can we justify it on the
approximate U$40m net I’m estimating for the last
and probably best quarter of 2016, as even
cherrypicking that best possible result would point
a 17X forward PE ratio and is still rich compared to most things out there.
No, BTO is a growth story, that’s why the market is buying it up now. In the quarters to come
we’ll be given crowd-pleasing tidbits from (we expect) incremental production growth, all on
good cash cost figures that make each ounce very profitable. But we’re now just six quarters
away from the new main event of Fekola which promises to transform the company and turn it
into a 900k/annum producer. Then comes Kiaka and who know what else afterwards.
I don’t mind admitting that I’ve had a tough time recently in justifying the price of BTO and
keeping it as a Top Pick in The IKN Weekly as its bottom line numbers make it look expensive,
no ifs or buts. However judging BTO on what it is today is a mistake, it’s time to start
considering what this company will be worth when it’s making U$500/oz operating profit on
900,000 ounces of gold per year, because that’s the type of valuation BTO is moving towards.
10
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
$m
source: company filings, IKN ests for 4q15

,
It’s also time to consider what a Tier One player would be willing to pay to buy out B2Gold and
make it part of its own operations, because although Limon is small and Libertad looks tired,
Otjikoto, Fekola and even Masbate lone are the type of high production/low cost assets that can
grace the table of any self-respecting market leader company. The Clive and his team did it
once with Bema (and my stars they sold that one at just the right time), now it’s the turn of
B2Gold to be put in the crosshairs as the target for major M&A at the right time in the market
cycle.
BTO remains a Top Pick and its 12 month price target is moved to C$5.30
representing an upside of 38.4% to this week’s close of C$3.83. This target price is
derived from the assumption that this time next year (i.e. when the target time limit is reached)
we will be looking down the barrel of a 900,000 ounce gold producer in 2018 and the market
will be happy to value such a company at U$4Bn. With 2016 now looking good, this is now a
catalyst-rich story that may need to consolidate its recent gains in the next few weeks, but over
a more predictable 12 month period and assuming gold doesn’t cave in on us it is set to justify
its new price level and a lot more besides. I personally hold a lot of B2Gold and won’t add to
my position, but I’m no longer a semi-weak hand thinking about cashing in the position. This is
the main pillar of my portfolio and will stay that way, own some yourself.
Stocks to Follow
Of our thirteen open positions currently on the ‘Stocks to Follow’ list, six registered week-over-
week gains (REG.v, SAND, TK.v, INV.to, LRA.v, FCV.v) and seven showed losses (BTO.to,
SAM.to, WDO.to, RRI.v, CNL.to, MAD.v, HBM short). The big winner of the week was INV
Metals (INV.to up 46.6%) thanks to its positive PFS news, escorted to the podium by decent
gains in Focus Ventures (FCV.v up 10.5%) and Lara Exploration (LRA.v up 12c). Meanwhile the
biggest losers were Miranda Gold (MAD.v down 16.1%), HudBay short (HBM short down
11.7%), Riverside Resources (RRI.v down 11.7%) and Starcore Intl (SAM.to down 11.3%). Of
those SAM hit my back pocket the most, but it’s a double-edged sword as I’m now looking to
buy some more cheap ones if possible. Overall and when considered in light of the drops in
GLD, GDX and GDXJ last week as the sector took a (well deserved?) breather, the portfolio was
a swings and roundabouts exercise and did okay.
We currently have 13 open positions, two fewer than our self-imposed maximum of fifteen at
any given time. Eleven of the thirteen are in the green, two are in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to hold C$2.11 12-sep-14 C$3.83 81.5% New tgt $5.30 IKN375
Regulus Res REG.v hold C$0.64 06-apr-15 C$1.29 101.6% Long-term exploreco top pick
Starcore Intl SAM.to STR buy C$0.59 10-jan-15 C$0.80 35.6% New 1.04 tgt, v. buyable here
Long positions (in current order of preference)
Sandstorm Gold SAND STR buy U$3.80 17-apr-16 U$5.18 36.3% New tgt IKN374 $6.20
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.23 17.9% Value Zn play, added again
Wesdome Gold WDO.to STR buy C$1.90 22-may-16 C$2.02 6.3% KGI M&A target
Riverside Res RRI.v buy C$0.38 27-jun-16 C$0.415 9.2% new pick, now 60c tgt
Continental Gold CNL.to hold C$2.68 22-may-16 C$3.64 35.8% permit in 2016, $4.80 tgt
Miranda Gold MAD.v spec buy C$0.125 03-jul-16 C$0.13 4.0% new pick, small play, flip
INV Metals INV.to selling C$0.25 03-apr-16 C$0.85 240.0% PFS good, sell time
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.42 23.5% solid biz model
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.105 -54.3% refi news good, may now run
Short positions
HudBay Min. HBM short U$4.98 09-jun-16 U$5.45 -9.4% re-short on Cu, port balancer
11

,
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.
INV Metals (INV.to): Selling this week. The updated Pre-Feasibility Study (PFS) news was
late, but when it finally arrived on Thursday morning pre-open (4) it turned out to be a real
crowd-pleaser. The headline numbers (which I’m going to do the really easy way by sticking u
this table from the NR)...
...are just the type of mix the market likes to see at the moment, with a reasonable (U$285.9m)
capex estimate, chunky gold production (150k/year over 11 years) and a robust-looking 26.3%
post-tax IRR using U$1,250/oz gold
(which moves up to 30.0% at U$1,350/oz
Au, according to the stud results at least).
The reaction of the stock price was good
on Thursday and along with the situation
in Tinka (TK see below) was the main
reason I sent out the Flash update of
Thursday afternoon (see Apprendix 1). In
that I said that I may sell if I saw 70c on
Friday but, when INV opened and shot
straight through that number there was
no way I was going to sell immediately (or
put another way, I got greedy).
However that does not and will not
change the plan, as set out from the
beginning in this INV trade. It was always going to be a near-term trade of a few months, it
was always built around what we imagined would be a neat and tidy exit point just after the
updated PFS news. As things have turned out the PFS is solid and attractive, plus we’ve had a
12

,
lot of luck in running and instead of getting a double to 50c, we’re now sitting on a 240%
winner thanks to the markets strong pulses of optimism towards exploreco stocks since we took
the plunge.
But back to the plan; right now is a good time to sell into the enthusiasm and volume before
those people new to the story get to realize the problems that INV at Loma Larga (ex-
Quimsacocha) has on a community and wider political risk level. Now for sure INV may go
higher than it is today, you must be as clear about that as I am, but my risk management
antennae are now twitching and I want to take the easy money, rather than sweat every
percentage point out of the stock that’s possible. Therefore if I sell too early so be it, I’ll just
have to be content with “only” a 240%+ win on this one.
The money will be used in the addition to Tinka (TK.v), plus the potential additions to Starcore
(SAM.to) and Riverside (RRI.v). I want to stay exposed to the market, just swapping the
vehicles around a little.
Tinka Resources (TK.v): Added. As per the Flash update of Thursday afternoon (see
Appendix 1) I bought and added some more to my now reasonable sized TK position. I didn’t
get any sub-20c stock and my cost average did tick up a little, but in this case I’m going to
keep my cost at 19.5c for the time being as it’s a question of tenths in difference, not pennies.
And that’s about all, a value purchase on a stock that should get a boost from the rise in Zn
sooner or later. We saw the metal spot price touch U$1.00/lb for the first time in a long time
last week and the trend is clearly our friend, too.
Finally I don’t know who you are yet Sammy2005, but that’s only because I haven’t looked
hard, but I’ve done this investigation before and it’s not too difficult. So because I’m feeling lazy
this weekend I’m going to give you one single chance. If you post subscriber-only information
on Stockhouse again I will unsubscribe
you from this publication in a heartbeat,
Sammy2005. That’s what they call ‘fair
warning’ and thank you reader C for the
heads-up.
Riverside Resources (RRI.v): May
add on weakness. Here’s one to add to
my list of addition-shopping. RRI pulled
back on a sudden dearth of buying action
as the world forgot it cared about this
LRA-type play. If the volume remains
weak in the next five days there’s a
decent chance that it goes back under 40c
and if so, I will add a few.
Starcore Intl (SAM.to): Looking to add. Here’s the thing: On Saturday I mentioned to a
trusted and experienced friend in the sector that I was going to drop my target a little on SAM
but make it clear I still liked the stock and it was still one to buy and hold and be long on. His
reply, which I’ll paraphrase because he said it in about three different ways between my
protests, was, “It doesn’t matter how you phrase it or how much you explain, the stock will go
down”. And he was right (and I now owe him U$10) however when SAM got to the mid-70s
level it started to look like a real value purchase and a place to add (to an already chunky
position), which is why it made the Flash update of last week (see appendix 1).
This weekend’s 80c means my target is now 30% North...just not good enough for some of
you, I suppose. However I will underscore that SAM’s real beauty is its potential upside from its
other assets, such as Toiyabe which has seen the start of a decently sized (5,486 meters of
Reverse Circulation and 1,219 meters of core drilling in 23 holes) drilling campaign as per last
week’s NR from SAM (5). As RC is being majority used and considering the early stage level of
13

,
Toiyabe, this has the look of first pass drilling to gauge the asset’s prospectivity, perhaps with a
view to attracting in a partner to take it on and cover the costs in typical JV style. But however
it goes, this is a new front for SAM and as it’s getting precious little market cap from its
exploration stage properties, it’s unlikely to do any harm and may eventually add value.
Miranda Gold (MAD.v): MAD dropped 16.1% on light volume. Good, serves you all right, now
play nicely and don’t spoil it for others, this Palisade etc pump won’t get going until we’re closer
to the four month escrow limit, anyway. My best guess for the start of the noise would be late
September, what with this one being a third-rank stock. I’ll buy more if it goes under my cost
average price, which is perfectly possible.
Continental Gold (CNL.to): CNL finally found some
selling after its good recent run and backed off sharply
last week, as this year-to-date chart (right) shows. I
picked the YTD chart because it has the scariest looking
technical shape, by the way ☺.
I don’t think this is a place to add with great value and
much prefer to hold through at this time. However,
that’s my personal call, also based on my portfolio and
how I got all I wanted at the first buy move.
Focus Ventures (FCV.v): It’s great to write the phase
“Good news from Focus Ventures” this week, as it’s been the biggest laggard by far in the
portfolio and the main thorn in my side this year. On Thursday FCV announced (6) that it has
extended the facility on the U$3.5m it owes to Sprott Resources Lending Partnership (i.e. the
Rick Rule end of Sprott) to September 30
2019. In other words Ridgway struck a deal
with Rule to boot forward the debt by three
years.
It’s a good enough deal and the extras
awarded to Sprott/Rule for the boot-forward
are, “..to pay an amendment fee to the
Lenders by way of the issuance of 2,740,340
common shares of the Company at a deemed
price of CDN$0.10 per share. The extension
agreement also calls for anniversary payments
to the Lenders equal to 6% of the amount of
the loan principal outstanding at the time,
payable in cash or common shares at the
election of the Company.”
Frankly, it could have been a lot worse. Rule got due consideration for his largesse and good
will in the deal, but it was more like an eight ounce cut instead of a full pound of flesh this time.
The stock price responded well to the news and this weekend FCV sits at above 10c for the first
time in 2016 (since the hurried pre-feas at the end of 2015 sunk the stock).
What this means to the share structure is as follows: As things stand and assuming this deal
with Sprott closes correctly, it will leave FCV with 130m shares out (precisely, 130,003,726) and
Sprott owning 20.02m of those, or 15.4% of shares out. If you go for the fully diluted totals, as
Sprott owns all the 6.0745 warrants outstanding it brings the totals up to 136.078m F/D and
Sprott on 26.091m, or 19.2% of fully diluted shares.
We can then add in the 6% of the $3.5m principal that FCV must pay back to Sprott annually in
the new deal, this aside from any debt servicing and at the discretion of FCV, can be paid in
shares. To give an idea of its effect, let’s say the end of year one of the new debt deal comes
14

,
around and FCV still owes all its financial debt outstanding of $3.5m. Six percent of that is
$210,000 and if FCV is still a 10c stock at that time, it means another 2.1m shares get issued to
Sprott. This scenario would see Sprott owning 28.2m of 138.2m F/D shares, a nice way to get a
large chunk of a company that gets a little bigger every year, no?
In other FCV news, there’s a strong rumour in Peru that the neighbours of FCV at Bayovar,
Brazil’s Vale (VALE), are looking to sell their 40% of its Bayovar Miski Mayo operating
phosphates mine to minority owner Mosaic. If the deal goes through (and we know Vale is
restructuring its world operations in light of its problems in core Brazil) it would leave Miski
Mayo 75% owned by Mosaic and 25% by Mitsui. This may turn out to be good news for FCV
because (and follow the bouncing ball)...
• Mosaic wants to replace supply it’s about to lose from its Florida mine, now closing
• Taking another 40% from Miski Mayo would cover the shortfall to present customers
• But Vale sells most of its Miski Mayo produce to Brazil and Argentina
• Therefore, those Southern Cone customers will need to find a new supply
• Step forward one of the best untapped P2 projects in the world.
As Argentina’s soya industry is suddenly flying again (thanks to Macri scrapping one export tax
and reducing another) the potential for a supply crimp comes at a time when the agro industry
there may need new and extra demand. I have a meeting set up with FCV in this quarter and
when that happens, I’ll be able to get more information on how the South America phosphates
market is looking.
Bottom line: There’s reason to start liking FCV again and thank the stars for that, it’s been way
too long. But don’t get too bullish too soon, false dawns are the norm in this stock and as
always I care a lot about the signal from volume, it needs to become more fluidly traded to give
itself a chance of making a sustained upmove. But all is not lost here, I’ll therefore genuflect at
my statuette of Saint Jude Thaddaeus and keep on holding.
Wesdome Gold Mines (WDO.to): A quiet week at the market, with a persistent seller of
medium size keep the lid on WDO and the price back at or around the $2 level. As noted on the
blog Friday (7) the week ahead sees Tony Makuch take over at Kirkland Lake (KGI.to) and one
of the things he’s been briefed to do by his sponsors Eric Sprott and Tom Stanley is to secure
the purchase of WDO. And it’s why we’re in the stock in the first place, of course. The timing of
KGI’s run on WDO can pit your guess against mine, I have no fixed idea as yet but will keep the
ear close to the ground.
HudBay Minerals (HBM) (HBM.to): Reader CD wrote in on Friday and among other things,
said, “I do not understand your reasons for shorting HBM, since Cu market is a lot more
complicated to grasp and predict”. That’s fair comment, above all because it’s the outlier in the
current portfolio, so without re-hashing too much I can boil it down to four main reasons, the
combo of which has got me to short HBM (again):
• Financially HBM is a dog. Its high financing debt level is being and while its Constancia
mine is up and producing well, it’s marginally profitable at best under current market
circumstances. The balance sheet freak that lives in me sees a weak company at a
fundamental level. Now, that may be my own weakness as an investor showing
through, personal itches that I can’t help but scratch even when near-term sentiment
chases a stock away from me. You’re as good a judge on that as I.
• Copper metal looks bearish (to me at least). The proof of this particular pudding I think
is in this current month of July, we’ll see out the macro data look once the month is
done, but the current tug’o’war between the copper money people who want the metal
higher and the real world copper user people who insist the demand to push it higher
doesn’t exist is the battle of the moment.
15

,
• The market likes HBM too much. Aside from the whole “whistle past the graveyard” on
its debt, HBM is getting nowhere fast at Rosemont and its Manitoba operations are long
in the tooth. Constancia is its make-or-break project (and pointed out in the analyses
that got me shortingHBM) and just because it’s new and now producing doesn’t mean
it can produce the type of cash flow it needs to out-run its financial weaknesses. HBM
today is a call option on copper, but it’s not one of those unlimited time ones either.
• On a personal portfolio management level, having at least one short position in brings
some balance to the portfolio. You may disagree as to my chosen vehicle, but the
conceptual side of the argument is the thing here.
In the end it’s just a trade, I’m not beating myself up about its existence and neither should
you. I’m willing to give it through July to see where things stand as I think macro copper
numbers will start to weigh on the metals and then its dependent stocks. So come the first
week of August I’ll stick my finger in the air, see how things are and make a further “hold or
fold” call on this short. Until then, it runs.
Sandstorm Gold (SAND): SAND’s re-rating
run continues, up 5.7% on the week and the
big move up Monday morning first thing
wasn’t anything to do with my words on the
stock last Sunday, it was more likely to be
TD Securities clients wading in as Daniel
Earle of TD Sec upgrading the house reco to
Buy and the target price to CAD$8.50. As
SSL.to was at CAD6.39 last weekend that
represents a 33% upside and correlates to a
U$6.50 price target for SAND in US Dollars.
As I’m at U$6.20 you’ll hear no complaints
from me about Earle’s new level.
The Copper Basket
After twenty-eight weeks of 2016, The Copper Basket shows a 84.76% gain to level stakes.
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 HudBay Min. HBM.to 5.31 235.23 1656.02 7.04 32.6%
2 Ivanhoe Mines IVN.to 0.61 778.96 880.22 1.13 85.2%
3 Reservoir Min. RMC.v 4.08 48.69 449.41 9.23 126.2%
4 Capstone Min. CS.to 0.44 382.04 336.20 0.88 100.0%
5 NGEx Resources NGQ.to 0.65 205.06 215.31 1.05 61.5%
6 Western Copper WRN.to 0.38 94.19 120.56 1.28 236.8%
7 NovaCopper NCQ.to 0.395 104.33 86.59 0.83 110.1%
8 Cordoba Min. CDB.v 0.16 86.86 70.36 0.81 406.3%
9 Copper Mtn CUM.to 0.445 118.8 67.72 0.57 28.1%
10 Copper Fox CUU.v 0.125 417.64 58.47 0.14 12.0%
11 Nevada Copper NCU.to 0.66 80.5 50.72 0.63 -4.5%
12 Atico Mining ATY.v 0.28 97.59 43.92 0.45 60.7%
13 Amerigo Res ARG.to 0.205 173.61 27.78 0.16 -22.0%
14 Hot Chili Ltd HCH.ax 0.09 445.723 26.30 0.059 -34.4%
15 Revelo Res. RVL.v 0.055 99.19 9.42 0.095 72.7%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 84.76%
The Copper Basket had a slight losing week overall, down just a few tenths after a big run up
16

,
and overall that’s not bad for a consolidation process (if you’re a bull on copper that is...I’m
not). Six stocks put in weekly wins (HBM.to,
IVN.to, CS.to, CUM.to, NCQ.to, WRN.to) and
The Copper Basket 2016, weekly evolution
it’s notable the number of producers that 100%
made the frame there. Four others were 80%
UNCH on the week (RMC.v, NGQ.to, CUU.v,
60%
ARG.to) which leaves five losers (NCU.to,
HCH.ax, ATY.v, CDB.v, RVL.v), all from the 40%
tinycap end of our basket. The dogs aren’t 20%
barking this weekend.
0%
-20%
Best winner was HudBay (HBM.to up
10.3%...grrrrrrr), with no other stock putting
in a double figure percentage win on the
week. The worst losers were Hot Chili (HCH.ax down
18.1%) and Nevada Copper (NCU.to)
Over at the metals trading pits, copper had a very good
start to its week on the back (mostly) of world economic
data that pointed to growth (and the Doctor likes growth),
that push the futures price up from U$2.15/lb to a high of
U$2.28/lb on Tuesday (and had me squirming in my short
pants). But there was no follow-through on the move and
copper retraced to end the week at U$2.23/lb. Trading
went from reportedly heavy to light as the week wore on.
The main macro data event of the week came
Wednesday/Thursday when China released its preliminary
trade data. The headline copper number of imports up
23% year-over-year sounds bullish to start, but when we
factor in the now confirmed reports that unsold copper is
now leaving China meainland and going back to the warehouses, plus the treatment and
refinery Charge (TC/RC) data for copper which are at the highest charges of the year now, it
points to a saturated concentrates market with the same type of demand lag we’ve reported on
in these last few weeks. There was also this intriguing report out of Reuters last week that
notes (8) a seaborne supply lag from Chile to China in June (world’s biggest producer meets
world’s biggest user) that’s due to unwind this month.
Choppy seas off the coast of Chile caused widespread delays to copper shipments from the
world's top producer in the second half of June, potentially supporting prices in a market grappling
with oversupply.
Cargoes were stranded at ports as stormy weather prevented ships from loading, said miners in
Chile, including world No.1 Codelco.
That could buttress prices in the short-term, although any impact is unlikely to last long as miners
said exports were back to normal by the start of this month.
It’s difficult to call this one accurately because there’s scant knowledge of exactly when and
how much copper arrives in China from the Chilean backlog this month, but that has the smell
of a buried lede to me and we may be about to see extra supply dumped on the SHFE and LME
Asia warehouses.
Now for the weekly copper warehouse inventory bullets:
• Yet another aggregate rise in total world copper stocks last week. The three official
warehouse systems total moved up 24,090 metric tonnes (mt) (+5.5%) to 466,095mt.
• Shanghai SHFE inventories rose by a significant 15,069mt (+9.3%) to finish the week
at 177,199mt. This is not good news for the copper bulls, the shape of the inventory
chart below makes it clear we’re now seeing a trend change that’s too early in the year
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 ht62 dr3luj ht01 ht71
source: IKN calcs

,
and at too high a number for anyone’s comfort.
• At the LME, the negative news for copper prices was underscored by another move up
in inventories. Stock finished Friday up 8,050mt (+3.6%) at 231,275mt.
• Comex stocks grew by 971mt (+1.7%) to finish Friday at 57,621mt. Fair enough,
trifecta complete.
Below is the Shanghai-only chart and it’s going up, so be warned.
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 ht01
Mt Cu
source: Cochilco
Yes for sure it bounced and started moving up in the same way in 2015, but the process
happened later in the year and the baseline was sub-100k, not 150k.
Now for comments on a couple of basket stocks:
Atico Mining (ATY.v): I can’t help it, I keep
staring at ATY and thinking that it’s cheap. I’m
aware that 2/3rds of its revenue comes from
copper and just a third from gold (which is why
it’s on this list, after all), but the way it’s been
flatlining these last few weeks while all around,
even copper producers have caught bids, gets
me wondering whether there’s a near-term
trade here. And yes, even though it’s the minor
metal we can assume ATY gets a boost from the
improving gold price in 2q16.
Ivanhoe Mines (IVN.to): I took an interesting mail from seasoned market professional A.N.
Other this week, who opined for hs own reasons that a spin-out of IVN’s Kipushi project may be
in the cards. That makes sense, as it’s the main zinc project in the asset book (go have a look,
but this is the one that’s been wowing the market with long, high-sulphidation 30% and 40%
Zn hits) and the way in which Zn has been running would make it more interesting as a stand-
alone. Here’s a slightly edited version of the mail I sent to A.N. Other in reply
“...I put IVN on the Copper Basket watchlist even though it's larger the than normal
type of market cappers in that list because I wanted to watch Friedland and the way he
goes about marketing and promoting his charges more closely. This isn't the first time
I've wondered why a single company has multiple projects of the size it has. It's almost
a "Three Flagships" situation and that's not the most efficient way of adding
shareholder value. Or is it? I don't know and I've wondered why Friedland hasn't spun
off things to date. My potentials reasons have been 1) the IVN treasury is the important
driver at the moment, the split-ups can wait until that's more depleted, 2) Friedland is
way better than me at marketing 3) this time it's different. It's quite possible that all
three work together. But the obvious one to leave is the Zn play, for sure.”

,
If anyone wants to further those ideas or add
their own, you know my mail address. Meanwhile
in trading IVN did very well but the main events
happened on Monday and Tuesday morning,
when the stock broke higher on strong volume
and stayed there, even when somebody or other
liquidated over a million shares at a slight
discount.
That’s the chart of a well-supported stock.
The Low Cost Producer Basket
After 28 weeks of 2016, the Producer Basket shows a gain of 136.45% 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 24.92 21.40 190.0%
2 Newmont NEM 17.98 529.12 21.87 41.33 129.9%
3 Goldcorp GG 11.56 830.22 16.01 19.29 66.9%
4 Franco Nevada FNV 45.75 176.298 13.25 75.17 64.3%
5 Agnico Eagle AEM 26.28 217.67 12.20 56.07 113.4%
6 Ang/Ashanti AU 7.10 405.27 8.51 21.00 195.8%
7 Detour Gold DGC.to 14.41 170.85 5.50 32.20 123.5%
8 Sibanye Gold SBGL 6.09 228.71 3.91 17.08 180.5%
9 Buenaventura BVN 4.28 254.19 3.24 12.73 197.4%
10 New Gold NGD 2.32 509.89 2.40 4.71 103.0%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 136.45%
An interesting week which stocks on the list did their own thing. Four showed weekly gains
(NEM, AEM, AU, SBGL) and six were losers (GG, ABX, FNV, DGC.to, BVN, NGD) with the biggest
winner Sibanye (SBGL up 8.5%) as the South Africa based producer got a kick from avourable
move in the forex to counter the gold drop. The biggest loser was Detour (DGC.to down 6.6%),
I don’t really know why so I won’t try to BS you.
Thanks to bagging four winners against the grain (GDX was down 2.1%, recall) our basket
outperformed the benchmark and is now 18.16% ahead on the year.
The Low Cost Producer Basket: Weekly performance
160% and comparative to GDX control
140%
120%
100%
80%
60%
40%
20%
0%
-20%
Goldcorp (GG): With nearly two quarters now in charge, it’s time for the simple question:
How long does Garofalo get before the major shareholders at GG start openly complaining
about this stocks clear underperformance? It’s been rather quiet over at GG recently too, with
19
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 ht62 dr3luj ht01 ht71
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
basket 0%
gdx control -5%
-10%
-15%
-20%
-25%
source: Google, IKN calcs
ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71
source: ikn calcs, NYSE/Nasdaq data

,
just seven NRs out of the comapny since its 1q16 results day and most of those of a regulatory
nature. The only new-news has been the purchase of Kaminak (KAM.v) and the taking of 20%
(minus a shaving) of Independence Gold (IGO.v) and although that second stock is up 150%
sicne then, basically on the GG news, the investment was less than C$1.5m and that’s the type
of money that does not move any dials at a U$10Bn+ market capper.
Not, the only real news out of GG recently has been the KAM purchase and that’s now a fait
accompli*. As we’re not far from the 2q16 results and Conference Call (July 27th and 28th
respectively), the PPS weakness and relative silence doesn’t bode particularly well. We’ll see.
Regional politics
Argentina: Job losses in mining under Macri
According to Argentina’s INDEC stats office in its update of Thursday July 14th (9) the mining
sector in Argentina lost 1,261 jobs in the first quarter of 2016. This was the quarter in which
the mining export tax was revoked under the promise that such a move would create more
jobs, so unsurprisingly the anti-Macri (pro-CFK) side of Argentina politics has jumped on these
new figures as proff that Macri’s austerity programs are doing more harm than good (even
though it’s way too early to judge such things in a sector like mining).
Argentina: Employees in "Mines and Quarries" sector
80000
70000 69101 68747 68153 67436 66175
60000 55555 55829 56144 57035 57947 59104 61059 62559
50000
40000
30000
20000
10000
0
1q13 2q13 3q13 4q13 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16
source: INDEC
Chile: Barrick and Pascua Lama again (plus a side of Zaldivar)
Barrick hasn’t given up on Pascus Lama, as witnessed by the interview(s) given by ABX’s
president Kelvin Dushnisky last week in Chile when he stated that the company is now looking
at diferent ways to develop the project, including a staged growth idea with a smaller, open pit
to start things off and provide cash flow, or an underground operation on the Argentina side
20

,
only (which is very silly idea, as only 25% of the deposit is in Argentina and if Chile digs in its
heels ABX is stuck bigtime), as well as bringing forward the plans for an on-site refinery to add
value to the end product.
In other news, Kelvin Dushnisky also stated (10) that ABX was looking to sell its remaining 50%
in the Zaldívar copper mine, also in Chile (and next to the La Escondida mine), as it’s a non-
core asset and the cash raised would help drop its debt load further. This sounds more likely as
an immediate-term plan (even though Dushnisky was at pains to say there was no deal on the
table right at this moment), because ABX already has form on this matter having sold its first
50% to Antofagasta (ANTO.l) in 2015 for U$1Bn. ANTO is also the likeliest buyer, but I’d expect
ABX will be fishing for more than the straight billion this time.
Ecuador: Fruta Del Norte semi-approved
To pomp and fanfare, the Lundin Gold (LUG.to) Fruta del Norte (FDN) gold Project got its
licence approved and changed from “exploration” to “exploitation” by the government of
Ecuador on Wednesday June 13th , an event reported by the company this way (11) in the 14th:
Lundin Gold Inc. is pleased to announce that the Phase Change Application (the
"PCA") in respect of its 100% owned La Zarza concession, which is host to the Fruta
del Norte Project ("FDN" or the "Project"), has been approved by the Government of
Ecuador. With this approval, the La Zarza concession moves from the exploration
phase to the exploitation phase under Ecuador's mining law and permits Aurelian
Ecuador S.A., the Company's wholly owned subsidiary, to enter into the Exploitation
Agreement with the Government of Ecuador and to proceed with its plans to develop
the Project.
Though the market didn’t react at all because it was fully baked-in news and the only other
alternative would have sent it plummeting. And that was never going to happen, what with LUG
and Correa/Cordova now BFFs.
However, it’s not over on the permitting stakes at FDN, no matter what the headlines might
have you believe. What FDN/LUG needs to do now is be awarded the “Exploitation Contract”
and that’s going to be the most interesting document of the lot. That’s because:
1) The contract needs to be agreed in a maximum of six months from last Wednesday, whici
means the clock is now ticking.
2) It cannot be awarded until other key permits, such as its Environmental Impact Permit (EIA),
is granted.
3) It estabishes the terms, conditions and limit dates for the start of construction, the build-out,
the mining of FDN, transport and sale of the metal products.
4) It’s a material contract, so we the public will finally get to see the nitty-gritty detail of what
LUG has signed onto, instead of the corporate presentation versions they prefer
In other words, last week’s news was a given, it’s the next permit NR that has the big staff.
Peru: PPK’s ministers
The names of the 19 cabinet ministers of the new Pedro Pablo Kuczynski (PPK) administration
were offically unveiled on Friday evening (12) (while you were watching scenes from Turkey on
CNN) which brought to an end speculation, rumours and leaks about the people chosen by the
President elect (he gets the job on July 28th). I’m not doing all 19 names here, just a quick
word on the six that matter to us on the outside looking in at Peru and its mining industry.
1. Prime Minister and Cabinet Chief, Fernando Zavala: At 46 years old he’s younger than
the average politico at the top of the tree in Peru, but he has plenty of experience having been
Economy Minister under Alejandro Toledo when just 34 years old, back in 2005 and 2006. Since
then he’s been in the private sector and comes from the top job at Peru’s biggest brewery, the
very well regarded Backus. Zavala is a friend and close colleague of PPK, they’ve worked
together on many occasions and see eye to eye on economic matters. He’s also a respected
21

,
figure across the Peru political spectrum, including the sane majority in the Fujimoristas party
Fuerza Popular. A good choice for PM and should do well.
2. Minister of Economy and Finances, Alfredo Thorne: This one was pre-announced a
few weeks ago and we’ve already covered his biog in previous editions, but as he’s a key
member of the new government he gets an extra word here. A classic, orthodox economist, we
can fully expect him to continue the current economic and fiscal policies that have seen Peru
grow in the last 15 years. There’s more in previous editions of the Weekly if you care enough.
3. Minister of Energy and Mining, Gonzalo Tamayo: The appointment of Tamayo has
been widely rumoured and expected for a couple of weeks, Friday saw confirmation. Gonzalo
Tamayo is an economist and comes to the government from his company, economics
consultancy group ‘Macroconsult’ (which just happens to have its offices in the same office
building as Minera IRL, whether that’s interesting or not).
The interesting wrinkle here is that Tamayo is more “Energy” than “Mining”, his speciality is the
fuel and power industries (electricity generation,/transmaission, O&G) and although he’ll have a
good knowledge of hard rock mining he’s no specialist. We can therefore expect that the person
chosen as his Vice-Minister of Mines (currently Guillermo Shinno, who by all accounts is on his
way out) will become a powerful player in the country’s mining sector.
4. Interior Minister, Carlos Basombrío: One of the most interesting appointments made by
PPK, Basombrío has moved from newspaper columnist to the person in charge of country order
and security but he’s not just a journalist with an opinion as this English language biog from the
Wison Center shows (it’s a good overview and saves my time (13)):
Carlos Basombrío is a Peruvian sociologist and journalist. He works as an independent
researcher and consultant for Peruvian and international organizations. He writes a bi-
weekly column at Peru 21, a Peruvian leading newspaper, where he has served as
Press Ombudsman since 2015. He is the consulting director of the Woodrow Wilson
Center Latin American Program citizen security project. He is the author of several
books and essays on human rights, democracy, civil military relations, police reform
and citizens security
Basombrío has been a member of the Instituto de Defensa Legal (1986- 2001), one of
the most important Peruvian NGO and has served three times as its general director.
He was also a fellow at the Woodrow Wilson Center (1994-1995).
From 2001 and 2004 he served in the Ministry of Interior in several positions: Vice
Minister, Chief of Cabinet of the Minister, coordinator of the Police Reform Commission
and member of the Police Modernization Commission.
If your Spanish is up to it and you want more, here’s a link (14) to the aforementioned columns
written by our new Interior Minister. In a nutshell he’s pro-law and order, anti “army on
streets”, clear corruption and narco-money is the main plague in the political echelons of Peru.
5. Minister of Transport and Communications, Martín Vizcarra: Not a job that directly
affects the mining world, but Vizcarra gets a mention because he’s also PPK’s Vice-President
and as mentioned in previous editions of the Weekly, has plenty of positive experience with
mining projects and how to reach good results from community relations negotiations. Seeing
him get a ministerial job on top of his Veep role means there’s another smart mining brain at
cabinet level. That’s good.
6. Environment Minister, Elsa Galarza: This post is always a potential problem for the
mining industry whatever country we’re considering, so the good news to convey here is that
Elsa Galarza is not one of the ultra-green treehugging type of enviro ministers. She comes to
the post from Lima’s Pacific University where she’s worked as a director of its Investigations
Centre for many years and by all accounts, she’s practical and real-world about the
environmental issues facing the country. A personal friend of mine worked with her for several
years and likes her, calling her practical and undogmatic.
22

,
Bottom line: Summing up, we still need to keep an eye on the as-yet unannounced new Vice-
Minister of Mines, but overall the latest round of political news from Peru is good and PPK has
put in place the type of cabinet that should offer a continuation of the current economic and
political policies we’ve seen these last few years. For sure there will be tweaking round the
edges and insdie the country there will be more noticeable changes, but for those looking in
from the outside the bottom line is “business as usual”. No news is good news.
Dominican Republic: New mining regulations in place
On Wednesday I picked up on a local news report (15) that was clearly a pro-government puff
piece but still made some good and positive points about the state of the country’s mining
industry. It noted that between May 2015 and June 2016 the Ministry of Energy and Mines in
Dom Rep had emitted 44 different administrative resolutions regarding exploration and
operation of mining concessions, as well as establishing seven new protocols which together
have established clear rules in the sector. The rulemaking has cleared up grey areas in the
granting and potential confiscation of concessions as well as efforts to make mining more
responsible environmentally and socially. In the period the MEM has granted 21 new
concessions under the new rules and denied three concession petitions.
Although it’s difficult to get a true pulse from a pro-government piece such as this, those hard
facts point to a government that’s getting its act together as regards mining.
Nicaragua: The November Presidential election
I haven’t mentioned this upcoming election yet, which although not pressing was a bit of a
lapse in the Regional Risk Review of IKN373 so let’s run a few words today. Basically, Daniel
Ortega has sewn up the “democratic” election in Nica so tightly that he’s bound to win. First in
2014 managed to push through a constitutional change that allows him to run yet again (there
is now a limitless number of five year terms up for grabs). Come election day he will have been
in power for nearly ten years. But the main move this time next this year he used some very
clever tricks (that I won’t go into, it’s complicated and I only know the bare bones story myself)
in the Supreme Court (judges firmly under his control) to bar the main opposition PLI party
from running its candidate. This means in effect that Ortega and the Sandinista Party is up
against its main opposition from an
unpopular right wing party
candidate that doesn’t stand a
chance and with Ortega needing
just 40% of the popular vote for a
win in round one, this “democratic”
election is over before it starts.
That’s not such a bad thing for the
mining industry in Nica of course,
Ortega has done a good job of
putting the country on the “miner-
friendly” map and the 2009 crisis
year apart, the country has enjoyed
reasonable and sustained growth under his ten year (and counting) management (see GDP
chart here, we average 5% per annum). And for what it’s worth on a personal level I’m not
against the Voltairian ideal of enlightened absolutism, we’ve seen in LatAm States such as
Bolivia, Ecuador and Nicaragua that a well-meaning leader can take a quasi-dictatorial position
and still do well for his country over the long term. But debates on the pros and cons of
democracy are for another day and if you’re after free, fair and open elections you’re better off
looking somehere else than Nicaragua this November.
23

,
Market Watching
Golden Predator (GPY.v): A pump in the making?
I’ll tell you what I know, no more and no less.
This started because of the IKN blog post on that Byron King mix-up of last week (16) where
the Agora people decided to tell the world that the 100+oz gold bar he was holding in a photo
used in his hyped-up pump for Victoria Gold (VIT.v) was from the VIT “Gold Eagle” (sic, it’s
really ‘Eagle Gold’) mine project. It wasn’t, it was from the nearby 3Aces mine owned by Golden
Predator (GPY.v) and Mr. King got another deserved helping of huevo delivered to his self-
important cara.
Okay and enough about that (and to be 100% clear while we’re here, VIT.v is a horribly
overpriced junior that’s been pumped to the rafters by all the usual suspects and done for the
amusement and profit of large New York based money, definitely not for me and just another
TSXV accident waiting to happen). The reason for this segment is GPY.v and information landed
on this desk last week from a source that will not be named but is close to the story (as they
say). A handful of bullet points for your consideration:
• The gossip is right here in bullet point one: I learned late last week that GPY is really
starting to talk up its 3Aces thing. Its recent gold pour at the project is one thing, the
real word from 3Aces is that the company is framing it as site of a potentially massive,
game-changing discovery. The type of exploration program GPY is now putting together
is the type that takes years and costs multi-millions to execute and thanks to its now-
closing placement, it has the money to do what it wants. I like the name too, it has that
“Hey lookie, I won me a gold mine in a card game” feel, nicely Yukonesque.
• GPY went through some very lean times in the 2014-2015 period and was basically a
10c stock that didn’t get much buying because everyone thought it was either going
bankrupt or would be broken up into tiny pieces, but somehow it survived and it’s been
on one nosebleeder of a run recently, up 9X on high volumes to this weekend’s 89c.
• We know that GPY head man William (Bill) Sherriff is renowned as an aggressive
promoter and marketer of his stock(s). He’s also a man that’s rubbed people up the
wrong way in his time and has been (rightly) accused of over-hype. That needs to be
taken into account in today’s GPY, but we also know that Eric Sprott took a large $7.3m
chunk of the 19.55m unit placement at 73c that’s about to close. That’s more than
interesting.
• We also note that this so-called early stage development project managed to neatly
time a 100oz gold pour for the week that a whole bunch of newsletter writers and anal
ysts were doing a multi-stop tour of Yukon mining projects. From a bulk sample, taken
from a project with no resource. Hmmm.....
• With 73.05m shares out (pro-forma on the nearly closed placement) and a stock price
of 89c this weekend, GPY’s market cap is $65m and that’s not a bargain for an
exploreco but if the hype starts, we’ve already seen companies with...errrr...
”speculative assets”...demand far higher prices.
• We should also note that GPY has a history of moving fast on big volume when things
start to roll its way. Consider this long-term chart as ample evidence.
24

,
And that’s it, all I know. Basically it boils down to:
1) Mark’s heard some juicy gossip on an exploreco
2) The company in question has a track record of being a hype machine
3) Big money and interesting names have just got on board, there’s a large development
program in the pipeline that will feed newsflow all through the bull gold run.
4) Add in that recent gold pour (to a select audience of confirmed pump artists) and it all
smacks of a promo pump in the making, whether or not 3Aces is the next Red Lake.
Finally, be 100% clear that I am NOT a buyer of this stock today or in the near future. It’s not
my style, it’s not my geographical area of expertise (a thousand market mouths know more
about The Yukon than I do, maybe ten thousand) I don’t know enough about GPY (yet) and
even though my source is legit and trustworthy it’s all new to me and I only stumbled across it
by semi-accident after running a blog post on a different subject. But I think there’s enough
substance to write up the hearsay and rumour today in the Weekly, you’re all big boys and girls
and can decide whether you just ignore my salacious gossip, or add it to things you may have
heard, or potentially make it the start of your own DD.
Dalradian Resources (DNA.to) short redux
After the piece in IKM374 last week that noted the regulatory filing out of Sprott and its recent
selling, it would be remiss of me not to
mention, at least in passing, the heavy selling
action we saw in DNA in the last five days of
trading. That’s a change of hands at a major
league scale and without share price
improvement it has to be considered a prima
facie bearish signal for the stock. However, as
noted on the blog yesterday (17) for every
seller there’s a buyer and large blocks don’t
get willing takers without there being
confidence behind the decision. Overall, still a
fight in which I’m more comfortable watching
than participating. No position in DNA.
Episode three of “What I’d buy now”
This is the third time we’ve run this segment, with the first edition coming in IKN369, and then
the second four weeks ago in IKN372. For those of you just joining us, in essence it’s a way to
convey “what I like now” in my own portfolio, considering the state of the market, the company
particulars and their shares prices at that point and the rules of the game are these:
1) You give me $50,000. We assume flat forex during the time period.
25

,
2) You tell me I have to invest every dollar in currently open IKN Weekly stock p.icks
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.
In the first episode (IKN369 to IKN372) I managed to change my $50k into $58,003. We then
changed the picks and started again in IKN372, so here we are four weeks later to see how
things turned out
Mark spends $50,000 in IKN372 Mark's $50k in IKN375
company ticker current PPS amount invested PPS today position value
Wesdome WDO.to C$2.04 8000 C$2.02 7922
Tinka Res TK.v C$0.23 7000 C$0.23 7000
Starcore Intl SAM.to C$0.80 6000 C$0.80 6000
HudBay Short HBM U$4.60 5000 U$5.45 4076
Sandstorm Gold SAND U$4.83 5000 U$5.18 5362
Regulus Res REG.v C$1.25 5000 C$1.29 5160
Continental Gold CNL.to C$3.34 5000 C$3.64 5449
B2Gold BTO.to C$3.12 5000 C$3.83 6138
Lara Expl. LRA.v C$0.98 2000 C$1.42 2898
INV Metals INV.to C$0.52 2000 C$0.85 3269
Focus Ventures FCV.v C$0.08 0 C$0.105 0
Total 50000 NEW TOTAL--> $53,274
The bottom line: The $50k is now $53,274 and we made another profit. However there was a
big oser on the list this time, the near $1k lost in the HudBay (HBM) short. We should also tip
our hat to lucky luck because if it weren’t for the Thursday/Friday rally in INV Metals things
would have looked a lot worse.
But still, two wins out of two so far and so it’s time to re-set the list. This time there are 12
stocks because RRI.v and MAD.v have joined, but I’ve left out INV.to because I’m about to
close it in the week ahead. Therefore after due consideration this is how I’ve decided to spread
around the $50k, with sights set on the result edition in IKN379:
Mark spends $50,000 in IKN375
company ticker current PPS amount I'd invest today
Wesdome WDO.to C$2.02 8000
Tinka Res TK.v C$0.23 7000
Starcore Intl SAM.to C$0.80 6000
Riverside Res RRI.v C$0.415 5000
HudBay Short HBM U$5.45 5000
Sandstorm Gold SAND U$5.18 3000
Regulus Res REG.v C$1.29 2000
Continental Gold CNL.to C$3.64 5000
B2Gold BTO.to C$3.83 4000
Lara Expl. LRA.v C$1.42 2000
Miranda Gold MAD.v C$0.13 1000
Focus Ventures FCV.v C$0.105 2000
Total 50000
As for notes on the new list, WDO gets the biggest amount because I think we’re now in the
potential deal period between it and KGI. I’m looking for TK.v to finally catch the zinc metal
price wind as that goes and stays above U$1.00/lb...what could posibly go wrong? SAM at 80c
looks cheap, it wouldn’t take much to get this one over $1. Down at the bottom I’ve trimmed
the B2Gold size because of its run-up, basically. REG too, because it’s going to be under the
weight of its financing. MAD.v gets a small $1k because it can’t take much weighting in real life
26

,
and I’d like to keep it real. And Focus (FCV.v) gets some virtual cash assigned for the first time,
the debt deal reached last week is good news and it might be able to catch a bid or three at
last. We’ll come back and see how things have got on in four weeks’ time.
Asanko Gold (AKG): Final reminder
AKG gives us its 2q16 production numbers and that hastily convened Conference Call to discuss
them on Wednesday 20th July at 9am EST (18). Here’s the link to the webcast (19), one that’s
worth tuning into for the potential fireworks on the Q&A session afterwards. A person at K2
Associates contacted me last week and said they would be on the call and looking to ask
questions, it remains to be seen if “the queue of questions is too long and some people don’t
get to ask theirs” but if K2 gets to the mike, hilarity may ensue.
Orla Mining (OLA.v-H): An update
Last week we featured this shell stock as one to watch, in the five trading days between then
and now it jumped a cool 40% to finish the week
at 70c. Indeed something is brewing and as I
revealed last week on the blog (20) in that small
scoop post (that got hits from many places,
notably including Agnico Eagle and Franco
Nevada...I wonder why?) we now know that OLA
has been in discussions with Pershimco Resources
(PRO.v) regarding its Cerro quema project in
Panama. That would imply that OLA isn’t going to
run with its current ‘project of interest’, Blue
Quartz, as the company flagship because even if
OLA doesn’t get Cerro Quema it’s clear they’re
looking around for something else.
As for Cerro Quema, I don’t know whether OLA will secure a deal (the people running PRO are
notoriously difficult to deal with, info received on several prevous occasions) and there’s also a
country risk angle to the project, as for one thing Panama currently has a de facto moratorium
on the issuance of new permits and the current Cerro Quema concession lapses in April 2017.
Then there’s the iffy state of community relations around that particular project, things have
been bad for quite a while and any new team coming in would have to work hard to turn things
around, even then it’s debatable as to the chances of success.
What to make of all this OLA thing? I don’t know and I’m no buying shares and getting involved
(yet), but what’s clear is that a market that couldn’t move a gold junior to save its life last year
now sees shell companies jump 40% on rumours. Sic transit gloria mundi**.
Conclusion
IKN375 is done, we end with bullet points:
• B2Gold (BTO.to) (BTG) is confirmed as a Top Pick, with a 2016 that looks good, 2017
that looks better and one of these days somebody’s going to pay a big premium to add
it to their big gold company. It’d fit Newmont the best, I think.
• I expect gold to bounce between U$1,300/oz and U$1,350/oz for a while, but the gold
stocks will be just fine and the good ones will do well.
• I’ve taken a piece of the upcoming pump in MAD.v, but GPY.v is for somebody else. All
the same, the info is there and you can do what you want with it.
• It’d be great to see FCV rally a bit. Pass the rosary.
• Buy. Hold. Win. Except for INV Metals, which goes this week.
27

,
I thank you in advance for any feedback. Our Top Pick stocks are Regulus (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
*No, the Greek cheese is not a side order
**No, Gloria did not vomit on a bus last Monday.
Footnotes, appendices, references, disclaimer
(1)https://nftrh.com/
(2) https://www.theguardian.com/uk-news/2016/jul/15/theresa-may-nicola-sturgeon-holyrood-article-50-decision
(3) http://finance.yahoo.com/news/b2gold-corp-achieves-record-second-140513127.html
(4) http://finance.yahoo.com/news/inv-metals-announces-robust-preliminary-100000489.html
(5) http://finance.yahoo.com/news/exploration-drilling-commences-starcores-toiyabe-090000454.html
(6)http://www.marketwired.com/press-release/focus-to-extend-credit-facility-tsx-venture-fcv-2142626.htm
(7) http://incakolanews.blogspot.pe/2016/07/tony-makuchs-first-job-at-kirkand-lake.html
(8) http://www.reuters.com/article/us-chile-china-copper-idUSKCN0ZV064
(9) http://www.indec.gov.ar/uploads/informesdeprensa/erl_07_16.pdf
(10) http://www.aminera.com/2016/07/15/barrick-ve-traspasar-activos-no-esenciales-venderia-50-minera-zaldivar/
(11) http://www.cronica.com.ec/informacion/zamora/item/14070-aprobaron-inicio-de-fase-de-explotacion-de-fruta-del-
norte
(12) http://elcomercio.pe/politica/gobierno/gabinete-ministerial-ppk-estos-son-ministros-gobierno-noticia-
1916847?flsm=1
(13) https://www.wilsoncenter.org/person/carlos-basombr%C3%ADo-0
(14) http://peru21.pe/noticias-de-columna-carlos-basombrio-4657
(15) http://diariodigital.com.do/2016/07/13/energia-minas-presenta-resultados-regulatorios/
(16) http://incakolanews.blogspot.pe/2016/07/getting-your-basic-facts-wrong-while.html
(17) http://incakolanews.blogspot.pe/2016/07/the-top-three-most-visited-ikn-posts_16.html
(18) http://finance.yahoo.com/news/asanko-gold-conference-call-details-155451705.html
(19) https://cc.callinfo.com/r/14pene9goso8h&eom
(20) http://incakolanews.blogspot.pe/2016/07/since-ikn-weekly-published-on-orla.html
Appendix 1: Flash update dated Thursday July 14th 2016
Good Thursday afternoon, 1:30pm local time, an hour and a half left in the Thursday session. As news has been
mounting up and today's generally red market offers an opportunity to add, here are thoughts on four covered stocks.
Adding to Tinka Resources (TK.v): We've seen moderate selling in TK this week and it's currently at-or-round 20c.
That's a good level for me to add to my current position without bumping up the personal cost average and I'm going to
take it. The company is in good shape, executing on plans as per, Zinc metals prices are nearly at $1.00/lb and this
stock is getting no credit for that move yet. A good opportunity here, I'm going to take it and add more to my position,
hopefully at 19.5c.
Starcore (SAM.to): If SAM goes lower than its current 76c to 79c on the gold retrace and new near-term negativity, I'll
add to this position as well. Spike-down selling is what I'm looking for as if somebody decides to throw in the towel, a
real deep bargain may show up today or tomorrow.
INV Metals (INV.to): We got the updated pre-feas from INV this morning and the stock has reacted nicely to the news.
I'm still looking to exit on this news window, though not today. Perhaps seeing 70c tomorrow will be enough for me to
sell, if not I think we'll also see good volume and the liquidity window extend into next week. More on INV in IKN375 this
weekend
28

,
Focus Ventures (FCV.v): Good news from this company today as well, FCV has nailed down a debt extension deal with
lenders Sprott that boots principal payment three years down the line. The cost of the deal is relatively light. Again, more
on Sunday.
Stocks To Follow Closed Positions 2015
Closed in 2015 closed close price
Argonaut Gold AR.to jan'15 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'15 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'15 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'15 C$0.075 26-jan-14 C$0.035 -53.3% sm, sold on Cu downturn
Fortuna Silver FSM mar'15 U$4.12 10-nov-14 U$3.75 9.0% Short used as hedge
GoldQuest Min. GQC.v mar'15 C$0.26 27-oct-13 C$0.085 -67.3% given up ghost
Rio Alto Mining RIO.to apr'15 C$2.30 07-apr-11 C$3.57 55.2% Top pick, bot out, big win
Timmins Gold TGD jun'15 U$0.60 19-apr-15 U$0.62 3.3% near-term trade, out of time
First Majestic AG jul'15 U$10.51 10-aug-14 U$4.55 56.7% horrible failed trade
NovaCopper NCQ.to jul'15 C$1.05 09-apr-14 C$0.50 -52.4% no more Cu exposure, sm sell
McEwen Mining MUX aug'15 U$0.695 21-jul-15 U$0.92 32.4% Closed nearterm flip for win
Midas Gold MAX.to sep'15 C$0.39 21-sep-15 C$0.35 -10.3% Sm. trade idea that didn't work
New Gold NGD oct'15 U$2.18 23-aug-15 U$3.05 39.9% trade closed, profit taken
Legend Gold LGN.v nov'15 C$0.085 01-mar-15 C$0.035 -58.8% tiny "land grab" idea, failed
Timmins Gold TGD nov'15 U$0.245 20-sep-15 U$0.15 -38.8% small near-term loser
Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dec-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
Network Expl. NET.v feb'14 C$0.01 22-jul-12 C$0.005 -50.0% position closed, did nothing
Tahoe Resources TAHO feb'14 U$13.10 08-apr-13 U$21.72 -65.8% short closed due to reality
Darwin Res DAR.v mar'14 C$0.10 14-jul-12 C$0.045 -55.0% tiny risk play dropped
B2Gold BTO.to mar'14 C$3.07 28-nov-12 C$3.35 9.1% closed to free up capital
Pretium Res PVG mar'14 U$5.38 22-nov-13 U$6.50 -20.8% short closed as port longer
Gold Res Corp GORO may'14 U$5.07 26-jan-14 U$4.12 16.7% took profit
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Took profit, sm near-term win
Eco Oro Min. EOM.to aug'14 C$0.48 22-sep-13 C$0.26 -45.8% sold small loser to make room
True Gold TGM.v sep'14 C$0.395 02-feb-14 C$0.41 3.8% M&A won't happen, sold
Santacruz Silver SCZ.v sep'14 C$1.04 26-jan-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-apr-14 U$0.99 -28.3% failed trade, sell, raise cash
Kinross Gold KGC nov'14 U$2.90 20-oct-14 U$2.15 -25.9% V small trade, didn't work, chau
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.145 -48.2% lost China sponsor
Stocks To Follow Closed Positions 2013
Closed in 2013 closed close price
USA Graphite USGT feb'13 U$0.93 08-jan-13 U$0.17 81.7% short tgt made/trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
United Silver USC.to mar'13 C$0.21 28-oct-12 C$0.095 -54.8% small Ag sector trade, failed
Aurcana Corp AUN.v apr'13 C$1.07 11-nov-12 C$0.55 -48.6% closed on poor YE results
Gold Res Corp GORO apr'13 U$14.11 25-jan-13 U$9.38 33.5% short tgt made/trade closed
Marlin Gold MLN.v apr'13 C$0.075 10-feb-13 C$0.065 -13.3% closed trade
Bear Creek BCM.v may'13 C$2.58 01-apr-13 C$2.40 -7.0% near-term, time ran out
Lupaka Gold LPK.to may'13 C$1.12 23-oct-11 C$0.32 -71.4% towel thrown in
Tahoe Resources TAHO may'13 U$18.62 08-apr-13 U$14.70 21.1% took profit on ST short
OceanaGold OGC.to jun'13 C$3.03 16-sep-12 C$1.18 -61.1% sold on gold drop
IMPACT Silver IPT.v jun'13 C$1.14 13-jan-13 C$0.62 -45.6% sold on silver drop
Duran Ventures DRV.v jun'13 C$0.045 10-may-13 C$0.025 -44.4% ST trade never worked
Plata Latina PLA.v jun'13 C$0.79 10-apr-12 C$0.13 -83.5% closed
29

,
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
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
30

,
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
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.
31