IKN #376Premium

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The IKN Weekly
Week 376, July 24th 2016
Contents
This Week: Trade heads up (and a heads up for next weekend), In today’s issue, Things next
week, The metal is leading the miners.
Fundamental Analysis: NOBS fundamentals report on Atico Mining (ATY.v).
Stocks to Follow: Overview, INV Metals (INV.to), Starcore Intl (SAM.to), Riverside Resources
(RRI.v), Continental Gold (CNL.to), Focus Ventures (FCV.v), Tinka Resources (TK.v), B2Gold
(BTG) (BTO.to), Wesdome Gold Mines (WDO.to), Miranda Gold (MAD.v), Sandstorm Gold
(SAND) (SSL.to), HudBay Minerals (HBM) (HBM.to).
Copper Basket: Overview, Western Copper & Gold (WRN.to), NGEx Resources (NGQ.to).
Low Cost Producer Basket: Overview, Newmont (NEM), Agnico Eagle (AEM).
Regional Politics: Peru: PPK’s inauguration, Peru: Ollanta leaving the economy in good shape
thanks to mining, Ecuador: “The time is right”, Ecuador: Chile visits, Mexico: Anti-mining
propaganda.
Market Watching: Wesdome Gold Mines (WDO.to) 2q16 production numbers, Miranda Gold
(MAD.v) files its 3q16 financial results, Tahoe Resources (TAHO) (THO.to) has a Guatemala
permit problem. Really.
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 (and a heads up for next weekend)
In normal style, a quick word here at the top on a new trade decision: I’m going to buy some
Atico Mining (ATY.v) next week. Full details on that in today’s main event, the NOBS report on
ATY in the fundies section.
As for next week and IKN377, next Monday August 1st is a market holiday in Canada (though
not in the USA). I haven’t decided yet, but for personal reasons may take an extra day to
deliver IKN377 so if it doesn’t hit your mailbox Sunday evening don’t worry, it’ll come Monday.
In today’s issue
• I’ve been meaning to take a better look at Atico Mining (ATY.v) for a while and the
responses from the semi-throwaway line last week got me off my lazy butt. Good thing.
• The trade in INV Metals worked out well and is now closed. Some of that cash is now in
more Starcore (SAM.to) shares, that one also playing ball and offering a discount entry
window last week at just the right time. ATY gets some of that cash next week too,
plus I still want some cheapies in Riverside if the market is willing.
• Last week gold behaved itself and bounced around inside the expected range. There
are quite a few potential external reasons to see it moved around in the week ahead
too, not least an FOMC that won’t move the headline rate but may move markets on its
1

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fineprint wording
Things next week
Events of note in the next few days.
• The Democrats have their conference, in which the losing primary candidate will do a
much better job of endorsing the winner than the Republicans managed. By the way
I’m not saying that Donald Trump can’t win in November, I think it’s perfectly possible.
However I am saying that if he does it will be the anti-vote for the ages and he’ll win in
spite of the establishment GOP, not because of it.
• The Fed meets, with the FOMC Tuesday and Wednesday and the announcement the
usual time slot Wednesday, you know the routine. That Janet & Co won’t touch the
rates is this month’s easiest macro prediction, therefore all eyes on the wording and
any changes in tone. One thing to look out for is any comment on Brexit and how the
Fed is accommodating that recent external shock, because even though the market has
baked it all in to its satisfaction and has no more Brexit Fear (!!!), the deeper rhythms
of the macroeconomy may be addressed. For those of you looking to trade around the
FOMC keep your eye on Calculated Risk (1) or your preferred independent US biz
medium on the day.
• The Sprott Natural Resource Symposium happens from Tuesday 26th to Friday 29th, a
long four day conference on all things mining (or five days if you include the “pre-event
tomorrow Monday, a trip to Grouse Moutain sponsored by Riverside Resources (RRI.v)).
The Sprott people have pulled in plenty of the “usual suspect” speakers from Agora,
Stansberry/Casey Research and suchlike (bless em), but there are also famous and
willing CEO-level speakers such as Rob McEwen, Robert Quartermain and Robert
Friedland lined up (the “friends of Rick” brigade) plus plenty of workshops and events
(the Brent Cook prospect generator panel stands out, “Insights into the Business of
Exploration” featuring Morgan Poliquin of Almaden Minerals, Christopher MacIntyre of
Lara Exploration, Stephen Nano, President Mirasol and John-Mark Staude, President of
Riverside). Overall the Sprott party is big enough to expect the four days to generate
third party newsflow and noise.
All those and more.
The metal is leading the miners
In last weekend’s edition IKN375, we noted that during that week’s market action, “...(t)he 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 gold bullion had stuck in a drop but the
overlying mining stocks had held out better.
This week gold dropped again, but even though
the loss was much smaller the effect on the
mining stocks was greatly amplified. In the last
five trading days the main gold ETF, GLD,
moved down by a small 0.4% but in the same
period the precious metals miner ETF, GDX,
was down 3.7% and the juniors ETF, GDXJ,
dropped by a weighty 6.1%.
There’s an ongoing debate which can seem
chicken-and-eggy at times, whether the metal
leads the miner or otherwise. The debate exists
at two main levels as well, so let’s be clear that
the sweeping, philosophical, macro level isn’t the one being addressed in this short opener. This
is the near-term sentiment position and it’s one that can and does change, so while there are
2

,
times that the miners will move and we then see its effect in the metal, at the moment it’s clear
that gold is setting the pace and the mining companies are behind its curve.
That may be a good thing for next week. As this ten day chart of gold versus the XAU index
shows, the miners had no problem
bouncing off weakness the week before GLD gold holdings, Brexit vote to date (metric tonnes)
last, but the straw that broke the camel’s 1000
990
back was last Wednesday, when gold
980
couldn’t hold U$1,325/oz and dropped 970
960
another U$10 to U$1,315. We also note
950
that GLD inventories hardly budged last 940
930
week (in fact they added a small net
920
amount on the week), which suggests the 910
last tranche of speculative money has been 900
890
blown off and we’re back with tighter hands 880
in the metal. If so, gold is consolidating at
this new level ($1,300/oz to $1.350/oz and
that will allow the miners to catch back up.
And all that is a long-winded way of saying “In the week to come I expect the mining stocks to
recover from their losses of the week just gone”. Intro over, time to do numbers.
Fundamental Analysis of Mining Stocks
Today we look at Atico Mining (ATY.v).
NOBS report dated July 24th, 2016
Atico Mining Corp. (ATY.v)
Company Overview
Atico Mining Corp. (Canada: ATY.v, USA otc: ATCMF Frankfurt 9AO.f) is a junior mining
company operating in Colombia. Its flagship is its 90% ownership of the operating ‘El Roble’
copper/gold mine, 150km South of the city of Medellin. Current share structure is as follows:
Shares out: 97.592m
Options: 7.886m
Warrants: zero
Fully diluted shares: 105.478m
Current share price: C$0.44
Market Cap: C$42.94m
Approx working cap per S/O: C$0.02
All prices are in US Dollars unless stated. Forex U$0.80=CAD$1
NB: As Atico reports in US Dollars, we stick to that as our default currency today.
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 61/81/7 61/91/7 61/02/7 61/12/7 61/22/7
mt
source: SPDR GLD data

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Overview
In last week’s edition, IKN375 dated July 17th I wrote one short paragraph on ATY in the Copper
Basket section. It wasn’t much, almost an afterthought in fact but it was also true and here’s
what I wrote:
“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.”
One of the nice things about the Weekly is the interaction I get from you people and it often
comes from quarters that I least expect. Such was the case last week and the handful of mails
that, paraphrasing and lumping together, all said “I’d like to see a real look at Atico in the
Weekly”, or “ATY more please” and “Yes, I think it’s cheap too! Have a closer look”. That kind of
response is the type to snap me out of torpor and that’s why this week’s NOBS report exists
(and by the way, for those just joining us, NOBS = No BS).
This closer look was overdue because on some levels what I found is what I expected, i.e. a
nicely run but small copper/gold mine in Colombia. But there were surprises as my ignorance on
the stock was revealed, particularly on the real reason the stock has been lagging. This
company is a puzzle for a financial numbercruncher to tackle, it’s about a weak balance sheet
that may or may not get better, it’s about cash flows and whether they’re enough to get the
company through the next and important two quarters in its current structure, it’s about the real
revenues mix and not the one that’s suggested in news releases.
In other words this stock story is right up my street and I should have been paying better
attention. Best of all, after running the numbers I’ve convinced myself there’s a trade here.
Management and shareholders
ATY is run by the Ganoza family of Fortuna Silver (FVI.to) (FSM) fame, with Fernando Ganoza
the CEO, the FVI CEO Jorge A. Ganoza as ATY chairman and the family patriarch Jorge R
Ganoza as president and director. Another director is the FVI CFO, Luis Ganoza. They also
have other familiar Fortuna/Gold Group names on board such as Thomas Kelly and Mario
Szotlender. In the Ganoza family ATY benefits from proven and franked ability to do mining and
run a mining company at a profit. The Ganozas have plenty of skin in this game, with Jorge R.
Ganoza owning 3.378m shares, Jorge A. Ganoza owning 3.799m shares and Luis Ganoza
owning 3.823m shares. Add in the 1.986m shares owned by Szotlender and that’s 13.3% of
shares out held between those four alone. Total founding group holdings come to around 18%
or shares out and on top of that, most of the options are performance related issues for officers.
Away from insiders and officers, the biggest single holder of ATY stock is Frontdeal Limited, a
private Cyprus company wholly owned by Russian steel billionaire Alexey Mordashov. At #93
on the Forbes World’s Richest person’s list (2) and with a net worth of U$13.3Bn, I doubt he’ll
be too worried about trading his 10.9m shares of ATY worth around U$3.2m and can be
considered a tight-hand holder ☺. According to the latest corporate presentation (3) other large
insto holders include Resource Capital Funds, Geologic Resource Partners and Gold 2000.
Retail owners cover around 33% of ATY.v share ownership.
Company history and operations
The whole ball game at ATY is its 90% of the El Roble mine in Colombia, via its majority
ownership of a Colombian company named MINER. To make it simple, here’s a piece of script
from the latest 43-101 that explains all succinctly:
The El Roble project consists of mineral concessions totaling approximately 6,779 hectares from
which an underground mine and processing facility currently owned and operated by MINER
produces gold and copper from a volcanic massive sulfide (VMS) deposit near the town of
Carmen de Atrato. On November 22, 2013, Atico acquired 90% of MINER and its assets, which
include the El Roble mining concessions, exploration licenses, the El Roble underground mine,
processing facility, and ancillary facilities. The remaining 10% of the property is owned by several
private owners.
4

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So, 90% of a working mine. On top of that, El Roble pays a 4% net smelter return royalty (NSR)
on precious metals and a 3% NSR on copper to the Colombian Federal government. On the
question of infrastructure it’s an optimum situation: El Roble sits 3½ hours from big city Medellín
by paved road, it’s on the national electricity grid, water is abundant, the employee pool is deep,
security isn’t a massive issue as this is not one of the Colombia “hot” zones for terrorism or
political protesting. All these things keep down costs and you couldn’t ask for more.
Regarding production history, El Roble began as a small 30 tonnes per day (tpd) mining
operation in 1972, expanded to half to its present throughput size in 1990 but at that time only
recovered copper from its ore, then from 2004 onwards the gold became part of the revenues
mix too. ATY.v was created to take advantage of the El Roble opportunity as a new IPO and
bought into the mine in 2013 on an optioning deal added investment to the mill and exploration
success to expand the production capacity and resource. It eventually confirmed its investment
by taking up its full option and 90% ownership of the mine.
The resource
El Roble is a volcanogenic massive sulfide (VMS) copper/gold deposit (with some silver), a type
of mineralization found in many places around the world (but this is the only one in operation in
Colombia). It’s typical of its type, with several relatively small but high grading lenses of
mineralization found close to each other. The other good thing about VMS lenses is that if you
find one you’re likely to find others in reasonably predictable places close by and that’s what
ATY has managed to do since buying into the mine in 2013. If you want more about the
mineralization style, there’s the reasonable quick’n’dirty in that corporate presentation (3) and a
better description in the latest 43-101 resource report dated April 2016 and found on SEDAR.
There is no 43-101 compliant reserve at the mine, but there is a resource and this table from the
43-101 gives the current count:
As VMS deposits such as this one tend to have predictable mineralization we should be
comfortable enough with resource category only, no need for reserve numbers to feed a mill
with confidence. Now for sure there are a lot of numbers in that table, as it breaks down the
resource into the separate VMS lenses currently known as well as running the cut-off on a
copper equivalent (CuEq) basis of 0.93% CuEq. Other things too, but the bottom line to the
table is the “total measured and indicated” line close to the bottom, that’s the paydirt here and
that’s 1.87m tonnes at 3.46% copper and 2.27g/t gold, to give a total contained copper
resource of over 142m lbs. (I don’t care much about the tiny silver by-product). As ATY and its
newly expanded plant is mining that out at around 5m lbs copper per quarter, that’s seven years
of mining right there and more than enough for our purposes, especially as ATY has already
identified plenty of exploration targets that are likely to hit more mineralization.
There is a slight wrinkle to that current resource though, one we should mention. The issue is
the cut-off at 0.93% CuEq, because it assumes a price of U$2.80/lb copper. Along with the
5

,
assumption of 93.5% recovery it means the cut-off assumes a minimum sales revenue of
U$53.77 per tonne. If you reverse-engineer the numbers with copper where it is today, bouncing
around the U$2.20/lb level, the implication is that the current cut-off should be at around 1.1%
CuEq and that in turn would crimp at least some of the resource total. But for the time being it’s
only a minor problem because a) there’s a lot of good high grading material at El Roble and b)
the company can wait for copper prices to improve over the years before mining that lower
grading stuff if necessary. Bottom line for our purposes today: the resource is good and robust.
That’s the company background and overview of the mine done, we now move to the real work
and the numbercrunching. We need to do four things to get a handle on ATY the stock:
1) Consider its production schedule.
2) Move to the profit and loss, consider the financial performances it’s been posting and
will post, with particular attention to the current level of profitability.
3) Consider its balance sheet position and pay particular attention to its liabilities because
ATY has a key financial debt it needs to pay back.
4) Stick those three parts together, run the numbers and decide whether ATY can cover its
dues in 2016 because if it can without doing something else to cover its financial
obligations, this share price looks particularly cheap right now.
To understand ATY today and to decide whether there’s a trade opportunity here, those four
points are the centre of it all. So here goes:
Production
We start with the operational parameters and first up, here’s how we’’ve seen an acceleration in
throughput at El Roble as ATY has invested at
the mill and got capacity up to a nameplate mt/qtr ATY.v: Tonnages milled
800tpd. Since installing the higher capacity it’s 70000
had some glitches, mostly not of the 60000
company’s doing, but the 2q16 numbers just 50000
posted (4) show the type of run rate it’s 40000
capable of at a steady state and there’s every
30000
reason to expect quarterly throughputs such
20000
as the 64,246 tonnes of Q2 to continue.
10000
0
Next up, here below are copper and gold head
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
grades. We’ve seen gold grade drop in the last
couple of quarters, part of that due to lower source: company filings
grades coming out of the mine but part is also
a change of production schedule at the plant, with ATY preferring quicker flottion that pushes
through more tonnage at the expense of lower recoveries for the minor payable of gold. For the
record and after running the numbers, I fully agree with this move by the ATY team, it’s cost
effective to concentrate (no pun intended) on copper production at the expense of the gold.
ATY.v: Avg gold head grade (g/t) per qtr
4.00 3.60 3.70
3.50 3.12 3.14 3.00 2.65 2.81 2.63
2.43
2.50 2.21 2.20
2.00
1.50
1.00
0.50
0.00
When it comes to the 2q16 production figures, they were pretty good thanks to the higher
throughput rates. However when it comes to sales and suchlike we need to take this part of the
2q16 production NR into account:
6
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
ATY.v: Avg copper head grade (%) per qtr g/t Au
4.50
3 4 . . 5 0 0 0 3.01 3.07 3.63 3.61 2.91 3.45 3.26 3.34 3.81 3.63
3.00
2.50
2.00
1.50
1.00
0.50
0.00
source: company filings
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
% Cu
source: company filings

,
Despite having a record quarter in concentrate production, the Company only delivered one of the
two concentrate shipments scheduled for this quarter due to the national transportation union
strike in Colombia. The Company anticipates that this interruption will result in higher ending
concentrate inventory and lower sales for the quarter, as revenue from the second scheduled
shipment will be recognized in the third quarter.
A miss on sales compared to production isn’t a drastic problem, it just means that sales get
bumped into the next quarter and in the great scheme of things it evens itself out quickly. But
we need to take into account the reduced sales in Q2, because it’s going to cause a net loss for
the quarter in question. Be prepared for that.
Therefore, the rest of today’s anal ysis models the next three quarters:
• 2q16 because that’s what we have already. We assume sales at roughly half the normal
rate.
• 3q16 that produces at the same level as Q2, but the deferred sales bump up revenues
significantly.
• 4q16 that produces at the same level as Q2, with sales equal to production as things
are back to normal.
Let’s be clear, it’s unlikely to be that cut and dried simple but as far as a model goes it works. As
we’ll see later on, the current key metric at ATY isn’t whether it returns a net profit every quarter
but whether it can cover its 2016 (and 2017) debt repayment obligations.
Here’s the copper production chart which has three columns: straight production, payable
production and sales. In the end sales is what matters so that’s the set of columns in colour and
they are low for 2q16 due to the delivery hitch, peak at 6.2m lbs in 3q16 as inventory is
unwound, then stabilize at 4.5m lbs in 4q16.
ATY: Copper production and sales, per quarter
6.5
6
5.5
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
7
41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Mlbs Cu
copper prod Mlbs
payable copper Mlbs
copper sold Mlbs
source: company filings, IKN ests
Gold production follows the same pattern, sales down and then adjusted in the final quarters of
2016. We base our assumptions around 3,000/oz Au per quarter.
ATY: Gold production and sales, per quarter
6000
5000
4000
3000
2000
1000
0
41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Oz Au
gold prod oz
gold sold oz
source: company filings, IKN ests for 2q16 sales
But when you start looking, you realize how little money those gold ounces make for ATY.
Copper received prices are in line with the spot market, but when it comes to gold here’s a chart
that shows the net received price for its ounces. In 4q15 ATY received as little as U$439.25/oz
average for its gold and that only rose to U$521.92 in 1q16. Those are heavy penalties and we

,
assume it continues in the quarters to come,
with a maximum of U$600/oz as we exit 2016.
Those may turn out to be conservative
assumptions on my part and ATY starts getting
more for its gold ounces, but I like conservative
more than over-expecting. As for copper, I’m
using a net received assumption of U$2.05/lb
for 2q16, then U$2.10/lb for 3q16 and
4q16...again conservative end stuff.
What that means in turn is that the metals
revenues mix is heavily skewed in copper’s
favour (and to repeat, I ignore the very minor
credits from silver for the sake of this anal ysis). The chart below left shows sales revenue for
each quarter to date, plus estimates for the quarters to end 2016. Then right (N.B. cut down Y-
axis) the percentage of revenue that comes from copper:
I don’t mind admitting ignorance on this, the last time I looked seriously at ATY its revenues mix
was roughly 2/3rd copper 1/3rd gold, That’s now around 85% copper and 15% gold, a big change
and all due to the penalties it takes on the gold sales.
Summing up so far so good. We get a sales glitch in 2q16 so be prepared, but production is
going well at the new throughput speed and there’s no reason why ATY can’t continue at this
rate indefinitely. We also note this really is a company made or broken by the price of copper,
its gold sales are minor compared so the recent run in the gold price isn’t going to save ATY.
Quarterly financial results
We start with our preferred operations overview chart, extrapolated out to 4q16 again in order to
work through the expected sales miss in 2q16 and show how ATY should compensate for that
in 3q16, with 4q16 offered as a kind of model for current levels of production matched by sales
ATY.v: Operations overview
20
18
16
14
12
10
8
6
4
2
0
-2
8
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
ATY.v: Gold net received price
1400
1200
1000
800
600
400
200
0
$m
revenues total cost of sales Income from mine ops
source: ATY filings, IKN ests
The total costs of sales at ATY (comprised of direct costs, royalties and depreciation and
41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
U$/oz
source: company data
ATY.v: Revenue by metal
16
14
12
10
8
6
4
2
0
41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
$m ATY.v. estimated % of revenues from copper, per qtr
Au rev calc 100
95
Cu rev calc
90
85
80
75
70
65
60
55
50
source: company filings, IKN ests
41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
source: company filings, IKN ests
uC
morf
sver
fo
%

,
amortization) have previously fluctuated with sales but for 2q16 estimates I’m not cutting them
too deeply, due to the new higher throughput
rates at the mine which make for higher fixed
costs. That means that according to my
admittedly conservative assumption, the low
sales expected in 2q16 make for the first Income
from Mine Operations loss for many quarters.
Here right is the same light blue columns in the
above chart isolated, for an easier look. On the
other hand, 3q16 looks to be a bonanza quarter
that’s the the sales adjustment...it’s swings and
roundabouts. Finally in 4q16 we expect a Income
from Mine Operations of U$2.75m, that using
U$2.10/lb copper of course (for a simple idea of
price sensitivity,the model has every 10c/lb Cu
change worth $450,000/qtr to ATY.
Which brings us neatly to the earnings overview below. Here are those same light blue columns
you’ve already seen twice before, as they provide a benchmark for the pre-tax and net earnings
numbers. We expect ATY to post a loss for 2q16, but to bounce back strongly thanks to those
extra sales in the current period of 3q16. For 4q16 and the balanced-out model quarter, we
estimate a net of $0.8m.
ATY.v: Earnings
8
7
6
5
4
3
2
1
0
-1
-2
-3
-4
9
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
ATY.v: Income from Mine Operations
8
7
6
5
4
3
2
1
0
-1
-2
$m
Income from mine ops
pre-tax earnings
net earnings
source: ATY filings, IKN ests
Balance sheet items
After wading necessarily through production and quarterly earnings, we now get to the bit that
decides whether ATY is a buy or not and unusually, it’s all about the liabilities side of the
balance sheet. To kick off here are the basic overview assets and liabilities charts for ATY...
...with first impressions of assets perhaps the large amount locked up in the fixed side (normal),
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
source: company filings/IKN ests
srallod
fo
snoillim
ATY.v: Assets Breakdown per qtr
100
90
80
70
60
50
40
30
20
10
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
ATY.v: Liabilities Breakdown per qtr
$m 50
cash inventories 45
other current fixed
40
35
30
25
20
15
10
5
0
source: company filings, IKN ests
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
source: company filings/IKN ests
srallod
fo
snoillim
LT liabilities current liabilities

,
the low cash levels (not normally a good thing). As for the overview chart for liabilities,
comparing the just-under-$80m level of asets to the $35m or $40m level of total liabilities, along
with the large amount of the company’s value in the fixed column, smacks of a company with a
potential liquidity problem and potentially cash-starved. You wouldn’t be wrong.
I’m not going into every nook and cranny here today, but once you delve inside the liabilities
held by ATY most things aren’t that bad. On the current side, accounts payable are countered
by accounts receivable and on the long-term side, $18m of the total is a deferred tax liability that
won’t make or break anything (even though there’s a much smaller lawsuit open between the
government tax people and ATY at the moment, which gets play in the market chatter but only
because it’s a regulatory filing, it’s not something we should really fret about even if the worst
happens and it’s definitely not a company-breaker).
However, there is one thing that really matters and after due consideration, I firmly believe it to
be the reason that’s been holding back the stock price: ATY has a financial debt with the metals
trading company, Trafigura. Back in 2013 when ATY bought its way into El Roble, Trafigura lent
the company $8m at a near-10% annual rate with grace periods thrown in. Then in 2015 the
parties renegotiated the debt to allow ATY the chance to defer up to four payments that year
and in the end ATY deferred two to this year. All very interesting I’m sure, but we need a
practical result from this so check out this next chart representing the repayment schedule
under the current terms of the deal. In essence (and including 2q16, we know the production
numbers but we don’t have the financials yet) ATY has nine chunky cheques to write between
now and the end of 2017, which will
fluctuate somewhat but if you smooth them ATY: Debt repayments to Trafigura, 2016 and 2017
out for a simple model, come to around $m
$740,000 each. And importantly, due to the 1.6
deferrals of last year ATY has double 1.4
1.2
payments to make in the next two quarters,
1
3q16 and 4q16. Visually and simplified, the
0.8
schedule looks something like this right.
0.6
0.4
This current quarter, 2q16, isn’t the hump 0.2
and when the quarterlies are filed in mid- 0
August I fuly expect to read that the latest 2q16 3q16 4q16 1q17 2q17 3q17 4q17
installment was paid on time, no matter
source: IKN calcs from company filings
whether 2q16 were crimped by the
transport strike, as with cash of $2m and working capital of $1.55m carried over from 1q16 ATY
shouldn’t have a problem making the payment.
No, the fun starts in the second half of this year when, according to the terms of the re-
scheduled payments, ATY has to pay back just under $3m in cash to Trafigura. That’s going to
be the big cash suck and the concern is clearly over its liquidity to the end of this year what with
copper, provider of roughly 85% of ATY’s revenues, remaining at a stubbornly low market price.
Even then ATY isn’t totally out of the woods because it has four more payments of (again to
stress, an IKN estimated and smoothed out) $740,000 per quarter in 2017. The good news is
that come 2018 that’s all she wrote, if ATY pays all that off its home free on the financial debt
issue and our liquidity concerns should be confined to history. Therefore the two questions are:
1) Can ATY make the payments? Answer, yes. Its mine is profitable, its credit is good with
many other places, even if it doesn’t make enough on cash flow to cover the payments
it will be able to raise enough from other places r even re-negotiate with Trafigura.
There’s no way ATY is going down the pan just because of this debt repayment
schedule, but dilution or new debt isn’t shareholder-friendly.
2) Can ATY make the payments without adding further financial burdens? Answer: That’s
the big question. By “financial burdens” I mean news shares added, new debt deal,
booting a part of the debt forward, etc. It would be best for everybody on board if ATY
clears this financial debt and strengthens its balance sheet without any further inputs
expect for cash flow and profits. If it can do that, the shares are going to be worth a lot
more at the end of the process.
10

,
If we can answer number 2) with a range of probable/possible we get a good handle on the risk
of owning ATY.v and its potential reward
in 2016. Evidence is needed and here left ATY: Repayment schedule of Trafigura debt
12
is Exhibit A, the to-date repayment
schedule (right) and estimated future 10
payments that ATY will make to Trafigura 8
on a quarterly basis. I’ve split the
6
payments down into the burden the
remainder has on the long term and 4
current-term sides of the liabilities book 2
and the interesting thing here (well, nerdy
0
old me thinks it’s interesting at least) is
how the current liabilities don’t shift much
until 4q16, then the debt gets lifted from
those shoulders quickly. That’s a function
of the term date of the debt, plus the way in the the next two quarters have double-payments
coming up. But also notice something more basic about this repayment chart: It’s now been six
quarters since ATY has been paying off what it owes and they’s already brought the debt down
substantially. It stood at $6.838m left on the books as at 1q16, that will be down to an IKN
stimated $6.15m in the 2q16 filings, so even in the last year or so when money in treasury has
been looking tight, ATY has cut the cheques and paid its debts.
It has done so without diluting the share count,
either. On the subject here’s how shares have
evolved and it’s been stuck at 97.5m for the last
two and a half years. That’s a shareholder-friendly
chart, all right. This is a company that’s loathe to
dilute, perhaps because its insiders have that skin
already in the game and want their payola later.
Now for the key metrics of working capital and
liquidity. First working cap on the left in red and
again note that even when things were tight in
2014 and 2015 ATY has managed to keep paying
down its debt (admittedly with two deferral
quarters, but the overal numbers don’t lie). With just over $1.5m in positive working cap as at
1q16, the 2q16 payment isn’t in question even with the low reported sales in the period.
Yes, we’re modelling the working cap to dip in 2q16 because there’s a combo of 1) a cheque to
write that takes weight off the long-term debt pile, not the short term, plus 2) reduced sales that
will bring about a net loss for 2q16. But even when I do my conservative modelling ATY keeps
its working cap head above water. Then we get to 3q16 and in this quarter it has to pay double
dues to Trafigura, but thanks to the out-sized revenues we can expect from the deferred metals
sales, they’re covered okay. Equally crucial is 4q16 but here we’re also good because 1) we
can expect a modest profit from El Roble, even at current low copper price levels and 2) come
11
41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3 tse71q4
$m
LT part of debt
current part of debt
source: ATY filings, IKN calcs
ATY.v: Shares Out
110
100
90
80
70
60
50
40
30
20
10
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3
source: company filings/IKN ests
serahs
fo
snoillim
3 ATY.v: Working Capital per qtr
2.5
2
1.5
1
0.5
0
-0.5
-1
-1.5
-2
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
source company filings/IKN ests
srallod
fo
snoillim
ATY.v: Cash & inventory
12
10
8
6
4
2
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2 tse61q3 tse61q4
$m
source: ATY filings, IKN ests

,
4q16 significant amounts of the liability load will be coming off the near-term column, not just the
long-term. That’s the magic moment for this stock and its debt load, the moment when it has got
over its two quarters of double payments and suddenly people will look at its financial position
and say, “Hey, not bad at all now, they’re over the hump” and buy the stock. Meanwhile the
other chart above right shows the cash liquidity level and to the straight cash level I’ve added
the inventory holdings. That’s important because, for example, ATY has already stated that the
metals left unsold in 2q16 will turn up in the inventory levels and a large portion of that is akin to
fully liquid cash, because it’s going to be added back soon enough. And again through the
crucial 3q16 and 4q16 “double payment” quarters, as inventory is sold down and 3q16 extra
profits move through the books, cash treasury isn’t expected to drop below $2m. Now that’s
important because even if working capital dips to zero in one of those periods, come the “light at
the end of the tunnel” moment and the 4q16 figures, working cap will bounce back again as the
short-term liabilities get lighter but all the time, ATY can be fully expected to have enough day-
to-day cash at hand to go about its business and run a mining company.
Bottom line: Even under my conservative parameters and even using today’s low copper
prices, there’s no cash crunch at ATY.v in 2016. That’s the main message of this anal ysis
today, everything I’ve written and all the charts shown have been to lead up to that bold-typed
and underlined statemment because that, ladies and gentlemen, is our investment advantage in
a nutshell. Ask around the marketplace and those brokerages covering ATY and you’ll hear the
same refrain every time, here’s an example from Dundee in its comments on the 2q16
production numbers:
“Although working capital increased to $1.5M (from a deficit of $0.5M at year-end), we
believe that at current commodity prices liquidity will be tight in 2016.”
And that’s good news, because they’re wrong. Well, not exactly wrong because “tight” is a
subjective thing, but what that sort of statement does to sell side clients is put them off buying
the stock. If more people knew that ATY’s cash position, without being optimum, is comfortable
enough for this size of company and it will
certainly be able to cover its debt repayment
schedule without recourse to share dilution
or a refinancing, then its share price would
be much than it is today.
Here right is a chart of the ATY book value
(total assets minus total liabilities) per share.
As at 1q16 it stood at just under U$0.42 and
that should drop slightly in 2q16 because
unsold inventory normally doesn’t get all its
value whack. But by end 2016, with debt
being paid off and ATY mildly profitable at
current copper market prices, it should move
above 44c. That’s compares to its current
share price of CAD$0.44, or U$0.335 at current forex, and gives a Price/Book (P/BV) ratio of
0.8X. So how doe that sort of PE ratio compare with what’s out there? Here’s a chart:
Range of price/book ratios in mining companies
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
12
ot.SC ot.MUC YTA MBH GAI NVB ot.VT v.TPI CGK GTB MEN XUM ot.CGD OROG XBA MSF GA LPG
source: NYSE/TSX data
oitar
koob/ecirp
ATY.v: book value/share
0.48
0.47 IN US DOLLARS
0.46
0.45
0.44
0.43
0.42
0.41
0.4
0.39
0.38
0.37
0.36
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 61q4
source: company filings, TSX, IKN calcs

,
Now this one is difficult, it’s just straight plain difficult to give you a decent comparative company
or range of companies to ATY because there really isn’t anything in the sector that matches its
profile. There simply aren’t any high-grade small scale copper producers with Colombia (or
similar) exposure, so what I’ve done is pick semi-randomly (I just went down my list of covered
stocks and chose a few junior and senior producers without cherrypicking) some producing
stocks to show what type of PE they’re currently commanding. If you stare at those names for a
while you’ll see a few patterns:
• Base metals producers get lower ratios than precious metals producers.
• Silver producers are currently priced on the highest ratios of all, higher even than
goldies.
• Companies with large debt levels get lower PE ratios.
• Larger companies get slightly better ratios, but there are exceptions to that rule and it’s
not uncommon to see big companies priced down or smaller ones priced up.
But what’s also clear is that ATY is being priced cheaply compared to its equity value and I’d
argue that’s a result of two factors; Its base metals profile and its perceived liquidity problem
due to its debt. I’ve tried hard to think about this as objectively as possible (after all, I don’t want
to fool myself into investing here where there’s no upside or underestimated risk) and one of the
companies that shows the model is B2Gold, which although a gold company and larger suffered
from a low share price for a long time because of its perceived problems with liabilities. Now
that gold has shot up and the market assumes it can cover its obligations easily, its share price
has galloped ahead and now sits at nearly 2X, not so long ago that was 0.65X (and I wrote
about it extensively at the time). That’s what ATY shares are set to do as its image improves.
Valuing Atico Mining and conclusion
Which begs the question, what share price upside can we expect from ATY once its debt is
considered under control and it’s deemed financially solid by the all-seeing and all-wise Mr.
Market? I highly doubt we’ll ever get the type of 3X or 5X multiple we’re seeing today for some
silver and gold names. Under optimum circumstances 2X is probably a limit for a base metals
company that’s small, profitable and financially solid (even by then paying a dividend,
something I’d like to see eventually from ATY.v but that’s a conversation for another day) and
that may happen in the longer-term to ATY, say by the middle or end of 2017. And of course
another factor that would help greatly is a rally in the copper price, because if copper made it to
U$2.50/lb by the end of this year it would mean something in the order of U$1.35m in extra
revenues to a model quarter, that’s a lot of money for a U$33m market capper.
We’re allowed to consider the optimistic upside of course, but under present circumstances of a
low copper price and a company that will be seen as improving its financial structure
significantly come the end of this year, I think aiming for a 1.5X Price/Book ratio isn’t out of the
question. That would be U$0.66 at the 2016 year-end P/Bv, which is a rounded down and forex-
adjusted CAD$0.86 share price. That’s 95.4% higher than where we are today. If that’s too rich
for your blood, a more modest 1.2X P/Bv and using the same parameters would get us to a
CAD$0.70 target, 59% higher than this weekend.
In other methods, we could assign a net asset value (NAV) to ATY as stands, but the problem
there is that the valuation is exposed to subjective inputs, which is a fancy way of saying that
anal ysts tend to make shit up. I can’t count the number of times I’ve seen price targets reverse-
engineered to suit the type of target the brokerage (boss) wanted in the first place and over-
valuing of fixed assets, or overestimation of profit potential, or unrealistic discount levels are just
three ways of manipulating a dataset to get to the answer you wanted in the first place. But to
try and be as level-headed as possible as ATY stands today, I could take the baseline of an
approximate $40m equity, add in its profit potential at current and perhaps higher copper prices
over the next seven years (though we could stretch out the mine life easily if we wanted), apply
a reasonable discount and get to a U$60m NAV without breaking much sweat or becoming
overly polemic. That’s an CAD$0.81c share price target for you.
As for cash flow targets, that’s a little unfair under the current copper price regime but it’s not
impossible, either. Any modest improvement in the copper price would get forward P/E ratios
dropping quickly, what with ATY today as only modestly profitable and at the right point on the
13

,
leverage scale. I didn’t spend a lot of time on this method for ATY (because it doesn’t do justice
to the present day at ATY and the main catalyst of debt repayment) but the model I’ve run this
week that plugs in U$2.50/lb copper for 2017 gets me to a 75c price target using a reasonable
6X forward price earning ratio.
Seriously, you can play around with these models for hours on end (and I know because I do)
but what really matter at the end of the day is the integrity of the call. An anal yst can try and
pick a best method to shine a light on a stock, but when modest and reasonable assumptions
via different methods all point in roughly the same direction, and when the method that best
takes into account the main market concern and how it’s going to change soon aims us at a
good share price upside, it gets to the point where it would be stupid of me not to take notice.
The IKN Weekly recommends Atico Mining (ATY.v) as a buy and sets a six (not 12) month
share price target of C$0.70 on the stock, representing a 59% upside from this weekend’s
CAD$0.44. The price target is predicated on the main catalyst, which is that ATY will indeed be
able to cover its debt repayment schedule during 2016 and once it has got to the end of the
year, the market will re-rate the stock on its stronger fundamentals and proven capacity to make
profits even at the current modest prices
levels for copper. I’m going for a target
based on a reasonable 1.2X price/book
ratio once people see the balance sheet
clean up, which may turn out to be a
staging post for greater things. An
eventual stock price in the mid-80s
wouldn’t surprise me in the least.
What ATY offers today is a trading
advantage, it’s clear to me after running
the numbers that ATY isn’t in the type of
uncertain financial position that most
people assume. It’s going to file a weak
looking set of 2q16 financials with sales
and a bottom line loss that those who
aren’t looking may consider a reason to
sell or avoid, but the key to understanding this stock isn’t in the P+L, it’s the balance sheet (“it’s
the economy, stupid”). If copper prices improve then so does this stock, that’s a given but even
if they don’t, ATY‘s going to be just fine and that makes for a very low downside risk attached to
an entry either today or when the 2q16 financials come out in mid-August. Low risk balanced
against high potential reward is my kind of equation. I will buy some ATY.v in the week ahead
and it will become part of the ‘Stocks to Follow’ list as from next weekend.
End of Report
Stocks to Follow
Of our twelve open positions currently on the ‘Stocks to Follow’ list, four made gains last week
(REG.v, RRI.v, MAD.v, HBM short) and one remained unchanged (SAND). That means seven of
them lost ground (BTO.to, SAM.to, TK.v, WDO.to, CNL.to, LRA.v, FCV.v) and of those, the
bigger losses were taken by Lara Exploration (LRA.v down 12.0%) and Continental Gold (CNL.to
down 9.9%). The biggest winner was the HBM short (HBM short up 11.6%)
With the taking of profits in INV Metals last week we’re left with 12 open positions, three fewer
than our self-imposed maximum of fifteen at any given time. Eleven of the twelve are in the
green, then FCV stuck stubbornly in the red.
14

,
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to buy C$2.11 12-sep-14 C$3.69 74.9% new tgt $5.30 IKN375
Regulus Res REG.v hold C$0.64 06-apr-15 C$1.36 112.5% Long-term exploreco top pick
Starcore Intl SAM.to STR buy C$0.62 10-jan-15 C$0.78 25.8% New 1.04 tgt, added
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 STR buy C$0.195 19-apr-16 C$0.225 15.4% Value Zn play, added again
Wesdome Gold WDO.to buy C$1.90 22-may-16 C$1.93 1.6% KGI M&A target
Riverside Res RRI.v buy C$0.38 27-jun-16 C$0.44 15.8% new pick, now 60c tgt
Continental Gold CNL.to buy? C$2.68 22-may-16 C$3.28 22.4% permit in 2016, $4.80 tgt
Miranda Gold MAD.v spec buy C$0.125 03-jul-16 C$0.135 8.0% new pick, small play, flip
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.25 8.7% solid biz model
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.10 -56.5% refi news good
Short positions
HudBay Min. HBM short U$4.98 09-jun-16 U$4.82 3.2% re-short on Cu, port balancer
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
INV Metals INV.to jul-16 C$0.25 03-apr-16 C$0.95 280.0% Trade closed on time
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): Position closed. This trade worked out well. As for me, on Monday I
sold half at 95c and mentioned such to a couple of fellow longs in INV. One of them wrote back
with a “Why sell half? Don’t be cute” and of course he was right, so the other half went at the
same price. It doesn’t matter that I didn’t get to sell at the very top price (it traded over $1 for
a few minutes) but by the way that volume peaked and then dropped off for the rest of the
week I did manage to pick the right day and that’s
gratifying, even though I’m aware that it’s more
luck than judgment. Anyway, a successful trade
closed and time to move on.
Starcore Intl (SAM.to): Added. I know reader
DQ did better than me because he mailed to say
he’d bought (and asked a posteriori if there was
anything wrong with the company as far as I
knew...I liked that touch). I know reader C didn’t
get his bids filled because the rebound came
quickly. I was stuck in between somewhere, I
couldn’t get any of the really cheap ones but a got
15

,
enough at 70c avg to bring up my overall cost average to 62c. And that’s what I consider to be
an excellent addition point on this stock, your actual distressed sale knock-down bargain.
Riverside Resources (RRI.v): Still trying to add on weakness. Even though I planned to
add some more I didn’t, because the lowest 40c price available was a) on thin volume and b)
not the deep bargain I was looking for. RRI
closed up on the week at 44c but that Friday
action looks fakey tape-painting on no interest so
there’s a decent chance my desired lower price
shows up on Monday. If it does, I’ll buy some.
Interesting to note that RRI is an engaged
participant of next week’s Sprott Vancouver
summit, with the company sponsoring tomorrow
Monday’s “pre-event” trip to Grouse Mountain (5)
and then John-Mark Staude participating in two
scheduled events during the week (as well as
undoubtedly getting the most out of his
marketing buck at the company booth etc). All
this jives with the bottom line simple reason I bought this stock when I did, as it fits the bill as
“next prospect generator to be pumped”.
Continental Gold (CNL.to): CNL was weakest of all our covered and owned stocks, which
was something of a surprise after its strong recent run. We note via this YTD price chart that
the highly regarded analyst Ron Stewart of Dundee upped his target in the stock on June 28th,
which coincided with that recent lift-off. Potentially the price just got ahead of itself a little and
has now oversold on the way down.
I’ve kept an eye on the relevant Colombia
media channels and there’s no news or
negative developments from Buriticá, the
police operation to clean up the town is
said to be 87% complete and advancing,
we now have the regional governor saying
he would like to patrol the zones with
drones (of the helicopter rotor camera
variety, not the US military missile
carrrying ones, I hasten to add) in order
to make sure things stay orderly and calm
(though that might be political posturing
more than reality). We’re still neatly ahead
on this trade and not under pressure, under $3 it may become truly buyable again.
Focus Ventures (FCV.v): It’s not a surprise, but it’s still disappointing to note that FCV
couldn’t follow through on volume last week and the whole trading pattern quickly dried up
again. It stayed at or around 10c all week and that’s an okay thing, what’s not is how it didn’t
even open on two days while on the other three, less than 100k shares were traded. FCV has
secured its mid-term future by doing its debt boot deal, what it needs to do now is find a
partner for Bayovar12 else get stuck spinning wheels.
Tinka Resources (TK.v): Yes, people are getting antsy and there’s a small trickle of “TK not
moving???” mails now coming in, comparing TK to both zinc at $1+/lb now and also the move
put in by (the highly promoted and very expensive) Trevali, which has moved up with the metal
well enough. But it’s only frustrating if you’ve run out of money to spend, because TK cheap is
just an ongoing opportunity to get the best Zn value for money in the whole sector. The lag TK
is showing to zinc is an advantage and not an issue, there’s no way I’m going to shout about
this one from the rooftops or on the IKN open blog; this message is for subscribers only and
16

,
will stay that way.
For what it’s worth I think it’s being held back by the company’s hesistance in running a
financing, the world knows TK needs to raise cash and the larger names on board (e.g.
Sentient) want their cheap entries. Perfectly logical that it stays under the 25c cap until the
requisit pounds of flesh have been paid.
B2Gold (BTO.to) (BTG): B2 dropped on the week of my target upgrade, which is good for
my own ego. In fact the stock traded right in line with peers, which means there’s nothing
special to worry about for one given week. As of this weekend BTO.to offers 43.6% upside to
target and I think that’s tremendous value with very little downside risk, as long as gold doesn’t
cave in on us all. Top Pick, own this one above all others featured here.
Wesdome Gold Mines (WDO.to): We consider the 2q16 production results as announced on
Wednesday in ‘Market Watching’ below. Here we note that the production numbers had little
effect on WDO’s share price and it had another quiet week as the stock basically drifted along
with the rest of the market, its drop closely matching the benchmark averages. This is now a
binary play, as it looks valued to peers and it’s all about the day that KGI makes its move to buy
WDO out. I didn’t expect that to happen in Tony Makuch’s first week, but I am expecting
something to happen sooner rather than later so if a friendly deal can’t be worked out, the
hostile event will take over.
Miranda Gold (MAD.v): There’s a longer piece on MAD in ‘Market Watching’ below. The
promo pump may be starting earlier than I expected. Here we note the generally quiet market
action and the way there’s all you can eat between 13c and 14c, then move on.
Sandstorm Gold (SAND): SAND again showed great price resiliance, with sub U$5 prices
quickly finding buyers. The thing that caught
my attention on watching the tape on “bargain
hunt Wednesday” was that every time a larger
seller showed up to dump a position, willing
buyers sucked them up very quickly. You can
see the dynamic here on this 1 minute/5 day
chart. Finishing unchanged on the week to the
penny, SAND continues to take on all-comers
and looks in great shape.
One negative worthy of mention is the 20%+
loss suffered by Mariana Resources (MARL.L)
last week, almost certainly connected to the
Turkey political risk factor post-attempted
coup d’etat. A 64p stock two weeks ago, it’s now at 50p but we shouldn’t be too hard on the
17

,
trade as SAND is already miles ahead on the deal and from what I understand, it doesn’t work
in one of the politically hot areas of the country. SAND’s equity exposure is one thing, the real
jewel here is the 2% NSR it holds on eventual production and that’s a long-term asset.
HudBay Minerals (HBM) (HBM.to): It was far from the only copper name to see weakness
at market last week (despite the metal price treading water, see below) but the double digit
drop in HBM caught the eye for timing, as we’re now just days from its 2q16 financials release
scheduled for post-close this Wednesday July 27th, with the Conference call set for Thursday
28th. At 10am EST (access the webcast here (6)). We note that HBM hasn’t and doesn’t pre-
announce its production figures, but as things stand and taking into account what we know
from the Peru Ministry of Energy and Mining
(MEM) stats we expect the key Constancia HBM: Constancia monthly copper production
production number at around 75m lbs Cu. 1 1 4 6 0 0 0 0 0 0 13124 14050 12856 13733 14377
We’ve talked about those figures previously
in IKN374, here’s the chart again as a 1 1 0 2 0 0 0 0 0 0 8965 997910476 11146 1067910604 9852
7849 7843
reminder. Once the 2q16 numbers are 8000
known I for one will be looking past HBM’s 6000
near-inevitable rah-rah on “cash flow before 4000 2488
2000 683 714
changes in...” etc and to the stats that
0
stress-test the weak spot of the HBM story,
its financial debt position and resulting
balance sheet. I know these things are
boring and their effects tend to take time in
filtering through but in this particular case and point in time, any noticable deterioration in the
HBM liquidity position could hit the stock hard. Hope so anyway ☺.
In trading, volumes were average in both the main TSX ticker and the NYSE. The sharp stock
price drop also put my short back into positive territory again (just) and that’s a good thing.
The Copper Basket
After twenty-nine weeks of 2016, The Copper Basket shows a 74.31% 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 1484.30 6.31 18.8%
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 0.44 382.04 343.84 0.90 104.5%
5 NGEx Resources NGQ.to 0.65 205.06 235.82 1.15 76.9%
6 Western Copper WRN.to 0.38 94.19 98.90 1.05 176.3%
7 NovaCopper NCQ.to 0.395 104.33 80.33 0.77 94.9%
8 Copper Mtn CUM.to 0.445 118.8 67.72 0.57 28.1%
9 Cordoba Min. CDB.v 0.16 86.86 62.54 0.72 350.0%
10 Copper Fox CUU.v 0.125 417.64 54.29 0.13 4.0%
11 Nevada Copper NCU.to 0.66 80.5 47.50 0.59 -10.6%
12 Atico Mining ATY.v 0.28 97.59 42.94 0.44 57.1%
13 Amerigo Res ARG.to 0.205 173.61 28.65 0.165 -19.5%
14 Hot Chili Ltd HCH.ax 0.09 445.723 23.62 0.053 -41.1%
15 Revelo Res. RVL.v 0.055 99.19 8.93 0.09 63.6%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 74.31%
The Copper Basket dumped hard last week, the basket average down over 10% and with just
18
51.naJ bef ram rpa yam nuj luj gua pes tco von ced 61.naJ 61.beF 61.raM 61.rpA 61.yaM
mt Cu
source: MINEM Peru

,
three of the twelve posting a weekly win (CS.to, NGQ.to, ARG.to). There were three other
UNCH stocks (IVN.to, RMC.v, CUM.to) which
leaves nine losers (HBM.to, CUU.v, NCU.to,
NCQ.to, HCH.ax, WRN.to, ATY.v, CDB.v,
RVL.v) and all double figure percentage moves
were to the downside too, the biggest losers
being Western Copper & Gold (WRN.to down
18.0%), Cordoba Minerals (CDB.v down
11.1%), HudBay (HBM.to down 10.4%) and
Hot Chili (HCH.ax down 10.2%).
However, that sector negativity was not fed by
copper metal price weakness as the
underlying commodity basically trod water all
week in the $2.20 - $2.30/lb region. What could be
weighing on the copper stocks is this longer-dated dailies
chart, which shows the lower highs going in and this
current price deck as the next monment of downturn.
Now for the weekly copper warehouse inventory bullets:
• It was a quiet week for the inventories dataset,
with an overall drop in world copper stocks of
9,995 metric tonnes (mt) (+2.2%) to 456,100mt.
• After the recent rebound Shanghai SHFE
inventories dropped a little, down 2,228mt (-
1.3%) to finish the week at 174,971mt. Some
cheer for the bull argument there, but the signal
isn’t strong and it’s hardly a trend-breaker. An
eye on next week’s numbers necessary.
• LME stocks put in a more significant drop, down 8,550mt (-3.7%) to close the week at
222,725mt.
• As for the smaller Comex system, stocks there rose by 783mt (+1.4%) to finish Friday
at 58,404mt. No comment.
Below is the Shanghai-only chart and the squiggly line there is still deciding what to do. We
know it’ll eventually add tonnage as 2016 grows older, but bulls hope it won’t start moving up
too quickly.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
19
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
The Copper Basket 2016, weekly evolution
100%
80%
60%
40%
20%
0%
-20%
Mt Cu
source: Cochilco
Now for comments on a couple of basket stocks:
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 ht42
source: IKN calcs

,
Western Copper & Gold (WRN.to): It’s
been on a great run recently but the gains
put on since Brexit have turned out to be
unsustainable, so WRN is now showing the
chart of a blow-off top and a stock that
needs to consolidate a while. That’s a big
18% dump in one week with the volumes
accelerating into the lows of Friday, too.
Don’t try to catch falling knives, wait until it’s
found its floor if you fancy this one as a
trading vehicle on copper.
NGEx Resources (NGQ.to): There’s this rule of thumb I have that when a junior mining
company’s project starts getting exposure in the local press, there’s something good going on
because it’s attracting attention from a wider business audience in the country of operations,
not just inside our weird little sector and world. This happened to NGEx last week in this pro-
mining piece entitled “The Revenge of the Mining Companies Will Be Sweet” (in fact its exact
translation is “the revenge of the miners will be terrible”, but the message that carries in
Spanish is very different so it needs to be translated for gist) (7) that covers several aspects of
the mining scene in Argentina under the new Macri government, but large chunk was devoted
to NGEx and its bi-national Vicuña project on the border with Chile (it’s known locally as
“Constelación”). Here’s a translation of the section:
“That’s the case of the Constelación project, considered the biggest in the history of
South America, larger than Pascua Lama because it is located in the Atacama region
of Chile and the Argentine provinces of San Juan and La Rioja and includes the
deposits of José Maria (named in honour of the founder of Opus Dei, José Maria
Escrivá de Balaguer), and Filo del Sol. “This project is mouthwatering for Chinese and
Japanese investors, who want something safe”, said Ricardo Martínez, the geologist
who discovered the Veladero mine and the deposits that make up the Constelación
project.
“The Canadian company NGEx has teamed up with the Japanese Pan Pacific Copper
and the Japanese JOGMEC to work the three bi-national deposits of this project which
have, according to preliminary studies, a mine life of 50 years. The initial investment is
around U$3Bn to mine copper on the Chilean side and gold and silver in Argentina.”
Now, you and I will note the approximations, assumptions and generalities of that piece which
point to a journalist uneducated in the ways of mining who has talked to experts and tried to
condense the piece down its essence then “sex it up” for a more general audience. There are
some inaccuracies there for sure, but I doubt NGEx will take anybody to task for the description
of what it’s doing up in the high Andes.
The Low Cost Producer Basket
After 29 weeks of 2016, the Producer Basket shows a gain of 131.84% to level stakes.
20

,
company ticker price 1/1/16 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Barrick ABX 7.38 1164.67 23.93 20.55 178.5%
2 Newmont NEM 17.98 529.12 21.84 41.27 129.5%
3 Goldcorp GG 11.56 830.22 15.20 18.31 58.4%
4 Franco Nevada FNV 45.75 176.298 13.01 73.78 61.3%
5 Agnico Eagle AEM 26.28 217.67 11.70 53.73 104.5%
6 Ang/Ashanti AU 7.10 405.27 8.53 21.05 196.5%
7 Detour Gold DGC.to 14.41 170.85 5.34 31.24 116.8%
8 Sibanye Gold SBGL 6.09 228.71 4.00 17.47 186.9%
9 Buenaventura BVN 4.28 254.19 3.23 12.71 197.0%
10 New Gold NGD 2.32 509.89 2.24 4.39 89.2%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 131.84%
Another interesting week in which our ten stocks split into two separate groups. The righteous
and good were the team of Sibanye (SBGL up 2.3%), AngloGold Ashanti (AU up 5c),
Buenaventura (BVN down just 2c) and Newmont (NEM down just 8c). At a pinch we could
include Franco Nevada (FNV down 1.9%) as it too performed better than the market
benchmark (GDX down 3.7%). The flipside underperformers include New Gold (NGD down
6.8%) and once again Goldcorp (GG down 5.1%) was weak. Agnico Eagle (AEM down 4.2%)
probably wasn’t helped by the news out of its La India mine in Mexico that it had been victim of
an armed robbery. Barrick (ABX down 4.0%) didn’t have a great week either.
But thanks largely to the outperformance of our two South Africa exposed stock, AU and SBGL,
the IKN Basket whupped GDX’s trasero and is now over 22% ahead of its benchmark, the
biggest gap of the year so far. And to bore you to death on the subject, as this year’s plan was
to pick stocks that would outperform the market instead of just running with the crowd, I’m
happy about that.
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
0%
-5%
-10%
-15%
-20%
-25%
Newmont (NEM): Considering that NEM
reported its 2q16 on Wednesday morning
and the stock dumped at the open as
seen in this chart, you might be led to
believe the numbers weren’t that great. In
fact they were strong, beat the market
and got general plaudits all round, the
company just had the bad luck in
reporting on the day of the main gold sell-
off. A second look at this chosen chart of
NEM versus the Gold and Silver index
(XAU) shows how it beat the street for the
rest of the week and quite right too.
21
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 ht42
The Low Cost Producer Basket: Weekly performance
160% and comparative to GDX control
140%
120%
100%
80%
60%
40%
20%
0%
source: ikn calcs, NYSE/Nasdaq data -20%
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 ht42
basket
gdx control
source: Google, IKN calcs

,
NEM’s showcase Q2 number was its bottom line, a U$231m (44c/share) adjusted net earnings
(8) that was a pretty honest number too, with the gold price rise complemented by a drop in
cash costs to improve margins substantially. Operationally NEM finds itself in a sweet spot,
turning good profits (and in the Conference Call, there was a strong hint that they were about
to up the dividend). NEM’s issue as mentioned a couple of weeks ago is its reserves depletion,
not something the company must address imediately but it’s going to have to do something
about it sooner or later and that means capital spending in the works.
Agnico Eagle (AEM): We still don’t have much in the way of detail about the size of the haul
of gold and silver (it’s probably silver/gold concentrate or doré) stolen from AEM’s La India mine
in Sonora state, Mexico by an armed gang (who left one bullet in a security guard’s leg but
apart from that the human toll wasn’t bad, happy to say). When the robbery happened AEM
didn’t seem to know (an accounting thing?) but that was five days ago, so it would be wild to
think they don’t have a figure yet.
Regional politics
Peru: PPK’s inauguration
This Thursday July 28th is the date Pedro Pablo Kuczynski (PPK) takes over as President of Peru
from the outgoing Ollant Humala, a shows that coincides with Peru’s annual Independence Day
celebrations, with its traditional military parade and all sorts of things followed by the national
midwinter holiday period. The Presidents of Mexico (Peña Nieto), Chile (Bachelet), Ecuador
(Correa), Paraguay (Cartes), Argentina (Macri, a personal friend of PPK’s) and Colombia
(Santos) are confirmed guests of the ceremony, as is Juan Carlos I of Spain, now ex-king as he
abdicated to let his son take over. That’s a pretty impressive Spanish-language turnout for an
inauguration, though notable in expected absence is Evo Morales of Bolivia (Maduro of
Venezuela’s no-show was a given, and interim Temer of Brazil has way too much on his plate).
The USA is sending along its Overseas Commerce Secretary, which is nice of them. Expect to
read how PPK is a business-friendly President in Reuters, Bloomberg etc with close connections
to the mining industry.
Peru: Ollanta leaving the economy in good shape thanks to mining
The main structural weakness in the Peru mining sector is the lack of pipeline projects, as
there’s only the Las Bambas ramp-up left to come before the country’s major projects are all
operations and from there, there’s a big gap to whatever might come next. But the recent
additions to operating mines have given a shot in the arm to the national economy at the right
time and the outgoing Ollanta Humala government has been taking every opportunity to sing its
own praises in the last couple of weeks.
One example is Pedro Cateriano, the Prime Minister for the next five days, who said last week
(9), “The GDP of Peru rose by 4.88% in May, principally as a result of a growth of 33.24% in
mining production. This thanks to the production of Las Bambas, the Cerro Verde expansion,
Constancia and Toromocho”. That’s true, as are the plaudits gained from the IMF this week
(10) who estimated 2016 GDP growth for Peru at 3.7%, with a forecast of 4.1% for 2017. Even
when we consider that the IMF tends to over-estimate prospects for the so-called business-
friendly countries in the region (by the same token it consistently under-estimates “unfriendly”
countries such as Ecuador, Venezuela, Argentina and Bolivia), those are decent growth
numbers for a region expected to run at close to zero growth this year and 1.7% in 2017.
Ecuador: “The time is right”
I was sent over this link yesterday Saturday morning (11) a Bloomberg TV interview with Ron
Hochstein of Lundin Gold (LUG.to) and the Fruta Del Norte project. Its header is “The time is
right to explore in Ecuador” and it’s a reasonable, eight minute Q&A for a general business
audience that doesn’t bring anything particularly new to the table (though he skirted round the
real reason why Kinross bailed on the project with a whiff of sophistry). Hochstein did note that
the IFC (world bank financing arm) is looking at taking part in the financing of the project,
22

,
which I think is the first time I’ve heard that mentioned on the record (but it’s been an off-
record message for quite a while). The upcoming Presidential election was mentioned and the
Hochstein position is that “Correa cannot run again” (as we noted last week that’s now under
debate), he states the Correa party candidate (whoever they may be) is heading the polls (true)
but went back to the new laws now backing the mining sector, with the implication that the
change at the top wouldn’t alter the project risk (oh yeah?). Overall, cynical Mark is unsurprised
that a company exploring in Ecuador says that the time is right to explore in Ecuador.
Ecuador: Chile visits
Last week saw another visit (12) by a delegation of Chilean mining people to Ecuador, an
assortment of bigwigs from all corners of the Chilean sector that got the red carpet treatment
from the Correa government. Chile and Ecuador have become tight associates as regards
mining (e.g. Codelco and Ecuador’s State mining company Enami doing JV exploration or
Llurimagua) and we were again treated to “We want to form a long-term partnership...develop
mining in Ecuador...win/win” type quotes from the assembly.
We also got to hear from the Ecuador government that its goal is to attract 10% of (what it
says is) the U$6Bn that’s invested in mining in LatAm every year. That’s an interesting goal.
Mexico: Anti-mining propaganda
This is the type of thing that drives me up the wall, not just because of its misinformation
content but also because the mining industry never makes a concerted effort of rebuttal against
the NGOs and knee-jerk treehuggers peddling this crap. Last week in Mexico, during a
presentation by a group of anti-mining NGOs for a (13) “Manual for the defence of communities
against the impact of mining in Mexico” (in other words, an instruction book on how to stop
mining companies in your community), one of the presenters, a lawyer from Greenpeace, said
the following (translation of direct quote):
“At the end of 2014 a total of 25,267 mining concessions were registered (in Mexico) which,
according to the Mexican Geological Service, cover a concessioned surface area of nearly 26
million hectares. This represents around 12.7% of the national territory”.
And how was this anti-mine coordination meeting reported by the press? Here are (translated)
four examples of the headlines (and there were many more, play with Google and find out for
yourself) (14) (15) (16) (17):
“NGOs: 12.7% Of Mexico’s Terrain Is Concessioned to Mining Companies”
“Mining Companies Consume Mexico: They Already Have 12% of the Territory”
“Mexican Mining Companies Already Have As Much Terrain (12%) As The Country’s
Nature Reserves”
“Mining Companies Awarded 12.7% of the Nation’s Land”
Of those four only the first one is in any way accurate, the others use inflammatory language
and are deliberately trying to create the false impression that mining companies “own” 12.7%
of Mexico. As you and I know (or you damned well should by now) the reality is nothing of the
sort and owning a mining concession is a million miles from “owning” the land. So why doesn’t
the mining industry tackle this head on, because it’s both a way into teaching a wider audience
about how it works and a way to show them the BS they’re being fed by the anti-mining
industry? It would be simple stuff too:
1) Explain what a concession is
2) Explain how you get one and what you need to do to keep one
3) Most importantly, explain why a mining company will own concessions that are much
MUCH larger than the mine therein contained. This last point is the one that’s most
played upon by the anti-mining screechers and it just by doing this, your average
person would see the hypocrisy in the Greenpeace propaganda.
23

,
And of course it isn’t just a tactic used in Mexico, I come across this “Mining owns X% of my
country! How dare they!” argument all the time, with variants such as “Mining Company XYZ
owns a concession that includes a graveyard! They’re going to dig up my relatives!” and all
sorts of others. The world of mining is hardly perfect and there are still some companies that
give it a bad name, but it’s long past the time that the good guys need to be painted as some
sort of gang of land-rapists and property usurpers.
Market Watching
Wesdome Gold Mines (WDO.to) 2q16 production numbers: On Wednesday WDO
announced its 2q16 production numbers
(18). This won’t be a long look because, as WDO: Gold prod/qtr
16000
noted above, the NR didn’t affect the stock
14000
price action much and the numbers were
12000
generally considered to be “in line” (famous
10000
phrase). But a few details are of note, so
8000
here goes:
6000
4000
Production came in at 12,147 oz gold, with
2000
Eagle River producing 10,210 oz and Mishi
0
producing 1,937 oz. The total was slightly
above WDO’s 12koz guidance for the Q2.
Average head grades improved back after
their big miss in 1q16, while rock tonnages were correct at Eagle River and a bit light at Mishi...
g/t Au WDO: Average gold grade, per qtr mt WDO: Tonnes milled, per qtr
14 100000
12 12.5 90000 Mishi
Eagle River 80000 Eagle River
10 10.1 Mishi 70000
8 8.7 60000
7.01 50000
6 7.4
7 6.6 40000
4.9
4 30000
20000
2 2.4 1.8 2 2.3 2.6 1.9 1.5 1.8 10000
0 0
3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
source: company filings source: company filings
...which is probably the reason behind the slight production miss at this smaller operation.
WDO: Gold production vs sales, per qtr
Ozt Au
18000 production
15878 16023
16000 15188 sales
14000
12408
12000 11740 11265
9633
10000
8100
8000
6000
4000
2000
0
3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
source: company filings
We also got the sales figure for the quarter from WDO which is 11,265 oz and compares as
24
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
Ozt Au Mishi
Eagle River
source: WDO filings

,
seen above to previous quarters. As WDO was also kind enough to give us its average selling
price for that gold of CAD$1,637/oz, we also have a close estimate of its final sales figure for
the quarter of CAD$18.44m. From that and then by using a range of reasonable estimates for
the costs profile, we get this as our estimates for its operations financials:
CAD$m WDO.to: Operations overview
25 23.1 22.3 23.6
20.9 21.0
20 17.0 16.0 19.4 18.8 15.8 17.217.6 18.2 16.8 17.5 18.418.0
14.4
15 13.3
12.3
10
5
0
-5 revenues total op expenses Op earnings
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16est
source: company filings/IKN ests
With “total operating expenses” (which includes mining processing costs, depletion and G&A as
well as a smattering of small “other” costs) coming in at an IKN estimated CAD$18.0m...
CAD$m WDO.to: Costs overview
25 mining processing costs depletion
G&A other expenses
20
15
10
5
0
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16est
Source: WDO.to filings, IKN ests
...we are staring down the barrel of a WDO that gives us a break even quarter, give or take a
hundred thou either side (my best guess is $0.1m net, but it’s tough to know just what financial
expenses they’ll add to any given quarter).
WDO.to: Net Earnings
10
8
6 4.2
4 2.9 2.2 2.6
1.1
2
0
-2 -0.8 -0.7
0.1
-4
-3.3
-6 -4.3
25
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 tse61q2
source: company filings/IKN ests
srallod
fo
snoillim
All in all a “meh” quarter from WDO and that’s just what both IKN and the market in general
was expecting from the company, which is why the stock didn’t do much on the news. We
didn’t get any change to 2016 guidance in the NR and that would mean WDO is still expecting
to produce somewhere in the region of 34,000 oz in the second half of this year, which would

,
be a big improvement on the 20,183 oz of the first half. They may guide lower once the 2q16
financial and MD&A are published, though. In the end this is an underperforming mining
company and that’s exactly why the insiders and large shareholders want its change of control.
Tom Stanley and Eric Sprott want new people in (the specific name is Kirkland Lake) and that’s
why we’re long the stock. This 2q16 production NR doesn’t change anything in that equation.
Miranda Gold (MAD.v) files its 3q16 financial results
MAD filed its 3q16 (to end May) financials and MD&A on Friday afternoon. There wasn’t a lot of
big news in the filings but we’ll take a few lines to note things that are different from our recent
write-up. However, I must stress that due to the small size of the numbers at MAD.v, things
that change the figures in a proportionately large way are often small in absolute size, so the
overall story here of “nothing really big to report” is the main message
On balance sheet items, cash at $1.756m was slightly below the IKN estimate of $1.9m, but the
bigger news was that marketable
securities have dropped to just $29,000.
That’s because MAD.v sold its 400,000
shares of Red Eagle (RD.v) during the
quarter and from what I can make out,
they must have sold them sooner rather
than later in the quarter and not got the
best price available.
Still, working capital at $1.782m is
reasonable enough and with the recent
placement that’s set to rise as expected.
I’ve just made a few slight adjustments to
the forward estimates based on the 2q16
numbers and it doesn’t quite get to $4m at
the end of the current quarter any
longer...but no biggie.
In the P+L, the only out-sized thing was a
$100k charge taken on forex, which inflated
the “other” part of the May 2016 column on
the right a little more than expected:
MAD: Expenditures breakdown
1
0.8
0.6
0.4
0.2
0
-0.2
-0.4
26
31.voN 41.beF 41.yaM 41.guA 41.voN 51.beF 51.yaM 51.guA 51.voN 61.beF 61.yaM
MAD: assets
6
5
4
3
2
1
0
$m Exploration net
office
consulting fees
other
wages
source: company filings, IKN ests
The net loss was in-line:
41.guA 41.voN 51.beF 51.yaM 51.guA 51.voN 61.beF 61.yaM tse61.guA tse61.voN
C$m
fixed assets
marketable securities
other short term
cash
source: company filings
MAD: Working capital
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
41.guA 41.voN 51.beF 51.yaM 51.guA 51.voN 61.beF 61.yaM tse61.guA tse61.voN
$m
source: company filings, IKN ests

,
MAD: Net loss per qtr
1
0.8
0.6
0.4
0.2
0
27
31.voN 41.beF 41.yaM 41.guA 41.voN 51.beF 51.yaM 51.guA 51.voN 61.beF 61.yaM
$m
source: company filings, IKN ests
Over at the MD&A there wasn’t much of note except for this, which gets quoted directly:
“Miranda continues to refine its Colombia exploration models including a re-focus towards
epithermal gold vein and replacement systems with higher grade potential. Recently
Miranda began evaluating a stratiform copper-silver province through reconnaissance and
evaluations of third party projects. This province displays values commonly of 1.5 to 2.5%
copper and are the first reported occurrence of these systems in Colombia.”
That can be translated as “we’re looking to do new things” and that’s good, because as
mentioned before the MAD assets as stand are mediocre at best. We also note that MAD.v has
two workshops lined up at the Sprott Natural Resource Symposium this week coming, which is
quite interesting because it’s by far the smallest exploreco to have been given space on the
speaker list. This, along with that semi-cryptic MD&A message that they’re up to new things
may suggest that the pumpo is about to get going. As things stand today I’m in and long but
not going to chase the stock price, not even a single half cent. If I can get a few more at or
preferably below my current cost average of 12.5c I will do so, but if I don’t get any I’m not
going to lose any sleep over it either.
Tahoe Resources (TAHO) (THO.to) has a Guatemala permit problem. Really.
Don’t underestimate the potential that Tahoe Resources (TAHO) (THO.to) mining licences are
coming under real and serious legal pressure. As noted on the blog last Thursday (19) there’s
now a formal petition in from the anti-mining legal pressure group CALAS as to the validity of
the mining permits awarded to the company for its Escobal mine in San Rafael las Flores. The
Ministry of Energy and Mining (MEM) has for around seven months done everything in its power
to delay and/or ignore the legal case building up against both it and the company, but with the
move last week and the formal petition, once the one month response period is up CALAS can
(and will) take the Minister to court for dereliction of duty. This is a powerful legal mechanicsm
and it’s the same strategy CALAS used to get the MEM to suspend and then rescind the permits
for the El Tambor/La Puya gold mine run by KCA. In that case, there was a judicial ruling to
suspend the mining permit but the MEM repeatedly ignored it until CALAS submitted its formal
petition. Once the one month period was done, CALAS moved to prosecute the Mining Minister
and within days the licence was suspended and eventually in June revoked. That’s the track
that the Tahoe Resources permits are now on.
Whether the permits get permanently revoked is up for debate (I doubt it, TAHO makes too
much money in a place like Guatemala to be clsoed down) but be clear, the political risk here is
much higher than the North is having you believe.
Conclusion
IKN376 is done, we end with bullet points:
• Atico (ATY.v) is an interesting story and it’s a buy, my first long in the copper space for
quite a while and be clear that this is a copper story, no matter how it’s framed the
gold is a minor payable. The key is to recognize that ATY is indeed going to get through

,
its 2016 financial period without the need to refi or dilute. Once through that, it will get
applause and higher share valuations even if copper doesn’t manage to move its price
up. The reward greatly outweighs the potential risk in this trade, the kind of odds I like.
• Want a value micro-cap? Tinka Resouces (TK.v) has its window of opportunity wide
open. The risk is if zinc the metal decides to reverse but its bullish run doesn’t seem to
be over. When TK hits 40c this year, don’t say you weren’t warned.
• Repeat message: Next Monday August 1st is a market holiday in Canada (though not in
the USA). I haven’t decided yet, but for personal reasons may take an extra day to
deliver IKN377 so if it doesn’t arrive in your mailbox Sunday evening don’t worry, it’ll
come Monday.
• If I had to bet on one stock getting a bump from the Sprott Vancouver bunfest next
week, the bet would be on Riverside Resources (RRI.v). I’d still like to add at lower
prices than this weekend’s 44c, though.
• Buy. Hold. Win.
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
Footnotes, appendices, references, disclaimer
(1)http://www.calculatedriskblog.com/
(2) http://www.forbes.com/profile/alexey-mordashov/
(3) http://www.aticomining.com/i/pdf/presentation/presentation.pdf
(4) http://finance.yahoo.com/news/atico-produces-4-79-million-203948432.html
(5) https://www.grousemountain.com/about
(6) http://www.hudbayminerals.com/English/Investor-Centre/Presentations-and-Events/Event-Details/2016/Q2-2016-
Conference-Call/default.aspx
(7) http://brecha.com.uy/la-venganza-las-mineras-sera-terrible/
(8) http://finance.yahoo.com/news/newmont-announces-second-quarter-operating-201500378.html
(9) http://www.aminera.com/2016/07/19/peru-cateriano-mineria-sigue-impulsando-crecimiento-la-economia/
(10) http://gestion.pe/economia/fmi-mantiene-proyeccion-crecimiento-peru-37-2016-2165903
(11) http://bloombergtv.ca/2016-07-22/shows/the-daily-brief/the-daily-brief-clips/lundin-gold-ceo-time-is-right-to-explore-
in-ecuador/
(12) http://www.diariopinion.com/nacional/verArticulo.php?id=940385
(13) http://www.energypress.com.ar/84323-presentan-manual-para-la-defensa-de-las-comunidades-frente-a-impactos-
de-la-mineria-en-mexico
(14) http://www.gacetamexicana.com/mineras-consumen-mexico-tienen-ya-12-territorio/
(15) http://www.sinembargo.mx/22-07-2016/3070159
(16) http://nwnoticias.com/#!/noticias/el-127-del-territorio-mexicano-concesionado-a-mineras-ongs
(17) http://periodicolavoz.com.mx/otorgan-a-mineras-12-7-del-territorio-nacional/
28

,
(18) http://finance.yahoo.com/news/wesdome-announces-second-quarter-2016-203000579.html
(19) http://incakolanews.blogspot.pe/2016/07/guatemala-tahoe-resources-taho-thoto.html
Stocks To Follow Closed Positions 2015
Closed in 2015 closed close price
Argonaut Gold AR.to jan'15 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'15 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'15 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'15 C$0.075 26-jan-14 C$0.035 -53.3% sm, sold on Cu downturn
Fortuna Silver FSM mar'15 U$4.12 10-nov-14 U$3.75 9.0% Short used as hedge
GoldQuest Min. GQC.v mar'15 C$0.26 27-oct-13 C$0.085 -67.3% given up ghost
Rio Alto Mining RIO.to apr'15 C$2.30 07-apr-11 C$3.57 55.2% Top pick, bot out, big win
Timmins Gold TGD jun'15 U$0.60 19-apr-15 U$0.62 3.3% near-term trade, out of time
First Majestic AG jul'15 U$10.51 10-aug-14 U$4.55 56.7% horrible failed trade
NovaCopper NCQ.to jul'15 C$1.05 09-apr-14 C$0.50 -52.4% no more Cu exposure, sm sell
McEwen Mining MUX aug'15 U$0.695 21-jul-15 U$0.92 32.4% Closed nearterm flip for win
Midas Gold MAX.to sep'15 C$0.39 21-sep-15 C$0.35 -10.3% Sm. trade idea that didn't work
New Gold NGD oct'15 U$2.18 23-aug-15 U$3.05 39.9% trade closed, profit taken
Legend Gold LGN.v nov'15 C$0.085 01-mar-15 C$0.035 -58.8% tiny "land grab" idea, failed
Timmins Gold TGD nov'15 U$0.245 20-sep-15 U$0.15 -38.8% small near-term loser
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