IKN #379Premium

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The IKN Weekly
Week 379, August 14th 2016
Contents
This Week: Trade heads-up and IKN Weekly delay in September, In today’s issue, Instant
gratification, Gold trends, A correction in the cards?
Fundamental Analysis: Wesdome Gold (WDO.to).
Stocks to Follow: Overview, Wesdome Gold (WDO.to), Riverside Resources (RRI.v), Tinka
Resources (TK.v), Atico Mining (ATY.v), B2Gold (BTG) (BTO.to), Regulus Resources (REG.v),
Sandstorm Gold (SSL.to) (SAND), Miranda (MAD.v).
Copper Basket: Overview, Amerigo (ARG.to), Cordoba (CDB.v), NGEx (NGQ.to), Ivanhoe
(IVN.to).
Low Cost Producer Basket: Overview.
Regional Politics: Guatemala: Mining royalty payments set to increase, Nicaragua: Caminic’s
annual event, Argentina: Beware inflation (again), Peru: Yanacocha kills Conga, Colombia:
October 2nd is the Ibagué referendum day, Colombia: Eco Oro (EOM.to) stripped of half its
concession.
Market Watching: Minera IRL: Peru Mining Ministry’s Gullermo Shinno talks up Minera IRL,
Dalradian Resources (DNA.to) trades higher, Plata Latina (PLA.v) redux, Gold Reserve (GRZ.v)
update: Still avoid this story like the plague, Episode four of “What I’d buy now”, Meeting
Regulus Resources (REG.v).
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 IKN Weekly delay in September
The usual top-of-the-tree notification: I’m buying more Wesdome Gold (WDO.to) and will take
advantage of the artificially low relative price of this stock in order to average down my current
position. All the details in ‘Fundamentals...’ below.
Also, please note that the edition of The IKN Weekly scheduled for Sunday September 11th
2016 (IKN383, I think) will be delayed by at least a couple of days and will probably go out on
Tuesday September 13th or Wednesday 14th. This is because I now have a site visit to the
Regulus Resources (REG.v) Antakori project set for those days (the only ones possible). As it’s
1) a Top Pick at the weekly 2) a large personal position that’s been going very well and 3) also
the first time any third party will have access to the project to see what’s going on, I’m going to
make an exception to the normal rule and the Weekly will be late that week. I hope you
understand this decision, more details in ‘Market Watching’ below.
In today’s issue
• The share price of Wesdome Gold (WDO.to) has been driven down by unusual
circumstances and is not justified by its strengthening fundamentals. It’s now a bargain
price and I’m buying more.
1

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• The pieces on Guatemala and Argentina are the main regional political developments
this week. Aside from the growth of anti-mine opposition, miners there will have State
burden hikes to contend with.
• Regulus is going well and I’m getting the chance to check out the project in September.
Nothing wrong with Tinka either that portfolio-based longer-term thinking won’t cure.
• Buy. Hold. Win.
Instant gratification
Bell, book, and candle shall not drive me back
When gold and silver becks me to come on
King John, Act 3, Sc 3, ll 14-15, Bill Quill
People will stop at nothing when shiny metals promise quick gains, not even eternal damnation
puts them off the scent. Back in the 13th century (as documented by Shakespeare in King John
at the end of the 16th) “bell, book and candle” was shorthand for excommunication from the
Catholic Church as, after passing sentence, the
presiding priest would ring a bell, close the bible
and then blow out a symbolic candle so the
condemned standing in front of him knew his soul
was lost to Lucifer. That was then when the glister
of physical metal was the prompt, these days we
have the stock market promo pump to steal your
soul. Rick Rule, Marin Katusa and Porter Stansberry
running a pump on Northern Dynasty concurrently?
Are you guys serious? When it comes to pumps like
this, I often find myself forming the question, “Are
people really this stu...” but never get to finish it
because yes, they are. Hey ho, NAK offers
optionality on poisoned salmon, I suppose.
A new trend I’ve noticed in my mailbag these last few days are complaints about the portfolio
stocks that have either turned into losses or haven’t moved with the rest of the market, with
the two best examples being Wesdome (WDO.to) and Tinka (TK.v), because I’ve received more
mail on those than any of the other stocks we either cover or follow. Now that’s fair enough,
but the trend that catches my beady eye can be paraphrased as “I’m thinking about selling my
Tinka because it hasn’t performed as well as XYZ”, or “Do you think Wesdome rebound,
because it’s getting expensive to own?”. I’m not going to quote anybody directly on this
subject, but I will say that there have been several mails of the same style from different
people. Ok, fair enough, I hear you, I’ve picked a duffer out the pack and you don’t like me any
longer. With that in mind, four points:
1) The IKN Weekly runs a portfolio of stocks for a very good reason. It’s not a big
portfolio, with just a couple of rare and temporary exceptions it’s one that’s deliberately
kept to a maximum of 15 names to avoid the newsletter no-lose BS, but it’s diverse
inside its limited parameters of “junior mining” and it’s also weighted in cash terms
which means that the top three positions plus Sandstorm have done me very well this
year. I would strongly suggest the reader considers why portfolio systems of equity
ownership have proven to be so popular over centuries of stock market trading.
2) If you have over 50% of your net wealth in juniors you shouldn’t be reading me, you
are not the audience for this publication and never will be, unsubscribe immediately
and save yourself some money. This also applies if you have more than 50% of the
money you invest in mining companies is in one single stock. What are you doing here?
3) You cannot win them all, period. The market participant needs to choose their
battles, and it’s often the case that not entering an eventual winning trade is more
2

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painful than backing a loser. If you think you can win them all, even in the hot market
period such as now, I again meekly suggest you use the advice on subscriptions in
point 2) above. I don’t like being wrong on trades, I don’t hide them, I try hard to be
realistic when things go wrong, but getting the big ones right inside a portfolio allows
space for the mistake to happen.
4) This novel trend of impatience with anything that doesn’t immediately move up, on
demand and in the near-term, impresses me greatly* but it also points towards a new
angle of opportunity, one that I plan to take advantage of next week by adding a
significant amount to my position in Wesdome and potentially adding to my Tinka
Resource holding if the price gets down to my cost average (and it’s not far away now).
It’s the way of the success-driven world that everyone’s out there all the time “killing it”,
strengths are lauded and weaknesses must be hidden from view for fear of being crushed by
the wheels of society. We’re told we learn from our mistakes, but may the High Deities help you
if you’re stupid enough to admit failure. In other words, the largest crock of shit served up by
our modern world and something you’re never going to get from The IKN Weekly. I can
guarantee that I will continue to fail, come up short, disappoint my audience and along the way
I’ll tell you about it when it happens.
*Impressive is not necessary a good thing
Gold trends
In The World Gold Council 2q16 and half-year report, found here (1) we learned last week that
the big gold client in all its forms so far in 2016 is the investment world. We the financial
players bought 448.4 metric tonnes of the stuff in the second quarter of this year, even greater
than jewelry demand (a rare thing for the market). Here’s one of the main tables from the
report which shows that overall demand YoY is up 15%, that’s more than enough all on its own
to justify the price improvement we’ve seen:
Jewelry demand dropped as prices rose, which is what jewelry demand tends to do in price rise
moments (it recovers during flat periods, it doesn’t necessarily need price drops). The WGC also
goes on to report the big change in gold demand is in The USA. There was a notable uptick in
recycled gold supply too.
3

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A correction in the cards? (A disjointed rant)
There are three side effects of acid: Enhanced long-term memory,
decreased short-term memory, and I forget the third.
Timothy Leary
Yes, it’s perfectly possible. I’ve been in several exchanges (regarding the current frothy nature
of the market this week and I too think we may be near a top, particularly in the junior mining
stocks. The market cannot go up in a straight line, we all know that and there’s a whole range
of signals coming from the market leading stocks that point to a move that’s getting tired. And
then there’s this...
GLD gold holdings, July to date (metric tonnes)
1000
990
980
970
960
950
940
930
920
910
900
4
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 61/52/7 61/62/7 61/72/7 61/82/7 61/92/7 61/1/8 61/2/8 61/3/8 61/4/8 61.8.5 61/8/8 61/9/8 61/01/8 61/11/8 61/21/8
mt
source: SPDR GLD data
...the way GLD found larger sellers and lost 20 metric tonnes of inventory since last week, with
12 of those coming off on Friday alone.
Then again, gold moves back up by $50/oz next week and the game is back on again for all
mining stocks, all shapes and all sizes. Take your pick.
Reader DQ yesterday Saturday sent over a very interesting presentation out of Gann Global
financial (here’s the link (2) and it’s recommended viewing) dated August 2nd (more recently
released to non-subscribers to Gann). The Gann guy uses largely technical analysis and is
calling for a correction in several places, including a “healthy correction” in gold in the near-
term that will set up a move to even higher prices. I listened, took notes, found the argument
credible.
• So yes, Gann Global’s take is a solid one, there are plenty of technical signals to expect
some sort of broad market correction.
• And yes, GLD is seeing selling and the gold stocks in particular have run too hard too
fast and need to correct at some point because no bull market goes up in a straight line
forever..
• And yes, the front line gold stocks are looking tired so when they reverse so the juniors
that have run further recently would normally come down with an even nastier jolt.
• And yes, I’m seeing anecdotals such as the complaints about non-performers in the
portfolio and the need to sell them because others are selling them in order to free up
cash for instant gratification wins.
But I’m not selling anything because I'm just too dumb at trading to enter the fray. I’m no good
at second-guessing very-near-term moves and what’s more, even when I try and they work out
I don’t enjoy the experience very much. Some people live and breath daytrading, I find the
whole thing stressful and ultimately too much like roulette for my taste. On the flipside I can
handle healthy corrections in issues such as B2Gold or Sandstorm if they come along, I don’t
feel the need to second-guess on Regulus, I have the patience to hold through on Starcore as it
treads water. All of which means I'm going to stick with fundamental analysis, with stock
picking, with the never-ending search for value (whatever that word might mean, I still don’t
understand it), I’m going to Buy. Hold. Win. Every bull market has a wall of worry to climb and

,
sometimes those worries aren’t a fantasy, they become real and lop a chunk of your paper
winnings from your holdings. For a while, at least. But even if the correction comes along don’t
lose sight of the real story here, WE ARE IN A BULL MARKET FOR GOLD.
Fundamental Analysis of Mining Stocks
Wesdome Gold (WDO.to) 2q16 financial results and trade update
NB: Please note that as WDO reports in Canadian Dollars, the Loonie is used as default
currency unless otherwise stated.
On Thursday August 11th Wesdome Gold Mines (WDO.to) announced (3) its 2q16 financials.
Today’s job therefore is reasonably straightforward, we examine the numbers WDO filings,
consider what we can expect from the company in the next couple of quarters, take into
account the developments in its share price action since taking a position in the stock and once
that’s all done, decide what to do about this underperforming position, on a buy/hold/sell basis.
Most of today’s piece is straight numbercrunching in order to get a quantitative handle on the
present day WDO and any personal opinion is left to the end of the piece so let’s get straight
down to it, less blah-blah and more numbers.
Production results and outlook
As both production and sales numbers for 2q16 were pre-announced by WDO on July 20th (4)
there aren’t any surprises in the reported
numbers in this first chart, so the big thing WDO: Gold prod/qtr
16000
here is to take a swing at what we can
14000
expect in 3q16 and 4q16. Starting with the
12000
production breakdown chart and WDO
10000
recovered well enough from the grade-
8000
related big 1q16 production miss (we talked
6000
about in detail in our original anal ysis of
4000
WDO in IKN371 dated June 19th, not going
2000
over all that again) and posted over 12k in
0
2q16. As the visual also suggests, I’m
expecting better things from WDO in the
second half of the year and that’s because:
• The Eagle underground (U/G) operation is now producing on the new higher grading 7
Zone, which reported an average 11.26 g/t gold grade. That compares with the 7.01
g/t Au milled in 2q16.
• The mill is back running at full tilt and we should expect continued good throughput
levels.
• Misha open pit has plenty of 1.8 g/t material stockpiled, we can expect better average
production grades from that end of WDO.
This gold grade tracking chart shows the big
1q16 dip at Eagle UG and the nearly-done recovery in 2q16. With the new rock now making
it to the mill, it’s not out the question to see the
type of bonanza grades last seen in 2014 but
let’s take things one step at a time, 9g is a
decent enough target for the time being.
If you do the math on that and assume the same
type of recovery grades as WDO has been
getting recently, we end up at a 3q16 production
5
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Ozt Au Mishi
Eagle River
source: WDO filings
WDO: Average gold grade, per qtr
14
12 12.5
10 10.1
8.7 9
8
7.01
6 7.4
7 6.6 4.9
4
2 2.4 1.8 2 2.3 2.6 1.9 1.5 1.8 1.8
0
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3
g/t Au
Eagle River Mishi
source: company filings

,
estimate of 13,800 ounces gold. When you figure that into the production and sales chart it
looks like this:
WDO: Gold production vs sales, per qtr
18000
15878 16023
16000 15188 14500 14000
14000 12408
12000 11740 11265
9633
10000
8100
8000
6000
4000
2000
0
6
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
Ozt Au
Serie1
Serie2
source: company filings
As you can see, I’m estimating sales of 14,500 oz in 3q16 as there’s a slight lag of sales from
2q16 which should catch up and boost the final total a little. For 4q16 I assume the same type
of 12koz output from Eagle U/G even though the company has suggested it could go higher,
and 2k from Misha rock (again, WDO says it’s capable of 3k/qtr, I’ll again stick to the
conservative side here and build in the potential for pleasant surprises).
All that means the 2016 forecast production is now a few ounces under 48,000oz Au. This
compares to the WDO guidance of between 54k and 60k which wasn’t changed during the 2q16
production report but is now under review by new CEO Duncan Middlemiss. Back in IKN371 I
just went with a blanket guess for the rest of the year based on the WDO guidance but also
said that I thought it was a crock. That’s now confirmed and I’ll go with 48k for the year, but as
you’ll see below that’s going to be more than enough to confirm the turnaround at WDO and
see the company posting positive financial results. This, plus the recent share price drop, is
what makes WDO so attractive as a trade today.
Financial results and outlook
To segue smoothly and professionally from production/sales to financial results and outlook (I
like to pretend I’m a professional sometimes) this
WDO: Realized gold price per qtr
next chart is chosen to show the connection
between the two and just why 3q16 is going to 1800 1740
1750
be a lot better than anything we’ve seen in 1700 1640 1637
1650
recent quarters at WDO. Realized gold price for 1600
the company in 2q16 came in at CAD$1,637/oz. 1 1 5 5 0 5 0 0 1499 1465 1467 1474
1450 1407
1400 1375
As things stand so far this month, gold has 1350
averaged CAD$1,740/oz or so and though it’s a 1300
1250
tough thing to predict a full quarter average you 1200
have to start somewhere, so I’m going to
assume that as the 3q16 realized selling price for
Q3. The point is, even if gold lags a little in
what’s left of the quarter (we’re half way through now) the realized price isn’t going to be a
little higher, but a LOT higher. That’s good for all Canadian gold mining companies of course,
but it’s especially good if you’re one of those outfits that’s been on the fulcrum point of
profitability up to now and that’s where WDO sits. And extra CAD$100/oz to selling prices
brings more leverage to a previous breakeven operation than it does to a Goldcorp.
What that means to operations and eventual profitability is shown in the main operations
overview chart below:
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3
CAD$/oz Au
source: company filings

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WDO.to: Operations overview
30
25.0 26.0
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 18.418.2 18.1 18.2
14.4
15 12.3 13.3
10
5
0
-5
7
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
CAD$m
revenues total op expenses Op earnings
source: company filings/IKN ests
Admittedly this chart is a little busy because I wanted to include the 2014 numbers (back when
WDO wasn’t as dysfunctional), but if you home in on the 2q16 numbers you see revenues of
CAD$18.447m and total operating expenses of CAD$18.232m (our estimates had assumed
CAD$18.0m, the fees to fight the proxy battle came in more expensive than I’d guessed at
$0.6m) for an operating earnings number of CAD$0.216m (IKN 2q16 estimate CAD$0.44m, so
we were pretty close). But then come our estimates for 3q16 and 4q16 and, as long as WDO
delivers on the reasonable-but-not-overly-optimistic production increases we’ve baked in for the
rest of the year, operating profit is set to move up sharply as you can see.
Here below left is a close-up of costs alone from the above chart, with the main “mine
processing costs” item isolated below right for easier viewing (same colour, same data).
WDO.to: Costs overview
25
20
15
10
5
0
As you can appreciate, WDO is pretty comprehensive about its operating costs and doesn’t try
any sleight of hand such as sliding G&A down to the “other costs” section (hello Fortuna Silver).
You can also see how mine processing costs are
pretty regular and we get a company that uses
at-or-around $18m per quarter to do its
business. I like predictable.
This chart right isolates the operating earnings
and presents them on a per-share basis (S/O
have just moved from 118.676m to 129.864m,
so it’s best to take this into account). The model
predicts a big change from the breakeven 2q16
to 5.3c/share in 3q16 and 6c in 4q16. That’s the
leverage of better gold prices writ large. This is
what makes WDO attractive today as it’s being
judged on what it’s just delivered in a non-
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
WDO.to: mine processing costs per qtr
CAD$m
mining processing costs depletion 18 G&A other expenses 15.36 15.38 15.86
1 1 4 6 13.41 12.89 14.10 12.95 14.39 13.95 14.50 14.50
12
9.68 10
8
6
4
2
0
Source: WDO.to filings, IKN ests
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
$m
source: company filings
WDO.to: operating earnings per share
0.07 0.060
0.06 0.055 0.053
0.05
0.04 0.034
0.026
0.03 0.019 0.023
0.02 0.013
0.01 0.002
0.00
-0.01 -0.004
-0.02 -0.012
-0.03
-0.04
-0.035
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
$
source: company financials/IKN ests

,
wonderful quarter and not on what it’s doing today. As for post-tax profits, they are as always
harder to predict in smaller mining companies that
can get their numbers skewed either way by WDO.to: Net Earnings
10
relatively small one-time influences. Also, as WDO 8
has been picking up financial credits they’re really 6
4.2 4.2
not the best way of judging this company on a 4 2.9 2.2 2.6 3.6
1.1 1.8 quarterly straight line basis. WDO returned a 2
bottom line profit of CAD$1.837m in 2q16 thanks 0
to one of those and that’s okay by be, but it’s a -2 -0.8 -0.7
-4
little flattering and in truth WDO was a breakeven -3.3
-6 -4.3
company last quarter. We’ll see better things from
the quarters to come and WDO will comfortably
fulfill the IKN Rule One (make a profit), but I will
continue to gauge its performance on operating
earnings rather than strict bottom line net/net.
Over at the balance sheet, things look just fine. Assets and liabilities overview charts here,
there’s not much difference between these now and the IKN371 overview, and thanks to the
recent placement WDO has plenty of cash liquidity.
Something I do expect in the quarters to come is a WDO that pays down part of its debt and
work on that rather than trying to swell treasury. But even if my assumption there is wrong,
with net profits expected in the second half of this year working capital should improve quickly
and that’s the datapoint that really matters.
Recent share price action
We now need to move away slightly from the strict focus on financial and outlook at WDO in
order to take into account the share price movements in WDO. We’ve recently seen three main
influences on share prices:
1) The stock was bought in large quantities by Tom Stanley of Resolute Funds as he/they
8
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
source: company filings/IKN ests
srallod
fo
snoillim
WDO.to: Assets
160
140
120
100
80
60
40
20
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
WDO.to: Debt Breakdown per qtr $m
fixed 35 other current
cash 30
25
20
15
10
5
0
source: WDO.to filings
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
source: company filings
srallod
fo
snoillim
LT debt
current debt
WDO.to: Cash treasury per qtr
40
35
30
25
20
15
10
5
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
source: company filings/IKN ests
srallod
fo
snoillim
40 WDO.to: Working Capital per qtr
35
30
25
20
15
10
5
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
source company filings/IKN ests
srallod
fo
snoillim

,
increased position to fight the proxy AGM.
2) After the AGM, rumours were rife that Stanley (plus allies) would move to buy out
WDO, most likely via an offer from Kirkland Lake (KGI). This is of course the major
reason I personally recommended the stock as a buy in June and bought share myself.
This caused the stock to move up sharply from the $1.70s level to $1.90 and eventually
$2.10s or so.
3) Then the recent action, that’s seen Tom Stanley sell down his position to a recently
disclosed 17.5% (see IKN378 last week). This heavy selling has weighed heavily on the
stock and pushed it down to this weekend’s $1.57 price.
Even after taking into account the rise in the share count, the recent selling has had an
impressive effect on the share price, as seen in the chart below right.
WDO.to: Shares Out
150
140
129.9130.0 130.0
130
118.1 118.7
120
111.1 111.1 110.9 111.0 111.1 111.1 111.2
110 105.8
100
90
80
We’re now back to a market cap seen at the end of the terrible 1q16 quarter and $44.5m has
been sliced off since end 2q16. Now that may be due to a lacklustre quarter just posted, but it
really wasn’t that bad and Q3 is going to be a lot better. No, the only logical reason for the
price drop in WDO these last few weeks is selling pressure from Resolute.
Here’s a three month price chart of WDO and we see three phases of interest. Box 1 shows that
after a rocky 1q16 and poor production results, WDO had steadied its ship and was performing
to the market benchmark. Then came the strong rumours of a buyout, friendly hostile or
otherwise, which shifted WDO into a higher gear (and got me long as well). That period lasted
until early July when suddenly WDO reverted back to benchmark performance as the chances
of a deal subsided and unknown at the time Tom Stanley at Resolute began to unwind his
newly acquired out-size long position. July saw WDO trading quietly (and ignorant old me still
thought a deal was likely) but that changed at the end of last month as the selling pressure
began to accelerate, a phase that continues until today.
You’ll also note the significant drop of traded volume in WDO. Other market participants are not
stupid, they spot somebody determined to sell at any price and they’ll happily give that person
9
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
source: company filings/IKN ests
serahs
fo
snoillim
WDO.to: Market cap at qtr end
300
250
200
150
100
50
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 WON
$m
source: TSX, WDO.to filings

,
precisely that opportunity; if they really want to sell, let it be any price. As Napoleon is
supposed to have said before making a decisive attack at the Battle of Austerlitz in 1805, “Let
us wait twenty minutes; when the enemy is making a false movement we must take good care
not to interrupt him.”
Which brings us to the meta data and the one that matters, the one on which I’m betting my
money, the price/book ratio at WDO. Here you see
how that’s progressed in the last three years and WDO.to: Price / Book Value Ratio
from the dog days of the bear market, WDO like 2.60
2.40
many others sprung back as the gold price moved 2.20
up. It commanded 2x P/Bv even after the poor 2.00
1.80
1q16 financials because it became clear the 1.60
company was moving into profitability, then came 1.40
1.20
all the proxy battle and takeover talk fun. But since
1.00
then, the driving down of the share price has seen 0.80
P/Bv drop to 1.64X, the lowest since January 2016 0.60
0.40
when gold’s big move had hardly started.
If WDO were a loss-making company, or in a sector
falling out of favour, or with significant balance
sheet weakness that type of drop in relative book value could be understood from a
fundamentals point of view but WDO is none of the above, it’s a company that did indeed have
a rough period at the start of the year but is now back on track and thanks to the strong rise in
the price of gold (especially true in Loonie terms) it’s now a strongly profitable company. For
another angle, just earnings alone show WDO as a true bargain today because even my
reasonably conservative operating assumptions for the next couple of quarters bring it to a
forward 8X price/operating earnings multiple and I can show you dozens of companies running
12X on that, many of them in much worse financial shape than WDO (there are some at 15X
and above too, but let’s not shoot too high straight away).
Want another cherry-picked comparative to show my bias confirmation? Yeah sure, we can do
this ☺. If WDO were a silver producer, at the current gold/silver ratio it would be a profit-
making 3.2m oz AgEq per year company with a market cap of U$156m. If you care to check
around a little, that puts WDO at roughly 50% the market cap of an equivalent, modestly
profitable silver name on a per-ounce basis and that means that even if, like me, you think
silver companies are priced too expensively these days there’s still a ton of room for WDO’s
share price to improve as soon as it comes back into favour.
Discussion and conclusion
I could go on and on, the point should be clear by now and the price/book at WDO today holds
the key to it all. Once Tom Stanley and Resolute Funds have stopped their selling, WDO will
bounce back to the type of valuation it was getting before because it’s a healthy company that’s
back on track and producing gold at a profit. It doesn’t even need gold to improve any further,
CAD$1,700/oz to 1750 will be more than enough to see the ratio return to North of 2X. This
bargain has manifested itself due to artificial and temporary selling pressure by a man who’s
using emotions and not mathematics or cold market logic to make his decisions. But hey, it’s a
free country and he can do what he wants with his own money. I hope he continues to do just
that, in fact.
I believe that Tom Stanley is making a big mistake here and is guilty of trading on emotions, he
may well be pissed at WDO and he wants them to fee the pain of a big share price drop. Well
fine, he as a large shareholder has the ammunition and the will to move the stock like that but
once he’s done selling WDO will bounce back and perform well because that’s what happens in
capital markets. Any stock-based price influence only lasts so long, what really counts in the
end is the company’s fundamentals, the solidity or otherwise of its business, its potential to
make a profit. As WDO has managed to right its ship and Q3 will come in well Stanley is making
in my opinion a stupid and emotionally charged mistake with his own money. That’s a good
10
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 WON tse61q3
P/BV
source: TSX, WDO filings, IKN ests

,
thing, because it’s opened up a window of obvious opportunity to buy a profitable gold
producer at a sizeable discount and I’m not going to let this opportunity run away from me, I’ll
take a small part of his counter thanks very much.
It’s normally a cardinal sin in markets to stay in a stock once its story changes, but this one has
all the look of the exception that proves the rule. If WDO were in bad financial shape I wouldn’t
get involved any further, now that the opportunity for the buyout payola seems to have passed
me by I’d just pack up, sell the position, take the loss, move on. The thing that makes this
trade attractive is that WDO is in good shape, not bad. Financially sound, profitable, growth on
board and all at the right time in the old market. The IKN Weekly reiterates its buy call on
Wesdome Gold Mines (WDO.to) and sets a new target based on its next six months
of projected operations, rather than the aborted buyout assumption of before, of
CAD$2.05, representing a 30.6% potential upside from this weekend’s level. I plan to
add substantially to my position next week and will buy in tranches, as it’s likely the stock will
go lower before reverting and moving higher. To give a rough idea, I hope to get my current
cost average of $1.90 down into the $1.60s. Be clear that I haven’t given up on the idea of
WDO as an imminent takeover target, as with Makuch at KGI and Middlemiss at WDO I’m sure
those two can at least have a polite conversation and perhaps find enough common ground.
But the actions of Stanley/Resolute have sent a clear message that chances have diminished
greatly in recent weeks, one that’s illogical to ignore. Therefore I’m keeping the possible buyout
as potential gravy, but changing the rationale for the price target to something based firmly on
what WDO is today (and for what it’s worth I’m being pretty darned conservative too, I could
have tried to wow you all with a CAD$2.50 target but The IKN Weekly just doesn’t work like
that). But what it does do is spot the wrinkles and when the stock market offers you an
anomaly, it’s best to say thank you and accept it. I add to my WDO.
Stocks to Follow
Six of the twelve open positions on The IKN Weekly ‘Stocks to Follow’ list made gains last week
(BTO.to, REG.v, SAM.to, SAND, ATY.v, CNL.to), including the four biggest positions in cash
terms, so that’s good. The big winners were Regulus (REG.v up 22.6%) and Sandstorm (SAND
up 13.2%). Not so good are the losers, four positions lost ground (TK.v, WDO.to, RRI.v, MAD.v,
LRA.v) and the biggest loss in Wesdome (WDO.to down 11.3%) wasn’t much fun, though it
now opens the door to the opportunity you’ve read above in today’s Fundamentals section (the
beauty of being a neverwrong newsletter writer is to adapt reality to suit circumstances). Then
two others were unchanged on the week (MAD.v, FCV.v).
We currently have 12 open positions, three fewer than our self-imposed maximum of fifteen at
any given time. Ten stocks are in the green, two in the red.
11

,
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to hold C$2.11 12-sep-14 C$4.49 112.8% tgt $5.30 IKN375
Regulus Res REG.v hold C$0.64 06-apr-15 C$1.68 162.5% LT exploreco top pick
Starcore Intl SAM.to STR buy C$0.62 10-jan-15 C$0.76 22.6% $1.04 tgt, good qtr posted
Long positions (in current order of preference)
Sandstorm Gold SAND hold U$3.80 17-apr-16 U$6.53 71.8% New $7 tgt IKN378, v. strong
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.20 2.6% Top value under radar Zn play
Wesdome Gold WDO.to STR buy C$1.90 22-may-16 C$1.57 -17.4% New tgt, avg down, top value
Atico Mining ATY.v buy C$0.48 24-jul-16 C$0.52 8.3% 70c tgt, Cu play, want to add
Riverside Res RRI.v buy C$0.38 27-jun-16 C$0.425 11.8% Proj. Gen. model. 60c tgt
Continental Gold CNL.to buy C$2.68 22-may-16 C$3.69 37.7% permit 4q16/1q17, $4.80 tgt
Miranda Gold MAD.v spec buy C$0.125 03-jul-16 C$0.13 4.0% Small play, flip, so far quiet
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.38 20.0% 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
None at present
Closed in 2016 closed close price
Phoscan Chem FOS.to jan16 C$0.28 29-mar-15 C$0.265 -5.4% Buyout trade, bot but poor deal
True Gold TGM.v jan16 C$0.18 23-aug-15 C$0.25 38.9% okay trade, sold on pol risk
McEwen Mining MUX jan16 U$1.09 25-jan-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-apr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-apr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-jan-16 U$2.96 43.7% closed good near-term trade
Sandspring Res SSP.v mar-16 C$0.195 18-oct-15 C$0.32 64.1% Hit tgt, took profit
Teranga Gold TGZ.to mar-16 C$0.54 15-feb-15 C$0.60 11.1% disappointing trade
B2Gold BTG mar-16 U$0.85 13-jan-16 U$1.30 52.9% Separate trade on B2, hit tgt
Dalradian Res DNA.to mar-16 C$0.67 27-oct-13 C$1.00 49.3% Hit target, sold, good win
HudBay Min. HBM may-16 U$4.10 03-apr-16 U$4.36 -6.3% Short trade, poor timing
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
HudBay Min. HBM aug16 U$4.98 09-jun-16 U$4.80 3.6% short trade covered, no big deal
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
Wesdome Gold (WDO.to): Adding. A lot on WDO above today, here we note for the record
that I’m going to expand this position and average down on costs next week. Compellingly
cheap stock under today’s market circumstance.
Riverside Resources (RRI.v): Still trying to add on weakness. If it went up I’d be
reasonably happy because I’m already long (even though the position is a little light in absolute
terms). If it went down I’d be happier, because I’d then add to my heart’s content at a
reasonable addition point. Instead and for the fourth (?) week running we’re stuck in No Man’s
Land and my “still trying to add on weakness” message is left unchanged. Because it’s true.
Tinka Resources (TK.v): Add?. On Wednesday evening TK CEO Graham Carman and I
managed to squeeze in a quick meeting, which literally happened because I flew into an airport
and he was flying out of it 45 minutes after I arrived. We got about half an hour together in
one corner of Lima Starbucks which isn’t enough to go into deep detail about everything I’d
want to know, but we still managed to cover the main points.
12

,
• Drilling permits are taking their sweet time. This isn’t due to any problems at TK, it’s
because Peru has recently added another layer of permitting requirements and now, in
effect and to explain it over-simply, once you have your permit you need another
permit so that first permit is valid. The boring technical details are just that, the real
world upshot is that TK now expects its drilling campaign to kick off in 4q16, not 3q16.
• Community-wise, things are going nicely. Plenty of acceptance from the three
population zones (all small) on top of TK’s concession, most of the formal agreements
are in place (including the ones needed for the first phase of drilling), all formal
agreements are expected to be wrapped up soon. From what I heard, things are fine.
• The results from the Airborne geophysics testing of a couple of months ago should be
with us in the public sphere soon. CEO Carman didn’t want to say too much, but it’s
clear enough from his expression and guarded tone that the company likes what
they’ve seen. Some new targets produced, other results are likely to confirm the
prospectivity of previously generated targets (and help refine them).
• Treasury-wise, TK is in a better position than I expected with around C$2.5m at bank.
That means no immediate pressure to finance, but it’s also clear that the company is
looking to raise funds soon and will probably get enough to see it through the whole of
2017. CEO Carman reports plenty of interest at an insto level, both from funds already
in and new potential backers. And yes, I know most CEOS would look you in the eye
and say that kind of thing but here’s the advantage of working with a guy like Carman,
he’s a straight shooter, doesn’t bullshit anyone and if he says that kind of thing it’s
because it’s true.
TK is a great bargain and the recent round of “selling because it’s not moving up” is a fine
opportunity to add at a discount price. I’m looking to add next week if the current prices are on
offer again.
Atico Mining (ATY.v): ATY didn’t offer a real
chance to add on weakness spent all week except
for a very early Monday trade over 50c. It was
looking to be a quiet week on volumes too, very
itty-bitty right up to half an hour before the close
on Friday when suddenly Scotia put through a 2m
share cross at 52c. As this three month charts
shows, that’s a big block of Atico. It’s also at a
new level of pricing for the year, only time will tell
whether the buyer or the seller is the smart one.
I’m betting on the buyer.
B2Gold (BTO.to) (BTG): Plenty of BTO dropped 3.5% in the last few minutes of Thursday
trading, which was weird until the news came out post-bell (5) that it had agreed to run a
$100m at-the-market share placement.
And I was like, “Oh crap, The Clive couldn’t resist it could he? He hates the fact the share price
is rising so much and the company gets no direct tangible advantage, he has to get his slice”.
It’s the kind of crap you have to suck up from this guy, underscored by the NR section which
explains what BTO plans to do with its new-found booty:
The Company intends to use the net proceeds of the Offering, if any, to fund
ongoing general corporate expenditures, discretionary capital programs,
accelerated exploration at the Fekola Project in Mali and exploration and
feasibility work at the Kiaka Project in Burkina Faso.
13

,
In other words, anything they want to do. Uff. And
by way of a cherry on the cake, if you check out the
five day price chart you’ll see that the price started
drifting on Thursday afternoon, before the deal was
announced. Aka “small favours for friends”.
Grumble over. BTO is still my Top Pick and biggest
position. It’s nothing personal, it’s capitalism.
Regulus Resources (REG.v): I met with REG.v CEO John Black last week and the results of
that chat can be found in ‘Market Watching’ below. Here we note the stellar trading action in
REG last week, the stock pushing on the from recent lull around the placement price and
breaking as high as $1.87 at one point before trading to a Friday close of $1.68, up and
impressive 22.6% on the week. The move last week has all the hallmarks of “no sellers”,
volume was light-ish, barring Thursday when 159k of shares saw REG touch that $1.87 (looked
fat finger). It may be different come November when the recent placement shares come out of
escrow, but there seems to be very few people willing to sell at this point and take intermediate
profits. It’s dawning on people just what Antakori could be. We were in first. Ha.
Sandstorm Gold (SSL.to) (SAND): I’m glad I raised the target price on SAND last week, as
it went through my previous U$6.20 number like a dose of salts last week and even started to
sniff at threatening the new U$7.00 number. Even though it backed off at the end of the week
SAND had another stellar time at market and is now one of the firm market leader stocks in its
mid-cap sector, a go-to for larger money wanting to rotate out of Tier One stocks and add risk.
It’s a nosebleed ride for me, I’m setting 12 month target prices that are taken out in weeks and
then new ones that are threatened in mere days.
Miranda Gold (MAD.v): Very quiet but I don’t care much, tiny position as it is. It has three
months to do something. Next question.
The Copper Basket
After thirty-two weeks of 2016, The Copper Basket shows a 91.55% gain to level stakes.
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 HudBay Min. HBM.to 5.31 235.23 1420.79 6.04 13.7%
2 Ivanhoe Mines IVN.to 0.61 778.96 1339.81 1.72 182.0%
3 Reservoir Min. RMC.v 4.08 48.69 449.41 9.23 126.2%
4 Capstone Min. CS.to 0.44 382.04 324.73 0.85 93.2%
5 NGEx Resources NGQ.to 0.65 205.06 250.17 1.22 87.7%
6 Western Copper WRN.to 0.38 94.19 111.14 1.18 210.5%
7 NovaCopper NCQ.to 0.395 104.33 81.38 0.78 97.5%
8 Cordoba Min. CDB.v 0.16 86.86 78.17 0.90 462.5%
9 Copper Mtn CUM.to 0.445 118.8 60.59 0.51 14.6%
10 Nevada Copper NCU.to 0.66 80.5 53.94 0.67 1.5%
11 Atico Mining ATY.v 0.28 97.59 50.75 0.52 85.7%
12 Copper Fox CUU.v 0.125 417.64 50.12 0.12 -4.0%
13 Amerigo Res ARG.to 0.205 173.61 29.51 0.17 -17.1%
14 Hot Chili Ltd HCH.ax 0.09 445.723 22.29 0.05 -44.4%
15 Revelo Res. RVL.v 0.055 99.19 8.93 0.09 63.6%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 91.55%
14

,
The Copper Basket average rose by a little under 4%, more than enough to set yet another
new 2016 high. A full nine of the stocks
registered weekly gains (HBM.to, IVN.to,
CS.to, NGQ.to, NCU.to, NCQ.to, WRN.to,
ATY.v, RVL.v), two were unchanged (RMC.v
because it’s sold out, then ARG,to), just four
signed off on weekly losses (CUM.to, CUU.v,
HCH.ax, CDB.v). The best performer was
Ivanhoe (IVN.to up 17.8%) thanks to some
bullish news and a very full explanation of
what it all means in the news release (that
Friedland guy, why don’t more people do the
same as him?). No other stock moved up or
down by double percentage figures.
Over at the copper trading pit the metal was mostly
unchanged until the end of the week, when news from
China was that the July financial data showed loans in
Yuans had dropped off, which means the expected
government economic stimulus we (they?) were all
expecting has failed to materialize, so far at least (6).
Imagine that! The Chinese government not doing
what it was expected to do! How rebellious of them!
What a shocker!
Now for the copper warehouse inventory bullets for
the week:
• Another modest move in the total world
copper inventories last week, this week up a
small 5,514 metric tonnes (mt) (+1.3%) to
finish Friday at 436,832mt.
• Shanghai stocks made an upmove for the first time in a month, rising 9,234mt (+5.6%)
to reach 174,563 by week’s end.
• LME stocks went the other way, down 4,275mt (-2.1%) to close the week at
202,375mt.
• At Comex, little change. Stocks rose by 465mt (+0.8%) to finish Friday at 59,894mt.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
15
31'13ceD ht91 ht9 dn2ram dr32 ht31 ht4yam ht52 ht51 ht6yluj ht72 ht71 ht7 ht82 ht91 ht9 ht03 ts12 ht11 ts1bef dn22 ht51 ht5rpa ht62 ht71 ht7nuj ht82 ht91 ht9 ht03 ht02 ht11 ts1von dn22 ht31 dr3naj ht42 ht41 ht6ram ht72 ht71 ht8 ht92 ht91 ht01 ts13
The Copper Basket 2016, weekly evolution
100%
80%
60%
40%
20%
0%
-20%
Mt Cu
source: Cochilco
In other words, another quiet week and that’s normal for August. China has been glued to the
synchronized diving and the table tennis. Above is the Shanghai-only chart which shows the
dr3naj ht01 ht71 ht42 ts13 t7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 r3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71 ht42 ts13 t7gua ht41
source: IKN calcs

,
lateral pattern continues. Expect more of the same in the next three to four weeks, let’s see
how Labor Day changes matters.
Now for notes on a couple of the basket component stocks:
Amerigo Resources (ARG.to): This one was on my shortlist shopping list as the potential
next purchase in the copper space. It’s not there any longer. As noted last weekend, last week
was the time for ARG’s 2q16 financials and while they weren’t anybody’s idea of a disaster,
after a careful picking over of the financials the conclusion is unavoidable; there’s no trade here
yet, not for the time being anyway. If copper prices improve so will AG (natch), but after
looking at the inner financials at ARG it’s not one that’s going to enjoy the type of first modest
flush in copper price to $2.30/lb or $2.40/lb that I’m pencilling in, not as much as others
anyway. I came away from the ARG numbers thinking about adding to my Atico (ATY.v)
position, because for the same type of small copper producer position ATY is in much better
shape as a company.
Bottom line: ARG discarded from the potentials. Hey, I’m favouring NGEx Resources anyway.
Cordoba Minerals (CDB.v): On Friday evening reader ‘RW’ reminded me of my note in
IKN368 dated May 29th entitled “Cordoba Minerals (CDB.v) is back at a buyable price”, written
when it was at 57c. As RW noted in his mail today it’s a 90c stock it’s 57.9% higher than eleven
weeks ago, it’s attracted heavyweight newsletter support from the likes of Brent Cook and RW’s
mail ended with a question that was simplicity itself: “How do you feel, Mark?” (though he
added an emoticon smiley).
Fair question RW. To start the answer here’s how that IKN368 article finished (excerpt):
With 86.8m shares outstanding (fully diluted 109.1m), a share price of 57c and a
consequent market cap of just under CAD$50m, CDB is now priced in the same range
as my Top Pick stock Regulus (REG.v). It’s prospectivity is clear, we’ll need to see how
the next set of drills come in but overall, this looks the right type of price for anyone
(like me) who watched as the stock shot off without them to consider an entry. We’re
not going to see anything close to 16c ever again in this stock (well, at least in the
indefinite future, you know what I mean) and if it lives up to the billing of its clearly
enthusiastic and positive CEO (who, we recall, left the CFO post at Lake Shore Gold to
join this company) there will be the same type of upside in CDB that I see in the
longer-term future of REG. I’m not going to jump in immediately, but I wouldn’t have
a word against anyone who decides to allocate some of their risk capital to this combo
of better entry point and exciting prospect.
In the piece I noted that CDB was at that point a contemporary to our house Top Pic k and my
preferred play on copper exploreco, Regulus
(REG.v). Back then REG was at 90c, it’s now
$1.68, it’s up 80.6%...so smiley right back at you
☺. But more seriously, yes of course I’ve played
this stock badly and not climbed aboard even
after identifying its potential on several occasions
in the year. I’m not going to deny to obvious, it
doesn’t matter how much ‘potential’ I spy in CDB
or any other stock if I don’t step up to the plate
and buy the equity.
One thing I did notice last week though; when
CDB released its latest set of drill numbers (7)
the stock price didn’t move, even though
numbers were good and grades strong on the target they were going for. And the NR included
the line that, “....ongoing drilling at the Alacran Copper-Gold Deposit has discovered significant
new lateral extensions to known copper-gold mineralization, indicating significant potential for a
16

,
large tonnage open-pit copper-gold resource”, a reasonable claim and justified by what we got
from the drills.
It’s hardly the only one out there, but the stock price move in CDB now looks tired. Add in how
I’m happy about my exposure to copper via REG.v and then my leeriness to Colombia exposure
(being long CNL.to for very specific reasons is enough for the moment) and I’ll continue to
leave CB.v to others, but I will reiterate that I wouldn’t have anything to say against the person
who speculates via this stock. Certainly prospective and if Cook/Mazumdar like it, it’s likeable
period.
NGEx Resources (NGQ.to): NGQ told the market what it wanted to hear last week when on
Friday it announced that (8) the spin-out of the silver zone into newco Filo Silver. That’s due to
start trading at the end of this week coming and if you want shares, be a holder of NGQ by
August 23rd.Then on Friday NGQ announced its 2q16 financials (9), which were in-line with
expectations.
I’ve worked quite closely on the NGQ numbers this week and I’m close to buying some. The Filo
Silver deal looks very attractive and provides instant asset value re-rating, I like the size of
copper up there, I don’t like Argentina long-term but it has its attraction in the near-term for a
potential trade. I’m going to take another week to think about it, whuss that I am.
The Low Cost Producer Basket
After 32 weeks of 2016, the Producer Basket shows a gain of 158.63% to level stakes.
company ticker price 1/1/16 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Barrick ABX 7.38 1164.67 25.33 21.75 194.7%
2 Newmont NEM 17.98 529.12 23.90 45.17 151.2%
3 Goldcorp GG 11.56 830.22 15.67 18.88 63.3%
4 Franco Nevada FNV 45.75 176.298 13.71 77.77 68.5%
5 Agnico Eagle AEM 26.28 217.67 12.72 58.46 122.5%
6 Ang/Ashanti AU 7.10 405.27 8.88 21.91 208.6%
7 Detour Gold DGC.to 14.41 170.85 5.79 33.91 135.3%
8 Sibanye Gold SBGL 6.09 228.71 4.60 20.10 230.0%
9 Buenaventura BVN 4.28 254.19 3.97 15.62 265.0%
10 New Gold NGD 2.32 509.89 2.91 5.70 145.7%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 158.63%
A full house of winner for our basket this week, led by Goldcorp (GG up 8.1%) as that stock
finally put in a long-overdue rebound bounce. All the others registered gains too, but the range
of +0.8% to +3.2% for the nine means GG was the clear winner for the week.
The Low Cost Producer Basket: Weekly performance
200% and comparative to GDX control
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
-20%
GG finally got its bounce helped in no small measure by a “three days with Garofalo” piece
17
dr3naj ht01 ht71 ht42 ts13 t7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 r3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71 ht42 ts13 t7gua ht41
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
0%
basket -5% gdx control
-10%
-15%
-20%
-25%
-30%
-35%
-40%
source: Google, IKN calcs
ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 ts1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71 ht42 ts13 ht7gua ht41
source: ikn calcs, NYSE/Nasdaq data

,
produced by Scotia in which Garofalo used a Jam Tomorrow strategy and said that Peñasquito
and Cerro Negro were already doing better than in Q2 (not difficult, they couldn’t have been
any worse) then Scotia’s hook was “why wait until the end of the fourth quarter to buy these
improvements, GG is cheap now!”. Bless them all. Apart from that stock, the bigger boys really
did trade as a team and looked tired at the end of the week, There’s that “tired” word again.
Regional politics
Guatemala: Mining royalty payments set to increase
Last week in the politics section we noted the slight mystery of a new Vice-minister of Mining in
Guatemala. This week the reasons behind the change may have become clear, as the country’s
President Jimmy Morales announced (10) a whole range of tax increase proposals that include a
bump of duty on fuel from Thee Quetzals (GTQ) to Five Quetzals (1 Quetzal = U$0.133) per US
gallon, additions to VAT (sales tax) and corporate income tax back up to 29% (from 25%).
All those will affect mining costs in Guatemala indirectly, but the one that really matters is the
Jimmy Morales proposal to raise royalties on extractive industries (i.e. O&G and mining) from
1% to 10%. At the moment, several mining companies in Guatemala are paying more than the
legally stipulated 1%, with “voluntary payments” topping up royalties to between 5% and 5.5%
(the highest profile cases are Goldcorp at Marlin and Tahoe Resources at Escobal). But the
royalty initiative is only one of a total of 47 changes proposed by parliamentarians the current
Mining Law, there will be a lot to talk about next week including one of the other main events a
clause to give official prior consultancy rights to locals directly affected by any mining project.
Theoretically this law already exists as part of the OIT169 international rulebook to which
Guatemala is a signee, but the country now wants prior consultancy in its own organic law.
The law projects will be debated and voted on in parliament next week and once passed,
they’re most likely to come into effect on January 1st 2017 (the usual date in Guatemala for
fiscal changes, but that’s only an assumption at this stage and there’s nothing to stop them
from effecting them immediately). The package is likely to pass largely to the government’s
liking too, with influential people such as the US Ambassador to Guatemala making off-record
noises of approval for the reforms and the anti-corruption body CICIG approving (and set to
receive more State funding as a result). We should also note that the 10% mining royalty isn’t
the most extreme proposal out there, as the centre-left TODOS party, an umbrella political
coalition made up of several smaller groups typically connected with indigenous rights and rural
communities that controls just 18 of the 158 parliament seats in Congress, counter-proposed on
Friday a law that raised royalties on mining operations to 25% (11). The 25% level is unlikely to
pass however, it has the look of the radical outlier that lets the government proposed 10% pass
more easily.
Nicaragua: Caminic’s annual event
Next week sees Nicaragua’s main mining conference, organized by the country’s chamber of
mining CAMINIC (12). Coinciding with the event, Nica’s major newspaper published a long and
good interview with CAMINIC president Sergio Ríos Molina which is on link (13) below and is
recommended reading for anyone into the Nicaragua mining space (it’s in Spanish, there’s
always Google Translate). Ríos Molina comes across as a smart guy with his head screwed on
about the reality of mining, both in Nicaragua and the wider world. For example, here’s what he
had to say about the fact that the Rancho Grande project was denied its social licence by locals
who opposed it:
“I think at the end of the day the worst affected (by the denial of the Rancho Grande
permit) wasn’t the mining industry, but the community and municipality. However we
cannot think that we are the owners of the truth, social licences must be won and
populations have to be convinced that these projects are going to improve their lives
and those of their children. If we can’t offer those conditions, then logically we can’t
develop a project.”
But this last Q&A regarding the background and roles of NGOs is a great answer too:
18

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Question: Some anti-mining campaigns are financed by European organizations. How
can you explain that?
Sergio Ríos Molina: It’s important to recognize that serious organizations that really
work for the well-being of populations and nature do exist. This is good for the country
and for the mining industry, too. But there are others who use financing to affect the
growth of industry in less developed countries and that is wrong. We should be clear
that the countries who finance (anti-mining campaigns) are developed economies that
have reached their current level of wealth by taking advantage of their natural
resources and in many cases those of other countries like ours. Now they try to stop us
from doing the same thing. To date I haven’t seen a single campaign to stop the import
of minerals to their countries and that must be because it would affect their economies
...(continues)”.
From where I sit, he sounds like the right person to develop mining in Nicaragua.
Argentina: Beware inflation (again)
The message about Argentina here at The IKN Weekly has been consistent: Yes there is new
interest about the country since Macri took over, but fools rush in where angels fear to tread
and the reforms he wants to push through have no guarantee of success.
We’ve also been pointing at the key datapoint you need to follow for almost a year, long before
it got popular in the trade press. Macri needs to lower inflation and he and his team have
always set “the second half of 2016” as their target for this. The reason is simple enough:
Under Cristina Fernández de Kirchner inflation was always high, but large percentage pay
increases saw the purchasing power of the average Argentine keep pace with prices. This isn’t a
sustainable situation in the long-term and leads to real hyperinflation problems (see Venezuela),
but it can keep things stable in the medium-term and nearly always longer than orthodox
economists claim. But under Macri salary rises have been largely crimped, so inflation needs to
come down quickly because if not, Argentina suddenly becomes poor in Peso terms (which is
what counts when you’re in the supermarket).
That’s the VERY basic outline, now for the rub because doubts are now arising about this fight
against inflation, here are a couple of links for your consideration.
Here in this Reuters report (14) last week, the local bigwig for JP Morgan, Facundo Gómez
Minujin, said the following (translated):
“For this year we see inflation at 42% and then for next year 21%. And it’s difficult to
change that trend. It’s difficult to lower inflation by much, especially next year when
there are elections”.
By that, he’s referring to the round of Congressional mid-term elections when a lot of the seats
in the national parliament are up for grabs. This will be the first big test of the results of the
Macri government policies. The assumption is that the hardline macro/fiscal policy will have to
be softened for a period and more populist policies offered to give the Macri government a
chance of doing well. I needn’t tell this audience of the potential dangers being baked into the
pie. As a sidebar, it’s also easy to argue that “21% for 2017” is rather optimistic as well, rose-
tinted specs from someone who wants Macri to do well.
Meanwhile this article in The Economist (15) last week suggested that the Macri honeymoon
period is coming to an end and also focussed on the price inflation/salary see-saw as key.
Here’s an excerpt from the piece, plus one of its visuals:
Mr Macri has reservoirs of political strength and popular goodwill to draw on. Though
Argentines are angry, most still blame the Kirchners for their hardship. Allegations of
corruption have enfeebled Ms Fernández as a political force. A new generation of
politicians is competing to become the next presidential candidate of her Peronist
party, weakening its ability to provide opposition to the government.
19

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But Mr Macri’s honeymoon is coming to an end (see chart). With legislative elections
due in October 2017, “the government needs to show some economic results in the
first quarter of next year,” argues Juan Cruz Díaz of Cefeidas Group, an advisory firm.
The IMF thinks the economy will rebound in 2017; it forecasts growth of 2.8%.
My only argument with the above is this line, “Though
Argentines are angry, most still blame the Kirchners for their
hardship”, because “most” is way too strong and “some” is a
more accurate image (please recall the decade-long hatred The
Economist showed for the Kirchnerist governments, they’re
anything but unbiased). It’s also notable how political
commentators (largely sympathetic to the Macri cause) are
starting to shift the time window to “the first quarter of 2017”,
even though Macri ran and won his election of “second half of
2016” as the critical period when the sacrifices he demanded of
Argentines would start to bear fruits. Add in this CEOP poll that
shows 7 out of10 Argentines unhappy with their personal
economy and opposition popularity at 47% versus Macri
government popularity down to 33% (15a) and the scene is set
for the big fight to come. Argentina the political beast has
always been sensitive to its economic well-being, so if Macri
does turn things around in the next two quarters we may be
witnessing the low point of his acceptance ratings. If he doesn’t I can guarantee this audience,
as day follows night, they’re going to get a lot worse.
The bottom line: The song remains the same, be very careful of Argentina exposure, ladies and
gentlemen. Yes there are opportunities there, in our focus sector of mining and others, but the
risks are much higher than the promoters of the country and its concession land would have
you believe. Take for example one scenario in which we see large-scale protests building in the
first and second quarters of 2017, then the CFK end of the political spectrum doing well in the
2017 mid-terms and wresting control (total or partial) away from Macri in congress. Attitudes
towards the country would quickly return to “Ah well, they’ve been FUBAR forever anyway, at
least we serious people tried...” and the FDI that Macri needs to complete his economic
turnaround won’t happen and that statement very much includes those mining projects we all
like to talk about.
As I put it to one person last week, a historic window of opportunity tends to come around in
Argentina mining from cycle to cycle and that window is right now...for people wanting to sell.
Be it land, projects or concessions, you get interest from opportunistic buyers and that grows
into a fully-fledged seller’s market. People owning mining assets in Argentina have the chance
to book safe profits on previous investments right here right now in 2016. But the issue is 2017,
because if they hold on to their land assets for a while longer those profits might be even
higher next year, Macri starts turning Argentina around meaningfully and the buying interest
becomes a feeding frenzy. But if things go wrong next year, the window will suddenly slam shut
as it’s done so many times before. Risk/reward is favourable today, but could go badly out of
balance in the near future.
Peru: Yanacocha kills Conga
On Friday the director of communications at Yanacocha SA (NEM, BVN), Raúl Farfán,
announced that due to the lack of Social Licence and low metals prices (specifically copper), the
Conga project in Cajamarca is to close and will be wound up by 2020 (16). He said (translated):
“Conga has been discarded. For it to work we need two variables; that there is a social
licence and that it is economic. Even if we solver the social problems, at this time it’s
impossible from an economic point of view. The international price of metals such as
copper, which is basically what Conga has, makes its viability impossible”.
20

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He went on to say that Yanacocha SA will continue developing its other projects in Cajamarca
such as Yanacocha Verde, Chaquicocha, Chaquicocha Túnel, y Quecher Main. Three things to
say about this:
1) Yanacocha has picked the right time to cut Conga, what with the new PPK government
coming in, Gregorio Santos being freed, etc.
2) There’s never a right time for this type of embarrassing and very expensive failure.
Yanacocha has wasted hundreds of millions of dollars on a project that they themselves
screwed up due to arrogance and woefully bad community relations.
3) It’s funny to see the press and company try to frame Conga as a “copper project with
gold”, that’s bullshit of course. Yes of course it doesn’t work without the copper
component, but 2/3rds of revenues from the project would have been from gold, 1/3
from copper.
This decision will also give the locals who oppose the new top “hot project” in Peru, Tia Maria in
Islay Arequipa (Southern Peru), plenty of cheer.
Colombia: October 2nd is the Ibagué referendum day
We now have a set date for the referendum against mining in the city of Ibagué in Colombia, a
vote that targets the AngoGold Ashanti ‘La Colosa’ project above all others. It’s set to happen
on Sunday October 2nd, seven weeks from today (17). Expect negative political risk headlines
for mining in Colombia that week. Also expect any mining company worth its salt with Colombia
exposure to use the period between now and then to explain why it’s not the same for them
and how it’s different where they are and how Ibagué is an isolated issue. Of course.
Colombia: Eco Oro (EOM.to) stripped of half its concession
On Friday evening Eco Oro Minerals announced (18) that it had received word from Colombia’s
National Mining Agency (ANM) which “...deprives the Company of its mining rights in respect of
50.73% of the Concession area that falls within the preservation zone of the Santurbán Páramo
established in Ministry of Environment Resolution 2090 ("Resolution 2090").” It then goes on to
cherry-pick the reasons the ANM gave the company for the refusal to extend its concession.
This decision came as no surprise, it was only a matter of time before ANM stripped EOM of its
rights (as far as it can under Colombian law, at least. We can now expect EOM to take its case
to the same ICSID/CIADI international tribunal that has been used recently by several mining
companies to claim damages for the stripping of rights. We’ve seen recent cases in Venezuela
(Gold Reserve just the week before last, Rusoro will get its decision soon) and Peru (e.g. Bear
Creek at Santa Ana, who will get nothing because they broke the law). I’ve already received
mail from people who naturally assume EOM has a great case and will clean up at ICSID/CIADI
the way the market thinks GRZ has done (oh yeah? You trust Venezuela all of a sudden? How
cute.).
Be clear: EOM’s case is weak. Aside from the fact it will take years to process, the assumption
that “Canada is protected by Free Trade Agreements” and that’s all you need to know is an
arrogant white man’s fantasy. EOM treated Colombia like shit for years on end and has been
thrown out for bad practices, anyone betting of EOM getting a big reward is taking an almighty
gamble and the only people who are guaranteed winners in this upcoming case are the lawyers
on either side. Buy shares in EOM on the back of Friday’s news and you’re feeding them first.
EOM and their ilk are prime examples of the dregs of mining society, do not feed the animals.
The good news here: Unlike anything from Ibagué in October, this case is highly unlikely to
affect the rest of the mining industry in Colombia. EOM.to is rightly hated by their own peers
and the whole of the sector has already distanced itself from these outright scumbags. Avoid
EOM the same way, if you know what’s good for you.
21

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Market Watching
Minera IRL: Peru Mining Ministry’s Gullermo Shinno talks up Minera IRL
Last week in the note ‘Continuity’ we remarked on the pleasant surprise of Guillermo Shinno’s
re-appointment as Vice-Minister of Mining in Peru (and as his boss Gonzalo Tamayo, Minister of
Energy and Mining, is more “energy” than “mining” it makes Shinno a powerful figure in Peru’s
had rock mining scene). This weekend we note an interview Shinno gave to Peru’s official news
agency Andina that also made all the major newspapers and business channels (19). Here’s
how the note starts (translated):
The Vice-Minister of Mining, Guillermo Shinno, today said that mining investment
projects that were delayed due to international contexts are slowly reactivating in Peru,
also that three projects under construction are advancing in the sector.
“Some mining projects are coming back to life. There are some that are now advancing
and others that will naturally take more time”, Shinno told Agencia Andina. In particular,
yesterday Minera IRL announced the renewal of drilling activity at the Ollachea project
in Puno, after an interruption of almost a year. The Vice-Minister highlighted that this
announcement of exploration activity is a requisite required of Minera IRL in order to
receive financing to start construction of the mine in the future.
He went on to refer to other projects in the first stages of construction at Marcona in Ica, the
amplification at Toquepala in Moquegua and Tombomayo in Arequipa.
The note then continues to talk about other mining project at various stages of development,
but to see Vice-Minister Shinno highlight the Minera IRL project at Ollachea in such a way is no
small beer in Peru. People, that note is a big thing that will bring a whole bucket of positive
attention to the company but most of all it underscores, officially and off-record, the strong
support IRL has for its project from the new PPK government. And let’s remind all here that the
primary source of financing for Ollachea will be the debt financing agreement for up to U$240m
that IRL has in place with Cofide, a semi-State run investment bank. Shinno’s words were not
picked out of the blue or by chance, this short interview sent a long and obvious message to
everyone in the Peru mining world.
Dalradian Resources (DNA.to) trades higher
Richard Nixon: “What has been the the impact of the
French revolution on western civilization?”
Chou En-Lai: "The impact of the French revolution
on western civilization - too early to tell."
Sadly, that little exchange has been debunked (20) and is know understood to be one of the
finer Lost In Translation moments of our times, but it still came to mind last weke as I watched
Dalradian Resources (DNA.to) power higher.
DNA is a stock I traded with success and sold back in March once it had pinged my revised
target of $1.00. The last time it got a mention
in The IKN Weekly was just after Brexit in
IKN372 dated June 26th, when the potential
political fall-out from The UK’s decision to leave
the EU cast a shadow over the Stock (being in
Northern Ireland, part of the UK) and the call
was to avoid exposure to DNA. Here’s part of
the conclusion to that post:
“...its political situation has suddenly taken
a turn for the worse. The IKN Weekly's
recommendation is to avoid exposure to
Dalradian Resources (DNA.to) until such
time as the political future of Northern
22

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Ireland is better understood.”
And above the chart to see how DNA has been trading recently: The three things that jump out
at me are:
1) DNA’s share price has largely ignored the hypothetical negative effects of
Brexit.
2) In July volumes started cranking up
3) All of a sudden in the last ten days we’ve seen a very strong move up from
DNA, again on expanded volume.
The first one surprises me frankly, I thought Brexit would do more to DNA than just keep it
from moving up while other stocks rallied. We’re now into August and a market that seems to
have forgotten all about Brexit (unless you live in Perfidious Albion), The Olympics and
Trump/Clinton is all that seems to matter now.
Combined with number 1), the volumes of July now look as though somebody smarter than me
(there are multi-millions of those) was taking advantage of the weaker-handed sellers and
mopping up the large offers without seeing the price drop. And then combine 2) with 3) and we
start looking to the near future of DNA and its clearly flagged bulk sample results due in the
next few weeks (according to the 2q16 filings, out last week) and the Feasibility Study that’s
due out end year and is on time/budget (though treasury will look tight once it’s done).
In particular, there are all sorts of rumours flying about as to the value of the bulk sample
results and they may be driving this new price surge. The general schtick is that a) the bulk
sampling will show strong gold grade reconciliation because b) the bulk sampling will include
the small side-veins that mostly haven’t made it to the current 43-101 resource so c)
Curraghinalt will look better than before. Meanwhile, detractors are talking about DNA’s
penchant for selective access to the project/data to those willing to promote the story and a
bulk sample taken from an area of the mine that isn’t particularly representative of the whole.
Bottom line here: My “avoid” call on DNA in late June looked smart enough for a month or so
but last July and early August has changed that, it’s now a fail (it doesn’t look like one, it is one,
it’s over 40% up quod erat demonstrandum). So I was wrong, it happens, I’ll live. However I’m
not changing my call on DNA and still consider it an avoid because at a share price of $1.54 and
a market cap of CAD$335.5m it’s not just politically risky now, it’s an expensive stock with
further to fall if things go wrong. Brexit may have been forgotten but it’s not gone, it’s just too
early to tell what happens on that one and the retail market may be able to ignore its effects,
but I’m quite sure it’s given the potential buyers of DNA reason to think carefully.
Plata Latina (PLA.v) redux
In “Plata Latina (PLA.v) The next silver turnaround?” last week I highlighted the corporate
change at PLA which may signal a revival of this failed silver company with a cool name that
works Mexico. By the looks of the ten day chart, I think it’s fair to say that we weren’t the only
people to think the news potentially significant. PLA was up over 20% on the week and for a
time traded 41.6% higher than this time last weekend. Though I’m happy to say that some
early bird somewhere got about 90k of shares at 6c before the rest of the market saw what was
going on. It’s not much more than a shell at this point and not a trade for me until we know
something more. But worth keeping an eye on this ticker, I’d vouch.
Gold Reserve (GRZ.v) update: Still avoid this story like the plague
Further to the “avoid GRZ” call in IKN378 last weekend, the Gold Reserve (GRZ.v) NR on
Monday (21) gave a lot more detail on the deal it’s apparently struck with Venezuela but once
the optimism and spin is stripped away, the deal is still almost exactly the same as the MOI-
level deal it announced in February. GRZ talks of a cash distribution and that’s fine. Apparently
it’s coming “soon” and we can trust Venezuela to hand it over in two separate tranches. From
there GRZ will raise capital (after running a distribution???) to fund its 45% of the Las Brisas
23

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project..huh? Sorry folks, this is all way too weird and loose to be credible. If you feel like
gambling don’t let me stop you but the way in which the share price traded from high to low all
last week vindicates my simple Avoid call on this stock. There are plenty of other ways to play
the mining market, not this one please.
Episode four of “What I’d buy now”
The fourth edition of this segment, it’s becoming a regular thing and even though I still don’t
know whether it’s something for the long-term it’s become popular among at least one section
of readers (and it keeps me brutally honest about my lack of aptitude for near-term trading.
Here’s the quick repeat section for those of you just joining us. This section is a way to convey
“what I like now” in my own portfolio considering the state of the market, the company
particulars and their shares prices right here and now. It’s more of a thought experiment than a
map of how I’m trading the market (because I tend not to day-trade very much) and the rules
of the game are these:
1) You give me $50,000. We assume flat forex during the time period.
2) You tell me I have to invest every dollar in currently open IKN Weekly stock picks.
3) I’m allowed to allot different dollar amounts to different stock, from zero on up.
4) I base my decisions, choices and dollar amounts on what I think today about the
company, the stock price and the current underlying micro and macro fundamentals.
5) You know that I like all the stocks because you know I already own them, we both
understand answers are about how I feel today about the stocks today for the next four
weeks, no more or less.
In the first episode (IKN369 to IKN372) I managed to change my $50k into $58,003. In the
second episode (IKN372 to IKN375) I managed to change my $50k into $53,274. We then
changed the picks and started again in IKN375, so here we are four weeks later to see how
things turned out:
Mark spends $50,000 in IKN375 Mark's $50k in IKN379
company ticker PPS invested PPS today position value
Wesdome WDO.to C$2.02 8000 C$1.57 6218
Tinka Res TK.v C$0.23 7000 C$0.20 6087
Starcore Intl SAM.to C$0.80 6000 C$0.76 5700
Riverside Res RRI.v C$0.415 5000 C$0.425 5120
HudBay Short HBM U$5.45 5000 U$4.65 5734
Sandstorm Gold SAND U$5.18 3000 U$6.53 3782
Regulus Res REG.v C$1.29 2000 C$1.68 2605
Continental Gold CNL.to C$3.64 5000 C$3.69 5069
B2Gold BTO.to C$3.83 4000 C$4.49 4689
Lara Expl. LRA.v C$1.42 2000 C$1.38 1944
Miranda Gold MAD.v C$0.13 1000 C$0.13 1000
Focus Ventures FCV.v C$0.105 2000 C$0.10 1905
Total 50000 NEW TOTAL--> 49853
The bottom line: The $50k is now $49,853 which means I managed to register a small loss, I
suck at trading and to cut a long story short...
• The top three weighted positions all lost money, which proves what I know. Just those
three at the top managed to lose over $3k of my imaginary $50k pot. Ugh
• Below those, the HudBay short did okay, as did the SAND and BTO positions.
• Apart from those, all the others were either a bit up or a bit down.
So an abject failure in what’s supposed to be a bull market, but hope springs eternal and it’s
time to re-set the list for the next four week period. The only change is the loss of the HBM
short and the addition of new position Atico Mining (ATY.v) and after due consideration this is
24

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how I’ve decided to spread around the $50k, with sights set on the result edition in IKN383:
Mark spends $50,000 in IKN379
company ticker current PPS amount I'd invest today
Wesdome WDO.to C$1.57 10000
Tinka Res TK.v C$0.20 7000
Starcore Intl SAM.to C$0.76 6000
Riverside Res RRI.v C$0.425 5000
Atico Mining ATY.v C$0.52 5000
Continental Gold CNL.to C$3.69 5000
B2Gold BTO.to C$4.49 5000
Sandstorm Gold SAND U$6.53 3000
Regulus Res REG.v C$1.68 1000
Lara Expl. LRA.v C$1.38 1000
Miranda Gold MAD.v C$0.13 1000
Focus Ventures FCV.v C$0.10 1000
Total 50000
WDO continues to get top billing and weighting, this price is now too cheap and I’m backing it
up with real money too (see above). I’m going to take advantage of the fact TK.v is at the
bottom of its recent trading range this weekend. SAND and REG are lighter this time because
they’ve both made moves and I think they need to consolidate before moving much higher.
Meeting Regulus Resources (REG.v)
Last week I caught up with John Black, CEO of out Top Pick stock Regulus Resources (REG.v)
and had his undivided attention for four hours (over a decent steak and some red wine, if you
must know). We had a good long chat about a wide range of subjects, but mostly about REG
itself and here’s the condensed need-to-know from the exchange.
Antakori: Overall REG and CEO Black are happy about the way things are going. New Chief
Geologist Stewart Redwood is greatly respected by all and being a very experienced Peruvian
hand, knows how to run a team there in the right style. The joint working agreement with
Coimolache (it’s not a JV but very similar in practical terms) has started well, the two teams are
getting to know each other and have found plenty of common ground, the data sharing
protocols are working as envisaged and according to CEO Black, Coimolache has been more
open and accommodating than they needed to be under the agreement, which has been a
pleasant surprise and has helped move things along at a good pace. The plans for the first
phase of drilling are now being finalized, that now look like going ahead in 4q16 as planned
(reality-wise, 3q16 was talked about but is really too soon on a practical level) on the first
targets, then in 2017 once the worst of the rainy season is done with the major and juiciest
targets will get their turn.
Site visit: Your author has been invited up to take a look at the action, visit the REG activities
and those of the Coimolache mine too. The only problem is that due to scheduling and other
commitments in a slightly complicated three-cornered diary, the only viable window of
opportunity will be Friday September 9th to Monday September 12th. That means in turn that
The IKN Weekly that would normally go out on Sunday September 11th is going to be delayed
for that weekend.
Argentina: REG is now active in looking to monetize its Argentina assets. Black says he has
received a number of offers for deals on the several exploration stage project and concessions
owned by REG in Northern Argentina and the offers have ranged from the opportunistic little
guys (the type of people looking to put together BS pump jobs) to serious and large mining
companies wanting to do long-term things. Some of the offers are clearly more interesting than
others to a serious mining guy like CEO Black, who was quick to concede that today’s REG is
getting practically zero credit for its Argentine projects and that’s something which needs
addressing.
25

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Those three are the main takeaways from the meeting, but as it was North of four hours it’s fair
to say that there are a lot of details that won’t make the page. On those, suffice to say that as
an anal ysts and shareholder of REG I came away very happy from the meeting. Or that might
have been the Chilean Camenére. Expect a lot more on REG in September from the upcoming
site visit.
Conclusion
IKN379 is done, we end with bullet points:
• Wesdome Gold Mines (WDO.to) is an obvious buy and $1.57 is a knock-down bargain
for a producing and profitable gold miner in this market. It doesn’t even need higher
gold prices to move up significantly. In other potential additions news, cheap Tinka
(TK.v) would tempt me to add, as would Riverside (RRI.v) and even Atico (ATY.v) if
that decided to drop into the 40s.
• If I were braver I’d also buy some NGEx Resources (NGQ.to) next week. I’m a coward.
• And I’m a coward because the signals from Argentina are worse than the average
English language business media site would have you believe. Meanwhile, it’s not just
anti-miners that TAHO need worry about these days, as resource nationalism raises its
head there.
• I’m happy to have nailed down a date to visit the Regulus (REG.v) Antakori project, just
a pity that it has to be on a weekend and disrupts normal service of The IKN Weekly.
• I’m expecting a few complaints that I didn’t cover the eye-popping NR out of Ivanhoe
(22) last week, so here’s a line to tell you why. I like everyone else looked at its
contents and watched as IVN soared higher on the news. I like everyone else was
impressed by the layout and contents of the NR as well. My personal problem is that I
simply ran out of time to do the news justice and look at it carefully, I’ve been
pounding on NGQ.to in the week and then my attention was taken by Wesdome and
the more I looked at that current position’s new price, the more I saw it as a gilt-edged
opportunity. Pretty promise I’ll have a better look at IVN this week but in the
meantime, it’s now being covered by the world and his wife in the sector so there’s
already a ton of ink on the news in other places. Brent Cook and Joe Mazumdar did a
good job on it in their letter today, for example.
• 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
26

,
Footnotes, appendices, references, disclaimer
(1)
http://www.streetinsider.com/SEC+Filings/Form+FWP+SPDR+GOLD+TRUST+Filed+by%3A+SPDR+GOLD+TRUST/11
930540.html
(2) http://www.gannglobal.com/webinar/2016/August/16-08-GGF-Webinar-
Replay.php?inf_contact_key=22596e8819dbdc38d85cce8740e11a5f7660cb1401c04f7d9f120f37a7e118ce
(3) http://www.wesdome.com/wp-content/uploads/2016/08/08-11-16-Q22016FinancialResultsFINAL.pdf
(4) http://www.wesdome.com/wp-content/uploads/2016/07/07-20-16-Q2ProductionFINAL.pdf
(5) https://finance.yahoo.com/news/b2gold-corp-announces-market-offering-101829851.html
(6)http://mineriasustentable.com.mx/cobre-cierra-en-minimos-de-un-mes-por-datos-de-china/
(7) http://finance.yahoo.com/news/cordoba-minerals-hpx-discover-significant-110000513.html
(8) https://finance.yahoo.com/news/ngex-securityholders-approve-spin-filo-213000045.html
(9) https://finance.yahoo.com/news/ngex-reports-second-quarter-2016-210000164.html
(10) http://elperiodico.com.gt/2016/08/12/pais/propuesta-de-reforma-fiscal-subiria-precios/
(11) http://www.guatevision.com/reforma-tributaria-regalias-a-la-mineria-provocan-discusion-en-el-congreso/
(12) http://www.aminera.com/2016/08/12/nicaragua-queremos-enfocarnos-las-buenas-practicas-del-sector-minero/
(13) http://www.elnuevodiario.com.ni/economia/401069-no-podemos-concebir-nicaragua-mineria/
(14) http://lta.reuters.com/article/topNews/idLTAKCN10L1S6?sp=true
(15) http://www.economist.com/news/americas/21704824-battle-over-utility-bills-mauricio-macris-first-big-crisis-its-cold-
outside
(15a) http://elcomercio.pe/economia/mundo/siete-cada-diez-argentinos-ve-mal-economia-su-pais-noticia-
1924154?ref=portada_home
(16) http://www.eleconomistaamerica.pe/empresas-eAm-peru/noticias/7763333/08/16/Yanacocha-anuncia-que-se-
retirara-de-Conga-en-el-ano-2020.html
(17) http://www.las2orillas.co/2-octubre-se-realizara-la-consulta-popular-mineria-ibague/
(18) http://www.newswire.ca/news-releases/colombian-national-mining-agency-deprives-eco-oro-of-its-mining-rights-
590034201.html?tc=eml_mycnw
(19) http://www.andina.com.pe/agencia/noticia-viceministro-shinno-se-reactivan-proyectos-mineros-el-peru-
625966.aspx
(20) http://peterhousehold.blogspot.pe/2011/07/chou-en-lai-on-french-revolution-did-he.html
(21) https://finance.yahoo.com/news/bolivarian-republic-venezuela-agrees-pay-135100010.html
(22)http://finance.yahoo.com/news/ivanhoe-mines-announces-could-prove-113654617.html
27

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Stocks To Follow Closed Positions 2015
Closed in 2015 closed close price
Argonaut Gold AR.to jan'15 C$1.47 14-dec-14 C$2.53 72.1% Big gain small time, profit taken
Amerigo Res ARG.to jan'15 C$0.405 20-jul-14 C$0.285 -29.6% Given up on weak Cu prices
Reservoir Min. RMC.v jan'15 C$6.05 18-jun-14 C$4.12 -31.9% sold on Cu downturn
Coro Mining COP.to jan'15 C$0.075 26-jan-14 C$0.035 -53.3% sm, sold on Cu downturn
Fortuna Silver FSM mar'15 U$4.12 10-nov-14 U$3.75 9.0% Short used as hedge
GoldQuest Min. GQC.v mar'15 C$0.26 27-oct-13 C$0.085 -67.3% given up ghost
Rio Alto Mining RIO.to apr'15 C$2.30 07-apr-11 C$3.57 55.2% Top pick, bot out, big win
Timmins Gold TGD jun'15 U$0.60 19-apr-15 U$0.62 3.3% near-term trade, out of time
First Majestic AG jul'15 U$10.51 10-aug-14 U$4.55 56.7% horrible failed trade
NovaCopper NCQ.to jul'15 C$1.05 09-apr-14 C$0.50 -52.4% no more Cu exposure, sm sell
McEwen Mining MUX aug'15 U$0.695 21-jul-15 U$0.92 32.4% Closed nearterm flip for win
Midas Gold MAX.to sep'15 C$0.39 21-sep-15 C$0.35 -10.3% Sm. trade idea that didn't work
New Gold NGD oct'15 U$2.18 23-aug-15 U$3.05 39.9% trade closed, profit taken
Legend Gold LGN.v nov'15 C$0.085 01-mar-15 C$0.035 -58.8% tiny "land grab" idea, failed
Timmins Gold TGD nov'15 U$0.245 20-sep-15 U$0.15 -38.8% small near-term loser
Stocks To Follow Closed Positions 2014
Closed in 2014 closed close price
Fortuna Silver FVI.to jan'14 C$2.80 23-dec-13 C$3.19 13.9% small ST trade closed
Rio Alto Mining RIO.to jan'14 C$2.06 07-jun-13 C$2.30 11.7% trading position finally closed
Network Expl. NET.v feb'14 C$0.01 22-jul-12 C$0.005 -50.0% position closed, did nothing
Tahoe Resources TAHO feb'14 U$13.10 08-apr-13 U$21.72 -65.8% short closed due to reality
Darwin Res DAR.v mar'14 C$0.10 14-jul-12 C$0.045 -55.0% tiny risk play dropped
B2Gold BTO.to mar'14 C$3.07 28-nov-12 C$3.35 9.1% closed to free up capital
Pretium Res PVG mar'14 U$5.38 22-nov-13 U$6.50 -20.8% short closed as port longer
Gold Res Corp GORO may'14 U$5.07 26-jan-14 U$4.12 16.7% took profit
Bear Creek Min BCM.v may'14 C$1.63 23-mar-14 C$2.05 25.8% Took profit, sm near-term win
Eco Oro Min. EOM.to aug'14 C$0.48 22-sep-13 C$0.26 -45.8% sold small loser to make room
True Gold TGM.v sep'14 C$0.395 02-feb-14 C$0.41 3.8% M&A won't happen, sold
Santacruz Silver SCZ.v sep'14 C$1.04 26-jan-14 C$0.86 -17.3% silver/M&A spec, rel. small
Timmins Gold TGD nov'14 U$1.38 09-apr-14 U$0.99 -28.3% failed trade, sell, raise cash
Kinross Gold KGC nov'14 U$2.90 20-oct-14 U$2.15 -25.9% V small trade, didn't work, chau
Salazar Res SRL.v hold C$0.28 02-mar-14 C$0.145 -48.2% lost China sponsor
Stocks To Follow Closed Positions 2013
Closed in 2013 closed close price
USA Graphite USGT feb'13 U$0.93 08-jan-13 U$0.17 81.7% short tgt made/trade closed
Lachlan Star LSA.to feb'13 C$1.50 30-sep-12 C$0.95 -36.7% sold to reduce port risk
United Silver USC.to mar'13 C$0.21 28-oct-12 C$0.095 -54.8% small Ag sector trade, failed
Aurcana Corp AUN.v apr'13 C$1.07 11-nov-12 C$0.55 -48.6% closed on poor YE results
Gold Res Corp GORO apr'13 U$14.11 25-jan-13 U$9.38 33.5% short tgt made/trade closed
Marlin Gold MLN.v apr'13 C$0.075 10-feb-13 C$0.065 -13.3% closed trade
Bear Creek BCM.v may'13 C$2.58 01-apr-13 C$2.40 -7.0% near-term, time ran out
Lupaka Gold LPK.to may'13 C$1.12 23-oct-11 C$0.32 -71.4% towel thrown in
Tahoe Resources TAHO may'13 U$18.62 08-apr-13 U$14.70 21.1% took profit on ST short
OceanaGold OGC.to jun'13 C$3.03 16-sep-12 C$1.18 -61.1% sold on gold drop
IMPACT Silver IPT.v jun'13 C$1.14 13-jan-13 C$0.62 -45.6% sold on silver drop
Duran Ventures DRV.v jun'13 C$0.045 10-may-13 C$0.025 -44.4% ST trade never worked
Plata Latina PLA.v jun'13 C$0.79 10-apr-12 C$0.13 -83.5% closed
Bellhaven BHV.v jun'13 C$0.065 03-jun-13 C$0.12 84.6% closed ST trade
B2Gold BTO.to aug'13 C$3.07 28-nov-12 C$3.44 12.1% sold 1/2 to raise cash
Colossus Min. CSI.to aug'13 C$0.72 24-jul-13 C$0.79 9.7% closed thru nerves on future
28

,
Pretium Res PVG.to aug'13 C$8.20 11-jun-13 C$10.14 23.7% closed to raise cash
Bear Creek BCM.v sep'13 C$2.06 30-may-13 C$2.20 6.8% sold on pol risk decision
MAG Silver MVG oct'13 U$7.00 12-sep-13 U$5.62 19.6% near-term short
Gold Res Corp GORO oct'13 U$9.52 03-may-13 U$4.98 47.7% short tgt made, covered
AQM Copper AQM.v oct'13 C$0.31 16-oct-11 C$0.125 -59.7% closed failed trade
First Majestic AG nov'13 U$11.51 07-nov-13 U$10.50 8.8% v near term short, closed
Fortuna Silver FSM nov'13 U$4.00 07-nov-13 U$3.68 8.0% v near term short, closed
Primero PPP nov'13 U$5.70 07-nov-13 U$5.75 -0.9% v near term short, closed
Starcore Intl SAM.to nov'13 C$0.235 08-sep-13 C$0.17 -27.7% ST trade didn't work, sm loss
B2Gold BTO.to dec'13 C$2.22 28-nov-12 C$2.16 -2.7% closed ST trade to raise cash
Stocks To Follow Closed Positions, 2012
Closed in 2012 closed close PPS
Soltoro SOL.v jan'12 C$0.87 07-nov-11 C$0.94 8.0% cash moved to BCM.v
Gold-Ore Res GOZ.to feb'12 C$0.84 13-oct-10 C$0.98 16.7% trade closed on ELG.v offer
Minefinders MFN feb'12 U$11.68 17-nov-11 U$14.80 26.7% target made, trade closed
Iron Creek IRN.v mar'12 C$0.58 26-sep-10 C$0.31 -46.6% time up on small bad trade
U.S. Silver USA.to apr'12 C$2.18 15-mar-12 C$1.86 -14.7% ST trade no good, cut loss
Augusta Res. AZC.to may'12 C$3.10 29-jan-12 C$2.07 -33.2% bad mkt, bad trade cut loss
Bellhaven BHV.v may'12 C$0.50 22-sep-10 C$0.28 -44.0% new mgmt not impressive
Zincore Metals ZNC.to may'12 C$0.325 29-jul-11 C$0.17 -47.7% bad mkt, bad trade cut loss
Soltoro SOL.v may'12 C$0.70 18-mar-11 C$0.41 -41.4% bad mkt, bad trade cut loss
U.S. Silver USA.to aug'12 C$1.78 27-jul-12 C$1.36 -23.6% fail ST trade close pre split
Estrella Gold EST.v aug'12 C$0.91 27-mar-11 C$0.14 -84.6% Closed on port realignment
Fortuna Silver FVI.to sep'12 C$1.07 03-may-09 C$5.32 397.2% sell call $6.17/ Mar25
Strait Minerals SRD.v oct'12 C$0.125 09-dec-11 C$0.12 -4.0% closing coverage til FY13
Sunward Res SWD.to oct'12 C$1.47 13-mar-11 C$1.21 -17.7% sold, took loss
Gold Res Corp GORO oct'12 U$21.47 09-sep-12 U$17.40 19.0% Short trade closed
Yellowhead Min. YMI.to nov'12 C$1.00 01-apr-12 C$0.63 -37.0% sold, took loss
Primero Mining PPP nov'12 U$7.26 07-oct-12 U$6.73 7.3% Short trade closed
Bear Creek Min. BCM.v nov'12 C$3.38 07-nov-11 C$3.72 10.1% Took small profit
Vena Resources VEM.to dec'12 C$0.70 31-may-09 C$0.18 -74.3% Failed trade (caps F)
Galway Res GWY.v dec'12 C$2.19 24-nov-12 C$2.30 5.0% closed good ST arb trade
Stocks To Follow Closed Positions, 2011
Closed in 2011 closed close PPS
Sunward Res SWD.v jan'11 C$1.05 21-nov-10 C$1.63 55.2% target made, trade closed
Serengeti Res SIR.v mar'11 C$0.245 05-dec-10 C$0.285 16.3% sold pre-tgt, ST trade fail
Fronteer Gold FRG apr'11 U$2.37 03-may-09 U$15.24 543.0% buyout, trade closed
Minefinders MFN apr'11 U$9.09 07-nov-10 U$16.89 85.8% target made, trade closed
Metalline Min. MMG may'11 U$1.04 26-jan-11 U$0.89 -14.4% exit, resource disappointed
Peregrine Met PGM.to jul'11 C$0.87 06-mar-11 C$2.60 198.9% buyout offer, closed
Dynasty Metals DMM.to jul'11 C$4.20 03-may-09 C$2.85 -32.1% Sold. Fail. Move on.
Aura Silver AUU.v aug'11 C$0.22 13-oct-10 C$0.16 -36.4% Bad pick. Take loss
U.S. Silver USA.v aug'11 C$0.52 26-jan-11 C$0.71 36.5% closed to make room
B2Gold Corp BTO.to sep'11 C$2.80 12-may-11 C$4.27 52.5% target made, trade closed
Bear Creek Min. BCM.v sep'11 C$3.80 27-may-11 C$4.17 9.7% macro sell call victim
Minefinders MFN sep'11 U$14.70 10-aug-11 U$15.15 3.1% macro sell call victim
Great Panther GPR.to sep'11 C$3.03 22-aug-11 C$2.64 -12.9% macro sell call victim
Fortuna Silver FVI.to sep'11 C$1.07 03-may-09 C$5.36 400.9% sold 20%, macro sell call
Focus Ventures FCV.v nov'11 C$0.40 20-apr-10 C$0.20 -50.0% cut losses, bad trade
Regulus Res. REG.v dec'11 C$1.17 14-aug-11 C$0.52 -55.6% cut on news of poor 43-101
2009 and 2010 closed positions in appendices below
29

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