IKN #381Premium

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The IKN Weekly
Week 381, August 28th 2016
Contents
This Week: In today’s issue, US Jobs Friday, There’s that correction.
Fundamental Analysis: Wesdome Gold (WDO.to): Kiena is a potential game changer.
Stocks to Follow: Overview, Atico Mining (ATY.v), Wesdome Gold (WDO.to), Starcore Intl
(SAM.to), Tinka Resources (TK.v), Continental Gold (CNL.to), Miranda Gold (MAD.v), Sandstorm
Gold (SSL.to) (SAND), B2Gold (BTG) (BTO.to).
Copper Basket: Overview, Revelo Resources (RVL.v), Capstone Mining (CS.to).
Low Cost Producer Basket: Overview, Goldcorp (GG).
Regional Politics: Next week.
Market Watching: Updating on zinc’s bullish run, The Denver Gold Forum September 2016,
Avino Silver & Gold Mines Ltd (ASM) (ASM.v) redux, Starcore Intl (SAM.to) production results.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
In today’s issue
• Wesdome Gold Mines Ltd (WDO.to) has a new higher price target on last week’s
surprise good news. That’s in the Fundamentals section.
• Copper either bounces from here, or my recent modest warming towards the sector is
wrong. Either way, I haven’t committed much yet and watching seems best.
• Last week saw that “healthy correction” I mused about a couple of weeks ago. I am
100% comfortable about holding through such moments when they come along.
• Nothing in the ‘Regional Politics’ section this week. Maybe it’s because I wasn’t paying
much attention, maybe it’s the Northern summer lull, maybe it’s because Venezuela and
Bolivia have no import to the contents of this publication because you’d be crazy to put
junior mining cash in either, but there really wasn’t much going on to catch the eye.
US Jobs Friday
Some US BLS Employment Reports are more important an others and the one coming up this
Friday, sandwiched between Janet & Friends at Jackson Hole and September 5th US Labor Day
is set to be a key dataset that may tip the balance in the Fed’s “Raise or Not” debate. As things
stand this weekend (though expect refining of numbers as from Wednesday) consensus is for
175,000 non-farm payroll jobs added and a headline unemployment rate of 4.8%. I don’t think
the Fed will raise next month by the way, but I’m not discarding the potential either and I will
say that the proximity to the US Presidential election is unlikely to put Janet off the decision;
after all, she’s going to be accused of political bias and meddling whether she raises or not, so
it’s best just to ignore the peanut gallery and stick with the numbers.
1

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There’s that correction
Just two weeks ago in the IKN379 intro piece entitled “A correction in the cards?” I wrote on
the potential of a downmove in a piece that started this way:
“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.”
Last week the gold ETF GLD dropped 1.5% week-over-week, the precious metals miners’ ETF
GDX lost 9.3%, the junior miners’ ETF GDXJ lost 9.8%. I think we can call this one a result.
However I also made clear my own position at the end of the note and here’s that paragraph,
because the message is as valid now as it was then:
“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.”
And so it has come to pass that B2Gold and Sandstorm have gone through what I consider to
be that healthy correction, blowing off at least some of the hot-fast-dumb money they and
many other stocks in that category had attracted. Regulus has become choppy on light volume.
I even chose the words used on Starcore well, because it’s treading water at the 70c mark
while the higher volume stocks lose ground. And none of the paper losses of last week have
bothered me in the slightest because that’s me, the way I am.
I’ll repeat this or similar messages to this until I’m blue in the face if necessary: I lay out my
way of approaching the market and if you decide to follow me lockstep, then fine. If you prefer
to take the information and use it in your own decision process, also fine. If you think I’m an
idiot and a contrary indicator, also fine. But I’m not responsible for your decisions, your
investments, your money. That’s you.
Fundamental Analysis of Mining Stocks
Wesdome Gold (WDO.to): Kiena is a potential game changer
Preamble
The optimists among us will tell us that when life gives you lemons you should make lemonade.
If you’re dealt a dose of hard luck there’s always something you can do to make the best of a
situation. But in the case of Wesdome last week, it was dealt a large dose of good luck and we
can change the adage to, “When life gives you gold, make a goldmine". It’s quite possible, I’d
go as far as probable, that a profitable gold mine has just dropped into the lap of WDO from
what, in its 2016 incarnation at least, feels like nowhere.
2

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Background and intro
Our original analysis of WDO was in IKN371 dated June 19th. That called the stock a buy as an
M&A target. Then came IKN379 dated August 14th, just two weeks ago, which took a new look
at WDO on the back of its quarterly results, the lowered likelihood that WDO would be bought
out, plus its new lower share price and after running through all the permutations and
crunching the numbers, here’s the pay dirt line from the conclusion of that edition
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
So I was long, I thought it a bargain and since then I’ve added
two more chunks and got my cost average down nicely in
what’s now a pretty big position. Then came last week’s
surprise and that’s going to be the focus of today’s note.
Our job today is simple enough. Using the CAD$2.05 target
price set in IKN379 as baseline, we consider the new Kiena
developments of last week and estimate how much it may
have added to the company’s value. We then set a new price
target, so if results are more interesting to you than process
feel free to skip the next eight or nine pages of waffle and go
straight to the conclusion, that’s where the moneylines get laid
out.
The news
Wednesday post-close brought the news when
WDO.to announced (1) a “High Grade Gold
Discovery at Kiena Complex in Val d'Or
Quebec”, a NR that immediately got a short
post dedicated to it on the blog (2) with this
photo (above right) of part of the drillcore
featured, a serious visual gold intercept by
anyone’s standards. By the way, that post
became the week’s single most-viewed on the
IKN blog, which tells its own story.
As for the drill results, the highlights were
equally as eye-popping. Here’s the direct
quote from the NR:
• 94.35 grams per tonne (g/t) gold over
17.40 m uncut (18.03 g/t cut) in hole
U-6124
• 223.12 g/t gold over 14.25 m uncut
(18.59 g/t cut) in hole U-6125
• 238.81 g/t gold over 5.00 m uncut
(15.71 g/t cut) in hole U-6125
• 8.43 g/t gold over 8.2 m uncut (3.82
g/t cut) in hole U-6130
The drill hits in question were good enough to
make for a ‘gold porn’ post on the blog that
evening (3), a slash of visible gold in a core
that, visually at least, reminded me of the
famous Aurelian hole out of Fruta del Norte.
3

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There above is the drill map that came with the NR, which shows how the drills came from two
separate platforms inside the mine at the 670m and 910m levels. Notes on the map:
• The way to visualize this map is first to consider you’re looking vertically down.
• Then assume the target and the intersects are at around the 1,100m to 1,200m depth
horizon
• Then note that the drill holes in pink coming in “from the left” were drilled from the
670m level, so they went down 500 m or so (approximately 700m total length). They
include U-6124 and U-6125 that nailed the best assays, as well as holes currently
underway and planned holes.
• And the drill holes in blue were drilled from the 910m level, so they started from a
deeper level and are perhaps 300m long.
WDO had previously theorized that the same S-50 Z-Fold vein that the company had mined
closer to the surface at different levels over its historic mine life (both pre-WDO and during its
ownership) would re-appear and give similar strong gold returns at depth. The theory isn’t new
but it’s the first time it’s been tested and, as you can see from that photo above, it’s been a
very successful experiment. As a result WDO is following up with new holes to try and intersect
the vein at different places along the Z and we understand now has plans for a total of 14
holes, around 5,000m in total.
Assuming they hit the mineralization again (and off-record vibes from inside the company are
strongly positive already) we will probably see WDO expand the drill program further this year
in order to get to the point when they can announce a 43-101 compliant resource number for
the discovery. That will take more drilling, it may well mean a new underground platform in a
different underground location too.
Background to Kiena
But before we go any further we need some context to the location and the mineralization, so
the best thing to do is step back and take a look at the whole Kiena mine (4). Bought by WDO
from a private miner that had hit financial
troubles in 2003, the Kiena mine added to the
properties and concessions held by WDO in the
Dubuisson township zone of Val D’Or, Quebec.
Kiena is the mine complex, and the concession
package around is held separately as “The
Wesdome Group Properties” and include
Wesdome, Shawkey, Siscoe and Siscoe-
Extension, Mine École, Lamothe, Lamothe-
Extension, Yankee Clipper and Callahan
propertie. Kiena (photo right) was operated by
its previous owner for over 20 years (1981 to
2002) and after purchasing, WDO put it back into
production in late 2006 and WDO mined there
until 2013, when the mine was put on care &
maintenance. It’s been in mothballs ever
CAD$m WDO: Total asset carrying value at Kiena
since and with a closure plan in place.
120
110 "Wesdome Group" expl. props
100 24.79
As for asset value, this chart shows that at 90 24.79 Kiena Mine PP&E
its peak in 2010 and 2011 the mine 80 24.77
70
complex plus the concessions were valued
60
a m t i n o e v e h r a C s A b D e $ e 1 n 0 0 fi m rs . t S w in ri c t e te n th e d n o w th n e a K n i d e n i a s 3 4 5 0 0 0 14.60 14.77 65.54 79.68 88.82 24.79 24.79 25.37
now virtually totally written off as a 1 2 0 0 40.66 44.85 32.98 30.93 30.84 25.64 18.70
carried asset, (just $281k) and the 0 0.28 0.28
“Wesdome Group” exploration properties 2007 2008 2009 2010 2011 2012 2013 2014 2015 2q16
are now booked at $18.7m as a part of source: WDO filings
4

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them were sold to Agnico Eagle for $7m in 2q16. This next chart strips away the properties part
of the carry and shows how the Kiena mine only has been booked to balance over the years.
So what we have to this point is a
mothballed mine that’s worth nothing
to WDO’s books, but as that photo
above shows the facility clearly has
asset value if the mine were to start up
again and anecdotal reports tell of a
production facility that’s been kept in
good condition since closure. But it’s
not only priced at zero as an asset, it is
in fact a net liability on the WDO books
because it has a $6.2m closure plan
charge booked in liabilities at the
moment, with the company due to
hand over most of that cash in tranches this year. Yes, that means if the decision to re-open
Kiena happens, that cost is lifted from the balance and WDO gets financial boost. We’ll come
back to this angle later.
Now for a look at its history of operations under WDO. Back in the late 1990’s the previous
owners built in a new design capacity of 2,000tpd for the mill and facility, which was to be fed
half by ore from the Kiena mine and half from a nearby operation also owned by the company.
Under WDO and in the period late 2006 to end 2012, this is the type of throughput per quarter
WDO ran at the mine.
WDO: Tonnes milled per quarter
100000
80000
60000
40000
20000
0
On a couple of occasions WDO showed it could run Kiena at close to 1,000tpd for a quarter, but
the typical was between 700tpd and 800tpd and the average over the whole 2006-2012 period
was 746tpd. That’s the type of throughput rate we
could expect from the mine if it re-opened.
But the key to success or failure at the mine is a
combination of gold grade and costs and chief
among those is the grade. We’ll take a look at the
financial performance a little further down but this
chart showed the average recovered gold grade
per quarter in the period it was operated by WDO
(minus the last couple of quarters in 2013, it was
a dead duck by then). There are four main periods
to the mine, grade-wise:
• Late 2006 to mid-2008, when grade was typically around 4g/t Au.
• Late 2008 to mid-2009, when average grade spiked as WDO found and exploited a
high-grading zone they discovered.
5
60q4 70q2 70q4 80q2 80q4 90q2 90q4 01q2 01q4 11q2 11q4 21q2 21q4
WDO: Estimated Tonnes milled per day
1000
900
800
700
600
500
400
300
200
100
0
source: company filings
60q4 70q1 70q2 70q3 70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4
source: company filings
WDO Kiena mine: Recovered gold grade
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
60q4 70q1 70q2 70q3 70q4 80q1 80q2 80q3 80q4 90q1 90q2 90q3 90q4 01q1 01q2 01q3 01q4 11q1 11q2 11q3 11q4 21q1 21q2 21q3 21q4
WDO: Kiena mine carrying value
CAD$m
100
88.822
90 79.675
80
70 65.535
60
50 40.662 44.845
40 32.979 30.929 30.837
30
20
10
0.281 0.281
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2q16
source: company filings
g/t Au
source: company filings

,
• Mid-2009 to mid-2011, when grade dropped again to an average of a little over 3 g/t
Au.
• Mid-2001 onward, where grade dropped even further to between 2 g/t and 2.5 g/t Au.
It was of course also a function of the drop in the price of gold in early 2013 (remember the big
1q13 waterfall? Yeah me too..ugh) but to a great extent the failure of WDO to keep average
grade bumped up caused the closure of the mine. It certainly made it borderline economic and
marginal at best in its last years and that despite cost cutting measures in 2012 and continued
efforts to find higher grading material. And by the way, as recovery percentages are high at this
mine (the benchmark assumption is 95.5%) true grades aren’t much different, between 0.1g/t
and 0.3g/t higher depending on the grade average.
Next I want to illustrate the process that went on the WDO through the period by quoting quite
extensively from the company MD&As. Here below isn’t everything written by WDO on its Kiena
mine between 3q08 (when the high grading material showed up) and end 2012 (when the
decision to mothball was taken), but it’s most things and by reading through you get an idea of
how the company had grand plans for the future, then things didn’t go quite as well as they’d
like, then they got worse until the situation deteriorated to the eventual care & maintenance
decision point. It adds 1½ pages to today’s note on WDO, but I think it’s a valid exercise to
quote a lot. The original plan was to edit heavily and show representative snippets, but when I
tried it the overall message got lost and hey, it’s better to show you most everything and you
can make up your own mind that way (mine’s already made up, after all):
3q08 MD&A: “The highlight of the quarter was continued improvement at the Kiena operations.
The recovered grade increased 40% compared to the first half of 2008 and tight cost control
measures contained costs at last year’s levels. Subsequent to quarter end, a potentially
significant new find located 3 kilometres east of the shaft was announced on October 14, 2008.
Preliminary drilling results included intersections of 4.45 gAu/tonne over 5.1 metres and 6.82
gAu/tonne over 7.7 metres. Drilling is continuing on this exciting prospect with the purpose of
defining its geometry and dimensions.”
4q08 MD&A: “On the exploration front, a potentially significant new gold discovery was made
three kilometres east of the Kiena shaft. The mineralized system has been traced over 500
metres of strikelength and remains open in all directions. Highlights include intersections of 6.82
gAu/tonne over 7.7 metres, 6.92 gAu/tonne over 8.0 metres, 8.75 gAu/tonne over 5.8 metres and
4.25 gAu/tonne over 17.0 metres. An aggressive drilling campaign will follow in 2009 with the
intent of delineating the size potential and determining the internal continuity of this exciting new
discovery.”
1q09 MD&A: “At the Kiena mine initial production from the North zone – B lens yielded higher
than expected grade and we are hopeful this will continue as mining proceeds.”
2q09 MD&A: ”At the Kiena mine, higher than expected dilution in the North zone had a negative
impact on grade. The Company will work its way through this low grade and expects contributions
from the VC and Schist zones to start helping halfway through the third quarter.”
3q09 MD&A: “At the Kiena mine production increased 38% over the second quarter. Although we
remain in a lower grade phase of our mining sequence, efforts to gain efficiency through
increasing throughput were successful. Throughput increased 30% over second quarter levels
with a marginal increase in grade.”
1q10 MD&A: “At the Kiena mining complex we worked our way through a very low grade
sequence and are happy to see grades finally improving. In April 2010, millheads averaged over
5.0 gAu/tonne. For the first quarter, Kiena produced 6,460 ounces of gold from 65,660 tonnes
milled at an average recovered grade of 3.1 gAu/tonne.”
2q10 MD&A: “At the Kiena mining complex we worked our way through a very low grade
sequence and are happy to see grades finally improving. For the second quarter, Kiena produced
7,683 ounces of gold from 68,072 tonnes milled at an average recovered grade of 3.5 gAu/tonne.”
3q10 MD&A: “At the Kiena mining complex we worked efficiently through a low grade sequence.
For the third quarter, Kiena produced 6,511 ounces of gold from 67,044 tonnes milled at an
average recovered grade of 3.0 gAu/tonne.”
4q10 MD&A: “In 2010, the Company started driving a one kilometre long exploration drift to the
Dubuisson Zone, east of the Kiena mine. Detailed drilling proposed for 2011 will establish size,
continuity and mineability of this material. Positive results would offer potential to generate
6

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production growth for our Val d’Or operations over the short to medium term.”
1q11 MD&A: “At the Kiena mine, larger volumes of lower grade ore generated the same level of
production as last year. The mine produced 6,442 ounces of gold from 70,997 tonnes milled at an
average recovered grade of 2.8 gAu/tonne. During the first quarter, the operation surpassed a
major safety milestone of one million hours worked without a lost-time accident. Kiena is currently
encountering tricky mining conditions in two small stopes. This will dampen second quarter
production. As our larger stopes come online, we expect production to increase in the second half
of the year.”
2q11 MD&A: “At Kiena, difficult mining conditions in two small stopes dampened second quarter
production, as previously disclosed. The mine produced 4,980 ounces of gold from 70,505 tonnes
milled at an average recovered grade of 2.2 gAu/tonne. The mine schedule at Kiena was relying
on two small stopes for production in a transitional period, while larger stopes were being
developed. Both of these stopes experienced excessive dilution and loss of ore due to poor
ground conditions. Development of our larger stopes remains behind schedule, but we are
confident that we will catch up and increase production in the second half of the year.”
3q11 MD&A: “At the Kiena mine, production suffered from severe dilution and lost ore caused by
ground control challenges encountered in the first and second quarters. The mine schedule had
been relying on these small stopes in the transitional period while larger future production areas
were being developed. These events do not in any way compromise reserves or future production
areas. These unfavourable circumstances were exacerbated by a retarded development advance
due to labour issues related to the very tight labour market causing high turnover. Development of
our larger, future production areas is proceeding more slowly than anticipated. Both mining
operations are in major development cycles to bring on the next generation of production areas. It
is difficult to attract and retain skilled and experienced development miners under present industry
conditions.”
1q12 MD&A: The Kiena Mine in Val d’Or remains our biggest challenge. As previously reported,
2011 production suffered from severe dilution and lost ore caused by the caving in two small
stopes. Development of new stopes fell behind due to a tight skilled labour market, lack of
advance and financial stress on a key contractor (Press Releases dated June 14, August 15 and
November 7, 2011). This put us in a development catch-up position for the first quarter, 2012
(Press Release dated March 15, 2012). During the first quarter, lateral development totalled 1,070
metres versus a planned 820 metres. We now have two large stopes, including the 388 Zone, in
production. In late April, 2012, the Company announced the implementation of a new mining plan
at Kiena (Press Release dated April 25, 2012). This involves 20% cost reductions, a mandate to
improve grades and development of the Martin Zone. The new plan is to be implemented as of
May 2, 2012, and involves workforce attrition of 10%, dropping from 3 underground diamond drills
to 2, deferral of summer surface drilling, a re-organization of the production shift schedule and
finally, a reduction of planned mill throughput to 20,000 tonnes per month from 30,000 tonnes per
month. The goal of the plan is to reduce costs and improve grades. It does not sacrifice
development and features more selective mining and development of the Martin Zone. Stabilizing
the cost structure and ensuring a longer term view at Kiena is a priority for us.”
2q12 MD&A: “At Kiena, second quarter production totalled 5,330 ounces at a recovered grade of
2.5 gAu/tonne. The mine resumed a steady production rhythm following an aggressive
development effort in the first quarter of 2012. Kiena remains our biggest challenge and in light of
this, the Company initiated a restructuring program in May, 2012 designed to reduce total
operating and capital costs by 20%. The results of this effort started appearing in June, 2012 and
should be fully reflected in the upcoming third quarter. Stabilizing the cost structure and ensuring
a longer term view at Kiena is a priority for us.”
3q12 MD&A: “At Kiena, both grade and throughput increased compared to the third quarter,
2011. We continue to aggressively develop new production areas. Although gross margins are
thin, they are positive and hopefully will continue to buy us time as we develop some areas with
better grades. The mine’s performance remains extremely sensitive to gold prices. Work will
continue to ensure tight cost control and optimize development and production sequences.”
4q12 MD&A: “The Kiena Mine in Val d’Or continued to operate on very thin margins. The last two
years have been marginal in both grade and production. Mining viability, reserve and resource
estimates are acutely leveraged and reliant on external factors, particularly the gold price. Despite
this, we keep identifying new zones with limited drilling enforcing the view of this property’s
outstanding exploration potential. On March 7, 2013, the Company opted to suspend mining at
Kiena by June 30, 2013. Salvage mining of developed reserve blocks will continue, after which
the infrastructure will be placed on care and maintenance status. The decision was made in
context of optimizing returns of capital allocated amongst all our operating mines and projects.
Management does not favour equity financing options under current fragile market conditions to
fund further exploration and development work at this point at Kiena.”
Taken as a whole, the MD&A segments show an operation at Kiena that was full of promise in
2008, wasn’t quite matching that promise in 2009, then began to drop away. The flow and ebb
of optimism closely correlates with that quarterly average grade chart above and they also
7

,
closely match this next chart, that shows annual (not quarterly) production and sales of gold
from Kiena. The best year was 2008 with 40,344 oz Au produced during that year. You can
clearly see the effect of low grade on production in 2011 and 2012.
Oz Au WDO Kiena mine: Annual production and sales
45000
40344
40000
35404 35398
production
35000 32162
sales
30000
25000
19516 18814
20000
15000
10000
5000
0
2007 2008 2009 2010 2011 2012
source: company filings
WDO Kiena mine: Average realized gold price
Financial performance of the Kiena mine
CAD$m
As we’re about to see, the “good years at WDO 2000
Kiena were 2008 to 2010 when production ran at 1800 1658
1600 1519
reasonable levels thanks to the gold grade, costs
1400 1286
were steady and the gold price was moving up. 1200 1114
929
This average realized gold price chart for Kiena 1000 749
800
over the six full years of WDO operations is good
600
to keep in mind as we work through the other 400
data. 200
0
2007 2008 2009 2010 2011 2012
Back in 2007 production was good but the source: company filings
average gold price of CAD$749/oz for the year
wasn’t enough to make the mine profitable. By 2011 the average gold price of CAD$1,519/oz
was strong, but by then Kiena was having its grade issues, production was down and costs had
moved up. But as this next chart shows, the three
WDO Kiena mine: Operations overview
years FY08 to FY10 were profitable: CAD$m
45 bullion revenue operating costs Mine Op Profit
As throughput remained reasonably steady at 40
35
Kiena, when grade was good so was production
30
and that shows in the bullion revenue bars above.
25
Grade was always the key for production, but the 20
double whammy faced by WDO in 2011 was a 15
drop in grade at the same time as a rise in costs. 10
5
Previous years’ costs had fluctuated between
0
$27.1m and CAD$29.7m, suddenly Kiena costs -5 2007 2008 2009 2010 2011 2012
rose to CAD$35.568m and left no mine operating source: company filings
profit at all. Despite cost cuts in 2012, production
couldn’t move higher and it was the same story, so came the 2013 decision to shutter the mine.
WDO Kiena mine: Operating Costs WDO Kiena mine: Mine Operating Profit
CAD$m CAD$m
40 16
35.568
35 31.78 14
30 26.227 27.127 29.746 28.084 12 10.666 10.875 10.609
10
25
8
20
6
15
4
10 2
-0.06 -0.017
5 0
0 -2 -0.538
2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012
source: company filings source: company filings
8

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Here isolated are the same two datasets you see above for costs and Mine Op. Profit, for easier
viewing and consideration.
Summing up the previous operations at Kiena, WDO had a small but profitable gold mine going
that thew off around CAD$10m in annual operating profits, but only while average grade held
up. When the good grading material ran out and they couldn’t find any more, the combo of
lower production and higher costs brought a logical end to the mining operations and since
then it’s been on care & maintenance. The exploration projects around the mine site have
retained their asset value, but the Kiena mine itself has been written down to virtual zero even
though it’s clearly a valuable fixed asset if they can find enough good grade rock there to re-
start operations. With all necessary infrastructure and all all mining permits in order, the only
thing that’s missing is good grade rock and it’s a straightforward line to a new producing mine.
And this is why last week’s new release was so interesting. From out of nowhere (according to
the WDO 2016 books at least), the company has a clear opportunity to add a new and
profitable operation to its suite and all at very little overall cost. A gold mine for free, if you like.
What Kiena needs to become a new mine is therefore simplicity itself: It need to find enough
high grading material at this new deep S-50 discovery to justify a re-start of operations. Since
Thursday’s post on the blog (5) I’ve heard from inside the company that a rough target has
already been set and if WDO can delineate around 500,000 new ounces of gold at this high
grade target they’ll cross their internally set threshold and there will be enough to justify the
development of the orebody.
How likely is that? The answer is “very”. Setting aside for the moment the “remnants” of the
resource when Kiena shut down stood at 204,000oz (average grade 3.4 g/t with a 1.9 g/t cut-
off) the thing to do is to look back at the historical production at Kiena when the same S-50
vein was being exploited higher up in the system and see what it delivered. The part of the Z-
type structure WDO seems to have hit is the the mid-point, a thicker “arm” of the system that
further up had a strike length of between 250m and 300m. So once the type of grade reported
by WDO is thrown into a reasonable guesstimate at the orebody size, 500k looks like a very
passable number as things stand.
Timeline to eventual production
However it’s not just “flick a switch” on this, even with things all good it will take time to get
Kiena operating again and the biggest drag on that will be the construction of any underground
infrastructure to reach this new deep mineralization. If we assume the current 14 hole program
hits enough interesting stuff in the weeks to come, at some point WDO will expand the program
and dedicate a few million to better explore and come up with the resource on which final
decisions are made. That kind of operation isn’t so very easy in midwinter Quebec but it’s still
perfectly possible U/G, so time and money. Then the ramping down to the horizon, which
according to a friend of mine who knows the rock and way things are up there, would take a
roughly estimated 15 months until the body is ready to be mined. That’s the critical path
timeline, things such as re-starting of the machinery up top would be easily accommodated
inside the time. Therefore how about something like this, assuming of course each stage meets
with the necessary success to move straight on?
• Current 14 hole program: To October.
• Expanded exploration program: October 2016 to March 2017.
• Build decision: April 2017.
• Ramp construction: April 2017 to August 2018
• Kiena production start-up: 4q18
What could possibly go wrong? ☺
Yes indeed folks, this is mining and as you know a lot can go wrong. I’m not trying to pull the
wool over your eyes and say it’s going to be plain sailing, but there’s no way round last week’s
9

,
news is exciting for WDO. That the sketched outline of ounces and times may turn out to be
wrong, but the chances there’s a brand new gold mine here for WDO are high.
• Production facility on site (and in good condition)
• Fully permitted (that little fact alone is worth millions of dollars)
• Traditional mining zone
• Just add good grading rock...and that’s exactly what WDO found last week
What the new Kiena could produce
Now this one is tough, it’s one of those segments in which I feel confident about getting into
the ballpark but the eventual reality may be very different. However we can make enough
reasonable assumptions (aka wild guesses) to show that an eventual mine here can become a
significant asset for WDO but again, grade rules all other matters. Some assumptions:
• The new operation is green lighted, Kiena has a resource of 700,000oz on the books
(200k old rock, 500k new rock), first full year of commercial production is 2019.
• Throughput is set at 270,000 tonnes milled per year. That works out at 740 tonnes per
day (tpd) and is just under the six year throughput average of WDO at Kiena (2006-
2012). The mill has run at over 1k tpd, this is a reasonable estimate.
• Mill feed is made up of a blend of the remaining rock grading around 2 g/t and the new
deep zone rock. It runs at an average of 4.5 g/t recovered grade, below the historical
recovered average of 4.75 g/t (i.e. around 5.0 g/t head grade) and a lot lower than the
1990’s when the S-50 vein was being exploited.
• The point here is that WDO understands it needs a higher average grade to make this
mine work over the longer term and the mine plan will be a trade-off between the
necessary throughput quantity and the amount it can extract from the deep zone on a
daily basis. This is probably why they’ve set a 500k oz minimum for the new discovery,
they know it will have to be mined at multiple faces.
Once the parameters are in place it’s a question of simple mathematics:
(270,000 tonnes X 4.5 g/t gold) / 31.1 = 39,067oz
In other words, according to my model “New Kiena“ is good for 39,000 oz Au production per
year. And with 500k oz outlined at depth, then considering previous difficulties face by WDO in
accessing some of its high grade material, let’s say Kiena is good for a conservative 10 years of
production at that rate (the math says a lot more of course, I’m keeping it tight).
As for profitability, things have changed and mainly for the better since Kiena shut down
because gold in Canadian dollar terms is trading between CAD$1,720/oz and CAD$1,780/oz
while operating costs are down from their 2011 and 2012 spike peaks. That’s not to say costs
might not go higher again, especially by 2019, but in theory at least a mine like Kiena has much
more robust margins with which to play. It’s this combo of 1) Better gold prices 2) Controlled
operating costs and 3) Grade-driven production increases that makes any re-start at Kiena so
attractive. And to illustrate that, check out this
updated version of the ‘Operations overview’ chart WDO Kiena mine: Operations overview
CAD$m
seen above, this time with a Model Year of new 80 bullion revenue operating costs Mine Op Profit
operations at New Kiena that assumes sales of 70
39,000 oz gold, an average selling price of 60
CAD$1,700/oz and operating costs of CAD$32m: 50
40
It targets an annual Mine Operating Profit of 30
CAD$34.3m (26c/share WDO), so even if I’m 20
10
being too optimistic about costs and they come in
0
at CAD$40m, there’s still plenty of flesh on this
-10 2007 2008 2009 2010 2011 2012 MODEL
particular bone. And you get ten years of that, not
source: company filings, IKN ests for model year YEAR
just one.
10

,
Valuing Kiena
This is where the rubber hits the road. The question of finding a quantitative valuation for a
mine that may become a producer and throw off CAD$20m or CAD$30m per year in profits for
ten years. Or a lot more for longer, or less for less. Or may not ever open. The profit potential
is clear enough but for my taste any positive free cash flow from Kiena is too far in the future to
base a valuation for the asset as things stand today, so the only way forward is to find an asset
value for the mine. And the major problem here is this equation:
NAV = MSU
(Net Asset Value equals Make Shit Up)
It’s one of my major pet hates of the mining anal ysis world, anal ysts who pick any old number
out the sky to value “A Thing” in order to justify their preferred target price for the stock. It’s
way waaay too easy and way waaaay too common to see subjective “because I say so”
valuations at the top of an equation that magically turn into some kind of objective
demonstration of logical truth once the math has been applied and a target price generated at
the bottom of the stock of numbers. It grates on me like no other subject, it’s the whoredom of
sell side anal ysis writ large...and now I’m about to use the same type of guesses to value
Kiena and eventually WDO ☺.
So keep that in mind. Also keep in mind that I’m not trying to impress or wow anyone, my job
is to convince myself about what to so with my money and I tend not to BS myself (very
much...about business at least). Let’s start with some statements:
• The outlying exploration properties are given a carrying value by WDO, but the Kiena
mine itself has been written down to zero.
• The production facility is worth plenty money, no matter what the books say.
• The fact the mine is fully permitted is worth plenty of money too.
If we go back to the carrying value chart for Kiena again...
WDO: Kiena mine carrying value
CAD$m
100
88.822
90
79.675
80
70 65.535
60
50 40.662 44.845
40 32.979 30.929 30.837
30
20
10
0.281 0.281
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2q16
source: company filings
...and note the previous write-downs, I suspect the machinery is given around $30m value at
WDO while the gold underneath was the variable between 2008 and 2011. When the mine
closed first the in-situ gold was written off, then in 2015 WDO cleaned its books by writing the
machinery down to near zero too.
So to value Kiena I’m going to make four assumptions:
• They find enough gold to make that construction decision.
• They have 700,000 oz gold resource (200k from before, a new 500k from the high
grade). This could turn out to be a lot more if a build decision is made of course, but
let’s pitch at the low end and the apparent threshold number.
• This is obviously subjective, but I’m going to value those ounces at a nominal
CAD$100/oz in-situ. There’s a case to make that a lot more considering there’s a fully
permitted mill on top, but that’s a reasonable number considering peer valuations today
11

,
and will do for the time being. So my best-guess orebody is worth CAD$70m.
• The production facility as stands is newly valued at CAD$31m (as at 2014). That’s a
reasonable low-end assumption.
In other words, I’m speculating (there’s no other word) that one rather on-spec drill program
that WDO ran and announced last week has added CAD$101m in asset value to the company.
Not shabby.
As for the company share price, WDO as a whole, we need to take into account the speculative
nature of the above because it’s still early days in this proces to eventually re-open Kiena (a
potential 2½ year timeline remember). I do that by considering that for the rest of the
corporation, WDO typically runs a price/book ratio of 2X (remember that in IKN379 the whole
idea was to take advantage of the artificially low P/Bv level caused by the incessant selling of
Resolute, see IKN379 for more), because this company tends to value its fixed assets very
conservatively. Therefore by keeping things simple (K.I.S.S.) I’m going to leave the multiple for
the Kiena end of WDO at 1.0X, which recognizes the speculative nature of the asset valuation
at this time. Assuming things go well, the Kiena end of WDO can and eventually will get the
same type of valuation multiple as the rest but for the time being we’re going 1X on Kiena
alone to adjust for risk. With 129.64m shares out, that’s CAD$0.78 per share.
Valuing Wesdome (WDO.to) in light of new information
This last section is more straightforward, because all we do is add the newly valued Kiena to
our previous estimate for WDO.to as per IKN379. Back then we valued the company at
CAD$2.05 and not a single bean was attributed to Kiena. We now add that 78c above directly
and get to CAD$2.83. But there’s one more wrinkle to add to the overall corporate valuation of
WDO in light of last week’s news. As at 2q16 WDO had earmarked on its liabilities CAD$6.2m in
closure costs for Kiena so in the event that new decisions are made and the mine is re-activated
that cost suddenly disappears from the books and NAV increases by that amount. That’s
another 4.8c/share and hey, what the devil, I’m gong to throw in a bonus 0.2c and round that
up to 5c. Therefore The IKN Weekly moves its price target on Wesdome Gold Mines
Ltd (WDO.to) to $2.88, representing a 21% upside from this weekend’s price of
CAD$2.38. Last week’s share price surge was totally justified and I need to stress here that
once again, my valuation and new target price is conservative and lowball both in terms of the
WDO we understood before last week and the “new WDO” with the potential of Kiena attached.
Last week’s news from WDO was a surprise, it was exciting, I’m lucky to have been long the
stock when it came out because Kiena and its obvious potential to be a game-changer for this
company was the last thing on my mind when I opened the trade in IKN371, the last thing on
my mind when I reiterated and added via the anal ysis of IKN379. But sometimes the market
hands you a dose of good luck. When it does, accept gratefully.
12

,
Stocks to Follow
Another tough week for juniors, another reasonable response from the ‘Stocks to Follow’ list.
Yes for sure there were seven losers (BTO.to, REG.v, SAND, RRI.v, MAD.v, LRA.v, FCV.v) and
among those heavy losers in the shape of big holdings B2Gold (BTO.to down 11.5%),
Sandstorm (SAND down 9.8%) and Regulus (REG.v down 9.0%) but with GDX down 9.3% and
GDXJ down 9.8% on the week they were hardly outlying results. Meanwhile getting four
winners (TK.v, WDO.to, ATY.v, CNL.to) wasn’t bad and they include the big win in Wesdome
(WDO.to up 46.9%). Starcore (SAM.to) also did well to be unchanged on the week.
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, one unchanged since inception, one in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to buy C$2.11 12-sep-14 C$3.76 78.2% tgt $5.30 IKN375
Regulus Res REG.v hold C$0.64 06-apr-15 C$1.51 135.9% LT exploreco top pick
Starcore Intl SAM.to STR buy C$0.62 10-jan-15 C$0.70 12.9% $1.04 tgt, excellent value
Long positions (in current order of preference)
Sandstorm Gold SAND buy U$3.80 17-apr-16 U$5.61 47.6% $7 tgt IKN378, turnaround story
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.21 7.7% Top value under radar Zn play
Wesdome Gold WDO.to buy C$1.72 22-may-16 C$2.38 38.4% New $2.88 tgt IKN381
Atico Mining ATY.v buy C$0.50 24-jul-16 C$0.59 18.0% 90c tgt, Cu play, good qtr
Riverside Res RRI.v buy C$0.39 27-jun-16 C$0.39 0.0% Added IKN380, 60c tgt
Continental Gold CNL.to buy C$2.68 22-may-16 C$3.76 40.3% permit 4q16/1q17, $4.80 tgt
Miranda Gold MAD.v spec buy C$0.125 03-jul-16 C$0.135 8.0% Small play, flip, so far quiet
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.30 13.0% solid biz model
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.09 -60.9% 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.
Atico Mining (ATY.v): Added. ATY had another good week and my cost average rose a
couple of notches as I added to the personal position, as outlined last weekend.
13

,
ATY traded in a tight channel, touching 62c to the upside and 55c to the downside but those
numbers were exceptions rather than rules.
Wesdome Gold (WDO.to): Added. Doing so and being very lucky about it on Monday at a
sub-$1.60 number. It went lower still on Wednesday but I didn’t take any more, happy with the
size I have now. Then came the large stroke of luck and the big win, which as seen in above is
100% justified and WDO should add more to those wins too.
Starcore Intl (SAM.to): We do the company’s quarterly production numbers in ‘Market
Watching’ below, here we note that SAM did much better than the average gold producer last
week and even rallied off the somewhat disappointing production numbers for the quarter,
probably because they’re all going to be profitable ounces anyway.
Tinka Resources (TK.v): My favourite slide on
the new corporate presentation (6) is this one
because it’s a simple argument that rams home
how cheaply TK is being valued at the moment.
For sure it’s not a producer like Trevali and it’s not
as advanced at Arizona, but its $30m market cap
and the 3Bn lbs ZnEq already under resource
make for a clear valuation on a per pound basis.
And there’s a lot of exploration upside left at TK,
with newsflow on that set to kick off in 4q16. And
it won’t have a large community of Arizona
residents opposing the mine’s construction, either.
Continental Gold (CNL.to): Last week the
governor of Antioquia, Luis Pérez Gutierrez, once
again made public noises in favour of CNL and told residents of Buriticá that they were looking
to create up to 1,500 direct jobs with the CNL project (7). He also spoke of the four legal small
mining companies still left in the zone and that 23 other small mining companies had applied
for formalization, which if all granted would add another 500 jobs to the town. Along with a
reiteration buy call from Daniel Earle of TD Sec, who repeated the off-record reports IKN picked
up last week and told clients that the environmental permitting process had reached
“observaciones” stage (a good thing), this was enough to move CNL up in a strongly negative
down week for the sector and its out-performance was notable.
Miranda Gold (MAD.v): It had to happen at some point, we got some real news from MAD.
The company on Tuesday announced (8) that its optioning-in partner Prism (PRS.v) had begun
its drill program on the Cerro Oro project in Colombia as it earns in to up to 70%. By the
sounds of the script...
14

,
Drilling will test several veins where historic and active artisanal workings show higher
assay values. Drill fans on two to three fences along a 600m trend are designed to test
several veins and intervening mineralized wall rock. Veins, stockwork, and
disseminated mineralization will be tested at the same time. The veins extend for
approximately 2 km of strike; this program is an initial test of vein and grade continuity.
...this could be the project on which the expected promo pump will be hung, the way in which
PRS is going about this early stage and limited drill program has the feel of “can’t not hit
something” and from there the stock(s) can the talked up. Meanwhile trading was still light but
there are signs of some limited buying, 200k trades here and there.
Sandstorm Gold (SSL.to) (SAND), B2Gold (BTO.to): Both at the larger end of the juniors
spectrum, both sucked along with the general market sell-off. The good news is that both these
stocks are now very buyable at these lower prices if you’re feeling like a new position or a top-
up. I have enough of both, but I wouldn’t stop anyone from adding here.
The Copper Basket
After thirty-four weeks of 2016, The Copper Basket shows a 78.81% 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 1324.34 5.63 6.0%
2 Ivanhoe Mines IVN.to 0.61 778.96 1300.86 1.67 173.8%
3 Reservoir Min. RMC.v 4.08 48.69 449.41 9.23 126.2%
4 Capstone Min. CS.to 0.44 382.04 282.71 0.74 68.2%
5 NGEx Resources NGQ.to 0.65 205.06 227.62 1.11 70.8%
6 Western Copper WRN.to 0.38 94.19 97.96 1.04 173.7%
7 NovaCopper NCQ.to 0.395 104.33 75.12 0.72 82.3%
8 Cordoba Min. CDB.v 0.16 86.86 68.62 0.79 393.8%
9 Atico Mining ATY.v 0.28 97.59 57.58 0.59 110.7%
10 Copper Mtn CUM.to 0.445 118.8 57.02 0.48 7.9%
11 Copper Fox CUU.v 0.125 417.64 52.21 0.125 0.0%
12 Nevada Copper NCU.to 0.66 80.5 45.89 0.57 -13.6%
13 Amerigo Res ARG.to 0.205 173.61 27.78 0.16 -22.0%
14 Hot Chili Ltd HCH.ax 0.09 445.723 20.06 0.045 -50.0%
15 Revelo Res. RVL.v 0.055 128.486 10.92 0.085 54.5%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 90.17%
There were two weekly winners in The Copper Basket this week (ATY.v, RVL.v) and two
unchanged stocks (RMC.v, CUU.v). And that
means eleven losers and that’s a lot, with the The Copper Basket 2016, weekly evolution
100%
worst of those losers NGEx Resources (NGQ.to
down 18.4%) as it adjusted post-spinout the 80%
other big losers such as Capstone (CS.to down 60%
12.9%), Nevada Copper (NCU.to down 9.5%),
40%
Copper Mountain (CUM.to down 9.4%) and
20%
Cordoba (CDB.v down 9.2%) had fewer
excuses. 0%
-20%
Copper the metal was behind the stock
weakness as it went under U$2.10/lb for the
first time since June. The weekly chart (Right)
shows the situation is still constructive, but only just and copper would need to bounce into
September for the pattern to flow.
15
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 ts12 ht82
source: IKN calcs

,
Andy Home did a good overview piece of the copper inventories scene this week (9) and he
also points at refined copper leaving China and being
stored in LME warehouses in Shanghai/South Korea,
because China is “full of copper” now and demand, though
still good, is being oversupplied. Here’s an excerpt:
There's no big mystery as to where this metal is coming
from. Surging arrivals at LME sheds in Singapore and
South Korea have broadly corresponded to export flows
out of China.
And in part this is no more than a continuation of the
stocks rebalancing that has been playing out for several
months, a refilling of a depleted LME system from high
inventories in China that accumulated earlier this year.
But unlike the mini surge of LME arrivals in early June,
there is no obvious bull-bear battle being waged across
the front part of the London copper curve.
If no-one is being forced to deliver metal against a short
position, the alternative explanation would be that this is
China pushing out surplus.
If so, it would mean that copper oversupply, already
clear to see at the raw materials stage of the supply
chain, is finally starting to take manifest form in the refined metal arena.
Back in IKN377 dated July 31st I laid out my new warming to the copper sector and call that the
metal has probably bottomed out. But I wasn’t anyone’s idea of a full bull rah-rah-to-da-moon
shiller as this excerpt from that weekend’s edition shows:
“I’m not saying that I’m right to be bullish copper, I am saying is that the
probability is now to the upside and the surprise is to the downside. I’m not
saying that I’m a full-bore copper bull, I am saying that I’m confident the
bottom is in and that over time copper prices are set to improve modestly.
Don’t expect U$3/lb as my most optimistic position would be U$2.50/lb by the
end of the year and my best guess perhaps $2.35/lb (but hey, I’ll tell you
now, U$2.25/lb come year end would be good enough, it’s the lack of
downside potential that I like the most).”
Since then I’ve taken out a new position in Atico (ATY.v) and that’s been doing okay and
holding its head above water so far, but I’ve found committing to any other new copper
position difficult (example, I whussed out about NGQ.to and didn’t buy). As value is a function
of price, let’s see if there’s any significant selling in the copper names next week and a bargain
appears. The risk is that the current price channel breaks (as Goldman Sachs predicts it to do)
and then it’s anyone’s guess where we finish, but if it holds there could be a bargain to buy
next week, even for a near-term trade. But even my lukewarm bullishness on copper depends
on the basic “the bottom is in” and as we’re now moving back towards that bottom, copper will
need to rebound from here to keep my tentative positivism intact.
Now for the copper warehouse inventory bullets for the week:
• Overall copper inventory levels in the world’s three systems rose sharply last week, up
54,644 metric tonnes (mt) (+12.3%) to finish Friday at 498,110mt.
• Despite the overall gain Shanghai stocks were down, dropping by 8,760mt (-5.0%) to
finish the week at 165,803mt.
• Because the big change happened at the LME, where stocks rose by a mighty 69,200mt
(+34.2%) to close the week at 271,575mt. That’s a massive move and the type of
influx that had previously been rumoured for July when the markets talked of unsold
copper leaving China after having moved in. That looks to have finally happened and if
16

,
so it’s a clear bear signal which helps explain copper’s weakness last week.
• At Comex stocks continue to move in small increments, this week the total rising 510mt
(+0.8%) to finish Friday at 60,732mt.
Here’s the Shanghai-only chart, which isn’t the main event this week by any means, that’s the
LME but we keep tracking the China world via this dataset all the same. SHFE was down by
about 10k tonnes last week but the real story is the continued sideways action, unchanged
since mid-June.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
17
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 ts12
Mt Cu
source: Cochilco
Now for notes on a couple of the basket component stocks:
Revelo Resources (RVL.v): I liked the news out of RVL last week (10). Here’s the whole NR:
VANCOUVER, BRITISH COLUMBIA--(Marketwired - Aug 24, 2016) - Revelo
Resources Corp. ("Revelo" or the "Company") (TSX VENTURE:RVL) announces that
pursuant to the Company's stock option plan, 3,435,000 incentive stock options
exercisable at $0.15 per share for a period of three years have been granted to
directors, officers, employees, management company employees, and consultants of
the Company.
And the thing to like is placing the strike price at 15c when your stock is trading at 8c and 9c.
Those are genuine incentive options, priced to make anyone buying in today money before they
do. Positive optics and a smart decision by management.
Capstone Mining (CS.to): Down by a heavy 12.9% last week, I was reminded of the blog
post I published on July 26th entitled “Capstone Mining (CS.to) and a cash costs explainer”, (11)
which did a little on the differences in the way cash costs are calculated and tried to explain
why CS.to had just announced a net quarterly loss even though it claimed a U$1.66/lb cash
cost for copper. This chart was part of the piece...
...and on that day, spot copper was U$2.24/lb. With spot now at U$2.08/lb it’s not a tough call
to say that CS.to is currently unprofitable on all but “C1” operating cash cost parameters and

,
that goes a long way to explain the recent share price action.
Here for example is the chart from 26th July to date, we’re 15.9% down.
The Low Cost Producer Basket
After 34 weeks of 2016, the Producer Basket shows a gain of 123.53% 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 21.22 18.22 146.9%
2 Newmont NEM 17.98 529.12 21.13 39.93 122.1%
3 Goldcorp GG 11.56 830.22 13.24 15.95 38.0%
4 Franco Nevada FNV 45.75 176.298 12.76 72.35 58.1%
5 Agnico Eagle AEM 26.28 217.67 11.41 52.42 99.5%
6 Ang/Ashanti AU 7.10 405.27 7.19 17.73 149.7%
7 Detour Gold DGC.to 14.41 170.85 5.30 31.03 115.3%
8 Sibanye Gold SBGL 6.09 228.71 3.85 16.82 176.2%
9 Buenaventura BVN 4.28 254.19 3.42 13.44 214.0%
10 New Gold NGD 2.32 509.89 2.55 5.00 115.5%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 123.53%
Another big losing week for the bigcaps, all our components down and no fewer than five
double figure percentage losers (GG, ABX, BVN, NGD, SBGL). And look now at the gap between
ABX and NEM, they’re now duking it out for the number one market capper spot with less than
a hundred million between the two names.
The Low Cost Producer Basket: Weekly performance
200% and comparative to GDX control
180%
160%
140% 120%
100%
80%
60%
40%
20%
0%
-20%
18
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 ts12 ht82
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 ts12 ht82
source: ikn calcs, NYSE/Nasdaq data

,
Our basket average lost nearly 2% compared to the GDX benchmark, mainly due to the big loss
in equal-weighted AngloGold (AU). We’re still over 31% ahead on the year though, it’s still
working out fine.
Goldcorp (GG): The Reuters exclusive on Wednesday regarding high levels of selenium
seeping into groundwater around the GG
Peñasquito gold mine in Mexico (12) may have
affected the stock a little, but it really wasn’t
much and as GG has been by far the weakest
Tier One stock all year, it’s not going to be notied
much in the great scheme of things. But it’s
another straw added to this camel’s back and the
type of thing that happens to a company that
can’t seem to catch a break. To be just 38% up
on the year while GLD is up 24% is plain
embarrassing.
Regional politics
Nothing this week, as apart from small miners murdering a Vice-Minister in Bolivia there really
wasn’t much going on.
Market Watching
Updating on zinc’s bullish run
The International Lead & Zinc Study Group (ILZSG) filed its half year report on the lead and
zinc markets on Monday (13) and here’s a screenshot of the bit that matters, the zinc supply
and demand notes:
These data fit in with the current market whizzdumb on zinc, we’re in a supply deficit and that’s
what’s been driving the price improvement.
19

,
And the state of the bullish market is clear in this Reuters note (14) Friday, in which I’ve taken
the liberty of bold-typing a couple of lines:
MELBOURNE, Aug 26 (Reuters) - London zinc touched its highest in 15 months on
Friday as fresh shutdowns in China's steel sector added to mine supply concerns to
ignite a short-covering rally. China plans to cut steel production by 2.91 million
tonnes this year in inner Mongolia, a government official said, according to state
media. As China steel mills shutter, steel prices lift, meaning the remaining mills
can pay more for ingredients such as zinc.
The news pushed investors to cover short positions in a market already beset by tight
supply.
"Zinc has definitely been the outperformer. It is coming from supply constraints with
last year's closure of big mines," said strategist Vivek Dhar of Commonwealth Bank
Australia.
"Stronger-than-expected steel output in China this year has also helped boost
zinc demand and prices."
In other words:
• Stronger than expected steel output in China has pushed zinc prices higher.
• And now weaker steel output in China will push zinc prices higher.
All in the space of a few lines in a single wire report. Who said capitalism had to be coherent
and logical anyway?
Here at the Weekly we’ve been calling zinc as bullish since IKN364 dated May 1st, back then an
86c/lb metal so on the macro side of the equation this call is doing well. Unfortunately for some
of you our preferred vehicle for zinc speculation, Tinka Resources (TK.v), has been a bit of a
stick-in-the-mud and refused to move up from its 20c-or-so valuation in all this time. However I
say “for some of you” rather than “for me” because even though I’m already in TK and have
bought on more than one occasion, this continued lid on the stock means I get get more at
cheap prices before it starts moving up. And it will, it just needs to get that financing done.
As for the future of zinc, the market consensus seems to be that U%1.10/lb is going to be a
tougher barrier to cross than the Buck level, which is borne out by the chart above.
The Denver Gold Forum September 2016
I was sent over this link by reader ‘FR’ (ty ma’am) and though it’s still three weeks away I think
it’s worth handing on to you people. September 19th to 21st sees the annual Denver Gold
Forum, one of the most established and best events for precious metals mining companies of all
sizes in the year. This link (15) takes you to the page where the presentations of all the
exhibitors and talkers will be hosted and what you get once it’s filled (the day after each
presentation) is a whole bunch of corporate presentations in one place on the companies we
20

,
care about most. Right now it’s empty, go back there on September 22nd onward and you’ll
have an excellent centre for source material. Heads up complete.
Avino Silver & Gold Mines Ltd (ASM) (ASM.v) redux
Featured last week in this section and earmarked as potentially interesting (but let’s see how it
delivers in 3q16 first), Avino Silver & Gold Mines
(ASM) (ASM.v) lost U$0.15 (-6.25%) on the week
to finish at U$2.25 but that wasn’t bad all things
considered, as this chart shows the XAU index was
down a lot more. Plus silver names in general got
harder hit (e.g. PAAS down 12%).
We need to recall from last week that it was a $3
stock in July and U$2.75 before it filed its quarter,
so it has lost its chunks already. At U$96.7m market
cap, once you take into account the near-U$20m
working cap position (half of that covered by cold
hard cash) it’s not being overvalued here. Its near-
term share performance is going to be closely tied to the spot price of silver so if that metal
rebounds after this drop towards U$18/oz and runs back t0 $20, there will be far worse ways of
playing the leverage on such a bounce. On my radar.
Starcore Intl (SAM.to) quarterly production results
On Monday Starcore Intl (SAM.to) announced (16) its production results for the last quarter at
its San Martin mine in Mexico, officially is “1st Fiscal Quarter Ended July 31, 2016”. Remember
it just went through a stub year so it’s a bit of a mouthful, we’ll call it “The July quarter” from
now on. The bullet point takeaway as follows:
• At 4,207 oz Au, the quarter sucked. I was expecting something between “more” and “a
lot more” due to the high grade gold discovery it had previously announced.
• Tonnage throughput was lower due to “production issues”. We weren’t told anything
else, which also sucks.
• Despite lower output we can expect SAM.to to post a profitable quarter. It’s not all bad.
• Market reaction to the production numbers was subdued, but SAM performed relatively
well last well (compared to the big losers all around in the PM space ). Unless gold
caves in on us this looks like it’s as low as it goes.
• No change to the IKN price target here. SAM is very cheap, mediocre quarter or not.
Now for some charts, starting with the overall production per quarter:
SAM.to: Gold Equivalent produced
8000
7000
5749
6000 5338 5381 5130 5194
5000 4429 4686 4544 4207
4000 3476
3000
2000
1000
0
21
41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa 61.yluj
oz AuEq
source: company filings
According to the IKN calculations (tonnages, grades, recoveries, Casio pocket calculator), that

,
4,207 oz Au Eq is made up of 3,992 oz gold and 15,569oz silver. The total compares favourably
to the very low previous quarter but in fact is a miss, in relative terms to other quarters before
and compared to what I was expecting from an operation that for the first tim in a long time
had the opportunity to add high grade mineral to its mill feed from its well-discussed discovery.
Here below are the two charts that have the main reasons for the miss:
On the left, tonnage throughputs were a lot lower than normal at just 66,176mt for the quarter
(and please note the cut-down Y-axis). SAM spoke of “production issues” as the reason for the
miss and left it at that, another annoying example of Mushroom Politics from a junior miner to
its shareholders. That could be a strike, a machinery mishap, rock fall, anything but what we
know is that SAM missed out on running perhaps 10,000 tonnes during the quarter.
On the right we have average gold had grades. Clearly SAM has been processng at least some
of the new high grading gold lens they discovered earlier in the year but not that much of it.
They’ll have their reasons for that I suppose, let’s wait another quarter and see what they
return by way of average grade before jumping to conclusions but for me, they held back on
using too much of the good stuff and there’s still a bumper production quarter or two to come.
As for what all that means for the financial model, today we’ll just stick with the Operations
overview chart for a general handle. The assumptions today are:
• SAM sells at an average of CAD$1,680/oz gold in the period. That could be a little on
the conservative side, but that’s the way I like my models.
• SAM sells 100% of production (have to start somewhere)
• Costs are lower than the normal quarter due to that operations shortfall. Reduced
tonnage throughput is a negative of course, but its silver lining is that op. costs drop
accordingly.
Here’s the chart, plus comparatives to previous booked quarters:
SAM.to: Operations overview
10
9
8
7
6
5
4
3
2
1
0
-1
22
41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa tse61.yluj
SAM: tonnes per day throughput
85000
80000
75000 70000
65000
60000
55000
50000
45000
40000
$m revenues
COGS
mine op earnings
source: SAM filings, IKN ests
41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa 61.yluj
tpd SAM.to: Avg gold head grade (g/t) per qtr
3.50
3.00 2.81 2.89
2.50 2.23 2.38 2.55 2.34 2.42 2.36 2.22 2.22 2.17 1.98 2.00 1.99
2.00 1.66
1.50
1.00
0.50
0.00
source: company filings
31.naj 31.rpa 31.yluj 31.tco 41.naj 41.rpa 41.yluj 41.tco 51.naj 51.rpa 51.yluj 51.tco 61.naj 61.rpa 61.yluj
g/t Au
source: company filings

,
With projected revenues of CAD$7.1m, COGS at CAD$5.2m and a subsequent mine operating
earnings of CAD$1.9m it’s nobody’s idea of a blowout quarter, but it’s tody enough for a small
miner and will end with a net profit ($0.8m according to the model, though that’s always a
tougher one to call with a small company).
As for the way the market reacted, it was good. In fact, better than I expected. This was a
heavy losing week for junior mining companies but SAM finished the week unchanged. Volume
was light and the over-riding feeling was
that there may not be a thousand people
champing at the bit to own the stock today,
but sellers are few and far between and
that’s what’s keeping this stock together. I
agree with the “nobody wants to sell” thing
because that’s my position too (bias
confirmation alert), there’s too much to like
about SAM at this price and that’s why it’s a
Top Pick stock. Lacklustre quarter aside,
there’s the new Altiplano tolling operation,
there’s the Creston project and second-
string Mo properties behind that, there’s
also the expected closing of the real estate
deal in the next month of September that’s
due to bring in U$7m in cash into the structure (and in one fell swoop all liabilities are lifted).
Downside was tested last week and is minimal to naught. Upside potential is strong and if
things start going well for SAM, the blue-sky potential is mouthwatering (but I tend not to point
too hard at that part). So, a bummer of a quarter but the recommendation remains unchanged
on SAM for the time being, it’s a stock to own with a very conservative $1.04 price target and a
Top Pick here at the Weekly.
Conclusion
IKN381 is done, we end with bullet points:
• In the midst of a quiet week for the sector, the Wesdome (WDO.to) news was like
manna from heaven. I’m not trying to claim genius in owning this stock before the
Kiena news was known, it’s a dose of sheer luck and nothing else. All the same, it’s a
potential (even probable) game-changer for the stock and there’s plenty of upside left
in it. It also makes the potential for M&A action that much higher, but we’ll see about
that later. Hold on tight to your shares people, it’s going higher.
• And yes it was a quiet week and yes, next week is likely the same story. Until Friday at
least when the US Jobs report comes to shake us out of our torpor.
• Copper needs to bounce from here to keep my moderate bull outlook intact. We’ll see.
As for the correction we saw last week, I tried hard to care about the paper losses in
BTO, SAND and found that I didn’t. Because they’ll go back up again soon enough.
• Imperfect.
• 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
23

,
Footnotes, appendices, references, disclaimer
(1)http://www.wesdome.com/wp-content/uploads/2016/08/08-24-16-HighGradeDiscoveryKienaFullFinalpdf.pdf
(2) http://incakolanews.blogspot.pe/2016/08/wesdome-wdoto-and-gold-porn.html
(3) http://incakolanews.blogspot.pe/2016/08/wesdome-wdoto-and-gold-porn.html
(4) http://www.wesdome.com/operations/kiena-complex/
(5) http://incakolanews.blogspot.pe/2016/08/wesdome-wdoto-at-kiena.html
(6)https://www.tinkaresources.com/assets/docs/ppt/tinka_presentation_aug_2016.pdf
(7) https://www.youtube.com/watch?v=gpay70IfruI
(8) https://finance.yahoo.com/news/miranda-prism-begin-drilling-epithermal-131500775.html
(9) http://www.reuters.com/article/us-china-copper-ahome-column-idUSKCN11127O
(10) https://finance.yahoo.com/news/revelo-grants-incentive-stock-options-152301608.html
(11) http://incakolanews.blogspot.pe/2016/07/capstone-mining-csto-and-cash-costs.html
(12) http://www.reuters.com/article/us-goldcorp-leak-idUSKCN10Z1YN
(13) http://www.ilzsg.org/generic/pages/file.aspx?file_id=1883
(14) http://www.dailymail.co.uk/wires/reuters/article-3759390/London-zinc-hits-15-mth-high-amid-China-steel-cuts.html
(15) http://www.denvergoldforum.org/dgf16/archived-presentation-stream-2016/company-webcasts-alphabetical-2016/
(16) http://finance.yahoo.com/news/starcore-produces-4-207-equivalent-130000213.html
24

,
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
25

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