IKN #382Premium

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The IKN Weekly
Week 382, September 4th 2016
Contents
This Week: Trade heads up, In today’s issue, Brexit and gold, both oversold.
Fundamental Analysis: NOBS report on Rye Patch Gold (RPM.v).
Stocks to Follow: Overview, Rye Patch Gold (RPM.v), Atico Mining (ATY.v), Miranda Gold
(MAD.v), Starcore Intl (SAM.to), Wesdome Gold (WDO.to), Tinka Resources (TK.v), Sandstorm
Gold (SSL.to) (SAND), B2Gold (BTG) (BTO.to).
Copper Basket: Overview, Ivanhoe Mines (IVN.to), Capstone Mining (CS.to).
Low Cost Producer Basket: Overview, Barrick (ABX).
Regional Politics: Colombia’s multiple referendums, Dominican Republic: Jurassic Park, Chile
woos China, Argentina trying to attract (Chinese) FDI too, Argentina wants to create national
mining laws, El Salvador: OceanaGold (OGC.to) wants to deal government says no way.
Market Watching: Overview, A brief Minera IRL update.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
Trade heads up
As per the Thursday Flash update (see Appendix 1) and today’s NOBS report, I’m going long
Rye Patch Gold (RPM.v). Details below.
In today’s issue
• As noted in the Flash update Thursday (see Appendix 1) Rye Patch Gold (RPM.v) is my
new long position. I bought a few Friday (overpaying at 37c, some of you really
overpaid at 38.5c and 39c) and will buy more when it drops further. Risk is higher than
in my other open gold producer trades, but the size of the potential reward counters
that risk well. As a result it’s not going to be a big position for me, but it’s a valid one.
See ‘Fundamentals...’ for more.
• Many of you typically skim/skip over the ‘Copper Basket’ section and that’s fair enough.
But this week I’d like to aim you towards the note on Ivanhoe Mines (IVN.to), without
false modesty I think it came out well and makes a valid point for all strata of the junior
mining world.
• The Wesdome Gold Mines Ltd (WDO.to) notes in ‘Stocks to Follow’ explain a little more
about the way target prices work, I received several “If $2.88 hits will you sell?” mails
last week, it’s a point that needs clearing up.
• It’s Labor Day tomorrow Monday, no open markets in the USA or Canada but once
that’s out the way we’re fully into the busy-business and deals month of September.
Expect a lot of hubbub from the mining sector, the trick will be to filter out the empty
noise and focus on true signals.
1

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Brexit and gold, both oversold
I’ve used this dataset more times then I care to
remember recently, so it’s impossible to ignore the
latest development. The day the UK referendum’s
shock came through and Brexit was called winner,
June 24th 2016, gold shot through U$1,300/oz and has
stayed there ever since.
Though it hardly needs mention to an audience of this
calibre, that day buyers of gold bullion were
everywhere and come the end of trading inventories
for market leading ETF for gold bullion, SPDR’s GLD,
had moved up nearly 20 metric tonnes to finish at
934.31mt. Less than two weeks later those inventories
had peaked at over 982mt.
Last week bullion holdings at GLD dropped and
finished at 937.89 metric tonnes gold so within a spit
and a whisper, if we taken the largest single traded
depository of gold bullion as our
benchmark for the sector, it’s GLD gold holdings, Brexit result to date (metric tonnes)
1000
reasonable to say the whole buying
990
spree set off by Brexit has now
980
unwound. It’s also fair to say that 970
in general terms the bounce in 960
precious metals stocks over that 950
period has unwound, as seen by 940
this XAU vs GDX chart (they track 930
each other reasonably faithfully, 920
which is what you’d expect) 910
900
I’m not going to get cute with you
at this point, frankly I didn’t think
we’d get back to these levels
because Brexit looked like a real
systemic shock to the way money works, not
your normal, common or garden financial shock.
If I thought the above selling were on the cards I
wouldn’t have sold just one of my long positions
between June 24th and today (INV.to) and I
would have waited until this week to add more
stocks to the IKN list, rather than buying in July
and in August (new positions in RRI.v, MAD.v,
ATY.v plus plenty of additions to existing ones,
though admittedly most have worked out
relatively okay so far, only RRI.v lagging).
Anyway, Brexit may have been originally
oversold as the immediate end of the world as we know it, but now it’s equally as strange to
see it considered wholly contained by the wider financial world. Mind mind floats back to how
many times I heard the word “contained” in the first phase of the 2008 subprime (etc) financial
crisis (hey wow that Hank Paulson, he was so smooth on CNBC).
Nah sorry, not that easy. It may not be at the top of the time-critical agenda now but Brexit is
still here, it hasn’t gone away, it’s going to affect the Eurozone one way or another and one of
its logical effects will be to bump up safe haven demand in the Old Continent (please note the
GBP at $1.33 and not $1.45). So where has all the gold inventory gone? The gold price has held
2
61/42/6 61/82/6 61/03/6 61/5/7 61/7/7 61/11/7 61/31/7 61/51/7 61/91/7 61/12/7 61/52/7 61/72/7 61/92/7 61/2/8 61/4/8 61/8/8 61/01/8 61/21/8 61/61/8 61/81/8 61/22/8 61/42/8 61/62/8 61/03/8 61/1/9
mt
source: SPDR GLD data

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up and over U$1,300/oz all the way through, its signal is different from that of the western
world casino players who have turned their backs on the safe haven and sold down their
ounces in GLD. Where have all the precious metals equity longs gone?
• GG was U$18.38 on June 24th . Now U$16.02 and 12.8% down.
• ABX was U$20.47 on June 24th . Now U$18.16 and 11.3% down.
And yeah sure I cherrypicked those instead of the modest gains registered in NEM, AEM or FNV
but GG and ABX are classic entry stocks for insto money, the ones that get the buttons pressed
first by fund managers who don’t follow the sector closely, they’re the gateway drug stocks for
the type of top-down large moves that come in from the NYSE. And be clear, ABX and GG
aren’t the only net losers in the large cap space, I could continue.
Less than two weeks ago on Wednesday August 24th I remarked (1) that producer mining
stocks were at buyable prices for the first time in a while. Along with the way the gold sector
snapped to attention after Friday’s weak-ish US Jobs report, I can’t help but feed my own
biases by thinking that we’ve gone past merely “buyable” and reached fully oversold levels in
the mid-point of last week. We’re in the vespers of Labor Day and an expected market pick-up,
time to see if renewed interest translates to the gold price. Though I remain utterly unworried
about the medium and longer-term, it would be pleasant to see some bull action confirmation in
the near term now, too. Mind you, on second thoughts I’d still like to finish buying my RPM
position and at cheaper prices so perhaps we can dip one more time on Tuesday before the
upmove rally kicks in? Asking too much again? ☺
Fundamental Analysis of Mining Stocks
Today we look at Rye Patch Gold (RPM.v).
NOBS report dated September 4th, 2016
Rye Patch Gold Corp. (RPM.v)
Company Overview
Rye Patch Gold Corp. (Canada: RPM.v, USA otc: RPMGF, Frankfurt 5TN.f) is a Vancouver
domiciled junior mining company operating mainly in Nevada, USA. Its flagship is its newly
minted 100% ownership of the Florida Canyon gold mine in Nevada, now in the process of re-
opening. Current share structure is as follows:
Shares out: 387.085m
Options: 15.06m
Warrants: 27.387m
Fully diluted shares: 429.532m (to 444.532m)
Current share price: C$0.37
Market Cap: C$135.82m
Fully Diluted Market Cap: C$158.93m
Approx working cap per S/O: C$0.13
All prices are in Canadian Dollars unless stated. Forex U$0.80=CAD$1
3

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NB: As Rye Patch reports in Canadian Dollars that is default currency in this report. When used or
mentioned, United States Dollars are denoted “U$”.
A bit of background
Rye Patch Gold (RPM.v) is a stock that’s always been there in the background, I’ve looked at it
several times over the years and it’s always come across as a well-run company, but I’ve never
managed to find a decent reason to buy and own the stock, even when it did that opportunistic
and smart land grab from under the nose of Coeur (CDE) (CDM.to) that snagged a significant
part of that company’s Rochester mine. Up to early this year it’s been in my “small and neat
exploreco” category, on my radar screen and occasionally looking like a bargain (yes I know I’ve
missed a few in my time) but I was never clamouring to buy the stock.
Then on May 25th this year RPM announced (2) it was buying the Florida Canyon mine in
Nevada and the company was transformed. As you’ll see, “New RPM” is suddenly a very
different beast as for one thing it’s about to become a gold producer, for another its share count,
asset value, liability structure etc have all changed radically. Details of that below.
As you can see in this two year chart, the
market approved of the changes starting May
25th. Its share price was already reacting to
the nascent gold bull, moving up from the at-
or-about 15c to 25c or so, but then it popped
hard and ran to 45c by late June/early July.
Since then we’ve seen a correction in the
stock (like many others) as the heat has been
drawn out of the first flush of gold’s run but
that peak gives an idea of what RPM as a
sock is capable of doing as we move towards
production. When I made my decision to buy
last week the stock was bouncing around 32c,
Thursday evening and the Flash update buy
reco it was 33.5c and then it popped hard on overbuying Friday. Here we are today, 37c.
Management and shareholders
RPM is led up by Bill Howald, a highly experienced geologist with particular expertise in the
Nevada region and co-founder of the company. The rest of the long-term RPM team have the
type of background and experience you’d want from your junior too. As for directors, I’m not the
only person who got the bucket-of-cold-water feeling when seeing the name Randy Buffington
on the roster (as reader GJB mentioned the same just this weekend), one of the men to blame
for the Allied Nevada Hycroft mine disaster and subsequent share price massacre. However,
I’ve learned more about that particular dark episode and now consider Buffington guilty of bad
oversight rather than lying (in short he was lied to and didn’t spot it until it was too late), so
having him as a board member is okay I suppose, he’s not in the executive position this time.
One criticism I’ve heard levied at the management team is that CEO Howald may be an
excellent and peer-respected geologist, but he’s not a mine builder and not a mine operator.
That’s fair criticism too, so it’s worth rebutting that with the fact that as part of the deal the
previous mine team have come on board, headed up by Joel Murphy who has spent 20 of his
35 year career running Florida Canyon. If they don’t know every nook and cranny of the asset,
nobody does. As for major shareholders the largest is a new entrant into the company, the
Donald Smith Value Fund of New York, part of the Donald Smith insto with around U$3Bn AUM.
They now own 45.5m shares, which is approximately 12.4% of shares out. Other big holders
include fund Sun Valley with 18.7m shares and Kinross (K.to)(KGC) with 12.9m shares. Insiders
at around 1.3% ownership have a portion but that’s mostly Howald (2.5m shares) and other
don’t own many, the lack of skin in the game is a risk to consider.
Florida Canyon
Details later, things we need to know at this point:
4

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• It’s a low grade, open pit, heap leach operation. Scoop, truck, dump, NaCN, gold.
• It’s been an operating mine for many years. This is not an unknown or unpredictable
asset, rocket scientists need not apply and the people who ran it before are the people
who will run it now.
• It was mothballed by its previous owners in 2015 due to the low gold price. At the time
it was the right decision.
• RPM has bought it because gold has gone up in price and made its mining economics
work again. It’s not a cheap gold producer and when gold dropped under U$1,150/oz its
economics became marginal (and U$1,100/oz it plain didn’t work) but at the new
U$1,300/oz level, plus benefitting from some much-needed capital injection to make
things more efficient, it works and is a profitable operation, on paper at least.
• They’re now putting the mine back together and it’s going to be a relatively rapid
construction period. We can expect first production in 1q17 and it should be free cash
flow positive almost immediately. Florida Canyon is billed as a 75,000 oz gold per year
operation and the current mine plan gives it a life of eight full years.
• It has this as a current 43-101 compliant resource (table from the recent PEA):
• Not all those ounces make it to the RPM mine plan. It has a sulphide resource too, but
that’s not part of the current mine plan either and I’m going to completely ignore it (not
doing NAV = MSU today, this is cash flow).
• The exercise today is to show that without the bolt-on extras that may come with the
deal, Florida Canyon in operation next year will see RPM’v’s share price improve. Bread
and butter first, blue sky later. On with the show.
Financials overview
One of the things I like about the NOBS report format it’s that it’s not cookie-cutter sell side, I
can do what I want and don’t have to cover things if they’re not so important. So this bit is going
to be quick today, the past financials of RPM bear little weight on why why I’m recommending
the stock, but by showing you a few of the generated charts it’s an easy way in to showing the
effect of the Florida Canyon deal, plus how I think the key quarters to come can develop.
Here are the assets and liabilities overview charts:
RPM: Assets
100
90
80
70
60
50
40
30
20
10
0
Can you spot the quarter when the deal is incorporated into the company? Yeah, I can too ☺.
The deal was finalized on July 29th, therefore the whole shebang only shows up on the books in
the upcoming 3q16 report. We need to make some forecasts on how the balance sheet will look
at this time and it’s not so easy to get the exact relationship between current and fixed assets
right, we don’t know exactly when RPM will write the big capex cheques, but the overall picture
should be close to what we see above as long as you take into account and digest the following
5
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3
$m RPM: Liabilities Breakdown per qtr fixed
other current 40
cash 35
30
25
20
15
10
5
0
source: RPM filings
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3
source: company filings
srallod
fo
snoillim
LT debt
current debt

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bullet points:
• First things first and to make it 100% clear: Under normal I care a lot about the past
financial history of a company under analysis. But this time I don’t, even though RPM
has proven itself to be a smartly run company on financials and has income from its
royalty with CDE that has basically covered its modest exploration and corporate
expenses these last three years. I care about RPM because I like the Florida Canyon
deal and the new structure, as that has precious little to do with the previous shape of
RPM I largely ignore its history, positive though it was.
• The deal involves buying Florida Canyon for a ticket price of U$15m cash plus 20m
shares of RPM (plus a few adjustments, but those are the biggies).
• At the same time, RPM signed on to a U$27m debt facility with Macquarie that comes
with a reasonable LIBOR +8% price and necessary hedging (125k oz). It’s due paid
down in the first four years of production.
• As part of the deal, RPM had to raise at least $30m in an equity placement. In the end
they went for $40m and it was so popular they ended up raising gross proceeds of
$49.1m. That’s a good result and gives the company plenty of financial flexibility.
• Please note that re. the U$27m debt deal, to simplify my model I’ve assumed it fully
drawn as at 3q16. I’ve also assumed it as CAD$33m on the books and the forex
remains constant (remember RPM reports in Loonies).
• Regarding debt, I’ve also assumed that due to the financial leeway afforded by the
successful equity raise, once the mine is off and running in early 2017 RPM will be
financially astute and start paying down that debt more rapidly than the contract obliges.
The sooner that debt’s off the books, the sooner RPM becomes financially very solid.
This is my best guess, RPM may decide to play that a different way. However, even
with the assumption of financial leeway and positive free cash flow quickly in 2017, I’m
also assuming RPM keeps treasury levels comfortable in the first year and isn’t too
aggressive in its paying down of the Macquarie debt facility. See below and the cash
treasury and working capital charts for more.
• I’ve guessed (there’s no other word) at the timing of the capex spending in 2016 (and
early 2017) as the mine is readied for re-start. Of the approx $83m it has available in
liquidity (which I’ve assumed to treasury), approx $27m gets spent this current quarter
(which includes the U$15m cash to the vendors, then $30m is spent to end 1q17. This
may not be the rate (in fact I’d be shocked if those turn out to be exactly right), but the
important thing about the first phase is the overall asset level as cash is turned into a
newly working mine.
• Also please note that the RPM plan assumes a spend to end 4q16 of around $38m
(cap-ex plus start-up op-ex). I’m pitching at $42m deliberately and assuming some
costs overrun. If it doesn’t happen I get a bonus to my financial assumptions.
RPM: Cash treasury per qtr
60
55
50
45
40
35
30
25
20
15
10
5
0
6
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3
source: company filings/IKN ests
srallod
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snoillim
60 RPM: Working Capital per qtr
55
50
45
40
35
30
25
20
15
10
5
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3
source company filings/IKN ests
srallod
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snoillim

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Finally here’s the shares outstanding count:
RPM: Shares Out
500
450
400
350
300
250
200
150
100
50
0
7
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1
source: company filings/IKN ests
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The S/O used to be 143.838m, it’s now 387.085m and that’s a big jump, but that’s not all we
need to consider.
1) On October 17th (call it six weeks’ time) the 223m shares placed at 22c in the recent
placement comes out of escrow and are free trading. Now for sure most of those will be
in it for the long haul but I expect plenty to take the near-term difference they’ve made
(68% up is no bad deal for four months) and cause significant selling pressure on the
stock.
2) Then on November 29th the brokers and bonus warrants attached to the deal, also
priced at 22c, become free trading. That’s another round of potential selling pressure
and dated for you, too. I’ve adjusted for the amount of warrants I think may be exercised
in the above chart for the 4q16 period.
3) Another part of the deal is that once in commercial production, RPM has to pay it mine
vendors the final quota of the ticket price and that may come out in the form of 15m
shares. If so, it will bring the fully diluted total up to 444.5m
4) Due to the high level of warrants and their strike price, I think it’s smarter to use the fully
the share count for the financial calculations, as it’s very unlikely RPM’s count will stay
under 400m next year. In what comes I’m taking 429.5m shares as my baseline for any
EPS calculations.
With the share issue covered, that finishes need-to-know on financial structure (and yes, I’m
cutting corners to try and keep this thing focussed, thanks for noticing ☺). I’m now going to
move on to the main point of today, sticking a valuation on the Florida Canyon operation:
Valuing Florida Canyon
Longer-term readers among you should know me by now. I’m the conservative guy, the
“where’s the real story here?” guy, the “get the big picture right” guy, the “buy the baseline, not
the blue sky” guy. To that end, I’m clear about the attraction of the RPM.v trade at the moment:
• We like the fact that the Standard Mine next door to Florida Canyon comes in with the
deal. It may provide a few ounces at some point.
• We like that Florida Canyon has some modest resource upside potential in itself.
• We definitely like the fact that RPM’s Lincoln Hill deposit, less than 30 miles by road
from Florida Canyon, could provide extra resources at a later date. One of the best
things that could happen to RPM’s new main asset would be that its mine life improved.
• Though useful, the approx $10m in royalties we can expect from what’s left of the
Rochester deal with Coeur now represents a quarterly 0.3c/share. It covers G&A at the
office, it’s not the reason to buy this stock.
• We like the way in which a relatively high cash cost mining operation such as Florida
Canyon, one that had to be mothballed recently due to the drop in gold, can see big
improvements in its operating margins if gold decides to move up, let’s say to
U$1,400/oz as a first step.
• We even like the potential for quicker debt relief from forex. If we assume improving
commodities prices in the future we should also assume a stronger Canadian Dollar
versus the US Dollar. As this is a Canadian Dollar reporting company holding US Dollar

,
debt, its financial would quickly benefit from that.
But until the baseline is in place all the above is my idea of gravy, or blue sky. First and
foremost Florida Canyon has to “work” under today’s market conditions and if it does, we can
consider in a sober way what any or all the above
may be able to contribute and that’s what happens
now. We’ve already taken a look at the resource
count (here right again, just for fun) and we know
there’s something over a million ounces in
measured oxide resource. That’s at a cut-off of
0.187 g/t gold and that’s a measured resource
averaging 0.404 g/t gold. The indicated bumps the
total up. There is a little inferred oxide but it’s not in the mine plan. There’s sulphide resource,
but that’s not in the mine plan either. In other words, in Florida Canyon we’re talking about a low
grade, open pit classic dirt shifting exercise that’s all about keeping costs low per tonne of rock
moved. They’ll be digging scooping, dumping material on leach pads, making pregnant solution,
processing it with standard CIL technology. In the case of Florida Canyon, the mining rate is
expected at around 21,000tpd.
A short aside: Let’s talk about scoping studies. Before we go any further there’s an issue to be
addressed. This Florida Canyon gig is being moved forward on the back of a (158 page MDA
authored May 2016) PEA or ‘scoping study’, the type of first pass document that can get you
into trouble if you’re not careful and trust too much as a genre (for more information, I’m sure
anyone who was long Rubicon last year can help you out).
The thing is, there are PEAs and there are PEAs. For example, if you decide to put your
absolute trust and money into a PEA outlining a poorly understood underground vein system, I
wish you the very best of luck. You’re going to need it. But if you put your trust in a PEA.....
• that’s a past producing open-pit mine
• that has hundreds of thousands of metres worth of drilling in it, a lot of that recently
done
• that’s working a mine plan with zero inferred resources
• and is going to be run by the person who ran it for the last 20 years
...then I think you’re on firmer footing. For the record, your author 100% agrees with the RPM
decision to move straight to production. This is a well-understood deposit and there’s virtually
nothing MDA could have told the Florida Canyon team about the deposit or how to mine it that
they don’t know already. In reality what RPM needed from a third party compiler this time was a
decent and updated price list of the things they need to buy in order to ramp up and start
production again, so why waste tens of millions of dollars (in cash and opportunity cost) on a
unnecessary document? I’m good with Florida Canyon going on a PEA only, in this case it
would have been an active negative to go through the phases of PFS and FS. Which just goes
to show that in mining as in most other things, rules are made to be broken. End of aside.
Back to the numbers and regarding that mine plan, the PEA is the place to check it out and it’s
where I’ve had my nose buried all week even after having realized this was a buy. It’s around
about this point where I could bore you to death with four hundred charts and as is often the
case the dilemma is what to leave out, rather than what to include. But I am going to show at
least a couple of charts from the deeper numbercrunch, they’re mostly squarely based on the
numbers proposed by RPM/MDA in the PEA and let’s start with this one below, that gives the
forecast gold productions per full year. There is a small amount of pre-production expected in
2016, plus the plan includes remnant production of around 34,000oz gold in year nine (i.e.
2025) but what you have below is the eight full years in the plan, the chart including the number
of ounces mined, the ounces crushed onto pad and then the number that really matters, final
recovered gold ounces per year.
8

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RPM at Florida Canyon: Projected gold ounces mined, crushed
and produced per year
9
00597 00237 00627 00508 00787
00764
00166 00847
Ozt Au
140000
ounces mined out ounces crushed net gold production
120000
100000
80000
60000
40000
20000
0
2017 2018 2019 2020 2021 2022 2023 2024
source: RPM 43-101 PEA
There’s one soft year of production programmed for 2022, but a typical year at the mine is
expected to be gold production in the mid-70k range. Here are the strip rate and estimated gold
recovery levels per year, important inputs for a low grade high tonnage earth shifting exercise.
RPM at Florida Canyon: Forecast gold recovery
rates per year
100
90
80
70
60
50
40
30
20
10
0
2017 2018 2019 2020 2021 2022 2023 2024
source: RPM 43-101 PEA
Both have their fluctuations as the mine plan goes though fairly typical phases of more/less
waste, more/less grade, etc. What this shows once again is how the deposit is understood by
those who will mine it out. And seriously, I could go on and on and on with dozens of visuals on
this mine, that’s because the PEA is very solid source material with real-world, non-BS price
inputs that stand up to scrutiny (feel free to have a look yourself, fun for the whole family). Okay
just one more, here’s an annual net sales revenues forecast generated at different gold prices...
RPM: Florida Canyon net sales revenue per annum
U$m
120
110
100 At U$1,000/oz
90 At U$1,100/oz
80 At U$1,200/oz
70 At U$1,300/oz
60 At U$1,400/oz
50 At U$1,500/oz
40
30
2017 2018 2019 2020 2021 2022 2023 2024
source: RPM 43-101 PEA YEAR
NB: Please note the cut-down Y-axis used to show contrasts, not to trick you
...and what this illustrates is that at the PEA model gold prices (U$1,000/oz gold, U$1,150/oz
thereafter) there’s a big difference between the net revenues (i.e. after royalty and sales costs)
they model on the baseline and the revenues that Florida Canyon can generate at current (or
higher) gold prices. Just for one example, the PEA assumes net gold sales revenue of
U$74.53m in 2017 (year one of production), while using the U$1,300 baseline it’s U$97m, close
derevocer
dlog
%
dap
morf
RPM Florida Canyon: Forecast strip rate per year
2.50
2.00
1.50
1.00
0.50
0.00
2017 2018 2019 2020 2021 2022 2023 2024
source RPM 43-101 PEA

,
to the amount they’d need to pay off the financial debt in one fell swoop. If you feel lucky, at
U$1,500/oz it’s U$112m. Good money.
So what we need is a model year. In order to wade through the myriad of numbers and boil it
all down to one table with which we can fairly value RPM on cash flow from Florida Canyon, my
solution is to build a model year forecast. For that I’ve chosen to use the first four full years of
production (2017 to 2020) and averaged out because these first four years are the key to
success, it’s when RPM has to pay down the financial debt and show the operation’s validity to
the world (or else). I’ve spent time trying to pick fault with the input numbers in the PEA, none of
them are stupid (in fact many of them seem overly cautious, which I like) so I’m going to mostly
go with those here. The main assumptions are as follows and are all derived from the averages
of years 1 to 4:
• Average tons per day mined: 21,000
• Average mined grade 0.014 oz/t (0.435 g/t)
• Average crushed grade 0.01475 oz/t (0.46g/t) (this is slightly higher than mined grade
because some lower grading material is scheduled to be stockpiled
• Average recovery percentage 72.2%
• Strip ratio 1.57X
So far so good, now for the pay dirt:
• Average gold production of 76,450 oz
• Selling cost U$5/oz (this by the way is the only input number I have doubts about, it
could be a bit higher but not by much, it’s not a massive cost in absolute terms either)
• There are total royalties due on Florida of 5.75% of sales.
• An operating cash cost of U$716.50/oz. A totally gettable number, check the 43-101.
With those in place we can make a good guess at the operating income potential of Florida
Canyon. The final step is to apply the criteria to four different gold prices to get an idea of how
Florida Canyon looks when things are bad, when things are good.
• Stress Test: U$1,000/oz average gold price, also the price used in the first three years
of the PEA plan.
• Baseline: U$1,200/oz average gold price, chosen because it’s just about the lower limit
and where Florida Canyon would turn from an asset to a liability for RPM the
corporation.
• Real Today: U$1,324/oz, this weekend’s price for gold.
• Blue Sky: U$1,500/oz, for those you like to think positively. But I’d like to stress that
you should base investment decisions on this kind of number, double true in the case of
RPM which needs to hedge 125,000 oz of gold in the first four years under the terms of
the Macquarie loan. That’s something like 31,250 oz per year that’s going to be tied
close to a price like today’s soon, a burden to move to get average prices to U$1.5k.
With that all done, here’s a table:
RPM at Florida Canyon: Model Year Revenues & Op Income (U$m)
Price Deck Stress Test Baseline Real Today Blue Sky
Prod. gold (Oz) 76,450 76,450 76,450 76,450
U$/oz $1,000 $1,200 $1,324 $1,500
gold revenues $76.45 $91.74 $101.22 $114.68
Op costs $54.78 $54.78 $54.78 $54.78
5.75% royalty $4.40 $5.28 $5.82 $6.59
sales costs $0.38 $0.38 $0.38 $0.38
Operating income $17.47 $31.99 $41.00 $53.78
Op inc/ FD share $0.04 $0.07 $0.10 $0.13
Sources: RPM data, IKN calcs and estimates
10

,
I’ll shock nobody by saying that the “Real World” column is the one to like. A model year
operating income of U$41m (CAD$50m, give or take) is an eye-catching number for a company
with a CAD$135m market cap. Now for sure that’s not the end of it all, RPM still has plenty of
things to pay from that cash flow, not least the loan (spread it over the full four year term and
they’re looking at U$2m per quarter or U$8m per year) as well as all the normal social niceties
such as G&A, tax etc. Those are going to fluctuate as and if RPM repays its debt more or less
rapidly so looking to the bottom line of Florida Canyon or the larger RPM.v company isn’t going
to be the way to value this company at the moment. The cash flow potential of this mine, that’s
the hook and if it can generate CAD$50m operating profits in its first year its current share price
will be but a distant memory.
And this is where the subjective target generation moment comes, the time at which I take that
model average Operating EPS of 10c per year and use a multiple to get a target. This isn’t
EBITDA or net profits, that cash isn’t all for the company and we can’t use the type of 12X or
16X multiples that PM miners can demand. It’s still not operating until next year, there’s
execution risk to consider, plus of course I like to be conservative and pitch low if possible. In all
and after thinking about this far too much for days on end (and it’s now Sunday afternoon and
I’ve only just decided on the multiple today) I’m going to pitch low rather than high (which would
be 8X for the record) for an 6X ratio to operating profits in Canadian Dollars (U$0.10 =
CAD$0.125) from its upcoming Florida Canyon mine in order to value Rye Patch Gold, that
would make it a 75c target price and 102.7% upside to this weekend (for the record, the
conservative Angel perched on my right shoulder is currently patting me on the head and telling
me I’m a good boy, the 8X Devil figurine on my left shoulder is cursing under its breath).
Upside potential
The reason I’m pitching higher is that just by crunching on Florida Canyon and its current
resource and mine plan doesn’t take into account the clear upside potential in RPM. Examples:
• Lincoln Hill: It’s just down the road, it’s the same type of grade and mine, it can provide
feed.
• Standard/Florida Canyon sulphide: Those both have ounces of gold that can be added.
• Gold can go up: The reason I’m taking on a riskier proposition is that it gives stronger
leverage in a bullish gold price environment. I think gold’s going up from here and
U$1,400/oz by the end of the year wouldn’t faze me in the slightest.
• Debt can be paid off more quickly. Assuming there no (or not much) cost overrun in the
capex and commissioning phase, the out-sized equity placement proceeds are going to
come in handy for a company that will probably want to strengthen its balance sheet
sooner rather than later.
• It becomes a buyout target. Assuming correct plan execution, one company name that
would like 75koz Au/annum produced in Nevada and pay this kind of price? How about
McEwen Mining? I thought it was a good fit too, that Rob wants production ounces.
• The Rochester Royalty: At around $4.5m per year for the next two and a half years, it’s
not massive money but it covers G&A. Worth 2c/share today.
All those and more, but we also need to consider the...
...Risks
There are many, of course. At this stage execution risk is a major element though with the
project now fully funded and the people involved knowing the deposit the way they do, complete
catastrophic failure of the Allied Nevada or Rubicon sort isn’t one of my worries.
• Gold price is the main risk of course. RPM is a “leverage to gold” play and though the
Florida Canyon economics still work at somewhat lower prices, leverage is and always
will be a double edged sword.
• Capex cost overruns are another aspect, but this one doesn’t worry me so much. The
cash cushion from the equity raise protects things.
11

,
• Opex cost overruns are more of a concern. I’ve checked over the PEA parameters on
this carefully and find no great fault, but this is mining
and shit happens so we need to be aware of the
potential consequences that come from higher
operating costs than budget. To give a frame, my
spreadsheet says that a 10% rise in operating costs
would mean and extra U$5.5m in annual costs, that
eats away at the operating margin. Or for another
visual, this chart taken from the PA shows the post-tax
IRR sensitivities for the three major cost factors, gold
price capex and opex. Gold price is the steepest line
of course, but note how changes in opex hurt the
economics more than the capex. It’s the way of the
large tonnage/low grade heapleacher.
• Then there are those shares due out soon (Oct 17th)
from lock-up, that promises to be a big liquidity event
and something that anyone buying now should keep
firmly in mind. There’s a mindgame here, you start
trying to second-guess other people’s motives and I
for one am clear on the risks of buying now and riding
through that tsunami currently on the far horizon. I’m
just going on the numbers, folks, these things may
have their influence but ultimately if the company
performs as it says it will and gets its mine working, the effect will be temporary.
Conclusion
I’m going to call Rye Patch Gold (RPM.v) a “producer”, because it has income from that royalty
and it’s now on the cusp of real production from its new mine. But it’s also the riskiest producer I
currently own, it’s a company that’s
diluted its share count significantly
and taken on a sizeable amount of
debt to build a mine. The plan is good
but if anything goes wrong (even
things out of the company’s control
such as the gold price) this stock can
take a real drubbing, be aware.
The good news is that the potential
upside is excellent, even when using
the fully diluted count for ‘per share’
calculations and even using the
current gold price (anything further up
makes the stock simply
mouthwatering as long as it has a
good time until this time next year).
The reward, based on a multiple to cash flow of 8X that’s slightly higher than my normal but is
chosen to adjust for the several avenues of potential upside in the stock, gives a 100%+ share
price target and a this stage of a bullish year, that’s impressive. The IKN Weekly recommends
Rye Patch Gold (RPM.v) as a speculative buy and sets a 12 month price target of 75c on
the stock, representing a 102.7% upside to this weekend’s price of 37c. I bought some on
Friday, I’ll buy more next week but as noted in a couple of places already this isn’t going to be a
big position in cash terms, the leverage is fun but the risk is there too (and then there’s October
17th and November 29th to consider). Stocks like B2Gold and Sandstorm are more solid and
even if your risk tolerance is higher than mine, if you don’t own those make them purchases
before RPM, but be clear, if 1) RPM builds its mine on time 2) it operates at the costs it says it
can operates and 3) the gold price co-operates, this is a dirt cheap mining stock.
End of Report
12

,
Stocks to Follow
Leaving aside the new position in Rye Patch Gold (RPM.v) opened on Friday, seven of the other
12 open positions in the ‘Stocks to Follow’ list made gains last week (REG.v, SAM.to, SAND,
TK.v, WDO.to, MAD.v, LRA.v), one remained unchanged (CNL.to) and four were losers (BTO.to,
ATY.v, RRI.v, FCV.v). The biggest losers in percentage terms were Focus Ventures (FCV.v down
11.1%) and Riverside Resources (RRI.v down 10.6%), the biggest winners were Wesdome
(WDO.to up 10.1%) and Lara (LRA.v up 7.7%) and then bizarrely three stocks all up by 7.1%
(SAM.to, SAND, TK.v). Overall a good week aside from the continued weakness in largest
position B2Gold, but even that couldn’t stop it from being an overall winning week for my
personal back pocket. I’ve had worse.
With the addition of Rye Patch Gold (RPM.v) on Friday (see Appendix 1) we now have 13 open
positions, two fewer than our self-imposed maximum of fifteen at any given time. Ten stocks
are in the green, one unchanged, two in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to STR buy C$2.11 12-sep-14 C$3.65 73.0% tgt $5.30 IKN375
Regulus Res REG.v hold C$0.64 06-abr-15 C$1.57 145.3% LT exploreco top pick
Starcore Intl SAM.to STR buy C$0.62 10-jan-15 C$0.75 21.0% $1.04 tgt, excellent value
Long positions (in current order of preference)
Sandstorm Gold SAND buy U$3.80 17-apr-16 U$6.01 58.2% $7 tgt IKN378, turnaround story
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.225 15.4% Top value under radar Zn play
Wesdome Gold WDO.to buy C$1.72 22-may-16 C$2.62 52.3% New $2.88 tgt IKN381
Atico Mining ATY.v buy C$0.51 24-jul-16 C$0.58 13.7% bot again IKN382, 90c tgt
Rye Patch Gold RPM.v buy C$0.37 02-sep-16 C$0.37 0.0% New IKN382, 85c tgt
Riverside Res RRI.v buy C$0.39 27-jun-16 C$0.35 -10.6% 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$0.145 16.0% Small play, flip, so far quiet
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.40 21.7% solid biz model
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.08 -65.2% 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
13

,
Now for some notes on current basket stocks.
Rye Patch Gold (ROM.v): Position opened. Plenty on RPM above, here a quick line to mark
the official opening of the position and we’re done.
Atico Mining (ATY.v): Added again. The reason is simple enough, it was cheaper and I
couldn’t resist the bargain. A nice finish to the week put some gloss on the purchase as noted
in the Flash update on Thursday (see Appendix 1), but you’ll also note the cost average in the
table above has clicked up by a penny as a result of that addition.
Miranda Gold (MAD.v): As per the Friday Flash update (see Appendix 1) I tried to add a few
and turned this tiny position into a merely very small position, but there was nothing doing and
I didn’t get any at the right price. As noted in the Flash update, not a minute’s sleep was lost
bout this fact. Friday saw a bit of tape-painting at the end of the week and I wouldn’t put too
much trust in that 14.5c close. It will probably adjust down next week, assuming the big pumpo
doesn’t start before then.
Starcore Intl (SAM.to): In a tough week, SAM did very well pricewise and went a long way
to confirming the working theory here that it’s difficult to find sellers under 70c these days
(though SAM did trade a little at 68c). Thursday’s rebound to 79c wasn’t particularly convincing
because volumes were thin, but you don’t need me to remind you here that I firmly believe
SAM is worth every penny at any of these prices.
Wesdome Gold (WDO.to): When WDO shot higher on Monday and started closing in on the
IKN Weekly $2.88 price target, I got a couple of mails asking whether I’d sell any if the stock
dinged the target. Fair question, so here’s a chance to address the underlying issues and there
are three main points:
1) Under normal circumstances, the object of a price target isn’t to automatically sell the
stock if it hits. The first thing is to hope that it is eventually hit (the other option isn’t so
pleasant) and then assuming it happens, use the moment to re-evaluate the company
under its new circumstances. It’s like, “OK, I was looking for this price to happen...now
what does the company, the wider market and the relationship between the two look
like today?”. At such a moment there are three options on the trade, buy (in fact ’add’)
hold or sell and a buy or a hold would imply a new target were set.
2) On a personal basis my tendency is to set conservative, low-end targets that I think
wholly reachable under normal market circumstances. That means I leave room for a
stock to beat my target when the market atmosphere is strongly bullish, i.e. the way
it’s been for most of the last six months.
3) In the case of WDO last week I was particularly conservative on my NAV and book
value multiples and I’ve been conservative on my resource number for Kiena (setting it
at the apparent 700k oz threshold and a 4.5 g/t eventual head grade when I saw at
least one other report talk of a million ounces processed at 6 g/t). I leave room for
surprises, for blue sky, for upside. My general philosophy is one of “Okay, let’s see if
I’m a buyer even if things aren’t
perfect and there’s some
disappointment down the line”. When
I can answer that one with a “yes”, I
tend to be that buyer.
I’m aware that my target may not be to the
taste of some of you out there, perhaps after
bigger and brasher promises. That’s fair
enough, but on this one and until we have
more solid information at Kiena I’m going to
take it babysteps. However, be clear that
hitting $2.88 doesn’t mean I’m a seller on this
14

,
stock and that I am crystal clear on the stock’s potential to go much higher. We have the next
set of drill results, we have a potentially bullish set-up in gold that sees all rise on the tide, we
have a quarterly production NR in early October that may outperform...all sorts of things. Once
again I remind you of the imperfect system of “this is what I’m doing with my money”,
ultimately in the DD stage I’m trying to convince myself of any trade and not trying to convince
you. What you see when I call a buy is a narrative of what went on as I researched, it’s not a
sales pitch.
In trading WDO did very well, it even took a breather midweek before re-launching and ending
10% up on the week. I couldn’t ask for more from this trade.
Tinka Resources (TK.v): TK finally showed a few signs of life, trading up with active buyers
and on increased volume (300,000+ volumes on Wednesday and Thursday) and while Friday’s
close of 22.5c still isn’t anything new as a price, it’s better than the easily available 20c of the
last couple of weeks. There’s a buyer out there, about time too what with Zn where it is.
Sandstorm Gold (SSL.to) (SAND): During the 2q16 conference call on August 7th Nolan
Watson (3) was buzzing about a big potential deal that may or may not come off. Here’s part of
the transcript from that call.
“Over the course of the last couple months, we've been working on a transaction that although the
opportunity is not exclusive to Sandstorm, it was one for which we did not have sufficient capital
to complete, even if we fully drew out our revolving facility, knowing that we would not be
considered as a counterparty for the transaction without raising equity capital. We made a
calculated decision to raise the capital so that we could continue to pursue the transaction
knowing that there was still a material risk that we did not end up being the chosen counterparty.
We were comfortable with this risk because we had debt, and the worst case scenario of this
decision is that we would end up being debt-free and cashed up and ready to continue to look for
new acquisitions, and had the opportunity not come up, we would not have raised the equity. I
should emphasize that the deal is still far from certain and we're also working on other deals
which we could decide that we prefer those other deals to complete them instead.”
We don’t know what it is or with whom, but we do know he talked about the fact that the
revolving loan facility was fully available and that it was the type of “big deal” such cash would
need. As SAND has more than U$100m available on that credit line, we’re not talking the type
of small deal we’ve seen so far this year in things such as Mariana (Hot Maden etc). Why
mention this now? Well, if a big deal is going to happen, chances are that it wouldn’t happen in
August and would happen in the Back To Work period of dealmaking and that starts this week.
B2Gold (BTO.to): According to a Friday evening regulatory filing on SEDAR (4) the $100m at-
market sales of shares of B2Gold announced
on August 11th and being run by Canaccord
has so far placed 7,596,800 at an average
price of just over U$3.50 for net proceeds of
U$26.09m to the company. That means
there’s another U$74m or so of selling
pressure to go yet and that certainly isn’t
helping BTO in the market a the moment. I
expressed dismay on hearing the news when
it came out, one of those occasions where it
sucks to be right. I’ll grit my teeth and hold
through, because I’m looking into mid-2017
for my $5.30 price target and there’s a long
way to go.
I’m just glad that Wesdome has kept people’s minds away from the fact that my stalwart Top
Pick stock and biggest position has sucked recently. Oh damn, did I just say that?
15

,
The Copper Basket
After thirty-five weeks of 2016, The Copper Basket shows a 78.27% gain to level stakes.
company ticker price 1/1/16 Shares out Market Cap current pps gain/loss%
1 Ivanhoe Mines IVN.to 0.61 778.96 1425.50 1.83 200.0%
2 HudBay Min. HBM.to 5.31 235.23 1267.89 5.39 1.5%
3 Reservoir Min. RMC.v 4.08 48.69 449.41 9.23 126.2%
4 Capstone Min. CS.to 0.44 382.04 263.61 0.69 56.8%
5 NGEx Resources NGQ.to 0.65 205.06 239.92 1.17 80.0%
6 Western Copper WRN.to 0.38 94.19 86.65 0.92 173.7%
7 NovaCopper NCQ.to 0.395 104.33 78.25 0.75 89.9%
8 Cordoba Min. CDB.v 0.16 86.86 69.49 0.80 400.0%
9 Atico Mining ATY.v 0.28 97.59 56.60 0.58 107.1%
10 Copper Mtn CUM.to 0.445 118.8 54.65 0.46 3.4%
11 Copper Fox CUU.v 0.125 417.64 50.12 0.12 -4.0%
12 Nevada Copper NCU.to 0.66 80.5 48.30 0.60 -9.1%
13 Amerigo Res ARG.to 0.205 173.61 26.91 0.155 -24.4%
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 78.27%
It was another losing week for the basket average but not by much, just 0.54% lost this time
and the five winners (IVN.to, NGQ.to, NCU.to, NCQ.to, CDB.v) almost equalled the weight of
the seven losers (HBM.to, CS.to, CUM.to, CUU.v, WRN.to, ARG.to, ATY.v), the count made up
by three unchanged stocks (RMC.v, HCH.ax, RVL.v). Best winner was Ivanhoe Mines (IVN.to up
9.6%) on the back of another marketing move by Friedland, worst loser was Western Copper &
Gold (WRN.to down 11.5%).
Copper the metal did well last week and the dailies chart (left) shows just the type of bottoming
out pattern at the right time that a tepid wannabe bull would like to see.
The hourlies chart on the right is also featured because it shows the choppy nature of trading,
quick price spikes like these are a sign of thin trading, not a grand surprise for the time of year,
last week in August. My take is that copper is successfully climbing a wall of worry, specifically
the “wall of supply” worry that has been promoted by the (apparently though you never know
with those two-faced gits) bearish Goldman Sachs. That the world has had scary copper supply
16

,
and inventory and smelter prices thrown at it in such a concerted manner but the main tell of
them all, the copper price, hasn’t budged by much is its own bullish signal. Though my take is
admittedly on what looks like a thin couple of trading weeks, let’s see if the first week of
September brings resolution. I remain a wannabe whussy semi-bull on copper. Pathetic, isn’t it?
It’s the end of another month, time to check in on the monthly inventory tracker charts:
Copper inventories, per month, 2012 to date
1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
17
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram rpa yam nuj luj gua
Mt Cu source: Cochilco
LME Shanghai Comex
Copper inventories: percentage held per exchange
80
70
60
50
40
30
20
10
0
21.naJ bef ram rpa yam nuj luj gua pes tco von ced 31.naJ bef ram rpa yam nuj luj gua pes tco von ced 41.naj bef ram rpa yam nuj luj gua pes tco von ced 51.naj bef ram rpa yam nuj luj gua pes tco von ced 61.naj bef ram rpa yam nuj luj gua
LME Shanghai Comex source: Cochilco
The LME is back as the Daddy of them all, be in no doubt. The SHFE warehouses continue with
depletion at the same time as the (re?) export of Chinese copper floods into the LME.
Meanwhile, Comex has kept its position over 10% for nearly a full year.
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
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 is now flashing a different signal to that of the big LME
inventory build-up.

,
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
18
31'13ceD ht91 ht9 dn2ram dr32 ht31 ht4yam ht52 ht51 ht6yluj ht72 ht71 ht7 ht82 ht91 ht9 ht03 ts12 ht11 ts1bef dn22 ht51 ht5rpa ht62 ht71 ht7nuj ht82 ht91 ht9 ht03 ht02 ht11 ts1von dn22 ht31 dr3naj ht42 ht41 ht6ram ht72 ht71 ht8 ht92 ht91 ht01 ts13 ts12
Mt Cu
source: Cochilco
Now for notes on a couple of the basket component stocks:
Ivanhoe Mines (IVN.to): As stated on a handful of occasions this year, the reason I included
the larger-sized IVN.to in this year’s list was interest (perhaps mere curiosity) in watching more
closely how Robert Friedland goes about positioning, promoting and marketing his companies
to the wider world. I’ve been impressed on several occasions in 2016 with what I’ve seen and
the impressive share price performance is due at least in part to his abilities. But last week saw
a genius stroke move, a pièce de résistance, meisterwerk level and I really have to take my hat
off to Robert Friedland’s marketing prowess because the stunt he pulled (I choose my
substantives carefully) should go down as a case-study for every single junior mining company
CEO. Let’s first consider what normally happens to juniors when they’re approached by a larger
company:
1) They talk informally and then normally (but not always) sign a Confidentiality
Agreement (CA) which offers the larger access to the smaller’s data room.
2) The larger will then rootle around, perhaps do a site visit or two. Sometimes its interest
in the smaller company is aimed at a potential buyout and that process may continue,
but there are plenty of other reasons for a CA to happen that don’t involve active
interest in a potential buyout.
3) However, if a buyout has been mooted by the big company and they like what they see
at this stage, it’s typical for the two sides to advance the process and move into new
rounds of talks and negotiations. This is when management and board members will
meet, potential advantages and problems of a fusion discussed, all sorts of other and
then if things really move forward, dollar prices get a mention.
4) A buyout deal eventually happens or does not happen.
For sure it’s not as straightforward as that, but that’s a reasonable framework and it gives an
idea of the stages any given junior exploreco has to go through in order to nail down its most
coveted exit, that of the juicy premium buyout. But the basic point is that a junior being
approached by a larger company is normal, it’s nothing strange, it happens all the time and it’s
typical for any junior to have several CAs open at the same time. And they won’t talk about that
unless asked and when a nosy guy like me says “So...got any CAs running?”, they will offer up
the number they have open (“Oh, we have four/seven/three/eight”) but that’s all, as CAs by
their very nature mean that they can’t talk about the details.
However, normal rules do not apply to Robert Friedland.
1) IVN is approached by a larger company or companies.
2) IVN tells the world that it has been approached in a news release that subsequently
gets picked up by wires such as Reuters and Bloomberg (and half a dozen other places,
check Google for more) who write their own stories on the NR.
3) IVN shares pop higher.

,
That’s what we saw from IVN in its NR last Monday (5) and with the ensuing media coverage
(examples (6) (7)) and as Bloomie put it...
“Shares in the Vancouver-based company rose as much as 16 percent and
was up 14 percent at 11:50 a.m. in Toronto, pushing up its a market value to
C$1.5 billion ($1.1 billion).”
...because the whole pitch was “hey everybody, we’re getting bought out!” when the only
substantives were nothing more than 1) we’ve signed CAs and 2) we’ve decided to eventually
pay for third party advice on any eventual deal offer. And that last piece is the key, it sounds
great and potentially too expensive for small-end junior, but notice that no money has changed
hands. That’s all about having a board of directors 100% in line with the management and
marketing of a company and that’s what happens when you have one man running the show
with a keen nose for salesmanship.
The point: Any junior mining company can use the same strategy as Friedland did last week.
However, it also needs the things that Friedland has and those are also part of his genius.
1) Assets and properties that are truly interesting to larger mining companies. The reason
explorecos usually keep quiet about CAs is that they don’t want to annoy or scare away
majors by running up your share price on a promo by simply using their interest as a
marketing tool. If your properties are mediocre and you start shouting they’ll stay
away. But if you really have something top drawer and you know the majors are
serious about buying you (and yeah, I’m looking at you John Black of Regulus
Resources) you can shout and scream and get the share price moving, you won’t scare
them away.
2) Brass neck. Most junior CEOs don’t have the marketing chops to do what Friedland
does but I’d contend that it’s already part of the skillset they need and that it’s going to
be even more important as the years roll by. Having a timid geologist in love with rocks
as the company top dog works in early stages, but it can become a veritable hindrance
as your junior mining company grows. And listen, selling skills aren’t brain surgery,
sales gurus are made not born.
3) A board of directors that works with the company officers, not against them. And by my
own experience of watching juniors from the outside I can tell you hand on heart,
ladies and gentlemen readers of The IKN Weekly, that situation is far less common than
you’d imagine.
Friedland may be world class at this but it’s not some magical gift exclusive to him, either. This
is a formula and more juniors should
take note of what he does and the way
he does it, from company structure all
the way up. It gets results like this(cid:2)
19

,
Capstone Mining (CS.to): After my ritual slagging of CS.to last week (I don’t like weak
balance sheets and I’m not afraid of telling people), let’s offer a brighter alternative to this
company’s stock: If you like copper from here, it’s a good way of play any pop.
As seen in that chart which shows the CS.to stock price and several peaks and trough prices of
the copper spot price annotated, CS.to in 2016 has shown its chops as a way to play copper
spot price volatility. If (and it’s a big IF, you need to decide that one first and I’m giving no
clues today) you think copper has another near-term rally in store (U$2.09/lb to a reasonable
U$2.25/lb would be a +7.7% gain in the metal without it even threatening the top of its
established 22016 range, you could ride CS.to from today's 69c to perhaps 85c, that’s a pre-
commissions 23% potential upside in a near-term trader with good liquidity and market
position.
Let us be clear, this isn’t a trade for me. It’s an idea of a trade for you if, and only if, you think
copper’s done with the downside and can spring back more violently than I think it will.
The Low Cost Producer Basket
After 35 weeks of 2016, the Producer Basket shows a gain of 125.33% to level stakes.
company ticker price 1/1/16 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Newmont NEM 17.98 529.12 21.44 40.52 125.4%
2 Barrick ABX 7.38 1164.67 21.15 18.16 146.1%
3 Goldcorp GG 11.56 830.22 13.30 16.02 38.6%
4 Franco Nevada FNV 45.75 176.298 13.07 74.11 62.0%
5 Agnico Eagle AEM 26.28 217.67 11.66 53.57 103.8%
6 Ang/Ashanti AU 7.10 405.27 6.91 17.04 140.0%
7 Detour Gold DGC.to 14.41 170.85 5.36 31.35 115.3%
8 Sibanye Gold SBGL 6.09 228.71 3.72 16.27 167.2%
9 Buenaventura BVN 4.28 254.19 3.53 13.90 224.8%
10 New Gold NGD 2.32 509.89 2.70 5.29 128.0%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 125.33%
A rollercoaster for PM stocks ended with things roughly where they were this last week. Three
weekly losers (ABX, AU, SBGL) and seven winners (GG, NEM, FNV, DGC.to, AEM, BVN, NGD)
with the biggest win a relatively modest 5.8% from New Gold, the two South African exposed
stocks (AU down 3.9% and SBGL down 3.3%) the worst performers for forex factors. And as
20

,
noted on the blog Friday evening (8) the most interesting development is at the top of the
shop, where Newmont (NEM) has taken over from Barrick (ABX) as world number one in
market cap terms. There are arguably larger companies out there that do precious metals, such
as the Chinese Zijin and Australia’s BHP, but the former is quasi-private and quasi-State, the
latter is mainly base metals, so we’re going to call NEM as the new gold Top Dog. Another poke
in the eye is for Goldcorp (GG) and Franco Nevada is now snapping at that one’s heels.
As for our tracking charts, very little change in those.
The Low Cost Producer Basket: Weekly performance
200% and comparative to GDX control
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
-20%
Barrick (ABX): Aside from the way NEM has now taken over as sector top dog, the most
interesting large cap news of the week came from ABX when it announced (9) it had hired
George Bee as a new Vice President with the brief to develop and bring into production the
Lama deposit in Argentina, part of the Pascua Lama JV. Bee knows the company and the
location, having worked on the construction and commissioning of Veladero when that mine
was coming online, so that’s a good thing and in the NR blurbs it was pointed out all all that he
also worked on the type of “staged ramp up” envisaged here while working the Goldstrike mine
in Nevada. The ABX idea is to start small on the Argentine side of Pascua Lama, which holds
around 25% of total project reserves. That’s not a bad idea, nor is it a bad idea to start small
on the Lama side and with underground operations only. The idea is clearly to get a foot in the
door then gain the necessary permits on either side of the border and expand in time (I
wouldn’t be surprised to see ABX using the national envy card that exists between the two
countries to its advantage. The risk ABX is taking is that Lama fails to be permitted even in a
reduced size operation (Argentina has active environmentalist lobbies and a Glacier Law on its
books) or that no expansion is allowed (your guess on cash costs for a low-production level at
Lama is as good as mine, I can’t see a small mine there moving the dial at ABX) and it becomes
another version of the White Elephant it already is.
Regional politics
Colombia’s multiple referendums
Or should that be referenda*(10)? Anyway, Colombia is now set for multiple polling and they
start on October 2nd when long-time mail pal and reader RK notes;
“Oct. 2 is both the Ibague Referendum and the Plebiscite for Farc Deal
Approval. (I’m) hoping the the enthusiasm surrounding the Plebicsite
mitigates the negativity associated with the Ibague vote....but its interesting
that both items fall on the same day.”
Indeed. We can expect three things from October 2nd in Colombia:
1) The nation will vote FOR the peace deal. A good thing and one that will frank President
Santos’s win against the largely right wing opposition to the deal led by ex-President Uribe).
21
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 t4peS
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
0% basket
gdx control -5%
-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 ht4peS
source: ikn calcs, NYSE/Nasdaq data

,
2) On the same day, the city of Ibagué vote vote against the presence of mining companies in
its region.
3) The first vote result will bury the news of the second vote result, for a while at least. The
publicity from the anti-La Colosa referendum isn’t going to be as damaging to Colombia’s
international standing as it might have been but it’s not going to go away as a result either.
To this October 2nd double bill we need to add the referendum planned in the wider Tolima
region (home to Ibagué that still doesn’t have a set date, but now there’s more and in another
region of Colombia as the district of Quinchia in the department of Risaralda (West Central
Colombia) so hold on to your hats folks, this referendum idea is starting to spread through the
country.
Several reports in the last week (example (11)) have pressure groups and/or authorities in
Quinchia talking about running the district’s own referendum on mining, with the Ibagué vote
mentioned as inspiration (NGOs in Quinchia have openly mentioned their contact with the anti-
mining Mayor of Ibagué) and the recent Constitutional Court ruling on prior consultancy the
new catalyst. There’s nothing firm about this referendum yet but with Quinchia home to several
mining projects (e.g. those owned by Canadians Seafield and Batero) this isn’t the type of
development that will help Colombia’s perceived or real political risk profile.
*For what it’s worth** I instinctively prefer the classical version “-a”, to my ears the “-ums” version sounds clunky and
lacks elegance, but I blame my alma mater for that, rather than myself or anyone else. So “-ums” is fine.
**not much
Dominican Republic: Jurassic Park
The first report of the comments made by Dominican Republic’s Minister of Energy and Mines,
Antonio Isa Conde, found the press on August 31st and I’ve seen the same news re-hashed
every day since then in Spanish language business press and wire services, as well as making
the op-ed comment columns of newspapers. Here’s how DomRep’s Noticias Sin reported it (12),
as it was just about the first to run the story, my direct translation of the story:
Santo Domingo, Dominican Republic – The Minister of Energy and Mines, Antonio Isa
Conde, considers the (country’s) mining law that dates back to 1971 as “Obsolete and
Jurassic” and announced that his ministry was working on a law project to modify the
legislation.
He said that the proposed changes in the law were conceived in order to reduce
concession holding times and their extension areas, as well as giving nor rigour to the
oversight of the mining industry, above all in the aspect of environmental protection.
The Minister said that previously, there were concessions awarded for an unlimited
amount of time, though the majority were for 75 years. Most of these (concession
holders) do not comply with the rules that modern standards of mining demand. He is
in favour of a Mining Law that forces companies to remedy environmental liabilities.
“It’s a blessing that the country has a lot of mining wealth, but this could become a
curse if we don’t respect environmental rules”, he said.
Isa Conde said that ideally, the Dominican State would define which areas were of
interest for mining, in the same way the Ministry is doing for the hydrocarbons sector
which has defined blocks which are subsequently tendered.
“And this was possible because the hydrocarbons sector was virgin in respect to
regulations and rules have been drawn up in this government with modern day and
progressive criteria”, he said.
The Minister said that the Ministry will work to organize small-scale mining and that the
“Cultivating Clean Water” program is being elaborated with the need to protect the
water sources in mining communities.
IKN382 back and this Isa Conde guy sounds like he’s going about his job the right way. The
22

,
main barrier to any exploration stage mining company in a country such as Dom Rep with an
underdeveloped formal mining industry isn’t an excessive rulebook, it’s the potential for social
unrest and community risk that comes from misconceptions of modern mining. If a public
traded junior wants to do its job right it will almost certainly be in full compliance with the
changes envisaged by Minister Antonio Isa Conde, so this type of law change will benefit their
profile in the wider population.
Chile woos China
High-ranking Chilean mining authorities spent most of last week in Guangzhou China at the
“Chile Week China 2016” conference, (13) (14) billed as an opportunity to present Chilean
mining investment opportunities to China’s mining industry. Main spokesperson for the group,
Executive Veep at Cochilco Sergio Hernández, didn’t just focus on Chinese capital looking for its
next big copper mine project but also at the underlying infrastructure of the industry. He said
(translated):
“There is coincidence in that China, as the world’s largest copper consumer, needs Chile as the
world’s largest producer. And that we in turn need the Asian country as it’s the biggest buyer of
our copper....Chines authorities have shown interest through many of their companies in
participating in the process of technological improvement and financing of mining projects in
Chile...there are at least four groups of Chinese companies from the sectors of project
engineering, plant and foundation construction, technology transfer and project financing that
have committed visits to Chile in order to meet with Chilean mining companies, particularly in
(the State-run companies) Codelco and Enami.”
Argentina trying to attract (Chinese) FDI too
This weekend sees the latest G-20 Summit in China, and this weekend President Macri delivered
a speech from the venue in which he said among other things (15), “We invite all the world to
invest, to participate in (our) transformation to become a great exporter of value added foods
and not just grains, to develop mining and renewable energy”. Though addressed to “all the
world, his remarks were understood by one and all to be addressed to Chinese capital. Now
read on, as the next section is connected.
Argentina wants to create national mining laws
I’m glad Reuters covered this and published in English, it makes my life easier. Here are two
sections from their report (16):
The Argentine government wants to unify mining regulations under a proposed federal
law that would permit open-pit mines to operate throughout the country as part of an
effort to jump-start investment in the sector, a government official said.
Argentina has fallen behind its mineral-rich neighbors Chile and Peru in mining
investment, despite containing rich deposits of copper, gold, silver and zinc. Local
regulations are tough, and seven of the country's 23 provinces prohibit open-pit mining
altogether due to environmental concerns.
"We have decided to invite the provinces back into the system by way of a federal
agreement," Argentine Secretary of Mining Daniel Meilan said in an interview last
week. The government plans to send its mining bill to Congress early next year, he
added.
...
The lack of a nationwide mining law "is perhaps the only impediment to investment" in
the sector, said Hugo Nielson, secretary general of the Latin American Mining
Organization, a regional grouping.
Gaining the backing of provincial governors is expected to be challenging, as many
local officials prefer not to cooperate with the sector, mining sector experts said.
Meilan said details of the proposal will be hammered out with local officials before the
bill is sent to Congress.
The first step will be to draft the bill with input from the Federal Mining Counsel
(Cofemin), a grouping of regional mining officials.
"Then we we'll sit down with the governors and negotiate an agreement of the proposal
that will be sent to Congress," Meilan said.
23

,
The key phrase is “Gaining the backing of provincial governors is expected to be challenging”,
because that could be the understatement of the year. The Federal nature of Argentina means
that even if the National government goes ahead and produces a new law which does exactly
what Meilan or Nelson want of it, it’s useless unless the provincial governments agree to it
because their constitutions precede national laws. For a useful and workable law, all provincial
governors will have to sign on to the deal before it reaches the national parliament and that,
ladies and gentlemen, isn’t one you should hold your breath over. In Spanish there’s a phrase,
“Del dicho al hecho hay mucho trecho” which translates reasonably as “There’s a big gap
between said and done”. It’s the first thing that came to mind when I read of Meilan’s plans last
week in the Argentine press.
El Salvador: OceanaGold (OGC.to) wants to deal, government says no way
The main news in the story out of El Salvador last week on the ongoing dispute between Pacific
Rim (now part of OceanaGold (OGC.to) (OGC.ax)) and the government of the country was
normal, the details buried beneath were bizarre. The seven year, $250m dispute between the
two sides at the CIADI/ICSID International tribunal is almost over and the court has indicated it
will rule this month, September 2016.
However last week El Salvador press reported (17) the government defence Sawyer in the case,
one Luis Parada, saying that he had been approached by OGC the week before and offered a
“private and confidential negotiation” by the company, presumably them trying to reach some
sort of settlement before the ruling is handed down. This is a pretty bizarre turn of events and
smacks of a company that knows it’s about to lose. It’s also highly irregular, because under
normal circumstances it would be the company’s team of lawyers who offer a deal but Señor
Parada said that first OGC told ICSID/CIADI of its intentions to broker talks and a deal, then a
few minutes later OGC itself sent an e-mail with the offer of talks to the government case
lawyers.
For the record, the government rejected the offer of the private and confidential negotiation
and remain very confident of coming out on top. All eyes on ICSID, “mid-September” being the
expected time for the judgment.
Market Watching
Overview
Not much here this week, that end of summer thing and I expect newsflow on stocks and so
forth to ratchet up considerably as from Tuesday morning. So...errr...okay, the guy shorting
First Majestic’s an idiot, Silver One is a mini-me scam spinning from the main scam First Mining,
Panoro’s use of funds is a joke, Avino looks perky, Primero is selling Cerro del Gallo to try and
get itself out of its mess, Eldorado Gold’s CEO is about “to be resigned” and I cannot believe
that people have actually bought up Dynasty Metals & Mining, I presume some sort of financial
death wish mentality. And this on IRL. More next week.
A brief Minera IRL update
Things are moving forward at Ollachea and the drills are still turning in correct style at the
Minapampa target, which may turn out to be a decent resource extension to the current mine
resource (I have no idea or hint of an idea on the assay results though). Meanwhile, one of the
stipulations of George Bee’s move to head up the Barrick (ABX) Lama project (see above) is
that he renounce all ties to other companies, which means we can expect him to resign from
the board of Minera IRL. That’s a good thing in my book by the way.
On the corporate side things are moving slowly and though this board drive me half crazy with
their snail-like pace there is in fact no need to rush at this time. The key will be the completion
of the Minapampa drill program, after which the Cofide financing agreement can be executed
and from there all the pieces can fall quickly into place. I can report that in Lima these days,
the off-record buzz in the sector is that IRL and the Ollacha project are being taken far more
24

,
seriously again and the understanding is that “it’s going to happen as a project” (I’ve heard
unprompted, “Oyez Mark, Ollachea va ahora!”) or similar from more than one Peru mining
contact recently. Patience is required by us on the outside, but there’s every reason to be
confident about a happy ending to this sordid affair.
Finally in Shadenfraude news we can report that Jaime Pinto is now being actively investigated
by the government of Peru into the alleged bond fraud that happened under his watch during
the Fujimori government of the 1990’s (this case totally unconnected to anything Minera IRL,
be clear). Much to Pinto’s surprise, when he went up before the beak a couple of weeks ago the
judge stated that new evidence had been found and issued several (Peru equivalent of)
subpoenas to gather information on those elements. The next stage of the case is due to
happen very soon and Pinto may find himself in a lot of trouble that day. Which would be a
shame, of course.
Conclusion
IKN382 is done, we end with bullet points:
• The last thing written about Wesdome (WDO.to) in last week’s edition was, “Hold on
tight to your shares people, it’s going higher”. That worked. Good.
• Rye Patch (RPM.v) is a departure from my normal risk-intolerant way because for one
thing the upside is juicy, for another it’s about time I added some extra risk to the
portfolio. They get this re-start right and if gold goes higher than it is today, 80c could
be just the beginning.
• Copper looks happier and has that “I’m bottoming out again” about it. For the time
being I’ll stick with my Regulus (REG.v) and Atico Mining (ATY.v) to play the sector
(risk is low in those) but I suspect the metals is in the process of confounding the bears
again and if so, there’s room to add at least one more, something with more beta.
• Labor Day is upon us tomorrow and even in this non-stop digital interconnected world
that means something, the classic threshold day between the summer lull and “back to
work up North”. Expect more newsflow in the mining world as from Tuesday pre-open.
• It’s my youngest daughter’s 10th birthday this week and just the thought of her
reaching double figures is bizarre, but that’s reality for you. Posting will be light on the
blog tomorrow and Tuesday.
• 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
25

,
Footnotes, appendices, references, disclaimer
(1)http://incakolanews.blogspot.pe/2016/08/producer-mining-stocks-are-at-buyable.html
(2) http://www.ryepatchgold.com/news/2016/index.php?&content_id=269
(3) http://seekingalpha.com/article/3996997-sandstorm-golds-sand-ceo-nolan-watson-q2-2016-results-earnings-call-
transcript?part=single
(4) http://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00026119
(5) http://www.marketwired.com/press-release/ivanhoe-mines-seeks-strategic-advice-response-unsolicited-interest-its-
projects-tsx-ivn-2153852.htm
(6)http://finance.yahoo.com/news/canadas-ivanhoe-mines-gets-unsolicited-160514796.html
(7) http://finance.yahoo.com/m/a03c5b79-cb0a-3ad1-9868-b12c749fe37f/ss_ivanhoe-surges-as-copper-find.html
(8) http://incakolanews.blogspot.pe/2016/09/newmont-barrick.html
(9) http://www.diariodecuyo.com.ar/home/new_noticia.php?noticia_id=728689
(10) http://www.spectator.co.uk/2016/07/why-the-plural-of-referendum-must-be-referendums/
(11) http://www.eldiario.com.co/seccion/RISARALDA/quinch-a-prepara-consulta-popular-sobre-megaminer-a-1608.html
(12) http://www.noticiassin.com/2016/08/antonio-isa-conde-dice-ley-minera-es-obsoleta-y-jurasica/
(13) http://www.cochilco.cl/Archivos/destacados/20160902114242_Cochilcoreunion.pdf
(14)
http://www.cochilco.cl/Archivos/destacados/20160829165837_COCHILCO%20COMUNICADO%20DE%20PRENSA%2
0CHILEWEEK%202016%20(002).pdf
(15) http://jornadaonline.com/tw/161293
(16) http://www.reuters.com/article/us-argentina-mining-idUSKCN1175S9
(17) http://www.aminera.com/2016/09/01/minera-oceanagold-negociar-salvador-arbitraje-ciadi/
Appendix 1: Flash update dated Thursday September 1st 2016
Good Thursday afternoon, 5:30pm local time, the markets have been closed over two hours, grey and cloudy outside,
Bolivia has just beaten Peru 2-0.
Due to 1) the US Jobs report out tomorrow that may well serve up a buying opportunity and 2) Labor Day on Monday
which means The North American markets are closed, I've decided to bring forward the naming of the new IKN Weekly
position to tonight so that I have the option of buying tomorrow. Plus I'm taking the opportunity of making a couple of
small additions.
Buying Rye Patch Gold (RPM.v)
The reason for today's Flash update. This is the new position mentioned on the blog quickly a day or so ago...
http://incakolanews.blogspot.pe/2016/08/new-buy.html
...a full report on the company will be the main event in IKN382 out Sunday. In my personal portfolio it's not going to be
a big position, I'm buying to add leverage to gold and to take advantage of what I expect will be a good Q4 for the metal.
I'll go into the details Sunday but RPM is using debt to build a small mine that offers near-term production. At current
gold prices it just about works, if gold moves higher its margins improve greatly. There's risk to the downside as in any
'leverage' type play, but it's manageable and I like the potential upside a lot.
Adding to Atico Mining (ATY.v)
A quick note to say that I'm going to take advantage of the price weakness in ATY.v to add some more. The 53c close
today is a nice entry point. The copper price has held well enough at this bottom price again, so along with the good
fundies offered by ATY I'm sufficiently tempted to add once again. This should be my last addition and bring me up to
what I consider to be my full position.
Adding to Miranda Gold (MAD.v)
This is a tiny position, it's not going to get much bigger but all the same, current prices give me the chance to average
down a little so I'll add if the market gives me a price under 12.5c tomorrow, if it doesn't I won't lose a minute's sleep.
Enjoy the rest of your Thursday. I'm be watching Argentina vs Uruguay later.
Best, Mark
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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
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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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