IKN #383Premium

,
The IKN Weekly
Week 383, September 11th 2016
Contents
This Week: Fifteen years, In today’s issue, FedBuyHoldWin, Most stocks are not buys or sells.
Fundamental Analysis: NOBS update report on New Gold (NGD) (NGD.to).
Stocks to Follow: Overview, Rye Patch Gold (RPM.v), Sandstorm Gold (SSL.to) (SAND), Tinka
Resources (TK.v), Atico Mining (ATY.v), Miranda Gold (MAD.v), Continental Gold (CNL.to),
Starcore Intl (SAM.to), Wesdome Gold (WDO.to), Riverside Resources (RRI.v).
Copper Basket: Overview, Trilogy Metals (TMQ.to), Ivanhoe (IVN.to), HudBay (HBM.to).
Low Cost Producer Basket: Overview, Detour Gold (DGC.to).
Regional Politics: Colombia: A change of date in Ibagué, Argentina: Agua Rica banned,
Argentina Mining Conference in Salta, Peru: PPK visits China.
Market Watching: To confirm on Eldorado Gold (EGO) (ELD.to), Home thinks zinc, Red Eagle
(RD.v) to list in Lima, Episode five of “What I’d buy now”.
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
Fifteen years
The same as you all, I remember everything about today’s date 15 years ago. Let us never
forget.
In today’s issue
• New Gold (NGD) is a different animal to the one we looked at (and traded for a profit)
early year, the gold price charge is the main reason but it’s recently hit headwinds on
its Rainy River project. In light of its recent news and share price performance, we take
a look and decide whether there’s a trade to be had. Today’s Fundamentals section.
• There’s nothing wrong about not having an opinion on a stock, or passing it over, or
refusing to trade it. Other situations may be binary, the stock market most definitely is
not one of those.
• The bits on Tinka, Sandstorm and Wesdome in the ‘Stocks to Follow’ section are okay,
the rest is lightweight stuff.
• If I’m leery on Argentina as an mining FDI destination it’s because there’s good reason
to be leery about it.
FedBuyHoldWin
According to rumours that did the rounds on Friday that were enough to spook the market to
the tune of -400 points on the Dow, the September FOMC rate rise is back on the table. Lawrie
Williams did the whole sequence from a goldbug perspective in this post this weekend (1) and
his gold permabull obsession aside, it’s a fair summary. Here’s a chunk:
1

,
Apparently the downturn in the markets was because it was announced that the
normally dovish Fed Governor, Lael Brainard, is due to speak at an event on Monday.
The fear is that she may say something that is less dovish than her usual stance and
that could trigger further falls as analysts and traders try to read that as foreseeing a
Fed rate rise announcement at the meeting, despite this likelihood having been
previously discounted because of a lower than anticipated nonfarm payroll increase a
week ago followed by a fall in Services PMI.
Gold was hit too, with both price dropping and fundies weakened. As the updated GLD
inventory chart here shows, gold inventories at the biggest gold bullion ETF rose sharply on
Monday on the back of the Friday rally and the new assumption that the Fed wouldn’t raise.
Come Friday that new position was almost totally unwound and we’re back to 939.94mt.
We live in the world of jawbone, the Fed Kabuki Theater (copyright Gary Tanashian) in which
high frequency trading moves the
market back and forth on GLD gold holdings, Brexit result to date (metric tonnes)
conjecture, rumour and renewed 1000
expectations. It’s becoming so 990
beautifully managed that we hardly 980
970
need the FOMC decision any longer.
960
In our main sector we should note
950
that gold did much better than the
940
PM stocks. GLD manage to improve
930
by 0.14% on the week, while GDX
920
(down 3.5%) and GDXJ (down 4.1% 910
) decided to take their cue from the 900
broad equity markets, not the
underlying metal.
What does it all mean for gold and
the stocks? It means nothing, it’s the noxious smell of near-term market farts in a garden of
jasmin and roses, it might distract your limbic reactions for a while but keep the financial
decision-making with the neocortex, please. We are in a bull market for gold. That goes for the
gold stocks, too.
Most stocks are neither buys nor sells
Monk: "Does a dog have Buddha-nature?"
Joshu: “Mu!”
The Recorded Sayings of Zen Master
Joshu, Koan 132, 9th Century AD
Here’s something that I’ve been chewing on ever since that Kerrisdale Capital hit-piece on First
Majestic (FR.to) (AG) came out, the one that revealed that fund’s short position in the stock.
Today’s intro isn’t about FR.to and more about the reactions received to the posts I stuck on
the blog about the affair (here (1) and here (2) if you care enough) and to give the quick’n’dirty
background:
• Kerrisdale published their hitpiece, I stuck a post on the blog with the link to the note,
expressed some mystery as to why they’d decided to short FR, but called it a “pretty
decent read” (because on an entertainment level it is) and left it at that.
• I found myself on the receiving end of the mouthbreather end of the market accusing
me of all sorts of things such as being short FR.to, in cahoots with Kerrisdale, even of
being part of Kerrisdale Capital and of course there was the near-inevitable message
about inflicting bodily harm on my good person. Usual sort of thing, nothing new.
• But while this was rolling out, at the behest of a smarter mailer I took a closer look at
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 61/6/9 61/8/9
mt
source: SPDR GLD data

,
the Kerrisdale piece (first time around I read it, didn’t study it) and started to find all
sorts of errors and biased, cherrypicked data. As a result I wrote the second post
calling Kerrisdale “plain stupid” for shorting FR.to, setting out the reasons why etc.
• That must have confused the mouthbreathers because I didn’t get any feedback from
the second post. Their thug-o-meter dropped to DEFCON 3 from DEFCON 4, or
something.
Once upon a long time ago when I was a little boy I distinctly remember there being three
positions you could take on any given issue; you could be for, against or neutral. So why does it
seem to me that those days are past? Was it George W. Bush’s “You’re either for us or against
us?” that stuck in the collective subconscious? And while the people actually rooting for a drawn
football match are few and far between, when it comes to the world of capital markets the rise
of fandom isn’t just financially illogical, it’s plug dumb stupid.
• Person X suggests a stock, you check it out, you pass, person X is mortally offended.
• I don’t like your stock pick I must be either stupid or shorting it or both.
• People who short stocks are financial terrorists, burn them with fire.
Et cetera. The boring fact is that not only are there three positions available to take on any
given stock (long/neutral/short) there are always going to be more in the “meh” category that
the ones that are interesting, active, possible trades to the long or the short side. After chewing
it over, here’s a little visual:
They tell me there are something like 1,500 mining stocks on the public exchanges in Canada
(feel free to correct me, I’m going on hearsay) which sounds about right because the number
of stocks I look at that get past first base and make for a potential trade are few and far
between, definitely less than 50 at any given moment (probably less than 30 thinking about it)
and even then I get picky about backing the likeable ones with real money. This doesn’t
discount that beauty is in the eye of the beholder, nor does it ignore the way a stock can move
from one side of that chart to the other just on price changes (risk management is the whole
ballgame). Above all it doesn’t discount subjective error (yeah I’m still kicking myself about not
buying Cordoba Minerals (CDB.v) at 15c and 20c when I’d identified it as a possible good thing
at the turn of the year, we all have our cross to bear) as of all the occupational hazards there
are as an equities analyst, the number one classic is throwing a winner into the discard pile.
But does that make being neutral on the vast majority of stock out there a bad thing? No, it
does not. The case of First Majestic is like so many other mining stocks; I choose to avoid, I
don’t enter the arena, I’m neither long nor short and no harm is done (assuming mouthbreather
doesn’t find me at trade fair). The stock market is way more fun than the casino because the
puzzle is harder to solve, the chances of tilting the game in your favour through study are
greater, the rewards are intellectual and not just financial. The reason I’m not into throwing a
thousand on Black or Red, is the same reason I don’t jump on some promo pump job or hot
trade or rapidly launching new market darling just because it’s moving up. But that’s just me.
3

,
As noted in the intro to IKN361 dated April 10th when the bull was in full flow:
Don’t try and participate in every hot trade idea, don’t feel envy for the
success of others, don’t get downhearted when that trade you passed on nails
big wins for somebody else. There’s going to be money to be made, but pick
your own battles and win your own money. Jealousy doesn’t become anyone.
Incidentally, while grabbing that quote from IKN361 I happened to notice that in the ‘Stocks to
Follow’ open list that weekend B2Gold was C$2.16, Starcore 47c, Regulus 40c, INV Metals 29c
and Lara Exploration 40c. Mind you, I was in the process of making another mess of a short
position in HudBay. Just sayin’.
Fundamental Analysis of Mining Stocks
Today we return to look at the state of play in New Gold (NGD) (NGD.to).
NOBS update report dated September 11th, 2016
New Gold Inc. (NGD) (NGD.to)
Company Overview
New Gold Inc. (Canada: NGD.to, USA: NGD, Frankfurt 32N.f) is a mid-tier producing gold
mining company operating in several countries. It has four mines currently in production, plus a
pipeline of advanced-stage development projects. Current share structure is as follows:
Shares out: 512.828m
Options: 14.3m
Warrants: 27.9m
Fully diluted shares: 555.03m
Current share price: U$4.70
Market Cap: U$2.41Bn
Approx working cap per S/O: $0.43
All prices are in US Dollars unless stated. Forex U$0.80=CAD$1
NB: As NGD reports in US Dollars and the majority of trading volume is via its USA ticker, unless otherwise
stated all prices are in US Dollars.
Background to today's NGD update note
This is a NOBS update report, the last time we took a close look was in IKN350 dated January
24th 2016 when I ran the numbers on the stock and bought for a short-term fliptrade after it had
gone through a weak price period (if you want a copy of IKN350, you know my mail address).
We’re not going to cover all the background to the company fundies in this update, so consider
today’s effort as adding to the body of work rather the replacing it. At that time the gold bull
4

,
market had not got underway, there was a sniff in the air and the bottom was in but gold was
priced at U$1,096/oz. As for NGD, it closed that
January weekend at U$2.02 and I bought some
shares with the view that the company’s medium-
term financial position was better than the market
envisaged and it would be able to cover its main
concern, the capex cost of Rainy River. As it
happens that trade turned out well and I sold just
a couple of weeks later and made myself a very
quick and useful 43% profit. However it’s also fair
to say that it was a bad decision to sell. As we
now know, gold moved and kept moving from
February and the new bull arrived. If I’d held my
NGD it would have been at least a double in
three month, perhaps close to a triple. So sigh I
might but 1) the trade set-up was always near-
term focus and 2) the cash generated from that
successful trade went into other positions that have done okay.
That was then and this is now. The background offered is to set some of the scene as I’m not
approaching NGD today with the same attitude and market view as in January 2016 (it seems
like an age away). Today’s note is built on different foundations in order to attempt an answer to
a simple question. Considering...
• the new price levels of NGD
• its now fully profitable operations thanks to the gold price
• the proximity to the opening of the company-transforming Rainy River mine
• the latest batch of cost overruns announced by the company last week
...the question is a simple one: Is there a trade here?. So let’s see.
This week: Another capex blowout at Rainy River
Last week we got a news release from NGD (4) that revealed the latest capex estimate for
Rainy River. The NR elicited this blog post (5) including a previous version of this chart:
New Gold (NGD): Rainy River capex budgets, 2014 to date
U$m
1200
1045
1000 885 877 877 912 940
800 713
600
400
200
0
May 2013 Jan 2014 Jan 2015 Jan 2016 May 2016 July 2016 Sep 2016
buyout FS guidance guidance guidance guidance guidance
source: NGD
The overrun is clear, it’s even worse in Canadian Dollar terms, where you would have thought
some of the extra cost would be mopped up by today’s NGD-friendlier forex rate and to make
matters worse, when NGD paid C$310m to buy Rainy River in May 2013 the capex bill was
placed at U$713m. There are other issues, such as the way NGD said the project was now 45%
complete when on its original timeline expected it to be 60% complete by mid-year (the 60%
point unlocks the next deposit payment from stream holders Royal Gold). More on that below.
Later on in the week NGD head man Randall Oliphant appeared on Canada’s BNN business TV
in the interview linked here (6), basically to defend his company and make the case for the cost
overruns, as well as reiterate that the project was still on course on its construction timeline and
would open for business in the middle of next year. But his appearance didn’t do much to stop
the selling and once the dust had settled NGD was 11.2% down in the four days of trading last
5

,
week. A look at both the 2016 year-to-date chart (left) and a 10 day intraday chart (right) and
comparing NGD with the Gold & Silver Index (XAU) benchmark sheds some extra light on last
week. The longer view chart (left) shows that with a few variations along the way NGD has
performed lockstep with the industry average.
The near-term action chart (right) shows that for some reason (perhaps intel gone wrong,
perhaps a little priming) NGD strongly outperformed the market on the first day of last week
(Tuesday 6th, we were closed Monday 5th for Labor Day). Then came bad news and the drop
that started at the bell Wednesday and continued the rest of the week. NGD underperforming
the sector average by around 5% over the last two trading weeks. Which brings us back to the
main question, does today offer a buying opportunity in NGD? Its share price dumped on the
capex blowout news but if it can deliver the mine and it runs as planned, that costs overrun
becomes a detail in history and NGD is transformed. Unsurprisingly the rest of today’s note
aims to do just that and there are several bits of the story to chew over. What comes next:
1) We check on the state of play in its current operations
2) We look at its financials and work out whether they can cover the new capex bill
3) We estimate whether NGD generates enough cash once RR is up and running to pay
off its heavy debt load
4) We wrap it all up with a big bow and do a conclusion section
Current operations
Before getting to the thorny issue of Rainy River we need to check on the other moving parts of
NGD, as the company is now officially relying on the cash flow coming from its four operations,
namely New Afton, Mesquite, Peak Mines and to a lesser extent Cerro San Pedro (now
depleted and in the process of closing), in order to cover the Rainy River (RR) capex. So you
now get a brief update on the four mines which include a production chart and a financial results
chart for each one, after which we throw them together and consolidate results.
New Afton: Until Rainy River (RR) comes along, New Afton remains the star operating asset at
NGD even though it’s also the only one that generates more revenue for this gold mining
company from another metal than from gold (e.g. in 2016 to date New Afton revenues are
comprised of U$58m gold, U$86.9m copper and U$2m silver). As such I add a copper
NGD New Afton: Gold production, per qtr
35000
30000
25000
20000
15000
10000
5000
0
6
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
NGD New Afton: Copper production, per qtr
Au Oz
30
25
20
15
10
5
0
source: company filings
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
Cu Mlbs
source: company filings

,
U$m NGD at New Afton: Financials overview Revs
production chart to the gold one here. As 100 Op Ex
Deprec/Deplet
for financials, New Afton’s low operating 90 Mine Op Earn.
costs mean that it’s managed to ride the 80
low copper market prices successfully 70
60
and return operating profits every
50
quarter, though a glance at this chart
40
also shows how they’ve been crimped 30
compared to the good old days of 20
2014.The high asset carrying value of 10
New Afton also means it reports 0
relatively high Depreciation/Depletion 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
charges, something that crimps its source: company filings, IKN calcs
overall operating returns but raw cash
flow from the mine is much less affected by asset value and the money generated by New Afton
certainly helps fill the Rainy River capex hole.
Mesquite: At Mesquite in Southern California USA production has tended to be weighted to the
second half of each year and that’s what we’re expecting again in 2016, as to date the two 25k
oz Au quarters posted are a long way behind the original NGD 2016 guidance of between 130k
and 140k oz for the year.
NGD Mesquite: Gold production
50000
40000
30000
20000
10000
0
A pure gold producer with no byproduct credits, as you might expect Mesquite has benefitted
from the rise in gold prices and in 2q16 returned Mine Operating Earnings (MOE) of U$10.5m,
the first time it’s cracked a double figure profit in a long time. Costs are lower this year as NGD
spent heavily in 2015 on capital works (pre-stripping etc) and the benefits of that are now
showing. A healthy looking operation that should get better in the next couple of quarters as
production rises.
Peak Mines: Mostly gold with some copper and silver credits, Peak Mines in Australia has
benefitted from the rise in gold prices and the drop in the Aussie Dollar against the greenback.
As the financials chart suggests, it’s a better cash generator than a profit generator due to the
relatively high DD&A burden, much like New Afton. In 2016 NGD has also sunk money into
exploration in order to improve resource ounces and mine life, that program has been a
reasonable success.
7
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
Oz Au NGD at Mesquite: Financials overview Revenues
U$m Op Ex
Deprec/Deplet
50 Mine Op Earn.
45
40
35
30
25
20
15
10
5
0
-5
-10
source: company filings 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
source: company filings, IKN calcs
NGD at Peak Mines: Financials overview
U$m
NGD Peak Mines: Gold production Total Revenues
50 Op Ex
40000 45 Deprec/Deplet
40 Mine Op Earn.
35000
35
30000 30
25000 25
20000 20
15
15000 10
10000 5
5000 0
-5
0
-10
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
source: company filings, IKN calcs
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
Oz Au
source: company filings

,
Cerro San Pedro: Finally Cerro San Pedro in Potosí Mexico, now in its last quarters of
meaningful production as the mine winds down after being depleted and mined out. There was
a operating expenses spike in 4q15 when the big round of final lay-offs happened, since then
production (from the leach pads, the cycle times mean there’s still recoveries of gold to get and
there will be silver captured in solution for longer) has dropped off but as you’d expect, so have
costs so thanks to the hike in gold prices CSP continues to deliver quarterly earnings. But it
won’t be for much longer and comes 2017 we don’t model revenue from the mine.
Consolidated production and revenues forecasts
Time to put those four together and included in this first consolidated production chart are
estimates for production in the next two quarters:
NGD: Consolidated quarterly gold production
140000
130000
120000
110000
100000
90000
80000
70000
60000
50000
40000
30000
20000
10000
0
8
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
NGD Cerro San Pedro Gold production
35000
30000
25000
20000
15000
10000
5000
0
Oz Au
New Afton Mesquite Peak Mines C/San Pedro
source: company filings
We expect less from Cerro San Pedro, more from Mesquite and steady stuff from the other two.
This model puts NGD’s 2016 gold production at
388,234oz, above the midpoint of NGD’s current
guidance for the yar of 360,000 to 400,000 oz (there’s
very little chance of the company missing to the
downside). At this point I want to take a side-step and
note the evolution of the revenues mix at NGD,
because in the last six quarters it has steadied out and
the company now gets a sold 2/3rd of incomes from
gold and around 29% from copper (the difference
made up by the small silver credits).
This helps in putting together this next chart, the operations earnings overview below:
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2
Oz Au NGD at Cerro San Pedro: Financials overview Revenues U$m Op Ex
Deprec/Deplet
50 Mine Op Earn.
45
40
35
30
25
20
15
10
5
0
-5
-10
source: company filings 1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16
source: company filings, IKN calcs
NGD: Percentage revenue by metal Au Cu Ag
100%
90%
80% 32.05% 37.64% 28.73% 29.48%
70%
60%
50%
40% 30% 63.33% 58.75% 67.37% 67.35%
20%
10%
0%
2013 2014 2015 1h16
source: NGD filings/IKN calcs

,
NGD: Quarterly Earnings Overview
240
220
200
180
160
140
120
100
80
60
40
20
0
9
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
$m revenues
op-ex
Mine Op Earnings
source: company filings/IKN ests
Thanks to the improvement in gold we model NGD to give revenues of nearly U$200m per
quarter for the second half of this year (for the
record, the model spits out U$194m for 3q16 and NGD: Operating Earnings per qtr, 2014 to date
60
U$197m for 4q16 but I live in the real world and
know that if both of those are spot on it will be 50
more luck than judgement) and MOE of around 40
U$50m/qtr, thanks to the reeling in of costs 30
across the corporation. Once G&A, exploration
20
and share-based payments are backed out, you
10
end up with Operating Earnings and that’s what
you have in this chart right. We expect NGD is 0
good to generate around $40/qtr with gold where -10
it is and that’s good money, because it’s the
Op.Earnings money that can feed the Rainy
River build-out.
Financials overview and covering the Rainy River capex
I’ve gone about this section today is a different way than the method in IKN351 and built a
different model. That’s for several reasons, as we now know more about the progress at Rainy
River, we know more about the financing package and how much there is to cover, the price of
gold and the company’s profitability has altered substantially. Let’s start with a quote from last
week’s NR that comes just after the bit where they said they need U$480m (which includes
U$50m contingency) to finish Rainy River and get it up and running:
New Gold's cash and cash equivalents as at August 31, 2016 were approximately
$145 million. The company also has a $300 million revolving credit facility, of which
$125 million has been used to issue letters of credit, with the $175 million balance
remaining undrawn. Though New Gold does not currently anticipate requiring it, the
company's revolving credit facility also provides New Gold with the option to draw an
additional $50 million above and beyond the base $300 million, subject to lender
participation. In addition, the remaining $75 million of the stream deposit will be
received from RGLD Gold AG, a wholly-owned subsidiary of Royal Gold Inc., when
60% of the estimated Rainy River project development capital has been spent and
other customary conditions have been satisfied, which is expected to be in the fourth
quarter of 2016. Combining these three sources of funding provides the company with
pro forma liquidity of approximately $400 million. At the same time, with 2016 guidance
for all-in sustaining costs(1) of $750 to $790 per ounce, New Gold's four operations
continue to generate robust margins and cash flow.
Summing that up:
• They need to cover U$480m (and considering their track record at the mine to date,
we’re obliged to consider the U$50m contingency as money they need and will spend)
• They have $145+$175+$75 = $395m on hand (or “approx U$400m” as they say), plus
the $50m extra revolver facility which they say they won’t need.
• They’re relying on the operating profits from their other four mines in the next four
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
$m
source: company filings, IKN ests

,
quarters (“to mid-2017) to cover the difference.
As the difference looks like $85m to me and the current ops at NGD look good for around $40m
per quarter at current gold and copper prices, I agree with NGD. They’re not going to need that
extra $50m revolver facility, they are going to cover the capex cost.
The Rainy River timeline to production
However, there’s a wrinkle. In its latest update NGD noted the project was 45% finished. That’s
not as advanced as expected in the original plan and we know that because at the beginning of
2016 NGD expected to have received the final $75m from the Royal Gold stream by now. To
directly quote the 2015 year-end MD&A:
Royal Gold to provide New Gold with a $175 million deposit for the development of the
Company’s Rainy River project $100 million paid at signing with the remaining $75 million to be
paid when 60% of the project development capital has been spent (subject to customary
conditions precedent); expected to be in mid-2016
This chart shows the speed of development so
far at Rainy River, with the main “overall
construction” in red and as a comparative one of
the other keys to the critical path timeline,
“concrete placement”. We see that in general
terms the concrete placement bars have kept to
the right rhythm, but overall construction has
lagged. This is likely due to the re-working of the
tailings facilities (aside: I know “better late than
never” but why are they going “industry best
practices so late in the game? What’s the
purpose of spending all that money on a
feasibility study otherwise?) and at least the
metal-and-concrete part of the build-out looks
roughly on time. But we can also take the overall
advancement rhythm as seen so far and
extrapolate it out to see where we can expect to
hit the magic 100% level and have a mine. That
looks like this and even though I’m the first to
admit that’s a little simplistic, as things stand
today it’s not going to be easy to deliver Rainy
River in “mid-2017” as calmly stated by Randall
Oliphant on BNN last Friday. In the vernacular,
they’d better get a move on.
Overall, considering the mediocre execution and
constant capex revisions to date, I don’t see any reason to trust Mr. Oliphant when he says
Rainy River will be up and running “mid-2017” (I also note the imprecise deadline as my idea of
“mid-2017” is June 30th and the end of 2q16, I’ll bet dollars to doughnuts he’s planning a bit of
poetic licence already). And that’s important because of this:
NGD: Liabilities per qtr
2000
1800
1600
1400
1200
1000
800
600
400
200
0
10
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2
source: company filings
srallod
fo
snoillim
NGD at Rainy River: Project Advancement 1
85%
0.9
Overall construction 75%
0.8 concrete placement
0.7
0.6 50%
45%
0.5 40% 40%
0.4 30%
0.3 21%
15%
0.2
0.1
0
3q15 4q15 1q16 2q16 Now
source: company filings
NGD at Rainy River: Estimated project completion at
100% 1 current rate of advancement 90%
0.9 80%
0.8 70%
0.7 60%
0.6
0.5 40% 45%
0.4 30%
0.3 21%
0.2
0.1
0
current liabilities LT debt other LT liabilities
51q3 51q4 61q1 61q2 woN tse61q4 tse71q1 tse71q2 tse71q3 tse71q4
source: company filings

,
At U$1.6577Bn (with a B) as at end
2q16, the liabilities position at NGD is
already heavy stuff. That moves to an
IKN estimated U$1.9Bn come the end of
2q17 and assuming that RR is delivered
at that point. The main problem in that
liabilities pile is the one we mentioned in
some detail back in IKN351, the U$800m
in financial debt that’s set in two
tranches, one U$300m debt that matures
in 2020 and another U$500m debt that
matures in 2022. Assuming full take-up
of the revolver and a couple of other
minor effects, the model moves that to
U$988m come 2q17:
And that, ladies and gentlemen, is a lot of money.
Of course there’s the addition of fixed asset value at the
same time, but the net effect on book value is a wash as
seen here. And by the way, as at this weekend and using
the 2q16 financials, NGD is running a price/book ratio of
1.1 which is slightly under the industry average of 1.3X at
this time but then again, most mining companies don’t
carry debt that covers 40% of your asset value.
Can NGD pay down its debt load?
We get to the final subject of the day. We know NGD has the cash to build Rainy River, we
know its current operations are doing fine and enjoying the gold price hike, we know Rainy
River might not come in on time, we know NGD is up to its wazoo in liabilities and around half
its burden is in old-fashioned financial debt. We need to know whether NGD can pay it down
and for that, we start with some estimates for annual production at NGD in the years to come.
NGD: Annual gold production and forward guidance
700000 655000 655000
600000 600000
500000 435699 460000
397688 380136 388000
400000 360000
300000
200000
100000
0
11
3102 4102 5102 tse6102 tse7102 tse8102 tse9102
NGD: Long-term financial debt/qtr
1100
1000
900
800
700
600
500
400
300
200
100
0
if RR on time
if RR late 2 qtrs
source: company filings
In this chart I go back to 2013 just for fun, but the real story is in the years 2017 to 2019. After
taking into account all operations and then the effect of Rainy River to come, I’m forecasting
NGD to be a 655,000oz gold per annum producer. The question is “when”, because if RR is
delivered on time (by which I assume end 2q17, with first production in 3q17 and commercial
production in 4q17) NGD can be a 655k oz producer in 2018. However, if we assume a lag in
the completion of RR of two quarters everything gets set back and NGD as a corporation only
manages to reach 600k in 2018, with full speed only achieved in 2019.
21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2
source: company filings
srallod
fo
snoillim
NGD: Book value
4000
3500
3000
2500
2000
1500
1000
500
0
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2
U$m
source: company filings, IKN ests

,
The next bit is very difficult, because to get an accurate forecast on the revenue generating
ability of NGD or any other company in the years 2017 to 2019 you need to be able to predict
where gold’s going to be three years down the line. I have enough trouble guessing for the next
three weeks let alone three years. Then there are other factors such as the general level of
price inflation and costs etc, is basically an impossible task.
So to get a handle on the potential, I’ve gone about the task in a different way and assumed the
following:
• NGD is going to have around $1Bn of financial debt on its books, half of which needs
paying down come 2020 and the other half in 2022.
• We can lump the next three years, 2017 to 2019, into one block and attempt a
calculation on operating earnings in that time to get a handle on how much NGD will
have on hand to make that first deadline, $500m in 2020.
• Instead of trying to estimate raw gold revenues and/or cash costs per ounce, we focus
on the margin earned by NGD for each ounce. Normally over an extended period if gold
prices go up so do costs, plus in the end it’s what NGD makes on its production that will
count. Therefore the guesstimate is aimed at the operating earnings for NGD (which is
after all what will be used to pay down the debt).
• We adjust the raw gold numbers to take in revenues from copper and silver over the
period by using a 0.75 divisor (at the moment it’s 0.67, but the relative weight of copper
revenues is set to drop once RR comes on line).
• We use four different net margins per ounce, increments of $200/oz to $500/oz. We can
also calculate the potential earnings using the “RR On Time” scenario” and the “RR
Late” scenario as seen above.
And once all that’s done, this table pops out at the end of the spreadsheet:
Total Op. Earnings of period 2017 to 2019
Net margin Au RR on time RR 2 qtrs late
$200/oz $472m $431m
$300/oz $708m $646m
$400/oz $944m $861m
$500/oz $1,180m $1,077m
source: IKN SWAGs
Remember those totals are for a three year aggregate, they’re not for a single year. The idea is
to see whether NGD can cover a $500m payback in 2020 and by the looks of things, it can. The
$200 and $300/oz margin lines are probably too conservative as once RR is up and running it’s
going to be a low cash cost producer and over the corporate whole I doubt AISC will be over
$900/oz (at current parameters) even after the Royal Gold stream on RR pulls down top line
revenues. For me at least, the best fit line is probably the U$400/oz margin assumption, i.e.
NGD makes $400 for each ounce of gold (and gold equivalent) it produces. So even in the
delayed start scenario some U$861m is generated over the period and that’s enough to cover
the obligations it has the next year, even when taking into account social niceties such as other
financial pressures and tax. But it’s not a massive blowout win either, we’re only just about
covering at that point and that means overall book value isn’t going to move up by much in the
next three years.
Conclusion
The good news: Rainy River will get built and barring under-performance or a caving in of the
gold price, New Gold the company should be able to generate enough cash from its operations
to cover its debt obligation. The bad news: At this point today there’s execution risk, there’s a
good year and a half or perhaps two years before we know that Rainy River is a fully fledged
machine that will deliver the financial goods and right now, NGD being priced where it is at 1.1X
BV is nobody’s idea of a massive bargain. The way I see things from an asset valuation side, if
RR performs NGD would first be able to move up to a industry average Price/Book Ratio of
1.3X (let’s say the shares at $6), and then as the debt starts to get paid down and book value
12

,
increases that can move to 1.5X. For that I can pencil in $7 at current gold prices and that’s
70% higher than this weekend, but for that kind of share price I’m way out at the end of 2018.
And two and a half years of clear execution risk and heavy debt burden between myself and a
70% win in a gold mining company is just too much potential pain and waiting for too little gain.
I’m not saying NGD is a bad investment or company at this point. I’m saying that there’s not
enough meat on the reward bone to justify exposing myself to the risk of further unpleasant
capex surprises, a delay to its flagship project (or perhaps merely Oliphant’s interpretation of
what the prefix “mid” means), an operation that will always have teething problems because
they all do to begin with, but might
have a big teething problem and not
just a small one. You never know.
Even after the significant share price
drop of last week and at a U$2.41Bn
market cap this weekend, NGD isn’t
much of a bargain. I agree with
Oliphant that the capex is covered and
RR will start without recourse to
further financings but that debt pile,
even though manageable, is heavy
and like it or not it’s going to put
pressure on the equity price for years
to come. Put in the simplest terms
possible B2Gold with its U$2.522Bn
market cap this weekend is obviously
a better stock to own than New Gold (NGD). Not a bad company, but not a stock I need to own
at this point when there are better places for my money, The IKN Weekly remains neutral on
New Gold and I will not buy into this price dip unless it goes much deeper.
End of Report
Stocks to Follow
In a tough week for the sector, particularly that broad-based sell-off on Friday that saw most
everything sucked down, the ‘Stocks to Follow’ portfolio did pretty well and even among the six
losers (BTO.to, REG.v, SAM.to, TK.v, ATY.v, RPM) the damage really wasn’t that bad. Yes true,
both Tinka (TK.v down 11.1%) and Atico (ATY.v down 10.3%) put in big drops, but both of
those had seen a bit of tape-painting on the previous Friday and the larger negatives there
weren’t unexpected. Other such as the Top Pick rank of BTO REG and SAM were small moves
inside trading ranges and overall the losers didn’t hurt much.
Meanwhile, to have six winners (SAND, WDO.to, RRI.v, CNL.to, LRA.v, FCV.v) and an
unchanged stock (MAD.v) in a week that saw GDX drop 3.5% and GDXJ drop 4.1% is a
pleasant surprise. Best winner was the 10.0% added to Riverside Resources (RRI.v) on the
rebound, that may be connected with news tomorrow Monday. Wesdome (WDO.to up 7.3%)
continues its stellar run.
There are 13 open positions on the ‘Stocks to Follow’ list, two fewer than our self-imposed
maximum of fifteen at any given time. Ten stocks are in the green and three are in the red.
13

,
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$3.51 66.4% tgt $5.30 IKN375
Regulus Res REG.v hold C$0.64 06-apr-15 C$1.50 134.4% LT exploreco top pick
Starcore Intl SAM.to STR buy C$0.62 10-jan-15 C$0.71 14.5% $1.04 tgt, excellent value
Long positions (in current order of preference)
Sandstorm Gold SAND buy U$3.80 17-apr-16 U$6.09 60.3% $7 tgt IKN378, trading well
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.20 2.6% Top value under radar Zn play
Wesdome Gold WDO.to hold C$1.72 22-may-16 C$2.81 52.3% $2.88 tgt IKN381 v strong
Atico Mining ATY.v buy C$0.51 24-jul-16 C$0.52 2.0% bot again IKN382, 90c tgt
Rye Patch Gold RPM.v spec buy C$0.355 02-sep-16 C$0.34 -4.2% New IKN382, 75c tgt
Riverside Res RRI.v buy C$0.39 27-jun-16 C$0.385 -1.3% Added IKN380, 60c tgt
Continental Gold CNL.to buy C$2.68 22-may-16 C$3.90 45.5% permit 4q16/1q17, $4.80 tgt
Miranda Gold MAD.v spec buy C$0.125 03-jul-16 C$0.145 16.0% Small flipper, now waking up
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.43 24.3% solid biz model
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.085 -63.0% refi news good
Short positions
None at present
Closed in 2016 closed close price
Phoscan Chem FOS.to jan16 C$0.28 29-mar-15 C$0.265 -5.4% Buyout trade, bot but poor deal
True Gold TGM.v jan16 C$0.18 23-aug-15 C$0.25 38.9% okay trade, sold on pol risk
McEwen Mining MUX jan16 U$1.09 25-jan-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-apr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-apr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-jan-16 U$2.96 43.7% closed good near-term trade
Sandspring Res SSP.v mar-16 C$0.195 18-oct-15 C$0.32 64.1% Hit tgt, took profit
Teranga Gold TGZ.to mar-16 C$0.54 15-feb-15 C$0.60 11.1% disappointing trade
B2Gold BTG mar-16 U$0.85 13-jan-16 U$1.30 52.9% Separate trade on B2, hit tgt
Dalradian Res DNA.to mar-16 C$0.67 27-oct-13 C$1.00 49.3% Hit target, sold, good win
HudBay Min. HBM may-16 U$4.10 03-apr-16 U$4.36 -6.3% Short trade, poor timing
Nevada Sunrise NEV.v may-16 C$0.185 28-feb-16 C$0.23 24.3% V. small, no big deal either way
Richmont RIC jun-16 U$7.60 01-may-16 U$9.30 22.4% near-term trade, profit taken
INV Metals INV.to jul-16 C$0.25 03-apr-16 C$0.95 280.0% Trade closed on time
HudBay Min. HBM aug16 U$4.98 09-jun-16 U$4.80 3.6% short trade covered, no big deal
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
Rye Patch Gold (ROM.v): Added. Last week’s edition of the weekly opened with a comment
on the price pop that came in RPM after the previous week’s Flash update:
“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...”
Therefore and to be clear, I got all the 35c I wanted on Friday and now have a full position in
this stock. People, there is no need to pay up. Get smarter about trading, please.
In accountancy news, on Friday RPM announced it had changed their firm of auditors from
Vancouver’s Hay & Watson to everywhere’s PWC, a step up on the ladder and a signal of a
company getting serious about its new corporate shape.
Sandstorm Gold (SSL.to) (SAND): Friday post-bell saw some market news from the TSX,
14

,
with the new make-up of the S&P/Dow Jones Indices announced. Here’s the headline block
from the NR which shows the changes to the main event, the TSX Composite:
And as rumoured for a couple of weeks (though I didn’t mention it here), Sandstorm in is
SSL.to ticker is one of the new members of the index (you´ll notice Ivanhoe Mines (IVN.to)
there too). I tend to have mixed feelings about these inclusions, because although we can
expect a little near-term boost from the event next week, in the longer-run it doesn’t matter
much as indices don’t run companies. The flip-side also exists, I’ve seen them added and I’ve
seen them taken off these lists and on removal day the ensuing price moves are less fun.
Regarding the news on the Yamana Gold (AUY) (YRI.to) Auga Rica project out of Argentina last
week as noted on the blog (7), a couple of you have noted that as from October 2015 SAND
has a stream deal there. Here’s the summary of the deal from the relevant YRI NR (8):
In consideration of $12 million in advanced payments, additional advance construction payments
of between $135 million to $225 million, and an additional payment of 30% of the spot price of
gold at the time each ounce of gold is delivered, Yamana has agreed to deliver to Sandstorm 20%
of payable gold from Agua Rica. The additional advance construction payments will be owed to
Yamana, and be based on the price of gold, at the time the Company completes 25% of the
construction of Agua Rica. The amount owed will be based on a sliding scale basis with a
minimum payment of $135 million if gold is below $900 per ounce and a maximum payment of
$225 million if gold is above $1,400 per ounce.
If Sandstorm elects not to make further advanced payments to the Company at the time of the
completion of 25% of the construction of Agua Rica, then the purchase obligation will convert into
a 0.25% net smelter royalty on Agua Rica.
It was part of the larger deal SAND struck with YRI that included the bigger and better looking
silver and copper stream deals based around YRI’s Chapada mine in Brazil and its Cerro Moro
project in Argentina (see the NR for more). The whole package deal came at a ticket price of
U$148m cash and 15m warrants of SAND with the U$3.50 strike, so the U$12m of the total
assigned to the Agua Rica end of the deal is small. It’s also fair to say that the timing of the big
package deal back in late was very good in hindsight and the Cerro Moro end of the gig in
particular is looking like a real bargain. (As a quick aside, that mine due open 2018,
construction work has already started, the big capex spend scheduled for 2017 and the IKN
spreadsheet has the deal worth U$16.7m per year in net revenues for SAND).
With all that said, it may not be the U$1.1Bn in asset carry value that YRI has invested in Agua
Rica but it looks as though we can kiss goodbye to the U$12m SAND sunk into the project. Now
this isn’t a company-killer number and I can imagine that as it was a small part of a bigger
deal, it could have been on the table to help get the main parts through. The problem is that I’d
be far happier to write this one off to experience if SAND didn’t already have a poor track
15

,
record in throwing cash down the toilet on deals that smack of gambles at a roulette table. The
general perception is that since the Bruington/Laskowski team got together to run the DD on
prospective deals the risky deals we saw in Aurizona, Colossus and such were a thing of the
past and that the company had “got serious”. The numbers tell me that as well (especially the
way that the balance sheet has been repaired to strength in 2016) but the failure of SAND to
spot Agua Rica as an Achilles Heel puts a dent and wipes some of the gloss off this new and
more positive image. Taking all things into consideration, this is a negative for SAND, it’s fallen
foul of political and social risk factors once again and although the bill is a relatively small one
this time, we shareholders are again the ones who are paying for the largesse. A yellow flag
rather than a red one.
Tinka Resources (TK.v): No good deed goes unpunished. On Tuesday TK announced (9) that
it had come to full agreements with two of the three communities located around its Ayawilca
project and that everything was now set fair for the issuance of the exploration permits it needs
to start the next round of drilling at the site, scheduled for November 2016. On contacting the
company, I was also assured that these were the big two and the ones they need to move
forward in 2016 and 2017. The final community isn’t trying to play hardball or be a hold-out, it’s
just a matter of time and logistics before they
sign their deal (it’s as simple as getting the right
people in the same place at the same time, not
always so easy in rural upland Peru) so all good
there, too.
This is the type of news that’s fundamentally
important and positive for a company such as
TK, but it’s also the type that receives a
collective shoulder shrug from the market and
“Well, that’s what you were supposed to do isn’t
it?” from (un, semi, or even fully) interested
onlookers. Community agreements don’t move
markets, even though they’re no given and take
a lot of work from a company to obtain in a
mutually respected way. TK and the team get congrats from me because I know what they’ve
been through to far but sorry, the market doesn’t care, the market wants drill assays.
In trading, TK disappointed and fell back to its recent default 20c position after a small/medium
sized seller showed up again and dumped into the 22c prices. That’s the way of this type of
small stock, it’s comes with the territory unfortunately.
Atico Mining (ATY.v): The glossy
finish to the previous week was rubbed
off this week and as this ten day price
chart illustrates, if you live by the
featherlight trading sword you die by the
featherlight trading sword. ATY popped
on low volume two Fridays ago, it
dropped on the same type of action this
Friday. I can’t say I’m worried about
either move as the proof of this
particular pudding will come with the
3q16 production and financial results,
that will show much better than 2q16
and prove to the world that ATY is a
profitmaker even at low copper prices.
Miranda Gold (MAD.v): On the subject of featherlight trading, even though the money
involved is very small, we’ve started to see price spikes and volatility coming in for our promo
16

,
pump flip idea MAD.v.
I’ve seen this type of pattern before and though not a
guarantee of pump-to-come, it’s type type of pre-wash
action one sees in the thinly traded stock before the real
action starts. The theory is that in this preliminary stage
the promo team spike up the stock on low volume then
step back. Anyone who’s keen to sell out and take a
small profit (or lesser loss) gets the chance of an out,
thereby cleaning up the stock and reducing eventual
selling headwind when the real promo gets underway.
Continental Gold (CNL.to): As this five day chart tracking CNL against the Gold & Silver
index (XAU) shows, CNL beat out the benchmark by 10% and had a good week. Also if it
weren’t for the Friday afternoon selling (which was admittedly understandable) it would have
been a great week.
The strength of buying didn’t go un-noticed by you people either, I took a few mails asking
whether there was something on the jungle drums in Colombia. The only potential reason I
could find is that on Wednesday evening as part of a press conference covering a range of
governmental issues, President Juan Manuel Santos made mention of the progress against
illegals in Buriticá and highlighted it as a real success story.
Starcore Intl (SAM.to): SAM continues to hang tough and I’ve heard from more than one of
you that getting shares at 70c or below has been between very difficult and impossible. Another
signal of 70c becoming a firm floor.
Wesdome Gold (WDO.to): On the table above I’ve shifted the near-term sentiment call down
to “hold” because I don’t really know what to think yet. The way WDO traded against the tide
on Friday now makes it long odds-on that the stock will go through the IKN Weekly $2.88 price
target soon (and note that it touched exactly that number on Tuesday), the sudden dive being
bought up quickly by a whole range of people seeing value. On the other hand, there’s a lot of
speculative blue sky being baked into this price today, the market isn’t just adjusting for
potential upside at Kiena but now assuming it’s there. The market may be right of course, but I
set my target in line with the type of risk parameters I’m comfortable with and it looks like I’m
going to go out of my comfort zone on this trade soon. Hey, that’s okay, wouldn’t be the first
time.
So the decision is “wait and see”, it’s “hold” until we get the next set of results from the current
drill program at Kiena and/or the 3q16 production numbers from its operating assets. With
those in the bag I can make a more proactive decision, until then I’ll let WDO ride the wave and
see how far it can go (all without worrying...too much).
17

,
Riverside Resources (RRI.v): A heads-up. I heard post-bell on Friday that we can expect
news out tomorrow Monday. I don’t know what that news entails because the company
wouldn’t tell me, I do know that from the vibes given off the company is keen about its
contents. We’ll probably have more about RRI in next weekend’s edition.
The Copper Basket
After thirty-six weeks of 2016, The Copper Basket shows a 77.60% 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 1487.81 1.91 213.1%
2 HudBay Min. HBM.to 5.31 235.23 1213.79 5.16 -2.8%
3 Reservoir Min. RMC.v 4.08 48.69 449.41 9.23 126.2%
4 Capstone Min. CS.to 0.44 382.04 259.79 0.68 54.5%
5 NGEx Resources NGQ.to 0.65 205.06 231.72 1.13 73.8%
6 Western Copper WRN.to 0.38 94.19 91.36 0.97 155.3%
7 Trilogy Metals TMQ.to 0.395 104.33 80.33 0.77 94.9%
8 Cordoba Min. CDB.v 0.16 86.86 69.49 0.80 400.0%
9 Copper Mtn CUM.to 0.445 118.8 55.84 0.47 5.6%
10 Atico Mining ATY.v 0.28 97.59 50.75 0.52 85.7%
11 Copper Fox CUU.v 0.125 417.64 50.12 0.12 -4.0%
12 Nevada Copper NCU.to 0.66 80.5 47.50 0.59 -10.6%
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 20.50 0.046 -48.9%
15 Revelo Res. RVL.v 0.055 128.486 10.28 0.08 54.5%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 77.60%
Another minor losing week for the basket The Copper Basket 2016, weekly evolution
100%
average, 0.67% lost with six losers (HBM.to,
CS.to, NGQ.to, NCU.to, ATY.v, RVL.v) propped 80%
up by five winners (IVN.to, CUM.to, TMQ.to, 60%
HCH.ax, WRN.to), with four unchanged stocks
40%
(RMC.v, CUU.v, ARG.to, CDB.v) at the fulcrum
20%
of the see-saw. Best winner was a relatively
modest one, the 5.4% added by Western 0%
(WRN.to). Worst loser and only double figure -20%
percentage move on the board was Atico
(ATY.v down 10.3%).
18
dr3naj ht01 ht71 ht42 ts13 t7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 r3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71 ht42 ts13 t7gua ht41 ts12 ht82 t4peS ht11
source: IKN calcs

,
The copper metals market rallied modestly to midweek , with the futures contract as seen here
playing catch-up to the spot price. The mini-rally petered out however and though the metals
was up for the week, however much I might want copper
to move up it’s still not a strong rebound signal.
Contract volume was higher last week, typical of the time
of year as summer ends and Labor Day is behind us. If we
take into account the very large inventory additions to LME
warehouses, it’s worth repeating last week’s comment
about how well the copper price is holding up under the
pressure and how it’s its own bull signal (although
admittedly a circular argument).
In copper fundies news the world got a chunky, data-laden
report out of Cochilco on Friday (10) on the evolution of
costs in large-scale copper mining operations in the country
(which account for between 80% and 85% of all copper
production in Chile, depending on how you draw your
lines). Chile is the world’s biggest producer and even
though its cost profile for copper is some 23% higher than
a plce like Peru (for example, a datapoint included in the Cochilco report presentation, its
overall cost levels matter on the world scale. This chart gets to the centre of its all:
The line at the top is the annual average selling price of copper. The bars at the bottom are the
average operating cash cost (or C2 cost) per Lb Cu in all large scale copper mining operations
in Chile (covering oxide and sulphide rocks, SX-EW conc and mixed extraction techniques, the
whole lot together). The problem is obvious to the eye and it’s one of gross margins.
Now for the copper warehouse inventory bullets for the week, data as usual from the excellent
and useful Cochilco weekly round-up report (8):
• Overall copper inventory levels in the world’s three systems rose sharply once again,
this week up 58,042 metric tonnes (mt) (+11.7%) to finish Friday at 556,152mt. The
world has seen over 112,000mt added to inventories in just two weeks and all that
(and more in fact) has gone to LME warehouses. Impressive.
• And in the same style as last week Shanghai’s SHFE stocks dropped while the global
total rose, down 8,688mt (-5.7%) to finish the week at 143716mt.
19

,
• Because again in the same style as last week the big move was in the LME system.
Stock uppsed another massive 79,025mt (+29.1%) to close the week at 350,600mt.
The exit of copper from China continues, so it’s rather impressive to see that copper’s
price didn’t sag on all this excess inventory.
• At Comex things were quieter but the stocks there do continue to make their stealth
move. This week they rose 1,104mt (+1.8%) to finish Friday at 61,836mt.
Here’s the Shanghai-only chart, which shows the new trend of drop while LME stocks rise
sharply. Quite possible that part of this story is a arbitrage gain with LME offering better terms
of storage and (for its own happy reasons) trying to capture as much stock as possible.
Shanghai Futures Exchange Warehouse Stocks, 2014-2016
400000
350000
300000
250000
200000
150000
100000
50000
20
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 ht11
Mt Cu
source: Cochilco
Now for notes on a couple of the basket component stocks:
NovaCopper is now Trilogy Metals (TMQ.to): A style over substance event last week as
NovaCopper (ex-NCQ) changed its name and its ticker to Trilogy Metals (TMQ.to) in order (12)
“...to better reflect the diversity of minerals at the Company’s 100%-owned Upper Kobuk
Mineral Projects”. La la lah. Personally I’m going to miss the name NovaCopper because “no va”
in Spanish means “It doesn’t work”.
Ivanhoe Mines (IVN.to): On Friday Reuters reported this (13), starting in this way:
KINSHASA, Sept 9 (Reuters) - Three people were killed in riots on Friday near a
border crossing between Democratic Republic of Congo and Zambia that serves as the
main export route for Congolese copper, Congo's government said.
The whole issue of security and political risk of being exposed to DRC is something that IVN will
always be exposed to and will not go away, whatever the company might do to try and mitigate
perceptions.
In trading IVN continues on its Duracell Bunny run, oblivious to all action around it as larger
money moves in and scoops up shares. The news (see the SAND piece above) that IVN will be
a member of the TSX Big Board composite out Friday will jig the stock along too, no doubt. It’s
the Friedland Factor, though one wonders whether there’s a reversal in store when this new
(and likely dumber) money works out that there isn’t going to be a takeover or purchase of any
of the IVN assets in the next few weeks.
HudBay (HBM) (HBM.to): The potential short I can never seem to get right would now be a
near 20% winner if I’d had the necessary cojones and kept the position on board. But in the
meantime, the scene shows that larger money agrees with my view on HBM (in fact that should
be the other way around, minnows are minnows) as one of the largest insto holders of HBM,
Franklin Templeton (FT) filed on Friday evening (14) that they’d cut their position as at August
31st. Here’s a snippet from the larger PDF with the moneyline:

,
That puts FT at 22.62m shares held and with 9.57% of shares, that under the 10% automatic
reporting threshold and they don’t need to file to the market authorities any longer. Also, note
that as at April 19th 2016 (date of the Management Information Circular) Franklin Templeton
(via its Franklin Resources arm) held 28.793m shares (12.2% of total S/O) so the August sales
were a second course, because FT had already disposed of a million or so beforehand.
The Low Cost Producer Basket
After 36 weeks of 2016, the Producer Basket shows a gain of 115.54% 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 20.79 39.30 118.6%
2 Barrick ABX 7.38 1164.67 20.42 17.53 137.5%
3 Goldcorp GG 11.56 830.22 13.22 15.92 37.7%
4 Franco Nevada FNV 45.75 176.298 12.64 71.68 56.7%
5 Agnico Eagle AEM 26.28 217.67 11.09 50.97 93.9%
6 Ang/Ashanti AU 7.10 405.27 6.55 16.16 127.6%
7 Detour Gold DGC.to 14.41 170.85 5.00 29.24 102.9%
8 Buenaventura BVN 4.28 254.19 3.63 14.30 234.1%
9 Sibanye Gold SBGL 6.09 228.71 3.39 14.84 143.7%
10 New Gold NGD 2.32 509.89 2.40 4.70 102.6%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 115.54%
Nine downers and just one winner on the week so a cheer and applause for Buenaventura
(BVN) and its 2.9% improvement since last weekend, a decent swim against a strong tide for
the larger producers. No need to list the losers, but we will note that the biggest smack down
came from New Gold (NGD down 11.2%) on the back of that unimpressive Rainy River capex
update. Also weak was the early year flyer Sibanye (SBGL down 8.8%), now re-overtaken by
BVN on the market cap league table. Newmont, third in the table at the start of the year behind
GG and ABX, remains top dog for the second week. Not bad.
Over at the tracking tables, the effect of having 1) NGD and 2) the two rather volatile South
African players AU and SBGL and 3) Detour Gold (DGC.to) that revised guidance down this
week on the back of...rainfall (ugh), all those equally weighted to the sector big players above
21

,
them, means the lead between us and the GDX closed by an out-sized 2.72% last week to
stand at 23.27%. Still good of course, nowhere near as good as the 33% lead seen in August.
The Low Cost Producer Basket: Weekly performance
200% and comparative to GDX control
180%
160%
140%
120%
100%
80%
60%
40%
20%
0%
-20%
Detour Gold (DGC.to): One of the tells of a bull market is how it treats its market darlings
when they deliver negative news. Detour Lake (DGC.to) is one such market darling that ticks
the boxes (big size, single mine, in Canada, all-star cast led by industry A-Teamer Michael
Kenyon, paying down debt and upping production, located in Ontario Canada obvious buyout
target) and last Tuesday DGC told the world of a downward revision of guidance for the year
(15) due to rainfall that is stopping the planned mining sequence from accessing higher grading
material at the right time. It’s one of those excuses of the “dog ate my homework” variety,
more irritating still is how it’s also the second time this year that DGC has trimmed its original
guidance of 540,000 oz to 590,000 oz for 2016. In July the upper end of that scale was
dropped to 575,000 oz, now there’s still a chance that they creep over the lower end original
guidance, but it’s looking unlikely.
• To its credit Dundee dropped its DGC target by $3, but only from CAD$46 to CAD$43.
• TD Sec called the news negative but kept its price target at CAD$41.
• Scotia said it didn’t matter much and kept its target at CAD$39.
We could continue. Canada loves Detour Gold, whether that’s good or bad is another story.
Regional politics
Colombia: A change of date in Ibagué
Further to last week’s note on the coincidence of dates for the national peace deal referendum
and the separate city of Ibagué and its local referendum on whether to allow open pit mining in
its region, both programmed for October 2nd, this Friday October 9th (16) the authorities in
Ibagué decided to move the date of the local vote on mining to October 30th in order not to
clash with the big national vote. By the way, you may be interested in reading the exact
wording of the Ibagué referendum question, which is this in Spanish:
“¿Está usted de acuerdo, sí o no, con que en el municipio de Ibagué se ejecuten
proyectos y actividades mineras que impliquen contaminación del suelo, pérdida o
contaminación de las aguas o afectación de la vocación agropecuaria y turística del
municipio?”
And this translated into English:
“Do you agree, yes or no, that in the municipality of Ibagué mining activities and
projects are executed that imply the contamination of the earth, loss or contamination
of water or that affect the vocations of farming and tourism of the municipality”
And no, I’m not making it up, it really is that biased. And employee of La Colosa would have to
vote “No” on that one.
22
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 ht11
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
0% basket
gdx control -5%
-10%
-15%
-20%
-25%
-30%
-35% source: ikn calcs, NYSE/Nasdaq data
-40%
source: Google, IKN calcs

,
Argentina: Agua Rica banned
As reported on the blog last week (17) the district of Andalgalá in the province of Catamarca
has banned all open pit mining operations in its territory, in a unanimous and legally applicable
vote that come on the back of a Supreme Court ruling that was then enacted into effect by a
local court in Catamarca which suspended the mine licence due to its potential contamination
effects on the local water supply (among other complaints, but that was the big one). This
municipal decision is not a small deal, it’s a big deal. Catamarca bills itself as one of the
“friendly” Argentine provinces for mining, Agua Rica is the biggest project in side its borders
and as noted on the blog Friday, there’s a U$1.1Bn asset value in play here. However the
nearby town of Andalgalá has been dead set against the project for many years with formal
opposition beginning around 2010. Last week’s decision is a massive result for the anti-mining
groups in Argentina and a black eye for the Macri government’s new mining policy and
marketing.
Argentina Mining Conference in Salta
To make matters worse, the Agua Rica decision came during Argentina’s biggest mining
industry conference of the year, Argentina Mining 2016 in the northern province of Salta (it’s
11th edition. Much as made of the new investment in the sector, with the official government
line of “U$1Bn already arrived, U$5Bn by 2018” being used by the State media channel Telam
(18) and therefore picked up by all friendly media sources (i.e. most of them in Argentina, just
a couple of examples here (19) (20)). The U$5Bn number is the first step along the way to
completing the “Desafio CAEM” (the Argentine Chamber of Mining Challenge) of attracting at
least U$20Bn in mining investments by the year 2021.
Peru: PPK visits China
Peru’s new President Pedro Pablo Kuczynski (PPK) and a team of a few of his ministers plus 18
high-ranking local businesspeople are in China on an official visit next week (agenda Sept 13th
to 16th). When asked the purpose, PPK was quoted by all media as saying (translated ) (21):
“What are we going to do in China? We’re going to bring investment in port
infrastructure, railways, industrialization of our minerals and we’re going to open
markets for our agricultural products and for tourism.”
So now you know. On his way back, he’s also stopping off to attend the UN General Assembly
next weekend and also meeting with John Kerry. You probably won’t notice.
Market Watching
To confirm on Eldorado Gold (EGO) (ELD.to)
Last week at this point I didn’t have much for ‘Market Watching’ but did write in a short
paragraph summing up recent developments and thoughts in a few mining subjects. To be
honest I’m not that proud of the piece, it was done after the fact (and after finishing a Rye
Patch note that took too long) and was rather too flippant and bloggish for this publication. But
there was one element of the notelet that got quite a bit of response, namely “...Eldorado
Gold’s CEO is about “to be resigned”...” so with feedback in mind I’d like to confirm this week
that yes, your author has reliable information that ELD is currently looking for a new CEO to
replace Paul Wright, who is on his way out, his tenure mainly compromised by his handling of
Greece. As for a timeline no real idea, it’s a case of finding and bagging the right candidate in
order for one of those “smooth transitions”.
It’s up to you to decide if that makes ELD a buy, sell or hold. Personally neutral and likely to
stay that way (see today’s intro for more).
23

,
Home thinks zinc
A good op-ed on zinc supply in China by Andy Home of Reuters this week that’s well worth the
time of anyone interested in the sector, so pick up the link from (22) below. There are several
subjects broached (including a little on copper too) but the main point is that due to the nature
of zinc mining in China, nobody really knows how much is being produced there. You should
read it all, but the last paragraph makes the most salient point:
Which brings us back to the core question of whether Chinese zinc mining is rising,
falling or broadly flat.
There are, as Westgate points out, some very differing views out there.
Looking at those for the first half of this year, he notes that ILZSG's zinc mine estimate
is 196,000 tonnes higher than that of Chinese state research house Antaike, 465,000
tonnes higher than that of the World Bureau of Metal Statistics and 711,000 tonnes
higher than that of independent research house CRU.
Given global mined zinc production is around 13.5 million tonnes, these differences go
way beyond being "just a near miss or rounding error".
The fact is that bulls and bears in the zinc market can pick and choose which data
series they want to use to argue their case.
If there is a "truth" in this hall of statistical mirrors, it can only be the price.
In the context of zinc mine concentrates, that means spot treatment charges.
These, everyone is agreed, have been falling not rising.
That smelter charges are dropping mean that smelters in China, the place where the
supply/demand rubber hits the road, are keen on attracting their share of (probably) dwindling
supply.
Red Eagle (RD.v) to list in Lima
Word reaches these shores that Red Eagle (RD.v), the junior about to start production at the
50k/year San Ramon mine in Colombia, has applied to the Bolsa de Valores de Lima (BVL, the
Peru stock market) for a listing there on the back of the successful placement it ran earlier this
year for Peru-only money and the listing is set to be approved this coming week. We can expect
the stock to go live on the BVL at the end of this month or perhaps the first week in October.
Episode five of “What I’d buy now”
The fourth edition of this segment, it’s becoming a regular thing and even though I still don’t
know whether it’s something for the long-term it’s become popular among at least one section
of readers (and it keeps me brutally honest about my lack of aptitude for near-term trading.
Here’s the quick repeat section for those of you just joining us. This section is a way to convey
“what I like now” in my own portfolio considering the state of the market, the company
particulars and their shares prices right here and now. It’s more of a thought experiment than a
map of how I’m trading the market (because I tend not to day-trade very much) and the rules
of the game are these:
1) You give me $50,000. We assume flat forex during the time period.
2) You tell me I have to invest every dollar in currently open IKN Weekly stock picks.
3) I’m allowed to allot different dollar amounts to different stock, from zero on up.
4) I base my decisions, choices and dollar amounts on what I think today about the
company, the stock price and the current underlying micro and macro fundamentals.
5) You know that I like all the stocks because you know I already own them, we both
understand these answers are about how I feel today about the stocks today for the
next four weeks, no more or less.
In the first episode (IKN369 to IKN372) I managed to change my $50k into $58,003. In the
second episode (IKN372 to IKN375) I managed to change my $50k into $53,274. In the third
episode (IKN375 to IKN379) I managed to change my $50k into $49,853. We then changed the
picks and started again in IKN379 so four weeks on it’s time to see how things turned out:
24

,
Mark spends $50,000 in IKN379 Mark's $50k in IKN383
company ticker current PPS amount I'd invest today PPS today position value
Wesdome WDO.to C$1.57 10000 C$2.81 17898
Tinka Res TK.v C$0.20 7000 C$0.20 7000
Starcore Intl SAM.to C$0.76 6000 C$0.71 5605
Riverside Res RRI.v C$0.425 5000 C$0.385 4529
Atico Mining ATY.v C$0.52 5000 C$0.52 5000
Continental Gold CNL.to C$3.69 5000 C$3.90 5285
B2Gold BTO.to C$4.49 5000 C$3.51 3909
Sandstorm Gold SAND U$6.53 3000 U$6.09 2798
Regulus Res REG.v C$1.68 1000 C$1.50 893
Lara Expl. LRA.v C$1.38 1000 C$1.43 1036
Miranda Gold MAD.v C$0.13 1000 C$0.145 1115
Focus Ventures FCV.v C$0.10 1000 C$0.085 850
Total 50000 NEW TOTAL--> $55,918
The $50k is now $55,918 and if if I do say so myself, considering the tough market conditions
of the past month, that’s a pretty decent result. Min points:
• Wesdome saved me. Getting that big pop in the biggest weighted stock on the IKN379
list covered a multitude of sins and made the result better than I deserved.
• B2Gold has really sucked in this period. Fortunately I’d lowered its rating so the hit in
cash terms wasn’t as bad as it might have been.
• Apart from those two and in general arm-waving terms, I can live with the rest.
Summing up so far in table form:
period final total profit/loss to $50k
IKN369 to IKN372 $58,003 $8,003
IKN372 to IKN375 $53,274 $3,274
IKN375 to IKN379 $49,853 $-147
IKN379 to IKN383 $55,918 $5,918
And that’s the end of period four, but the past is unchanging and what matters now is the
future so here’s how I’m going to take the normal and virtual $50k and use it on the current
open positions on the Stock to Follow list, period today to when IKN387 comes out:
Mark spends $50,000 in IKN383
company ticker current PPS amount I'd invest today
B2Gold BTO.to C$3.51 9000
Riverside Res RRI.v C$0.385 5000
Starcore Intl SAM.to C$0.71 5000
Atico Mining ATY.v C$0.52 5000
Rye Patch Gold RPM.v C$0.34 5000
Continental Gold CNL.to C$3.90 4000
Sandstorm Gold SAND U$6.09 4000
Tinka Res TK.v C$0.20 4000
Wesdome WDO.to C$2.81 3000
Regulus Res REG.v C$1.50 2000
Miranda Gold MAD.v C$0.145 2000
Lara Expl. LRA.v C$1.43 1000
Focus Ventures FCV.v C$0.085 1000
Total 50000
The main changes are:
• B2Gold looks tempting at this level again, I’ve moved it up to the highest weighting.
• I got lucky with Wesdome, it may still have a move left in it but I’m dropping it down
25

,
the weighting all the same, its big blast has probably happened.
• Riverside Resources is lagging and worth much more than its sub-40c level, that one is
boosted too.
• Tinka drops in the weighting, it just continues to tread water.
• Rye Patch is the only change, the only arrival and no positions left in the last four
weeks.
We’ll be back in IKN387 to see how we got on.
Conclusion
IKN383 is done, we end with bullet points:
• It’s always about risk versus reward. In Rye Patch Gold (RPM.v) last week I identified a
risky proposition that could offer excellent returns in a reasonably short timeframe, the
type of play that fits into a portfolio that needs a little more risk attached. But in New
Gold (NGD) this week it’s too much pain, too little gain. I’m pretty sure Rainy River is
going to be a decent mine and gold will come out of it at some point next year, but the
debt burden makes NGD difficult to buy. I bet there are several majors that feel the
same way, too.
• Wesdome (WDO.to) continues its rocket run, so even if my target is busted next week
consider me a firm holder until the next news cycle from the company. Then we’ll see.
• This time last week I wrote in the closing comments that “Copper looks happier and
has that “I’m bottoming out again” about it”. The bottoming out process continued this
week and perhaps I just need to take a breath and apply some patience, prices don’t
move to order in this game. The important part today isn’t that copper’s going up, it’s
that it’s managing to hold firm in the face of this supply tsunami.
• Call it “Neutral”, call it “Avoid”, whatever you prefer. Not only is it a valid position in the
market, it should be you most common reply when asked about stock XYZ.
• The person I watched playing guitar in the school strings band last week, also doing
her history homework and giving me arcane and detailed information about the Virreys
and ex-Presidents of Peru, wasn’t even born on September 11th 2001. In fact her
parents hadn’t even met at that time. It’s bizarre.
I thank you in advance for any feedback. Our Top Pick stocks are Regulus (REG.v), B2Gold
(BTG) (BTO.to) and Starcore Intl (SAM.to). Flash updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen. Namaste.
Mark
26

,
Footnotes, appendices, references, disclaimer
(1)https://lawrieongold.com/2016/09/10/september-fed-rate-rise-spectre-knocks-gold-and-stocks-again/
(2) http://incakolanews.blogspot.pe/2016/09/kerrisdale-shorts-first-majestic-ag-frto.html
(3) http://incakolanews.blogspot.pe/2016/09/the-us-jerbs-report-shows-why.html
(4) http://www.prnewswire.com/news-releases/new-gold-provides-rainy-river-project-development-update-
592562301.html
(5) http://incakolanews.blogspot.pe/2016/09/new-gold-ngd-white-oliphant.html
(6) http://incakolanews.blogspot.pe/2016/09/new-gold-ngd-white-oliphant-update.html
(7) http://incakolanews.blogspot.pe/2016/09/yamana-gold-yrito-auy-facing-u11bn.html
(8) http://www.yamana.com/English/investors/news/news-details/2015/Yamana-Announces-Metal-Purchase-
Agreements-With-Sandstorm-and-Provides-Update-on-Brio-Gold-Monetization-Initiative/default.aspx
(9) http://finance.yahoo.com/news/tinka-signs-access-agreements-communities-124500523.html
(10) http://www.cochilco.cl/Archivos/destacados/20160909112702_062016%20Seguimiento%20Costos.pdf
(11) http://www.cochilco.cl/Archivos/destacados/20160909113246_MERC%202016%2009%2009.pdf
(12) https://trilogymetals.com/news/2016/novacopper-is-now-trilogy-metals
(13) http://news.trust.org/item/20160909143039-no2k3/
(14) http://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00001691
(15) http://finance.yahoo.com/news/detour-gold-revises-2016-guidance-221658987.html
(16) http://www.newsjs.com/url.php?p=http://www.elespectador.com/noticias/nacional/consulta-popular-sobre-mineria-
ibague-se-llevara-cabo-e-articulo-653968
(17) http://incakolanews.blogspot.pe/2016/09/yamana-gold-yrito-auy-facing-u11bn.html
(18) http://www.telam.com.ar/notas/201609/162260-mineria-inversiones.html
(19) http://www.elliberal.com.ar/noticia/286912/preven-inversiones-mineras-us5-mil-m
(20) http://www.diariodecuyo.com.ar/home/new_noticia.php?noticia_id=729713
(21)http://diariocorreo.pe/politica/ppk-viaja-a-china-y-estados-unidos-en-busca-de-inversiones-para-el-peru-697295/
(22) http://www.reuters.com/article/us-china-zinc-ahome-idUSKCN11E2IK
27

,
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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