IKN #388Premium

,
The IKN Weekly
Week 388, October 16th 2016
Contents
This Week: Trade heads up, In today’s issue, Regarding GLD inventory growth, Regarding
Loonie/Greenback Forex, Close to the end of my buying (for the moment).
Fundamental Analysis: Excellon Resources (EXN.to) NOBS report, part two.
Stocks to Follow: Overview, Rye Patch Gold (RPM.v), Excellon Resources (EXN.to), Riverside
Resources (RRI.v), Starcore Intl (SAM.to), Tinka Resources (TK.v), Cordoba Minerals (CDB.v),
B2Gold (BTG) (BTO.to), Wesdome Gold (WDO.to), Atico Mining (ATY.v), Continental Gold
(CNL.to), Regulus Resources (REG.v), Focus Ventures (FCV.v).
Copper Basket: Overview, Ivanhoe Mines (IVN.to), Capstone Mining (CS.to), Amerigo
Resources (ARG.to), Trilogy Metals (TMQ.to).
Low Cost Producer Basket: Overview.
Regional Politics: Las Bambas: Trucks are the problem, El Salvador: ICSID/CIADI rules
against OceanaGold (OGC.to), Ecuador: Concession envelopes begin to be opened, More
Ecuador: Fruta Del Norte gets its EIA, Colombia: The Ibagué referendum is suspended, Brazil:
Death of an environment secretary, Argentina: Meilán pushes for a Federal policy on mining.
Market Watching: Wesdome (WDO.to) 3q16 production numbers, B2Gold (BTG) (BTO.to)
3q16 production numbers.
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
I’m looking to add to my position in Rye Patch Gold (RPM.v) this week and take advantage of
what is likely to be the low point in its share price cycle thanks to the 233m RPM shares about
to come out of lock-up. See ‘Stocks to Follow’ for more.
In today’s issue
• GLD signals gold has either found a bottom or is ready to move higher. Probably both.
See today’s intro for more.
• We feature part two of the Excellon Resources (EXN.to) analysis, with future guesses
galore and target prices set. That’s today’s main event.
• Both Wesdome (WDO.to) and B2Gold (BTO.to) (BTG) filed strong 3q16 production
reports last week, they both get examined in ‘Market Watching’ below.
• Copper had a weak week and on that subject, check out the potential ramifications
from the incident on the road outside of the Las Bambas copper mine on Friday, there’s
a Pandora’s Box of fun and frolics waiting to be opened there and it’s not just an issue
that could affect Peru. Regional Politics for that one.
1

,
Regarding GLD inventory growth
“The Times They Are a-Changin'”
Bob Dylan, 1964
I’m really not sure if I’m reading too much into this, but there’s enough hard data evidence and
previous tendency here to merit a separate opening section Consider the following:
1) Here at The IKN Weekly we use the GLD inventory data as a proxy for gold “popularity”
inside the classic western financial system.
2) We do so because it’s been shown to work. It’s a decent microcosm of the whole sector
and though it doesn’t track every single up/down move with perfect fidelity, it gets the
longer trends right. And the transparent, published dataset makes it easy too.
3) So the way in which GLD inventories have suddenly moved up in spite of the nominal
price of gold dropping and/or flatlining is interesting. Here’s a chart, notes underneath.
GLD gold holdings, Sept & Oct 2016 (metric tonnes)
1000
990
980
970
960
950
940
930
920
910
900
2
61/1/9 61/6/9 61/8/9 61/21/9 61/41/9 61/61/9 61/02/9 61/22/9 61/62/9 61/82/9 61/03/9 61/4/01 61/6/01 61/01/01 61/21/01 61.01.41
mt
source: SPDR GLD data
• GLD gold inventory holdings closed last week at 965.43 metric
tonnes (mt), the highest total since August 11th.
• GLD holdings are over 33mt up in the last month. This despite
the GLD price dropping by 4.8% in the same period.
• GLD holdings are up 17.8mt since October 6th. This despite GLD
flatlining in the same period (in fact, down by 30c).
If you run a bit of math 33 metric tonnes of gold at Friday’s closing price is worth U$1.33Bn,
and that’s quite a lot of money if you ask me. That holds true for the 17.8 tonnes and U$715m
in the space of just the last six trading days, as well. That’s interesting and it feeds my own bias
confirmation that gold looks good to go up from here. We’ve also seen in the last few days
Goldman Sachs (of all unlikely allies) call gold a good buying opportunity at under U$1,250/oz
and that very line hold well, with two spikes under in the last two weeks quickly bought up.
I think this has something to do with the discrepancy between gold and TIPS (inverse) I
featured in last week’s opening segment. There’s a market opportunity and big money doesn’t
normally leave vacuums at the macro level for long. What it certainly doesn’t have much to do
with is the prices of miners or metals over the last week, with both GDX and GDXJ dropping by
one solitary penny each (odd coincidence, but nothing else) and GLD itself down 0.3% since
this time last week. There hasn’t been much of a bounce (yet) but we have hit a consolidation
level. If the signal from GLD vaults is anything to go by, we’re in for a gold rebound from here.
Regarding Loonie/Greenback Forex
"There's too much confusion, I can't get no relief”
Bob Dylan, All Along The Watchtower, 1967
This publication has maintained the use of a “One Canadian Dollar Equals 80 US Cents” forex
assumption for an extended period of time in its fundamentals analyses etc, but as this chart
shows the trend in 2016 is beginning to run away from that set number.

,
I was okay in 2015 sticking with CAD1 = USD0.8, even when the late year slump took it under
0.7, and when gold perked up early this year that call got its due justification. But the move
since then from 0.8 to this weekend’s 0.761 looks more chronic in nature and is more difficult
for me to ignore. So after chewing it over the decision today is to wait and see a while longer,
but I will say that if the forex pair goes under 0.75 this time I’ll adjust any future analysis to
that level.
Close to the end of my buying (for the moment)
“All the money you make will
never buy back your soul”
Bob Dylan, Masters of War,1963
I’m not a bottomless pit of money. In recent months I’ve been making the most of previously
raised cash and positioning it into mining stocks, as well as trading in and out of a couple of
things for profit and entertainment, and as things stand today I have a couple of purchases
either pending (additions to EXN.to, addition to RPM.v, potential addition to RRI.v) but there
will come a time soon when the cash position in accounts gets too tight to be able to commit
much more to new buys without making sales first.
And that’s exactly how things should be, The IKN Weekly has always been about keeping it real
and ultimately the criteria of the ‘Stocks to Follow ‘ list is the imperfect and least-worst option of
“What I am doing with my own money”. Another aspect of keeping it real is that once the
current batch of buys are done, I’m going to have to make qualitative decisions about any given
current open position, compared with a potential trade. This is also a function of keeping the
list to 15 maximum at any given time and together bring their own portfolio discipline; this is
not a place that recommends stock after stock, never calls sell on anything and ends up with a
list of 74 different stocks (from which the best performers are neatly cherry-picked for public
advertisement purposes).
Fundamental Analysis of Mining Stocks
Today we feature part two of the coverage-opening analysis on Excellon Resources (EXN.to).
NOBS report dated October 16th, 2016
Excellon Resources Inc (EXN.to)
3

,
Company Overview
Excellon Resources Inc. (Canada: EXN.to, USA OTC: EXLLF, Frankfurt E4X1.f) is a junior
mining company operating in Mexico. Its flagship is the operating Platosa silver mine and
surrounding property in Durango State, Mexico. Current share structure is as follows and the
only difference from last week is the shares price and therefore the market cap:
Shares out: 74.82m
Options: 1.4m
Warrants: 12.43m
Deferred and restricted share units: 2.93m
Fully diluted shares: 91.58m
Shares due coverted from 4q15 debentures: 11.2m
Implied fully diluted count: 102.78m
Current share price: C$1.81
Market Cap: C$135.42m
Approx working cap per S/O: 16c
All prices are in United States Dollars unless stated. Forex U$0.80=CAD$1
Part Two Of Two
Last week in part one we set the scene and did the legwork on EXN, covering the company
structure, its financials to date and enough information on the La Platosa mine to put it into
context. This week we get to the business end of the trade, look to the future and set out what
we can expect from the company as it ramps up production, from which I get to set a price
target. This is the fun part and contains the reasons why, unlike so many other silver miner
plays, I find its current valuation a compelling purchase. Along the way today I reference the
current corporate presentation (1) and that’s a document that’s worth reading, it does a fair job
of explaining the main points of interest in the company and is worth your while.
There are two main jobs to do today
1) Explain in general terms how EXN plans to double (or thereabouts) production in the
next 12 months
2) Run the numbers, crunch the data and come up with a price target on the stock.
Of the two, the second part is the most important and interesting bit. That’s because I’m a
numbernerd. So I’m going to try and keep the first production upgrade section as concise as
possible but if you feel like I’m skipping over details and things don’t worry, this is going to be a
long-term investment and not a shorter-term tradeflip, there’s going to be plenty of time over the
course of the months to follow developments closely and get granular on what EXN is doing to
improve La Platosa.
What needs to be done first is explain how EXN plans to double its metal production by this time
To begin I’m going to start with the same slide featured in last week’s part one, the schematic of
the resource at La Platosa. You’ll find it on the next page and it’s a great visual because it
combines most of the key factors as well as the development plans in one place, as long as you
know what you’re looking at. You may recall from part one last week that EXN isn’t running
much throughput at its mill, with average processed of around 160 tonnes per day (tpd) in the
last few quarters despite having mill with a capacity of 350tpd as stands (and it could be easily
upgraded to 650tpd). The problem isn’t at the mill, it’s at the mine because the La Platosa
resource may be very high grading...
4

,
...but it has a big problem; it’s mostly underwater. This diagram alludes to the problem...
...and also to the solution (NB: If you can’t see it very well, please go get your copy of the latest
corporate presentation from the link (1) below and see it there in better resolution). The local
water table is at the level of the mineral resource and due to that, up to this year EXN has been
using a combination of pumping and then grouting (to stop problems from water pressure) in
order to get at the mineralization. This is how they’ve mined up to now and as the process is
slow and the grouting takes away valuable underground man hours, it has been an inefficient
way of going about mining. Along with the fact that they only have one access to the
mineralized mantos, there is the problem in a nutshell; EXN can’t get the tonnage out of the
ground quickly enough to feed its mill at the nameplate capacity, for quarters on end it’s only
managed around 160tpd of extraction. Not only that, but as the corporate presentation notes on
a different page its whole process is reactive, it’s always behind the curve and trying to keep up
with the problems being posed by mother nature. It was high time they got proactive.
This inset from the above diagram offers a second clue to
what’s going on today at EXN. Here you see the rate of
water pumping from the mine in gallons per second. Up to
2015 it climbed steadily as the mining reached deeper
levels in order to exposure the mineral, but if you look to
the right you see the line shoot higher in the “2016-2019”
period and is set to double. That’s because EXN has
finally got round to investing around $6m (half paid for, half
to go) in new and far more powerful pumping equipment
as well as getting in world-leading expert third parties on
water pumping matters to find a solution to their problem.
Which brings us to today. We’ve just left 3q16 and from information gathered we shouldn’t
expect anything different from the production and financials to be posted this quarter. In fact
they may even disappoint the market and offer up a buying opportunity to us at cheaper prices,
another reason I stated last week that I’m not in a hurry to position fully in this stock. However,
5

,
the first stages of the new pumping system are now being installed and it’s expected to get
switched on next month in November. In other words, for the first time EXN is going to get
proactive about the mining conditions at La Platosa and starting 4q16, then increasingly in 1q17
and the quarters afterwards, will be able to a) spend more underground man hours in mining
and not remediation b) open up new faces to mantos and therefore c) mine and extract at a rate
to fully supply its mill.
In short, production is about to shoot up because of a new, $6m water pumping system.
But that’s not all, because a second benefit becomes apparent when you check out the insert in
the top-right of that main diagram above. As the water table in the mine drops, the
mineralization that will get exposed is of a higher grade (Ag, Zn, Pb) and sometimes a LOT
higher grade. Here is the second reason we can expect production to move higher at La
Platosa, we’re going to see more rock at better metal contents being brought to the surface in
2017 and beyond (the current mine plan runs to 2020).
That’s the general story, but as I’m sure you can imagine it’s not quite as easy or
straightforward as that. And me being my normal cynical and doubting self have quizzed CEO
Cahill and his team quite closely on what they plan to do, because these underground water
engineering things sound easy right up to the moment you try to do them. Today I’m going to
edit myself and say that I’ve come away from the technical exchanges (when engineers are kind
enough to talk to me in words of one or two syllables) confident that they can deliver on the plan
The bottom line is things might happen sooner, they might happen later but they’re very
unlikely to fail in this project and once complete there’s an EXN in much better production shape
at the end of next year, 2017. And yes it’s likely to be technically complex but the kernel of the
whole plan is fairly straightforward:
• Pump water and lower the water table
• Get access to more mineral at higher grades
• Improve mill throughput and head grades
• Collect underpants
• ???
• Profit
By lowering the water table, EXN at La Platosa gets a double whammy benefit of more rock and
at higher grades (than the mine’s already very high grading material). With its mill ready right
now to accept double the amount of rock it’s currently processing, the upside becomes close to
automatic and costs on a per-ounce basis drops sharply.
A six quarter production forecast for EXN
So that’s the theory on how EXN is going to increase production, it’s now time to try and model
it into something numerically coherent. Once that’s done, we can play the financials game and
put together a target price. There are, as always, a host of ways to tackle this but after playing
with several models and trying to be as real world as possible, I’ve gone for this method:
We assume that come 4q17 the EXN production upgrades are complete and the mine is
running at its new rate. This may happen sooner of course, but one of the key criteria all the
way through my estimates today is conservative (you’ll see it used all over the place). Therefore
the model is built on the next six quarters’ worth of production and earnings (3q16 to 4q17).
One of the necessary assumptions is to model incremental growth per quarter. It’s probably not
going to be like that, as between now and 4q17 it’s perfectly possible that one quarter sees no
growth at all, then later another one gets 2X the assumed growth as the plan plays catch-up.
This is an artificial but necessary part of the production model, you’ll have to forgive me for not
being able to predict every aspect of the future with accuracy. However be clear here, this
company is an “Eyes On The Prize” proposition and it doesn’t matter a great deal if growth
happens in fits and starts, the end result is what matters.
We then take the type of production rate expected come 4q17 and use it to work on an
annualized financial model based on cash flow and earnings potential.
6

,
Less talk, more numbers. We start by modelling head grades for the three main metals, silver
zinc and lead, for the next six quarters. These charts show the recent head grade averages per
quarter and where we can reasonably expect them to go, notes below
EXN: Average Ag head grade (g/t), per qtr
684 700 700 700
700 614 594 632 600
600 550 533 547 536 550 475 483 500
500
406
400
300
200
100
0
• I’m modelling lead (Pb) to flatline at 5% after considering where EXN will mine
• However zinc (Zn) should see grades move up, I’m guesstimating 8%
• Then the big one, silver (Ag) is modelled on moving back to 700 g/t average head
grade.
Be clear that both zinc and especially silver grades could turn out to be a lot more. However I’m
going to cap them as seen above after considering potential mine dilution and most importantly,
keeping things to the conservative side.
Now for average recoveries and as this chart
shows, I’m not making this one too difficult. There
will of course be some fluctuation but for modelling
purposes I’m going for average 90% recoveries for
silver and 80% for both lead and zinc.
Finally, the chart bottom right models the
improvement in average mill throughput and
processing. This quarter (3q16) is expected to
match the recent 2q16 (we’ll find out about that
soon enough) and then with the next uptick in
water pumping due to start in November, we
should start to see resource access and therefore
mining rates improve starting 4q16. As noted above, the type of gradual upward curve over five
quarters here is unlikely to be the eventual
reality but you have to start somewhere,
though the result that matters is in the 4q17
column, in which we model EXN running at
320tpd, the bottom of its target range for end
2017 of between 320tpd and 350tpd (again,
the conservative choice).
With those three put together and then
making in-line assumptions on the silver vs.
Silver equivalent ratios we’ve seen before
from EXN (the Zn and Pb converted into
AgEq production), this is the main chart of
this section (which is why it’s the biggest):
7
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3 tse71q4
EXN: Zn and Pb avg head grades (%), per qtr
11
10
9 8
7
6
5
4
3
2
1
0
source: company filings, IKN ests
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3 tse71q4
%
Pb %
Zn %
source: company filings, IKN ests
EXN: Average metals recoveries/qtr
100
95
90
85
80
75
70
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3 tse71q4
%
Ag % Pb % Zn %
source: EXN data, IKN ests
EXN: Tonnes per day thruput average, per qtr
400
350
300
250
200
150
100
50
0
31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3 tse71q4
tpd
source: company filings, IKN ests

,
EXN: Silver and Silver Equivalent production per quarter
1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
8
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4 tse71q1 tse71q2 tse71q3 tse71q4
Ozt Ag/AgEq
Other AqEq
Ag Ozt
source: EXN filings
Again, if we get that smooth quarter-over-quarter production growth then all well and good, what
really matter is the end result and that’s the 4q17 column in which we forecast production of
589,891 oz pure silver, then another 333,832 oz of silver equivalent from the lead and zinc, for a
total quarterly output of 923,723 oz AgEq, which extrapolates as a 3.69m oz AgEq per year
production rate.
At this point you may notice that in its literature, EXN is aiming for a fully functioning run rate of
4m oz AgEq per year once all the improvements and upgrades are done and working. What I’m
proposing above is a fully functioning “new EXN” that produces at 3.69m oz AgEq/year,
substantially less than the corporate target. After all, 300,000oz silver isn’t chickenfeed for a
company this size, it’s over U$5m at today’s spot price. Therefore the question, “Why such a big
difference?”
ANSWER: BECAUSE I AM BEING CONSERVATIVE.
I wasn’t joking. As usual if I wanted to I could plug in the optimum numbers and datasets all the
way through this anal ysis and blow your eyes out if I wanted to, it’s really easy and if you want
that kind of thing, check out Casey Research of Future Money Trends or whatever other band of
hoodwinking scamsters you prefer. There are many ways in which I could get the production
rate up to way above 4m oz AgEq per year, just assume a 350tpd throughput rate and it breaks
above 4m, then add just 50g/t extra to the silver head grade and you’re already flying above
4.2m oz AgEq per year. A piece of cake.
No folks, as usual first and foremost I want to convince myself of this company’s potential and
that means throwing in assumptions that things aren’t as perfect and glossy as they are in a
corporate presentation. I want to know that even if EXN doesn’t reach its high goals on this
upgrade it’s going to be a great stock to own. Therefore by conceding that production rates and
head grades will improve but not reaching for the optimum levels, assuming problems and
glitches, understanding that mining isn’t an easy thing to do and reaching a compromise, I get to
see whether the financial numbers still stand up to scrutiny and whether this stock is a bargain
or not. Spoiler alert: It is a bargain. Read on.
Valuing Excellon Resources (EXN.to)
It’s showtime, all of last week’s NOBS report that set the scene and the above today leads to
this, sticking a share price target on the stock. As noted above the way forward here is a cash
flow and earnings model, we need to make a whole bunch of assumptions and as you’re about
to see, the concept of being not just conservative but very conservative in this model continues
through the financials as well. Here come a list of assumptions:
EXN is valued on the annualization of its 4q17 quarter, the one that should show the world what
it’s capable of in the years ahead. Again, this fully functional quarter with the benefits from the
upgrade work may come sooner, or it may not.

,
Therefore we assume the above stated parameters for production (320tpd, 8.0% Zn on 80%
recovery, 5.0% Pb on 80% recovery, 700 g/t Ag on 90% recovery, etc) and the resulting
production.
We then assume four different price decks for the metals, which are as follows:
• Silver U$17/oz, with zinc at U$1.00/lb and lead at U$0.80/lb. That’s our baseline set
• Silver U$18/oz, with zinc at U$1.00/lb and lead at U$0.80/lb. Even though silver’s
currently a bit lower than that, this is the one that represents today’s price levels and it’s
also the default price deck for eventual valuation purposes
• Silver U$20/oz, with zinc at U$1.00/lb and lead at U$0.90/lb. Here’s the optimistic price
deck, with the psychologically important $20 level for silver and note lead creeping up.
• Silver U$22/oz, with zinc at U$1.10/lb and lead at U$1.00/lb. This is our blue sky price
deck (you may think U$25/oz is possible, I like to walk before running).
With those in position, we can work out a gross revenues number for our model year. Then we
subtract 6.25% for marketing costs (a guesstimate based on previous deduction levels). With
that done we’ve reached the end of stage one of our valuation calculation and can put a table
together that looks like this:
EXN: Projected revenues by metal type (U$m)
item U$17/oz Ag U$18/oz Ag U$20/oz Ag U$22/oz Ag
zinc (Mlb) 16.2 16.2 16.2 16.2
U$/lb 1.00 1.00 1.00 1.10
Zn revs (U$m) 16.24 16.24 16.24 17.87
lead (Mlb) 10.2 10.2 10.2 10.2
U$/lb 0.80 0.80 0.90 1.00
Pb revs (U$m) 8.12 8.12 9.14 10.15
silver (Ozt) 2,333,633 2,333,633 2,333,633 2,333,633
U$/oz 17.0 18.0 20.0 22.0
Ag revs (U$m) 39.67 42.01 46.67 51.34
Gross revs (U$m) 64.04 66.37 72.05 79.36
Net sales (U$m) 60.07 62.26 67.59 74.45
Sources: EXN data, IKN calcs and ests
So far so good and as you can see, net sales of over $60m for a company this size, even at a
U$17/oz silver price, looks promising for a company this size. Part two of the analysis adds in a
range of reasonable financial assumptions which again tend to the conservative in order to build
an income statement model and potential corporate profit estimates for our model year.
Assumptions Part Deux:
• The main one, we assume an operating cast cost of U$9/oz silver. In its literature EXN
says it expects to bring down its AISC (all-in) to U$10/oz Ag once the upgrade is done.
Also, it’s worth noting that the operating cash costs in the last two quarters have been in
this vicinity (1q16 total cash cost/oz Ag U$10.38, 2q16 total cash cost/oz Ag U$9.81) so
although this U$9/oz number of mine is a long way South of the AISC at the mine, it’s a
reasonable and even conservative line item assumption.
• Depreciation at U$4.8m/year. AD&D at EXN is low, mainly because it carries its fixed
assets at a low book number (U$26.4m as at 2q16). At present depreciation revolves
around U$0.6m/qtr, my assumption doubles that due to the faster mining rate to come.
• G&A at $3.5m per year. This is one of the strong points of this company, it keeps its
G&A number very low and it’s one of the most efficient operating miners on this score in
9

,
the sector. I’ve allowed a little extra to creep in here, but not much.
• NSR at 1.25%. EXN has this NSR on La Platosa manto production.
• Exploration costs of $1m/year. At the moment it’s spending under $0.2m/qtr, this might
go up a bit. It’s a guesstimate, but it’s going to be a modest number anyway.
• The Mexico 8% royalty on EBIT. This is the one that may get revoked from the law
project just presented to Mexico’s parliament, for the time being we must account for it.
• Corporate tax at 30%. This is me being conservative again, as 30% is indeed the
Mexico tax rate today but the effective rate is likely much lower (e.g. companies can
deduct against the EBIT royalty). I’m just baking in the lowball scenario wherever I can,
it makes all surprises good ones.
• No interest payments. EXN has no debt, its financial charges are minimal.
• A share count of 102.8m. Here we are again being VERY conservative in assumptions.
As noted last week in part one of the analysis, we know that EXN has 74.8m shares out
but as nearly all options and warrants are in the money, plus those 11.2m shares from
the convertible loan struck at 50c, it’s better to assume that the real life share count
here is the fully diluted total plus the eventual converts (which could be made whole in
4q17). It means more dilution to the numbers and a lower target price than I could have
wowed you with, it’s the way I like to play.
• However, there is one concession to the use of the 102.8m f/d share total as our
benchmark for eventual share price valuation and the target: Because the exercising of
the derivatives implies cash flowing to treasury from the strike prices, plus considering
current treasury and the profit-making capacity of EXN before 4q17 comes around, I’m
adding 20c/share of cash (just over CAD$20.6m) to the target price when it’s generated.
With those in place here’s our condensed income statements table, again using the four price
deck options so you get a feel of what higher or lower silver (and other) prices can do:
EXN: Income statement items (U$m)
U$17/oz Ag U$18/oz Ag U$20/oz Ag U$22/oz Ag
Sales (U$m) 60.1 62.3 67.6 74.4
Cash COGS 21.0 21.0 21.0 21.0
Depreciation 4.8 4.8 4.8 4.8
G&A 3.5 3.5 3.5 3.5
NSR 0.8 0.8 0.9 0.9
Op income 30.0 32.2 37.4 44.2
Exploration 1.0 1.0 1.0 1.0
EBIT royalty 2.3 2.5 2.9 3.5
Tax (30%) 8.0 8.6 10.1 11.9
Net income 18.7 20.1 23.5 27.8
Shares (f/d) 102.8 102.8 102.8 102.8
EPS 0.18 0.20 0.23 0.27
Capex 3 3 3 3
FCF 0.26 0.27 0.30 0.35
Sources: EXN data, IKN estimates
This is looking good. Even using a whole range of conservative inputs and at just U$18/oz
silver, EXN generates an annual net profit of around U$0.20/share. Which brings us to our
target price generation table and for this, the final range of assumptions:
• We use the U$18/oz price deck
• We use a 12X price/earnings ratio (P/E) on EXN net profit. That may sound quite rich at
first sight for a small miner but in fact it’s not. Silver miners (for their own sweet
reasons) command richer P/Es (Fortuna (FVI.to) (FSM) typically commands 20X, just
as one example) and I could have gone higher. I wouldn’t call it a massively
conservative option but it’s definitely reasonable.
• We add 20c/share in cash, as per above.
10

,
• Everything up to now has been in US Dollars (as are the EXN financials), but as the
share price is in Canadian Dollars (CAD) we use our standard 0.8/1 conversion.
Here’s how things look:
Sales & earnings at model U$/oz Ag prices Target price & valuation data for EXN based on
$17/oz $18/oz $20/oz $22/oz Model year results
Sales (U$m) 60.1 62.3 67.6 74.4 12-month target $3.13 based on 12x EPS plus
Upside to target 73% 20c/share cash at end FY17
EPS 0.18 0.20 0.23 0.27 Mkt cap (CAD$m) $135 Enterprise value $192
FCF 0.26 0.27 0.30 0.35 P/sales ($17/oz) 2.18 EV/sales ($17/oz) 3.09
P/E ($17/oz) 10.0 EV/EBITDA ($17/oz) 5.5
P/E ($18/oz) 9.3 EV/EBITDA ($18/oz) 5.2
P/E ($20/oz) 7.9 EV/EBITDA ($20/oz) 4.6
Using a 12X P/E and an U$18/oz silver we generate a 12 month price target of CAD$3.13
for Excellon Resources, representing an upside to this weekend’s share price of 73%.
“How do I love thee? Let me count the ways.”
Sonnet 43, Elizabeth Barrett Browning
Discussion
Does a 12 month 73% upside float your boat? That not enough for you? Well folks, I want to
remind you a final time just how many lowball conservative parameters I’ve built into the model:
• Based on 3.6m oz AgEq per year and not EXN’s 4m oz AgEq.
• Based on lower end throughput target of 320tpd, not the upper end 350tpd
• Based on 700 g/t silver head grades when the mantos to come have much resource
grades.
• Based on U$18/oz silver, not a perfectly reasonable bull’s potential choice of U$20, or
Eric Sprott’s $25 or Keith Neumeyer’s $100.
• Operating cash cost of U$9/oz, when EXN aims for far lower.
• Taxing the corporation to the hilt
• Preferring a 0.8/1 forex pair for the Loonie and the Greenback rather than today’s more
advantageous 0.76/1.0.
• And more besides.
How do I improve thee, oh target price? How do I make it blow thine eyes out if I wanted to play
sequin-throwing games with thee, gentle IKN reader? Oh Elizabeth, let me count the ways...
Here’s just one example, the EXN sensitivity to the price of silver. This table shows the chosen
price target of CAD$3.13 and puts it up against targets generated from higher and lower silver
prices (as well as the modest changes in lead and zinc noted above). As you can see, leaving
everything else as per and just getting U$20/oz for silver gives this stock a 100% upside.
EXN silver price sensitivity (102.8m f/d shares)
price deck EPS 12m target target upside
EPS at U$16/oz silver 16.8c $2.72 50%
EPS at U$17/oz silver 18.2c $2.93 62%
EPS at U$18/oz silver 19.5c $3.13 73%
EPS at U$19/oz silver 20.9c $3.33 84%
EPS at U$20/oz silver 22.8c $3.62 100%
EPS at U$21/oz silver 24.2c $3.83 111%
EPS at U$22/oz silver 27.1c $4.26 135%
EPS at U$23/oz silver 28.4c $4.46 147%
EPS at U$24/oz silver 29.8c $4.67 158%
EPS at U$25/oz silver 31.1c $4.87 169%
source: EXN data, IKN calcs and ests
11

,
Or just for one more, if you bump up the mill throughput rate from the projected lower 320tpd to
the projected higher 350tpd, the price target at U$18/oz silver moves to CAD$3.57 (+97%) and
at U$20/oz silver moves to CAD$4.11 (+127%). Just a little tweak like that.
Or for another, just 50g/t extra on the average head grade for silver adds 12c to the 12 month
price target. I could go on.
Conclusion and recommendation
It’s been a long, two part analysis but hopefully it’s been worth it and I’ve convinced you the
same way that I’ve convinced myself about this stock. There are risks of course, there always
are and that’s mining, with the main one (apart from the metals complex prices collapsing on us)
is execution risk of the plan to pump down the water table. These engineering feats look simple
on paper, they’re inevitably trickier than that and if the pumping doesn’t work to plan, EXN
doesn’t get to expose all the rock it expects and we don’t get the type of throughput and grades
hikes built into even my conservative end model.
So bear the risks in mind, but also bear the advantages and opportunities here too. One of the
things I mentioned in passing last week and haven’t expanded upon today in Part Two (up to
these words at least) is that EXN is an under-covered stock in Canada with just one sellside
brokerage, Cormark, offering formal coverage on the name. I recall back how Fortuna Silver, to
name but one, enjoyed its price hikes in the explosive phase when brokerage after brokerage
picked up on the name as its presence expanded. We strange retail creatures who live in
JuniorWorld often assume the rest of the investment community has the same type of depth of
knowledge about all sector stocks as we do; that’s not the case and when a big house opens
coverage, it’s often the first time a potential shareholder has even seen the name of the
company, let alone considered it.
I’ve been looking around for a way to get into the silver space for quite a while and finally, via
EXN, I’ve found a legitimate way of getting exposure. My problem with the silver miners isn’t its
(admittedly somewhat fickle and
volatile) metal, I have no truck or
beef against silver (in fact my
wedding band was made out of the
stuff). My problem has always been
the expensive and sometimes
extremely expensive valuations
placed on the stocks in this sub-
sector, particularly when compared
to what’s on offer in the gold space.
But thanks to the combo of a) a less
well-known company (for the time
being, that will change in 2017), b)
the drop in the price of silver which
has popped a mini-bubble deflated at
least some of the crazy multiples
charged for silver miners and c) the
upcoming growth in EXN which may
have been acknowledged by the market but I strongly doubt that the full ramifications have been
understood yet, I now get my place at the silver table. The IKN Weekly recommends Excellon
Resources (EXN.to) as a buy and places a 12 month price target on the stock of
CAD$3.13, representing a 73% upside to Friday’s closing price and please be clear, if things
fall into place for this stock, its production upgrade goes well or if the price of silver starts
climbing, that price target and this company stock could go a lot, lot higher. Not to mention the
potential for it to be bought out eventually. This is a very cheap silver mining stock and an
excellent opportunity. Own some.
End of Report
12

,
Stocks to Follow
A better week, as although just six of the thirteen stocks open this time last week went up
(BTO.to, SAM.to, SAND, WDO.to, RRI.v, CNL.to), one was unchanged (ATY.v) and six dropped
(REG.v, TK.v, CDB.v, RPM.v, LRA.v, FCV.v) nearly all the right ones were in the win column and
compared to the flatlining sector benchmarks (GDX and GDXJ both down a single penny, GLD
down 0.3%) returns from Top Picks Starcore (SAM.to up 14.8%) and B2Gold (BTO.to up 9.4%)
made for good reading. Also applause-worthy was Continental Gold (CNL.to up 8.1%), the one
picked out the bag last week on its potential for a quick rebound. To the downside were the
larger percentage losses in Focus Ventures (FCV.v down 12.5%, though in fact that’s a penny in
very illiquid trading), Regulus Resources (REG.v down 11.3% but nothing here to worry about,
see below) and Rye Patch Gold (RPM.v down 8.8% and I’m happy about that, also see below).
With the addition of a first tranche of EXN.to last week there are now 14 open positions on the
‘Stocks to Follow’ list, one fewer than our self-imposed maximum of fifteen at any given time.
Ten stocks are in the green, one is unchanged, three 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$3.25 54.0% tgt $5.30 IKN375
Regulus Res REG.v hold C$0.64 06-apr-15 C$1.26 96.9% LT exploreco top pick
Starcore Intl SAM.to STR buy C$0.61 10-jan-15 C$0.70 14.8% $1.04 tgt, added a few IKN387
Long positions (in current order of preference)
Sandstorm Gold SAND STR buy U$3.80 17-apr-16 U$4.58 20.5% $7 tgt IKN378, still cheap
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.205 5.1% Top value under radar Zn play
Wesdome Gold WDO.to buy C$1.72 22-may-16 C$2.48 44.2% $2.88 tgt IKN381
Cordoba Min. CDB.v buy C$0.73 15-sep-16 C$0.75 2.7% Big copper, $1.50 tgt
Excellon Res EXN.to buy C$1.80 09-oct-16 C$1.81 0.6% New long IKN388/9, $3.13 tgt
Atico Mining ATY.v buy C$0.51 24-jul-16 C$0.53 3.9% bot again IKN382, 90c tgt
Rye Patch Gold RPM.v spec buy C$0.355 02-sep-16 C$0.26 -26.8% 75c tgt, post-Oct 17th add?
Riverside Res RRI.v buy C$0.39 27-jun-16 C$0.385 -1.3% Added IKN380, 60c tgt
Continental Gold CNL.to STR buy C$2.68 22-may-16 C$3.61 34.7% permit 4q16/1q17, $4.80 tgt
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.20 4.3% solid biz model
Focus Ventures FCV.v spec buy C$0.23 01-jul-12 C$0.07 -69.6% 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
Miranda Gold MAD.v oct-16 C$0.125 03-jul-16 C$0.10 -20.0% tiny spec trade, didn't work
13

,
2009, 2010, 2011, 2012, 2013, 2014 and 2015 closed positions in appendices below
Now for some notes on current basket stocks.
Rye Patch Gold (RPM.v): Looking to add this week. Tomorrow is October 17th and that’s
an important date for Rye Patch Gold (RPM.v) because it marks the day when the 233m shares
it sold to the world in the large private placement in June come out of escrow and are free-
trading. I’ve mentioned this date on several occasions already, particularly in the last two when
it became clear that I’d under-estimated its influence on the RPM share price and bought my
first slug of these share too early.
So now comes the flipside moment, or at least I hope, when I get to add to my first round
purchase at a much lower price and average down the position before RPM begins to make
good on its plan, go into commercial production in 2017 and make us all a boatload of profit.
What could possibly go wrong? Therefore I’m looking to add to my RPM this week coming and
by the looks of the price chart in the last ten days, there’s every chance of getting some at the
25c level. That’s good, I may be able to average down as low as 30c (or even less).
Excellon Silver (EXN.to): Position opened. Just a quick and standard line at this point,
confirming my initial and smallish starter position. Above are all the details on the company, n
need to wax lyrical here. May buy more this week.
Riverside Resources (RRI.v): May still add. I didn’t try to add any when RRI dropped to
34c (my finger was literally poised over the button) and now I regret it. Volume was light and if
the price shows up again I won’t hesitate this time.
Starcore Intl (SAM.to): That addition the week before last suddenly looks smart, what with
the sharp upmove in SAM last week from the way oversold lows we’d seen. My only caveat to
its return to the 70c/72c trading area is that it got back up here on light-ish volumes so it would
only take one medium-sized and determined seller to show in order to sink it again. Anyway,
don’t sweat the near-term stuff on this one too much.
Some minor but probably positive news from the company on Monday when it announced (2)
the process it’s going through to list in the USA (it will be a pinksheet) had taken another step
forward and the company was now under US listing requirements as the application is
reviewed. Presumably if all goes to plan SAM shares open for business there in a couple of
months’ time (or so).
Tinka Resources (TK.v): TK went down and the reason is good news. Last weekend we
mentioned that the financing was about to happen and sure enough, on Tuesday 11th in the
first day of trading last week TK announced (3) a $10m financing, planning to sell 50m shares
at CAD$0.20 apiece (with no warrant, also as expected). In fact the only surprise at this desk
was the size, I didn’t expect TK to go as large as $10m but I’m not complaining much either, it
sews up the whole subject to 2018 minimum. We need to acknowledge the downer of this
equity raise, that the S/O total is about to jump from just under 150m shares to just under
200m shares and dilute us holders by 33%, but the price has had this necessary round of
raising baked in for quite some time (I’d confidently opine) and there’s no new negative here.
As for how the raising is shaping, your author has made a couple of discreet inquiries to people
outside the company and learned a couple of things:
• The main shareholders of Tinka, Sentient Global Resources, who currently own 31.15m
shares or 21.46% of the shares out total, have committed to keeping their pro-rata
percentage ownership of the company. That implies they’re going to take 10.73m
shares.
• We understand that at least one other insto will become a new holder of TK shares.
Exact numbers here are not known.
14

,
• But I’ve saved the best bullet until last, because we hear this book is popular among
accredited investors, it’s filling fast and we can fully expect 100% placement come
November 1st.
In trading TK did well all week to keep light trading going at the 22c level but come Friday
finally bowed to the near-inevitable (under the circumstances of the placement) and dropped
back to close where it did, at 20.5c and providing precious little arbitrage for current holders.
But don’t worry, TK will be higher soon.
Cordoba Minerals (CDB.v): The good news from CDB this week comes from neighbours, not
the company itself. Last week South 32 Ltd, owners of the big Cerro Matoso mine just 30km
from CDB’s project in Colombia (4) received its key Environmental Impact Permit to expand its
operations and grow production from the government of Colombia, giving us solid evidence that
Colombia can indeed issue permits and get the paperwork through its still rather stodgy
permitting system.
In trading CDB fiddled around between 75c and 82c all week, finally closing at the low end of
the range on not much more than a coin toss. No biggie. As for newsflow and potential
catalysts, we should be close to getting the next set of assay results from its current and
expanded drill program. No guarantees on the timing of that one, but in the next week wouldn’t
surprise me.
B2Gold (BTG) (BTO.to): We run the numbers on the BTO 3q16 production report in ‘Market
Watching’ below, so here I’ll limit myself to saying that the share price did well last week and
rebounded nicely after finding the very bottom of the trough on Tuesday (and congrats to
reader NA, who was kind enough to
mention to me that he managed to scoop
up some BTG at U$2.22, just hours before
the bounce began...nicely timed, sir). One
of the things that surely helped was the
news (as reported on the blog (5)) that the
Filipino Environment Secretary, Gina López,
dropped a very big hint that many of the 20
companies currently under investigation, a
list which includes BTO at Masbate, won’t
get their licences suspended or revoked as
they only need “a little fixing”, rather them
being serious infractors. As we already
know BTO’s issue with the government is
purely an administrative one that would
almost certainly include the company we most care about here and it has lent even more
conviction to my position, as stated last week, that BTO has nothing to fear from the audit and
correction process and we’re not going to have a serious problem in this trade (though
confirmation of that call won’t comes until the end of the month, of course).
For more substantive stuff on BTO see ‘Market Watching’ below for the 3q16 numbercrunch
stuff, but before moving on I will expand a little on the rumour picked up from a couple of
places and then mentioned on the blog (6) about BTO apparently shopping its Nicaragua
assets, which means mainly Libertad/Limón. And to answer a couple of mails that came in...
• It’s what I heard from two very separate sources. No more no less and it was
interesting enough to stick on the blog, two separate sources makes it fair game. And
to be honest I don’t think it’s a meaningful share price catalyst, neither positive or
negative.
• One of them is part of a team that was invited to look and was then quoted a price by
BTO that was too rich for their blood. Which may mean BTO is slow-playing any
15

,
eventual sale so that its Nica ops cover overall corporate production in 2017, until
Fekola comes on line.
• I don’t have a firm opinion as to why BTO would want to sell, but I’d guess that a)
Limón is now small stuff next to the big mines in its suite b) Fekola coming on line in
2017 will only add to that c) Libertad has the rumbling social issue that’s delayed Jabali
access, plus its reserve/resource count is beginning to look tired and the mine may
show depletion as from 2018, so now’s a reasonable time to sell and try to extract
value.
• I don’t think BTO has a problem with Nicaragua politically, in fact they’ve always
enjoyed a strong relationship with the Ortega government (Daniel himself is strongly
rumoured to have been given a shareholding in the company in its early days) and it’s a
near-certainty that Ortega gets re-elected in the upcoming vote (because he’s semi-
rigged it).
All in my own opinion after mulling it over.
Wesdome Gold (WDO.to): We do WDO
in ‘Market Watching’ below. Here let’s just
put up the five day chart and show how
WDO dived even lower before staging a
strong recovery on the back of its good
3q16 production numbers, even though it
was a sleeper on the news for half a day.
However Friday gave WDO a good end to
the week and as long as the gold price
behaves that should follow through into
the next five days.
The next WDO catalyst should be drill
results from the second stage of drilling at
Kiena.
Atico Mining (ATY.v): ATY bumped along between its closing price and 56c on modest
volumes. No production report last week, it should arrive this week and time will tell whether
my predictions of a strong production quarter (and very strong sales quarter of course) gives
the PPS a bump.
Continental Gold (CNL.to): Last week I was
banging on the table about the near-term trade
potential of CNL and its chances of bouncing from
its price level back then, the way it had already
done three times before since late June, including
things like, “...if CNL moves up 10% next week I
wouldn’t bat an eyelid, it wouldn’t take much more
than a modest recovery in gold to do so.”
It went up 8.1% on the week and gold didn’t
budge. Enough said.
Regulus Resources (REG.v): Positive news; The site visit to Antakori is now confirmed and
I’ll be up in Cajamarca from the 25th to the 27th of this month. At last the trip has firmed up and
it’s going to be fun to traipse around the high country for a few days, as well as see Coimolache
in operation and most importantly, visit the Antakori project and get a feel for the local attitude
towards it all from the inside.
More good news is that I won’t be the only anal yst on the trip, as REG has invited several
other from the sellside brokerages etc and that means REG is about to get a blast of publicity
16

,
from people who get more eyeballs than this modest little publication.
In trading I’ve been getting a few nervy mails about the size of the shifts we’ve seen in REG
shares recently and the answers I’ve sent are all the same, “don’t panic”. This is a lightly traded
stock, most people in are for the long-term, the bid/ask reflects the stickiness and the swings
are indicative of a lowball player wanting to scoop up stock at a discount from anyone who
feels forced to sell, that’s all. This is for me and should be for you (if you’re in with me) a long-
term position, it’s a complete waste of time to follow its intraday noise in 2016.
Focus Ventures (FCV.v): It’s about time I addressed our biggest losing position (in
percentage terms) again because it’s doing very little. Yes it’s an annoying one and for me
personally one that’s so underwater I need scuba equipment, but I’m just going to keep on
holding it for the indefinite future and give it time. Reasons:
1) It’s good for the ego to see a failure on the board
2) It’s not hurting me much at this stage in the portfolio’s development, the hurt has all
been digested.
3) The nature of the FCV flagship project is that it needs to get a JV partner on board and
until it does that, it will indeed drift. But with a JV deal, the stock price will suddenly
launch higher and it will get taken very seriously by larger money. Which means in
effect that it’s a binary play, there’s little nuance at this stage and one of these days it
won’t simply start climbing higher gradually, it will pop violently and those not on board
will have to pay up to own.
As I don’t need the liquidity from the cash locked up inside my shares and I’m in no hurry, I will
therefore wait it out and hold through. But one of these days....
The Copper Basket
After forty-one weeks of 2016, The Copper Basket shows a 80.08% 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 1814.98 2.33 282.0%
2 HudBay Min. HBM.to 5.31 235.23 1178.50 5.01 -5.6%
3 Reservoir Min. RMC.v 4.08 48.69 449.41 9.23 126.2%
4 Capstone Min. CS.to 0.44 382.04 267.43 0.70 59.1%
5 NGEx Resources NGQ.to 0.65 205.06 239.92 1.17 80.0%
6 Western Copper WRN.to 0.38 94.19 94.19 1.00 163.2%
7 Trilogy Metals TMQ.to 0.395 104.33 76.16 0.73 84.8%
8 Cordoba Min. CDB.v 0.16 86.86 65.15 0.75 368.8%
9 Copper Mtn CUM.to 0.445 118.8 54.05 0.455 2.2%
10 Atico Mining ATY.v 0.28 97.59 51.72 0.53 89.3%
11 Nevada Copper NCU.to 0.66 80.5 49.11 0.61 -7.6%
12 Copper Fox CUU.v 0.125 417.64 48.03 0.115 -8.0%
13 Amerigo Res ARG.to 0.205 173.61 28.65 0.165 -19.5%
14 Hot Chili Ltd HCH.ax 0.09 445.723 20.06 0.045 -50.0%
15 Revelo Res. RVL.v 0.055 128.486 9.64 0.075 36.4%
NB: HCH.ax priced in AUD$, rest CAD$ Portfolio avg 80.08%
The basket average lost a point and a bit since IKN387 as just five of our names registered a
weekly win (HBM.to, IVN.to, CUM.to, TMQ.to, ARG.to), four remained unchanged (RMC.v,
CUU.v, ATY.v, RVL.v) and six booked losses on the week (CS.to, NGQ.to, NCU.to, HCH.ax,
WRN.to, CDB.v). The only double figure percentage movers were the gains in Trilogy Metals
(TMQ.to up 12.3%) and Amerigo Resources (ARG.to up 10.0%), overall trading was light in
these names.
17

,
In fact the complex held up well if we
compare them to the action in the metal, as
copper fell off a bit of a cliff last week on
China Fear!, yes indeed another round of data
that pointed to a soft economy. The two sides
of the coin seem to take it in turns, this week
it was the bear corner in charge. It shoved
copper back down to the “above U$2.10/lb”
region and away from the “above U$2.20/lb”
region, putting paid to my meek and mild
modest and nervous semi-bull opinion, for the
time being at least.
In other copper news, Chile’s Cochilco re-affirmed (7) its
price estimate of U$2.15/lb average for 2016, which is a
big DUH! call what with ten months gone and the year’s
average close to being set in stone. More interesting was
its call that reaffirmed the 2017 average price at
U$2.20/lb; Cochilco still expects a supply glut next year
and stockpiles to rise, thereby keeping a firm lid on the
copper market price. I tend to agree.
Now for the regular weekly copper warehouse inventory
bullets:
• Overall world copper inventory levels in the
world’s three official systems rose modestly last
week, up 8,725 metric tonnes (mt) (+1.7%) to
finish at 534,969mt.
• Shanghai was the difference, with SHFE warehouses adding meaningful inventory for
the first time in a long time as the country came out of Golden Week. Stocks moved up
by 14,381mt (+13.4%) to finish the week at 121,439mt and move away from the
psychologically important 100k level.
• Over at the LME we saw a small drop, down 6,225mt (-1.8%) finish the week at
349,075mt. Another smallstuff week here, moving on.
• Comex stocks shook off the first drop in many weeks the week before last and started
back on their regular “Few Hundred A Week” rhythm. Stocks moved up 569mt (+0.9%)
to finish Friday at 64,455mt.
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 ht11 dn2tcO
The Copper Basket 2016, weekly evolution
100%
80%
60%
40%
20%
0%
-20%
Mt Cu
source: Cochilco
dr3naj ht01 ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht6 ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 s1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71 ht42 ts13 ht7gua ht41 ts12 ht82 t4peS ht11 ht81 ht52 dn2tco ht9 ht61
source: IKN calcs

,
Above is the Shanghai-only chart, which shows that final uptick and the shape suggests that
SHFE stocks are either bottoming out now or beginning to do so. This would be inside the
realms of the normal. Now for notes on a couple of the basket component stocks:
Ivanhoe Mines (IVN.to): IVN came out with its NR on the Kakula deposit (8), the size and
grade was impressive and typified by this segment...
Indicated Resources total 192 million tonnes at a grade of 3.45% copper,
containing 14.6 billion pounds of copper at a 1% copper cut-off. At a 2%
copper cut-off, Indicated Resources total 115 million tonnes at a 4.80%
copper grade, containing 12.1 billion pounds of copper. At a higher cut-off of
3% copper, Indicated Resources total 66 million tonnes at a grade of 6.59%
copper, containing 9.6 billion pounds of copper.
...which added to the inferred makes he
deposit over 20Bn lbs Cu, the sellside anal
ysts swooned and fawned, the stock shot up
and then....stalled:
This despite a new round of target upgrades
from the brokerages (I saw $3-handles) and
the ten day virtual flatline you see above,
even accounting for the copper weakness last
week, was hardly part of the plan. The run
may be getting tired, but it’s still been highly
impressive and has made IVN a $1.8Bn
market cap vehicle.
Capstone Mining (CS.to): We’ve followed this
leverage play a little more closely than usual for a
few weeks precisely because of its leverage, the
type of company stock that gives good gains when
copper moves around this current price range.
However leverage is a double-edged sword and
CS.to is now back at 70c, nearly from whence it
came when the watch started, due to the copper
weakness of last week. CS didn’t manage to reach
the approx 85c level I personally had slated in, the
best as you can see here was 80c.
Amerigo Resources (ARG.to): On Friday ARG
announced that it had come to a collective wage agreement with its workforce and in the end,
only a couple of production days were lost to the strike mentioned last week. The shares rallied
10% on the week due to the news but volume was thin, it remains as a poor option to play
copper at the moment.
Trilogy Metals (TMQ.to): When this company used to be called NovaCopper we mentioned
on a few occasions that its share price gets thrown around quite regularly on very light traded
volumes. That’s still the case today and I wouldn’t hold much truck in the 12.3% move we saw
last week, all very thin and flimsy.
The Low Cost Producer Basket
After 41 weeks of 2016, the Producer Basket shows a gain of 83.72% to level stakes.
19

,
company ticker price 1/1/16 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Barrick ABX 7.38 1165.33 18.28 15.69 112.6%
2 Newmont NEM 17.98 530.595 18.16 34.23 90.4%
3 Goldcorp GG 11.56 832.381 11.91 14.31 23.8%
4 Franco Nevada FNV 45.75 178.01 11.27 63.33 38.4%
5 Agnico Eagle AEM 26.28 223.475 10.20 45.66 73.7%
6 Ang/Ashanti AU 7.10 405.27 5.42 13.38 88.5%
7 Buenaventura BVN 4.28 254.19 3.16 12.43 190.4%
8 Detour Gold DGC.to 14.41 174.06 4.12 23.69 64.4%
9 Sibanye Gold SBGL 6.09 228.71 2.62 11.46 85.9%
10 New Gold NGD 2.32 512.8 1.98 3.87 66.8%
Prices in U$/NYSE tickers, except DGC.to (CAD$) Portfolio avg 83.72%
Once the dust had settled it was week of small movements here with the early week sag, the
rally and then a semi-soft Friday all working to cancel each other out; the way the GDX
benchmark lost one single penny on the week is most succinct commentary of all. In our list we
saw seven uppers (GG, NEM, DGC.to, AEM, BVN, NGD, SBGL) and three downers (ABX, FNV,
AU) and aside from the larger move in Detour Gold (DGC.to up 5.1%) that recovered somewhat
from two weeks of exceptionally heavy selling, all moves were just a few tenths here or there.
The Low Cost Producer Basket: Weekly performance
200% and comparative to GDX control
180%
160% 140%
120%
100%
80%
60%
40%
20%
0%
-20%
In sector earnings news, I couldn’t help but grin about this Barron’s article (9) that previews the
3q16 earnings season, which of course is almost upon us for the major name miners, and
stated the following in its lead paragraph...
“Citigroup’s Alexander Hacking and team contend that the fall in gold
prices...could overshadow strong earnings from gold miners like Barrick Gold
(ABX), Newmont Mining (NEM) and Goldcorp (GG).”
...because it sounds like a leading contender for the 2016 No Shit Sherlock Award. The forward
looking price of gold is more of a factor on stock prices than the backward looking quarterly
earnings? Who Knew? ☺
But when you get into the meat of the Citigroup anal ysis there is more sense (than the
financially-challenged Barron’s reporter at least) and nuance in the call. Here’s the excerpt that
makes his main point:
“We are adjusting our estimates & reducing target prices for the North American gold
miners ahead of 3Q earnings. 3Q results should be strong across the board with gold
prices averaging ~$1,340/oz in the quarter. Yet, the equities have suffered a significant
pullback with gold falling over $100/oz to ~$1,255/oz from its peak in mid-July. The
group appears modestly oversold at spot gold, in our view, with 2-7% FCF yields and
P/NAV’s now trading slightly below 1x. The risk is that gold prices continue to fall,
especially given that net positioning is still long on COMEX and ETF inflows could
reverse.”
20
dr3naj ht71 ts13 ht41 ht82 ht31 ht72 ht01 ht42 ht8 dn22 ht5nuj ht91 dr3luj ht71 ts13 ht41 ht82 ht11 ht52 ht9
Low Cost Basket: Percentage difference between
basket and GDX control, 2016
5%
0%
basket -5% gdx control
-10%
-15%
-20%
-25%
-30%
source: Google, IKN calcs -35%
-40%
ht01 ht42 ht7bef ts12 ht6 ht02 dr3rpa ht71 ts1yam ht51 ht92 ht21 ht62 ht01 ht42 ht7gua ts12 ht4peS ht81 dn2tco ht61
source: ikn calcs, NYSE/Nasdaq data

,
That has more logic and suggests there’s a little at the present gold price thanks to recent
overselling (I agree), but then reverts to “well if gold goes down there’s risk”, which isn’t
exactly rocket science level anal ysis once again. For what it’s worth, Citigroup’s Alexander
Hacking prefers NEM and ABX, most other names are pitched as market performs, then he calls
AEM a sell at today’s price deck. Take that information as you will.
Regional politics
Las Bambas: Trucks are the problem
“Relax. Nothing is under control.“
Adi Da Samray
As noted on the blog late Friday, one man died during clashes between with police in Peru
when locals blocked roads to protest about trucks coming out of the Las Bambas copper mine
in the highland Apurimac region. We now have more details, as the protests happened around
50km from the mine, the clashes were very violent and along with the dead person, reports are
of scores of locals and 20 police officers injured.
So what’s the problem? The answer is very poor community planning by MMG, owners of Las
Bambas, as well as previous owners Xstrata. Once upon a time when Las Bambas was owned
by Xstrata (later taken over by Glencore) the plan was to build a 215km concentrates pipeline
to connect the mine to the Xstrata-owned Tintaya mine, a little closer to the coast. From there
it would join the existing transport infrastructure. But in the end the pipeline plan was deemed
too expensive and dropped. Cut to today and Las Bambas now close to its full production
rhythm, no pipeline built, the concentrate has to get to the coast somehow and we end up with
this being published by Reuters (10):
Congressman Richard Arce, who represents Apurimac, said the man was
shot dead by police and that scores of people from towns nearby were also
wounded.
A photograph from the clash provided by Arce's office showed a man lying
belly-up on blood-stained stones in a field.
The protesters were upset because of the heavy dust and noise on the road
where trucks transport the Chinese-owned mine's copper concentrates,
Solano and Arce said.
"On a recent visit I saw 97 trucks carrying 30 tonnes of concentrates in 22
minutes. Passing by in front of people's homes," Arce said. "That would be
outrageous to anyone."
The facts back that up. According to the latest figures from Peru’s Ministry of Energy and
Mining website (11), Las Bambas produced 34,983 metric tonnes of copper in the month of
August 2016 alone, that’s right on its expected production clip. I don’t have the exact figure at
hand but the conc there is known to be higher grades than the industry average and I’ve heard
off-record that they’re running it at 30% copper, so if we run with that number we can estimate
Las Bambas needs to ship out 116,667 metric tonnes of material to the coast of Peru per
month. At 30 metric tonnes per truck that’s 3,889 truck trips per month, though I’d expect
some trucks are overloaded somewhat (in typical Peru fashion) and carry an average of 40mt
per trip, so that would be 2917 trips. So taking everything into account and splitting
differences, let’s call it 3,400 trucks a month.
As there are 720 hours in a (30 day) month, that’s an average 4.7 trucks per hour, 24 hours a
day, seven days a week, 365 days a year rumbling past your (previously quiet and bucolic)
farmhouse 50km from the mine site. And as that includes all night-time hours, the true figure is
more likely to be ten trucks an hour in the daytime (one every six minutes) and as they’ll
naturally bunch into a convoy formation on the way down, Congressman Richard Arce is right.
And then they have to come back up the hill again. My stars the locals must be pissed with this
21

,
sudden deterioration in their lifestyles, let alone things like danger and the dust (often on dirt
track unpaved roads) and let’s note, this problem and last week’s violent flare-up that left one
dead (social media unofficially reports three dead) and many dozens injured was 40km to 50km
away from the mine and not in the zone of influence where locals get financial support. All of
the annoyance, none of the compensation and if nothing is done it’s only going to get worse
when the Haquira project owned by First Quantum and located just down the road from Las
Bambas comes online in a few years’ time.
I could go on about this, there are several directions in which this analysis could continue but
the most obvious one is that cutting corners and doing things on the cheap in a country with
poor internal transport infrastructure such as Peru is a recipe for community disaster. Peru is
currently marketing itself as the place to go big pit mining and a better option than Chile (for
example) because of its lower cost base. What we see above is the flipside of cheap, which can
turn out to be far more expensive for all concerned, be it company, local residents or the
country itself, than doing things the right way from the beginning. Also, be clear that this
particular combination of infrastructure and community risk is going to be a growing concern
across the whole LatAm region and can apply to Colombia, Ecuador (hello SolGold) and Andean
Argentina, as well as this corner of Peru. However Peru is a decent test case, as its
infrastructure varies greatly depending on where you are (e.g. Cajamarca is generally good,
Apurimac is particularly bad). Interestingly and as a final thought (without labouring the point,
as I really could spend pages on the subject) Chile holds a massive advantage here.
El Salvador: ICSID/CIADI rules against OceanaGold (OGC.to)
Back in IKN382 dated September 4th we previewed this pending ruling, called it to happen in
September and expected El Salvador to prevail over OceanaGold (OGC). Here’s a small excerpt
from that piece:
“...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.”
So I got the timing wrong, it took a couple of weeks into October to be handed down but on
Friday we learned (12) that not only had the CIADI/ICSID World Bank tribunal ruled for El
Salvador and against OGC, but it also awarded $8m in costs to the country (they estimate
spending $12m on the case, so that covers most of the costs). We now hear (off record) that
the winning El Salvador legal team plans to go after the OGC assets inside the country in order
to confiscate them and put a definitive end to the project.
In prima facie terms the hit isn’t great for a CAD$2Bn+ market cap company; OGC owned
around 20% of Pacific Rim before buying the other 80% in 2013 for CAD$10.2m. Add in
lawyers fees over the last three years and the $8m ruling today, I’m going to guesstimate that
OGC has flushed around $25m down the toilet in this escapade. So in plain cash terms a minor
hit, but it must call into question the strategic thinking and political risk nous at OGC,
considering that they walked into the Pacific Rim mess voluntarily during 2012 and 2013, and
clearly thought the already mortally wounded company offered an “opportunity”. And as luck
would have it, the ruling has been handed down at the same time that its flagship Didipio
property is under sanction in The Philippines.
Ecuador: Concession envelopes begin to be opened
Further to the thoughts passed on about Keith Barron, ARU.v and FF.v the other day, the first
part of the Swiss auction process for the large concessions areas being allotted in Ecuador
happened last week when tenders for concessions in the North of Ecuador (not the area Barron
is bidding for) were opened and four winners declared (13), namely Ecuador national Pedro
Iván Córdova Talbot, the best known name Ecuador Fortescue S.A. (part of Australia’s
Fortescue (FMG.ax) which got a big concession close to where SolGold is operating), Delaware
private company Green Rock Resources and Ecuador national Manolo Federico Díaz Vega (for
22

,
what all that information is worth). We can expect the tendering process to continue in the
week to come, with the next sets of concessions awarded.
More Ecuador: Fruta Del Norte gets its EIA
In news that shocked absolutely nobody, on Thursday Lundin Gold (LUG.to) announced (14)
that its Fruta del Norte project environmental impact study had been approved by the
government of Ecuador. This was a near-given because a) LUG has gone about its work in a
world-class manner and b) the Ecuador government really, really want their model project to
show off to the world. We should now be all set for the formal signature ceremony at the end
of this month when, as noted last week, LUG gets to hand over a U$25m pre-paid royalty
cheque in front of a lot of cameras and a smiling Javier Cordova.
Colombia: The Ibagué referendum is suspended
An interesting turn of events last week has seen the suspension of the much-publicized
referendum in Ibagué against open pit mining (and specifically aimed at the AngloGold Ashanti
La Colosa project, owners of 27 of the total 36 concessions in the Ibagué region of Colombia).
What happened was that an official in the local Chamber of Mining filed a judicial action against
the referendum, specifying that the question about to be used for the referendum is biased and
skewed against getting a representative response.
You may remember back in IKN383 dated September 11th I commented on this part of the
issue, here’s an excerpt from the piece that day:
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxx
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. An employee of La Colosa would
have to vote “No” on that one.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
IKN388 back and the news is that much to the consternation of the local mayor who’s
promoting this referendum, the Colombian judiciary agreed (15) (16). As of last week the
referendum vote has been suspended (not cancelled) until such time as mutually acceptable (or
judicially ruled) phrasing is chosen for the vote. That means in real terms that the referendum
could be delayed for a long time and that’s not a bad thing for the mining sector in Colombia,
or for AngloGold Ashanti.
In a final twist the ruling to suspend the Ibagué vote came just one day after the National
Constitutional Court of Colombia ruled that regional governments do indeed have the power to
veto large civil works projects such as mines, they cannot be subsequently overruled by the
national government (a line of reasoning that the Santos administration has been promoting
recently). One hearing about the ruling, the head of the National Mining Agency (ANM) said
(17) (translated), “The Constitutional Court has changed the rules for us” and complained about
the over-powerful influence of local governments on mining projects and operations.
23

,
Brazil: Death of an environment secretary
On the blog Thursday we broke the news (18) (to the non-Portuguese speaking world at least)
of the assassination of 54 year old Luís Alberto Araújo, the Environment Secretary of the
Altamira municipality of Brazil, shot dead by two men who approached him on a motorcycle as
he arrived at his house and put seven bullets in his head. Since then there have been plenty of
other reports out of Brazil in both local and national media about the assassination and
although its still early days in the investigation, the crime seems to have been motivated by one
of two causes: Either Aráujo’s opposition to the illegal logging business in the region of his
involvement in the environmental permitting processes of businesses in the region. Of the two,
according to the press (19) (20) (21) the illegal logger line of inquiry is apparently the most
likely at the moment. However, if it’s connected with EIAs and permits that’s the chance mining
projects such as the Belo Sun (BSX.to) Volta Grande project are mixed up in the sordid affair.
At the moment that’s unlikely, but the simple fact that a government enviro official was gunned
down in such a manner isn’t a great signal for overall political risk in the region, whatever line
of business you happen to be in.
Argentina: Meilán pushes for a Federal policy on mining
Argentina’s National Secretary of Mining, Daniel Meilán (who reports directly to the Minister of
Energy and Mining and is the de facto head of the mining sector in the government) continues
to push for his plan of a nationwide rule book for mining in order to attract foreign investment
into the country and provide a “level playing field” for the industry across the country. In other
words, his plan is to wrest control from the regional governments and governors and make
mining policy homogeneous across Argentina, something that goes against its Federal
constitutional make-up and has resulted in the fractioning of the country into pro-mining (e.g.
San Juan, Catamarca, Santa Cruz) and anti-mining (e.g. Mendoza, Chubut, Rio Negro) areas.
He was in Chubut last week (22) promoting the initiative and accompanied by the national
Senators who represent the province in the parliamentary upper house, telling the world about
the benefits and getting agreement from those with him. That’s preaching to the converted of
course and the real power in a place like Chubut lies not with the national senators, but the
regional governors such as Chubut’s Mario Da Neves (who is anti-mining and has stated enough
times that the people of Chubut will decide on whether there’s mining in Chubut, not the
national government). All the same, Meilán expects to submit a law project to the national
parliament at the end of this year with his proposals to streamline mining and attract more FDI.
There’s a distinct similarity between the way in which Argentina’s provinces can (and do) veto
mining activity and the way in which the judicial rulings have recently gone in Colombia.
Market Watching
Wesdome (WDO.to) 3q16 production numbers
On Wednesday evening, before Bob Dylan was a Nobel laureate, WDO filed its 3q16 production
numbers (23) and as mentioned
WDO: Gold production vs sales, per qtr
quickly on the blog that evening
(24), they were pretty good. Here’s 18000
15878 16023 15825
the production and sales chart that 16000 15188
14000
shows the 15,667 oz produced and 14000 12408
12000 11740 11265
15,825 oz gold sold in the quarter
9633
10000
(and please note that despite the 8100
8000
improvement shown I’m not
6000
bumping up my 4q16 guesstimate
4000
yet, nothing wrong with staying
2000
conservative at moments like this).
0
The reason for the improvement can
be found in this smaller chart that
tracks average gold grades, with
24
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 tse61q4
Ozt Au
prod
sales
source: company filings

,
Eagle River getting back over 10 g/t Au for the first time in a long time, that’s good news and
saw its portion of production move to 13,193 oz,
the best quarter for several years. Also to be
applauded is Mishi at 2.3g/t, which meant it
managed to produce 2,474 oz, over 2k for the
first time this year.
With that in hand we can have a guess at
revenues and such, here below is the overview
chart of that particular dataset, one of our ‘usual
suspect’ charts that gets wheeled out on
occasions such as this:
WDO.to: Operations overview
30 27.5
26.0
25 23.1 22.3 23.6
20.9 21.0
20 17.0 16.0 19.4 18.8 15.8 17.217.6 18.2 16.8 17.5 18.418.2 18.1 18.2
14.4
15 12.3 13.3
10
5
0
-5
25
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
WDO: Average gold grade, per qtr
14
12 12.5
10 10.1 10.07
8.7
8
7.01
6 7.4
7 6.6 4.9
4
2 1.8 2.33
2.4 1.8 2 2.3 2.6 1.9 1.5
0
CAD$m
revenues total op expenses Op earnings
source: company filings/IKN ests
By continuing to assume an average gold selling price of CAD$1,740/oz for the quarter (we’ll
get to know the real number when the quarter
comes out), it means WDO is slated with revenues
of just over CAD$27.5m which is up $2.5m from
the previous guesstimate. As for per-share
operating earnings, that looks good as seen in this
chart (right) at 7.3c/share (implied fwd ratio of
8.5X, that’s enough to justify the current share
price without Kiena adding to the mix). I’ve left
the 4q16 estimate unadjusted for the moment.
That’s good and the extra cash permeates through
the model, such as here at net earnings where
WDO is set to impress with a $5.2m bottom line (it
would impress me anyway) and that would be a
forward PE of 12.4X...good enough.
Overall a good quarter on a stand-alone basis, but
even better when we consider WDO has just come
off a very poor quarter in Q1 then a middling one
in Q2, at which point the CEO was replaced. This
is the first period in charge for new CEO Duncan
Middlemiss and he’s managed to deliver well
(which fits in with the positive reports I’ve head
about him from trusted voices in Canadian
mining). So not only is WDO back to money-
making ways, but it’s managed to steady the ship
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3
g/t Au
Eagle River
Mishi
source: company filings
WDO.to: operating earnings per share
0.08 0.073
0.07 0.060
0.06 0.055
0.05
0.04 0.034
0.03 0.026 0.019 0.023 0.02 0.013
0.01 0.002
0.00
-0.01
-0.004
-0.02 -0.012
-0.03
-0.04
-0.035
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
$
source: company financials/IKN ests
WDO.to: Net Earnings
10
8
6 5.2 4.2 4.2
4 2.9 2.2 2.6
1.1 1.8 2
0
-2 -0.8 -0.7
-4
-3.3 -6 -4.3
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
source: company filings/IKN ests
srallod
fo
snoillim

,
and show good numbers.
As for Q4, as mentioned in a couple of places above I’ve left the current IKN model for the
quarter untouched. That may change when WDO delivers its 3q16 financial report, but for the
time being I see the potential negatives of a lower gold price compared to Q3, but also
potential positive to the production schedule, for example noting how the best grades (by far)
from Mishi were delivered in the last calendar month of 3q16 (it says so in the NR, check it
out). But ultimately the real catalyst for WDO from here is going to be results from the Kiena
drilling and if the second set of numbers confirms what we got from the first set of exploratory
holes, I won’t need to lament any further that WDO did manage to ding my $2.88 target not
once but twice before dropping back (perhaps I should listen to myself more often). A good
quarter and I’m a happy holder, bring on the assay results.
B2Gold (BTG) (BTO.to) 3q16 production numbers
The last time we did BTO in any great detail was the ‘Fundamentals’ section of IKN375 dated
July , when we ran the 2q16 production numbers. This was then followed by a check-over of
the financial results in IKN378 dated August 7th when the quarter’s official results were posted
(we didn’t spend a great deal of time on them, as they came in pretty much as expected and
as-per what we’d framed in IKN375).
This quarter, I plan to go into detail once we have the 3q16 financials filed in a NOBS update
report on this letter’s number one stock and my largest position in cash terms, that should be a
week or so after The USA has chosen its next President. It’s about time we ran the ruler over
this one properly, so today the space is dedicated to a more general overview of the 3q16
production numbers announced by BTO on Thursday afternoon (25) and as noted on the blog
at the time (26), the way the NR got the share price to pop is indicative of the basic fact that
BTO has just posted a good quarter.
Let’s start with this chart, the same as on the blog that day except that it adds back in our 4q16
estimates.
oz Au Otjikoto prod BTO: gold production by mine
160000 Masbate prod
150000 Limon prod
140000 Libertad prod
130000
1 1 1 0 1 2 0 0 0 0 0 0 0 0 0 0 0 0 7159 31134 36963 38252 39374 35703 36172 47564 48000
90000
80000 62972
47676 50000
6 7 0 0 0 0 0 0 0 0 46241 41236 40368 47958 52727 57188
50000
3 4 0 0 0 0 0 0 0 0 11970 13158 15686 14517 8903 10216 11075 14185 14000
1 2 0 0 0 0 0 0 0 0 36862 25326 27681 31234 35234 29198 30807 37261 37000
0
4q14 1q15 2q15 3q15 4q15 1q16 2q16 3q16 4q16est
source: company filings
BTO posted production of 146,686 oz gold and there above is how it breaks down, with 37,261
oz from Libertad, 14,185 oz from Limón, 47,676 oz from Masbate and 47,564 oz from Otjikoto.
For my money there’s not a single weak link among them:
• At Limón, BTO’s smallest operation got back on track after first operational glitches and
then the work stoppage and blockade earlier in the year. The 14k number is around the
mine’s reasonable capacity and those ounces will be very profitable.
• At Libertad, this operation finally showed it could bounce back after several quarters of
lacklustre results and the main reason is in this line from the NR; “Mill head grade in
the quarter was 2.19 g/t, 13% above budget (of 1.93 g/t) and 23% higher than the
third quarter of 2015 (of 1.78 g/t)”. BTO brought more feed from its higher grading
Jabalí satellite to bump up average grades. However there was official word that its
26

,
other high-grading side-dish, Jabalí Antenna, isn’t going to be mined until 2017 now
(we’ve mentioned previously the social issues and access problems BTO has to that
area, it seems the problem still isn’t solved).
• Masbate put in another strong quarter, though not quite the gangbusters of Q2 (that
saved the overall corporate number, you may remember). Nothing to complain about
here and the mine saw its annual guidance raised from 175k-185k to 200k-210k.
• So all were good but if I had to choose, Otjikoto was the star of the show. Its 47,564
oz gold production is the first time it’s broken 40k in a quarter and it did it by a long
way. BTO reported that it’s mainly due to the de-bottlenecking work they did earlier
this year, the fruits now showing. We can expect many more 40k+ quarters from this
mine now and that’s even before the new high-grading material from the Wolfshag
zone comes into full play.
And thanks to the above BTO raised its overall output guidance frame for 2016 from between
510k - 550k ounces to between 535k – 575k ounces for the year. On that subject, please note
the above production breakdown chart and the IKN Weekly 4q16 production guesstimates
(Libertad 37k oz, Limón, 14k oz, Masbate 50k oz, Otjikoto 48k oz). I’ve deliberately left those
numbers unchanged from the IKN375 and IKN378 analyses, even though with BTO raising the
top limit as high as 575k there’s a strong hint that they might do a whole lot better (I like my
surprises to be good ones if possible). However, if my Q4 guesstimate comes to pass exactly, it
would imply a 2016 total gold production of 558,772 oz, above the top limit of the old guidance
and right in the middle of the new one.
U$m BTO: Bullion inventory
30
Moving to revenues, BTO pre-announced its record sales 24.9
number of U$193m on sales of 145,029 oz gold (averaging 25 21.3 23.2
20 17.5
U$1,331/oz). For a minor thing, the lower sales vs 14.3
15
production again implies that BTO has added to its bullion
10
inventory, here’s that chart with the 3q16 estimate of
5
U$24.9m in gold tucked away safely somewhere. But the
0
main event is the U$193m sales number which beat out my
3q15 4q15 1q16 2q16 3q16est
forecast by a full U$17m and I was darned impressed by source: company filiings
that. Therefore assuming reasonably constant operating
costs to previous quarters, here’s how the operations overview chart updates (and again, I’ve
left the 4q16 estimates untouched):
B2Gold: operating margins
$m
220 Revenues Total costs Operating Revs
193.0
194.0
164.8
170
138.9 136.5 139.3 139.0 144.3
129.0 120.3 114.9 122.4 115.6 116.9 116.3 117.8 115.0 120.0
120 91.9 98.3 99.0 103.5 101.8 110.6
78.0 74.0
70
54.2
37.1 42.4
22.0 15.9 18.9 23.3 19.6 22.9 21.2
20
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16 3q16est4q16est
-30
source: company filings
We’re pointing at an operating income of U$78m, which is around 8.4c per share. Wowsers,
that’s a 7.5X forward ratio to the share price and that, for a company with significant growth
baked in and production edging toward the magic million ounce gold barrier, is way cheap.
27

,
BTO: Operating Revenue per share, per qtr
0.09
0.08
0.07
0.06
0.05
0.04
0.03
0.02
0.01
0.00
28
31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 tse61q3 tse61q4
$/share
source: company filings, IKN ests
Want it in simple terms? Yeah me too; this was a cracking quarter from BTO and augurs well
for its 2017. This stock is crazycheap where it is this weekend, even after the rally powered by
these results. Top Pick, fear nothing, own and make a 12 month profit.
Expect a full NOBS update report in November when BTO reports its financials.
Conclusion
IKN388 is done, we end with bullet points:
• Excellon Resources (EXN.to) is my silver exposure play going forward, as my normal
skepticism for that metal is easily outweighed by the compelling nature of its financial
forecast. A strong enough company today, EXN is set to blossom in 2017 and beyond
and the big production jump will get it a lot of attention, no matter what silver prices do
in the meantime. Tremendous value in this stock today, you’d do well to own some.
• The gold sell-off looks done to me. Higher would be good, but for the time being I’d
accept it fiddling around in its current U$1,250/oz to U$1,260/oz trading range. Nothing
wrong with boring on occasion.
• So far in the 3q16 production results season we’ve had good quarters reported by
SAND, BTO and WDO. As EXN is brand new on board (and I’m not expecting great
things from its quarter) and SAM.to has a different financial quarter system that’s off
kilter from the normal by a month, the only one left to go is Atico Mining (ATY.v) and
that should be this week coming. Here’s hoping for 4 from 4.
• Just 23 days to go. Man I’ll be glad when this crazy circus is over, the noise from both
sides is close to unbearable and I’m thousands of miles away.
• The three Bob Dylan quotes in today’s introduction are dedicated to reader ‘R’, who
was miffed that I didn’t feature the man in this week’s Friday OT. For the record R, I’d
already featured Dylan and his finest video ever on The Friday OT way back in 2009,
link here (27) for your discernment, sir ☺.
I thank you in advance for any feedback. Our Top Pick stocks are Regulus (REG.v), B2Gold
(BTG) (BTO.to) and Starcore Intl (SAM.to). Flash updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen. Namaste.
Mark

,
Footnotes, appendices, references, disclaimer
(1) http://www.excellonresources.com/images/Presentation/2016/EXN_Corporate_Presentation_-
_September_30_2016_-_minimized.pdf
(2) http://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aSAM-2412057&symbol=SAM&region=C
(3) http://finance.yahoo.com/news/tinka-announces-10-million-brokered-110000585.html
(4) http://www.aminera.com/minera-south-32-ltd-empezara-proyecto-en-colombia-para-aumentar-su-produccion-de-
ferroniquel/
(5) http://incakolanews.blogspot.pe/2016/10/filipino-mining-political-risk-news.html
(6) http://incakolanews.blogspot.pe/2016/10/the-b2gold-btg-btoto-rumour.html
(7) https://www.cochilco.cl/Paginas/Sala-de-Prensa/Noticias.aspx?ID=83
(8) http://finance.yahoo.com/news/kamoa-kakula-project-now-demonstrated-113000418.html
(9) http://blogs.barrons.com/stockstowatchtoday/2016/10/14/gold-miners-who-cares-about-earnings-gold-prices-are-
falling/
(10) http://www.reuters.com/article/us-peru-mining-clash-idUSKBN12F01W?il=0
(11) http://www.minem.gob.pe/_detalle.php?idSector=1&idTitular=7603
(12) http://finance.yahoo.com/news/icsid-tribunal-finds-favour-government-180600813.html
(13) http://www.confirmado.net/ministerio-mineria-apertura-solicitudes-adjudicar-concesiones-mineras/
(14) http://finance.yahoo.com/news/lundin-gold-announces-approval-fruta-220000616.html
(15) http://www.noalamina.org/latinoamerica/colombia/item/16385-suspenden-provisionalmente-consulta-popular-sobre-
mineria-en-ibague-por-demandas-del-sector-pro-minero
(16) http://www.ecosdelcombeima.com/ibague/nota-93093-anglogold-ashanti-reitera-invitacion-a-debatir-sobre-el-
futuro-de-la-mineria-colom
(17) http://www.semana.com/nacion/articulo/agencia-nacional-minera-preocupada-por-fallo-que-avala-consultas/498992
(18) http://incakolanews.blogspot.pe/2016/10/brazil-altamira-regions-environment.html
(19) http://www.portaldoxingu.com.br/secretario-municipal-do-meio-ambiente-de-altamira-e-morto-tiros/
(20) http://g1.globo.com/pa/para/noticia/2016/10/secretario-municipal-do-meio-ambiente-de-altamira-e-morto-tiros.html
(21) http://www.portaldoxingu.com.br/secretario-estava-com-problemas-no-trabalho-diz-delegado-geral-da-pc/
(22) http://eldiariodemadryn.com/2016/10/la-nacion-acelera-con-las-provincias-un-acuerdo-federal-minero/
(23) http://finance.yahoo.com/news/wesdome-announces-third-quarter-2016-210000504.html
(24) http://incakolanews.blogspot.pe/2016/10/wesdome-gold-wdoto-3q16-production.html
(25) http://finance.yahoo.com/news/b2gold-corp-achieves-record-third-185322796.html
(26) http://incakolanews.blogspot.pe/2016/10/b2gold-btg-btoto-3q16-production.html
(27) http://incakolanews.blogspot.pe/2009/07/friday-ot-subterranean-homesick-blues.html
29

,
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
30

,
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
31

,
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.
32