IKN #404Premium

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The IKN Weekly
Week 404, February 12th 2017
Contents
This Week: In today’s issue, Everything is awesome!, The song and dance man.
Fundamental Analysis: B2Gold (BTO.to) (BTG) 4q16 production and 2017 guidance.
Stocks to Follow: Overview, Wesdome Gold (WDO.to), Starcore Intl (SAM.to), Belo Sun
(BSX.to), Regulus Resources (REG.v), Cordoba Minerals (CDB.v), Sandstorm (SAND), Tinka
Resources (TK.v), Excellon (EXN.to), Red Eagle Mining (R.to), Riverside Resources (RRI.v).
Copper Basket: Overview, Capstone Mining (CS.to).
Producer Basket: Overview.
Regional Politics: Big Beautiful Wall news, Odebrecht bribery: Ex-Pres Toledo’s arrest warrant
and more besides, Peru: Michiquillay tender caught up in the Odebrecht bribery scandal, Peru:
State of Emergency at Las Bambas, Chile: The La Escondida pay negotiation update, Argentina:
Strikes on the horizon, Argentina: The Federal Mining Agreement about to be sent to Congress,
Colombia: Páramos earmarked for carbon credits, Ecuador: Final polls for the Presidential
election (and it’s tight).
Market Watching: Lara Exploration (LRA.v): Deferred until next week, GLD gold holdings
bounce hard, Dynacor Gold (DNG.to): Denial is not a river in Egypt.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
In today’s issue
• Risk is rising and I’m raising cash as a result. See today’s “Everything is awesome!”
intro for the thinking behind that and the ‘Stocks to Follow’ notes for more details.
• I wasn’t impressed with B2Gold’s 4q16 and 2017 guidance, I was impressed with the
market’s reaction. Today’s main ‘Fundies’ note, it’s still a Top Pick.
• I don’t trust this copper rally, it looks speculative and unsustainable.
Everything is awesome!
It’s easy to make a profit in the stock market. I know that because I’m told that, it’s all I can
hear at the moment so who am I, sitting far from the madding crowd, to argue against the
absolute incontrovertible truth of the winners and movers and shakers who are all “killing it”?
Broad markets are up, precious metals up, industrial metals up, in fact just about every
commodity you can shake a stick at is on the rise. And of course juniors are up so with their
impressive springs come “Look at me and how clever I am” comments from all corners. Yup
you guessed right, the red warning lights are flashing bright in my eyes because when the idiot
end of the market crows loud, some sort of market top is close behind (but don’t worry about
the mouthbreathers, they’ll always have the Bildebergs to blame).
The contrarian investor’s quandary is write large at the moment: It’s one thing to be a
contrarian, the tough part is to know what you need to be contrarian against. As it’s suddenly
1

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easy to take a bunch of United States Dollars, but something with them and a while later sell
the same thing for more United States Dollars than you had before, the obvious, though non-
aggressive, counterparty to “everything going up” is to move into cash. As a market participant
with (mostly) long-term objectives, in most cases I’m ready and willing to ride out near-term
bumps if they come along in order to keep a plan on track. This means I hold things like BTO,
SAND, REG, TK, CDB etc and don’t fret too much about the volatility of the junior world, but
“move to cash” means for me taking profits willingly in the more punctual trades, preferring to
improve the cash position, or not adding to existing positions no matter tempting the share
price looks. A list of examples:
• Wesdome (WDO.to) has now gone, target hit, profit taken. The fact that Friday saw it
blow much higher without me hasn’t lost me any sleep at all
• Belo Sun (BSX.to) has until PDAC to get to target else be culled early and I’m only
giving it that long because I think there’s a reasonable chance Agnico steps up in the
next four weeks and makes its buyout offer.
• My Starcore (SAM.to) position is already smaller and although as stated (far too many
times) I’m not selling them all, it’s about time it got cut down to the right size. That will
happen this week coming.
• Riverside (RRI.v) hit my price target last week and although I like the stock and its
people a lot, I nearly sold last week and have some specific instructions on it below
today.
• Rye Patch Gold (RPM.v) still remains dirt cheap today and yes it’s tempting, but I’m
going to hold off the additions.
• Check the weekly sentiment column in the ‘Stocks to Follow’ list below and you’ll see
there’s only one “Strong Buy” call left, that of Regulus (REG.v) and that because we’re
counting the timeframe of this thinly traded bargain in years.
Mine is not a binary position, it’s moving in the nuanced grey area and not headline-making
“Buy It All!” or “Sell It All!” hyperbole. Be in no doubt that I’m still net long the junior mining
sector and will stay that way, what’s happening is a reeling in of some exposure, raising some
cash in the face of rising risk. The key being “some”, a word that gets undeserved short shrift
these days.
The song and dance man
It's oh so quiet, Shh shh
It's oh so still, Shh shh
It's Oh So Quiet, Betty Hutton, 1951*
Preamble: I’ve tried to tighten up this semi-dijointed rant up a bit, but part of
its message seems to be its very disjointed nature so in the end I edited it
down but kept its disparate nature. I’m not in the running for a Pulitzer
anyway. The TL:DR is “Trump isn’t really much of a factor to our investments
and the world isn’t about to end just because he’s in the Oval Office”.
We need to talk about President Donald Trump. Soon we’ll need not to talk about Trump, the
subject will get too repeated and too boring and as already noted on the blog (1) I’m going to
curtail references to The Donald over there as much as possible (my tiny contribution to online
well-being), but as The US government and its declarations are in the centre of all things newsy
at the moment, there’s no avoiding at least some comment.
And the main comment is that, so far at least, there’s very little that really matters to me about
President Trump’s administration. For sure there has been constant noise, sometimes close to
deafening, about the executive orders and decisions handed down, along with the pushback
from politicians and legal beagles alike. For what it’s worth, my fave to date is his picking a
fight with the US judiciary. Really not a very good idea, Donald, it’s your four/eight year
tenancy vs jurisprudence of two plus centuries, you’re taking a knife to a gunfight.
But it’s all rather inconsequential so far because it’s nearly all domestic policy. For sure building
2

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a big beautiful wall, re-doing NAF(F)TA and not letting people from dangerous countries will
affect people from countries other than The USA, but all of those are domestic and not foreign
policy decisions and if you piss off an Australian politico or two along the way, big deal. The
only thing we mining investors should care about are either domestic fiscal policy decisions that
have a knock-on effect through Wall St, or true foreign policy decisions by The Donald, so far at
least we’ve had none. Yes, we’ve had mutterings about a “phenomenal” (bless him) tax plan (2)
which people are guessing will be “stimulative” (translation: rich get richer) and just the rumour
saw bank stocks pop higher last week. When that one gets rolled out we can see how much
optimism is already baked in, but you don’t need to take my word for the lack of real fiscal or
economic news out there as yet, take it from somebody much smarter than I am about the
subject (3):
U.S. Federal Reserve Vice Chair Stanley Fischer said there was significant uncertainty about U.S.
fiscal policy under the Trump administration, but the Fed would be strict in meeting targets of
creating full employment and getting inflation to 2 percent.
Speaking at the Warwick Economics Summit on Saturday, Fischer also said he thought Dodd-
Frank financial regulation would not be repealed as a whole, and he hoped capital requirements
for banks would not be significantly reduced.
"There is quite significant uncertainty about what's actually going to happen, I don't think anyone
quite knows. It's a process which involves both the administration and the Congress in deciding
fiscal policy," Fischer said, in response to a question.
Translation: “We don’t know what he’s going to do to the US economy yet. And we’re the
freakin’ Fed, we’ve got computers and stuff, you guys out there don’t have a chance!”
Meanwhile, when it comes to foreign policy and foreign relations The Donald has found out
quickly that “The Art of the Diplomatic Deal” is a missing chapter from his best-seller, a good
thing for all of us. Remember all that “recognizing Taiwan” thing? Remember the “China nasty
people playing nasty currency games”? Remember the trade war Trump threatened if China
didn’t start giving America a good/fair/better deal? I’m sure President Xi Jiping of China
remembered all of them when he told The USA that he wouldn’t even pick up the phone if The
Donald wasn’t ready to accept the One China policy. Trump agreed, he now recognizes China
as a single entity offshore islands and all, the two had a long conversation (4) and once it was
done, the two were telling us of their assurances to work together for the greater good of both
countries. Donald, that’s what having your wings clipped feels like. So here’s my bet;
domestically Trump will continue to make waves, cause controversy and shake up “the system”
(or the bit of the system he has identified as the nasty bit), but when it comes to the fate of the
world he’s not going to make much of a difference, the smarter world leaders (China, Russia,
some parts of EU and that does not include the UK) have got his measure already. The most
insightful thing I read about Trump this week came from an unusual source, but a whipsmart
brain. Here’s Mel Brooks (5) on his new President and entourage (and before you send in any
stuffy mails, “anti-Muslim travel ban” are the words of The Guardian, not Brooks’ or mine):
Brooks, who views Trump’s anti-Muslim travel ban as poorly planned and poorly
executed – his parents came to the US as kids – does not revile the new president in
the kneejerk way most movie people do. “Trump doesn’t scare me,” he says. “He’s a
song-and-dance man. Pence [the vice-president] and Bannon [Trump’s scheming
henchman, a kind of Dick Cheney without the radiant, cherubic charm], those guys
make me nervous.” He adds: “We are not talking about Athenian democracy here.”
I agree. However much his style and persona might agree/disagree with you or I, this whole
drain the swamp” and “break the rules” schtick is only going to travel so far. Will “The
Resistance” in The USA change my life, or even my financial situation? About as much as the
Tea Party did (i.e not at all). Will a Trump tax law that allows the rich to get richer have a
knock-on effect on my portfolio? Maybe, but only in the same way the rich got richer through
Reagan/Bush1/SlickWilly/Dubya/Barry did. As long as Trump defines himself as a financial force
for change, be it ultimately positive or negative, I’ll be able to handle his character and
mouthiness. The way he’s already being put in his place on the world stage augurs well, he’s
turning into a net neutral for my life and that’s a welcome turn of events.
*Though you may remember the 1995 Björk cover version
3

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Fundamental Analysis of Mining Stocks
B2Gold (BTO.to) (BTG) 4q16 production, 2017 guidance
A couple of hours after I’d sent IKN403 last Sunday, strangely timed in the middle of SuperBowl
LI, B2Gold (BTO.to) (BTG) finally got round to announcing its 4q16 production numbers as well
as guidance for 2017 (6) (timing so weird that for a few minutes in my pre-coffee Monday
morning headmush I thought I must have missed the NR over the weekend by error). Today
we use the NR as long-overdue reason to take a good look at the house Top Pick, with three
general sections to today’s anal ysis:
1) 4q16 and 2016 production, sales and what it all might mean to the financials
2) An overview of BTO 2017 guidance and how it stacks up to previous years
3) Your author’s thoughts and conclusions on what we saw last week from BTO.
The 4q16 numbers
Oz Au BTO: Gold produced vs gold sold (incl all pre-prod oz)
Let’s get on with it and start with the 160000 gold produced (oz)
topline numbers, gold production and 140000 gold sold (oz)
sales for the quarter which you can see 120000
in the right-hand columns of this chart 100000
to you right. 80000
60000
Production came to 140,651oz gold in 40000
4q16, which isn’t a quarterly record 20000
(that stays with Q3 and its 146,686oz). 0
Sales were 151,514oz gold, which is a 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16 3q16 4q16
source: BTO
record and means BTO dug into its
bullion inventory a little (here right is
the house best guess on that). U$m BTO: Bullion inventory
30 28.2
We can go further, by breaking down production by mine in 25 21.3 23.2 20.0
20 17.5
the next chart below (the numbers add up the same as 14.3
15
above just more detail), with noted underneath to make the
10
points clear.
5
0
3q15 4q15 1q16 2q16 3q16 4q16est
source: company filiings
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 46846
90000
80000 62972
47676
6 7 0 0 0 0 0 0 0 0 46241 41236 40368 47958 52727 57188 48633
50000
3 4 0 0 0 0 0 0 0 0 11970 13158 15686 14517 8903 10216 11075 14185 10007
1 2 0 0 0 0 0 0 0 0 36862 25326 27681 31234 35234 29198 30807 37261 35165
0
4q14 1q15 2q15 3q15 4q15 1q16 2q16 3q16 4q16
source: company filings
• At Otjikoto in Namibia things were good and BTO saw another strong quarter of
production, no matter that the final total of 46,846 oz gold didn’t quite reach the Q3
record. Until Fekola kicks off later this year this is the new mine in the asset suite and
the throughput expansion of 2016 is now established in better production numbers, two
quarters in the bag and we can expect more of the same in 20178 and beyond. This is
4

,
also a very low operating cash cost machine and promises to be highly profitable for
the company (or whoever else eventually owns BTO). Zero worries here.
• At Masbate in The Philippines, zero operational worries here too. We know about the
whole government audit thing and how the final decision on Masbate has been deferred
by its DENR nutbar environment minister, so if you really want to split hairs there’s
something of a shadow hanging over the mine still, but in practical terms even this
militant government with an ax to grind couldn’t find enough to cause a big fuss and
that’s a good result in practical terms, this isn’t going to get closed down. As for those
operations 4q16 saw another good period at 48,633 oz gold produced, again beating
budget. We’ll get to guidance later, but there is a feeling Masbate will turn down the
dial a little in 2017 in order to keep its environmental nose clean (airborne dust
perhaps?).
• At Libertad in Nicaragua, production was disappointing. Yes I know that at first glance
of the above chart the 35,165 oz gold looks reasonably in-line with recent quarters, but
if you take a step back and look at the mine’s production rhythm since BTO took it
over, a streak has just been broken. In 2010, 2011, 2012, 2013, 2014 and 2015 the
best production quarter of each year was the Q4 period and sometimes it beat the
others by a long way. But not this time, Q3 was better and it doesn’t matter how B2
wants to frame it, Libertad came up short again.
• At Limón, the Nicaragua underperformance trait was even more obvious. B2 noted
problems with mine infrastructure (again, the water system they complained about had
recently been upgraded now apparently it needs doing again) and the lack of access to
normal run of mine ore means they needed to blend in lower grading stockpile. The
resulting 10,007 oz Au production number was another miss.
We’ll get to 2017 guidance from the four mines (plus Fekola) a little further down, first lets do
some financial prognostication for Q4 and from the above production plus slightly boosted
sales, BTO as usual pre-announced estimated Q4 revenues in last week’s NR (they will get
adjusted slightly come the year-end financials but they’re normally very close) of U$181.2m,
which looks like this next to previous quarters:
BTO: Quarterly revenues 193.049
200 181.2
180 164.803
160 138.892 136.506 139.25 139.01 144.252
140 114.924 122.422
120
100
80
60
40
20
0
5
41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 tse61q4
U$m
source: company data, IKN ests for FY15
The NR also gave us preliminary cash cost information for the 2016 year (though no segmented
info for 4q16) and the bit that most caught my eye was this line:
“Full-year AISC are expected to be near the low end of the reduced guidance
range of between $780 and $810 per ounce (initial guidance range was
between $895 and $925 per ounce)”
Sounds good, right? Well, not so great if you run a bit of mathematics because both 2q16 and
3q16 saw exceptionally low AISC costs at B2Gold, so when you take the company estimates for
the whole year, use a mid-point between the guidance and see what’s left, AISC for 4q16 is
estimated at U$783/oz. That looks like this on a chart:

,
BTO: AISC Cash costs evolution
1200 1091 1056
1000 946
875 874 873
807
800 731 702
600
400
200
0
6
41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 tse61q4
U$/oz
source: company filings
Then when you take the U$1,196/oz that BTO said it got on average for its gold in 4q16 (lower
than previous quarters through no fault of its own) then do the “received gold price minus
AISC” crunch, you get this chart:
BTO: AISC margin
U$/oz Au
(Avg received gold price minus AISC per ounce)
700 629
600 529
500
400
319 323
283
300 244
200 119 137
100
0
1q15 2q15 3q15 4q15 1q16 2q16 3q16 4q16est
source: company filings, IKN ests for 4q16
Margins aren’t bad and I’m not really complaining too hard about a company that’s making over
U$300/oz (it’s why B2Gold is a Top Pick after all) but they’re nowhere near as good as they
were in the last couple of quarters. That’s the negative influence of the Nicaragua operations
weighing on overall corporate margins, right there.
We can then put the two sides together and get an estimate for revenues, costs and the
resulting operating revenues:
B2Gold: operating margins
$m
220 Revenues Total costs Operating Revs
200 193.0 181.2
180 164.8
1 1 4 6 0 0 129.0 138.9 136.5 139.3 139.0 144.3 128.0
120.3 114.9 122.4 115.6 116.9 116.3 117.8 122.0
1 1 0 2 0 0 91.9 98.3 99.0 103.5 101.8 110.6
80 71.0
53.2
60 37.1 42.4 54.2
40
22.0 15.9 18.9 23.3 19.6 22.9 21.2
20
0
1q14 2q14 3q14 4q14 1q15 2q15 3q15 4q15 1q16 2q16 3q16 4q16est
source: company filings., IKN ests for 4q16
Despite generating more than $16m over 2q16, operating revenues are estimated as slightly
lower due to the hike in costs. We can then take it a step further and try for a net earnings
number, but as always this comes with a caveat, BTO may add/subtract one-time extras below
the line and the net earnings number gets skewed as a result, so this isn’t much more than a
best guess, what really matters as a straight line gauge is the above operating revenues

,
number. Still our estimate is for a U$30m net earnings number, take that for what it’s worth.
BTO: Adjusted net earnings
40
30
20
10
0
-10
-20
-30
7
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 tse61q4
$m
source: company filings, IKN ests for 4q15
Finally just one chart from the balance sheet items, that of working capital. I’m not including to
whole range of balance sheet charts today as a
lot will depend on just how fast BTO has been BTO: Working capital
250
spending at Fekola (and other places), whether
the signed cheques are dated December 28th or 200
January 4th, etc etc. We’ll do those when BTO 150
files its financials, what matters most today is a
100
check up on company liquidity and we’ll do that
via the working capital chart, which is estimated 50
as looking like this (right):
0
Before last week’s NR I’d had working capital
pegged at around $120m, now that’s a slice
lower at $110m. Not a concern however, plenty
of liquidity there and the Fekola build-out will
be just fine. And that wraps up the 4q16 numbercrunch, I’ll leave commentary until the end,
now it’s time to move on to the company guidance parameters for 2017, also announced in last
week’s NR.
BTO 2017 production guidance
One of the main things announced by BTO last week is encapsulated in this line from the NR:
“Fekola project mine construction is ahead of schedule for an October 2017
production start and remains on budget”
Now production start doesn’t mean commercial production so we’re obviously not talking about
Fekola’s eventual 350,000 oz/annum run rate for the fourth quarter of 2017, but this dos flag
that Fekola is ahead of its build timeline, the last time we heard from the company it was
estimated for the end of 4q17. This is good, as is the guidance given for pre-commercial
production in FY17 of between 45,000 and 55,000 ounces of gold. BTO delivers on that promise
and it will win plenty of bonus points with the market. That’s because the rest of 2017 guidance
isn’t so great. Here’s the table supplied with the NR, below some bullet point notes:
41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 tse61q4
$m
source: company filings

,
As mentioned above, the Fekola pre-production range of 45k to 55k oz Au is good. No
complaints, moving on.
• Also fully in order is Otjikoto, pitched at 165k to 175k for this year. As BTO has started
to churn out 45k+ quarters from that asset, there’s more than a suspicion of UPOD
(under-promise/over-deliver) there.
• At Masbate, the company has a clear policy of UPOD over the years but this time there
may be good reason for it to pitch lower. B2 has flagged capital works for the mine and
plans to use stockpiled material for production. As mentioned in passing earlier, there’s
a hint of this mine deciding to cool its jets a little in order to stay squeaky clean with
the Philippines environment authorities in 2017, that may be a reason why the
guidance is pitched to the low side. I think BTO is giving itself (and locals?) room to
breathe here. Not a bad thing.
• At Libertad it’s different, there’s no more room KOzAu Libertad production and 2017 guidance
160
for excuses or arguments, this operation is set to
140
underperform in 2017. Production is pitched at
120
between 110,000 and 120,000 ounces for 2017, 100
I’m expecting the lower level of that guidance 80
60
and if we stick that in an annual production chart
40
(right), not only do we see that 2017 is a
20
deterioration from previous years but we should 0
also recall BTO has been guiding increased 2013 2014 2015 2016 2017est
production for Libertad in previous years. source: BTO filings, IKN ests
The reason for the low 2017 guidance is this, for the NR:
“The Jabali Antenna pit is now planned for production in the third quarter of
2017, pending completion of permitting and relocation activities. In the fourth
quarter of 2016, gold production at La Libertad was 35,165 ounces, consistent
with the fourth quarter of 2015.”
This is the same Jabali Antenna high grading satellite pit that was identified in 2013, a
resource number produced in 2014 and was planned to come into production in mid-
2015...then in 2016...and now they’re saying 3q17. BTO has had significant community
access problems with this resource, the community around the mine isn’t giving access
permission, that’s why it keeps getting pushed back and it’s also why I’m most
comfortable in estimating Libertad in 2017 and the low end of company guidance. If
Jabali Antenna eventually happens on time then all good, I’ll take the happy surprise
and Libertad will outperform my expectations, but after the (literally) years of failed
progress here I’m not holding my breath and expect Libertad to run on lower grading
main pit mineralization.
• At Limón, the company’s 50k to 60k guidance isn’t looking to break any records, it’s in-
line with previous years but we do note the higher expected cash cost at this mine,
which leads us to the next point.
• Over the last two years, the gaps between operating cash costs and All In Sustaining
Costs (AISC) at BTO has averaged U$261/oz. That’s an acceptable number, but if we
strip out Fekola and stick with the sub-total line to give a like-for-like comparative, the
gap between Op Cash Cost and AISC is up to U$400/oz. That’s a lot and it would seem
to be all about capital works at Masbate (pre-stripping going on) and Limón (necessary
equipment upgrades are budgeted in). The overall AISC for 2017 is set around $200/oz
higher than in 2016 and that’s a lot.
8

,
To sum up 2017 production guidance, here’s an IKN chart of the minimum and maximum range
set at each production facility in 2017, plus my own best-guesses:
BTO: 2017 guidances and IKN forecasts for each mine
BTO low end guidance
Oz Au BTO high end guidance
200000 IKN forecast 190000 175000
180000
160000
140000
120000 110000
100000
80000
60000 50000 50000
40000
20000
0
Limon Libertad Masbate Otjikoto Fekola
2017 2017 2017 2017 2017
source: company filings, IKN ests
• I’m pitching at the low end of guidance for the Nicaragua mines (Libertad and Limón)
• At Otjikoto I’m expecting upper end production
• Masbate may turn out to be the outperformer again (after all it did over 200k last year
and BTO can crank up production in the second half of the year if it wants to)
• Fekola is the bonus prize, I’m pitching straight in the middle of the guidance and let’s
see what 4q17 gives us later on.
BTO also gave us preliminary guidance for FY18 last week of 900k, so if we take that number
as read and factor in the 2017 house
estimate, here’s how BTO’s production
profile is evolving over the years:
This chart is the same information but with
an attempt to break down the consolidated
total into mines. The interesting thing about
2017 is that with that pre-production from
Fekola in 4q17 the year ahead would be set
to produce less than 2016 (and for what it’s
worth, the new 570k oz guesstimate for
FY17 is a mile away from my previous
forecast of 620k for 2017).
BTO: annual production and estimates
1000
900
800
700
600
500
400
300
200
100
0
9
0102 1102 2102 3102 4102 5102 6102 tse7102 tse8102
BTO: sales and IKN forecast sales, per annum
1000 900
900
800
700
600 550.423 570
493.265
500
373.4 391.2
400
300
200 108.7 144.5 158
100
0
OzAu
Fekola
Otjikoto
Masbate
Limón
Libertad
source: BTO filings, IKN ests
Discussion and conclusion
I was unimpressed with B2Gold’s 4q16 production numbers. Just over 140k was at the low end
of expectations and the continued glitches at its Nicaraguan mines, Libertad and Limón, are
0102 1102 2102 3102 4102 5102 6102 tse7102 tse8102
OzAu
source: BTO data, IKN ests

,
weighing on its consolidated performance.
I was equally unimpressed with the company’s 2017 guidance, notwithstanding the bright spot
of the advanced move to production at Fekola. The company’s 545k to 590k guidance range is
crimped by Libertad again and its failure to get Jabali Antenna off the drawing board. The other
downer was the guidance on costs, B2 is having to spend more than anticipated this year and
that’s going to eat into profits.
However, I was highly impressed by this:
When the market takes a lacklustre set of results, shrugs it off and powers a stock higher on
the news we should all pay close attention, B2Gold’s rally last week didn’t just beat the market
but pulverized it and all on good volume, too. Not only that, but B2Gold has neatly
outperformed the market in 2017 to date, as this chart indicates:
Be it luck or judgment (I think it’s a mix of both), that’s the chart you want from a
fundamentals-based Top Pick call. Clearly the market is looking beyond a soft 4q16, it’s even
giving a pass to a lowball 2017 production guidance on higher average costs. Why that might
be so is interesting to consider, here are my thoughts:
1) B2Gold has set up 2017 as a transition year. It’s getting capex heavy lifting done at
Limon and Masbate, it’s moving to production at Fekola, the market is willing to forgive
under such circumstances.
2) It’s been no secret that B2Gold has wanted to dispose of its 49% holding in Gramalote
in Colombia for a long time. Last week I picked up solid intel from two sources (one
10

,
tipped me off, then I knew where else I could ask and a completely separate one
confirmed it) that a sale to AngloGold Ashanti (the 51% owner-operator) was close to
being struck and wrote as much on the blog (7). This for me is the first part of the
asset –cleaning process BTO will go through before getting bought out.
3) Next up, with Fekola on line the company will have three decently-sized low cash cost
gold mining operations, ones that will fit into any larger mining company’s portfolio of
assets very easily. Not so easy to say that about the Nicaragua assets Libertad and
Limon, particularly when considering their ongoing production glitches, so it wouldn’t
surprise me in the least to see BTO sell off these operations in the year to come to the
highest bidder.
4) This would leave a lean and strong BTO with a rock solid balance sheet, ready to be
bought by one of the big boys. And this is what I believe is happening now and the
reason we saw B2 move up last week. It’s why I slapped a 12 month $5.30 price target
on the stock last year, a target that matures in mid-2017.
That price target was set in IKN375, back on July 17th 2016. At the time BTO was a $3.88 stock
and gold was trading at U$1,327/oz, since then we’ve been into a small Valley Of Darkness and
back out again. These days gold is lower, BTO is higher and we’re just 19.1% away from hitting
my 12 month target. The plan was, and still is, to sit and wait while the broader mining world
cottons on to the fact that BTO is going to be a tasty meal for one (or more) of the majors and
see its asset multiples increase as a result. With a return to sector optimism, that’s now
underway and neither they nor we should worry about the 2017 transitional year, BTO is now
frying bigger fish and I expect the multiple to be largely baked in before those bids arrive.
That’s why I’m happy to reaffirm my $5.30 price target this weekend.
However, no matter how established a portfolio position may be (and BTO certainly qualifies for
that, I’ve been in and out of it since 2010) there are no sacred cows in this game, no falling in
love with stocks and no sentimental hanging on, come the time. An eventual move in the price
of gold may change things, but as the market stands today I would most likely sell the whole of
my B2Gold position if and when $5.30 shows.
Top Pick reaffirmed, $5.30 target reaffirmed, my largest position and it’s staying that way. End.
Stocks to Follow
Of the fourteen stocks open this time last week, ten made week-over-week gains (BTO.to,
REG.v, SAND, TK.v, WDO.to, BSX.to, ATY.v, RPM.v, RRI.v, R.to) and four losers (CDB.v,
SAM.to, EXN.to, LRA.v). Of the four losers, only EXN and its 5.8% drop is of any slight concern
(and as noted last week, its 4q16 numbers didn’t deserve a rally and it needs to show what it
can do in 2017). Meanwhile of the winners, the best of the bunch was Wesdome Gold (WDO.to
up 28.5% but I got off about half way up that run, see below), followed by Tinka (TK.v up
19.7%), Riverside (RRI.v up 13.7%) and B2Gold (BTO.to up 9.9% and a cheer for that one,
feeling much richer this weekend). All good solid moves compared to the benchmark ETFs (GDX
up 3.2%, GDXJ up 6.5%). If it weren’t for EXN I’d have called it a fully successful week.
With the sale of Wesdome Gold (WDO.to) last week, we now have 13 open positions on the
‘Stocks to Follow’ list, two less than our self-imposed maximum number at any given time. Ten
of the positions are in the green, two are unchanged, one is left in the red. Happy to note that
there are now three 100%+ winners in the list too, including both Top Picks.
11

,
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
B2Gold BTO.to buy C$2.11 12-sep-14 C$4.45 110.9% tgt $5.30 Top Pick prod.
Regulus Res REG.v STR buy C$0.64 06-apr-15 C$1.50 134.4% LT exploreco top pick
Long positions (in current order of preference)
Sandstorm Gold SAND buy U$3.80 17-apr-16 U$4.82 26.8% $7 tgt IKN378, good Q4
Tinka Res TK.v buy C$0.195 19-apr-16 C$0.365 87.2% Under-radar Zn.
Cordoba Min. CDB.v buy C$0.73 15-sep-16 C$1.49 104.1% First $1.50 tgt hit, going up LT
Starcore Intl SAM.to part sell C$0.61 10-jan-15 C$0.61 0.0% ex-Top Pick, reducing position
Belo Sun BSX.to spec buy C$0.90 30-jan-17 C$1.11 23.3% near-term trade $1.28 tgt
Excellon Res EXN.to buy C$1.71 09-oct-16 C$1.79 4.7% $3.13 tgt, Ag growth story
Atico Mining ATY.v buy C$0.51 24-jul-16 C$0.90 76.5% tgt $1.10, Cu play
Rye Patch Gold RPM.v buy C$0.31 02-sep-16 C$0.31 0.0% 75c tgt, bot more IKN400
Riverside Res RRI.v hold C$0.39 27-jun-16 C$0.58 48.7% Added IKN380, 60c tgt
Red Eagle Min. R.to buy C$0.71 13-dec-16 C$0.84 18.3% Big growth potential
Lara Expl. LRA.v hold C$1.15 08-apr-12 C$1.08 -6.1% solid biz model
Short positions
None at present
Closed in 2017 closed close price
Continental Gold CNL.to Jan'17 C$2.68 22-may-16 C$4.17 55.6% trade closed, profit taken
Focus Ventures FCV.v Jan'17 C$0.23 01-jul-12 C$0.05 -78.3% Give up
Wesdome Gold WDO.to Feb'17 C$1.72 28-aug-16 C$3.00 74.4% Target hit, sold, good trade
2009 to 2016 annual closed positions in appendices below
Now for notes on some of the current basket stocks:
Wesdome Gold (WDO.to): Position closed. And although I didn’t get the best price, it was
easy enough on the day to ignore WDO as it sped through my nominal $2.88 target and
towards a 3-handle, where I placed my ask that got snaffled up happily by that nice Mr. Market.
64.4% gain in less than six months, a trade that’s worked out well, I wish all those remaining
long good fortune and hope I’ve left some money on the table for them.
Starcore Intl (SAM.to): Lightening position this week. I’ve tried to be cute about it and
failed, waited for a slightly better price (to cut the overall cost average) and not got it, so no
more Mr Cure and the next few days will see me cut my SAM holding to the size at which I’ll
feel comfortable about holding through longer term. The cash will be hoarded for another day.
Belo Sun (BSX.to): Giving it until PDAC. BSX traded pretty well last week without ever
threatening the $1.28 target price I have on this very-near-term trade, the trading range was
tight as seen in this chart and volumes were healthy. It also managed to shrug off all the
reports coming out of Brazil that the environmental pressure group that operates in Pará
region, Funai, announced it plans to challenge the awarding of the construction permit to Belo
Sun at Volta Grande. I was reading them in Portuguese as early as last weekend, they even
managed to make the English language trade press later in the week (8).
The reasons why you or I shouldn’t be too concerned about these potential legal battles:
• We’re only in this trade for a short period of time.
• It’s much, much MUCH more difficult to get a permit overturned than it is to stop it
from being awarded. Now the cat is out the bag, it’s the environmental groups playing
catch-up and the mining company in the box seat. I will all be extremely unlikely to be
able to get a stay of any type placed on the permit, it will stand and be valid until such
12

,
time as a successful judgment comes down against it and that could take months or
even years.
So here’s the deal: I think there’s a
reasonable chance that Agnico Eagle
(AEM) steps up in the next few weeks and
offers to buy out the 80% of BSX that it
doesn’t already own, so I’m going to give
the potential M&A a bit of time to see if it
indeed matures. But I’m no going to give
it long, up to and including PDAC is my
time window and if it hasn’t happened by
then I will sell earlier than my target price
if necessary, take a reduced profit and
move on. This was, is and always will be a
quick flip trade. I want to build my cash
pile more than I want to sponsor a gold
mine in an environmentally sensitive region of Amazonian Brazil.
Regulus Resources (REG.v): Getting ready for lift-off. REG is set to set its drilling at AntaKori
in March, it’s also playing host to another site visit soon (I won’t be on it, vacation things to do)
and the timing of both will suit the chattering classes looking for the next big copper thing at
PDAC this year. That’s because AntaKori really is the next big copper thing, the sooner the
wider market realizes that the better. The light volume we normally see in this stock means that
it will only take one larger player wishing to invest to push it a lot higher, it’s beginning to look
ripe for that kind of move and for that, it’s now the only Strong Buy near-term sentiment call
left on my list.
Cordoba Minerals (CDB.v): Last weekend I was wondering all about the February 7th
exercise date limit for the CDB $1.50 warrants. Just hours later the company announced (9)
that it was pushing back the exercise date to the end of March. I guessed what was happening,
got in touch with CEO Stifano and my hunch was confirmed; one of the holders of the warrants
that is not HPX had been (pleasantly?) surprised by the big and late run-up in the stock price,
hadn’t expected its $1.50 warrants to come into play and wanted a bit more time to get its
piggy bank together in order to exercise and make the shares whole. That there are instos
willing to take up this opportunity is a good thing, green flag is waving, the overhang potential
has been virtually removed. In the end CDB traded down a tad at $1.49 come Friday’s close but
that’s not a worry.
Sandstorm Gold (SAND): We’ve noted in the last couple of editions how SAND has been
going up without out-performing the market
average. Well this time it’s different folks,
SAND shifted up a gear and beat the market
by around 5% last week. There’s a lot of buzz
around this Frankenstein’s monster JDL and
Luna Gold merger, soon to be called Trek
Mining (Shrek Mining) and as the pro-forma
structure means that once SAND has turned
the debt it holds with LGC into equity of the
new company, SAND will be the owner of
around 19% of Shrek. That’s way too much
for a royalty/streamer, so I’d expect SAND will
liquidate into the round of promotion that’s
bound to come with this mess of a company.
Tinka Resources (TK.v): A whole bunch of things to report about TK, which makes a
pleasant change.
13

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First up, the share price popped hard on Monday morning as a reaction to a buy reco from
newsletter writer Jim Dines (10) (or Mister
Dines to a grunt like me). The chart shows how
TK shot forward and retraced quickly, but a
new raft of buyers turned up later in the week
and the overall 20% win was a strong one on
solid buying volume (Dines is one of the
longest-standing stock newsletters and has a
pretty loyal following, I understand). It was
enough of a move to attract the attention of the
market regulators, which saw TK put out one of
those fakey “we dunno what’s going on” NRs
(11) later in the week came real news, when
the company announced (12) it had received
the final approval for its 2017 drill program and
the one drill would start turning in the next
couple of days, with another joining it in April. This is good and means we can now expect
newsflow from the company all year. This comes with useful timing, just days before TK.v hosts
an analysts’ visit to Ayawilca and from what I’ve heard, they’ve managed to attract some pretty
influential voices on the trip. As I’m confident they’re going to like what they see up there, we
can look forward to more positive vibes to push prices higher.
Which is a long way of saying that even though my original 35c target price has been hit and
event though I’m raising cash from other places in the portfolio, with zinc up and over
U$1.20/lb these days and the stock starting to gain momentum I’m holding on to my TK shares.
The personal portfolio position is my idea of “right sized” and I’m not greedy for more. Your
situation may well be different, in fact it almost certainly is.
Excellon Resources (EXN.to): The worst performing stock on the list last week but I can’t
say I was surprised, as laid out in IKN403 last weekend EXN needs to show instead of just talk
a good company. In other news, we had a decent NR out of the company on Tuesday morning
(13) which announced better terms for sales of its concentrates. Here’s an excerpt...
The final terms agreed with two purchasers are materially better than terms seen in recent years
and represent an approximately 60% reduction in treatment and refining charges relative to 2016
based on budgeted tonnage for 2017 and at current metal prices.
...and as I was interested in what that would mean in real money terms, I asked the company
what difference it would imply at roughly current production rates, as well and double the
current production (after all, that’s the EXN plan). The answer was approximately $2.9m on
1.4m oz/annum AgEq (the best guess for current production rates) and $5.5m on 2.4m oz
AgEq. That’s pretty good money.
Red Eagle Mining (R.to): There was a rumour going round Colombia last week that R-to was
having operational problems at San Ramón, so when the talk reached this desk I did the
obvious thing and contacted the company. It’s total BS (and not the first time false rumours
about problems have been passed around about R.to), the ramp-up is going on schedule and
commercial production is expected to be announced at the end of March.
Riverside Resources (RRI.v): Two things about RRI this week:
1) Last week we had an example from RRI of a rare thing in the junior mining world; a
news release (14) that announced dusters from a drill campaign that is in fact good
news for the company. It’s rare because for one thing, juniors tend not to be as open
and transparent about their drill misses as this. It’s rare for another because even
though they didn’t find big mineralized widths, RRI and its JV partner Antofagasta
(ANTO.l) were happy with the results. That’s no small thing because even without the
mineral hit, both sides believe they’re on the right trail and there are enough geological
14

,
clues for a porphyry to be found nearby. It’s also noteworthy because ANTO is
infamous for quick-hitting and handing back on a JV deal if they don’t find exactly what
they’re looking for in the early stages of exploration (e.g. the way they stuck one hole
into Lara Exploration’s Sami project in Peru and immediately gave up). To see ANTO
sticking around is a double positive for what they might have found.
2) The stock hit my 60c target price last week. This chart below shows the deal, it
managed to ping the 60c level before
falling back and the chart suggests
price resistance right on that number.
RRI isn’t an easy one to trade because
decent daily volumes can be patchy. If
I’d had called sell on it during the past
week the 60c would have disappeared
in a flash and I wouldn’t have got out
at my target, but I’m allowed to put in
an ask this week on due warning and
that’s what I’m going to do. If 60c
comes again I’m going to sell, quite
simply because I want to raise cash and
my original target is here.
This decision is no reflection at all on the high quality of work done by CEO Staude and his
team, I’m also well aware that RRI has been active recently and it could come out with news at
any moment that shoots the price not just higher, but a lot higher. This is a simple portfolio
management decision, coupled with a respect for original targets because, ultimately, I’m
happy about taking 50% winners in that make it in less than three quarters. That might not be
the way you are, but that’s me.
The Copper Basket
After six weeks of 2017, The Copper Basket shows an 23.14% gain to level stakes.
company ticker price 1/1/17 Shares out Market Cap current pps gain/loss%
1 Imperial Metals III.to 6.06 93.587 654.17 6.99 15.3%
2 Capstone Min. CS.to 1.26 382.04 638.01 1.67 32.5%
3 NGEx Resources NGQ.to 1.20 205.06 266.58 1.30 8.3%
4 Western Copper WRN.to 1.86 94.19 198.74 2.11 13.4%
5 Copper Mtn CMMC.to 0.94 118.8 150.88 1.27 35.1%
6 Excelsior Min. MIN.to 0.63 167.364 145.61 0.87 38.1%
7 Cordoba Min. CDB.v 0.73 86.86 129.42 1.49 104.1%
8 Regulus Res. REG.v 1.20 68.368 102.55 1.50 25.0%
9 Coro Mining COP.to 0.15 483.425 91.85 0.19 26.7%
10 Atico Mining ATY.v 0.95 97.59 87.83 0.90 -5.3%
11 Amerigo Res ARG.to 0.345 173.61 77.26 0.445 29.0%
12 Trilogy Metals TMQ.to 0.66 104.33 68.86 0.66 0.0%
13 Copper Fox CUU.v 0.125 417.64 66.82 0.16 28.0%
14 Nevada Copper NCU.to 0.77 80.5 64.40 0.80 3.9%
15 Revelo Res. RVL.v 0.070 128.486 8.35 0.065 -7.1%
NB: All stocks priced in CAD$ Portfolio avg 23.14%
Just three losers (NGQ.to, MIN.to, CDB.v) and two unchanged prices (TMQ.to, RVL.v) from this
time last week, which means ten winners and not listing them all. But the biggest upmoves are
worth mentioning, which are Western Copper & Gold (WRN.to up 27.1%), Coro Mining (COP.to
15

,
up 15.2%), Copper Fox (CUU.v up 14.3%) and Amerigo Resources (ARG.to up 14.1%). All dogs
wagging tails, which is its own commentary on the state of this rally.
The Copper Basket 2017, weekly evolution
30%
25%
20%
15%
10%
5%
0%
Jan1st jan8th 15th 22nd 29th feb5th 12th
source: IKN calcs
The move was fuelled by the big pop in the price of copper on Friday, supposedly on the back
of “supply worries” as La Escondida went on strike,
Las Bambas saw protests and delivery blockages
stopped shipments out of Papua New Guinea too.
See ‘Regional Politics’ for views on the first two but
what’s obvious to me, when considering the shape
of the Friday move (and note it wasn’t Thursday
when La Escondida closed gates), the volume and
the action in the futures market only, plus the clear
end user demand slack we0re seeing via inventory
growth (see below), is that this move in copper is
speculative bullshit and won’t last. It may go higher
and it may do it quicktime too, pumps like this which
are backed by serious amounts of money don’t go
for just 24 hours and pack up shop, they come with
reserves in the arsenal. But expect this move to be
ultimately opposed and when it does, it will spike
and drop fast. Don’t fall for this one,
Now for the regular weekly copper warehouse
inventory bullets, with information to back up my
skeptical position on last week’s big copper price move.
• Total world stocks levels moved a lot higher last week, with the aggregate of the three
official futures systems reaching 624,260 metric tonnes (mt), up 57,397mt (+10.1%).
That’s a big move in what’s normally a quiet, pre-action period.
• The big move and big surprise was the continued arrival of inventories into the SHFE
Shanghai warehouses. This is a novel development, as normally the Chinese New Year
period is a quiet one for inventory movements but this year things have run straight
through. Stocks moved up a massive 53,806mt (+240%) to finish Friday at 277,659mt.
• Over at the LME, things were quieter with inventories dropping, normal for this time of
year. Stocks dropped 8,950mt (-3.5%) decline to close at 248,200mt and offset the
SHFE rise a little, probably due to some arbitrage action.
• Comex stocks moved up again and it’s notable that the build is now accelerating (as per
the Comex’s stated intentions, too). Last week they moved up 4,635mt (+4.9%) to
close the week at 98,401mt. The magic 100k mark is nearly there.
Here’s the Shanghai-only chart, and the upmove in warehouse stocks is as plan as day. Just last
week I was musing on how it may go higher but not reach the heights of 2016, that suddenly
16

,
seems like an underestimation. There’s a lot of copper out there that’s not being used, I see not
reason for the people who buy it to pay higher prices than just a week ago.
Shanghai Futures Exchange Warehouse Stocks, Dec'13 to date
400000
350000
300000
250000
200000
150000
100000
50000
17
ht5naj ht9 ht61 ht02 ht52 ht92 dr3gua ht7 ht21 ht61 ts12 ht52 ts1ram ht5rpa ht01 ht41 ht91 dr32 ht72 ts1von ht6ced ht01 ht41 ht02 ht42 ht92 dr3luJ t7guA ht11 ht61 ht72 ts1naJ ht5beF
Mt Cu
source: Cochilco
Now for some notes on a couple of our basket stocks:
Capstone Mining (CS.to): Here’s the thing:
• I understand that CS plans to produce 94,000 tonnes (207m lbs) of copper in 2017 at a
fully loaded cost of around U$2.30/lb.
• I understand copper shot up to U$2.75/lb last week, therefore there’s a theoretical
margin of 45c on those pounds of copper. That’s U$93.2m, or around CAD$110m and a
lot of money next to a market cap of CAD$638m this weekend.
• But I also know that 43,000 tonnes (94.8m lbs) of that copper is hedged with a
maximum price of $2.53/lb. Do the math and the margin drops to U$72.2m, or
CAD$96.3m.
• That’s a theoretical PE of 6.6X or so and sounds quite good.
Which justifies its market cap and share price. But with its $344m of financial debt on the books
and the company’s well-earned reputation of underestimating costs there’s no way I can get
comfortable with this company, even if the $2.75/lb price sticks.
The Producer Basket
After 6 weeks of 2017, the Producer Basket shows a gain of 21.72% to level stakes.
company ticker price 1/1/17 Shares out Mkt Cap (Bn) current pps gain/loss%
1 Barrick ABX 15.98 1165.33 22.71 19.49 22.0%
2 Newmont NEM 34.07 530.595 19.98 37.65 10.5%
3 Goldcorp GG 13.60 832.381 14.15 17.00 25.0%
4 Franco Nevada FNV 59.76 178.01 12.20 68.55 14.7%
5 Agnico Eagle AEM 42.00 223.475 11.36 50.83 21.0%
6 Ang/Ashanti AU 10.51 405.27 5.43 13.39 27.4%
7 Kinross Gold KGC 3.11 1245 5.09 4.09 31.5%
8 Royal Gold RGLD 63.35 65.281 4.67 71.53 12.9%
9 Buenaventura BVN 11.28 254.19 3.60 14.16 25.5%
10 Sibanye Gold SBGL 7.06 228.71 2.04 8.94 26.6%
Prices in U$, NYSE or NASDAQ tickers Portfolio avg 21.72%
All ten winners this week and no big outstanding performance from any of the basket
components, this was a week in which the boats rose on the tide. We’re still ahead of the GDX
benchmark but only by 0.83%. Nothing in it, really.

,
The 2017 Producer Basket: Weekly performance and
comparative to GDX control
25%
20% basket
gdx control
15%
10%
5%
source: Google, IKN calcs
0%
Jan1st 8th 15th 22nd 29th feb5th 12th
It’s weekends like this when I start feeling guilty for not following the larger caps featured here
more closely, its just tough to get a handle on these larger companies and doing it right without
taking away too much of my worktime, it’s not the focus of this publication. So this commentary
section tends to be fluff and without substance and another week of slight guilt passes over
me, but what I can note quickly and painlessly is that it’s interesting to see how the two new
picks for the basket are performing so far, Royal Gold the worst performer of the ten and
Kinross the best. In an accidental way that’s roughly what I set out to achieve in a bullish
market atmosphere, if the tide turns RGLD will sit next to FNV and become a strong anchor
while the more volatile issues wilt away.
Regional politics
Big Beautiful Wall news
Tell me again how Mexico gets the better of the current NAFTA deal, will you? According to its
official INEGI beancounters last week, Mexico’s industrial GDP dropped 0.14% in 2016 and one
of the main causes of the retraction was the 6.4% drop in mining activity in the country (15).
This makes three years running that mining sector GDP has been negative, though we need to
mention that Mexico counts oil and gas production under the heading “mining” in its economic
data, so the well-documented Pemex production drops are undoubtedly part of the main mix.
In other news, we heard last week that the big beautiful wall would cost something in the
region of U$22Bn to U$25Bn (16) though President Trump has vowed to get the price “WAY
DOWN” (his capslock, not mine). This confused me, I thought he said it was going to be free.
Odebrecht bribery: Ex-Pres Toledo’s arrest warrant and more besides
We’ve followed this story for the last couple of weeks, therefore a quick note on the news that
a national and international arrest warrant has been issued for Peru’s ex-President Alejandro
Toledo, accused of accepting up to U$20m in bribes from Odebrecht (and from what’s been
said about the case, there seems to be overwhelming evidence against him too). Two things:
1) Toledo was last spotted in San Francisco, California. No official arrest warrant has been
issued by either the US government, nor Interpol, therefore until such time if he stays
low he stays out of a remand prison. This is likely to be a temporary situation though,
his goose is cooked.
2) The Peruvian political class is now very, very nervous. Toledo’s wife has already fired
warning shots about how she know what other people have said and done in previous
years, including her specific mention of current President Pedro Pablo Kuczynski (who
was Toledo’s FinMin in the first half of his government). The chances of the bribery and
corruption charges stopping at Toledo and not spreading are roughly zero, unless of
course Toledo can cut a deal based on what he knows.
18

,
But wait! There’s more! Last week also came with “unfounded” (i.e. only the whistleblowers
inside Odebrecht have revealed the truth so far) revelations (17) that Brazil’s current President
Michel Temer, Colombia’s President Juan Manuel Santos and Panama’s President Juan Carlos
Varela have all accepted bribes. The accusations against Temer of Brazil and Santos of
Colombia (Nobel Peace Price winner, bless him!) are that they accepted contributions for party
election campaign funds, but the ones against Varela are akin to those of Toledo, straight back-
pocket stuff. As mentioned last week, this one is going to be a lot of fun. Grab some popcorn.
Peru: Michiquillay tender caught up in the Odebrecht bribery scandal
Last Thursday Peru’s Ministry of Energy and Mining, along with the government’s “Proinversion”
investment arm charged with drumming up FDI for national projects, announced (18) that the
tendering process for the Michiquillay copper project in Cajamarca province was set to happen
in the third quarter of this year. Previously owned by Anglo American as from 2007 (when it
picked it up in a tendering auction, feel free to smirk) it was handed back to the country in late
2014 after Anglo made a complete dog’s breakfast of community relations and along with the
upset caused by the reasonable nearby Conga project and the slumping price of copper, the
company decided to cut its losses, which ran to several billion in sunk costs.
Last week’s announcement is interesting for two reasons. First because the Peru government
seems to be looking at the timing of the copper market to drum up interest, rather than put the
property up for tender immediately. Secondly and perhaps more interesting, up to late last year
it was assumed by one and all that the property was going to be sold by the government to
Milpo, the Peru mining company majority owned by Brazil’s Votorantim and at that time under
the charge of Victor Gobitz who waxed lyrical at any opportunity about Milpo at Michiquillay.
Just couple of months later, Gobitz has moved to be CEO of Buenaventura (BVN) and the Peru
government is knee-deep in the Odebrecht scandal and scared stiff of any potential accusation
of favoritism or un-transparent deals, not least with another Brazilian company connected to
the whole Lava Jato corruption affair in its home country.
Therefore Michiquillay will now go to public auction. Its a great copper project, be in no doubt,
and Anglo spent plenty of money in its development (geological and engineering/technical
studies) so it’s as close to off-the-peg as they come and likely to attract plenty of interest from
the world’s big copper players. Yes its community and political risk situation is a mess, but from
what I’ve been told over the weeks and months it’s not a lost cause in the same way as others
(Conga, Cañariaco), it’s more like Rio Tinto at La Granja...mistakes to unwind and deals to do,
but a decent CSR team (rather than the notoriously clumsy fools at Anglo American who seem
to attract trouble like magnets all over the world) would consider it a winnable challenge.
Peru: State of Emergency at Las Bambas
This one started on Wednesday, with the local populations around Las Bambas (MMG, Chinese
capital) calling a strike and road blockade protest. Then on Friday afternoon, the government of
Peru declared (19) the area around the Las Bambas copper mine under State of Emergency,
thereby giving special powers of intervention to both police force and the armed services (the
latter normally stays out of Peruvian domestic affairs). On news of the State of Emergency,
locals backed down from their road blocks (thankfully, no blood spilled this time) and awaited
Saturday, when two national cabinet ministers (health and transport/construction) arrived at
the centre of the protests, the district of Challhuahuacho, to take part in a three-cornered
meeting in order to try and sort out the problems.
According to protesting locals, the root cause of the problem is that Las Bambas has not
complied with a previous agreement to build local infrastructure for the nearby population,
including improvements in roadways and a hospital.
The declaration of the State of Emergency made for trade media headlines and may well have
contributed to the pop in the price of copper on Friday, but this isn’t going to be a world copper
supply bottleneck of any importance. You can expect a new agreement between both sides
soon and production at Las Bambas is unlikely to be affected in any meaningful way.
19

,
Chile: The La Escondida pay negotiation update
Hey, I suck sometimes. So much for my confident prediction that the La Escondida strike either
wouldn’t happen or if it did, it would only last a couple of days before the two sides got
together again and struck a deal, we’re now on Day Four and the whole thing is happening.
The same day the strike began the BHP-operated mine declared Force Majeur on production, a
surprising move that indicates management are ready to dig in for the long-term instead of
running back to the negotiating table. In fact on Saturday lunchtime, La Escondida union
leaders stated (20) that management had made no effort to reach out to the striking work force
and seemed to be waiting for them to make the first move, which of course they’re avowed not
to do. The union leader likened the situation to a warring marriage and asked that the
government step in as some sort of guidance counsellor:
“If the government wants to do something it will have to get the two sides
together, it can’t be an entity that looks away and doesn’t get involved.”
And that sounds a little less resolute to my ears than the normal union bluster, perhaps the
strikers have been taken by surprise as much as I have by the management’s position. What’s
also happening is that Chilean media are running reports and analysis articles on how the
workers at La Escondida are “The Highest Paid Workers in the Country” (blue-collar) and
whipping up a bit of public opinion against their strike.
Argentina: Strikes on the horizon
The leader of Argentina’s biggest union, the CGT, (21) this weekend called for a demonstration
of worker protest on March 7th in the form of a large march and rally in Buenos Aires, with a
view to then calling for a national strike of union members in protest against the Macri
government policies. Top of the list this year is the way the government wants to put a n 18%
limit on pay rises, which is less than the current and expected rte of inflation (economics 101
should be enough to tell you why one side insists on this and the other rejects the policy out of
hand). The preludes to this autumns key mid-term elections in Argentina begin.
Argentina: The Federal Mining Agreement about to be sent to Congress
As last week unfolded so did details of the Federal Mining Agreement (FMA), the Daniel Meilan
initiative to make Argentina as a nation more attractive as a destination for mining investment.
We now hear (22) that agreement has been reached in principle to the contents of the FMA and
the next step, probably in the next few days, is to get each of the 23 governors of Argentina’s
provinces to sign the document and then send it to the nation’s Congress, where it will get
official ratification.
However and as expected (see last week) the end product is now set to be a style-over-
substance Potemkin Village of a document, as although it’s bound to be promoted with
trumpets and cheers at PDAC next month the original plan behind the document, to lay out a
set of rules that covers the whole country, lays in tatters because the only way Meilan could get
the anti-mining provinces to sign on the dotted line was to include a clause which states, very
clearly, that it was up to the governments of each separate province to decide their attitude
towards mining. In other words, this so-called (ha ha) Federal Mining Agreement is of no worth
whatsoever and changes nothing in the world of Argentina mining, complete power of veto
remains firmly with provincial government and governors so the anti-mine positions of places
like Mendoza, Chubut, Rio Negro, Tierra del Fuego and a bunch of others won’t change.
The FMA is a waste of bureaucratic time and money and achieves precisely nothing, keep that
in the back of your mind when you hear all the rah-rah about Argentina in March.
Colombia: Páramos earmarked for carbon credits
The latest plan from the government of Colombia, specifically its Environment Ministry in
conjunction with a study run by the regional government of Boyacá, to solve the thorny
problem of its high-country páramo areas and the prohibition of mining on them, is to offer the
20

,
regions as carbon credit areas on the world market (23). Presumably the money raised by
carbon credits will help pay off the ICSID/CIADI damages when they’re awarded against the
country for reverting concessions.
Ecuador: Final polls for the Presidential election (and it’s tight)
Late last week was the cut-off date for the final voter intention polls allowed to be published in
Ecuador before the election, set for next Sunday February 19th. Unsurprisingly the main
pollsters all published on that day and here’s how they’re reading the vote (24):
Ecuador Presidential Election: Final voter intention polls
50%
45%
Moreno Lasso Viteri
40%
35%
30%
25%
20%
15%
10%
5%
0%
Perfiles Ciees Op Pub Ec Cedatos Market
source: elpais
The government (i.e. Rafael Correa backed) candidate Lenin Moreno is front-runner in all polls,
but interestingly he’s only scoring the necessary 40% for a first round victory (as long as he’s
10%+ ahead of the second place) in two of the five polls. It’s going to be a close-run thing as
to whether Moreno gets a K.O. victory and if not, he’ll have to run off against either right wing
CREO party candidate Guillermo Lasso or possibly the centre-left Social Christian party
candidate Cynthia Viteri, who is running Lasso close in some of the polls.
If it goes to a second round all bets are off, there could be a big shock in the cards as
governmental opposition rallies round a single candidate. As for our focus sector, you’d
probably want the status quo to win out and Moreno as your next President in order to continue
Rafael Correa’s pro-mining national plans. An opposition victory would put a lot of uncertainty
into the mix, because anti-mining groups are using their special interest votes to help
candidates that would normally be pro-business. Interesting times and all to play for next
weekend.
Market Watching
Lara Exploration (LRA.v): Deferred until next week
On Monday I met up with LRA CEO Miles Thompson for an extended meeting and was
expecting to write up the meeting this weekend. But on further consideration I’ve decided that
LRA needs more time and effort on my part, I’m going to defer the piece for one week and do a
more detailed article on the company in IKN405, next weekend.
GLD gold holdings bounce hard
I’ve typically commented on GLD holdings in the intro sections of The IKN Weekly. I’ve moved
this piece down here today because of the extended rants in the intro today. It’s probably a
better place for this type of comment, anyway.
An interesting week for my gold dataset of choice, GLD inventory holdings (25):
21

,
GLD gold holdings, US Election to date (metric tonnes)
960
940
920
900
880
860
840
820
800
780
22
61/9/11 61/11/11 61/51/11 61/71/11 61/12/11 61/32/11 61/82/11 61/03/11 61/2/21 61/6/21 61/8/21 61/21/21 61/41/21 61/61/21 61/02/21 61/22/21 61/72/21 61/92/21 71/3/1 71/5/1 71/9/1 71/11/1 71/31/1 71.81.1 71/02/1 71/42/1 71/62/1 71/03/1 71/1/2 71/3/2 71/7/2 71/9/2
mt
source: SPDR GLD data
This weekend, GLD gold inventories stand at GLD: Inventory/Price Ratio, 2016 to date
7.5
836.72 metric tonnes and as you can see
7.4
from the right side of this chart, that 7.3
represents a sharp rally from recent lows. 7.2
GLD inventories have added 37.65mt in what 7.1
we’ve had of February so far and that means 7.0
just one thing; the US instos are back buying 6.9
6.8
gold. Or better said, they’re speculating on
6.7
gold. And a look at the GLD price/inventory
6.6
ratio suggests they’re right to do so, the price
6.5
has begun to lag again. Just a bit.
This may be enough of a temporary catalyst
to push gold higher and away from the direct
influence of that pervasive TIPS ratio and indeed,
we saw the metal nudging over a couple of key
technical levels (or so they tell me) before it lost
impetus...so much for key technical levels. But if
inventories stay where they are, to get the above
ratio back to 7.0, its reversion median for the last
three months, we’d need a gold price of around
U$1,265/oz. That’s beginning to look gettable in
this newly optimistic market scenario for gold
bullion. As for the mining stocks, let’s see how the
broad market affects them at the same time.
Dynacor Gold (DNG.to): Denial is not a river in Egypt
I don’t think the world really has cottoned on to just how much trouble Dynacor Gold (DNG.to)
is in due to the way it tried to cut a massive corner in its permitting for the Veta Dorada
processing plant. I’ve covered the story quite closely for the last six months on the blog, but
with the advent of Peru media coverage on the issue last week (26) it’s suddenly gone up a
notch, even if the media is just at a local level. There are several layers to the story, but the
71/3/1 71/4/1 71/5/1 71/6/1 71/9/1 71/01/1 71/11/1 71/21/1 71/31/1 71/71/1 71.81.1 71/91/1 71/02/1 71/32/1 71/42/1 71/52/1 71/62/1 71/72/1 71/03/1 71/13/1 71/1/2 71/2/2 71/3/2 71/6/2 71/7/2 71/8/2 71/9/2 71/01/2
Source: SPDR data

,
main point is that instead of doing the permitting right for the processing plant location, DNG,
via its wholly owned local subsidiary Veta Dorada SAC, went for a much easier and quicker
permit by pretending the land it wanted to develop was for mineral exploration, not for
developing and building an operating plant. It’s a complicated one, but the need-to-know is that
the real permit would have cost them a lot of money and the permitting track is usually around
six years, instead DNG got its permit for free in just six months. Not only is this illegal, but the
episode has severely annoyed a whole host of Peruvian national mining companies who have
been going about their permitting the right way, only to see a bunch of gringos waltz in, ride
roughshod over the rules and, so far at least, get away with it.
But that now looks likely to change. There are several ways in which this story may develop
(like I say it’s complicated) but the path of least resistance and the most likely solution is:
1) DNG pays a multi-million dollar fine
2) Its permit and licence for the Veta Dorada property is reverted to the regional
government of Arequipa
3) The land is then immediately put back up for tender to the highest bidder, which may
turn out to be DNG but there’s nothing to stop any other legitimate mining company
from bidding on the property either.
The other sidebar issue to this is whether, as some people strongly suspect, DNG paid a bribe
to some or other local government or even national government official in order that they turn
a blond eye to the irregular
permitting and let them get their
licences. That’s also bding
investigated by local authorities and
as there has been a change in the
Arequipa regional government via
election since the illegal permit was
issued, there’s less internal friction to
stop that truth from coming out.
Since the IKN blog broke this story in
early October 2016 DNG.to has
under-performed the market, as
seen in this price chart comparing it
to the gold and silver index (XAU).
But it hasn’t been a massive collapse
either and that’s something that is
definitely in the cards when (and not if) this story finally blows up. And as a final comment, I
find it amazing that Canadian market authorities haven’t obliged DNG to issue a statement on
this negative material event for the company yet.
Conclusion
IKN404 is done, we end with bullet points:
• Despite putting in a mediocre set of figures by its standards, B2Gold (BTO.to) (BTG)
rallied like a champion last week. That’s as bullish as signals get. Top Pick solid.
• Risk is rising. Therefore I will reduce my risk. I do that by converting some of my
shares into cash and keeping that cash on the sidelines for a while. This isn’t
complicated.
• Of course I didn’t get out at the top of Wesdome, and of course I don’t care tuppence
23

,
about that. Be clear, if gold goes to U$1,400/oz WDO won’t just be higher, it will be a
lot higher. But I’ll be richer too, just not via that particular trade.
I thank you in advance for any feedback. Our Top Pick stocks are Regulus Resources (REG.v)
and B2Gold (BTG) (BTO.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://incakolanews.blogspot.pe/2017/02/two-ikn-policy-decisions-for-next-four.html
(2) http://business.financialpost.com/investing/market-moves/tsx-hits-all-time-high-fuelled-by-energy-banking-stocks
(3) http://www.reuters.com/article/us-usa-fed-fischer-idUSKBN15Q0G0?il=0
(4) http://www.reuters.com/article/us-usa-trump-china-idUSKBN15P0ED
(5) https://www.theguardian.com/film/2017/feb/10/mel-brooks-donald-trump-doesnt-scare-me-hes-a-song-and-dance-
man
(6) https://globenewswire.com/news-release/2017/02/06/914027/0/en/B2Gold-Corp-Reports-Record-2016-Gold-
Production-Fekola-project-mine-construction-ahead-of-schedule-now-on-target-for-an-October-2017-production-
start.html
(7)http://incakolanews.blogspot.pe/2017/02/b2gold-btoto-btg-news.html
(8)http://www.mining.com/locals-ask-brazil-to-suspend-belo-suns-gold-mine-licence/
(9) http://www.marketwired.com/press-release/cordoba-minerals-applies-to-extend-term-of-warrants-tsx-venture-cdb-
2193626.htm
(10) http://incakolanews.blogspot.pe/2017/02/mining-prs-and-ottotrans-part-99.html
(11) http://www.newswire.ca/news-releases/tinka-unaware-of-any-material-change-612929503.html
(12) https://www.tinkaresources.com/news/tinka-receives-approval-to-initiate-drilling-activities-at-ayawilca-zinc-project-
mobilizes-first-drill-rig
(13) http://www.marketwired.com/press-release/excellon-reports-materially-improved-offtake-terms-for-2017-tsx-exn-
2193850.htm
(14) http://www.marketwatch.com/story/riverside-reports-drill-results-and-go-forward-program-with-antofagasta-at-the-
thor-property-sonora-mexico-2017-02-09-8160216
(15) http://www.proceso.com.mx/474012/sin-crecimiento-actividad-industrial-mexico-en-2016-inegi
(16) http://edition.cnn.com/2017/02/11/politics/donald-trump-border-wall-cost/
(17) https://www.theguardian.com/world/2017/feb/11/brazils-corruption-scandal-spreads-across-south-america
(18) http://www.portalminero.com/pages/viewpage.action?pageId=124488333
24

,
(19) http://elcomercio.pe/sociedad/apurimac/bambas-declaran-estado-emergencia-cotabambas-noticia-
1967641?ref=portada_home
(20) http://www.lanacion.cl/noticias/economia/mineria/huelga-en-minera-escondida-trabajadores-piden-al-gobierno-que-
interceda/2017-02-11/113443.html
(21) http://www.lanacion.com.ar/1983882-pablo-moyano-pidio-una-marcha-contundente-para-el-7-de-marzo
(22) http://www.elesquiu.com/politica/2017/2/11/pacto-federal-minero-provincias-acordaron-texto-final-239173.html
(23) http://www.elcolombiano.com/medio-ambiente/colombia-usara-sus-paramos-para-vender-bonos-de-carbono-
GI5912668
(24) http://www.elpaisonline.com/index.php/2013-01-15-14-16-26/internacional/item/244840-ecuador-moreno-lidera-
encuestas-presidenciales
(25) http://www.spdrgoldshares.com/usa/historical-data/
(26) http://incakolanews.blogspot.pe/2017/02/dynacor-dngto-dont-say-ikn-didnt-try-to.html
Stocks To Follow Closed Positions 2016
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-ago-15 C$0.25 38.9% okay trade, sold on pol risk
McEwen Mining MUX jan16 U$1.09 25-ene-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-abr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-abr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-ene-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-ene-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-abr-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-abr-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
Avino G & S ASM nov-16 U$2.00 21-oct-16 U$1.40 -30.0% Abandon trade on bad bot deal
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
25

,
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
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
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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
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
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Minera Andes MAI.to sep'10 C$0.75 28-jul-10 C$0.95 26.7% ST trade closed
Gold-Ore Res GOZ.to sep'10 C$0.52 01-aug-10 C$0.75 44.2% target made, trade closed
B2Gold Corp BTO.to sep'10 C$1.45 25-may-10 C$2.01 34.5% target made, trade closed
Blue Sky Uran BSK.v oct'10 C$0.41 19-may-10 C$0.22 -46.3% v small v bad trade closed
Dia Bras Expl DIB.v oct'10 C$0.14 30-aug-09 C$0.35 150.0% target made, trade closed
S. Amer. Silver SAC.to nov'10 C$1.38 24-oct-10 C$1.60 -15.9% loss on short, small fail
Ventana Gold VEN.to nov'10 C$7.92 27-jun-10 C$13.51 70.6% trade closed on buyout
Lumina Copper LCC.v nov'10 C$1.42 11-aug-10 C$3.65 157.0% trade closed
Antares Minerals ANM.v dec'10 C$1.42 06-dec-09 C$8.40 491.5% trade closed
Rio Alto Mining RIO.v dec'10 C$0.69 23-mar-10 C$2.16 213.0% trade closed
Coro Mining COP.to dec'10 C$0.585 03-oct-10 C$1.24 112.0% target made, trade closed
Stocks To Follow Closed Positions, 2009
Closed positions closed closing PPS
Cardero Res CDY/CDU.to May'09 U$1.20 03-May-09 U$0.87 -27.5% sold on negative news
Eastmain Res. ER.to May'09 C$1.04 06-May-09 C$1.315 26.4% trade closed
Radius Gold RDU.v May'09 C$0.165 03-May-09 C$0.235 42.4% trade closed
Latin Amer Min. LAT.v May'09 C$0.12 03-May-09 C$0.158 29.2% trade closed
Aquiline Res. AQI.to July'09 C$2.03 16-Jun-09 C$1.68 -17.2% took loss, bad timing
Chariot Resources CHD.to Aug'09 C$0.20 12-Jul-09 C$0.415 107.5% trade closed
Castle Gold CSG.v Sep'09 C$0.64 02-Aug-09 C$0.60 -6.3% ST trade didn't work out
Guyana Goldfields GUY.to Sep'09 C$2.30 12-May-09 C$4.50 95.7% profit taken
Los Andes Copper LA.v Sep'09 C$0.09 21-Jun-09 C$0.09 0% trade closed
Pediment Gold PEZ.to Oct'09 C$0.80 09-Aug-09 C$1.00 25.0% trade closed
Minera Andes MAI.to Oct'09 C$0.68 03-May-09 C$0.71 4.4% too much bad news
Dynasty Metals DMM.to Nov'09 C$4.18 03-May-09 C$6.01 43.8% half sold
Rusoro Mining RML.v Nov'09 C$0.55 03-May-09 C$0.57 3.6% underperformed
Important Disclosure
The information and opinions contained within this report reflect the personal views of the author and therefore all
material within should not be construed as accurate or reliable or be utilized as advice for investment or business
purposes. Independent due diligence and discussions with ones own investment and business advisor is strongly
recommended. Accordingly, nothing in this report should be construed as offering a guarantee of the accuracy or
completeness of the information contained herein, as an offer or solicitation with respect to the purchase or sale of any
security or as an endorsement of any product or service. All opinions and estimates included in this report are subject to
change without notice. It is prohibited to copy or redistribute this report to any type of third party without the express
permission of the author.
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