IKN #613Premium

The IKN Weekly
Week 613, February 21st 2021
Contents
This Week: Trade heads-up, In today’s edition, Gold moving into its consolidation period.
Fundamental Analysis: Selling Peru, Three sales on changes in gold and Peru.
Stocks to Follow: Fiore Gold (F.v) update, Kuya Silver (KUYA.cse), Element 29 Resources
(ECU.v), Norsemont Mining (NOM.cse), The two Top Picks (MAI.v) (RIO.v), Strategic Metals
(SMD.v), Minera IRL (MIRL.cse).
Copper Basket: Overview, Crown (CWM.v), Solaris (SLS.to), Aldebaran (ALDE.v).
Producer Basket: Overview, Barrick (GOLD), StreamerWatch.
Tiny Dogs: Overview, Constantine (CEM.v), Antler Gold (ANTL.v).
Regional Politics: Updating on the Ecuador presidential election Tracking Chile and Peru
Covid-19 cases (week six), Argentina and its “VIP Vaccines” scandal.
Market Watching: Overview, New Gold (NGD) 4q20 and annual results, Copper Mountain
(CMMC.to) 4q20 and annual results.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
“
Trade heads-up
Next week, your author is selling some positions to re-align his portfolio to the unveiling reality
of 2021, cutting some exposure to gold and some exposure to Peru by selling the following:
 Element 29 Resources (ECU.v)
 Norsemont Mining (NOM.cse)
 Kuya Silver (KUYA.cse)
I will also complete the sale of Fiore Gold (F.v) next week, price as seen. See below for details.
In today’s edition
 There’s never an easy or right moment to make trend changes to a portfolio. The
decision to sell three positions and lighten exposure to 1) precious metals and 2) Peru
wasn’t taken lightly, for one thing it flies in the face of messaging about the country,
the metals and also the stocks that were bought and held for good reasons, but get
sold for different and larger ones. That happens today, I’m selling NOM, KUYA and ECU
and there may be further sales to come, too.
 The reasons are twofold, gold and politics. Regarding gold, its trading last week was
not good, the type we see when instos liquidate holdings in order to go play in the Risk
On world of equities. Longer-term, this desk is still fully bullish on bullion and it remains
the most important element of my long-term portfolio and investment strategy. Near-
term, it’s time to lighten a little.
 On politics, here are now two problem election countries for mining in South America,
1

not just one. The situation in Ecuador is set to deteriorate, while in Peru the
Presidential election round one vote is just seven weeks away and the campaign is
beginning to suit the left wing candidate, Verónika Mendoza. That’s not good news for
those exposed to Peru, hence two of the three sales next week.
 Copper’s rally moved into top gear last week and even the bullish guy like me who was
predicting U$4.00/lb was surprised with the speed. The red metal runs through today’s
edition, but gets plenty of treatment in The Copper Basket.
Gold moving into its consolidation period
Today’s edition expands on the notes of last weekend in IKN612, admits the market went
against its bullish gold position last week and faces the reality of gold in the near-term; we’re
not going to see much upside until vaccine euphoria has washed through the world. Early
results from widespread vaccination programs such as in Israel, The UK, regions of The USA,
even Spain with promising numbers this weekend, all add up to a world about to come out of
hibernation and spend its money. But it won’t just be families on happy, carefree vacations
again, by the time large regions of the first world are “Covid-19 free” (more like “battened
down but with outbreaks”, but you get the drift), the Finance Ministers of the world’s
industrialized nations will be out-doing themselves on stimuli in order to get their country’s
economy going first and fastest. This is not a good recipe for the price of gold, ladies and
gents, and while we certainly agree that the ongoing US Dollar debasement will help the price
of gold, we’ve seen time and again that economic expansion and Risk On trades will out-do the
long-term effects of a fiscal and monetary policy based on near-limitless debt (or so they seem
to think).
We se it in the way GLD inventories and dropped recently. The selling through the US
Presidential election resolution was one thing, it also came to a halt but February has seen the
slide begin again. Further below we include the long-term chart of the same data, for context.
GLD gold holdings, Sep'20 to date (metric tonnes)
1300
1280
1260
1240
1220
1200
1180
1160
1140
1120
1100
2
02/9/1 02/9/6 02/9/11 02/9/61 02/9/12 02/9/62 02/01/1 02/01/6 02/01/11 02/01/61 02/01/12 02/01/62 02/01/13 02/11/5 02/11/01 02/11/51 02/11/02 02/11/52 02/11/03 02/21/5 02/21/01 02/21/51 02/21/02 02/21/52 02/21/03 12/1/4 12/1/9 12/1/41 12/1/91 12/1/42 12/1/92 12/2/3 12/2/8 12/2/31 12/2/81
mt
source: SPDR GLD data
GLD gold holdings, 2016 to 2021 (metric tonnes)
1400
1350
1300
1250
1200
1150
1100
1050
1000
950
900
850
800
750
700
650
600
61/4/1 61/61/3 61/62/5 61/8/8 61/81/01 61/92/21 71/41/3 71/42/5 71/4/8 71/61/01 71/72/21 81/21/3 81/22/5 81/2/8 81/21/01 81/42/21 91/8/3 91/02/5 91/13/7 91/01/01 91/02/21 02/5/3 02/51/5 02/82/7 02/7/01 02/71/21
mt
source: SPDR GLD data

As for the Inventory/Price ratio, it’s only fair to offer up the same two chart periods:
7.40 GLD: Inventory/Price Ratio, Sep'20 to date
7.30
7.20
7.10
7.00
6.90
6.80
6.70
6.60
6.50
6.40
3
1/9 6/9 11/9 61/9 12/9 62/9 1/01 6/01 11/01 61/01 12/01 62/01 13/01 5/11 01/11 51/11 02/11 52/11 03/11 5/21 01/21 51/21 02/21 52/21 03/21 4/1 9/1 41/1 91/1 42/1 92/1 3/2 8/2 31/2 81/2
Source: SPDR data, IKN calcs
8.40 GLD: Inventory/Price Ratio, 2016 to 2021
8.20
8.00
7.80
7.60
7.40
7.20
7.00
6.80
6.60
6.40
6.20
6.00
5.80
5.60
61/4/1 61/71/2 61/13/3 61/21/5 61/42/6 61/8/8 61/02/9 61/1/11 61/41/21 71/03/1 71/41/3 71/62/4 71/8/6 71/12/7 71/1/9 71/61/01 71/82/11 81/11/1 81/62/2 81/01/4 81/22/5 81/5/7 81/61/8 81/82/9 81/9/11 81/42/21 91/7/2 91/22/3 91/6/5 91/81/6 91/13/7 91/21/9 91/42/01 91/6/21 02/22/1 02/5/3 02/71/4 02/1/6 02/41/7 02/52/8 02/7/01 02/81/11 12/4/1 12/71/2
Source: SPDR data, IKN calcs
This is the dataset which relieves any real worries about gold; it isn’t losing its popularity as a
safe haven among all the instos and large trading desks, just a portion of them . More
seriously, the impression gathered from our preferred ratio is that of inertia, the type that stops
gold from moving fast in either direction.
The reasons to hold gold are very different from the reasons to hold gold stocks and, using my
well-worn phrase one more time, it’s worth remembering that gold isn’t there to make me rich;
it’s there to stop me, or any other wise holder of the metal for that matter, from becoming
poor*. The PM stocks are different; they will act and react to give all the speculative gains you
could ever require. As market momentum has moved away from precious metals and toward
their industrial cousins, so shall we by selling a couple of PM stocks, reducing exposure and
(usefully) raising some cash.
*Again.
Fundamental Analysis of Mining Stocks
Selling Peru
Hot on the heels of the call to sell and avoid Ecuador on the back of the new social volatility in
the country, today’s main Fundies note has been taken over by a similar regional political risk
issue. Today we do this:

 Outline the deteriorating political scenario in Peru, with just seven weeks to
go before the first round of the 2021 Presidential elections.
 Forecast a strong showing by the main left wing candidate for Peru President,
Verónika Mendoza. Not only is she favourite for one of the two run-off places,
but she may come in first place in the April 11th vote.
 We have changed our position on gold and now, with leeway for standard market
fluctuations, expect it to tread water for the next few months. In conjunction with our
near-term neutral view on gold and expected inertia in the precious metals miners’
sector, I call sell on three positions to lighten exposure to PMs, or Peru, or both.
The pathetic excuses to sell start now, beginning with the background scenario now developing
in Peru and then explaining the central problem. After that, the sell calls.
The scenario. The way into this thorny subject is the latest voter intention poll. There were a
couple of other iffy polls released on the week, but the only one worth our time came from
Peru’s newspaper of record El Comercio and polling company DATUM, which ran a 1,200 person
survey (margin of error +/-2.8%) that looks like this:
Those poll results reflect that of the other reasonable poll in the last couple of weeks, Ipsos, on
which we reported two weeks ago. The tendencies are:
 George Forsyth’s lead dropping fast
 The rise of “least worst” Yonhy Lescano
 Keiko Fujimori has her hard vote at 8%, but is finding it very difficult to build
momentum
 Verónika Mendoza continues a slow rise, up two points since the last DATUM poll
 Daniel Urrestí’s hard-line right wing populism hasn’t found any momentum
 “The field” has five candidates between 3% and 4%, any one of which could find
momentum, and in a couple of recent polls we may have one in the shape of Rafael
López Aliaga (not named above)
We also have the black hand of authority in the mix, because the candidacy of George Forsyth
has been denied by Peru’s electoral body and the only way he stays in the race is by winning
his appeal (difficult to call the outcome). However, the most important data point from the
DATUM poll was that, with less than two months before the election, just 18% of Peruvians
have decided their vote. Another 46% are now thinking about which candidate to vote for,
while 34% said they hadn’t given it any thought. The combination is not good: An uncertain
make-up of the field of candidates (with just seven weeks left, it’s quietly scandalous that we
don’t have an official list), the lack of public interest the campaign, the highly fractured nature
of the field, all piled on top of a country being hit hard by its Covid-19 second wave and coming
after a attempted far right wing Congressional coup attempt last year that was only stopped by
massed public protests in the streets (and the deaths of two of the protesters at the hands of
the police). And the scenario is laid out.
4

The problem: As one looks down the field, it becomes more obvious that Verónika Mendoza is
in a strong position for this first round vote. Bullets:
 George Forsyth needs to turn around his fading momentum fast. His early popularity
among young voters has waned, the negative signal being that the more people hear
from him, the less they like. His appeal with the Peru electoral body has sapped further
momentum.
 Yonhy Lescano has risen in the polls due to support in the South of the country for his
centre-left policies, but his horizons are limited. This is another dyed-in-the-wool career
Peruvian politico with plenty of skeletons in his closet, his advancement is mostly a
commentary on the dearth of leadership options in Peru. His “least worst” campaign
may be able to attract more soft vote intention in the near-term, but upside is limited.
 Much the same can be said for the latest springer in the polls, Rafael Lopez Aliaga,
another “least worst” establishment politico figure, this time with policies that compete
with the right wing populists (Keiko Fujimori, Daniel Urrestí), there’s a certain amount
of desperation in seeing somebody with decades of political background being
presented as the new fresh and honest face of Peru politics.
 Keiko Fujimori’s job is to keep her party alive by getting them above the minimum vote
levels and allowing them Congressional representation. While third in the polls, her
anti-vote and general public rejection has grown enormously since the last election. Of
all the contenders, hers is the easiest to discard as a potential for one of the two run-
off place.
Which brings us to Verónika Mendoza. We begin not in 2021 but in 2016, as that was the year
Verónika Mendoza came from nowhere to
get 18.7% of the vote and third place in the 20% Verónika Mendoza voter intention for 2016 election 18.7%
first round election behind Keiko Fujimori 18% 15%
16%
(39.9%) and Pedro Pablo Kuczynski (21.1%). 14% 12% 12%
12%
She was typically polling between 2% and 9%
10%
5% with two months to go in the vote and 8%
6% 4%
her surge only came when focusing on the 4% 2% 2%
Lima conurbation in the last weeks of the 2%
0%
campaign. In that campaign, she was widely
criticized for not denouncing Venezuela as a
dictatorship (the classic attack on left-
wingers in all LatAm), a mistake she won’t
make again and she’s already been
vociferous and loud against the Maduro
regime. The chart shows how her 2015/2016 election campaign started slowly and built into the
final weeks, she will be doing the same thing again this time.
Meanwhile, there’s even evidence that the “Left Shift” in LatAm politics has already arrived in
Peru. With Argentina, Uruguay, Bolivia and now Ecuador all taking a jump to the left in their
recent elections (and Chile almost certain to join them in November), it’s not been quite as
obvious in Peru so far, but this analysis (2) of the 2020 special
congressional elections in Peru (the one that filled the current
Congress) notes the shift as well Here’s a small visual from the
note (right): The right wing (derecha) lost 17.3% of voting power
in the 2020 congressional elections, compared to the same
elections of 2016 and after margins of error, those spoils were
shared by the centre parties (+5.08%) and the left wing (izquierda) (+8.33%).
With seven weeks left in a campaign that is being ignored by a Peru fed up with their samo
samo politicos, the 2021 election campaign is opening up for the left wing Mendoza. She is
benefitting from the public’s disdain for politics in general, offering them an alternative to Peru’s
5
51'ced
01-5
61'naj
41-21
61'bef
81-31
61'ram
01-5
61'ram
71-51
61'ram
42-22
61'rpa1/ram03 ht01
noitcele rpa
source: IPSOS/wikipedia

eternal political class. The disaffected voter who sees nothing of benefit from their electoral
choices will be attracted, provincial voters will be attracted, voters who want to “change the
system” will be attracted, what’s more Verónika Mendoza increasingly has the young vote on
her side. On top of the natural tendency for the teens and twenties age groups to be more left-
leaning, Peru’s new generation of voters are tired of the mess made by Congress, the
presidency and its main political actors. Although Mendoza has been on the political scene for at
least a decade (she was Nadine Heredia’s personal secretary until she found out how corrupt
she and her husband were), she represents a different branch politics that doesn’t get
stigmatized by Milennials in the way the Left is hated by those Peruvians who lived through the
Sendero Luminoso terror years. Not only does she have the real left wing largely to herself, she
also gets the rebellion vote, the anti-system vote and the votes of those people who stood up
to Congress in November 2020. Peru’s standard political class seems to have forgotten about
the usurping of Congress by Manuel Merino (a move supported by Yonhy Lescano, which will
come back to haunt him), the campaign has to date been all about promising wonderful things
in the future under their government. That is a mistake, Mendoza will capitalize on it when she
turns her attention to the capital city in March. She also has the best Twitter presence of all
candidates (and that’s by a mile). Personable, educated and a good speaker, her private life is
also impeccable. Bottom line: This woman is dangerous to mining investments in Peru in 2021.
In previous editions of The IKN Weekly, the forecast for Peru’s 2021 Presidential election has
been one of uncertainty and a gathering storm, but not of a threat to Peru exposed mining
companies. While the second round and resolution on who becomes the next President is
further into the future, the first round vote is beginning to shape up and suddenly, it is not
looking anywhere near as positive for investments in the country. Peru now looks set to join the
Left Shift across LatAm and we shouldn’t merely expect Mendoza to reach the run-off, she now
has a clear run at coming first in the April 11th vote and moving to the run-off with real
momentum. If that happens, it will send shockwaves that will hit Peru’s investor-friendly image
hard. And here’s what I plan to do about it:
Three sales on changes in gold and Peru
The combination of two major trend factors, that of gold’s likely inertia in the near-term and the
rise of left-wing Veronika Mendoza in the Peru elections, means there’s action to take.
However and to be clear, this desk is not calling for a wholesale wipe-out of the precious metals
mining sector, á la 2013. This is more about inertia, we are likely to see the precious metals
stocks underperform those of other sectors (e.g. base metals/copper). Also, not all PM stocks
are going to be affected in the same way, so pruning the portfolio also means targeting the
weakest sub-sectors. Here’s a list of potential winners and losers in a neutral gold market:
Large producers: Stocks should slowly decline as costs creep, so the macro is
slightly neutral. However, these companies are big enough to out-perform tidal
changes, the effect will be minimal here.
Small producers: Would also see cost creep, but countered by growth/M&A
opportunities. Overall IKN best-guess is a neutral market, therefore good for stock
pickers.
PM Developers: If fully funded (or with obvious runway) to production, this sub-
sector is best positioned of al after the latest drop. Any cost increase will be more
than compensated by re-rating on execution of project, an example of this type of
PM junior would be Minera Alamos (MI.v, Top Pick, financed to production), Rio
Alto (RIO.v, Top Pick is all-but financed) or Orezone (ORE.v, fully financed to
production just days ago). They’ve all been dragged down by a market they no
longer need to appease, they will rebound fastest.
PM Explorecos: If well funded, slightly negative. If treasury is an issue in 2021,
negative. Once again, the saving grace will be stock picking, no need to rush for
the door because this isn’t a gold crash scenario. gold isn’t about to drop hard (or
much further).
6

With that, decisions get made. I am looking to sell the combo of 1) PM exploreco 2) without
deep treasury 3) in Peru. As noted above I have chosen to sell three stocks, namely Kuya Silver
(KUYA.cse), Element 29 Resources (ECU.v) and Norsemont Mining (NOM.cse), but before we
get there, it’s only correct to explain the reasons “why not” on two other stock positions that fit
the bill in theory:
 Not selling Pucara Gold (TORO.v): This company hits all three criteria so it was always
going to be under consideration, but it stays for the time being because it’s cheap and
unlikely to get much cheaper without new news, and also because it has drill results in
the pipeline and for the small money involved, there’s very little personal risk in holding
through a few months until Pacaska is drilled. However, this stock is already on its
Strike One and we may sell for its own reasons in the meantime.
 Not selling Minera IRL (MIRL.cse). Also in Peru, also a PM company, also with a funding
gap, MIRL checks on all criteria and if it were a normal stock or company, yes I would
sell it. But it’s not normal and unfortunately, I know that I have to hold these shares
until at least a deal to fund Ollachea is announced (or some type of sale is made).
There’s also the question of the thin market, which means it’s better left alone.
With the discards explained, now for the upcoming sales and their explanation
 Selling Kuya Silver (KUYA.cse): In Peru, Precious Metals (silver) and looking to
finance soon. What’s more, by selling this I get to bank a small profit and, at the same
time, reduce exposure to silver. The first sale.
 Selling Element 29 Resources (ECU.v): This one hits two out of the three criteria
and it may turn out to be a mistake, what with its target metal being copper. However,
it’s one of the few places where I can lighten the portfolio of Peru exposure
meaningfully, plus (as noted below) there’s no need to sellfirst thing Monday morning;
if copper keeps its rally going I will be able to sell these later in the week at higher
prices.
 Norsemont Mining (NOM.cse): Finally and on due consideration, I’m going to man
up and take my loss on Norsemont Mining (NOM.cse). This company looks great on
paper, which means the way is has traded almost since its IPO is something of a
mystery. Also, I cannot help but notice that the promised newsflow from the company
regarding appointments etc has not made it to any NR yet, the type of detail that
wouldn’t matter had the company not already dragged its heels on promised newsflow.
When my NOM trade went -50% last week, it was time to make a decision to either
stop the bleeding and include this larger and bad trade in the sales, or let it some time.
Ultimately, today’s edition of the weekly is about making unpopular decisions so NOM is
the third stock that gets cut from the Stocks to Follow as of next weekend.
It bears a reminder that, suspicions on NOM’s tardiness aside, the three sell calls are macro
calls on my specific portfolio and its conditions (underlined and bold typed for a good
reason). This isn’t a sudden hatred for the work being done at KUYA, it’s not about a change of
heart about the prospectivity of the ECU assets, it’s not a call on environmental or social risk at
NOM in Chile. These are decisions made despite company fundies, not due to them and in
every case, I’d be happy to return to the trades once the current political risk period has
passed. But until that point, my Peru exposure and my PM exploreco exposure is reduced
accordingly.
7

Stocks to Follow
Copper ran, gold retreated and the result is a portfolio littered with negatives in the PM world,
with the green ink mostly around the Cu plays. However, nobody gets out unscathed from a
week where GLD dropped 2.2%, GDX dropped 5.9% and GDXJ 5.4%. We had five winners
(CMMC.to, TMQ, MIN.to, KUYA.cse, MIRL.cse) and two other stocks remained unchanged
(ORE.v, AUL.v), that leaves ten losers and the 14.7% lost by New Gold (NGD) was the only
loser that dropped by double figures. Meanwhile on the bright side Copper Mountain (CMMC.to
up 24.4% did a good job of leadership among the copper stocks.
After re-jigging the recommended stocks list into a new order of preference last week, I wrote
that I currently think CMMC, TMQ, NOM and SMD are the best near-term opportunities on the
list. That call lasted exactly one week, as NOM is now being sold due to portfolio re-alignment
and one too many question marks around the stock. Also, SMD failed to battle the PM
headwinds last week even after getting good news (see below), but at least CMMC and TMQ
delivered nicely. Expecting that to continue as copper is bought into the week ahead.
We currently have 17 open positions on the Stock to Follow list, but that drops back to 14 next
week due to the planned sale of three positions. Nine of our stocks are in the green compared
to their cost averages, eight are in the red.
company Ticker this week Avg Price Reco date Current PPS Gain/Loss% Notes
TOP PICKS
Minera Alamos MAI.v STR BUY C$0.21 13-Oct-19 C$0.56 166.7% New $1.14 tgt Aug'20 #1 idea
Rio2 Ltd. RIO.v STR BUY C$0.83 22-Apr-18 C$0.72 -13.3% $1.58 tgt, bot again Nov'20
Recommended stocks (In order of preference)
Copper Mountain CMMC.to STR BUY C$1.40 22-Nov-20 C$2.96 111.4% Added Dec'20, trade for FY21
Trilogy Metals TMQ STR BUY U$1.84 15-Sep-19 U$2.50 35.9% Added Dec'20, Cu for 2021
Norsemont Mining NOM.cse SELLING C$1.55 6-Sep-20 C$0.77 -50.3% Cut loser to reduce Au exp.
Strategic Metals SMD.v STR BUY C$0.40 31-Jan-21 C$0.39 -2.5% Asset $ trade, proj generator
New Gold NGD BUY U$0.76 9-Feb-20 U$1.51 98.7% 3q20 tgt $2.80
Excelsior Mining MIN.to STR BUY C$0.98 10-Mar-19 C$1.00 2.0% Added again Dec'20, Cu'21
Royal Road Min. RYR.v BUY C$0.155 17-Mar-19 C$0.38 145.2% Model paying off in Nica
Element 29 Res ECU.v SELLING C$0.49 7-Feb-21 C$0.57 16.3% Return post-Peru election
Great Bear Res GBR.v BUY C$15.83 26-Aug-20 C$14.45 -8.7% M&A major tgt, added IKN590
Orezone ORE.v BUY C$0.79 21-Jun-20 C$0.98 24.1% M&A now or re-rate later
Kuya Silver KUYA.cse SELLING C$1.66 8-Nov-20 C$2.34 41.0% taking profit
Aurelius Res AUL.v spec buy C$0.075 28-Jun-20 C$0.05 -33.3% 1st assays promising, spec buy
Pucara Gold TORO.v hold C$0.65 4-Oct-20 C$0.265 -59.2% Strike One
Minera IRL MIRL.cse hold C$0.195 22-Jul-12 C$0.145 -25.6% hold until further news
Long-term non-mining hold
Mene Inc. MENE.v LT Hold C$0.65 6-Dec-20 C$0.63 -3.1% LT bet on jockey&horse,will add
Closed in 2021 closed close price
Fiore Gold F.v jan'21 C$0.98 21-May-20 C$1.25 27.6% will close all next week
2015 to 2020 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Now for some notes on covered stocks:
Fiore Gold (F.v) update. I now feel stupid for waiting, but circumstances have changed and
as such, as per today’s decision to lighten PM exposure I will also sell my remaining shares of
Fiore Gold (F.v) next week and close the position with a real close price.
8

Kuya Silver (KUYA.cse): SELLING. A line to underscore the decision made above in today’s
Fundies section. KUYA fits the profile as a 1) precious metals 2) exploreco 3) in Peru, the right
mix for most weakness going forward, according to the house theory at least. It’s up for debate
as to whether KUYA’s silver-based profile is better or worse than a gold profile for a junior, but
on a personal level silver is never going to be a long-term investment vehicle and it’s easier to
take profits on this company than it would be a goldco.
Element 29 Resources (ECU.v): SELLING: Considered as a trade only recently and bought
just three editions ago, it’s a quick turnaround and farewell for ECU.v due to your author’s
desire to lower exposure to Peru. However, the way copper is blasting forward at the moment
means I’m likely to sell during the latter days of next week, rather than trying to leave first
thing tomorrow morning at the bell. As for a sell target, though there’s no way I’m getting cute
on a trade that is opened and closed so quickly, it wouldn’t surprise me to get out at over 60c.
The market does not care a jot about the political risk opinions of this publication; both you and
I should fully expect any influence on Peru-exposed stocks to be limited in time and scope. I’m
also expecting plenty of pushback on the call, up to and including mockery will be welcome at
this desk. That’s a long way of saying there’s no need to rush for the door on any sale, today’s
“sell Peru” at The IKN Weekly call may make a minor ripple for a day or two, but it will soon be
forgotten in the flow because that’s what always happens.
Norsemont Mining (NOM.cse): SELLING. The final lightening this week is not in Peru, but
it does have the combo of precious metals and exploreco with a finite treasury. As noted above,
NOM also became the macro choice to sell due to its micro roll-out to date. Also, the position is
50% down and that alone is enough to kick in some basic portfolio preservation strategy.
This is the loser of the three getting cut, it’s also a fairly big realized loss for the portfolio and
that is never a good thing (the wins from KUYA and ECU do not come close to covering the
hole). Sometimes the only honest thing to do is admit a failure, cauterize and move on, NOM
has failed as a trade and will be closed this time next weekend.
The two Top Picks (MAI.v) (RIO.v): At the top of the table, the Top Picks lost 4c (MAI.v)
and 5c (RIO.v), their slow price deterioration continuing into the downdraft last week. They get
a mention here because if not, I fear this may be another edition of the weekly without any
meaningful information on its two biggest positions.
We find ourselves in a something of a news hole at both companies and at the same time,
which isn’t a major worry to this desk but the lack of news is clearly making people nervous
(the mailbox provides evidence, as does the price action in both. FWIW I know the RIO.v team
is hard at work finalizing on its financing package for Fenix, I also checked in with MAI
President Doug Ramshaw last week and news from that camp is of a Santana being built to
plan and a first gold pour still expected in 2q21.
Strategic Metals (SMD.v): SMD got immediate good news on its new position in Honey
Badger Silver (TUF.v), the re-worked exploreco
that has picked up a couple of SMD’s land assets
on option to go exploring for the new fashion
metal. Last week TUF announced a $3m
placement with none other than Eric Sprott
taking $1m of the deal and TUF’s new Chair
Chad Williams putting $1.5m of his money where
his mouth is (good to see).
That turns TUF.v into a C$13m+ market capper,
thanks to the boost in share price and share
count, with SMD’s slice now worth around
C$1.95m. In other words, from nothing SMD has
9

added around 4.5% of value to its market cap and has embarked on another of its successful
(to date) minority share positions in partner companies.
Minera IRL (MIRL.cse): Those who remember the litany of broken promises left by this
company in 2020 may remember the one about better investor outreach. A list:
 September 2020: Minera IRL issued two press releases
 October 2020: Minera IRL issued two press releases
 November 2020: Minera IRL issued four press releases
 December 2020: Minera IRL issued one press releases
 January 2021: Minera IRL issued two press releases
 February 2021: Minera IRL has to date issued zero press releases
Not only is the frequency of NRs lacking but content is thin, too. When CEO Benavides was
worried about his job it was one thing, so it’s notable that the only NR in December was to
announce the results of the AGM (and we never got the final vote count on that, just some
blather about it being “overwhelming”). We are back to Mushroom Politics at MIRL.
The Copper Basket
After seven weeks of 2021, The Copper Basket shows a gain of 28.42% to level stakes.
company ticker price 1/1/21 Shares out Market Cap current pps gain/loss%
1 Solaris Res SLS.to 6.08 104.67 742.11 7.09 16.6%
2 Copper Mtn CMMC.to 1.81 207.5 614.20 2.96 63.5%
3 Oroco Res OCO.v 1.85 185.11 349.86 1.89 2.2%
4 Western Copper WRN.to 1.57 135.6 280.69 2.07 31.8%
5 Marimaca Cop MARI.to 3.25 64.358 250.35 3.89 19.7%
6 Excelsior Min. MIN.to 1.12 239.063 239.06 1.00 -10.7%
7 Amerigo Res ARG.to 0.80 180.77 168.12 0.93 16.3%
8 Regulus Res. REG.v 1.07 101.85 119.16 1.17 9.3%
9 Chakana Cop PERU.v 0.60 117.2 66.80 0.57 -5.0%
10 Aldebaran Res. ALDE.v 0.455 93.64 60.87 0.65 42.9%
11 C3 Metals CCCM.v 0.115 375.17 60.03 0.16 39.1%
12 Element 29 Res ECU.v 0.45 66.7 38.02 0.57 26.7%
13 Doré Copper DCMC.v 1.00 40.938 36.84 0.90 -10.0%
14 Crown Mining CWM.v 0.105 87.53 25.82 0.295 181.0%
15 Chibougamau CBG.v 0.165 46.695 7.94 0.17 3.0%
NB: All stocks in CAD$ Portfolio avg 28.42%
An interesting week.
The Copper Basket 2021, weekly evolution
Note that it wasn’t all one-way traffic, as 30%
Element 29 (ECU.v) managed to lose 2c 25%
after its fast sprint up of the week before. 20%
Apart from that it was all green for copper
15%
last week, 14 winners on the list including
10%
the biggest winners Crown (CWM.v up
5%
55.3%), Copper Mountain (CMMC.to up
24.4%), Western (WRN.to up 21.1%), 0%
Jan 1st Jan10th 17th 24th 31st feb7th 14th 21st
Aldebaran (ALDE.v up 18.2%), Solaris
(SLS.to up 15.9%), Amerigo (ARG.to up source: IKN calcs
12.1%) and Regulus (REG.v up 10.4%) also
made the frame in the double figure percentage winners last week.
10

I decided to cheat with this week’s copper chart, waiting until Asia trading opened on Sunday
evening Americas Time before taking the screenshot. The result is copper up again, trading
early at U$4.09/lb:
The Longview 20 year chart shows the successful return to U$4.00/lb, as expected by these
pages but coming more quickly than anticipated. The bullish sentiment flow through our two
selected macro commentary pieces from two sources this week, first up this, an excerpt from
CNBC’s Trading Nation (3). The subject was the zoom in the price of copper and sure enough,
the panel was bearish.
“…after a 22% rally in three months, it may need a breather, strategist Matt Maley told
CNBC’s “Trading Nation” on Thursday.
Which is nice, considering what happened to the metal on Friday:
However, let’s give Mr. Maley his due and the floor, in order to develop his argument:
“On a short-term basis, you want to let them come to you,” Miller Tabak’s chief market
strategist said. “It’s had this huge rally, and it’s getting quite overbought on a near-term
basis.”
Maley pointed to its relative strength index, a measurement of how overbought or
oversold an asset has become. On a weekly basis, copper’s RSI has moved above 70,
which typically indicates overbought conditions.
Okay, so he’s looking at copper from a purely technical standpoint and hasn’t got a feel for the
supply/demand dynamics. However, his TA opinion is logical and stands to reason, it just wasn’t
on Friday.
“I think, therefore, it’s getting ripe for a pullback, which would be normal and healthy,”
said Maley. “Another concern is the dollar, which is a very crowded trade on the short
side. If that rallies at all here in the near term, that could be another excuse for
commodities to come in.”
11

Perhaps he’s grasping for his secondary, but the concept of the USD rallying into a mega
Northern Hemisphere vaccine rally isn’t easily dismissed any longer.
Maley added that this was not a bearish call. He turned bullish on commodities over
the summer and believes in the broader turnaround in the space.
“Love them long term and I think any pullback will provide a great buying opportunity.
Near term, you don’t want to be too aggressive here,” he said.
That’s a reasonable call, nothing wrong with banking a few profits or cutting a few losers if
given the chances (i.e. me today) and Mr. Maley isn’t such a bad macro commentator, after all.
He just wrong on copper near-term , as tonight in Asia makes clear.
Our other snippet this weekend is a direct translation (your author takes full blame) of the
report I read every Friday, Cochilco’s weekly missive on copper found here (4). As well as the
source for most of the inventory data we use, the Cochilco report proves its own summary of
the week in copper (and metals) and reading this week’s was an object lesson in ticking off
every major factor pushing copper during this Perfect Storm for the metal. It was pleasant to
hear the argument from another source, even more so from one as sober as Cochilco so here’s
a translation of how Chile’s oversight body saw the week:
“The copper price settled at U$3.995/lb, the highest level since September 9th 2011.
Compared to a week last Friday, the copper price registered an increase of 24.3c/lb
(+6.5%). On Thursday, the Chinese markets opened after their Lunar New Year holiday and
a strong demand impulse was observed, catapulting the price to close to U$4.00/lb. Among
the factors to explain the week’s price move are:
 In general, the price increase in copper is part of the improving prices for prime materials
on a world level. The last months have seen a rise in the price of petroleum, lumber, wheat,
corn, cotton and industrial metals, a phenomenon induced by large fiscal stimuli and
expansive monetary policies among the industrialized nations, in order to counter the
paralysation effects of the Covid-19 pandemic, which continues to affect The USA and
Europe.
 As such, the market for copper is characterized by expectations of a rebound in world
demand, a panorama of tight supply, a dollar trending lower, expectations of inflation in the
future and speculative bets on the metal connected to the idea that copper is a crucial
component in the generation of green energy to reduce carbon emissions.
 At the same time, copper inventories in the metals markets are at 247mmt, almost the
lowest level for a decade. As such, the spread between spt and the three month futures
contact is currently in backwardation (spot price higher than futures price), a condition which
occurs when the market perceives supply tightness in refined metal. This adds to
expectations that in 2021 and 2022, the copper market will be in overall deficit, adding
additional force to the price rise.
Couldn’t have put it better myself. We move to the regular weekly world copper inventories
section:
 World aggregate inventories rose last week, the total up 5,062 metric tonnes (mt) and
not a moment too soon for the sector. This weekend the aggregate is 213,987mt.
 The main news is around the SHFE, which saw a second vital addition in the last week
before CNY closedown and added 9,983mt (+14.5%). Along with the week before, that
12kmt added in the first two weeks of February and the bottom signal we required, we
now wait to see how quickly tonnages re-stock in the post-holiday period. Make no
mistake, supply remains extremely tight.
 The LME lost 1,850mt and dropped back to a total of 74,700mt in stock this weekend.
Extremely tight and cancelled warrant percentages are rising again, implying new
drawdowns to come.
12

 A significant move in Comex stocks, which are now seeing their own drawdown (North
American demand improvement??). Stocks dropped down 3,071mt and closed at
60,716mt, the Comex warehouses have lost around 10% of their copper holdings since
November.
Here is the Shanghai-only inventories, we welcome that 34k injection, but recognize we need
five or six other dumps of the same size to get the market back up to inventory.
Shanghai Futures Exchange Warehouse Stocks, 2014 to date
400000
350000
300000
250000
200000
150000
100000
50000
0
13
31'13ceD ht9 ht81 ht72 ht5tco ht41 dn22 5102
dr3yam
ht21 ht02 ht92 ht7bef ht71 ht62 ht4peS ht31 ht92 ht9 ht81 ht72 7102
ht5von
ht41 ht52 ht01 ht91 ht82 9102
ht6naJ
ht71 ht62 ht4gua ht31 dn22 0202ts1ram ht01 ht91 ht72 0202ht6ced ht41
Mt Cu
|
source: Cochilco
Now for notes on some of our basket companies:
Crown Mining (CWM.v): Remind me again how this stock managed to get on the 2021 list?
For what it’s worth, it had showed on a filter for the right size of small and active copper
company before a subscriber mail arrived suggesting it as a good idea. That got me to focus
and here we are, with a bona fide early 2021 tinycap springer to follow. As for the reason
behind this run-up, it seems to be this Feb 16th NR announcing a 6,000m drill program at its
two main targets (5).
“(TSX Venture: CWM) (Frankfurt: C73) is pleased to announce it has signed a drilling
contract with Timberline Drilling Inc. to drill a minimum of 6,000 feet at the Superior and
Engels deposits, both part of Crown’s Moonlight-Superior Copper Project in Plumas
County, California. Drilling is scheduled to start in May 2021…”
The announcement of a modest drill campaign, starting in three months’ time, was enough to
send CWM rocketing. Also notable in the NR was the information in the last paragraph:
The Company also announces that incentive stock
options to purchase up to 950,000 common shares
have been granted to various consultants of the
Company pursuant to the Company’s stock option
plan and are subject to any regulatory approval.
Each stock option vests immediately and is
exercisable at $0.20 for a period of three years from
the grant date.
The “various consultants” of the company seem to have
done a good job…for themselves. Aside the details
around CWM, this is what we look for from the tinycap
base metals stocks, but as years of read ink in he lower
half of the Copper Basket lists show, snagging one is easier said that done.
Solaris Resources (SLS.to): We marked SLS “at C$6.00” for the start of the nervy period for
Ecuador politics, which means its $7.09 price this weekend is indicative of a market unworried
about the risk of the second round vote (we also saw SolGold rally on Friday). SLS pimped its
week by announcing on Wednesday that it had increased the rig count on site to 12 rigs, as the
company begins to step out and explore a separate target close to the main drilling at Warintza.

Aldebaran (ALDE.v): I watched last week’s Technical Presentation webinar given on Altar by
Kevin Heather and came away with the impression that this extremely large, low grade project
would take a couple of years to reach a marketable point in the hands of another team. As it’s
this team, I can pencil on 2025 as a decent window for the revisit. However, it’s always going
to be low grade and on the wrong side of the Andean political border.
The Producer Basket
After seven weeks of 2021, the Producer Basket shows a loss of 12.00% to level stakes.
company ticker price 1/1/20 Shares out Mkt Cap (U$Bn) current pps gain/loss%
1 Newmont NEM 59.89 803.36 45.53 56.67 -5.4%
2 Barrick GOLD 22.78 1779.04 35.19 19.78 -13.2%
3 Agnico Eagle AEM 70.51 242.99 14.53 59.79 -15.2%
4 Kirkland Lake KL 41.27 272.984 9.75 35.73 -13.4%
5 Kinross Gold KGC 7.34 1260 8.24 6.54 -10.9%
6 Pan American PAAS 34.71 210.17 6.83 32.49 -6.4%
7 Endeavour Min EDV.to 29.62 246.2 5.23 25.48 -14.0%
8 B2Gold BTG 5.60 1064 5.06 4.76 -15.0%
9 Alamos Gold AGI 8.75 392.73 2.91 7.42 -15.2%
10 Pretium Res PVG 11.48 187.254 1.91 10.18 -11.3%
Prices in U$ except EDV.to (share price in CAD$ and mkt cap in approx USD) Port. avg -12.00%
Splat. They all dropped and notably, the -5.9% Week-over-Week drop in GDX was greater than
that of the supposedly more volatile juniors. The way in which the larger were hit more shows
in our list as well, with the three double figure percentage losers (GOLD -10.7%, AEM -10.3%,
KGC -11.4%) in the top five of market cappers. Our tracking charts show the sector heading
South quickly, plus we are now lagging the market by nearly 3%.
The 2021 Producer Basket: Weekly performance and The 2021 Producer Basket: Percentage difference between
2% comparative to GDX control GDX benchmark and basket (negative = IKN basket ahead)
3.5%
0%
-2% 3.0%
-4% 2.5%
-6% 2.0%
-8% basket 1.5%
-10% gdx control
1.0%
-12%
0.5%
-14%
0.0%
Jan 1st Jan10th 17th 24th 31st feb7th 14th 21st
Jan 1st Jan10th 17th 24th 31st feb7th 14th 21st
source: Google, IKN Calcs source: IKN calcs, NYSE/Nasdaq/TSX data
Barrick (GOLD): The bellwether stock for the precious metals mining sector last week, Barrick
gave us plenty to consider. Before GOLD reported its year and came in with good, market-
winning numbers on the 18th, on Feb 16th it announced the sale of Lagunas Norte in Peru to
Boroo PTY of Singapore. The price on the deal is (6) “…up to $81 million, plus the assumption
by Boroo of Barrick’s closure liability relating to Lagunas Norte of $226 million backed by an
existing $173 million bonding obligation.” The long-standing talk of Lagunas Norte being up for
sale is finally confirmed, Barrick happily accepting a low ticket price for what was once one of
its most prolific producing assets because it wanted rid of that heavy closure bond obligation.
Then came its 4q20 and YE report (7) which looked perfectly good to me, the stand-out data
point its free cash flow of U$1.092Bn (with a B) for the quarter; that’s a lot of treasury. Then
14

came the bonus ball, as in a separate NR (8) GOLD proposed a 42c cash distribution to
shareholders, that would come in three 14c tranches later in the year and requires approval at
the GOLD AGM. Along with the ongoing quarterly dividend, now at 9c (was 7c 1q20), Barrick in
total proposes distributing 78c per share during 2021, an attractive windfall for a $20 stock.
However, despite all that news GOLD stock did this:
GOLD suffered from being a market leader, when the chop came on Wednesday morning it was
one of the biggest droppers and that momentum carried on through earnings report day
(Thursday) and Friday. Bristow cannot seem to get a break at the moment and the gap
between his company and market #1 Newmont (NEM) has stretched to a full U$10Bn.
StreamerWatch: Our ongoing eye on the royalty/streamer plays in 2021, as this desk believes
the sub-sector will underperform:
 Large royalty/streamer Franco-Nevada (FNV) continues to show as one of the sector’s
most defensive stocks, matching the GDX benchmark.
 Mid-sized royalty/streamer Sandstorm (SAND) has stopped fracturing losses against
benchmarks and has found what looks like a floor price in February.
 Smaller royalty/streamer Metalla (MTA.v) continues to be beaten up.
A week such as last week should be theoretically good for the streamer plays, their defensive
make-up allows them to lose less when the market wants to sell off the miners. However, the
first two months of 2021 haven’t shown much resilience in the sub-sector, which works toward
the house theory that they are going to lose out to cheap sources of capital as the dollar
debasement continues.
The Tiny Dogs
After seven weeks of 2021, the Tiny Dogs show a gain of 16.18% to level stakes.
15

company ticker price 1/1/21 Shares out Mkt Cap current pps gain/loss%
Antler Gold ANTL.v 0.205 61.348 13.19 0.215 4.9%
Aston Bay BAY.v 0.045 163.975 8.20 0.05 11.1%
Constantine Met CEM.v 0.17 45.4 10.90 0.24 41.2%
Contact Gold C.v 0.115 240.757 26.48 0.11 -4.3%
Golden Pursuit GDP.v 0.22 40 7.40 0.185 -15.9%
Manitou Gold MTU.v 0.045 230.79 23.08 0.10 122.2%
Precipitate Gold PRG.v 0.240 106.241 22.84 0.215 -10.4%
QC Copper QCCU.v 0.315 105 27.30 0.26 -17.5%
Red Pine Expl RPX.v 0.040 477.22 23.86 0.05 25.0%
Warrior Gold WAR.v 0.090 91.818 8.72 0.095 5.6%
Prices in CAD$, data from TSXV basket avg 16.18%
This section attempts to track the tinycap mining sub-sector of the market, our ten companies
chosen under the following criteria to put together a list representing the state of play in the
sub-sector of tinycap exploration company stocks. At least that’s the plan.
 Market capitalization of under $20m. They have to be tiny. In two cases I’ve stretched the window a
little and allowed sub-U$20m market capper in that are just over the C$20m level, but the spirit is unaltered.
 A “non broken” stock price and project story. There are literally hundreds of tinycap juniors of the right
size, but it was a particularly depressing exercise to trawl through the whole of the TSXV and find companies
that are small enough, but with life in them. The vast majority of sub-$20m stocks are broken stocks, either
traded to death on the exchange or with projects that are a bust or with entrenched management more
interested in their monthly paycheck than anything else.
 Likelihood of meaningful newsflow in 2020. This connects to the company’s “unbroken” status, as we
want news and potential catalysts from companies with projects that can work.
 Decent management if possible. When you are down among the little guys it doesn’t pay to be too
choosy, but still I preferred companies that have teams or people with good peer reputations.
Our final Yellow Flag warning sign on the state of the PM and exploration mining sectors comes
here. The Tiny Dogs had another positive a week, with five of the ten components returning
gains (ANTL.v, CEM.v, MTU.v, QCCU.v, RPX.v)
three others unchanged (BAY.v, C.v, WAR.v) and 20% Tiny Dogs, 2021 weekly tracker
just two losers from the ten (GDP.v, PRG.v). 18%
16%
Some of the wins registered were bonanza-sized
14%
too, with big ups from Antler (ANTL.v up 30.3%),
12%
Manitou (MTU.v up 25.0%) and QC Copper 10%
(QCCU.v up 13.0%) and Red Pine (RPX.v up 8%
6%
11.1%). When the Tier 1 and Tier 2 stocks drop
4%
while the sector dogs wag their tails, watch out
2%
0%
Constantine Metal (CEM.v): Doing well this Jan 1st Jan10th 17th 24th 31st feb7th 14th 21st
year thanks to the run in base metals (zinc the source: IKN calcs, TSX data
main target here, but Palmer is polymetallic)
CEM isn’t waiting for its normal seasonality cycle, instead and for a change we’re seeing bids
during the Alaskan winter.
Antler Gold (ANTL.v): Last week down, this week up, ANTL has the volume and volatility flip
traders like and it may be attracting extra attention simply for that. Its rebound last week came
on solid news however, this Feb 16th NR (9) telling of developments at its main Erongo project
in Namibia.
NB: Please be clear that The Tiny Dogs is NOT a list of recommended tinycap stocks. It is a list of companies with
market caps of under $20m offering a reasonable representation of the wider tinycaps market. It is possible that in the
future I may buy shares in one or several of these stocks, but at the moment both my opinion and my wallet are strictly
neutral.
16

Regional politics
Updating on the Ecuador presidential election
If you don’t want to do a lot of reading, here’s the TL:DR:
 Ecuador’s CNE electoral body has refused to recount votes and this weekend, called the
second place officially for Guillermo Lasso.
 Yaku Pérez claims to have evidence and proof of widespread vote fraud. He has the
right to appeal the decision and is doing so, but it’s probably a lost cause.
 However, he is also heading up a protest march that’s set to be big once it arrives in
the capital, Quito, on Tuesday.
 Beyond the contested result, Guillermo Lasso must deal with Yaku Pérez if he is to
stand a chance in Round Two, the vote on April 11th (same day as Pru round one).
 Further out, almost all scenarios for mining in Ecuador look negative.
In the week since we last spoke, the proposed re-count of around 50% of the ballots has been
suspended and the Ecuador electoral body (CNE) has ruled that any objection to the election
result can only come after the official result has been announced. Then this weekend and as
expected, the CNE declared Andrés Arauz the winner with Guillermo Lasso pipping Yaku Pérez
for second place by around 0.3% (or around 33,000 votes nationwide). Therefore, officially it’s
Arauz versus Lasso in the second round and that suits Andrés Arauz down to the ground, he is
given a favourite’s chance against the right-wing establishment banker figure cut by Lasso.
However, the fallout from Round One is far from over and the repercussions of the rise and rise
of Yaku Pérez are only just beginning. This weekend he is heading up the march of indigenous
people protesting against what both he and his Pachakutik Party is calling a fraudulent result
and clear vote rigging. To begin, it’s not a small point that his party is taking up his cause and
for that angle, we need a bit of internal politics. This election result, as well as being a massive
success for the party, has resolved the long-standing internal power struggle at Pachakutik’s
leadership level (or perhaps suspended it for a distant future). Without going into a long history
of CONAIE and its political arm, Pachakutik, the internal divisions that have stopped it from
becoming a political force to date have revolved around two different discourses, built up by
different factions of its membership, but in Yaku Pérez the “Classists” and the “Ethnists” of
CONAIE have a single leader for the first time and one that appeals to a wider audience than
just their membership. A united CONAIE behind a single political leader is a novelty for the
indigenous movement and it’s one of the things it has been lacking as a real political power in
the country. That has now changed and with its large voting bloc in the upcoming parliament,
CONAIE and Pachakutik will now matter.
As for the protest march, currently gathering momentum as it moves toward Quito and more
people join in (they will of course cheat and 95% of the people you see arriving in Quito this
coming Tuesday February 23rd will not walk the full course), we are going to get another “show
of force” from the indigenous population, as per their October 2019 anti-fuel price rise protest.
By way of a reminder, when President Lenin Moreno tried to repeal the fuel subsidy law the first
two weeks of Octobers 2019 saw CONAIE lead other indigenous and social movement groups in
massive social protests in Quito. After two weeks that saw 1,330 people arrested and 435 police
injured among other datapoints, the proposed changes to the fuel subsidy laws were scrapped
after mediation by the United Nations. And that was just for fuel, this time they are protesting
against (what they believe to be) a fraudulent vote result! The protest will be noisy, militant,
likely to hang around the capital until some result comes from it. They aren’t going to get the
previously mooted recount of up to half the ballot papers, but there are already moves by
authorities to secure the backup records of votes in order to check against the published
numbers.
So anyone who thinks Round One is over needs to watch images from Quito next week. On the
subject, Yaku Pérez has also shown his mettle as a political animal since the election result
came through. His election campaign notably steered away from direct attacks on Andrés
17

Arauz, his invective for the frontrunner aimed at his mentor Rafael Correa. That was smart, as
his potential Kingmaker role meant it was best to leave the space to deal with Arauz. Not any
more, the gloves are now off and according to Pérez and all those who trailed Arauz in the
election, he is now everything Correa was but worse. He has also been testing his newfound
political power on Guillermo Lasso and understands how he needs his support if he’s to stop
Arauz. This is where it gets difficult to forecast the exact roll-out as a lot depends on whether
the demands for a recount are met, then what happens in that recount, all aside from the
ongoing social protest in Quito that starts on Tuesday. But no matter when or how Round Two
is decided, it stands to reason that at some point Lasso and Pérez (and potentially Xavier
Hervas, the surprise 4th place in the election) get together and try to agree on a pact that will
bind their voting blocks together in order to beat Arauz in the run-off. This could be where the
Cuena anti-mining vote comes into play, as the five motions to stop metallic mining from
affecting the waters of five Cuenca rivers were passed with a massive majority, 80.9%. Xavier
Hervas is against open pit mining operations, Guillermo Lasso needs to concede something
from his neoliberal agenda in order to secure sponsorship, mining is an obvious bargaining chip.
However both Lasso and Arauz should also look beyond the 2021 election, as the political map
of Ecuador makes the rural jungle zones ungovernable without the help of Pachakutik. If the
next government goes the antagonist’s route (e.g. tries to impose a mining project where it is
not wanted) it they will come up against the standard social protests but also a newly powerful
Pachakutik and a leader dead set against mining. When the dust finally settles on the 2021
election, it will go down as a negative inflexion point for the mining industry, the date when the
country’s executive was forced listen to its local communities for the first time ever. Sell
Ecuador and do not go back until things are very different.
Tracking Chile and Peru Covid-19 cases (week six)
Week six in what we trust will be a temporary series, with Covid-19 in Chile and Peru as its
agenda and any affect the virus in those countries might have on the price of copper as its
focus. Via four charts we keep a close eye on potential supply disruption of copper in the
world’s two biggest copper producer countries into an already tight world market. To keep it
standard, we’ll use the charts at the well-regarded Worldometers site for the ongoing track (10)
and each chart also comes with its seven day moving average. Commentary below:
Chile: The chart for new daily infections:
Chile: The chart for daily fatalities:
18

Peru: The chart for new daily infections:
Peru: The chart for daily fatalities:
In Chile, the infection rate has stalled and is dropping as the vaccination program rolls out. The
country is now unlikely to see serious copper supply bottlenecks due to Covid-19 infections.
In Peru it’s still a mess and anything could happen: First we cover what’s now called
“Vacunagate” (VaccineGate) in Peru, the discovery that aside an extra 1,200 doses sent to
vaccinate the medical professionals who administered the 12,000 person test in October 2020,
another 2,000 doses of Sinopharm’s Sinovax Covid-19 vaccine arrived quietly in Peru and were
given to a preferred VIP list, including the President at the time (ex-President Martín Vizcarra,
who has become Peru’s most hated politico in a matter of days) and his family members, the
Foreign Minister and Health Minister (both women, both now ex-Ministers), the team of seven
specialists in charge of buying Covid-19 vaccines for Peru (who went on to buy exclusively from
Sinopharm and subsequently rejected deals with Pfizer and Russia’s Sputnik V) and a long list of
favoured friends and their family members.
Even worse than in Argentina (see below), Peru is in uproar about their VIP Vaccine list and the
story has managed to overshadow the worsening reality of Covid-19 in the country. Peru
continued to run over 8,000 new infections per day and we repeat, that number severely
under-reports reality. It lockdown is highly porous and the political scandal unfolding is only
turning the population further against the political class, the country seems to be pinning all
hopes on the arrival of the vaccine. Peru this weekend starts Phase Two of its vaccination roll-
out, with 700,000 doses now being used to complement Phase 1’s 300,000 doses. With this,
the government expects to cover all front line medical staff and most teaching staff, which
means they are looking to open schools for their normal academic year (Southern hemisphere
school year starts March, ends December). On Friday, the new Health Minister said they expect
to have vaccinated 61% of the population by the end of July (i.e. the start of the next
government), which sounds optimistic in a country where only 59% of people say they will have
the vaccination in the first place.
Peru continues to see an average death toll of over 200 per day from Covid-19, but the
undercount of cases is clear once home oxygen demand is taken into account, running some
300% higher than during the first wave. The country is desperate for oxygen supply, but
19

ironically the 40 tonnes Chile wanted to send was stopped at the border by customs, who didn’t
like the paperwork. Chile plans to send 80 tonnes this week, instead.
Argentina and its “VIP Vaccines” scandal
Although not our focus subject, it would be remiss not to mention that, in much the same way
as in Peru, Argentina now has its own Covid-19 vaccines scandal. Labelled Vacuna VIP (V.I.P
Vaccines), the story began when the nationally famous journalist made it known he’d been
given the vaccine quietly, as a favour from the then-Health Minister. The Pandora’s Box opened,
we watched as a list of people close to the Alberto government who had quietly jumped the
queue (usually invited, but some insisted) and been vaccinated with Russia’s Sputnik V Covid-19
vaccine, as well as favoured ministry officials who work far from the front lines. The scandal has
cost the job of the Health Minister and there are even calls for the President’s head. As for the
journalist, he’s been fired by his main media outlet and made a grovelling public apology. Good.
Market Watching
Overview
Under normal circumstances, the following notes would be in today’s Fundamentals section, but
as the Peru political risk situation and portfolio adjustment have taken precedence, they go
down here.
New Gold (NGD) 4q20 and annual results
On Thursday February 18th NGD delivered its 4q20 and 2020 year-end financials in good order,
with the market reacting in the way seen in this five-
day price chart (right). At the bell Friday, a positive pop
that was immediately used as a liquidity event by a
market dedicated to getting out of precious metals
exposure last week. Our job today is to pick up from
the preview work done on NGD in IKN607 dated
January 17th, adjust the numbers for reality, consider
the current price/value balance and make a call on the
stock, in other words the usual task at hand. To wit,
today’s note starts at the finish, we ignore 4q20 and
paste up new NGD 2021 production guidance, as per
the company MD&A:
As much of the financial forecasting below is based on NGD guidance, it’s worth having the
above information. For example, it informs our next set of charts that consider 4q20 production
and sales revenues, along with the company’s newly announced guidance for 2021. The first
key variable at NGD is gold production and sales:
20

NGD: Gold production vs Sales, Oz per qtr
21
41006 60106 12647 58407 19167 41657 25869 65048 91108 00109 86958 45948 99029 99768 94676 95527 51576 92596 72156 26616 61208 49867 69038 69088 00058 00058 00078 00078 00078 00078 00098 00098
130000
120000
Total Au prod
110000
Total Au sales
100000
90000
80000
70000
60000
50000 40000
30000
20000
10000
0
1q18 2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21 4q21
source: NGD filings, IKN calcs
This smaller chart focuses on the current period and also divides gold production by mine. We
expect Rainy River to hit the straps coming into 2021 and become the regular provider it was
always designed to be (albeit at a lower run rate than the original plans), then New Afton will
have a soft Q1 due to its unfortunate stoppage, but when the capex works start paying off
production is set to improve back end 2021.
OzAu NGD: Quarterly gold production
110000
100000 Gold NA
90000
Gold RR
80000
70000
60000
50000
40000
30000
20000
10000
0
4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21 4q21
source: NGD filings, IKN ests
Moving to copper, New Afton hit our expectations by producing 18.5m lbs Cu and selling 17.5m
lbs Cu in 4q20. That was right on guidance and there’s every reason to expect that to continue,
barring a potential soft 1q21 due to the mine-stopping accident.
NGD: New Afton copper production and sales, per qtr
2.22 3.12 4.02 6.91 7.12 5.02 8.02 7.91 5.91 2.02 6.12 3.81 1.02 6.02 3.81 3.71 5.81 7.71 9.61 3.51 2.81 5.71 5.81 5.71
Mlb Cu
24 Cu prod
22 Cu sales
20
18
16
14
12 10 8
6
4
2
0
1q18 2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20
source: NGD filings, IKN ests
For FY21 we model 18mlbs production and 17m lbs sales for each quarter, in line with NGD
guidance to a high-end 68m lbs copper production this year. With average received prices for
gold (U$1,606/oz) and copper (U$3.15/lb) known for 4q20, here’s the revenues split by metal:

NGD: Revenues calcs by metal type
22
9.06
0.08
0.75
7.19
7.45
7.09
4.35
6.301
7.15
9.711
4.54
9.011
0.94
2.021
3.14
1.99
3.54
4.101
0.93
4.39
3.25
5.321
1.55
8.341
9.26
3.751
0.86
3.561
0.86
0.471
0.86
0.871
300
250
200
150
100
50
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4
U$m
Cu revs
Au revs*
source: NGD filings, IKN calcs *includes minor Rainy River Ag revs
In 4q20, sales of U$198.9m were very close to our estimate (and didn’t quite make the U$200m
line, that will happen this quarter). Going forward, the combination of improving production as
the year gets older, then much better prices for both copper (we use U$3.70/lb for 1q21, then
U$4.00/lb for the rest of the year) and gold (the hedges are off and NGD’s top line is
immediately boosted, we then guide a improvement to U$2,000/oz by 3q21) mean we estimate
sales at U$220m for 1q21, moving to U$240m and U$245m by the end of the year.
With gold and copper production, sales and 2021 guidance from both mines duly incorporated,
We can adjust our guidance further for 2021:
NGD: Quarterly Earnings Overview
9.761
9.68 2.16 8.91
1.551
1.58 6.35 4.61
4.861
7.49 4.16 3.21
2.931 2.501
4.46 4.03-
3.241
7.98 25 6.0
5.821
2.66 6.04 7.12
7.371
7.68
7.94 3.73
9.891
3.79
8.05 8.05
022
59 15
47
032
001 25
87
042
001 35
78
250
225
200
175
150
125
100 75
50 25
0
-25
-50
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
$m
revenues
op-ex
deprec/deplet
Mine Op Earnings
source: company filings
Two good things; NGD beat on costs and delivered positive guidance for 2021. With DD&A also
coming in right on the button, the result was a mine operating earnings of U$50.8m, which
beat our estimate by a handy little U$4.8m. This longview chart (below) shows the
development of MOI and where that U$50.8m fits in corporate history (one of its best quarters
ever). Then come our forecasts for quarters of 2021, which are all about seeing the price hikes
in gold (hedges are off) and copper (on fire at market) work through the books:
NGD: Mine Op. Earnings
100
90
80
70
60
50
40
30
20
10
0
-10
-20
-30
-40
31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 61q4 71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
$m
source: company filings, IKN ests

A word on our costs estimates. While NGD earmarked AISC per AuEq sold (i.e. all the gold,
copper and silver) for 2019 at U$1,620/oz,
while in FY20 AISC dropped a little to NGD: BTL finance cost, per qtr
35
U$1,562/oz. Therefore FY21 guidance at 29.8
30
between U$1,220/oz and U$1,320/oz for the
25 21.5
same metric gives an idea of the cost burden
coming off NGD now its capital works are all- 20 16.7 17.8 17.5 17.1 15.3 16.5 16.5 14.3 13.5 14 14 14
15
but complete at Rainy River and the necessary
10
balance sheet repair work is done
5
(redemptions and refis make for financial
friction below the line). While NGD has 0
separately earmarked sustaining capex and
growth capital estimates for 2021 to between
U$220m and U$305m, we expect on-site mine
op-ex to remain competitive and over AISC to drop as production increases. This is reflected in
our new op-ex estimates that move up to U$100m/qtr and no higher.
While some generalists may have sniffed at
the U$21.1m net loss for the quarter, those
who follow the miners know that operating
earnings are more important for a company in
NGD’s position and those look like this (right).
This quarter’s 6c was a small beat on
expectations (those costs again), but the fun
begins in 2021 as, assuming guidance and our
reasonable metals price parameters come
true, NGD becomes a quarterly money-making
machine. good for 10c Op EPS, then moving
higher as production and prices trend. At this
weekend’s deeply discounted share price of
U$1.51, that’s a sub 4X forward ratio on 10c/qtr operating earnings and that’s the type of
multiple a base metals miner would complain about, let alone a profitable precious metals
company that has just completed a successful turnaround period.
On the balance sheet, I hope these charts aren’t too small and I don’t want anyone to think
they are less important, just trying to save space.
23
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2
U$m
source: company filings
NGD: Operating earnings per share
0.18
0.16
0.14
0.12
0.10
0.08
0.06
0.04
0.02
0.00
-0.02
-0.04
-0.06
-0.08
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
cents
source: company financials/IKNcalcs
NGD: Assets per qtr
4000
3500
3000
2500
2000
1500
1000
500
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
$m fixed NGD: Liabilities
2200
other current
2000 cash & eq
1800
1600
1400
1200
1000
800
600
400
200
0
source: company filings
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
U$m other LT liabilities
LT debt
current liabilities
source: company filings
NGD: Working Capital per qtr
700
650
600
550
500
450
400
350
300
250
200
150
100
50
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
source company filings
srallod
fo
snoillim
NGD: Cash treasury per qtr
800
700
600
500
400
300
200
100
0
71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
source: company filings
srallod
fo
snoillim

The trends in assets (maintenance) and liabilities (the continued lowering of financial debt in
2021) are visually straightforward and accurate,
at least assuming NGD doesn’t buy something
new. Also, that improving working cap position
doesn’t take into account the undrawn revolving
loan facility held by NGD, the company has zero
liquidity issues in its future (which makes for a
pleasant change, thank you Renaud Adams).
With a new total share count of 680.25m S/O
(a few derivates made whole), Book Value per
share remains virtually unaltered at U$1.25. We
expect that to rise gradually in FY21 on cash
profit results in the quarters, no matter what
they use the money for.
NGD: Book value per share, per quarter
24
66.1 16.1 55.1 24.1 24.1 93.1
42.1 52.1 52.1
23.1
34.1
45.1
2.20
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3
800 NGD: Shares Out
700
600
500
400
300
200
100
0
U$m
source: company filings
This brings us up to date and ready to face less pleasant news: The six-month chart shows
NGD’s recent price drop and the pain of 2021:
From a peak of over U$2.30 (and aiming for my U$2.80 target, or so I thought), NGD has
reversed sharply and in 2021 it’s been virtual one-way traffic. For a different perspective, below
is a two year chart showing NGD against the gold
complex (GLD, GDX, GDXJ). Allowing for artistic
licence, NGD tracked GDX/J fairly closely both
before and after the Covid-19 crash event, its de-
coupling as a trade coming in 4q20. However,
just about all the stellar gains made in 4q20 have
now been wiped out in 1q21, so is that a fair
response to a weakened company or is this stock
now severely oversold?
The IKN Weekly reply is that yes, NGD is indeed
severely oversold. Here below is the price/book
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1
source: company filings
serahs
fo
snoillim

ratio and one of the reason we have pointed the finger at NGD for the past year and have been
banging on the table about the stock is here. A year ago NGD couldn’t even break 1.0X on
price/book (the classic signal of a dysfunctional company), then as the market woke up to its
turnaround, that P/Bv grew and topped at a far more reasonable 1.75X at the end of the year.
2.2 NGD: Price/Book ratio
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
25
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 WON
source: company data, NYSE, IKN calcs
Now, bizarrely, it’s back at 1.14X this weekend after the price rout, an illogical start to 2021
that is also the best indication that NGD is oversold. We remind readers that NGD was bought
up by instos because it was delivering on its turnaround, we are out the other side of that
process, 2020 worked to plan and NGD in 2021 is set up to make its money, but all that good
work has suddenly been discounted again. It’s as if, 12 months ago, NGD was a market
performing PM operator making its steady profits in the same way as GOLD, NEM or AGI, and
not a company in the penalty box after years of financial mismanagement and operational
woes. Put simply, due to the gold price nerves you can now buy NGD at July 2020 prices.
Conference call notes: As for the Conference Call last week, two matter stand out. First the five
minute soliloquy from CEO Renaud Adams regarding the recent accidental death at New Afton,
as it’s obviously affected him and the company significantly. My only reflection on this is an
abstract, as I have sat through many a quarterly conference call where other companies and
their LatAm mine operation(s) have had fatalities in the period and the accidents are never
even mentioned by the CEO, not even five seconds of thought given to lost workers and their
families. CEO Adams has already earned my complete respect as a professional, last week he
added personal chops to the mix. Second stand-out, the Q&A period turned into more heat than
light but one matter was clear; NGD is not selling its Artemis/Blackwater NSR and assorted
financial dues on the property. They’ve clearly been getting offers for the suite, too.
Discussion and conclusion
Setting to one side the terrible accident at New Afton which claimed the life of a contract
worker this month, NGD has done very little wrong in the past six months. Quarterly production
delivery has been good, the financial re-structuring has left the company with a solid balance
sheet (for perhaps the first time ever), guidance for the year is much as expected and with the
company now hedge-free, it’s in position to benefit fully from higher gold and copper prices. All
the same, NGD has been caught in a selling rush that has dragged the company back down to
where it was, relatively speaking at the start of Q3 when the Northern summer was still
unworried about Covid-19 and the US election was still a mystery play.
The house argument is centred in the above derivative chart of price/book, NGD in 2021 has
been overly castigated for being a turnaround success in 2020. This is no longer a dysfunctional
company under the shadow of potential bankruptcy, it’s now a financially health miner that will
make very good money in 2021 thanks to its production scheduled plus the gold and copper
prices, but it’s getting no reward for to date. That will surely change, the market won’t let a
healthy and potentially buyable company trade for under 1.5X for much longer. This spike is a
buying opportunity for those who think gold is close to its mid-term bottom (i.e. me), because
NGD is simply not the same company that it was two years ago, these days it’s fully robust and
capable of taking a soft market period in its stride. Unjustly oversold, the 4q20 financials saw
their liquidity event selling on Friday, but there’s so much underlying financial strength here

these days that it’s difficult to imagine the stock going down much further. NGD is very easy
stock to hold, even in the neutral gold climate now expected by this desk, it’s back to being
priced as if its heavy lifting and financial turnaround process were still going on. Quite the
opposite is true, as the new financial strength is now set at NGD, while the quarters of 2021 are
set to return sequentially better results (gold price willing).
Finally, and to spend just five lines on a subject that’s burned several of my hours this week,
after due consideration I still prefer New Gold as a trade over Wesdome Gold (WDO.to) at the
moment, particularly after the overselling in NGD last week. We will (of course) take a good
look at WDO come its 4q20 and year end financials, due on March 10th (11). By that time, the
price deck may have changed completely, too.
Copper Mountain (CMMC.to) 4q20 and annual results (in CAD unless stated)
As per schedule, our main copper producer play Copper Mountain (CMMC.to) reported its 4q20
and annual financials last week, pre-open on Tuesday February 16th (12). We’ve followed this
set of numbers closely, having made preliminary guesses at the turn of the year, then when the
company announced its 4q20 production numbers we adjusted our model and liked what we
saw in IKN607, dated January 10th (the weekend we had the US Capitol building on our minds).
We then previewed the earnings report in last week’s brief primer note, in which the focus was
price sensitivity to copper. Here’s how that note wrapped up:
“…at its current sub-C$500m market cap CMMC is a real bargain. The
argument in IKN607 was how CMMC is coming good at just the right time to
enjoy the copper bull run, that hasn’t changed a jot in the weeks since then
and the only real change is the confirmation that copper has plenty of legs left
in its price run.”
With that, preview done, time for the Q4 results via the usual suspect charts. We begin with
sales, which saw lower than expected physical shipments during the quarter.
CMMC: Copper production and sales, per qtr
Here we see the charts comparing production and sales at CMMC, the main copper product
showing how CMMC produced that strong 23.1m lbs Cu in 4q20, but sold just 18.712m lbs of
them. With 4.388m lbs unsold during the quarter at the received average U$3.35/lb, that’s
U$14.7m in revenues the company has to roll over for the next quarter.
26
030.02 114.02 382.81 216.71 826.02 134.91 016.81 843.91 054.81 139.71 203.61 120.71 885.81 895.71 274.71 268.71 290.81 978.81 439.81 428.71
001.32
217.81
Mlbs Cu
26
Cu prod (mlbs)
24
source: company filings
22 Cu sales (mlbs)
20
18
16
14
12 10
8
6
4
2
0
2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20
CMMC: Gold production and sales, per qtr
4256 4846 2357 9436
4218
5747 7217 6207 2296 4407 8946 0046 0026 8006 9316 4636 9947 9826 0366 2326
9598
3527
Oz Au
10000
Au prod
9000
Au sold
8000
7000
6000
5000
4000
3000
2000
1000
0
2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20
source: company financials, IKN sales est 4q20

True for gold, too. The difference in gold production and sales is around 1,700oz Au, or an
extra U$3m for next quarter’s sales. And it’s the same for the minor silver credits, with 144,954
o produced and 96,509oz sold in Q4, a difference of 48,445 oz Ag (that’s worth around U$1.2m
once sold). All told, that’s around U$19m (CAD$22.8m) in sales we can reasonably add to the
upcoming 1q21 financials.
On to production parameters, with some of the data pre-announced in its production report.
Tonnes of mineral mined and milled remain roughly constant at the mine, what changes is the
strip rate as CMMC. In 4q20, strip rate increased again as the company moved forward its pre-
strip program on part of the mine scheduled for production in 2021 and beyond. One repeated
message from CMMC this quarter is their plan to move throughput up again, from 45,000tpd to
65,000tpd with the decision on the upgrade expected this year. CMMC does not have a reserves
or resources problem, as current throughput leaves it enough for 60 years (!!) of production. It
therefore makes sense to invest in capital upgrades and process more rock per year.
mmt CMMC: Tonnes mined, per qtr 6 CMMC: Strip ratio, per qtr
22
20 waste mined
5
18 ore mined
16
4
14
12 3
10
8 2
6
4 1
2
0 0
2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20 2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20
source: company filings source: company filings
One big change in Q4 is mill head grade.
Traditionally around the 0.3% grade, CMMC CMMC: Mill head grade, per qtr
reports it is now in an area of higher grade
that will last at least through 2021. This
chart (right) shows the difference compared
to previous years, meanwhile in order to
illustrate just how small differences make for big changes at a large, low-grade
mining operation, here’s a simple table that
shows what happens when grade and
recovery get tweaked successfully:
CMMC: Head grade and recoveries matter
tonnes milled (mt) 3.5 3.5 3.5
Cu mill head grade 0.3 0.4 0.4
recovery 77% 77% 82%
Cu production (Mlbs) 17.8 23.8 25.3
source: CMMC filings, IKN calcs
In 4q20 CMMC saw recoveries of 77%, at the low end of its normal range. However, in the
Conference Call the team explained that thanks to the new crusher coming online in 2021, they
expect recoveries to improve “into the low 80s”. Our table above models three production
scenarios:
 The first column, using 0.3% Cu and 77% recoveries, represents the typical quarter
previously seen at CMMC.
 The second column, using 0.4% Cu and 77% recoveries, represents what CMMC
27
43.0 82.0 03.0 92.0 82.0 62.0 13.0 03.0 82.0 92.0 04.0
% Cu
0.50
0.45
0.40
0.35
0.30
0.25
0.20 0.15
0.10
0.05
0.00
2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20
source: company filings

returned in 4q20 and expects to return
throughout 2021.
 The third column, using 0.4% Cu and 82%
recoveries, represents what CMMC can
achieve by optimizing recoveries. The new
crusher should help the company achieve
los 80s recoveries in 2021 and beyond.
There is a big difference between 17.8m lbs and
25.3m lbs production per quarter.
Back to reality and sales of copper (and gold and
silver) in Q4 were significantly less than production, which means you’d expect that to show in
the company inventories tables and..
C$m CMMC: Inventories
80 Cu conc
crushed ore stockpile
70
ore stockpile
60 supplies
50
40
30
20
10
0
4q17 1q18 2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20
source: CMMC filings
…it does. This chart below separates the (literal) pay dirt, the conc is real money waiting to be
picked up.
CMMC: Cu conc inventories
28
603.11
669.6 394.7 457.8 254.9 949.7 538.8 855.8 150.7 888.5
12.792
758.1
593.5
C$m
14
12
10
8
6
4
2
0
4q17 1q18 2q18 3q18 4q18 1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20
source: CMMC filings
We get to the business end of the financials and the earnings overview chart:
CMMC.to: Quarterly Earnings overview
160
140
120
100
80
60
40
20
0
-20
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3 tse12q4
source: company filings, IKN ests
srallod
fo
snoillim
CMMC.to: Copper production, per qtr
revenues COGS Gross profit
1.81 2.71 9.02 5.91 9.91 0.02 3.81 6.02 6.81 5.81 3.61 6.81 5.71 1.81 9.81
1.32
26
24
22
20
18
16 14
12
10
71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4
Mlbs Cu
source:company filings

Operating profit came in at $40.5m and our estimate for 4q20 operating profit was just over
$44m, the difference all about the lower sales compared to production. See the chart right for
the separated data set. This is good, it means the model is working well and over time the sales
adjustments will even out. It also backs up the math that forecasts greater profits to come in
the quarters ahead.
Regarding costs and our 2021 forecasts, the gap
between received copper prices and AISC/lb Cu
shows not only the leverage that CMMC has
enjoyed in the latter part of 2020, but
importantly that the leverage is set to rise. The
company reports cash costs under control and its
guidance range makes it clear the company
doesn’t expect much creep over the nominal
C$60m they need to stay in business per quarter.
CMMC: Operating EPS, per qtr
0.40
0.30
0.20
0.10
0.00
-0.10
-0.20
-0.30
When we start factoring in operating EPS, the
cash generation abilities of CMMC at the
current price deck become more obvious. In
2021, our model forecasts operating EPS of $1.16 per share, or 2.6X price. That’s the financial
underpinning of current operations and probably the reason CMMC jumped the way it did last
week.
Moving to the balance sheet, there’s not much in the overview charts aside the clear move by
CMMC to lower its cash debt position.
More interesting in working capital, finally turned positive at $24.8m. Cash treasury also leaped
to $85m and all talk of liquidity issues at the mine is now history.
29
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3 tse12q4
source: company data, IKN calcs
retrauq
rep
erahs/$C
C$m CMMC: Assets breakdown, per qtr CMMC.to: Liabilities Breakdown per qtr
500
1000
cash&eq A/C Rec 450 900 Inventory fixed
400
800
350
700
300
600
250
500
200
400
150
300
100
200
50
100
0
0
17 18 18 18 18 19 19 19 19 20 20 20 20
4q 1q 2q 3q 4q 1q 2q 3q 4q 1q 2q 3q 4q
source: CMMC filings
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4
source: company filings, IKN ests
srallod
fo
snoillim
CMMC.to: Operating profit
LT debt
current debt
0.81-
8.82
3.93 5.04
0.75 0.06 0.36
0.47
80
60
40
20
0
-20
-40
02q1 02q2 02q3 02q4 tse12q1 tse12q2 tse12q3 tse12q4
source: company data, IKN ests
srallod
fo
snoillim
CMMC: Received copper price vs. AISC per Lb Cu produced
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1 tse12q2
U$/lb
Cu AISC U$/lb
Cu received price U$/lb
source: Company filings, IKN ests

100 CMMC.to: Working Capital per qtr
80
60
40
20
0
-20
-40
-60
-80
-100
-120
30
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4
source company filings, IKN ests
srallod
fo
snoillim
Discussion and conclusion
There are a wealth of reasons to own CMMC today:
 2021 production, which is now out the other side of major capex works and into a zone
of higher grading material which will last all year.
 2021 earnings, which are set to sparkle. For context, consider that valuing CMMC to a
mere 4X operating earnings would provide a 50% win to any investment at today’s
prices.
 The expansion plans to 65,000tpd throughput, which the company says would value it
at a NPV-8% NAV of C$1Bn (i.e. $4.80/share)
 Exploration a New Ingerbelle, which is set to provide the feed to the throughput
upgrade.
 Exploration at Eva in Australia. Up to now CMMC has been quiet about its exploration
asset, as in 2020 travel difficulties stopped their early stage development and
exploration plans. We will hear more about Eva in 2021, as the company reports it has
a “significant exploration program” planned.
However, the proof of the company is in its earnings and that is why CMMC reacted so well to
copper’s continued run last week, it returned an excellent 4q20 even while holding back on
some deliveries and at a lower copper price than today’s. Everything about this quarter was
right and it’s a simple decision to reiterate our buy call on Copper Mountain with our current
target price of C$3.80, representing upside of 27.5% to this weekend’s price.
Conclusion
IKN613 is done, we end with bullet points:
 Last week it was “be long copper”, this time it’s “stay long copper” and if you’re short
of ideas, even after it’s excellent run there’s plenty of profit left to be made in Copper
Mountain (CMMC.to) stock.
 New Gold’s (NGD) quarter was less impressive han that of CMMc, but the price drop
has gone way too far and there’s a good 2021 waiting for this company. Easy buy, even
in the face of a potentially stagnant gold price
 Avoid Ecuador and now avoid Peru, your author lightens on exposure to his adopted
country as from this week.
I thank you in advance for any feedback. Our Top Pick stocks are Minera Alamos (MAI.v) and
Rio2 Ltd (RIO.v). Flash updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen.
Mark

Footnotes, appendices, references, disclaimer
(1) https://encuestas.com.pe/encuesta-presidencial-datum-17-febrero-2021/
(2) https://www.lampadia.com/analisis/politica/la-izquierda-crecio-apreciablemente-en-las-elecciones-de-enero
(3) https://www.cnbc.com/2021/02/19/copper-prices-why-the-commodity-may-be-due-for-a-pullback.html
(4) https://www.cochilco.cl/Mercado%20de%20Metales/MERC%202021%2002%2019.pdf
(5) http://crownminingcorp.com/wp-content/uploads/2021/02/2021-02-16-NR-drill-contract.pdf
(6) https://www.barrick.com/English/news/news-details/2021/barrick-reaches-agreement-to-sell-the-lagunas-norte-
mine/default.aspx
(7) https://www.barrick.com/English/news/news-details/2021/a-year-of-delivery-and-development-as-barrick-meets-
targets-advances-growth-projects/default.aspx
(8) https://www.barrick.com/English/news/news-details/2021/barrick-proposes-return-of-capital-distribution-and-
declares-dividend/default.aspx
(9) https://antlergold.com/files/PR_20210216_final_re_exploration_update_clean.docx
(10) https://www.worldometers.info/coronavirus/country/peru/
(11) https://finance.yahoo.com/news/wesdome-announce-2020-fourth-quarter-123000280.html
(12) https://www.cumtn.com/investors/press-releases/2021/copper-mountain-mining-announces-q4-2020-financial-2143/
Stocks To Follow Closed Positions 2020
Closed in 2020 closed close price
TMAC Resources TMR.to Jan'20 C$3.41 20-Dec-19 C$3.61 5.9% TLS flip play, sold new year
Regulus Res REG.v Jan'20 C$1.10 20-Dec-19 C$1.30 18.2% TLS flip play, profit taken
Bonterra Res BTR.v Jan'20 C$1.90 9-Dec-19 C$1.66 -12.6% TLS flip play, loss taken
McEwen Mining MUX Jan'20 U$1.12 2-Dec-19 U$1.18 5.4% TLS flip play, profit taken
Core Gold CGLD.v Jan'20 C$0.255 7-Apr-19 C$0.305 19.6% arb trade, profit taken
HudBay Min HBM Jan'20 U$3.56 9-Dec-19 U$3.36 -5.6% TLS flip play, loss taken
Midas Gold MAX.to Feb'20 C$0.71 5-Jan-20 C$0.57 -19.7% sm & silly trade
Warrior Gold WAR.v Feb'20 C$0.08 3-Aug-18 C$0.05 -31.3% clean out non-perf sm stocks
Contact Gold C.v Feb'20 C$0.40 19-Aug-18 C$0.18 -55.0% clean out non-perf sm stocks
Sandstorm Gold SAND Feb'20 U$3.73 17-Apr-16 U$7.21 93.3% Sold during port rebalance
NexGen Energy NXE Feb'20 U$1.20 2-Dec-19 U$1.06 -11.7% TLS flip play, loss taken
MAG Silver MAG Apr'20 U$8.95 1-Mar-20 U$10.07 12.5% Sold to cut silver exposure
Alexco Res AXU Apr'20 U$1.69 7-Sep-17 U$1.69 0.0% sold to close Ag exp. in FY20
Bonterra Res BTR.v Jun'20 C$1.62 2-Feb-20 C$1.10 -32.1% under-performer cash moved
Regulus Res REG.v Jun'20 C$0.64 6-Apr-15 C$0.79 23.4% moved $ TMQ/MIN & Au stocks
Great Panther GPR.to Aug'20 C$0.60 21-Jun-20 C$1.10 83.3% Profit taken, good trade
Jaguar Mining JAG.v Aug'20 C$0.42 21-Jun-20 C$0.65 54.8% Profit taken, good trade
Sandstorm Gold SAND Aug'20 U$7.76 10-May-20 U$9.37 20.7% Profit taken, good trade
Integra Resources ITR.v Aug'20 C$2.23 13-Aug-18 C$5.40 142.2% Profit taken, good trade
Wesdome Gold WDO.to Aug'20 C$2.37 14-Oct-17 C$14.82 525.3% last 1/2 of big win closed
INV Metals INV.to Sep'20 C$0.40 17-May-20 C$0.45 12.5% Cut all Ecuador exposure
Cartier Resources ECR.v Nov'20 C$0.155 3-Aug-18 C$0.25 67.7% Exact close price TBA
Tinka Res TK.v Dec'20 C$0.195 19-Apr-16 C$0.195 0.0% Closed on a round trip fail
2015 to 2019 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
31

Stocks To Follow Closed Positions 2019
Closed in 2019 closed close price
Atico Mining ATY.v jan'19 C$0.55 24-Jul-16 C$0.32 41.8% patience ran out, made room
Candente Copper DNT.to jan'19 C$0.075 3-Ago-18 C$0.05 -33.3% tiny trade, made room for new
B2Gold BTO.to feb'19 C$2.11 12-Set-14 C$4.05 91.9% Took 1/2 profits, reduce size
Western Copper WRN.to mar'19 C$0.80 20-Ene-19 C$0.81 1.3% Spec trade that didn't work
B2Gold BTO.to mar'19 C$2.11 12-Set-14 C$4.15 96.7% Took rest of profit.
GT Gold GTT.v mar'19 C$1.17 10-Oct-18 C$0.90 -23.1% Took loss. Story changed
NovaGold NG apr'19 U$3.84 13-Ene-19 U$4.15 -8.1% Short that didn't work, sm loss
Zinc One Z.v jun'19 C$0.47 14-Set-17 C$0.025 -94.7% clearing out dead trade
Amarillo Gold AGC.v jun'19 C$0.24 22-Ago-18 C$0.20 -16.7% clearing out dead trade
New Gold NGD aug'19 U$1.44 31-Jul-19 U$1.23 14.6% ST short win thru Q2 earnings
IMPACT Silver IPT.v aug'19 C$0.39 21-Jul-19 C$0.46 18.0% took a quick profit
Fiore Gold F.v aug'19 C$0.34 26-May-19 C$0.56 64.7% Took profit, 2q19 avg
Chakana Copper PERU.v oct'19 C$0.84 22-Mar-18 C$0.16 -81.0% Exploreco trade fail. Want space
Wesdome Gold WDO.to oct'19 C$2.37 14-Oct-17 C$7.57 219.4% Sold half, profit taking
Superior Gold SGI.v oct'19 C$1.46 8-Abr-18 C$0.47 -67.8% Failed sm spec on Au. Moved on
Amerigo Res ARG.to nov'19 C$0.91 23-Set-18 C$0.50 -45.1% worst trade of year, hefty loss
Guyana Goldfields GUY.to dec'19 C$0.94 14-Abr-19 C$0.56 -40.4% taking the loss, financials weak
Tethyan Res TETH.v dec'19 C$0.30 8-Set-19 C$0.16 -46.7% tiny trade, word of probs in co
Stocks To Follow Closed Positions 2018
Closed in 2018 closed close price
Amarillo Gold AGC.v jan'18 C$0.38 24-Mar-17 C$0.31 -18.4% Cut away losing trade
Riverside Res RRI.v jan'18 C$0.39 27-Jun-16 C$0.31 -20.5% Cut away losing trade
Eros Res ERC.v jan'18 C$0.175 1-Mar-17 C$0.16 -8.6% CEO sudden exit, not good
Excellon Res EXN.to jan'18 C$1.54 9-Oct-16 C$1.66 7.8% 4q17 poor, one too many bad qtrs
Wesdome Gold WDO.to jan'18 C$1.68 15-Dec-17 C$2.06 22.6% Near-term trade block, took profit
Sabina G&S SBB.to apr'18 C$2.06 17-Dec-17 C$1.77 -14.1% Near-term trade, bad timing, small
B2Gold BTO.to May'18 C$2.11 12-Sep-14 C$3.67 73.9% sold 25% to reduce exposure
Lara Expl. LRA.v May'18 C$0.65 11-Feb-18 C$0.58 -13.8% Spec on Brazil didn't work
Solitario XPL June'18 U$0.72 19-Mar-17 U$0.41 -43.1% Failed trade, may return in 4q18
SolGold plc SOLG.to July'18 C$0.475 19-Nov-17 C$0.415 -12.6% cut, trade didn't perform
Pan American PAAS July'18 U$17.90 1-Jun-18 U$16.30 8.9% modest win on short position
NGEx Res NGQ.to Sep'18 C$1.01 22-Oct-17 C$1.00 -1.0% Closed to reduce Argentina exp
Sandstorm Gold SAND Oct'18 U$3.73 17-Apr-16 U$4.13 10.7% partial sale to raise cash for GTT
Aldebaran Res ALDE.v Nov'18 n/a n/a n/a n/a liquidate spin out of REG
Stocks To Follow Closed Positions 2017
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 1-Jul-12 C$0.05 -78.3% Give up, a disaster trade
Wesdome Gold WDO.to Feb'17 C$1.72 28-Aug-16 C$3.00 74.4% Target hit, sold, good trade
Belo Sun BSX.to Mar'17 C$0.90 30-Jan-17 C$0.90 0.0% failed near-term flip trade
Lara Expl. LRA.v Mar'17 C$1.15 8-Apr-12 C$1.05 -8.7% cut to make room for new trade
Rye Patch Gold RPM.v Apr'17 C$0.31 2-Sep-16 C$0.32 3.2% cut for doubts & new stock
Cordoba Min. CDB.v Jun'17 C$0.75 15-Sep-16 C$0.63 -16.0% closed
Constantine Metal CEM.v Aug'17 C$0.135 9-Apr-17 C$0.28 107.4% spec trade closed, good win
Red Eagle Min. R.to Sep'17 C$0.67 13-Dec-16 C$0.27 -59.7% IKN's biggest failure in years
Starcore Intl SAM.to Sep'17 C$0.61 10-Jan-15 C$0.31 -49.2% Patience ran out
B2Gold BTO.to Dec'17 C$2.11 12-Sep-14 C$3.39 60.7% sold small portion for liquidity
32

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
Timmins Gold TGD nov'15 U$0.245 20-sep-15 U$0.15 -38.8% small near-term loser
Please note that due to space considerations closed positions 2009 to 2014 are now
available on request, or were published in any edition to IKN553 (end 2019).
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.
33