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The IKN Weekly
Week 621, April 18th 2021
Contents
This Week: In today’s edition, Dirty laundry, The normalized market is good for gold.
Fundamental Analysis: The changes in South America political risk for mining.
Stocks to Follow: Wolfden Resources (WLF.v), Aurelius Minerals (AUL.v), Cartier Resources
(ECR.v), New Gold (NGD), Minera IRL (MIRL.cse), Strategic Metals (SMD.v), Minera Alamos
(MAI.v).
Copper Basket: Overview, The Peru copper stocks (REG.v, PERU.v, CCCM.v, ECU.v).
Producer Basket: Overview.
Tiny Dogs: Overview, Manitou Gold (MTU.v), Warrior Gold (WAR.v)
Regional Politics: A South America Covid-19 update, Ecuador: Yaku Pérez stakes his political
ground, Guatemala: The Escobal “pre-consultation” meeting is postponed again, Argentina
Chubut: Mining under threat of a blanket ban, Nicaragua’s growing dependence on gold mining.
Market Watching: Four stocks and no production news, Fiore Gold (F.v) quarterly production,
Wesdome (WDO.to) 1q21 production numbers.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
“
In today’s edition
 Today’s edition is not a normal one. We’ve cleared the decks, made use of the Weekly’s
segmented nature, set aside the standard coverage of topics for a week and instead,
devoted most of the issue to the rapidly changing face of political risk in South America.
 Our focus will be on South America for the time being. Don’t expect good news. We’ve
chronicled the Left Shift in the region for several months and the election of right wing
Guillermo Lasso in Ecuador two weeks ago isn’t going to change that trend. Argentina,
Uruguay and Bolivia are already back under left wing control, Peru threatens to join
them in dramatic fashion, later this year most pundits assume a Left wing victory in
Chile, then in 2022 Brazil and the recent change in fortunes of Lula da Silva compared
to his arch rival, President Jair Bolsonaro, is also telling.
Dirty laundry
I try to keep the blog and weekly separate, however today you get a small about some of the
contents of the blog last week. The details behind such spats become boring quickly, instead a
couple of more general opinions and statements:
 After the round of dirty attacks around Christmas, one policy decision made was to
become proactive about baseless rumours against my person. I knew that by reacting
the way I did, I leave myself open to the next phase of bile, namely…
 …the current attacks regarding my mental stability, a troll playbook of gaslighting to set
allusions of paranoia.
 One of the traits of paranoia is the need to create imaginary enemies and at this point I
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can assure you that the brain is working just fine, because I have no need to imagine
enemies. They are real, I know their names and how much they don’t like me. More
than enough to keep the mind from wandering into flights of fancy, thanks.
 Finally, I much prefer to be considered paranoid than anything that some rich and
angry enemies would like to fabricate about my person.
To wrap up, I’m not happy about using the blog this way either, the word cesspool springs to
mind and agree with mails received along those lines. It won’t be regular, however I cannot
guarantee it doesn’t happen again. That’s all, let’s do some real stuff.
The normalized market is good for gold
Your author’s stated position for the near-term of metals is bullish toward industrials (copper,
zinc etc), neutral toward precious (gold, palladium etc), then scratch-head and avoid silver. So
far at least the copper position is right (and avoiding
silver rarely causes me pain), but gold’s rebound
from the U$1,700/oz line to this Friday’s PM London
Fix has come faster than expected. The main reason
is the renewal of US Treasurys strength, which in
turn pushed yield down further last week. This
simple 10 year treasury yields chart shows the
backing off in April Friday’s yield closing at 1.5633%.
On that subject, remember all those screams of
terror about inflation? It seems so long ago, but a
mere five weeks have passed since the world decided
Joe Biden would ruin everything and inflation would
immediately spiral out of control now Trump has
gone. Instead, the “normalization” argument has
won out and that’s good, as that’s the one this desk bet on. In IKN620 last weekend, the intro
included this…
“…last week saw Mr Market finally make up his mind and decide the Fed is right, there
isn’t the type of serious inflation risk that many are calling (including ironically, the
hardcore goldbug world) down the line. Due to that, the Bonds Vigilantes backed off,
yields dropped and bonds were suddenly less attractive an alternative to gold as they
were.”
…and, as witnessed by the above chart that impulse didn’t suddenly stop last weekend, the
bonds vigilantes were backing off all week, all steam now out of the recent run. This has
allowed gold and the equities to run well in April, as seen in this 12 month chart.
Wrapping up the intro on metals, The GLD inventory/price ratio bears witness to how US instos
continue to sell off the metal, even as it rallies. It sets up an intriguing and very bullish
scenario, as the last times the ratio reached its “washout” indicator level of 6.0X or below have
been important turn points for the metal
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8.50 GLD: Inventory/Price Ratio, 2016 to date
8.25
8.00
7.75
7.50
7.25
7.00
6.75
6.50
6.25
6.00
5.75
5.50
3
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 12/13/3
Source: SPDR data, IKN calcs
In late 2015 and early 2016, the ratio washout coincided with the bottom of the years-long bear
market. Then in mid-2019, the washout coincided with gold’s change of trend into the current
bullish era. Therefore, the sharp drop toward 6.0X this time around (we are at 6.13X this
weekend would normally indicate a price drop too, but this time gold is finding other buyers
aside from Wall St instos. Please recall, this ratio does NOT predict the price of gold, instead its
purpose is to gauge sentiment of toward gold among insto desks and this is does faithfully. The
implication here is that once the trend changes and moves back higher toward 7.0X, the fuel for
gold’s rise will be instos playing catch-up to a gold price that’s moving away from them, thanks
to new and big buyers. East European Central Banks, for example.
Fundamental Analysis of Mining Stocks
The changes in South America political risk for mining
O, wonder!
How many goodly creatures are there here!
How beauteous mankind is! O brave new world,
That has such people in't.
(The Tempest, Act 5 Scene 1)
Today’s fundamentals note is long, covers several connected and semi-connected topics and
has some basic tasks to perform:
 We report on last week’s Peru election, the fall-out and the prospects in round two.
 We consider the result in the wider context of the Left Shift that has been in progress
for some time across The Americas.
 With a backdrop of higher metals prices in the future, we argue that a new and
aggressive round of Resource Nationalism in South America countries is now inevitable.
 Finally, we offer some thoughts on bearish trade set-ups and potential short trades,
with some practical fundies on two of the lowest hanging fruits.
That and plenty of detail, there’s lots to do. We will therefore take Dylan Thomas’s advice and
begin at the beginning, with a report on last week’s seismic political events in Peru.
Every why hath a wherefore (A Comedy of Errors, Act 2 Sc2)
Last week’s title may have been scribbled in at the last minute, but “Early indications of the
chaos to come” turned out to be an accurate commentary on the week just gone in Peru and its
politics. Let’s begin by marking the official result, with the count now at 100% and this bright
and cheerful visual from Peru’s #1 news radio media group, RPP (1):

Those are the top 12 finishers, enough to show the highly fractured nature of the result. Indeed
let us be clear, Peru would not be facing its nightmare round to if it weren’t for a series of
events that would do justice to A Comedy of Errors. On the right wing, either Rafael López
Aliaga or Hernando de Soto would have beaten Keiko to second place if the other hadn’t run,
the vote split between two intelligent fools glaringly obvious. The other major late factor was
the implosion of George Forsyth and the Victoria Nacional campaign, that failed to get even a
seat in Congress (edit: potential they get one on appeal) and as enough of those votes buoyed
Keiko, she made it to the run-off in front of the split right.
As for the fall out from the political Left, the big last minute change was the big drop in Yonhy
Lescano’s vote, the four to six point difference since the final official polls going to his radical
rival Castillo. As for Verónika Mendoza, she never found momentum but more crucially, when
the day of the vote arrived her anti-mining agenda that these pages feared and warned about
was not radical enough for the wave of protest vote! Also, though lefty and wanting to shake
up the system she’s seen by too many provincial voters as “one of them”, champagne Socialist
and not with Castillo’s popular touch. Also, the fact that candidates lose votes in Peru for being
women is undeniable and while there’s nothing likeable about that statement, it needs to be
stated because it will also weigh on Keiko in round two.
That’s a taster of the vote fall-out and I won’t bore you with too much of it (if you’re interested
enough, you probably speak Spanish already and don’t need English script). We stick to what
we know and that Round Two will be between the two worst candidates possible. When writing
two weeks ago that anything could happen in this election I meant it, but I didn’t expect the
single worst possible scenario to appear. But we also have final results from last week, the
make-up of Peru’s 130 seat Congress for the next five years (if it lasts that long). Here’s a
graphic, taken from a national daily, my English added:
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The Peru Libre (PL) party of Pedro Castillo will be the biggest bloc in parliament, with Fuerza
Popular (FP) of Keiko Fujimori with the second-largest number of seats. Alianza Para el
Progreso (Cesar Acuña) is the largest right wing bloc (his North coastal stronghold zone paying
off) and then the others. This is a highly fractured Congress and it will be difficult to come to
simple majority on anything, even issues that aren’t politically charged. The potential for
disaster remains high, Peru has no second chamber to provide checks or balances and this
Congress is as likely to fan flames as quell them when the crisis moments arrive. And they will.
Round Two scenario and forecasts
We now concentrate on the run-off is between Pedro Castillo and Keiko Fujimori, with the June
6th vote as the objective. First,the need-to-know about the party politics.
Keiko Fujimori and her Fuerza Popular party are known entities. Filled from top to bottom with
corrupt career politicians, their world has been blown to pieces by the recent investigations into
institutionalized corruption in Peru (Lava Jato, etc). Politically to the right wing and with populist
messaging aimed at the lower socio-economic groups, this is not subtle politics. Fiscally and
monetary policy would likely be standard neoliberal under her eventual presidency, FDI would
find her more acceptable than her local population. As for Keiko the candidate, she is widely
regarded by Peruvians as unelectable for any role, let alone President of the country. A lot of
water has flown under the bridge since 2016 and the election in which Keiko narrowly lost in
the second round to Pedro Pablo Kuczynski (PPK), much of that has exposed obvious corrupt
activities by Keiko and many of her political party (and family and friends, the network is vast)
and though she’s no longer on remand in prison, she’s still facing charges that would land her
in jail for up to 23 years. To underscore, much of the evidence in the main charges against her
is overwhelming and goes way beyond any political axes being ground.
Meanwhile on the other side, Pedro Castillo and his political party are Communists. Period. Take
a read for yourself at their manifesto (plan of government) and tick the boxes, you have
everything from the nationalization of primary industries (e.g. Perú Libre explicitly states its
objective is to nationalize Peru’s mining industry completely, once you read such things you
cannot say you weren’t warned later) to control of media (the press does not have a right to
freedom, instead its duty is to be co-operative with its government) and ownership of same, as
well as all communications infrastructure such as telephony (“The State will invest in all national
communications channels”). It will raise taxes on large companies immediately and significantly,
will raise the minimum wage substantially and will cap executive pay to 30X any worker in their
own company. This paragraph could triple in length with examples, this is not socialism with a
small or large S, it’s Communism in executive power, no more or less.
As for the man, he’s nobody’s firebrand politico but still wears his Hard Left political credentials
proudly. However (and like Lescano), the media is now making play with Castillo’s “socially
conservative” stance that, for them at least, juxtaposes with his hard Left wing politics on
matters of State and economy. Castillo opposes abortion, same-sex marriage, and the so-called
“Gender Perspective” inclusive teaching at schools, saying it turns people into homosexuals.
This is a popular opinion in many levels of Peru society and its pressure groups are likely to
have tipped their votes in his favour. Also, the powerful Catholic church like Castillo’s views on
abortion a lot more than progressive lefty Verónika Mendoza, he found no friction there.
Our main focus is mining, so here is a selection of specifics from Pedro Castillo and his party.
He agrees that mining should take place “where nature and the population permit it” and
certainly won’t ban mining, because he needs it to pay for his plans. To quote the man in the
week before the election (3) “The mining companies are taking all the wealth of the
country…we’re not going to scare off investment, but if companies leave, others will take their
place. Out with the companies that have stolen all our wealth and the wealth will stay with us.
The gold, the uranium and the lithium will stay with us (Peruvians).” Or this quote, translated
from the party manifesto: “The State must take control of three important sectors that generate
immediate wealth. The main mineral deposits of large and medium scale mining such as
Yanacocha, Antamina, Toromocho, Marcona, Cuajone, Quellaveco, Toquepala, etc. They must
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be nationalized and passed to the administration of regional governments, according to
jurisdiction.”
Regarding the Perú Libre party, this interview last week (4) with Vladimir Cerrón, president of
the Perú Libre party and the ideological central figure of the party, had several points of
interest, such as the headline quote “The State will invest in telephony, mining and gas”, a
statement straight out of the Communist Party playbook. Further on in the interview, he was
clear about the reasons for Castillo’s victory. As well as being “one of the people” who visited
inhospitable areas of the country “not like a tourist”, Cerrón said this:
“A key was our anti-neoliberal and anti-system economic program, which hit home
during this pandemic wave, as it has helped in this case (the Covid-19 pandemic) to
see the deficiencies in the system, in much the same way that the Managua
earthquake helped the Sandinistas expose what was happening in Nicaragua.”
Which is why Nicaragua has Danny Ortega today. Another interview with Cerrón last week was
published under the headline, “The eventual government of Pedro Castillo would assume the
financing of the media”, its implications ominously clear. However, the real agenda and
crackdown on civil liberties isn’t going to happen overnight and Pedro Castillo is no naïve
politico. He knows his role and what to do now, his move to the centre is guaranteed and the
pact-making has already begun. Indeed, his first reaction to the news in front of his local
supporters in the town of Chota, Cajamarca was to tell them they wouldn’t get everything they
wanted at once, the party would have to form alliances to get to the second round, they would
need to be patient.
So much for the players, now for the field. As noted in the blog post last week (also re-
published in Appendix 1, below), the neoliberal centre-left politicos and media channels have
fallen into line, their enablement of a dangerous hard left winger was too easy to predict. Last
week’s offered an outline of how round two will shape up, today we go further. To begin, it
almost goes without saying but on cue, both candidates have made their moves to the centre.
Keiko’s stance is to guarantee to be democratic on pain of something or other, Castillo’s is to
mention that he’s in talks to create a broad left front. Those early moves out the way, we get to
the central issue in round two: Peru’s fate will be decided by the number of people who
are able to go against their own convictions and vote for Keiko. It works like this:
Keiko has a hard vote minimum, adding hers to De Soto and RFA gives her 37% hard. Castillo
has his own, Lescano and Mendoza, that’s 36% hard. So far so good, we can reasonably give
both R2 candidates the same hard minimum, game on. Therefore, the other 27% of voters who
voted last weekend will decide the next President of Peru. That 27% are also almost all people
who previously stated they would never vote for Keiko again, as noted previously on many
occasions the Keiko anti-vote is very strong in the country. However, it’s made up of people like
Julia Valdivia, here interviewed for Spain’s El Pais (5):
“I am very anxious about the fact that a far-left candidate might go to the runoff,” said Julia
Valdivia, 34, standing outside a school in the upper-class neighborhood of Miraflores in Lima. “If
that happens and Keiko Fujimori is the other candidate, I’ll be forced to vote for her, although I’ve
never wanted to do that. But she would not sink Peru into stagnation, while Castillo is going to
destroy my country.”
And it’s made up of influential people such as Mario Vargas Llosa, who has over three decades
of bitter history with the Fujimori family and in 2010 swore on any book you could imagine that
he’d never vote for Keiko or any of her family, due the damage it would cause the country. This
weekend, MVLL published to say (6) he will vote Keiko as least–worst and recommends all
Peruvians do the same to stop the Communists from taking control. That is a level of
desperation rarely seen in polite Peruvian society and gives an idea of the fear (no other word)
now stalking the middle class barrios of Lima (from where this missive is written, I do not claim
innocence). In other words, never say never. So we know at least some of that 27% will go
back on their previous word in order to keep Castillo out, but the plain math tells us it would
need roughly half of them to swallow their pride and convictions in order for Keiko to pull off a
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political comeback of stunning proportions. These are not people with love for Castillo, they
voted for their own in the first round but we know they hate Keiko Fujimori and there’s the rub,
because it’s difficult to describe the hatred much of Peru feels toward the woman. Among the
75% of “Never-Keikos”, consider how the US right feels toward AOC or the US left feels toward
Ted Cruz. Then let it harden for ten years. Then catch them red-handed in a multi-million dollar
corrupt scam.
Next up, the likely rise in absentee voting in Round Two will hit Keiko harder than Castillo. It
was big in round one and likely to be big again, in fact we have already seen marches in Lima
actively promoting the absentee vote option, its protest marchers saying that they are fed up
with it all and refuse to decide any longer. For what it’s worth, the Communist Castillo will
benefit greatly from any voter apathy in Lima, city votes will go against him in round two. So
maybe it’s not so surprising to see people who don’t care about voting suddenly get a heap of
funding for their cause  and are militant enough to march about it. I digress slightly, but the
bottom line here is the lower the turnout, the better for Castillo and his more motivated rural
support base.
As for the upcoming campaigns, predicting Keiko’s line is like predicting which day comes after
Tuesday. Her main thrust will be in the provinces and rural areas and all about the way her
father saved them from the Communist terror group Sendero Luminoso. She will then connect
Pedro Castillo has not only to Communism, but the remnants of Sendero that now make up the
semi-outlawed MOVADEF political party in Peru. All that is easy to do, because it’s all true and
even last week, he was already in deny-and-deflect mode on reporters’ questions over his close
ties with MOVADEF (and therefore Sendero). He’ll want the information to come out in his way,
not the way of a Peruvian media that has also largely lined up behind Keiko Fujimori against its
own better judgement. Early days also show how Keiko will benefit from mass media coverage,
she has a better funded race and on the charm front, she’s also already “in talks with other
parties” in her move to the centre, presenting a united front is her only chance if she wants to
beat Castillo.
But for all the campaign advantages the Keiko campaign might from now to June, be clear that
Pedro Castillo goes into this run-off as clear favourite. What we witnessed last week was the
game-changing vote of the disenfranchised who stuck the middle finger to its political class. It’s
not a new phenomenon to Peru and nor is it confined to the political left, the movement is more
connected to populist extremes than a proscribed agenda. Arguably it began with the rise of
Trump and the Brexit vote, both results fuelled in their own country’s hinterland. Brexit would
not have happened without the UK’s poorer North sticking its finger(s, in V-shape) up at the
wealthier South. Or for another, I clearly recall a note by Jim Rickards (no need to agree with
the man to admire his intellect) who, after taking an extended overland road trip across
America before the 2016 election and often by Greyhound-type bus, came to the conclusion
Trump was a lock and made an excellent political call*. In Peru in 2021, the protest win won’t
disappear and, to the enormous good fortune of the Communists and chagrin of all others, they
go into round two facing the only candidate they can beat on paper. If it had been RLA, HdS,
Lescano or any other in second place we would not be going into paragraphs of explanations on
what is to come. The rise of Castillo and Perú Libre would of course still be big news, his round
one victory was clear and his party now has the biggest bloc of the upcoming parliament.
However it wouldn’t be the nightmare of today, instead we’re facing the genii out of the bottle
and this was confirmed to some extent today Sunday. The first snapshot poll of second round
voter intention was published by Peru’s most reputable pollster IPSOS (which, for the record,
accurately gauged the late surge in support of Pedro Castillo in its final week “confidential”
polls) (7) for one of the main TV channels and its Sunday night political program.
Pedro Castillo: 42% voter intention for round two
Keiko Fujimori: 31% voter intention for round two
Pedro Castillo’s early 11 point advantage won’t be impossible for Keiko to revert, but it’s surely
an uphill struggle.
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*But his action call was to buy gold, he thought a Trump victory would add U$100/oz to the metal. As noted above, a
good political call.
Thoughts on South America’s accelerating Left Shift
This month is the 50th anniversary of the publication of “The Open Veins of Latin America”*
(orig: Las Venas Abiertas de América Latina) by Uruguayan economist and left-wing intellectual
Eduardo Galeano. Considered something of a bible by the Left and obligatory reading for
anyone interested in South American socioeconomics, “Las Venas” was also the book Hugo
Chávez wanted to gift George W. Bush. That gives you a clear idea of its contents, the main
thrust of the post-modern Marxism espoused within based around the struggle against the Neo-
Colonialization of LatAm by the industrialized North and the need for continent-wide
emancipation from the reins of financial power. Y’know, that kind of rhetoric.
If Galeano were alive today (he passed in 2015), he’d be happy with the Left Shift our pages
have documented on numerous occasions to in the last year to eighteen months, rippling
through LatAm. Even The Americas as a whole, though N.Am’s political range is naturally set
more to the right and lumping Biden/Trudeau in with true Socialism is something I’ll leave to
right-wingers in their respective countries. The continent has been making its move to the Left
from top to bottom, with populist Lefty Andrés Manuel López Obrador now running Mexico,
pragmatic Peronist Alberto Fernández trying to bring order to chaos in Argentina and between
those two, plenty of evidence of clear shifts to the Left. Uruguay’s new Administration is a clear
Left shift (that small, stable and largely non-mining country doesn’t come up on our radar
much). Then followed Argentina and Fernández, later in 2020 Luis Arce didn’t just win in
Bolivia, his first round win was a landslide. This brings up another point, on how the Left Shift is
how it has not come up on the normal radar screens until it’s too late. Your author is a
consumer of polls great and small, from the shaky to the solid. One of the recent tendencies is
seeing how badly polls have predicted elections and the North has examples galore. Down here,
no normally credible pollster gave either Alberto Fernández of Argentina or Luis Arce of Bolivia
any chance of winning their elections in the first round of voting, but both did just that. Then
the hybrid green/ecology left movement that formed around Yakú Pérez in Ecuador came from
nowhere and nearly pipped the eventual President-elect to the run-off. All off-radar to the
standard conversation, all upsets to the Left as the rural, provincial and urban poor electorate
have come out in droves.
Peru last week provides a tipping point, the moment when the Left wing becomes more radical
and still retains power. The example Peru Libre can set for its fellow Socialist government of
now and future dos not bode well for the mining industry, these are not Chilean socialists, they
make AOC look like Sarah Palin. That momentum is now growing and the result of the first
round election in Peru, we can expect any policy change to be copied over the region.
*A little-known fact, stumbled upon this weekend.
Resource Nationalism is coming to South America
This theme in last week’s blog post on the subject (see Appendix 1) was deliberately general,
its focus the Peru index-tracking ETF rather than the mining industry. Not today, here we are
about the mining industry and while many of the political points in today’s issue are generalist,
when it comes to ramifications it’s all about what it means to our sector of focus (and our back
pockets).
To begin, look no further than copper, as resource nationalism is inevitable around this
metal. The sector’s big analysis event this week came from Goldman Sach, where GS rockstar
Jeff Currie put his name under that of two others at the house and published “Copper is the
New Oil” on April 13th, a 31 page macro note that, among other things, calls copper to
U$15,000/tonne.
X
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I’m not going to quote the work of others wholesale, however the above charts from the note
show enough to tell us GS expects a big move in the price of copper on the back of a supply
crunch. As for the contents of the note, I highly recommend you get your hands on a copy and
read it (and I expect you can work out who to mail) but for a general idea of its contents, here
are the five main headings:
 No decarbonisation without copper
 The green transition will support a surge in copper demand.
 The copper market is unprepared for this critical role.
 Sticky supply threatens to deplete copper stocks by mid-decade.
 Copper on a necessary path to $15,000.
It’s a strong note, however as I was reading it through and the news of Castillo’s win
confirmed, the penny dropped. There is no way the companies get to keep all that money.
However, Resource Nationalism comes in many guises and not all of them should put you off
investments. For example in Chile, we0ve already noted the debate on royalties and how it’s
bleeding into the late 2021 election, to the point where a new round of royalties in 2022 is now
likely even if the Right pulls off an unlikely victory. The debate around how miners making
excess profits while around them Chile needs to re-build has already developed in Chile this
year and audience reaction has been clear; taxing the miners is a vote winner for the November
2021 Presidential election.
We therefore expect Chile to be part of the Left Shift and as a result, get more expensive for
miners to do business, but not to start bleeding the sector dry. Not so true for other places,
epitomized by the better provinces of Argentina (or to stretch to LatAm a moment, Mexico) that
bring cause problems at a national or provincial level. Governments can add an extra financial
burden at the drop of a hat, blockades of mine by locals happen etc, but overall and as long as
the mining company is big and smart enough, business gets done. However the moves we’re
now seeing in Peru are worse, they are outright business unfriendly as epitomized by an
eventual Castillo government in Peru. It does not end when the taxes go up, if Castillo’s 70/30
call becomes policy it will be first of many slices taken from the balance sheets of mining
companies. First new taxes, perhaps then a round of extra royalties, all while company costs
rise on extra wage demands. If it only goes that far Peru gets let off lightly, but the moment
the government stops taking from the current assets and turns its attention to mining company
fixed assets, things get bad, fast.
To illustrate, we go down a worst-case road that Peru has now opened: We’ve already heard
how easily Candidate Pedro Castillo uses the term “…or else we’ll nationalize them…” when
discussing the projected tax rises. He and they won’t go that far so quickly, there are plenty of
stops between a free market economy and outright sequestration of private assets. For
9

example, Peru Libre’s manifesto includes the setting up and funding of a State mining company,
which would then go into JV with private entities on their projects. Then, the State company
gets an automatic minority stake in any project that moves forward. Then that stake goes to
51% and the State becomes operator. Then the State changes the deal and offers the private
company an operator’s fee, allowing them to make a profit while Peru The Nation digs up its
metal and processes it in its mills. Then, and only then, will an eventual President Castillo and
his Communist cohorts tell them to accept the deal or they get nationalized, but by then it’s
way too late.
Before moving on, a sidebar note: Peru has enjoyed around 20 (or 30 if you include the Alberto
Fujimori 1990s) years of relatively stable and strong GDP growth based on sound and orthodox
economic policy. Most notably, and an insightful point made to me last week by a non-financials
friend here in Peru, inflation has stayed low all through the period thanks to sound fiscal and
monetary policy. Those policies are personified by Julio Velarde, head of the Peru Central Bank
(BCRP) since the Toledo government who has seen six Presidents come and go before him.
Through all the political and social scandals that could have destabilized other economic
policies, Velarde has been a stalwart in defence of the rational and normal. Now 68 years old
and with 15 years at the job, he would be justified in retiring and indeed, even before the
election the left wing of Peru was promoting their own candidate, Oscar Dancourt, as the next
head of the BCRP. If Castillo wins and Velarde goes, the good work done over 20 years can be
unravelled in minutes by any head who agrees with and enacts policies of a left wing executive.
Pedro Castillo already has his mining policy laid out for Round Two so, to paraphrase a couple
of his recent statements into one, “The mining companies are welcome to stay but must pay
more. They get 70% of the wealth that comes out the ground, Peru gets 30%. That will change
and under my government, the mining company gets 30% and Peru gets 70%, more than
enough to keep them working in the country. Oh, and if they don’t like those terms we will
nationalize their mines”. It’s a simple, populist message that will go down well, that 30/70
message cuts through the statistics used by his opponent to show the benefits of the status
quo in mining. So why is the mining industry in particular going to suffer from this wave of
statism? The answer could simply be a sardonic laugh and a “why not?”, there are myriad
reasons to see mining companies in the line of fire, from the benign, “They are profit-making
entities often physically located in poor regions with poor governance”, to the philosophical,
“Along with farming, mining is the most basic of all capitalist endeavours, it is normal to see its
position at the leading edge of capitalism be challenged”, to the critical, “Data shows the way
revenues generated from mining operations have failed to reach the poor in the surrounding
regions”, to the opinionated, “Mining companies are run by idiots who picked a fight with a
dangerous enemy once too often.” Take your pick, and I didn’t even have to reach for the
Marxist-Leninist stained Plan of Government that Perú Libre and Pedro Castillo used to take
over 19% of the national vote.
Listing the risk
And with that, there’s enough examples of the problems to come in Peru and the wider region
caused by the Left Shift across the region and last week’s catalyst event in Peru. We end
today’s extended note with some practical, market-based thoughts. And on Thursday, a
“longtime subscriber” (true) and “busy businessperson” (hope so ) who will remain otherwise
nameless wrote in with a couple of points. Here we edit slightly and cut to the chase and the
reason to share their mail:
In many recent editions, and blog posts, you’ve noted political trends in
LatAm countries that portend trouble for miners there, and counseled
avoidance of those miners. But without having memorized where all of each
junior miner’s properties are located, it’s hard for an otherwise busy reader to
know which ones have the degree of exposure to warrant such avoidance.
Perhaps, at least for impatient subs such as myself, you could mention a few
of the principal names that are vulnerable? I’m not sure I can accurately list
which companies have material exposure to Ecuador, for example, or Peru.
10

Teck, for example, or are they too diversified? Do these political trends
provide short selling opportunities?
A good idea, let’s begin with a simple list of mining risk LatAm by country:
 Sell: Peru, Ecuador
 Avoid: Most Argentina, Bolivia, All Central America except Nicaragua, some Mexico
 Possible with risk: Some Argentina, Brazil, Colombia, Guyana, Nicaragua
 Buy: Chile, Most Mexico
In fact, as from this weekend the only jurisdiction I will confidently recommend in LatAm is
Chile. Peru is now off the map, Mexico is okay as long as you know your specific region, but the
rest are for risk-tolerant players only.
 Ecuador potential short trades: Lundin Gold, SolGold, Solaris Resources,
Salazar/Adventus, Cornerstone, Luminex.
 Peru potencial short trades: Buenaventura, Southern Copper, HudBay, Cerro Verde,
Volcan, Regulus, Bear Creek.
You can add to those if you like, those are the ones that are shortable in theory and likely in
practice, too. But before we get into the weeds I’d like to make context clear: I have the
greatest respect for the 28 year old internet trader with a $50,000 warchest and a penchant for
risk in the mining sector (not least because some of them are subscribers ) but in this case,
respectable young ladies and gents, my mind’s eye on these trade is certainly not you. The risk
of open-ended shorting is yours to take on, my target audience is the hedge fund that truly
hedges, running pair trades on sector peers of choice. That or the more sophisticated investor
who knows the risks of shorting and may even have their own ‘retail-sized’ pair trade set-up in
mind. Above all, shorting requires liquidity and when mining is the sector, one precious metals
name and then one industrial metals name stand out above all others as potential shorts for
Peru. They are Buenaventura (BVN) and Southern Copper (SCCO) and to finish today, we
provide thumbnails on what I believe to be the two most useful short ideas in light of the rise
and eventual victory in Round Two of Pedro Castillo:
Buenaventura (BVN): Liquid and actively traded on the NYSE as an ADR, Buenaventura has
some minor assets outside the country that hardly matter, this is as Peru-exposed as any
company could be. We’ve been over the financial weak spot at BVN more than once, the issues
around its financial debt position are no secret and the reason behind its price under-
performance. As the Benavides clan and its Class A voting shares refuse to dilute the share
roster, the family has been betting on 2021 cash flow to pay their way out of this burden (as
seen in the BVN 4q20 corporate presentation (9))
The plan, like any other good one, was to show a quick paying down of debt as from 1q21 and
11

then go to market and refinance. The 1q21 production numbers (out last week (10)) suggest
they don’t have as room to comply with the first part as expected. Production came in shy at
three mines, as well as the low-end result from Yanacocha as that 43.65% owned asset goes
through its own transition year (we assume the sulphides project will not be stopped or delayed
by the new government). Not a great start to a year that’s getting more difficult by the day,
which reflects in its price performance in 2021 and recently:
Its three year chart underscoring the turgid nature of its trading, even the dividend has drid up,
the YE19 payment withdrawn “due to Covid-19” and no sign of a payment since.
The above adds to our previous soft-coverage of BVN in The Producer Basket to end 2020, in
which we documented years of under-performance to peers. Cash flow is one thing, the real
issues arise at BVN when they go to market and try to refi the rest, by that time their country
debt rating may be worse than that of Argentina’s.
Southern Copper (SCCO): Our other focus company is by some distance the most exposed
publicly traded copper company to Peru. Southern Copper (SCCO) is majority owned by Grupo
Mexico (Mex: GMEXICOB) and that ticker provides another way to play Peru’s political
downside. SCCO the company also takes the two GMEX copper assets in Mexico, but although
Buenavista is back running at 900kt Cu per year
and SCCO’s production split between the two
countries is roughly 50/50 now, the lion’s share of
its asset value is still very much Peru. Most people
are aware SCCO has its main production facilities
in the massive, highly profitable and long reserve
life Toquepala and Cuajone mines in the South of
the country (see insert right, the operating cash
cost/lb Cu allows excellent margins). After that,
SCCO these days is most easily connected with Tia
Maria, its highly controversial project on the South
coast of Peru which has been opposed by locals
for decades, blood shed and all. However SCCO in Peru is a lot more than that, they have
12

extensive exploration concessions at various stages of development and the recent capital
expansion at Cuajoneis one of he largest capital works in Peru mining in the last three years.
After that they own the only large smelter left working in Peru since the infamously
contaminating La Oroya facility went bankrupt, its dedicated facility at Ilo (adding serious value
to its product, they get to keep TC/RC) as well as the dedicated railtrack connecting it to both
Cuajone and Toquepala. All that and more, SCCO is a healthy and profitable company, it’s
balance sheet far stronger than that of BVN.
However, there is plenty of long-term debt and that, along with the profits and dividends, is
being serviced by the wide margins of current operations. In this case, U$5.8m of the total
U$7Bn debt package held at SCCO is long-dated, with most of its bonds maturing between
2035 and 2050. That’s good news, what it gives is a company that pays and will pay heavy
interest expense to service to debt, in SCCO’s case over U$390m in FY2020.
The three year price chart (below left) comparing SCCO to the copper producers’ ETF (COPX)
shows SCCO is an industry average trade:
However, the 2021 YTD chart shows the makings of divergence, something we expect to widen
as SCCO’s State burdens rise with the new government.
Conclusion
Today’s long note tries to cover the bases, to to make sure its message is clear here are the
main conclusion points:
13

 Sell Peru, sell Ecuador, in fact it’s time to sell the whole South America region due to
the rise in left wing populist government. The only exception in South American mining
jurisdictions is Chile, but even there expect a price adjustment on mining companies as
new State burdens are placed on them.
 We expect Pedro Castillo to win the Peru run-off election and become the next
President. Only then does the bad stuff begin.
 There are shorting opportunities in mining, as we expect it to be one of the hardest hit
sectors in both Peru (as the example) and across the region (as its policies are copied).
Bottom line: Aside Chile, South America is not the place to look for mining investments for the
next two to three years. And with that, the mining newsletter letter that covers and trades Latin
American political risk in stocks puts itself out of business.
Stocks to Follow
This time last week I wondered whether I was being too optimistic about a new leg-up in
mining stocks. During last week’s trading, at the centre of my radar was therefore “…the follow-
through as, if the rally continues in the days ahead, we can expect the cash to rotate down
through the tiers and make for gains in our focus sector.” The week fitted that bill to a tee and
provided key evidence that a bull run in mining stocks has indeed begun. Our normal suite of
sector trackers did well, with GlD up 1.9%, GDX up 3.8% and GDXJ up 3.45%, rotation into
lower tiers seems to be starting while more insto-sized entries come via the gateway tickers
In so many words, another good week for the sector. As for the IKN Weekly Stocks to Follow
portfolio, it wasn’t all green and two of our small positions were hit by their own events but
overall another good week, with nine winners (MAI.v, RIO.v, CMMC.to, TMQ, SMD.v, MIN.to,
WLF.v, ORE.v, MENE.v) and seven losers (NGD, RYR.v, GBR.v, ECR.v, AUL.v, TORO.v,
MIRL.cse). The biggest mover was a loser, MIRL down 24.1% on heavy selling. But overall a
good week and for the second one running, the precious metals stocks and copper stocks once
again moved up together last week. That is good
With the addition of Wolfden Resources (WLF.v) and the sale of nothing, we are back over our
self-imposed limit at 16 open positions. Seven are in the green, seven in the red, two UNCH.
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$0.69 228.6% New $1.14 tgt Aug'20 #1 idea
Rio2 Ltd. RIO.v STR BUY C$0.83 22-Abr-18 C$0.83 0.0% $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$3.51 150.7% Added Dec'20, trade for FY21
Trilogy Metals TMQ STR BUY U$1.84 15-Set-19 U$2.46 33.7% Added Dec'20, Cu for 2021
Strategic Metals SMD.v STR BUY C$0.40 31-Ene-21 C$0.47 17.5% Asset $ trade, proj generator
New Gold NGD STR BUY U$0.76 9-Feb-20 U$1.79 135.5% 3q20 tgt $2.80
Excelsior Mining MIN.to STR BUY C$0.98 10-Mar-19 C$0.82 -16.3% Delayed, but still great value
Royal Road Min. RYR.v BUY C$0.155 17-Mar-19 C$0.37 138.7% Model paying off in Nica
Wolfden Res. WLF.v BUY C$0.30 11-Abr-21 C$0.30 0.0% near-term Zn trade
Great Bear Res GBR.v BUY C$15.83 26-Ago-20 C$15.50 -2.1% Binary M&A trade, wait for print
Cartier Resources ECR.v BUY C$0.32 21-Mar-21 C$0.295 -7.8% Binary M&A trade, wait for print
Orezone ORE.v BUY C$0.79 21-Jun-20 C$0.99 25.3% Binary M&A trade, wait for print
Aurelius Res AUL.v spec buy C$0.075 28-Jun-20 C$0.06 -20.0% Drillbit good, mkt bad. Spec buy
Pucara Gold TORO.v hold C$0.65 4-Oct-20 C$0.26 -60.0% Strike One, has Pasaska
Minera IRL MIRL.cse hold C$0.195 22-Jul-12 C$0.11 -43.6% CEO change will move stock
14

Long-term non-mining hold
Mene Inc. MENE.v LT Hold C$0.63 6-Dic-20 C$0.57 -9.5% 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$1.17 19.4% closed as part of rebalance
Norsemont Mining NOM.cse feb'21 C$1.55 6-Set-20 C$0.70 -54.8% Cut loser to reduce Au exp.
Element 29 Res ECU.v feb'21 C$0.49 7-Feb-21 C$0.54 10.2% Cut Peru exposure
Kuya Silver KUYA.cse feb'21 C$1.66 8-Nov-20 C$2.51 51.2% Cut Peru exposure
2015 to 2020 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Now for notes on moves in a selection of covered stocks over the shortened trading week:
Wolfden Resources (WLF.v): POSITION OPENED. While writing up the note last weekend
I decided to pay 30c, so I did. Nothing to add to last week’s overview of the stock today, only
the standard small comment about those of you who insist on paying up for a newsletter reco
and throwing your money down the toilet while doing so.
There was no point in paying 32c last Monday.
Aurelius Minerals (AUL.v): ADDED. I’m destined to pay 7.5c for my shares. And sure
enough, as soon as I was in again AUL came out with the news to ensure the position remains
in the red, at least for a while longer. However, I’m fully supportive of this placement and
consider it good management at a time when much is lacking.
The news (11) AUL is raising C$6m via a C$0.06 financing means 100m papers to the current
shares out as well as 50m warrants. However, AUL also announced a share rollback with the
placement and that will do it some cosmetic good in the future. Note to other mining
executives: CEO Ashcroft has the right attitude toward mailing, information exchange and his
unflinching reaction to criticism is without par. He defends his strategic decisions well, will
concede points when he thinks right, has a clear and logical vision and roadmap for his
company. As a result, neither of us have to take up much of each other’s time to get to the
points required. In a world of companies run by people who may be great in their specialist
field but have no idea on how to run a company, and with easily bruised egos among
boardroom snowflakes who simply cannot take the criticism when their narrative is deficient, it’s
refreshing to see at least some decent management
material in charge.
Cartier Resources (ECR.v): ECR traded at 30c and
31c all week, bar the final trades Friday that brought
it down to an annoying 29.5c finish. However, it’s
easier to overlook Friday’s close than the way ECR
has under-performed since announcing the Chimo
resource update (and confusing the world with a
smorgasbord of mixed messaging).
15

New Gold (NGD): A thought from the longer view today and indeed, the turnaround year
was 2020. Unfortunately, gold’s crimp has stopped the follow-through to date but we expect
that to improve once the world sees the improvement in NGD financial results in 2021.
The date for your diary is May 5th pre-open, with the Conference Call for its 1q21 financials and
production numbers the same morning (12). Also last week, NGD announced (13) its strategic
investment position in Talisker Resources (TSK.to), as reported in IKN618 dated March 28th. I
don’t know why it took them so long to write the NR.
Minera IRL (MIRL.cse): MIRL shares took a heavy hit last week, here’s a price chart:
I received “anything you know going on?” type
mails from fellow longs last week, but what you
see there is not brain surgery. That’s what a
long-term holder who gives up the ghost looks
like and I’m not going to sugar-coat it, the
same thing is likely to happen as others throw
in the towel as long as Diego Benavides
remains entrenched as CEO. His presence
hinders any opportunity to raise the capital
required for MIRL to move Ollachea forward
and as noted two weeks ago, until he leaves
there’s only one way the share price will go and
if he doesn’t leave, that means it’s going to
zero. This company must act as soon as
possible to save its major asset and reverse the fortunes of its share price. Haywood knows
that, which is why every passing week becomes evermore suspicious.
Strategic Metals (SMD.v): This is embarrassing. I made a real pig’s ear of the tables last
week and, on review of the mess, even puzzled to myself at the time why the December
numbers were so different, so thanks for the several mails that pointed out my double error.
This is the corrected table from last week’s note on SMD, updated to this weekend’s share
prices and market caps:
Equity positions and cash held by SMD
Ticker S/O PPS Mkt cap SMD % SMD NAV
RK.v 208.036 0.135 28.08 33.5% 9.41
GGL.v 44.946 0.19 8.54 38.9% 3.32
TUF.v 137.5 0.12 16.50 19.9% 3.83
PRG.v 106.241 0.18 19.12 19.2% 3.67
SNG.v 81.98 0.19 15.58 18.7% 2.91
ATC.v 162.384 0.17 27.61 8.5% 2.35
TG.v 57.887 0.115 6.66 2.6% 0.17
subtotal 25.66
Terra 4.2
Treasury 8.5
Total C$m 38.36
16

RK…RKR… a stupid error. Fortunately, my failures as an anal yst don’t detract from the strong
appeal of SMD as these prices, the baseline argument for holding is unaltered and it was good
to see it trading well on the week, up 2c to 47c at the close and threatening to break back out
to its previous levels. It wouldn’t be before time, the house call is that good mineral
concessions in politically safe regions of the world are going to increase in value and SMD is in
the right place and with the right corporate model to get leverage from asset re-rating.
Minera Alamos (MAI.v): In the March/April president’s letter that arrived in my inbox last
week (14), MAI president Doug Ramshaw started by telling us his company is “…poised to join
the ranks of gold producers right around the end of this quarter.” That may be so, but we also
need to be aware that first pour is one thing, ramping to steady state and commercial
production on a heap-leacher is quite another. I for one don’t expect commercial production to
be declared until 4q21 minimum, with 3q21 ramping the mine into steady state as long as all
goes well.
In trading, MAI has reacting well to positive gold news for the last three weeks and managed to
trade at 70c on Friday before closing at 69c, the first time we’ve seen a seven handle since
early January.
The Copper Basket
After fifteen weeks of 2021, The Copper Basket shows a gain of 22.20% to level stakes.
company ticker price 1/1/21 Shares out Market Cap current pps gain/loss%
1 Solaris Res SLS.to 6.08 104.67 966.10 9.23 51.8%
2 Copper Mtn CMMC.to 1.81 207.5 728.33 3.51 93.9%
3 Oroco Res OCO.v 1.85 185.11 423.90 2.29 23.8%
4 Marimaca Cop MARI.to 3.25 64.358 288.97 4.49 38.2%
5 Excelsior Min. MIN.to 1.12 273.585 224.34 0.82 -26.8%
6 Western Copper WRN.to 1.57 135.6 216.96 1.60 1.9%
7 Amerigo Res ARG.to 0.80 180.77 189.81 1.05 31.3%
8 Regulus Res. REG.v 1.07 101.85 86.57 0.85 -20.6%
9 C3 Metals CCCM.v 0.115 375.17 60.03 0.16 39.1%
10 Chakana Cop PERU.v 0.60 117.2 56.84 0.485 -19.2%
11 Doré Copper DCMC.v 1.00 40.938 46.26 1.13 13.0%
12 Aldebaran Res. ALDE.v 0.455 93.64 45.88 0.49 7.7%
13 Element 29 Res ECU.v 0.45 66.7 27.35 0.41 -8.9%
14 US Copper USCU.v 0.105 87.53 18.82 0.215 104.8%
15 Chibougamau CBG.v 0.165 46.695 7.94 0.17 3.0%
NB: All stocks in CAD$ Portfolio avg 22.20%
A mixed week for the basket, with an overall gain but the negative weight of the Peru election
leavened the mix. There were seven weekly
winners (SLS.to, CMMC.to, OCO.v, MIN.to, The Copper Basket 2021, weekly evolution
35%
WRN.to, ARG.to, CWM.v), one unchanged
30%
stock (CBG.v) and seven losers (MARI.to,
REG.v, PERU.v, CCCM.v, ALDE.v, DCMC.v, 25%
ECU.v), with the winners trending toward the 20%
larger caps and the losers either smaller in 15%
size, or exposed to Peru, or both. Biggest 10%
winner was Oroco (OCO.v up 13.9%) as that 5%
heavily promoted stock in 2020 woke up at 0%
last. Biggest loser was Regulus Resources
(REG.v down 13.3%) and that could have
17
ts1
naJ
ht01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81
source: IKN calcs

been worse, the stock finding some buyers and a 5c improvement on Friday. The copper price
strength last week was laid at the feet of the Goldman Sachs report, but in truth it was a
continuation of recent form:
The Vampire Squid event on copper (other places today) provided the impulse to send the
metal above U$4.20/lb for the first time since the overbuying and rush-up of February, with
spot closing at U$4.235/lb on the week. The futures pit wasn’t quite as impressed, however,
Friday late trading ticking it back under 420 (maybe this why April 20th is known as 420 day?).
For some perspective, this week we lean on the Cochilco weekly report comments and a dry
paragraph written by some suit in Santiago (translated):
“A copper market report was released during the week by an important and prestigious
investment bank, projecting a significant rise in the price of the metal to 2025 that
would in nominal terms overcome all historic highs. Regarding this, it is not possible to
discard that this type of information exacerbates the already positive expectations for
the red metal based on market fundamentals, and induce investors with greater
propensity for speculation to create price pressure on the metal via stock market
operations in metals markets.”
Translating formal Spanish is fun. Let’s be clear, this desk fully agrees with the GS call and data
from China last week underscored rampant demand, it’s not as if Goldman Sachs is imagining a
market. Via People’s Bank data, March 2021 refined copper imports were up 25% YoY, clearly
connected to last year’s world Covid-19 lockdown but still speaking volumes for demand. On the
subject of volume, first quarter refined volumes rose 11.9% YoY (its biggest import quarter
since 2008) while in the larger concentrates market copper imports were up 7.4% by volume
and 22% by FOB price.
We move to our regular weekly copper inventories section. Less requirement to bang on the
table now GS has the world focused on this precise dataset, the leading edge where physical
supply meets demand:
 Aggregate world copper inventories rose by 10,583 metric tonnes (mt) last week to
finish at 430,673mt.
 At the SHFE. A slight surprise to see it still ticking up and the warehosuses adding
8,896mt to reach 202,464mt. Below for a few more thoughts.
 At the LME, stocks added 2,275mt copper to close Friday at 165,375mt. No biggie.
 Finally, the small Comex movements continue, with 588mt leaving stocks at 62,834mt
this weekend.
Here is the Shanghai-only inventories chart, the small raise above 200k won’t make much
difference in the long-run, we are at the annual peak and it’s not high enough.
18

Shanghai Futures Exchange Warehouse Stocks, 2014 to date
400000
350000
300000
250000
200000
150000
100000
50000
0
19
ht5naj ht61 ht52 dr3gua ht21 ts12 5102
ts1ram
ht01 ht91 ht72 ht6ced ht41 ht42 6102
dr3luJ
ht11 ht72 ht5beF ht61 ht52 7102
dr3pes
ht21 ts12 8102
ts1rpa
ht71 ht62 8102
ht4von
9102
ht31naj
ht42 9102
dn2nuj
ht11 ht02 ht92 ht8 ht71 0202ht62luj ht4tco 0202ht31ced ts12
Mt Cu
|
source: Cochilco
“Look at me, I design coastlines, I got an award for Norway. Where’s the sense in that? None that I’ve
been able to make out. I’ve been doing fjords all my life, for a fleeting moment they become fashionable
and I get a major award. In this replacement Earth we’re building they’ve given me Africa to do, and of
course, I’m doing it with all fjords again, because I happen to like them. And I’m old fashioned enough to
think that they give a lovely baroque feel to a continent.”
Slartibartfast: The Hitch-Hiker’s Guide to the Galaxy, Douglas Adams, 1979
From time to time, one of this desk’s long-term pet subjects gets its moment in the limelight
(though I neither expect nor deserve any awards). To make hay while the sun shines, this desk
cannot help feeling justified for banging on the table about the bullish nature of the developing
drought in copper stocks, particularly in China, when a high-profile and very bullish strategy
report out of Goldman Sachs zeroes in this very point as a mainstay of its bull call and long-
term U$15,000/tonne (U$6.80/lb) price target. Horn toot over, back to work.
The Peru copper stocks (REG.v, PERU.v, CCCM.v, ECU.v): All four Peru stocks in our
Copper Basket this year list dropped last week, the five day chart versus the main copper
producer ETF (COPX) showing their collective reversal of fortune just as the copper market re-
ignited.
Be clear: I expect all these stocks to drop further next week, especially Regulus:

This map shows a part of the Cajamarca region of North Peru. On it, the location of AntaKori
and the location of Pedro Castillo’s home town, around 20km from each other as the crow flies.
I have no special information, but one has to wonder whether REG will be able to drill another
metre this year.
The Producer Basket
After fifteen weeks of 2021, the Producer Basket shows a loss of 2.18% to level stakes.
company ticker price 1/1/20 Shares out Mkt Cap (U$Bn) current pps gain/loss%
1 Newmont NEM 59.89 803.36 52.52 65.37 9.2%
2 Barrick GOLD 22.78 1779.04 39.57 22.24 -2.4%
3 Agnico Eagle AEM 70.51 242.99 15.69 64.58 -8.4%
4 Kirkland Lake KL 41.27 272.984 10.31 37.75 -8.5%
5 Kinross Gold KGC 7.34 1260 9.45 7.50 2.2%
6 Pan American PAAS 34.71 210.17 7.10 33.79 -2.7%
7 Endeavour Min EDV.to 29.62 246.2 5.90 28.75 -2.9%
8 B2Gold BTG 5.60 1064 5.44 5.11 -8.7%
9 Alamos Gold AGI 8.75 392.73 3.46 8.81 0.7%
10 Pretium Res PVG 11.48 187.254 2.15 11.46 -0.2%
Prices in U$ except EDV.to (share price in CAD$ and mkt cap in approx USD) Port. avg -2.18%
Another good week for PM producers, the gold price rally justifying all moves. As the tracking
charts show, GDX managed to get back into positive territory for the year on the back of the
money moving into the sector. Our basket was only a fraction behind last week, all ten of our
basket stock made gains as the tide of money washed in. Best performers were B2Gold (BTG
up 7.8% and then once again strong Newmont (NEM up 6.3%, its main rival Barrick up 4.9%).
The 2021 Producer Basket: Weekly performance and
4%
comparative to GDX control
0%
-4%
-8%
-12%
-16%
-20% 20
ts1
naJ
ht01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81
The 2021 Producer Basket: Percentage difference between
GDX benchmark and basket (negative = IKN basket ahead) 3.5%
3.0%
2.5%
2.0%
basket
1.5%
gdx control
1.0%
0.5%
0.0%
source: Google, IKN Calcs
ts1
naJ
ht01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81
source: IKN calcs, NYSE/Nasdaq/TSX data

The Tiny Dogs
After fifteen weeks of 2021, the Tiny Dogs show a gain of 12.32% to level stakes.
company ticker price 1/1/21 Shares out Mkt Cap current pps gain/loss%
Antler Gold ANTL.v 0.205 61.348 11.04 0.18 -12.2%
Aston Bay BAY.v 0.045 163.975 6.56 0.04 -11.1%
Constantine Met CEM.v 0.17 45.4 12.26 0.27 58.8%
Contact Gold C.v 0.115 240.757 24.08 0.10 -13.0%
Golden Pursuit GDP.v 0.22 40 6.00 0.15 -31.8%
Manitou Gold MTU.v 0.045 230.79 23.08 0.10 122.2%
Precipitate Gold PRG.v 0.240 106.241 19.12 0.18 -25.0%
QC Copper QCCU.v 0.315 105 17.85 0.17 -46.0%
Red Pine Expl RPX.v 0.400 95.341 73.41 0.77 92.5%
Warrior Gold WAR.v 0.090 91.818 7.35 0.08 -11.1%
Prices in CAD$, data from TSXV basket avg 12.32%
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.
The basket average lost under 0.5% on the week, which would have been a lot more if it
weren’t for the impressive move put in by
Manitou Gold (MTU.v up 25.0%). There were Tiny Dogs, 2021 weekly tracker
20%
two other winners on the week (CEM.v, 18%
RPX.v), then one UNCH stock (PRG.v) and the 16%
14%
rest were losers including the bigger drops in
12%
Aston Bay (BAY.v down 20.0%) and QC 10%
8%
Copper (QCCU.v down 12.8%). When the dust
6%
had settled, a moot week for the tinycaps and 4%
not much sign of the big money moving in via 2%
0%
GDX and the Tier 1 stocks making it down
here so far.
A couple of notes on covered stocks:
Warrior Gold (WAR.v): On Wednesday April
14th pre-open, WAR announced the results of
the 12 drill holes left in its 2020/21 winter
campaign at Goodfish-Kirana (15). They went
with the positive news that the program
“Intersects Gold in all Holes” in the headline, but
the grades and widths are not up to scratch for
an economic deposit and the share price reacted
accordingly.
21
ts1
naJ
ht01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81
source: IKN calcs, TSX data

At what point does an interesting and prospective project become “geologically interesting”? For
me that’s today, WAR has swung and missed once too often at this project for it to be anything
else but a longshot in 2021. However, the more important question for the company is to ask at
what point does its CEO field the question about killing the project? And when they do, is the
refusal because they “really feel they are onto something”? Exploration is difficult and very
chancy, explorecos and their teams are allowed to fail. What they’re not allowed to do is to fall
in love with their rocks and pay for their affair using OPM.
Manitou Gold (MTU.v): The post-close Friday news we reported last week on Alamos Gold’s
(AGI) second incursion and strategic purchase of MTU (15.9m shares to get it to 19.96%
ownership) did to the stock what we imagined it would do:
Popular all week, no sellers. Wishing them fortune, but not going to buy.
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.
Regional politics
A South America Covid-19 update
Covid-19 continues to sweep through a largely unvaccinated South America, with record cases
and deaths being registered in Peru, Brazil and Uruguay along with resurgence in other
countries. For one example Argentina this weekend took unexpected action to tighten
restrictions on movement, but the flipside of the Covid problem in 2021 quickly showed as a
mass protest against any further measures gathered in the centre of Buenos Aires. Our
occasional coverage of Covid-19 on these pages is mostly on suffrage and we concentrate on
those regions where the virus may affect mining activity. In keeping with this week’s theme, we
stay in South America and report on the three man problem countries for mining investments
and Covid-19; Chile Brazil and Peru.
Chile: Two weeks ago we reported on Chile’s nasty surprise; that even with a high level of
vaccinations the country was seeing a sudden spike in Covid-19 cases. Here is how the chart
has developed (this chart specifically the Official New Case numbers, with the 7dma added to
help the eye):
22

As for the new government message, the triumphalism of being first and fastest with its vaccine
program has given way to a new message, as seen in this interview with Health Minister
Enrique Paris (16) in which the backpedal was completed:
“We never said the vaccine would be our only answer. We have to vaccine ourselves,
but we must also pay attention to others things such as reduced mobility, the use of
masks, hand-washing and social distancing, so that the virus doesn’t spread.”
Expanding thoughts a little this week and going OT, we note that Ontario Canada is showing a
similar pattern of a spike after vaccines and this weekend, new Covid-19 restrictions have been
handed down to an unhappy populace. However and as noted in passing last week, Chile is
making good on its policy not to close down its industry (if possible).
Brazil: Also in IKN619 two weeks ago, we reported there were “…level-headed forecasts of
100,000 deaths from Covid-19 in Brazil in April 2021 alone.” It’s on.
The first 15 days of the month have seen over 47,138 deaths according to the official stats and
when it comes to the reality of the horrors in Brazil, the government number is best understood
as a start point. We are in another period where the banality of the horror takes over, headline
fatigue comes quickly and even while Covid-19 runs rampant (mostly through the poor areas, to
nobody’s surprise) the issue can and does drop off the front pages of its media. However, the
banality also covers the growing resentment toward President Bolsonaro, support finally
weakening even among his hard core supporters (his meddling with the military at the end of
March did not go down well).
Brazil remains open for business, the population caring as best it can for its and preventative
health measures largely up to the individual or organization (company, association, etc). The
government abandonment of the country at its time of greatest need is the theme being used
by Lula da Silva (and supporters) as his “not an election campaign” accelerates rapidly. With
last week bringing courtroom ratification of the annulment of his (and Dilma Rousseff’s)
sentence for corruption, in the accurate words of this wire report headline (17), ‘Lula is free to
contest the elections and is already favourite for 2022’, the first round vote October next year.
As there’s a long way between now and then and when the day arrives, likely enough
candidates to ensure there’s no first round winner, the better opinion poll read in Brazil is how
the second round match-ups measure. In the case of a Lula (52%) vs Bolsonaro (34%) run-off
the gap has risen by 13% since the same survey was taken a month ago, such is the rapid
rehabilitation of Lula in Brazil’s public eye. Even the other early candidate for the job, TV
presenter Luciano Huck, would beat Bolsonaro 48 to 35 in the run-off.
Peru: In the pre-election IKN619 edition two weeks ago, we wrote that “…the chances of
another strict and nationwide lockdown are increasing by the day.” Indeed it is so with a new
level of restrictions coming into force tomorrow Monday April 19th as cases rise in major urban
areas (yesterday Saturday saw 343 deaths, the 300+ number now common). In fact the new
restrictions coming to Lima and other areas aren’t that much of a step up, for example casinos
must close again but restaurants can still fill 30% of internal seats. For another example, the
change of night curfew limit from 11pm to 9pm isn’t going to stop anyone from having their
good time, illicit or not. With vaccinations still few and far between and just 1.4% of Peruvians
covered mainly frontline workers at those aged 80 or above to date, the restrictions entering
23

into operation until May 9th are all about containment while allowing to keep the country’s
motor running.
There’s plenty more on Peru in this edition, instead here a small footnote: The restrictions
tomorrow also include the prohibition of “meetings in open or closed spaces”, in other words a
tacit “No Campaign Meetings Until May” message to the two run-off candidates. The dynamic of
how and whether this directive is adhered to by the candidates may become an election issue.
Ecuador: Yaku Pérez stakes his political ground
Last week’s 52.5% to 47.5% victory of Guillermo Lasso against Andrés Arauz in the Ecuador
second round run-off was a big win for the man himself of course, but as the week drew on the
rise and rise in political power of Yaku Pérez became evident, too. Statistical evidence shows his
“Vote In White” campaign in the run-off, which exhorted people not to vote instead of picking
one or the other, turned the normal 10% absentee numbers in Ecuador into 17%. It was
certainly the major factor why Lasso won in the Yaku Pérez stronghold jungle regions, the
Pachakutik party leader reminding everyone how their march on the Correa government in
Quito in March 2015 was met with mockery from the President and police brutality in repressing
the protest.
He has also locked up control of his new party, as the only indigenous leader to side with Arauz
in round two, Jaime Vargas, was kicked out the party three days after the vote (18). Yaku Pérez
may not be President-elect today but he is the new leader of the opposition to the Lasso
government and his power in the jungle region has only increased since his narrow defeat in
round one. He will be a regular name in political circles, if only due to his party’s large
congressional bloc and the anti-mining message will not change.
Guatemala: The Escobal “pre-consultation” meeting is postponed again
When, in February 2019, PAAS completed its purchase of Tahoe Resources and became owner
of Escobal, the clock started on a deferred extra payment that would be due to shareholders of
TAHO once concentrate shipments re-started from the mine, with a ten year time limit on the
payment. At the time of the deal, those with memory will recall the corporate expectation that
the Xinka consultation would begin in the near future.
However, and I get to use that literally translated Spanish phrase again, the reality is other. No
end of delays and protests, some legal others social, mean that the process to bring the two
sides together has not even begun. Up to last week, the government of Guatemala was
confident that its new date of April 20th to begin the “pre-consultancy”, but once again it’s been
set back by unknown delays and now slated for May.
Two years and two months re now off the clock of the deferred, 70c/share payment worth
U$211m at the time of the deal. It’s now April 2021 and the pre-consultancy period is still a
month away. This is set to take weeks in the active meeting, but then a consultation period
begins and the process is expected to last six to nine months. And please note, this is not
consultancy, this is the meeting to decide whether the real meeting goes ahead and what it
should cover). That now takes us to the end of 2021 and, according to the government
schedule, the real consultancy then goes ahead as from March 2022, everybody agrees and
Escobal can get back to operations, let’s say by 2023. With the opportunity cost of leaving the
24

mine on C&M dropping by the year, there is no reason why PAAS should hurry to open Escobal
and it gets to enjoy its long-term fixed asset value on its books as long as the consultancy
process continues. With neither side in a hurry and locals still belligerent, expect this to drag on
for years to come (and don’t expect the silver physical supply side to be weighed down by
exports out of Guatemala).
Argentina Chubut: Mining under threat of a blanket ban
There’s never long to wait before the next episode of madness from The Basket Case Country.
We’re back in Chubut this weekend to report on the developments in the mining debate, a
subject we have followed closely due to its importance to Pan American Silver’s (PAAS) Navidad
project, but more widely as a keystone issue that would (or not) make Argentina more
attractive as a destination for mining FDI. Since our last episode, when the vote to approve
“Zonification” in the Meseta region was called off by Governor Mariano Arcioni (because he
would have lost it), the issue has developed on two fronts. Firstly, the law project is still up for
debate in the Chubut parliament and there’s talk of it finally going ahead before the end of
April…if not, May….but maybe not. It’s tough to call when it might happen because in Argentina
delaying formal debates is a standard political strategy, however the debate must either go
ahead at some point during this legislature or the law project dies. As things stand today, if it
does it would be voted down, the likely final nail in the coffin the decision by a prestigious local
university to pause all lawmaking until policy on all non-renewable resources is better defined
(19).
Meanwhile and on the other side of the debate, approval has now been gained for a formal
debate on a law project to ban all metals mining in the province of Chubut. This was set off by
an anti-mining petition that gathered enough signatures to pass the local constitutional barriers.
Now all signatures have been ratified, the question passes to Chubut’s Congress to debate and
vote on the ensuing law project. Again, it’s not easy either to predict the timing or the outcome
of that in this system, but the debate now part of the official schedule and must now be
recognized and acted upon by parliament in some way, shape or form. That’s most likely to be
an open floor debate and vote, so if that goes against the mining companies it would be a
serious reversal not just for local projects, but for the whole country’s mining sector. On the
other hand, the law project as stands has been denounced as unconstitutional by government
lawyers (20), so the event is more likely to cause more doubt and uncertainty in the country
than provide any clear rules for the future (however unpleasant they might be).
Ultimately, the exact timing of the Chubut debates and decisions on mining is less of an issue
for this publication than for others, as Argentina as a whole is a blanket avoid here at The
IKN Weekly and has been that way for some time. As this recent report notes (21), Argentina
post-Chubut has already seen an uptick in anti-mining protests since the Meseta vote was iced,
with violence at a big march against the Agua Rica project (AUY et al) in the North of the
country last weekend. There’s no reason to suppose the crazy suddenly stops now.
Nicaragua’s growing dependence on gold mining
One of the countries we should worry less about is Nicaragua, the only destination in Central
America that’s shown itself to be a long-term partner of precious metals mining and willing to
grow its industry. Ironically, having a hard left ruler in long-term power allows makes for a
stable playing field and with the rule known, capitalism can work well enough to make its profit.
The first set of meaningful macro data out of Nicaragua’s Central Bank this year (22) indicates
the country’s growing dependence on gold exports as a source of foreign currency (i.e. USD).
This chart taken from Nicaragua Central Bank figures (23) goes back to 2010, when the only
formal gigs in town were Hemco in Bonanza and B2Gols in Limon. Then B2Gold’s La Libertad
came back on line, production remained largely static for many years but the rise in the price of
gold, along with government policy to allow and encourage artisanal co-operative mining, has
seen production and dollar sales increase sharply in recent years.
25

Nicaragua: Gold exports, per month, 2010 to date
90
80
70
60
50
40
30
20
10
0
26
0102
naj
luj 1102
naj
luj 2102
naj
luj 3102
naj
luj 4102
naj
luj 5102
naj
luj 6102
naj
luj 7102
naj
luj 8102
naj
luj 9102
naj
luj 0202
naj
luj 1202
naj
source: BCN
U$m FOB
Indeed, the two months of 2021 saw FOB gold exports worth U$132.2m, that compares to
U$98.8m for the first two months of 2020 (unaffected by Covid in any way, and even less in a
country whose President decided the virus didn’t exist and wasn’t going to infect Nicaragua).
That’s a 33.8% jump in raw dollar exports, roughly half of which is covered by the rise in the
price of gold (+16.4% Jan/Feb YoY). It’s also 30.6% of everything Nica exported in January
and February, the sector now a mile ahead of its traditional export of beef farming and coffee.
Market Watching
Four stocks and no production news
The Market Watching section of the last two weeks has brought some focus on the production
numbers of eight followed companies. First we laid out the eight companies of interest in
IKN619, last week we covered the numbers posted by Harte Gold (HRT.to) and Sandstorm
(SAND). Cut to this weekend and news that the vigil is largely called off. We did get the Fiore
Gold (FV.) and Wesdome (WDO.to) numbers and we consider those below, but last week our
other four companies of interest, namely Pan American Silver (PAAS), Pretium Resources (PVG),
Copper Mountain (CMMC.to), New Gold (NGD), all announced in turn they would publish their
production figures on earnings day (typically early May) instead of pre-announcing them.
Which is fair enough (and in some cases, e.g. PVG, that policy has been in place for a few
quarters), if only to allow the company better information security. And in the end, it’s only the
dollars and cents that count so while those four companies will still have my eye when they
report, there’s less chance of a leading indicator from them now.
Fiore Gold (F.v) quarterly production
On April 14th, Fiore Gold (F.v) announced its production numbers for the first calendar quarter
of 2021 (its financial Q2) (24) and here’s the main event:
F.v: Gold production and sales, per quarter
0593 8383
4466 7646
5968 3768 4699 48501 3998 4698 5679 4479 95701 73701 58611 40511 2829 9009 0578 3909 58021 62021 29721 16721 23421 55421 4029 0129 51901 48801 00511 00511 00021 00021 00521 00521
14000
12000
10000
8000
6000
4000
2000
0
71_pes 71_ced 81_ram 81_nuj 81_pes 81_ced 91_ram 91_nuj 91_pes 91_ced 02_ram 02_nuj 02_pes 02_ced tse12_ram tse12_nuj tse12_pes tse12_ced
Oz Au
source: company filings

The 10,915oz produced was close enough to our forecast 11,000 oz not to cause worry. With
sales of 10,884 oz in the period and a pre-announced average sales price of U$1,770/oz, we
can also make an accurate estimate of revenues:
F.v: Operations overview
27
0.41 3.01
7.3
2.51
1.21
1.3
6.21 4.01
2.2
1.31 7.01
4.2
0.91
7.31
3.5
0.22
7.31
3.8
9.32
0.31 9.01
2.71
9.9
3.7
9.12
7.11 2.01
30
25
20
15
10
5
0
91_ram 91_nuj 91-pes 91-ced 02_ram 02_nuj 02_pes 02_ced tse12_ram
$m
revenues
total cost of sales
Income from mine ops
source: F filings, IKN ests
In the case of Fiore, the questions are around costs and with the company reporting that cash
dropped by around $2m during the quarter as it gets aggressive at its second asset, Gold Rock,
there may be am unpleasant costs surprise in the offing when the company reports its
financials next month. The above assumption includes cost creep, but it’s mostly guesswork and
I will remain on the sidelines at least until the financials are known. The small price rally seen in
F.v last week can be chased by somebody else. Production-wise, an in-line quarter.
Wesdome (WDO.to) 1q21 production numbers
Pre-open on Thursday 5th April, Wesdome Gold Inc (WDO.to) reported its 1q21 production
figures (25), along with some other basic info about its quarter with the financials set to appear
in May. Here’s top line gold production, which came in at 22,564 oz:
WDO: Gold prod/qtr
30000
27500
25000
22500
20000
17500
15000
12500
10000
7500
5000
2500
0
71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1
Ozt Au
Mishi
Eagle River
source: WDO filings
WDO got there by running Eagle feed at a lower grade than expected, then more Mishi tonnes
than in any quarter since 2019. Grades averaged 12.8 g/t, better than 4q20 but still to the low
side for the mine, the company expects them to improve as 2021 unrolls.
WDO: Average gold grade, per qtr
30
28.6
23.4
25
23.4
20 18.5 18.1
13.3 12.8 15 11.3 12 13.8 12.5 6 10 10.1 10.07 11.5 9.89.71 10.6 14 11.7 8.7 8.2 7.01
5 6.6 7.4 4.9
7
0
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 12q1
g/t Au WDO: Tonnes milled, per qtr
Eagle River
Mishi
source: company filings
08444 87334 77764 63505 14903 45782 35493 94324 76644 15535 04535
32846 11047 17219 25233 8478
4076 13721 11533 18470 18623 9108 75232 47855
90000
80000
70000
60000 3555
50000 204 40000 30000 20000
10000
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1
mt Mishi
Eagle River
source: company filings

Sales were 22,457 oz in the period, very close to the production number but WDO also
managed to send some ounces to treasury. That’s because 1,793 of the ounces sold in the
quarter were rescued from the ongoing Kiena development as they approach production re-
start.
Ozt Au WDO: Gold production vs sales, per qtr Production
30000 Sales
25000
20000
15000
10000
5000
0
1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20 1q21
source: company filings
WDO gave us its preliminary sales figure of C$49.8m. From this, our model forecasts an
operating earnings of C$16.8m, or 12c/share.
WDO.to: Operations overview chart
28
277.4
823.8
501.6 940.5
53.21
151.31
197.81
479.41
247.91
753.52
426.22
236.21 8.61
60
55
50
45
40
35
30
25
20
15
10
5
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 tse12q1
C$m
revenues
total op expenses
Op earnings
source: company filings, IKN calcs
That’s an in-line quarter from an in-line company. Overall, a solid quarter and what we want
from this reliable company. The best news was from Kiena and cam ein this CEO comment
segment:
“At Kiena we completed the reconciliation of the Kiena Deep A Zone bulk sample,
resulting in a positive reconciliation of 6% more gold compared to that of the mineral
resource block model and subsequently sold 1,793 ounces in Q1 2021 (3,293 ounces
to date). We are in the final stages of completing the pre-feasibility study and intend to
publish the results this quarter.”
The extra sales, block model reconciliation and news that the PFS (and therefore formal build
decision) is only weeks away. WDO rallied on the news and deservedly so, making the best of a
positive end of the week for gold and closing back in on the C$10 line. It seems just a couple of
weeks ago that I debated whether to buy at C$8 or wait for deeper value. Another mistake.
Conclusion
IKN620 is done, we end with bullet points:
 Sell Peru. Then sell most of your South America exposure, then place the money in
lower risk regions around the world.
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. Best, Mark

Footnotes, appendices, references, disclaimer
(1) https://rpp.pe/elecciones-2021-presidenciales
(2) https://iknnews.com/the-north-still-doesnt-understand-the-significance-of-the-peru-election-result/
(3) https://www.youtube.com/watch?v=l7OfhzzpEqk
(4) https://www.expreso.com.pe/destacado-en-portada/vladimir-cerron-estado-invertira-en-telefonia-mineria-y-gas/
(5) https://english.elpais.com/usa/2021-04-12/peru-heads-towards-presidential-runoff-after-vote-gives-surprise-lead-to-
pedro-castillo.html
(6) https://canaln.pe/actualidad/mario-vargas-llosa-pidio-votar-keiko-fujimori-segunda-vuelta-n433902
(7) https://larepublica.pe/elecciones/2021/04/18/pedro-castillo-superaria-a-keiko-fujimori-en-la-segunda-vuelta-segun-
ipsos-pltc/
(8) https://iknnews.com/the-north-still-doesnt-understand-the-significance-of-the-peru-election-result/
(9) https://www.buenaventura.com/assets/uploads/presentaciones/2021/f4aec8c2a2b437f06175c315977f0582.pdf
(10)
https://www.buenaventura.com/assets/uploads/reportes_de_prensa/2021/2baf41d1090cc5928e5a81d1bee1e4f6.pdf
(11) https://finance.yahoo.com/news/aurelius-announces-non-brokered-equity-100000718.html
(12) https://finance.yahoo.com/news/gold-announces-first-quarter-2021-204500361.html
(13) https://finance.yahoo.com/news/gold-announces-14-9-investment-132800200.html
(14) https://mailchi.mp/mineraalamos.com/presidents-letter-january-13347227?e=0b1aa276a1
(15) https://www.businesswire.com/news/home/20210414005280/en/
(16) https://cnnespanol.cnn.com/2021/04/16/chile-vacunas-covid-aumento-casos-trax/
(17) https://www.efe.com/efe/america/politica/lula-esta-libre-para-disputar-las-elecciones-y-ya-es-favorito-
2022/20000035-4513952
(18) https://www.las2orillas.co/la-revancha-de-los-indigenas-contra-rafael-correa-en-las-elecciones-de-ecuador/
(19) https://www.infobae.com/sociedad/2021/03/23/fuerte-reves-para-el-proyecto-de-megamineria-en-chubut-la-
universidad-de-la-patagonia-pide-que-no-se-debata/
(20) https://www.baenegocios.com/columnistas/Chubut-y-el-debate-sobre-los-proyectos-de-explotacion-minera-
20210411-0016.html
(21) https://www.infobae.com/politica/2021/04/18/recrudecen-los-conflictos-por-la-megamineria-en-el-pais-y-desafian-
los-planes-del-gobierno/
(22) https://www.eleconomista.net/economia/Deficit-comercial-de-Nicaragua-alcanza-247-millones-a-febrero-20210416-
0019.html
(23) https://www.bcn.gob.ni/estadisticas/sector_externo/comercio_exterior/exportaciones/index.php
(24) https://fioregold.com/fiore-gold-reports-19-increase-in-fiscal-q2-gold-production/
(25) https://www.wesdome.com/news/press-releases/index.php?content_id=402
Appendix 1: Blog post dated Wednesday April 14th
The North still doesn’t understand the significance of the Peru election result
That’s obvious. If you guys up there did, Peru stocks would have sold off a lot more than they have so far.
[chart missing]
With the emphasis on “so far”. And this isn’t just about mining stocks, we already know its sector anal ysts couldn’t spot
a political risk red flag if it were waved in front of their eyes by a seven foot Spetznatz veteran. No folks, there’s a reason
IKN chooses the Peru broad market index tracker ETF (EPU) and compares to that of Chile (ECH) (as well as the SPX
for context), this time the ignorance is a broad church and it’s not just a few million in bad bets on explorecos. Some
weakness yes, but you ain’t seen nothing yet.
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Markets haven’t sold off yet because for some reason, up there you guys think Keiko will waltz it and the Commie yokel
doesn’t stand a chance. Sadly, this desk begs to differ and predicts Peru will elect Pedro Castillo, an out-and-out
unalloyed Communist, as its next President. For the second round, there will be three main dynamics in play:
 With 20/20 hindsight (and apologies for using it), it’s clear last Sunday’s vote was Peru’s revenge on its
corrupt and vomit-inducing political class. It was Peru’s version of the Burn TWF Thing Down, joining the list
of countries that have turned round, looked its capital city in the eye and lifted its middle finger. Each country
has found its own way and Peru’s is also more complicated than a single sentence, but in essence its
neglected provinces joined the list of people who got revenge by voting for “one of them”, a fellow provinciano.
However, they are also antagonizing with his extreme left wing ticket, a double nightmare for the ruling class.
That provincial/poor-urban tendency to want to stick it to Peru’s ruling class and BTWFTD isn’t going to die
down in the next eight weeks and in all likelihood, will grow.
 Up your way and even still in Lima, Pedro Castillo is being made out as a high school teacher in a backwater
town with radical politics who got militant in his party and then got lucky. Errr, no. He may not be the best
orator and the local garb and funny hats might make him look “quaint” but scrub the spin from your brain right
now, this a smart and canny political operator who knows his way around the Peruvian left wing. What’s more,
he has a clear path to victory via the playbook written years ago by Ollanta Humala; Get to the run-off on an
extreme agenda, call for consensus, get together with the losing candidates, create a brand new policy book
to offer the country in round two based on consensus of centre/left parties (who will quickly fall into line, power
whores they all are). Suddenly the Communist wolf is dressed in sheep’s clothing and what’s more, the
intellectually corrupt and power hungry Peru left wing will go for it, too. As bad as the right, they want all the
slush they’re offered so when it comes to reaching consensus on a broad front for Round Two, they’ll justify
with “It’s best to control him from within”. Instead, these whores will open the door to a dangerous man with
even more dangerous friends, the type that close down Congress at the first opportunity and not the last. Be
clear, the Left will enable Castillo and turn him into a serious candidate.
 The North underestimates the Keiko Fujimori anti-vote. Round One wasn’t a logical result, it needed a
sequence of bizarre circumstances for Keiko to reach the second round, one of them was a vote that was split
into so many fractions that her strong anti-vote ceiling didn’t come into play. Frankly that was my mistake in
the IKN Weekly pre-election anal yses as well, I thought the hard 70% to 75% of people polled who say they
will never, ever vote for Keiko Fujimori under any circumstances (due to the manifold scandals around her
and the family) would be enough to keep her out of the run-off. Instead, she picked up just enough extra
voters (5%?) in highly fractured field on the back of a hard-line populist campaign to add to her solid 8% base
and sneaked in the back door. Good politicking to be sure, but be clear her hard ceiling has not disappeared
and it would take a lot of Peruvians going back on the “Never, under any circumstances” position for Keiko
Fujimori to garner enough votes to win. Not impossible of course, but it’s way more difficult than the North
currently imagines. What’s certainly wrong is the North’s blithe assumption that Castillo loses, in fact he goes
into round two as favourite no matter what the polls might say, as this seven-headed nightmare of election will
be decided in the provinces, not in Lima
The house call in IKN613 seven weeks ago to sell Peru has already saved subscribers from significant losses, today’s
follow-up goes out on the free blog and it’s still not good news. Sell Peru now and do not go back, the country is
heading for political disaster and what’s more, the mining industry is going to be at the very centre of the storm. You
have been warned.
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
30

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
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
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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
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.
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