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The IKN Weekly
Week 656, December 19th 2021
Contents
This Week: Trade heads-up, In Today’s edition, Reminding on Christmas and New Year
editions, Gold and currencies in 2021.
Fundamental Analysis: Selling Argonaut Gold (AR.to), Amerigo Resources (ARG.to)
Reiterating the buy call with more information.
Stocks to Follow: Aurelius Minerals (AUL.v), Argonaut Gold (AR.to), Minera IRL (MIRL.cse),
Minera Alamos (MAI.v), Rio2 Ltd (RIO.v), Mene Inc (MENE.v), Great Bear Resources (GBR.v),
Discovery Silver (DSV.v), Palamina Corp (PA.v), QC Copper & Gold (QCCU.v).
Copper Basket: Overview, Solaris (SLS.to), Western Copper & Gold (WRN.to), C3 Metals
(CCCM.v).
Producer Basket: Overview, Kinross (KGC) Agnico (AEM) and Barrick (GOLD), Barrick (GOLD)
and Newmont (NEM).
Tiny Dogs: Overview.
Regional Politics: Chile has a President-elect, Peru’s mining tax hike is off the table, Las
Bambas: MMG closes the mine and wins the battle, Argentina: Chubut rams through its
Zonification law, Mexico: Fortuna Silver (FSM) (FVI.to) and its local consultancy.
Market Watching: Copper Mountain (CMMC.to): Unduly sold down and a bargain buy.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
Trade heads-up
A short note at the top of the shop to make clear I plan to sell both Argonaut Gold (AR.to) and
Aurelius Minerals (AUL.v), with both companies leaving the ‘Stocks to Follow’ list by this time
next weekend. The rationale for selling the small and failed trade in Aurelius (AUL.v) is found in
‘Stocks to Follow’ notes, while the reasoning to cut the larger trade in Argonaut Gold for a
painful year-end loss is discussed in the main Fundamentals section.
Some weeks are better than others, time to get a bad one out the door. That’s IKN656.
In Today’s Edition
 Another bumper edition today, starting with one bad and one good in today’s main
Fundies section, as the bath I’m taking on the decision to realize losses in Argonaut
Gold (AR.to) is no fun. However, the update on Amerigo Resources (ARG.to) after last
week’s long note provides even more reason to be long the stock, I’m going to take
advantage and add significantly to last week’s small starter trade.
 The unusual section in today’s edition is ‘Regional Politics’. As well as being the normal
mix of mining/generalist news and views from around the region, most of the notes
today also include actionable trade ideas. Chile, Argentina, Mexico and Peru, take your
pick from the cream of LatAm’s mining jurisdictions.
 For some time, I’ve had a rant brewing about the naiveté of goldbug thinking towards
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the US Dollar, inflation, interest rates and the way gold doesn’t move while prices
around it lift. Today I get it off my chest, that’s the intro.
 Be long copper. And despite the price action last week, Copper Mountain (CMMC.to) is
still a great way to expose to the metal in the year ahead. Unduly sold off last week,
CMMC is a bargain buy at a price this weekend that won’t last long.
 Stocks to Follow has thoughts and news on the Minera IRL (MIRL.cse) AGM, on the
decision to sell the small and failed Aurelius (AUL.v) trade, on Top Picks Minera Alamos
(MAI.v) and Rio2 (RIO.v) and other things as well. There are always other things.
Reminding on Christmas and New Year editions
Please remember that markets are closed this Friday, the traditional Christmas Day public
holiday shifted back as this year’s December 25th falls on a Saturday. Also and as featured last
weekend, a quick reminder on what to expect from The IKN Weekly over the holiday season:
 IKN657 December 26th: A “bare bones” edition that will cover the closing prices for
the week, plus perhaps some abridged features if anything interesting or important
happens.
 IKN658 January 2nd: With December 31st landing neatly on a Friday this year, we’ll
wrap up 2021 in IKN658, close the 2021 Copper, Producer and Tiny Dogs baskets,
then present the new line-ups for each section for 2022. Other sections will be “bare
bones”.
 IKN659 January 9th: Back to normal service (and still for the record it’s my sister’s
birthday, but I’m not telling you how old she is).
Finally, I’m still working on a possible vacation week for myself, which may possibly the first
week of February but still undecided. Meanwhile, please accept my sincere wishes that you all
enjoy a pleasant and peaceful Nochebuena and Día de Navidad.
Gold and currencies in 2021
We begin with a news quiz: What do the countries of Russia, Mexico, Chile, Costa Rica,
Pakistan, Hungary, Armenia and The United Kingdom have in common? If you need a clue,
then swap out The UK for the entity that connects Perfidious Albion to the others on the list,
namely the Bank of England. Yes indeed, all eight countries on the list raised their key lending
rates last week and all for the same ostensible reasons of Omicron Fear and what Jay Powell
and his friends in The USA are now making clear, that The USA is at the end of its ZIRP period
and is now expected to raise rates next year, with three hikes in the pipeline and the first
perhaps as early as March (though hot debate on exact timing is for other places, not here).
With so many Central Banks on the same track the question as to why they raising rates is
pertinent and the answer is straightforward, they all want to head off the same inflationary
pulse that is driving policy and narrative at The US Federal Reserve. Neither is this a trend
confined to eight countries or even last week, Central Banks around the world have already
been hiking rates to counter the growing inevitability of The US cycle. The Fed has remembered
the other side of its dual mandate, has stopped worrying so much about employment and
inflation is the latest world fashion. Indeed, a good example is the country from which these
words are being written as Peru, which has added 0.5% to its base rate per month since
August and gone from a ZIRPy zero to 2.5%, the latest hike two weeks ago in the latest 0.5%
step that received due applause from the world markets. This desk has never hidden its
admiration for Peru Central Bank head Julio Velarde and we’re hardly the only ones, this year
he’s done more to keep the country steady than anyone in power and has stepped up to be the
adult in the room in 2021. His policy decisions have kept inflation largely under control this
year, despite its new and madcap government coming in. In fact, Velarde last week and for the
umpteenth time scored the top grade among the world’s central bankers in Global Finance
magazine’s annual survey one of only 12 CBers to do so.
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That’s an emerging market example, for a higher profile and more recent event let’s dial up last
week’s action in “Cable”, a.k.a The British Pound/US Dollar spot exchange rate and the most
traditional forex pair on the books:
The one week chart shows the relative period of calm into the FOMC, then the same type of
volatility in GBP/USD as many other devices as the world worked out what Jay Powell was
signaling in the FOMC communiqué, then in the Q&A presser afterwards. Then Thursday, and a
system shock that saw the GBP spike higher against the USDS due to the BoE rate rise that
caught a lot of the market on the hop. However Friday saw reversal, a growing concerns for
Omicron and the risk-off trade became dominant and when that happens, the world moves into
Safe Haven mode and hides in the USD.
Yes folks, the cruel reality is that the US Dollar is still the financial world’s safe haven of choice
and its strength has been a feature all year. The
USD is popular because you can buy the best-
moving major stock market in the world with it,
or you can protect your money from it when
things reverse. Here’s your chart on that and as
you can appreciate, the USD index has gone
from around 90 to 96 since Biden took over and
gave the financial keys to Jerome Powell and
Janet Yellen. Other currencies need to combat
the tendency you see right, particularly the
growing one in the second half of 2021, so Peru,
Armenia and all the rest hike their rate get hiked
and the race to the bottom, with its implication
for country price inflation, is deferred to another
day or lumped onto a different currency. We know the basic relationship, that the better the
interest you pay, the more attractive your currency and so it strengthens against peers (first
among equals the USD), therefore, if you offer a
higher yield you’ll attract more attention, more
investment and more money from other places
(even if it’s only on an overnight carry trade). The
reach for yield never ends, therefore it makes sense
to see currencies improve if their Central Banks
raise rates. Or at least tread water, as is the case of
the prudently managed Peruvian Sol (PEN) and if
you want to consider the flipside for further proof,
let the Turkish Lira be a lesson to you all (right)
The cockamamie Turkish Central Bank, for its own
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sweet reasons, has decided to make a series of rates CUTS recently and as you can see, hilarity
has ensued. Don’t expect the market for fancy brand German cars to be strong there next year.
Which brings us to the monetary metal and, as we’ve banged on this all year, the MMT
implemented in The USA has seen gold remain relatively neutral and revolving around the
U$1,800/oz price point all year:
A remarkably steady state, so if we chose an arbitrary point in time and Biden’s inauguration
day, that afternoon the London PM fix marked gold at U$1,856/oz. Last Friday’s PM fix saw gold
priced at U$1,807.70/oz, which means it’s 2.6% down in The Time Of Biden, less if we waited a
couple of weeks before starting the clock. So compare the “basically unchanged” performance
to that of silver, down 10.5%., but no matter how steady gold has been in price terms, its
general popularity has fared worse as the investment and financial world reaches for yield, or
market gains, or any other reason to eschew the traditional safe haven. Our example comes
straight from our regularly displayed database as, also on Joe Biden’s inauguration day, GLD
held 1.174.13 metric tonnes of gold…
GLD gold holdings, 2H21 to date (metric tonnes)
1250
1230
1210
1190
1170
1150
1130
1110
1090
1070
1050
1030
1010
990
970
950
4
12/1/4 12/1/41 12/1/42 12/2/3 12/2/31 12/2/32 12/3/5 12/3/51 12/3/52 12/4/4 12/4/41 12/4/42 12/5/4 12/5/41 12/5/42 12/6/3 12/6/31 12/6/32 12/7/3 12/7/31 12/7/32 12/8/2 12/8/21 12/8/22 12/9/1 12/9/11 12/9/12 12/01/1 12/01/11 12/01/12 12/01/13 12/11/01 12/11/02 12/11/03 12/21/01
mt
source: SPDR GLD data
…and these days its 978.58mt, a drop of exactly 195.55mt since January 20th. In old money,
that 6.11m oz Au or in percentage terms, GLD
inventories are down 16.7% in The Time of
Biden. Under those circumstances of steady
and chronic selling marked in terms of an
ever-strengthening currency (a.k.a. USD), gold
really hasn’t done that badly this year. Gold
has done better than silver, and while it’s
certainly been more boring than palladium as
seen here via the gold/palladium ratio (right)
in the end, the non-volatile nature of gold
bullion is one of the things that sets it apart
from other investment media and should be
part of its attraction.

However, the way goldbugs will quickly point out that gold bullion has “no counterparty to
worry about” comes with its implicit downside. If there’s nobody on the other end, there’s
nobody to offer you a reward for owning the vehicle. That’s a drawn-out way of saying that
gold offers no yield and in our modern world the search, hunt or reach for yield on one’s
investment is constant.
This is where the foreign currency markets come in as, if a person holding US Dollars and
looking for a new place to park their large amount of money wants return on their money, they
won’t go to gold bullion unless they are speculating that gold is about to make a move against
just about everything. Those moments of crisis are when gold comes into its own but, under
normal market conditions, a rate raise by something as solid as the British Pound (GBP)
increases its attraction or a currency and provides an alternative to parking cash in US Dollars
or bullion. Another option is the aforementioned Peruvian Sol (PEN), part of your author’s daily
life that gets my attention on a regular basis (and provides me with an easy example). The
well-managed PEN under Julio Velarde offers stability and yield, no matter what happens next
in its country’s crazy political arena:
All that and the Central Bank offers you a 2.5% base rate as from today, with a growing
economy and plenty of USD income from foreign exports to provide monetary backbone. Yield,
come to me… The point being that, in the currency race to the bottom, we can set silly Turkey
aside and state that the sensible countries around the world are now protecting their economies
from inflation as best they can by offering extra yield. It’s no coincidence to see eight countries,
including major world economies such The UK and Russia or big regional players such as
Mexico and Chile, raising rates in the same week that a keenly watched US Federal Reserve
decision and policy move was flagged. Suddenly, the world’s investment dollars have a whole
suite of interesting options to choose from in the never-ending search for yield and can move
out of the USD, into the currency of their choice and back to the USD again easily and quickly,
the so-called carry trade that allows safety in US devices when required, while providing
investment opportunities quite literally at the touch of a button.
This is the scenario that gold faces in late 2021 and, while its recent performance against the
USD has been admirably steady, those wrapped up in the gold markets tend to forget there are
more things to do with cash than a simple and binary “risk off gold, risk on dollar”. Those of us
interested in gold as an investment medium have to get real about what gold is, rather than
dreaming dreams of speculative riches by buying gold at U$1,800/oz one day and selling it for
U$2,500/oz in six months because they said it would happen on the internet. It’s simply not
how money works, there’s no imminent crisis to drive wealth away from currencies and even
with inflation in the pipeline, there’s no “hyper” on the horizon of the sensible countries and all
while world GDP growth is keeping economies up to speed. The USA has inflation? Yes true, but
(like it or not for your own reasons) 2021 has seen the USA post strong economic growth.
China will come in at +8%, my EM example today is Peru which is now on track for +13.2%
YoY economic growth and even when the Covid-19 dip is unwound, Julio Velarde’s Central Bank
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forecasts +3.8% GDP growth for 2022. Choose your own example country, there are plenty,
but all this is not the backdrop that pertains to an imminent world crisis. It allows big money to
keep reaching for yield, rather than hiding out in non-yielding bullion and countries raising rates
in anticipation of the Fed’s 2022 offer a host of alternatives aside from gold, the monetary
metal stuck at permanent ZIRP.
The goldbug who likes to believe there are only two currencies in the world, i.e. the US Dollar
and gold, and that the only possible way it all ends is “Weimar” is being myopic to the point of
financial stupidity and the people trying to capture the attention of the financially naïve by
predicting gold’s imminent rocket ship move have been banging this very same drum ever since
your author stumbled on the wonderful and whacky world of mining, closing in on 20 years
ago. In that time we have seen moments when gold rallies, but it’s never for the “Weimar
Coming!” forecasted reasons so, when the market later fails to follow on in the way predicted
they call “foul” and “manipulation” while blaming the “Powers That Be” or “The Bildebergs” or
“Them”. The world does not work like that. I’ve said it before and I’ll say it a thousand times if
necessary, gold does not make you rich; gold stops you from becoming poor. Once you
understand that, you’re on your way to understanding just why “gold refuses” to rise with the
current round of inflation. It’s also why the last few weeks have seen this desk so insistent on
the prospects for copper, a vehicle that makes far more sense in a world where GDP growth is
combining with inflationary tendencies under the world’s most important currency. Or if you
prefer, go with crazy palladium or Jekyll&Hyde silver but, as long as demand for gold keeps
moving in the way we see in the GLD inventories chart above, there are better metals on which
to wager your speculative dollars than the monetary metal with zero yield.
Fundamental Analysis of Mining Stocks
Argonaut Gold (AR.to): Selling
Preamble: When the bad news regarding Argonaut Gold (AR.to) was announced on Tuesday
and its reaction hit its share price, I decided not to go with the knee-jerk reaction and dump out
of the stock immediately. Maybe a mistake and maybe not, but after reading the NR then sitting
through and digesting the company Conference Call, documents and new literature my decision
was to wait the week out, see how the land lay. The reasoning was that the timing was already
about as bad as it could get, what with the news dropping into already negative sentiment and
just before a “hot” Fed decision that already had the market on tenterhooks. We were in the
middle of a heavy tax-loss selling period with people looking for excuses to sell stocks, also we
were coming up to a Christmas/New Year break that would slow down the search for any new
CEO, as well as the funding AR would require
for the capex shortfall it had just announced. In
so many words, AR couldn’t have timed its
announcement more poorly if it had tried and,
as a result, the decision was not to panic and
sell that very day when things looked their
absolute worst. Sure enough, we went through
the inevitable drop on Tuesday, then the other
near-inevitable hangover drop on Wednesday
as Canadian brokerages published their updates
on AR and adjusted price targets for clients. On
Tuesday and trying to use as much considered
opinion as possible, along with a FOMC decision
in the rear view mirror, all this I thought would
allow Thursday and Friday trading to gauge
sentiment and whether the market thought the trade still had a pulse.
Therefore, my decision to either hold the stock or sell was left to this weekend and that’s what
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you have today. For the TL:DR I’ve made it as simple as possible with a prosaic title, as I have
indeed decided to sell out of Argonaut Gold (AR.to) this coming week, take a nasty loss on the
chin and move on. What follows explains why and to do so, we look at the development of
news on Magino and its capex burden, starting at the end of 2q21.
First capex blowout signs from the 2q21 conference call: To track back and see how
this big capex overrun affects the market perception of AR.to, we move back in time to the
2q21 results from AR.to not long after The IKN Weekly began coverage and I’d bought in. The
report on its 2q21 numbers is found in IKN638 dated August 15th 2021. Feel free to check back
yourself, but in the edition I was good about better than expected production numbers and still
convinced AR.to was going to “Do a Wesdome” and pay for its Magino build-out organically, via
the liquidity it already had on-hand plus cash flow profits from operations. That was the
conclusion of the update though, before we got that far, the first job was to tackle the negative
news AR had brought to table. Here’s how that went in IKN638:
We begin with the negative from last week, conformation in company literature and
the Conference Call that Magino’s capex estimate is up. We’re now being guided
toward C$600m as the total ticket and while CEO Dougherty and his team were
naturally cautious about putting a hard number on the new projected total, it’s now
there on the horizon, but “general cost creep” and inflation is the driver and AR at
Magino is not immune to the wave of price increases we all know about. Here are
three quotes from the CC:
“Now to Magino, our initial capital outlay was projected to be between
CAD$480 million and CAD$500 million. We anticipate that we felt this
could be in jeopardy this year due to impacts of COVID foreign currency
exchange rates, contingencies and potential adjustments to the
development plans and cost inflations that have hit us just like everybody
else in this sector.”
“We now believe we are likely to exceed the 15% overage that we
disclosed during our Q1 press release on May 4.”
“..knowing what others are experiencing in their build costs right now, I
believe our 15% overrun is in jeopardy…”
That’s not a difficult guidance to understand and slating Magino at C$600m is now the
sensible option. It so happens this weekend, real world forex coincides with the IKN
house assumption of USD0.8/CAD1 which brings our revised assumption on the
Magino build-out to U$480m.
IKN656 back and as you can appreciate, AR.to that day warned on capex at Magino. The
company did so by stating its C$500m or C$510m upper limit [sidebar: maybe a small point at
this stage, but AR.to repeatedly uses either C$500m or C$510m as its previously understated
upper limit capex consideration] was “likely to exceed the 15% overage” already disclosed. Fair
enough and under such circumstances I got my calculator out, factored in that C$510m + 15%
wasn’t going to be enough and from that point, slated my capex estimate for the project at
CAD$600m (thereby covering either CAD$575m or CAD$588m with room to spare). At that
point, with capex already embedded and converting CAD into USD for the purposes of the
model, its cash and revolver liquidity channels meant AR.to had around U$220m on-hand and
needed to cover U$300m. Along with the expected free cash flow from its operations and on
due consideration, there was still no reason to believe AR wouldn’t be able to “do a Wesdome”
and build its new mine without any further capital. I said as much and moved to the next part
of the AR analysis that weekend.
The 3q21 news: That was the 2q21, we now move to 3q21 and another set of AR results.
That quarterly impressed this desk with the rate of spend at Magino, with model at the time
expecting CAD$460m in the ground, beaten easily by the CAD$490m and change reported
(which may have been due to long-lead items, but no real issues). As for capex news, this slide
from the 3q21 presentation…
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…summed up the situation, reiterating the Q2 announcement of “capex under review” though
aside from that and with 20/20 hindsight, it was ironic (and not in a good way) that AR.to
decided to announce it was “switching to grid power at operations” in its “upcoming initiatives”
section. I realize that referred to its producing ops rather than Magino…but still…
Last week’s Magino update: Which brings us to last Tuesday December 14th, a day that
began with this news (1) in the early morning mailbox that held two main announcements.
Here’s the first…
The Company announces that Pete Dougherty has ceased to be the President and
Chief Executive Officer of Argonaut Gold effective immediately. The Board of Directors
has commenced a search to replace these roles and is working in real time to put
interim leadership in place. The Board of Directors believes the existing executive
team, with the support and guidance of the Board, is well suited to continue to run the
business while a lasting leadership decision is being made.
Argonaut would like to thank Mr. Dougherty for his contributions during his tenure as
President and Chief Executive Officer.
…and to choose one snippet of many available, this explains the second:
After a review of the impacts of cost increases, inflation, COVID-19, adjustments to the
development plans and contingencies, the updated Magino EAC is approximately $800
million. It is forecasted that through December 31, 2021, approximately $342 million
will have been invested into the Project, leaving approximately $459 million remaining
to be invested to complete the Project.
In one fell swoop the founder of AR.to was gone and the capex estimate for Magino had
jumped to C$800m, a blow-out of eye-popping proportions so before we consider the numbers,
first let’s discuss the style and substance of the announcement. First, clearly Pete Dougherty
either fell on his sword or it was drawn out of its scabbard, planted in front of him and he was
then given an almighty push. The news of his departure was delivered in terse script and while
he got a “thank you”, there was precious little mitigation.
Perhaps the Magino blow-out was the last straw for the board, coming after the Cerro de Gallo
permit reversal of a couple of weeks previously, but I doubt it. That was something of a “shrug
moment” for this desk because a) CdG was not the reason to be long this stock and b) even if it
were green-lighted, it would have been behind the capex queue to Magino and not part of the
long trade. Instead, ex-CEO Dougherty was clearly being shouldered with the blame for a capex
increase that wasn’t just slightly higher than expectations, but changed the game at both
operational and corporate financial level. The news hit the stock as seen in the chart at the top
of this note, but it wasn’t as AR had been performing well prior to last week, either. In last
week’s ‘Stocks to Follow’ notes on AR in IKN655 I was already kvetching about its poor relative
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performance at market in the last few weeks, beginning the short note with, “Down another
13c to C$3.14 and without mincing words…UGH!”. Last weekend’s note also made mention of
the webinar of two Mondays ago, in which erstwhile AR CEO Dougherty was upbeat about
Magino. We then underscored how Magino was the catalyst for price appreciation at AR and
continued in this way:
“…if the selling seen last week was connected with the official refusal of
permit at its Cerro de Gallo project in Mexico AR was sold for the wrong
reasons, as the rest of us had written off that bad purchase a long time ago.
Since then AR has pivoted successfully into North America and is a different
beast (if it weren’t I wouldn’t be an owner).”
Just one week later and irony abounds in those words. It’s tough to put my finger on exactly
what looked off about AR.to trading in the run-up to last week’s bad news and I don’t mind
trying to argue against myself either, so here’s a price chart:
Gut feelings are fine, but, as seen by GDXJ the whole juniors complex was going in the same
direction, so my gut may be over-imagining matters. However, a lot of GDXJ’s dump has been
due to other companies sold for tax loss purposes, an argument that was difficult to make
against AR.to as it wasn’t a 2021 loser. Also, the stock has only just broken out from a long-
term ceiling price, which made sense when it happened as Magino began to come to fruition, so
again seeing it reverse so quickly didn’t sit right. So after discounting the first week of losses
due to normal profit-takers, as suspicions rose I found myself watching the AR tape closely in
December and the selling pattern perturbed me, suggesting somebody knew something that
others didn’t. Paranoia maybe, but I’ve watched too many tapes to discard the impression
gathered (especially now, with 20/20 hindsight).
Also, the absolute size of the capex increase was a bridge too far: After being guided at “over
15% overrun” on the original bill of CAD$500m, plus the language used and the apparent ease
with which AR.to kept to its 2q21 Conference Call message all allowed the anal yst (e.g. me) to
remain at an estimated CAD$600m for the total build. Perhaps I would have been able to
swallow a move up to CAD$650m and while griping, it would have been okay. But CAD$800m is
simply too much, adding C$200m to an estimate that had already been revised upwards and to
the point that forces the company to raise more money and add at least three years to its
capital payback period. Plus of course, last week’s NR was mostly about capex and there
weren’t many questions on eventual operational increase, but just the switch from grid power
to LNG will add around 20$ to power opex, then we’re all-but guaranteed to have to pay more
salary to workforce salary bills, such is the effect of a shortage of jobs and the inflationary
background.
Next up, it’s fine to lay all blame on the CEO (the buck stops here, etc) but in reality, it would
have been virtually impossible to keep a secret of a blowout of the size revealed last week, not
to insiders and not even to outsiders (e.g. third parties around Magino). The list of items adding
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to the Magino ticket cost is long, but examples such as the need to cement fill bedrock before
the tailings facility (TMF) were started, or 11 water dams that need building, or the switch from
grid power to LNG, or the change in critical path sequencing they call “schedule recovery” to
keep the project inside its current timeline, all these and more would be impossible to keep at
the CEO’s desk. The inference is obvious and everyone connected to AR, board included, either
would have known or should have known weeks before last Tuesday’s bad news dump.
Then there’s the role of Ausenco in this mess. During the ConfCall the AR.to board went to
lengths to talk about the great relationship they continued to enjoy with its EPC contractor,
upon which I remembered the immortal words of Mandy Rice-Davies; “Well he would say that,
wouldn’t he?” As the week drew on I fielded many mails on the AR and one of them, from an
industry professional who will remain nameless, started with, “How could Argonaut be 60%
over on a supposedly fixed-price EPC contact?” and elaborated on several points to underscore
the message. My reply to him started with this:
I once wrote a post entitled "When is a bought deal not a bought deal?", the answer
being "When the brokerage says so". Equally, in a hot labour market I doubt there's
any difference between EPC and EPCM, just because AR's didn't have an extra letter
didn't mean they could lump the contractor with the difference. To be fair Ausenco
would have a case for saying "hey, you didn't tell us about all this fillercrete for the
bedrock and those 11 water dams!" And "Oh, you want LNG and not grid now, do
you?", but yes I agree with you, AR went out of its way in the Q&A after the trainwreck
show to tell us they had a great relationship with Ausenco (...or else?).
I’m not saying the board has been underhand or complicit and, to the board’s credit, they did
the right thing and fired the CEO (after all, we can all name complicit boards who need to do
the same and haven’t). But the board’s move came late in the process and, at very best, they’d
already dropped the ball on corporate governance. The way in which the share price dropped
from CAD$4+ to just above C$3 even before last Tuesday’s announcement was annoying,, it’s
even worse now reasons for the weakness are evident. And toi add insult to injury, we had the
upbeat presentation by Pete Dougherty two Mondays ago, which featured plenty of talk about
Magino but nothing was bad, all was good, a spin cycle to remember.
Summing up context of last week’s bad news aggravated it content and, on due consideration,
was an exercise of CYA (cover your hindquarters) by a board that either wasn’t looking or if
they were, waited too long to act. And now, that same board of directors wants us to remain
loyal to their cause. If so, there had better be a good capitalist reason to do so and for that we
approach the numerical side of last week’s mess in a couple of ways.
The Tuesday morning presentation (PDF slideshow here (2)) didn’t hold back on the bad news
and here is the first slide in the show, which gives a visual overview of all the components that
have changed a C$510m capex project into one that now costs C$800m. This slide doesn’t take
into account the 2q21 guidance that already had this desk assuming C$600m for the total bill,
but does break the new EAC (Estimate At Completion) into its component parts:
Later slides went into detail about overruns of each line item and to be fair, the company was
as honest and open as it could be. They went into circumstances and the reasoning behind
each decision and each part was logical enough. Their job was to convey that a) they knew this
10

was bad news and b) try to get across that this was the whole enchilada, they had “kitchen
sinked” issue and they weren’t going to surprise with more capex additions down the line (e.g
the way Rainy River under Randall Oliphant blew out and blew out again). On the whole they
did a good job of the bad news and I came away with the impression that C$800m really was
the whole game (and if it weren’t woe betide them all).
Please consider the whole slideshow (ands review the ConfCall if desired) at your leisure, as
here we’re talking numbers and how it affects the AR.to share price and target for the stock.
First, the simple math:
 We were at C$600m capex.
 We are now at C$800m capex.
 The news removes C$200m from AR.to the net value
 At 311.2m shares out, that’s 64c per share.
Under those circumstances, the simple
subtraction moves AR.to move from last
weekend’s C$3.14 to C$2.50 and the initial
drop we saw on Tuesday morning, though
utterly depressing, was also logical. Then we
can add in a penalty for loss of trust from the
bad news and, give or take the initial market
reaction that saw trading around C$2.30
makes sense. However, Friday’s somewhat
exaggerated trading looks like an overstep this
weekend (right). Regarding Friday, AR came
under pressure all day because the stock was
due a GDXJ re-rating and sure enough, the
block went through at the end of the day.
Even under the bad vibes at Argonaut last
week, Friday’s action looked forced and false and there’s every reason to expect a very-near-
term rebound from the closing price of C$2.16.
As for potential upside, the valuation of a completed Magino will still be relatively close to our
estimates back in IKN638, the first time AR.to made us look higher for the capex bill:
“… we remind readers a comparative and reasonable target valuation for Magino isn’t
difficult to imagine, with the Alamos Gold (AGI) Island Gold mine quite literally next
door. Now in mature production phase, but also promising better to come from
recently discovered high grade mineralization at depth, Island has an asset value of
over U$1Bn and is carried at over U$730m (once corp segments its liabilities book are
considered). At Magino, AR is building a similar mine on a similar deposit with similar
exploration potential.”
That’s still a reasonable framework today, the issue now is how company NAV drops due to its
need to raise capital for completion. The do a Wesdome concept is off the table and, with
C$342m embedded as at end 4q21, it has C$456m to find. What’s more, as the remaining
capex heavy lift happens in the first three quarters of 2022…
11

…even with cash on hand and its existing revolver facility, there’s no way around the fact that
AR needs another C$190m or so to complete its mine. In other words, C$200m (U$160m) that
comes off NAV and brings our estimate to U$530m in benefit to AR’s balance sheet once a
completed and working Magino is making its positive difference to Argonaut gold. If we assume
the capex shortfall comes from a debt facility and the share count doesn’t change, we’d expect
U$1.70 of equity improvement from a fully functional Magino. That’s C$2.04 (U$1.70) per share
and, if we go that extra mile to assume AR’s stock dump levels out at around the C$2.30 price
point, we now have a new slated target price for the wounded company of $4.34. In other
words, if Argonaut Gold does the following:
 Becomes a vigilant board that guarantees correct oversight
 Hires the right person for CEO
 Gets a competitive financing deal on the cash shortfall it requires to finish Magino
 Executes to perfection, on-time and at the new budget
 Commissions its new mine without problems or glitches
 Gets to positive free cash flow and declares commercial production in the second half of
2023 (with first gold pour coming on schedule in 1q23)
We can reasonably expect the stock to move back to over C$4.00 after two years.
Discussion and conclusion
Aside from both the style and the substance of last week’s bucket of iced-cold water poured
over my junior portfolio by Argonaut Gold (AR.to), it’s that last list of requirements that makes
me a seller of this stock next week. When the rubber hits the road, Magino now requires too
much NAV from what is essentially still a junior miner in order to finish the mine and grow in
the previously predicted way. The board can promise not to drop the ball again and deliver on
that promise, the company can hire the right person to lead its build-out, secure the required
financing and deliver Magino in good shape in 2023 but even then, there won’t be enough
reward left on the bone for my taste compared to the obvious risks involved.
By cutting and running at this point I take my loss, though with a little patience and not
grabbing at the very first price tomorrow Monday morning I expect to be able to exit at a
modestly higher price than Friday’s C$2.16 close anyway. By doing so, I risk not being on-board
if and when a takeover bid for the wounded AR comes in but, with no CEO today, even this
board will have plenty of excuses not to entertain any opportunistic lowball bids (from
McCluskey at AGI or anyone else) and at the moment, there’s less appetite for buying debt into
an interloper anyway. So without a CEO we’re unlikely to see AR fall to M&A, unless it becomes
the very first target of a hostile bid in this cycle and that’s not easy to imagine.
As for financing, that won’t happen until and unless the right person is chosen as CEO ands
with the rotten timing of all this at year’s end, AR is likely to remain fallow until the New Year.
If AR headhunts the right person to head up its recovery that will be a de-risking moment and
I’ll not be on board for the share price recovery we’d see that day, but the flipside of staying in
AR.to is opportunity cost of not being able to deploy the money tied up here in other places. On
that subject, please see the second fundies note in today’s edition, as Amerigo Resources today
checks all the right boxes for right company, time and place. It may even offer us a near-term
cheap buying window in the next couple of days, as FDI is scared by spooky stories of Commies
taking over Chile (not an issue, please see today’s Regional Politics section for more).
I digress. The decision on Argonaut Gold (AR.to) is to realize my loss, therefore I will sell my
position in the days to come and re-deploy the money in a better story that provides more
potential upside at less risk. Far from the ending I imagined when buying in six months ago, I
leave with my tail between my legs but leave I do, a poor trade cauterized as from this week.
12

Amerigo Resources (ARG.to): Reiterating the buy call with more information
Here’s a little secret from this side of the counter: When you write a positive piece on a junior
mining company or management team, no matter how many gross errors are present the
company in question team will love it. You’re the best thing since sliced bread, they’ll praise you
for how good the note was, which means getting them to point out any inaccuracies or errors
(i.e. the type of feedback I really want) can be like pulling teeth. There always are
improvements to make as after all, they are intimate in the workings of their company and I’m
merely an outside observer looking in. However, when you write a negative note on a company,
get ready for that mail! And rest assured, when that mail arrives you can guarantee the C-suite
has conferred to find anything and everything to prove the error-strewn rubbish you wrote
about their company isn’t worth the virtual paper and ink it’s written upon. It is the way of the
world of the junior mining anal yst, part of the amusement of covering these small companies.
Which brings us to Amerigo Resources (ARG.to) and the coverage we re-opened on this
suddenly interesting story last weekend. But, before we go any further, I’d like to tip my hat to
the gentlemanly IR rep for ARG, Graham Farrell, as the exchange with him last week wasn’t like
my little pastiche above. Instead it was pleasant and cordial and without adding unnecessary
elaboration, while the thrust of his original mail was to list errors found in my note he also
mentioned his agreement with several other points made, kindly offered to bring AERG CEO
Davidson into the conversation and also helped clear up a couple of minor queries that came to
mind as the conversation developed. His exemplary conduct is a credit to him and his company,
the man is clearly a cut above most IR professionals this desk comes across these days.
With the scene now set, it’s only fair to readers of The IKN Weekly to note that there were
indeed errors in last week’s note. Here pasted is Graham Farrell’s original five-point list of
matters he brought to my attention:
 Company guidance for 2021 production has been 61MM lbs of copper, which
should be surpassed based on recent results. For 2022, I suspect that guidance
should be roughly inline with '21 as the plant is basically running at full capacity.
 Production is a factor of volume, grade, recoveries, and the infrastructure
restrictions that exist at MVC/El Teniente (the channel feeding tailings to and
from MVC)
 The company has publicly stated that they are no longer relying on the technical
report that was done under previous management, so the 80MM lbs of production
that was previously forecast should not be viewed as attainable at MVC with all
things being equal
 The pricing terms in your report that state the copper price adjustments are due
to delays that the company incurs between delivering product to customers and
receiving the money is not accurate. It is a simple M+3 formula that drive the
adjustments, up and down.
 There was no $20M cost overrun on the expansion. When the company
refinanced the debt in September 2019, the refinanced amount of $56.M included
the two loans we took to finance the expansion (loan one for $64.4M and loan
two for $35.3M, both of them with significant repayments to bring down
essentially $100M down to $56M).
Now for my comments on those statements and we go in reverse order, starting with the fifth
and last bullet: I’m sure that some point I will need to concede that there was no cost overrun
on the Phase 2 expansion project. However, the simple fact remains that the project was
announced as completed in January 2019, got off to a bad start, then in August 2019 ARG
refinanced its debt facility and bolted more than $20m in extra financial debt via the facility.
Regarding point four, I readily agree with Graham Farrell. I got the reasons behind the
quarterly reconciliation of copper revenues wrong. However, it doesn’t change the fact that
revenues do go through an adjustment process and they do change. My mistaken method
doesn’t change the company financials.
13

Finally, let’s the first three points together: It would seem that my error was not to have read a
public statement that their previous guidance was no longer to be relied upon. Fair enough, but
that disclosure gives us a more accurate estimate on what we can now expect from 2022
guidance. This is the most important point to have arisen from my exchange with ARG IR last
week and the reason for today’s update note. In effect, ARG is telling us that the expansion
project was, quite literally, a waste of money. We can put that into numbers and charts, too:
ARG: Property, Plant & Equip, per annum
14
8.15
5.642
4.75
5.642
6.65
9.262
9.78
5.872
2.98
1.482
4.09
7.682
1.98
4.792
U$m
450
400 machinery
350 plant & inf
300
250
200
150
100
50
0
YE 2015 YE 2016 YE 2017 YE 2018 YE 2019 YE 2020 3q21
source: company filings
At end 2015, total cost of property, plant and equipment came to U$298.247m as seen in this
chart (split given between machinery and plant). As we don’t have the 2021 year-end numbers
yet, we go with 3q21 for the current year and have the latest total of U$386.49m. That’s a
difference of U$88.243m and once labour charges are factored in, gives us a reasonable view of
where the expansion investment went. Alternatively, here’s the net book on the same line item
which of course also includes normal deprecation of fixed assets, but we see that within half a
million dollars, the fixed assets at ARG are valued the same as back in end 2015 before the
expansion project began.
ARG: Net book on Property/Plant/Equip, per annum
494.181 222.471 110.671
927.802 285.891
508.481 30.281
U$m
250
225
200
175
150
125
100
75
50
25
0
YE 2015 YE 2016 YE 2017 YE 2018 YE 2019 YE 2020 3q21
source: company filings
This confirms the company results and its likely guidance for 2022, in this chart repeated from
last week’s note showing quarterly production and now adjusted for future guidance:
ARG.to: Copper sales
905.41 995.51 714.31 571.51 791.61 152.51 482.61 25.41 912.41 595.71 395.71 29.21 568.31
945.91
70.42
28.11 7.31 29.41 9.51 11.51 31.51 9.61 61 61 61
25
22.5
20
17.5
15
12.5
10 7.5
5
2.5
0
61q2 61q3 61q4 71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4 1rtQ.ge 2rtQ.ge
source: company filings
rtq/uC
sblM

Aside the initial improvement noted in 3q18 and 4q18 which then fell back, plus the results in
3q19 and 4q19 that were boosted by copper production from slag temporarily provided by El
Teniente, production has remained essentially unchanged over the entire “expansion” period.
As for the three future quarters, today I’ve adjusted them down to 16m lbs copper per quarter
and while one or two may come in at 17m lbs, the inference doesn’t; the expansion project was
a waste of money and large, long-term shareholders now circling the company have every right
to ask ARG management, “Where has all the money gone?”. For sure, Amerigo took action on
this failure by firing the CEO at the time, Rob
Henderson. As a sidebar, he went on to be hired as
CEO of Great Panther Silver (GPR.to) (GPL) in April
2020, as markets were coming out of the Covid-19
lockdown sell-off. Brought in to oversee the
company’s expansion and its Tucano mine in Brazil,
things initially went well but GPR has hardly
covered itself in laurels in 2021, hitting problem
after problem (see GPR price chart, right).
But back to ARG and Henderson aside, we’ve seen
no real changes at C-suite level to account for the
failure to deliver production improvements. We are
the first to applaud CEO Aurora Davidson for
righting the creaking financials since taking the helm, she’s also had the good luck of higher
copper prices to help her out. However, she’s still the same person who was CFO when the
expansion project began and, as pointed out last weekend, the same Right Hand Lady of Chair
Klaus Zeitler over the long-term. ARG and its MVC subsidiary may have ambitious plans to take
its tailings reprocessing model now in steady-state profitability with El Teniente, and repeat it at
other locations in Chile but, are these the people to trust with a major expansion program? We
think not and, from the way some of ARG’s major shareholders have been acting, this desk is
not alone in that assessment.
In my mail exchange with Graham Farrell on Tuesday, as well as mentioning that I was already
a very small shareholder via a foothold purchase the previous day (to which I added during the
week, I’m now up to “small” and the cost average of C$1.28 pleases me), I also mentioned
that, in my opinion, the above was a small list of errors for a 13 or 14 page anal ysis on a single
company (annoying spelling mistakes aside and apologies for those, ladies and gents, I’m
aware it’s an ongoing weakness of this publication). I also found it interesting that the company
had nothing to push back on regarding the recent corporate manoeuvres, the way activist
shareholders are apparently circling the company, and the reasoning behind the defensive
corporate moves such as the decision to instigate a quarterly dividend and the share buyback
policies and actions.
And now to expand on the key point: With the knowledge that 2022 guidance isn’t going to be
substantially greater than anything seen this year, this desk’s suspicions that Ross Beaty,
Michael Luzich, potentially Rick Rule and potentially others besides are biding their time and
waiting for the moment to strike are firming up. Please consider:
 We have an established period of time between January 2022 and the publication of
AGM materials in late March
 We have a company that wants to repeat its business model in other places in Chile but
needs capex and shareholder approval to do so.
 We have deep-pocketed activist shareholders that could provide access to capital, but
are unlikely to voice trust the present management team (perhaps for their own ends,
of course).
 We also have a blueprint, as with Los Andes Copper (LA.v) we saw the exit of Zeitler
and Davidson allowed a key deal to happen that has subsequently tripled its stock
price.
15

We also have an 81-year-old Chair who now has to make a decision. Does he entrench and
fight for his position and cause corporate ruckus when a proxy slate comes up against his
tenure this year, or does he gracefully step aside and keep his legacy of success intact, while
allowing ARG to move to the next stage of growth under new management?
All signposts are pointing in the same direction and now, with a company that is keen on
running shareholder-friendly policies such as buybacks and dividends, now is the time to
position in the stock before the current management decides that their time is up (or it gets
that decision made for them). The former would be neater and cleaner, the latter would work
just as well in the long run but the likely upcoming changes at Amerigo will allow the company
access to the type of capital it needs to take its “green copper” story to the next level, under
the auspices of “caring capitalists” who are keen to show the world their “copper recycling”,
“sustainable battery metal” “100% renewable energy” credentials and “clean up mining”.
Last weekend, Amerigo Resources (ARG.to) was identified as the right story at the right time,
this weekend’s extra information and inferences only underscores the perception. I plan to
quickly grow this position into one of the larger ones held here at The IKN and that plan means
buying sooner, rather than later when the boardroom changes happen and the cat is let out the
bag. The timing of my regretful sale of
Argonaut Gold (AR.to) above gets its silver
lining, the cash is moving into what I
believe will become the copper success
story of 2022 and, as a final extra bonus
ball, the news that left wing Gabriel Boric
has won Chile’s run-off election may even
bring a bonus low entry point in the days
ahead. Adding next week and with this 12
month chart to round off, a reminder of
how AERG has been capped at market at or
around the C$1.30 level. The right price
won’t last much longer.
Stocks to Follow
The basic headcount shows six winners (DSV.v, SMD.v, GBR.v, AUL.v, MIRL.cse, MENE.v), three
unchanged stocks (MAI.v, QCCU.v, PA.v) and six losers (RIO.v, CMMC.to, AR.to, TMQ, ALDE.v,
APN.v) from the 15 stocks open at this time last weekend. Also, the majority of positions hardly
changed at all last week, with 10 of the 15 stocks moving by a penny or less in either direction
and with GBR moving up by just over 1%, that one joins the inertia club as well.
What’s left after the majority of small moves is a minority of big moves, with one big winner in
Discovery Silver (DSV.v up 20.2%) but three losers in Copper Mountain (CMMC.to down 6.6%)
Trilogy Metals (TMQ down 8.8%) and the dominant portfolio story of the week, the capex
blowout and fat loss at Argonaut Gold (AR.to down 31.2%). Summing up, what could have
been a week to mark the bottom of recent price action struggled against the AR.to headwind,
the inertia in the two Top Picks continues and overall it was all rather frustrating, but at least
DSV.v brought some relief.
With the addition of Amerigo Resources (ARG.to) we now have 16 open positions, one above
out our self-imposed maximum of stocks held and covered at any given time but that changes
by next weekend and goes back to 14 due to the planned sales. Four stocks are in the green,
one is UNCH, the rest are underwater to a lesser or greater extent.
16

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$0.52 147.6% $1.14 tgt Aug'20, #1 idea
Rio2 Ltd. RIO.v STR BUY C$0.83 22-Ar-18 C$0.61 -26.5% $1.30 1st tgt, building now
Recommended stocks (In order of preference)
Copper Mountain CMMC.to STR BUY C$3.42 18-Jun-21 C$3.12 -8.8% Top value Cu play, overweight
Amerigo Res ARG,to STR BUY C$1.28 12-Dec-21 C$1.28 0.0% 2022 Cu bet, mgmt change
Argonaut Gold AR.to SELLING C$2.95 25-Jun-21 C$2.16 -26.8% Capex blown out, cutting
Discovery Silver DSV.v STR BUY C$1.77 24-Oct-21 C$2.18 23.2% Serious Ag play, big&cheap
Trilogy Metals TMQ BUY U$1.84 15-Sep-19 U$1.55 -15.8% S32 suitor, stalled
QC Copper&Gold QCCU.v STR BUY C$0.26 25-Apr-21 C$0.30 15.4% Now drilling. Easy hold
Palamina Corp PA.v SPEC BUY C$0.295 21-Nov-21 C$0.24 -18.6% New, gold expl in S.Peru
Strategic Metals SMD.v BUY C$0.42 31-Jan-21 C$0.35 -16.7% Canada land bet+Zn in FY22
Aldebaran Res. ALDE.v SPEC BUY C$0.68 16-May-21 C$0.72 5.9% Waiting on drill assays
Altiplano Metals APN.v SPEC BUY C$0.31 17-Sep-21 C$0.25 -19.4% Cheap entry, 1q22 re-rate
Great Bear Res GBR.v hold C$15.83 26-Aug-20 C$28.84 82.2% Under offer, possible counter
Aurelius Min. AUL.v SELLING C$0.75 28-Jun-20 C$0.25 -66.7% No point waiting any longer
Minera IRL MIRL.cse hold C$0.195 22-Jul-12 C$0.08 -59.0% CEO change will move stock
Long-term non-mining hold
Mene Inc. MENE.v adding C$0.66 6-Dec-20 C$0.60 -9.1% LT bet, adding slowly
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 Min NOM.cse feb'21 C$1.55 6-Sep-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
Pucara Gold TORO.v apr'21 C$0.65 4-Oct-20 C$0.26 -60.0% Cut loser, Peru risk call
Copper Mountain CMMC.to apr'21 C$1.40 22-Nov-20 C$4.18 198.6% tgt hit, profit taken
New Gold NGD may'21 U$0.76 9-Feb-20 U$2.14 181.6% Sold to buy AGC, nice win
Orezone Gold ORE.v jun'21 C$0.79 21-Jun-20 C$1.61 103.8% sold on pop, leaky boat
Wolfden Res. WLF.v sep'21 C$0.30 11-Apr-21 C$0.19 -36.7% Failed spec trade, cut loss
Cartier Res ECR.v sep'21 C$0.32 21-Mar-21 C$0.235 -26.6% Failed spec trade, cut loss
Amarillo Gold AGC.v sep'21 C$0.31 30-May-21 C$0.30 -3.2% Capex story changed: Out
Excelsior Mining MIN.to oct'21 C$0.93 10-Mar-19 C$0.53 -43.0% May return in 2022
Royal Road Min. RYR.v nov'21 C$0.155 17-Mar-19 C$0.275 77.4% Closed on Nica pol risk
2015 to 2020 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Now for notes on a few of our covered stocks:
Aurelius Minerals (AUL.v): SELLING. Sometimes a trade simply fails, here’s an example. It
started very small and speculative, I added a few afterwards began but the hosue position in
Aurelius Minerals (AUL.v) was always a minor
trade and stayed that way. Sadly, in monetary
terms it got “even more minor” as time went on
and, even if a few of you followed me into this
trade, the strong suspicion is that most bailed
before we got to this point. In October we got a
small relief rally on the back of good drill results
saw some hope* return to the trade and I
decided to give AUL the time to produce its
resource estimate for Aureus East, still slated
for 1q22. However, the news last week (which
17

annoyingly isn’t even on the company website yet, despite the company hiring a third party IR
service recently) has changed my mind and as I’m dumping Argonaut next week, this smaller
failure gets cauterized as well. The NR dated December 16th (3) served two purposes, by
announcing the raise of $1.16m via a 40c flow-through placement (which also infers emitting
shares to Sprott to keep its participation at current percentage, while also presenting changes
at director level on the back of last week’s AGM. Here’s the CEO comment and why I’m selling:
"We are very pleased to welcome Mr. John Carter, FCPA, FCA, ICD.D, to the Board of
Directors. Based in Halifax, John will bring local representation to the Board. I would
also like to personally thank Mr. Randy Turner, our long-time Chairman and a Director
of the Company since 2007 who has retired from the Board this year, and welcome Mr.
Gilles Arseneau to the role of Chairman. I would like to express our sincere
appreciation to Randy for his guidance and contributions since the formation of the
Company," said Mark N.J. Ashcroft, P. Eng., President and CEO of Aurelius. "We are
very excited to enter 2022, as we build upon our recently completed Phase 2
exploration program, which brought our total metres drilled on the project since
September 2020, to over 21,000 metres of underground and surface diamond drilling.
This has resulted in the discovery of multiple new gold zones at the Aureus East
property. We are excited to build on these successes as we move closer to our
updated resource estimate at Aureus East in early 2022."
With Randy Turner stepping down as Chair, the writing is on the wall regarding its resource
estimate because no Chair bails before a company knocks one out the park. On a bad week for
the portfolio, I’ve therefore decided to do the necessary pruning and leave room for newer and
.
(hopefully) stronger shoots to come forth in 2022
*Not an investment thesis, but I used it as a crutch for a while.
Argonaut Gold (AR.to): SELLING. A quick line here to make sure the call is understood, this
time next weekend the trade in AR.to will be part of the “Closed in 2021” list and the loss taken
on the chin. You never expect to end a trade in a loss, but this one hurts more than most and
I’ll be clear, this isn’t just an uncomfortable percentage number that doesn’t make a big
difference in real money terms; this one hurts.
Minera IRL (MIRL.cse): Along with Argonaut and Aurelius above, plus some wholly
undeserved weakness seen in Copper Mountain (see today’s Fundies section), Minera IRL
completes my week of portfolio pain. On Tuesday December 14th Minera IRL held its AGM in
Vancouver and though it did things is its usual opaque way, the only thing that really matters is
the votes result and what we got from the company is this:
No vote numbers, just percentages of votes cast from a suspiciously low total of just 83
shareholders voting (the lawyers on the board would have thrown out anything they could, let’s
face it). We also get a clear idea of the rebellion as no vote ever gangs up on the rubberstamp
item of auditor like that. However these are notes in the margin and what counts is that Diego
Benavides succeeded in fending off his dissenters and keeps his job.
As for the rest, a fellow concerned shareholder left a simple question on the Silicon Investor
bulletin board last week (4) and as I started to reply, it became a vehicle for my position and
thoughts on the whole sorry tale so, rather than re-phrase it all, here’s the reply I left that
explains my view on what happens next. Long story short, as MIRL has said it intends to get a
third party Letter of Intent deal on the table for Ollachea by the end of 1q22, that’s what we
should let them do:
18

Sredna5, the ultimate objective of our activism has always been to get the share price
up. From that, one step back is the clearly defined position that we're not going to get
value for our shares while Diego Benavides is CEO, ruining the company while he fills
his pockets and those of his family and close friends (which include the waste-of-space
trio hired in July and the MIRL board packed with lawyer pals, of course). We now
have a company that has won the AGM vote and with promises to deliver at least an
LOI on a deal for Ollachea before the end of 1q22. That date coincides with the timing
of the filings of the annuals. Therefore and as stated previously, the ball is in MIRL's
court (aka give 'em enough rope). And the final part of this little mis-en-scene is that I
think I've proven to everyone's satisfaction close knowledge of what has been going on
inside MIRL recently, otherwise the nepotism and dirty dealings would not have come
to light. Also, intel on their movements and decisions wouldn't have got under their skin
to the extent of using phonetaps, making "late night" legal threats etc
With rant done and all that in place, let's assume I'm wrong about Diego Benavides.
Let's pretend for three months and two weeks that, despite his pathetic track record
and serial lies, he's a capable CEO who cares about shareholder value and above all,
that he's not pulling the wool over our eyes this time. Let's take them at face value
about one, or two or how-many-other interested parties wanting to do a deal on
Ollachea. And finally, let's go the whole hog and assume he can bring a deal to the
table that doesn't undervalue the asset or simply provide himself and his lying,
scheming cronies with an exit door at our expense. Aside from swallowing some pride
(no biggie), we'd have little to lose and a lot to gain if he delivers. And now, after all
that, some intel: A representative of a third party company visited Ollachea recently in
the company of Steve Ngatai, something I know because Ngatai simply cannot keep
his mouth shut. He may be the most experienced of the Potemkin Village trio but he
never has been and never will be C-suite material, more like a boy in man's clothing.
Therefore, we can assume that at least one company has expressed some interest in
Ollachea. There's no point in saying more simply to scupper a potential deal; the
vindictive crudball is named Benavides, not Turner, and i'll leave the paranoia, poor
judgement and patent lack of professionality to MIRL. I'm not into scoring points just for
fun or getting revenge on this most pathetic of C-Suites and boardrooms "just
because", especially if it means hitting our own back pockets. Capitalism doesn't work
like that so as far as i'm concerned, they have until end March to deliver and will be
held to their word afterwards, not before.
Minera Alamos (MAI.v): We note the continued drop of the Osisko Development (ODev)
position in Top Pick Minera Alamos (MAI.v), with another million shares crossed on Friday to
bring the total outstanding in its holding down to under 48m. The IKN Weekly has been
reporting on this obvious drag on stock price appreciation for several weeks and while boring,
we can infer good things, too:
 This Chinese water torture will come to an end eventually. Weak-handed positions stop
equity price growth, big ones stop them more, but they do come to an end sooner or
later and when ODEV has done selling, I hope you’re long like I am because the ride up
will be one to remember.
 There’s a near-term silver lining as well, as the market now knows Roosen will accept
52c. Therefore, no need to sell for any lower price even when we get heavy negative
days (such as last Tuesday/Wednesday around the FOMC turmoil).
 The recent block trades are good, they also suggest MAI management is working hard
to clear the backlog and it would only take one bigger fish to see the obvious value in
MAI shares at the moment for the whole blockage to clear. Yes, C$24m or so is a lot of
money for me but for large investment instos, it’s a manageable figure. What’s more, I
strongly suspect that it’s in ODEV’s best interest to have cash on its balance sheet
rather than marketable securities when it has to file its annuals. This is the company
that decided to throw it down a Cariboo-shaped money pit out of Barkerville, after all.
MAI deserves our patience during this period and, a year or two down the line, the way the
equity got dumped upon by a larger seller will be anecdotal stuff only. Sooner or later the
selling will finish, the only question is “when” and I don’t know the answer to that one.
Therefore, the way forward is to stay long because this way, I won’t be surprised and miss out
19

on the first stage of what happens when you hold a cork underwater then let it go.
Rio2 Ltd (RIO.v): RIO CEO Alex Black doesn’t seem to be into coffee any longer, so your
author is in the same boat as the rest of you and forced to get the views and news on Top Pick
Rio2 Ltd (RIO.v) via his appearances on webinars and suchlike. However, today’s notes aren’t
merely idle gossip and IKN offers one observation, amplifies one snippet from an appearance
last week, then gets to the main course and offers a well-sourced rumour picked up from
contacts with close ties to Chile.
First the observation that came from his appearance on the 6ix Media’s “Festivus” year-end
wrap up (link here (8)) along with MAI CEO Ramshaw, Integra Resources’ (ITR.v) CEO George
Salamis and Orezone Gold Corp’s (ORE.v) CEO, Patrick Downey. It was telling that all four CEOs
decided to blame the price of gold their woes, along with sidebar snipes at the World Gold
Council for not promoting the monetary metal well. Maybe they should look closer to home:
These guys need to wake up, smell the coffee ands stop transferring blame. Gold is up 2% in
the last six months, not something we can say about their companies’ stock prices.
Next your snippet and, at the end of the webinar, RIO’v Alex Black managed to get in the public
sphere something this desk has heard on several occasions, that Fenix at its current 5m oz Au
resource is still only scratching the surface and the company thinks there’s at least 10m oz held
at the deposit. Once again and away from the mediocre share price action, we note the RIO.v
“bootstrap” approach has been successful in raising the capital required to get the ball rolling at
Fenix and they are now building their mine, but once up and running nobody should expect the
current mine plan to be the be-all/end-all of the deposit. Thirdly the good gossip and this desk
has it on good authority that Newcrest (NCM) is now sniffing around Rio2 Ltd and has signed a
CA with the company, thereby allowing it into the data room. Without knowing (and I’ll surely
find out later), I can only suppose CEO Black is happy about this new interest. It certainly
makes sense, after having attracted technically competent teams such as BNP Paribas and
Wheaton (WPM) as active partners willing to write big cheques. In trading, RIO.v did well at the
end of the week and others may have heard the same rumour. We do not claim exclusivity, but
you now know what I do.
Mene Inc (MENE.v): I do have room to add a
couple more small tranches of MENE while these
prices remain low but last week didn’t do so,
mainly due to the decision not to open the trading
account and have Argonaut’s trading staring back
at me.
Considering the way it rallied into the Friday close,
I may have missed the very cheapest prices but
there is still enough to lower my cost average, if
20

required. Jay Powell and his friends may have precipitated the final clear-out of the drip seller.
Great Bear Resources (GBR.v): Sadly, we can’t read too much into the late-day volume in
GBR on Friday as that was a rebalancing trade for
the GDXJ index, not some special insider-info trade
trying to scoop up shares before a bid:
Last weekend, I handicapped an eventual overbid
from Barrick (or other) in GBR and Dixie at 50/50.
This weekend that’s obviously less, as while the
financial space is there for GOLD if it wants to move
on the deal, it’s always going to be personal and
one thing I am not going to do is to attempt to get
in the head of Mark Bristow. It’s still possible, but
chances drop with every passing day and if we
don’t hear anything this coming week, Occam’s
Razor states that Kinross will win the prize without
further competition.
Discovery Silver (DSV.v): This is what they should all do, all of the time:
DSV found buyers and accumulation in bulk, the share price rallied and blew past the
psychological C$2.00 barrier and closed Friday at or around the top prices of the week. Maybe
the market was making GDXJ pay for its rebalance and we see early weakness tomorrow
Monday, but I don’t care too much.
One point I’d like to underscore this weekend is the short expected timeline between PEA (now
out) and PFS, with the pre-feas expected as soon as the end of 2q22. In fact we should temper
expectations a little and give DSV the leeway to bring the PFA in during 3q22 and for what it’s
worth, I’d be okay with September and late 3q22. The point here is that 1) DSV would not have
“optimized” the recent PEA because it needed to meet market expectations on a PFS coming
very soon after. Added to the wealth of information in the recent PEA NR and it points to a
company willing and keen to move forward at Cordero, as well as one that isn’t try to kid with a
strong PEA that eventually gets nowhere.
Palamina Corp (PA.v): Before the NR from Palamina Corp (PA.v) last week (6), the stock had
continued to sell in what has the hallmarks of tax loss dumping and went as low as 21c, a
crazycheap price. After the NR and along with the improvement in sector sentiment, PA climbed
back and managed to finish the week UNCH.
As for the contents of the NR, it was one of those “Hi we still exist” numbers, or if you like the
“New Release to announce and upcoming news release” with the company reporting that the
first four holes from Usicayos are now in the bag and waiting for assay results. In fact, my best
guess is PA already has three of the four sets of results and is deliberately waiting for the last
set before announcing, but unlike other companies at other times of year that doesn’t
21

necessarily mean bad news. Instead, we’ve all seen
the way December has mauled the junior sector this
year and even positive NRs have become liquidity
events, so it would make sense to hold fire and
report these first pass assays once the market gets a
little saner in the new year. Cheap as chips and with
plenty of prospective target, this is the price to buy
some for the medium-term, no matter what these
first four holes return.
QC Copper & Gold (QCCU.v): The burn on drill
metres at Opemiska in 2022 was confirmed last week
with the company announcement that its next phase
of exploration had begun, via this NR (7) is “phase one 2022”, it’s planned to drill 50,000m via
two drill rigs and the strategy is (time to quote), “…to convert additional 'halo mineralization'
within the defined open pit resources as per QC Copper's MRE. The areas of focus within the
open pit resource include the Springer, Perry, Saddle Zones, and the Eastern Veins. Phase 1 will
also target known mineralization within the Perry Depth Zone, which could form an
underground component of an updated MRE.”
That’s exactly what we wanted to see from this upcoming campaign. By targeting zones that
would otherwise be waste but that QCCU believes may hold payable grades of copper
mineralization, each holes gets to aim for two birds with one stone. If successful, QCCU gets to
move rock across from waste to resource, improving tonnages while making significant cuts In
overall strip rate for the eventual mining operation. These targets were not part of the 2021
campaign but with 81.67m tonnes already in the M+IO category, QCCU has a strong chance of
adding large tonnages quickly to its main resource. Drilling is going to give us plenty of NRs
over 2022, so watch out for regular updates from this very promising small copper junior that’s
had a great second half of 2021, unlike most companies.
The Copper Basket
After fifty weeks of 2021, The Copper Basket shows a gain of 20.00% to level stakes:
company ticker price 1/1/21 Shares out Market Cap current pps gain/loss%
1 Solaris Res SLS.to 6.08 107.53 1636.61 15.22 150.3%
2 Copper Mtn CMMC.to 1.81 207.5 647.40 3.12 72.4%
3 Oroco Res OCO.v 1.85 192.584 398.65 2.07 11.9%
4 Marimaca Cop MARI.to 3.25 87.737 324.63 3.70 13.8%
5 Western Copper WRN.to 1.57 135.798 248.51 1.83 16.6%
6 Amerigo Res ARG.to 0.80 181.79 232.69 1.28 60.0%
7 Excelsior Min. MIN.to 1.12 273.585 123.11 0.45 -59.8%
8 Regulus Res. REG.v 1.07 101.85 108.98 1.07 0.0%
9 Aldebaran Res. ALDE.v 0.455 125.24 90.17 0.72 58.2%
10 C3 Metals CCCM.v 0.115 438.56 67.98 0.155 34.8%
11 Element 29 Res ECU.v 0.45 68.281 39.60 0.58 28.9%
12 Doré Copper DCMC.v 1.00 53.304 35.71 0.67 -33.0%
13 Chakana Cop PERU.v 0.60 111.41 29.52 0.265 -55.8%
14 Chibougamau CBG.v 0.165 53.077 11.41 0.215 30.3%
15 US Copper USCU.v 0.105 87.53 6.56 0.075 -28.6%
NB: All stocks in CAD$ Portfolio avg 20.00%
If it weren’t for Solaris Resources (SLS.to) it would have been a bad week for the list, in the
end it was only a minor negative with the basket average down less than one percentage point.
However, there was only three winners (SLS.to, WRN.to, CCCM.v) and one UNCH from the 15
component stocks, which leaves eleven losers. The other thing that helped the cause was the
22

lack of big losers, with no stock dropping 60% The Copper Basket 2021, weekly evolution
55%
under 10% and the worst of the lot Oroco 50%
(OCO.v down 8.4%). To the upside, Solaris 45%
40%
(SLS.to up 10.5%) beat the rest by a long
35%
way and was the only double-figure mover 30%
25%
on the list.
20%
15%
10%
As for copper-the-metal, we had another
5%
week that finished roughly where we started 0%
and the futures contract remains turning
around the U$4.30/lb line, but that’s not
even half the story about last week as
the chart points out (below right). I’m
glad I didn’t trade around the FOMC
announcement, not because of the lost
opportunity to pick up cheap vehicles
but because I’m not good enough at
trading very-near-term sentiment. For
every smart trader who cleaned up by
selling at the right time and buying
back, there’s a whipsaw victim. I would
have been in the latter category.
We had copper coverage to the gills
last week and there’s no need to repeat
the house bullish position ad nauseam,
so nothing has change don that score.
Instead we can update on Chinese
macro and China’s industrial production number for November came in at 3.8%, beating
expectations (+3.6%) and showing the right signal for copper bulls.
Next up is the regular weekly inventories section, numbers by Cochilco:
 World copper stocks movements are winding down for the end of the calendar year,
with a modest aggregate of 1,424 metric tonnes (mt) added to the trio below. Friday’s
grand total came to 177,3176mt and copper stocks remain very thin on the ground.
 The Shanghai’s SHFE continues too bounce around at virtual zero, losing 6,800mt and
closing the week at 34,580mt. Same message as last weekend, end-user orders for
Asian factories are all-but done, we await the Q1 influx. Hopefully, it happens.
 What SHFE lost, the LME added with 7,375mt added to stocks to bring the grand total
to 89,150mt and the likelihood the two numbers are connected by arbitrage is high.
 The Comex went up 851mt to finish at 53,587mt. No biggie, as usual.
Here’s the Shanghai-only inventories chart, the floor is being put in and the period between
New Year for the most of us and New Year for China is coming up. That’s when the line goes
near-vertical again, so expect to see reactionary “copper stocks up! Oh my gawd!” headlines
from journalists who are paid too much.
23
ts1
naJ
t01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81 ht52 n2yam ht9 ht61 dr32 ht03 ht6nuj ht31 ht02 ht72 ht4luj ht11 ht81 ht52 ts1gua ht8 ht51 dn22 ht92 ht5pes ht21 ht91 ht62 dr3tco ht01 ht71 ht42 ts13 ht7von ht41 ts12 ht82 ht5ced ht21 ht91
source: IKN calcs
Shanghai Futures Exchange Warehouse Stocks, 2014 to date
400000
350000
300000
250000
200000
150000
100000
50000
0
31'13ceD ht9 ht81 ht72 ht5tco ht41 dn22 dr3yam ht21 ht02 ht92 ht7bef ht71 ht62 ht4peS ht31 ht92 ht9 ht81 ht72 ht5von ht41 ht52 ht01 ht91 ht82 ht6naJ ht71 ht62 ht4gua ht31 dn22 202ts1ram ht01 ht91 ht72 0202ht6ced ht41 ht52 1202ht4luj ht21 ts12
Mt Cu
|
source: Cochilco

And whatever they’re paid, it’s too much. Now for notes on a couple of our basket stocks:
Solaris Resources (SLS.to): Likely to be the last hurrah for SLS in The Copper Basket, as its
market cap has ballooned too much for our list of junior-focused copper stocks. Last week SLS
improved another 10% on more strong fundamental news, its latest set of assays announcing
the expansion of the mineralized footprint at Warintza to an even greater size than before.
Leaving aside the political and community risk of Ecuador and the regional location of the
project, there’s no doubt that the SLS team has done a great job ijn unlocking the potential of
this massive porphyry system first identified by David Lowell two decades ago. Left fallow for
many years after that, SLS has got Warintza by the scruff of the neck and made it into a world
class copper deposit. You will never see me long the stock, but that’s for other reasons than the
rocks.
Western Copper & Gold (WRN.to): With the news (8) last week that the WRN at Casino
would be under environmental review with the Yukon Environmental and Socio-economic
Assessment Board (“YESAB”) until 2024 minimum last week, I expected WRN shares to come
under pressure. Those who remember how slowly the process was with Alexco will see the
issue of a date that fsr into the future. To my surprise, WRN was last week one of the few
winners on the list, which goes to show what I know.
C3 Metals (CCCM.v): A lot of geological arm-waving in the December 16th NR out of C3
Metals (CCCM.v) (9) as well as one reasonable hit of 48m of 1.24% Cu with a gold kicker, but
overall an unconvincing set of assays and frankly that doesn’t surprise. CEO Tomlinson is
apparently convinced there’s a porphyry driver underneath the known mineralization, which
considering the South Peru Andean setting is a little like saying that salt water is driving the
waves you find in the ocean. This continues to be a very easy pass and a stock for people whjo
like sponsoring the lifestyles of others.
The Producer Basket
After fifty weeks of 2021, the Producer Basket shows a loss of 15.08% to level stakes:
company ticker price 1/1/20 Shares out MktCap(U$Bn) current pps gain/loss%
1 Newmont NEM 59.89 805 47.69 59.24 -1.1%
2 Barrick GOLD 22.78 1778.04 32.70 18.39 -19.3%
3 Agnico Eagle AEM 70.51 244.187 12.31 50.42 -28.5%
4 Kirkland Lake KL 41.27 267.056 10.62 39.76 -3.7%
5 Kinross Gold KGC 7.34 1261.07 7.00 5.55 -24.4%
6 Endeavour Min EDV.to 29.62 252.568 5.64 26.81 -9.5%
7 Pan American PAAS 34.71 210.262 5.13 24.40 -29.7%
8 B2Gold BTG 5.60 1051.697 3.88 3.69 -34.1%
9 Alamos Gold AGI 8.75 392.739 2.84 7.24 -17.3%
10 Pretium Res PVG 11.48 187.833 2.52 13.39 16.6%
Prices in U$ except EDV.to (share price in CAD$ and mkt cap in approx USD) Port. avg -15.08%
A mixed week for the benchmark indices, with the bigger GDX improving by 2.1% and the
smaller junior carrier GDXJ down 0.2%. That’s what happens at the start of a top-down rally,
when large cash moves into the biggest caps first and then rotates down the pecking order. All
that makes sense, considering the nerves pre-FOMC and then the relief rally we saw after the
Jay Powell show, it also reflects via our ten stocks as, with a couple of exceptions (yeah Barrick,
looking right at ya) the rich got richer and the poor got…less rich.
We saw eight winners (no list) and two losers (EDV.to, BTG) and of the winners, most popped
by between 4.1% and 5.8%. The exceptions were the lower end of the market cap, PVG up
24

0.5%, AGI up 1.3% (and then Barrick, up 2.5% and lagging peers again). All the same and
despite the headwinds, our managed to do slightly better than the GDX benchmark though,
with just two weeks left on the candle, the 1.50% deficit is too much to make back barring a
serious market jolt.
The 2021 Producer Basket: Weekly performance and
20%
comparative to GDX control
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
Kinross (KGC) Agnico (AEM) and Barrick (GOLD): As is often the case, details emerge of
a M&A process after the fact and on Friday, the Globe & Mail reported (under paywall) that as
well as apparent deal winner Kinross, four other companies namely Barrick, Agnico as well as
Australia’s Evolution Mining and Newcrest Mining were all part of the bidding process and
“…almost all tabled formal offers.” As Agnico beat Barrick to the punch on Kirkland Lake, it
makes sense to consider AEM as the earliest drop-out and the others were formal bidders.
As noted in the brief notes in ‘Stocks to Follow’ today, there’s still plenty of room for a
counterbid for GBR but by simple logic, each passing day will see those chances begin to drop
and as nothing ever happens after December 25th in our sector, the trading week to come is
going to decide which way Occam’s Razor slices things.
Barrick (GOLD) and Newmont (NEM): As for the battle at the top of Tier 1, Barrick
continues to be trounced by its main rival:
This is not news, it’s simple continuation: At the start of 2021, there was U$7.6Bn difference
between the two company market caps, that’s now basically doubled to U$15Bn. However, it’s
as much about share price performance than deals or cash profits over the year with Newmont
clearly the “least worst” among peers and down 1.1% YTD, while Barrick has dropped by
19.3%. Considering they share much of the same production via Nevada Gold Mines and the
Pueblo Viejo mine in Dom Rep, that’s a big difference that speaks of the strategic advantage
currently enjoyed by NEM.
The Tiny Dogs
After fifty weeks of 2021, the Tiny Dogs show a gain of 13.21% to level stakes:
25
ts1
naJ
t01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81 ht52 n2yam ht9 ht61 dr32 ht03 ht6nuj ht31 ht02 ht72 ht4luj ht11 ht81 ht52 ts1gua ht8 ht51 dn22 ht92 ht5pes ht21 ht91 ht62 dr3tcO ht01 ht71 ht42 ts13 ht7voN ht41 ts12 ht82 ht5ceD ht21 ht91
The 2021 Producer Basket: Percentage difference between
GDX benchmark and basket (negative = IKN basket ahead)
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%
ikn -2.0%
gdx control source: Google, IKN Calcs ts1
naJ
t01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81 ht52 n2yam ht9 ht61 dr32 ht03 ht6nuj ht31 ht02 ht72 ht4luj ht11 ht81 ht52 ts1gua ht8 ht51 dn22 ht92 ht5pes ht21 ht91 ht62 dr3tcO ht01 ht71 ht42 ts13 ht7voN ht41 ts12 ht82 ht5ceD ht21 ht91
source: IKN calcs, NYSE/Nasdaq/TSX data

company ticker price 1/1/21 Shares out Mkt Cap current pps gain/loss%
Antler Gold ANTL.v 0.205 66.365 11.95 0.18 -12.2%
Aston Bay BAY.v 0.045 163.975 11.48 0.07 55.6%
Constantine Met CEM.v 0.17 45.4 23.15 0.51 200.0%
Contact Gold C.v 0.115 240.757 10.83 0.045 -60.9%
Golden Pursuit GDP.v 0.22 40 5.60 0.14 -36.4%
Manitou Gold MTU.v 0.045 230.79 16.16 0.07 55.6%
Precipitate Gold PRG.v 0.240 106.241 9.03 0.085 -64.6%
QC Copper QCCU.v 0.315 105 31.50 0.30 -4.8%
Red Pine Expl RPX.v 0.400 95.806 48.86 0.51 27.5%
Warrior Gold WAR.v 0.090 91.818 5.97 0.065 -27.8%
Prices in CAD$, data from TSXV basket avg 13.21%
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 nudged up slightly, as five of our basket stocks returned gains (ANTL.v,
BAY.v, C.v, GDP.v, MTU.v), three were losers
(CEM.v, PRG.v, RPX.v) and two remained 24% Tiny Dogs, 2021 weekly tracker
unchanged (QCCU.v, WAR.v). Overall the 20%
tinycap end of the market showed signs of life 16%
and the end of the heavy period of Canadian 12%
tax loss selling is probably behind us (and 8%
4%
them).
0%
-4%
No stock features this weekend, as we limp to
-8%
the finish line with the 2021 selections. The list
-12%
for 2022 is likely to change a lot as one feature
of 2021 was the plethora of new names to
choose from, with a lot of them finishing the
year under our $20m market cap barrier to make them eligible. Full details and the final choices
in IKN658, in two weeks’ time, though I will say that although it will never be the reason why
subscribers to this publication join or stay, in my view The Tiny Dogs list this year has been a
useful exercise and has served its purpose well, a pulse-taker for the smallest companies.
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’s possible in the future
I may buy shares in one or several of these stocks, at the moment both my opinion and wallet aretrictly neutral.
Regional politics
Chile has a President-elect
Today has seen the run-off vote for Chile’s Presidential election and with the famously efficient
Chilean fast-count result, before 7pm local time 99.73% of votes had been tallied with Gabriel
26
ts1
naJ
t01naJ ht71 ht42 ts13 ht7bef ht41 ts12 ht82 ht7ram ht41 ts12 ht82 ht4rpa ht11 ht81 ht52 n2yam ht9 ht61 dr32 ht03 ht6nuj ht31 ht02 ht72 ht4luj ht11 ht81 ht52 ts1gua ht8 ht51 dn22 ht92 ht5pes ht21 ht91 ht62 dr3tcO ht01 ht71 ht42 ts13 ht7voN ht41 ts12 ht82 ht5ced ht21 ht91
source: IKN calcs, TSX data

Boric receiving 55.86% of valid votes and José Antonio Kast on 44.14%. With that, Chile
confirms a polling advantage held for weeks into reality and the left wing Boric has indeed
defeated the far right wing José Antonio Kast and will be Chile’s next President, the handover of
power from the outgoing and increasingly disgraced Sebastian Piñera due on March 11th, 2022.
That gives Boric a little under three months to assemble his new government and in that time,
we’ll get plenty of noise about “how left wing is left wing” under Chile’s government in waiting.
The answer is the one we’ve maintained for weeks: Boric comes from the more radical left and
is remembered as such for his rise to fame during the student protests of a decade ago (the
high profile leader of that so-called “golden generation”, Camila Vallejo, is now a member of
parliament in Chile) but there’s no way he can govern Chile from such a radical position.
Internally, Boric’s main political agenda will centre on the Constitutional Reform process due to
begin next year with debate and vote on how the country’s constitution will change. Aside that,
he will have to govern by consensus and the current round of scare stories about Chile being
overrun by Commies were strictly for the consumption of undecided voters during the second
round process. Yes, I’d expect a Boric government to sit slightly further left than the years
when Michelle Bachelet had her two terms of office (and she was rarely an unpopular President
over her eight years, an achievement in South America) but not much further left. As for us on
the outside looking in at FDI opportunities, clam your fears because Chile is going to be the
same happy hunting ground for mining companies that it has been for the last three decades.
Once the post-election noise subsides, calmer heads will prevail. On that score, we dial up the
main ETF tracker for the country (ECH), which follows the headline market index for Chile:
As you can see, the index has been under pressure in the second half of 2021 as the market
increasingly perceived the left wing candidate as growing in favour. That dynamic has
continued in the very recent past…
…as José Antonio Kast’s very negative late round of campaigning and so-so debate
performances failed to make any late gains in privately commissioned polls done for the benefit
of a foreign audience (polls are not allowed to be published in the last two weeks in Chile). It’s
27

no surprise that the markets would have preferred Kast and we may see some extra selling
tomorrow Monday, but the assumption of a Boric victory was already largely baked in and for
this desk, going long ECH once the early effects have washed through is the winning trade
between now and his inauguration.
Peru’s mining tax hike is off the table
At some point Kitco is going to get its knuckles rapped by Reuters for wholesale re-printing of
its newswires, as the media giant is now cracking down on third party dissemination of its
reports. But in the meantime, we get to do this (10):
LIMA, Dec 17 (Reuters) - Peruvian Finance Minister Pedro Francke said on Friday that
the government would insist on a tax reform that includes higher taxes for the mining
sector, after Congress rejected much of the initial proposal earlier in the day.
"We will present the bills so they are discussed in the next legislature," Francke wrote
on Twitter.
The result in Congress, which allowed the government to carry out only a significantly
watered down tax reform, was a blow to the four-month-old administration of leftist
President Pedro Castillo.
His flagship plan is to hike taxes on mining companies in order to fund higher social
spending. Peru is the world's No. 2 copper producer.
Earlier this week, lawmakers had watered down the government's proposal and
removed any mention of a modification to the mining tax regime during committee
discussions. The final text voted on by Congress did not mention mining.
"Unfortunately the current climate is not the best...and this government has given the
wrong signal to the (mining) sector that is responsible for 60% of our exports," said
Carlos Anderson, a right-wing lawmaker, explaining why mining had been removed
from the package.
Peru's mining industry had also vigorously opposed the tax hike plan, arguing that it
was already paying as much or more than in other countries with large mining
industries and said it put in jeopardy a pipeline of new mining projects that would
require $50 billion in investments.
"We will work with Congress in more detail to reach consensus on the subjects that
were not approved," Francke added on Twitter.
Congress's decision to reject the mining tax hike occurred as one of Peru's largest
copper mines, MMG Ltd's Las Bambas, is set to suspend production indefinitely
starting on Saturday due to a road blockade by local residents who are demanding
jobs and higher economic contributions from the company.
(Reporting by Marco Aquino and Marcelo Rochabrun Editing by Paul Simao and
Alistair Bell)
For this desk, the most interesting part of last week was watching the Pedro Castillo executive
decide to stand down and not try to push through tax hikes by executive decree. That was a
purely political call and due to the way the Castillo government is being browbeaten from
several angles by a host of political and economic enemies. The government has been out-
played and out-manoeuvred by political opponents, business leaders and particularly the mining
industry, which has used the Las Bambas affair to great advantage and in the space of just a
few days, the support his government enjoyed in the provincial South of the country has
weakened significantly. His big mistake has been to threaten the back pockets of the rank and
file voting public that supported him in the election, particularly in the round two run-off against
Keiko Fujimori, but has little or no support for a hard left wing ideology. Perhaps Castillo
thought “the people” would rise up and support him in the face of their capitalist oppressors, if
so he drank too much of his own Kool-Aid. Above all, what people want are jobs and income
and the average Peruvian family doesn’t have the luxury of savings or time off work with no
pay. The suspension of Las Bambas saw the South move against Castillo due to that and now,
with the balance of power shifted to the mining company and its source of wealth, MMG has
seen its hardball tactics pay off.
28

More on that below, here we’ll round off by framing Pedro Castillo as the lame duck President
he most certainly is. As well as moving away from the party political base of the hard left wing
Perú Libre party, he has tried to bring his informal, provincial style of government to Lima and
is now paying a high price just for that naïve political error. A right wing “business friendly”
President such as Pedro Pablo Kuczynski could get away with the type of informal meetings and
dealings Castillo has used to promote his agenda, as PPK had business leaders and the main
media channels on his side who wouldn’t cause a fuss. Not so Pedro Castillo and the hatred of
this provinciano in Lima has made a legitimate target for anything that even smells like
wrongdoings or irregular activities. He’s no more or less trustworthy than any other politician
here in Peru (i.e. zero percent) but that’s not going to help him now and, of course, he’s
surrounded by the usual entourage of get-rich-quick opportunists who have become a heavy
yoke around his neck inside a short period of time. End 2021 sees Castillo as a naïve and
hamstrung President who played his cards badly and deteriorated his own power base, one who
needs to stop the negative tide or face destitution in the near future, I previously I gave him a
50/50 chance of making it through his entire mandate, now he’s unlikely to make it past 2022.
As for the Left wing of politicians and organizations who seized their chance to become kings
for a day, they are being shown as an ineffective government and the likelihood of Peru staying
left-wing once Castillo is gone are minimal.
There are practical consequences to this as well, as this chart of the main Peru ETF (EPU), the
index tracker to the Lima stock market IGBVL index, should remind readers that this desk
forecast the movements of this particular squiggly line very well in Q1 of 2021 by calling sell at
the very top, then reasonably well in Q2 and Q3 with the re-buy call that was a few weeks
early, but worked out in the end:
Though turbulence is likely again and exact timing difficult, EPU is beginning to look buyable
again. The IKN Weekly will keep you informed on this one as 2022 rolls out.
Las Bambas: MMG closes the mine and wins the battle
Hardball is as hardball does, so while MMG will take a near-term hit on the news this weekend
that it has made good on its threat (no other word) to suspend operations at the Las Bambas
copper mine in South Peru, it’s also now an exercise in kicking the Pedro Castillo government
while it’s down and turning as many people against the left wingers in power until either a) the
locals opposing the mine back down or b) the government takes action against the communities
and unblocks the Mining Corridor, be it by negotiation or force.
What happens now? Most likely, MMG will press its bet and remain shuttered (in a period of
time that suits the company fine, the Peruvian vacation season when workers take their weeks
by the seaside in any normal year as well), leaving the ancillary and indirect jobs dependent on
the mine to make their complaints and erode local support for the road blockades. The hardball
position taken by MMG has taken advantage of the poor government skills of the Pedro Castillo
team, as well as handing the anti-Castillo media and Congress another opportunity to kick them
on the way down. By cutting off access to jobs and earnings in the South of the country, MMG’s
29

strategy has paid off and Castillo is now getting the blame for not being able to control the local
communities on the “mining corridor”. Another reminder, if needed, that Peru will never be a
Communist paradise and capitalism continues to rule the roost.
Argentina: Chubut rams through its Zonification law
The standard phrase used on these pages about Argentine politics is “Anything can happen and
often does” and ¡Laaa Puuuucha! we saw a prime example on Wednesday evening in Chubut’s
provincial parliament building. We’ve watched the concept of “Zonification” in Chubut ebb and
flow over the last couple of years on these pages and coverage ramped up recently, as the last
few weeks have seen Governor Mariano Arcioni, under orders from the national executive to get
mining moving in his province, make a concerted effort to change plans into action. All fine so
far, but even this desk was “impressed” (for want of another word) in the way he executed on
his plan to get the law project to “Zonificate” the central Meseta region of Chubut out of the
rest of the province and allow mining, in a law change designed specifically to allow Pan
American Silver (PAAS) to develop its ‘Navidad’ silver mine.
We covered much of the build up to last week’s vote in recent issues and theres’ no need for a
blow-by-blow account, but a brief sketch on how it went down is useful, as it provides a
window on the way “politics gets done” in the Basket Case Country par excellence. Last week
saw Chubut’s parliament sitting for the last time this year (aside from a programmed session
this coming Tuesday which may now be suspended due to the potential for protests and
violence outside) and as the week began, rumours grew that Governor Arcioni and his allies in
parliament would try to present the law bill for treatment, debate and an eventual up/down
vote on Thursday. Proponents of the bill (e.g. unions and politicians pushing for jobs and
growth in the region) and its detractors (e.g. environmental groups, anti-miners and politicos
enjoying support from a naturally left wing Chubut population which identifies as “pro-nature”
and mostly against mining development) geared up for a day of marches and demonstrations,
not only at the parliament building but all around the region. Then suddenly and without
warning, a nominally administrative session of parliament on Wednesday afternoon, at which all
27 parliamentarians had to be present but nothing was expected done, was changed by its
chairperson (and ally of Governor Arcioni) to a full session and the “Zonification” bill was
presented for debate. Its opponents were caught on the hop and Governor Arcioni had done his
political calculations (which clearly included previous conversations with three brand new
members of parliament to sound them out on which way they would vote) and within the space
of two hours (lightning fast in Argentine political terms) the bill was debated, a vote called and
the bill was voted up by a count of 14 to 11, with two abstentions.
The pro and anti pressure groups expecting to march on the government building the next day
found out about the passage of the bill at the same time as the rest of us, with union leaders
celebrating (they now get to carve up some seriously juicy transport contracts between
themselves) and the anti-bill groups hitting the streets and becoming violent. Night one
included tear gas, rubber bullets and hospitalizations of protesters. Since then there have been
a seemingly endless number of protest marches in the West (Esquel etc) and Atlantic seaboard
East Chubut (Rawson, Trelew, Puerto Madryn, Comodoro Rivadavia, other towns and cities etc)
all calling foul on Arcioni, vowing revenge, demanding the law as pushed through be repealed
etc . This weekend Chubut has been split down the middle politically by the Navidad mine
project, not only due to the approval of the law but also by the backdoor way in which
Governor Arcioni not only pushed it through, but has pre-empted legal appeals by changing
certain provincial laws to stop the normal appeals process and leave any final decision in the
hands of judges who are supportive to his cause.
What happens next? First up in Argentina there’s a 30 day cooling off period for any new law,
called the “adhesion period” in which legal arguments can be brought against any decision.
Expect a mountain of those, but with the decision passed 14 to 11 and any appeals going to
Governor Arcioni’s allies, things are not good for the anti-mining side. Next, the province needs
to get permits granted to PAAS at Navidad as soon as possible, but that’s looking good thanks
to the willing help of a national government that must be pleased it can include Navidad in its
30

upcoming PEDMA pro-mining investment push. That’s been delayed (see Weeklies passim) but
is going to start in 2022 and make significant international noise (e.g. look out for plenty of pro-
Argentina sentiment and coverage at PDAC in March). From there and if the plan rolls out as
expected, PAAS will get moving as quickly as possible and start the tendering and contraction of
workers for the construction phase of the mine, at which point the wealth effect will start to
counter the anti-government sentiment now prevalent in the province. Once the jobs and
money start flowing, those politicians who pushed the law change through will have more
chance of surviving the next round of elections they face and the raw memory of how this bill
became law should have started to fade. At least that seems to be the plan. What could
possibly go wrong?
Bottom line: The news out of Chubut is a
major positive for Pan American Silver
(PAAS), but the company cannot afford to
rest on its laurels and must move to develop
Navidad as soon as possible. Assuming it
does, PAAS will bring one of the biggest
silver/zinc mines in the world online and
according to my view of its price action last
week (right) the consequences of this law
change are not yet reflected in the
company’s equity. Yes PAAS had a good day
Thursday morning on receipt of the news but
so did all the sector (we compare to SIL and
GDX above) and didn’t out-perform by as much as this desk imagined on what is wholly positive
news about a real dial-mover of a project. While some may view the news as adding extra
political and ESG risk to the company, this desk recognizes that in Argentina, possession (of the
law) is the whole game and it will be extremely difficult to roll back last week’s vote before this
mine becomes a reality, at least in its construction phase (that brings plenty of jobs to the
region even at that stage). The anti-mining politicos and groups are screaming blue murder and
will continue to do so, but with the law now through parliament the dynamic has changed
completely and all they have left is a rearguard action. Meanwhile and where it matters, i.e. the
Meseta zone, the law passage is popular, welcome and will bring jobs and income to a zone
badly in need of growth.
Mexico: Fortuna Silver (FSM) (FVI.to) and its local consultancy
Our coverage of this issue began in IKN650 dated November 14th in the note “Fortuna Silver
(FSM) (FVI.to) and its Mexican EIA permits” a few days before one of the worst car crash
conference calls for a mining company for many years (since Apex Silver in fact, for those who
can remember that far back) that began the waterfall sell-off in FSM that’s continued for over a
month. That day we reported on the refusal of environmental oversight body SEMARNAT to
award a necessary permit extension to Fortuna Silver’s (FSN) (FVI.to) San José mine in Oaxaca,
South Mexico. That first note got plenty of follow-up in subsequent editions of The IKN Weekly
as the wheels publicly came off FSM and has put the company and its share price under
enormous pressure.
However, in recent days an interesting new angle has emerged around the controversy. You
may remember we featured the main opposition front, “El Frente No a la Minería por un Futuro
de Todas y Todos” (“The No to Mining for a Future for All Front”) in the report found in IKN652
as we delved deeper into the issue. That body represents many townships and organizations
(that they say are) affected by the FSM San José mine.
31

But now, according to said organization (11), Mexico’s SEMARNAT has bowed to pressure from
three politicians from the MORENA party of President López Obrador (AMLO) and, instead of
running a local consultancy covering all ten of the local population centres apparently affected
by the mine and its operations, SEMARNAT has excluded six of the ten population centres and
is now only running its consultancy process on the four populations located closest to the mine.
Due to this,“El Frente No a la Minería por un Futuro de Todas y Todos” is calling foul on the
consultancy now being run by SEMARNAT and is the reason why we saw images of a mass of
people all voting against the mine’s permit renewal in “self-announced” meetings that took
place on Friday 10th and Saturday 11th of December (12). Also potentially telling is the way
SEMARNAT officials were invited to these meetings and at first accepted, but come the day
didn’t show and cited “security and safety concerns” as the reason for their no-shows. This
photo (above) is one of many from reports from the meetings, purportedly showing
overwhelming support for the “No Permit” position and the anti-mine groups say they collected
6,172 signatures in their petitions.
However, it seems SEMARNAT is now reluctant to take the views of people from these six
townships into consideration, despite having originally agreed to consult all ten of the affected
population centres in its original October 25th edict. The anti-mine collective now suspects
SEMARNAT of being under the influence of pro-mine politicians, accusing it of trying to railroad
through a partial consultancy that will result in the mine getting its permits approved. They may
have a point too, as the adapted process does seem somewhat suspicious but, if this is the
“solution” the ruling MORENA party want it’s certainly one that FSM won’t complain about as
long as the end result goes the way of the mine. As the four closest towns are the ones that
get the most direct benefit from the San José mine (employment and indirect jobs created), it
makes sense that this would be a preferred way forward and out of the paperwork mess.
Are we about to see a “capitalist solution” to a thorny problem, all due to AMLO turning a blind
eye and local politicians getting a result that favours their pro-mining stance? Time will tell, but
don’t be surprised if FSM gets to announce a surprisingly favourable result once the consultancy
process is completed. I’m not brave enough to call “buy” on FSM this weekend but it’s going to
be worth keeping an ear to the ground on this story. As Chubut Argentina proved this weekend,
government officials are not above bending the rules and playing the field to their advantage if
it means a mining project gets its green light. Watching brief.
Market Watching
Copper Mountain (CMMC.to): Unduly sold down and a bargain buy
A combination of unlucky timing, a less-than-perfect corporate marketing strategy (to be
diplomatic) and the general malaise felt towards mining companies that announce capex
increases at their projects resulted last week in a sell-off of your author’s largest copper play,
32

the mid-cap producer Copper Mountain (CMMC.to). However, unlike the sad story at Argonaut
Gold last week this company gets a full-court defence from The IKN Weekly and at this
weekend’s share price of C$3.12, represents a bargain entry point for those of us looking to set
their portfolios to Copper Bullish in 2022.
In fact we’ve had two piece of noteworthy news from the company recently and this publication
is late to the first one. On December 6th CMMC announced (13) the good news that the recent
very heavy rains and flooding that hit the Pacific coast of Canada had no meaningful effect on
its 4q21 production and that its logistics and supply lines remain intact. That’s good news on a
prima facie level (and luck plays a part in mining, after all), but it was also a tacit indication that
we can expect a normal quarter of production from its main Copper Mountain mine in BC.
With that news caught up and covered, we move to the reason CMMC saw selling last week, in
market action this desk regards as over-exaggerated and offering a useful copper trade entry
point for those so inclined and the right price for long-termer to accumulate (e.g. your author).
To the details and, on Monday December 13th CMMC announced (14) updated project
economics for its Eva project in Australia. The market reaction is highlighted in the left-hand red
box that I’ve added to this 10-day chart:
An immediate sell-off on volume that this desks considers as wholly unfair. The market began
to agree late Monday and buyers started moving in but then, come Tuesday, the world started
fretting about what Jay Powell was about to tell them and miners everywhere started to be sold
down. As CMMC is renowned as one of the Canadian markets preferred vehicles for liquid
trading in copper, the stock got hit again and come the hour of the FOMC announcement
Wednesday, was trading well under the C$3.00 line. Once the world realized that the Fed’s call
was reasonably benign the recover yin prices came, but copper stocks in general took another
bop on the head Friday morning and once again, CMMC was in the line of fire.
33

Summing up, a tough week for CMMC longs like myself but, as seen in The Copper Basket
above, it was hardly the only name with red ink last week. However, the original reason that
started its vicious circle looks largely misunderstood to this desk, so now let’s consider the Eva
news in a little more detail. But before diving in, please note that as CMMC at Eva covers a
company that reports in Canadian Dollars and a project priced in Australian Dollars, we’re going
to use the Lingua Franca of United States Dollars (USD) to keep the numbers more
straightforward. After all, its main product is always priced in UD and CMMC also has most of its
financial debt position in USD. Also in passing, recall that USD debt is in the friendly hands of
Copper Mountain’s partner Mitsubishi, there’s no predatory pressure involved.
What we got from CMMC were updated project economics for its Eva copper project, located in
Queensland Australia. The company is using a staged approach to development and will take
the next six months to make its construction decision. It plans to use cash treasury and
operating profits for the first stages of development and to any long lead time items, then once
the big green button is pushed, fund the build-out via debt facility. Here’s the main overview
table as presented in last week’s NR:
The reason that CMMC sold off is in line one: Your author believed that the market got as far as
the capex estimate, decided that we’re looking at another nasty capex blowout from a miner
biting off more than it can chew and
promptly sold CMMC down. So let’s
consider the way CMMC could move
forward on a new capex bill some A$129m
higher than before.
The A$836m development capex ticket is
U$595m in USD. As CMMC has an IKN
estimated U$160m in treasury at end 2021,
the first stage of semi-committal to the
project is covered easily without adding to
liabilities. As for earning power, CMMC has
been running on rails recently and with the
steady state of copper prices, it’s
reasonable to assume this type of recent operational profit margin remains attainable. From
those op profits in Loonies, it’s not a stretch of the imagination to get CMMC committing
another U$150m to Eva in 2022 directly from treasury. In other words, at the point CMMC
makes a formal construction decision, half the capex should be covered organically and the rest
CMMC.to: Working Capital per qtr
200
160
120
80
40
0
-40
-80
-120
34
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4
source company filings, IKN ests
srallod
fo
snoillim
250 CMMC.to: Cash and ST
200
150
100
50
0
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4
CMMC.to: Operating profit
source: company filings, IKN ests
3.3 7.61
1.21-
8.4 9.91
5.1- 4.5- 2.05- 0.81-
8.82 3.93 5.04
1.58
0.77
2.26
0.66
120
100
80
60
40
20
0
-20
-40
-60
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4
source: company data, IKN ests
srallod
fo
snoillim

can come from the debt market, as envisaged by CEO Gil Clausen in last week’s NR. However,
even there CMMC holds significant advantages over peers thanks to its friendly partner
Mitsubishi, a company that I am sure would be ready and willing to fund CMMC’s growth
project in return for the guarantee of physical copper deliveries to its manufacturing facilities
(vertical is good).
Meanwhile, the rest of the Eva project economics look either good or plan excellent, even at the
long-term U$3.39/lb copper price chosen to reflect its capacity for generating strong margins.
So overall and taking into account rthe bad timing of the announcement, into a market that’s
been itching for excuses to sell stocks in December and with a newly fashionable worry about
expanding capex for development projects, CMMC got a raw deal and a sell-off from a NR that,
on another day, would have seen the stock price rally instead of fall.
Or consider the other side of the coin; assuming this NR and project cheapens CMMC,
presumably another NR tomorrow morning announcing the suspension of Eva and those
impressive economics would make the stock rise. Indeed, the selling of last week was asinine
and, along with a couple of negatives that came along at the wrong time for CMMC last week,
the stock was sold down to levels that provide an excellent entry point. Though I’m already
really long CMMC, I’m going to try to find room to add a few more without making it a Top Pick,
as I plan to be active in the market next week in selling AR.to and adding to the new position in
Amerigo (ARG.to) while those $1.30 prices last. This price is too good to last long and copper
will be the place for your metals bets in 2022.
Conclusion
IKN656 is done, we end with bullet points:
 Be long copper. I’m going be longer still come Christmas Day and stay that way for
2022. Copper Mountain (CMMC.to) ands Amerigo Resources (ARG.to) offer sparkling
entry points at these December discount prices.
 The Argonaut Gold (AR.to) news was a real kick in the teeth and, on due consideration,
there’s not enough left on the bone any longer. If the de-risk from this uncertain
moment for Magino goes well and the company gets a new boss, the funds required
and starts to execute in better style, there’s always the opportunity of buying back in
later but, for the moment, the loss is taken and the cash deployed elsewhere.
 Whatever you might hear from people who pretend they understand the country
without having a word of Spanish to their name, don’t fear the left wing Chile election
result tonight. The day Michelle Bachelet came to power saw exactly the same forecasts
of doom from the right wing, they were wrong then and they’re wrong today. What’s
more, Chile’s mining is the last place any lefty government will attack and just Codelco
will make sure of that.
 Another lengthy edition today, with 38 tightly-packed pages over 21,000 words written.
I don’t know where these stream of words are coming from at the moment, perhaps I
need a hobby to keep me off the laptop. Stamp collecting, maybe.
 Wishing you all a happy and peaceful Christmas. See you in IKN657 and the bare bones
edition on Boxing Day (as they say where I was brought up), it will be much shorter
that today’s edition for sure.
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
35

Footnotes, appendices, references, disclaimer
(1) https://www.argonautgold.com/English/news-and-events/news-releases/news-releases-details/2021/Argonaut-Gold-
Provides-Updated-Magino-Construction-Capital-Estimate-and-Announces-Leadership-Change/default.aspx
(2) https://s22.q4cdn.com/115151820/files/doc_presentations/2021/12/AR-WEBCAST_MaginoEACUpdate-12142021-
FINAL.pdf
(3) https://finance.yahoo.com/news/aurelius-minerals-announces-closing-1-020500164.html
(4) https://www.siliconinvestor.com/readmsg.aspx?msgid=33625364
(5) https://6ix.com/event/festivus-with-the-rest-of-us-gold-developers/
(6) https://www.palamina.com/news/2021/12/16/palamina-concludes-2021-drill-program-at-the-usicayos-gold-project-in-
peru
(7) https://qccopper.com/news/qc-copper-announces-phase-1-of-its-2022-drill-program-on-opemiska/
(8) https://www.westerncoppercorp.com/news-and-resources/news-release/western-copper-and-gold-updates-schedule-
of-environmental-and-socio-economic-effects-statement-submission-process-for-casino/
(9) https://www.c3metals.com/c3-metals-intersects-48m-1-24-copper-and-0-43-g-t-gold-2/
(10) https://www.kitco.com/news/2021-12-17/UPDATE-1-Peru-to-insist-on-tax-reform-with-new-bills-after-legislative-
thumbs-down-says-minister.html
(11) https://vanguardia.com.mx/noticias/acusan-a-la-semarnat-por-consulta-amanada-y-favorecer-a-minera-BH1339377
(12) https://www.jornada.com.mx/notas/2021/12/14/estados/oaxaca-firme-rechazo-a-minera-canadiense/
(13) https://cumtn.com/investors/press-releases/2021/copper-mountain-mining-reports-no-material-impact-3698/
(14) https://cumtn.com/investors/press-releases/2021/copper-mountain-mining-announces-updated-economics-3859/
Stocks To Follow Closed Positions 2020
Closed in 2020 closed close price
TMAC Resources TMR.to Jan'20 C$3.41 20-Dec-19 C$3.61 5.9% TLS flip play, sold new year
Regulus Res REG.v Jan'20 C$1.10 20-Dec-19 C$1.30 18.2% TLS flip play, profit taken
Bonterra Res BTR.v Jan'20 C$1.90 9-Dec-19 C$1.66 -12.6% TLS flip play, loss taken
McEwen Mining MUX Jan'20 U$1.12 2-Dec-19 U$1.18 5.4% TLS flip play, profit taken
Core Gold CGLD.v Jan'20 C$0.255 7-Apr-19 C$0.305 19.6% arb trade, profit taken
HudBay Min HBM Jan'20 U$3.56 9-Dec-19 U$3.36 -5.6% TLS flip play, loss taken
Midas Gold MAX.to Feb'20 C$0.71 5-Jan-20 C$0.57 -19.7% sm & silly trade
Warrior Gold WAR.v Feb'20 C$0.08 3-Aug-18 C$0.05 -31.3% clean out non-perf sm stocks
Contact Gold C.v Feb'20 C$0.40 19-Aug-18 C$0.18 -55.0% clean out non-perf sm stocks
Sandstorm Gold SAND Feb'20 U$3.73 17-Apr-16 U$7.21 93.3% Sold during port rebalance
NexGen Energy NXE Feb'20 U$1.20 2-Dec-19 U$1.06 -11.7% TLS flip play, loss taken
MAG Silver MAG Apr'20 U$8.95 1-Mar-20 U$10.07 12.5% Sold to cut silver exposure
Alexco Res AXU Apr'20 U$1.69 7-Sep-17 U$1.69 0.0% sold to close Ag exp. in FY20
Bonterra Res BTR.v Jun'20 C$1.62 2-Feb-20 C$1.10 -32.1% under-performer cash moved
Regulus Res REG.v Jun'20 C$0.64 6-Apr-15 C$0.79 23.4% moved $ TMQ/MIN & Au stocks
Great Panther GPR.to Aug'20 C$0.60 21-Jun-20 C$1.10 83.3% Profit taken, good trade
Jaguar Mining JAG.v Aug'20 C$0.42 21-Jun-20 C$0.65 54.8% Profit taken, good trade
Sandstorm Gold SAND Aug'20 U$7.76 10-May-20 U$9.37 20.7% Profit taken, good trade
Integra Resources ITR.v Aug'20 C$2.23 13-Aug-18 C$5.40 142.2% Profit taken, good trade
Wesdome Gold WDO.to Aug'20 C$2.37 14-Oct-17 C$14.82 525.3% last 1/2 of big win closed
INV Metals INV.to Sep'20 C$0.40 17-May-20 C$0.45 12.5% Cut all Ecuador exposure
Cartier Resources ECR.v Nov'20 C$0.155 3-Aug-18 C$0.25 67.7% Exact close price TBA
Tinka Res TK.v Dec'20 C$0.195 19-Apr-16 C$0.195 0.0% Closed on a round trip fail
2015 to 2019 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
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Stocks To Follow Closed Positions 2019
Closed in 2019 closed close price
Atico Mining ATY.v jan'19 C$0.55 24-Jul-16 C$0.32 41.8% patience ran out, made room
Candente Copper DNT.to jan'19 C$0.075 3-Ago-18 C$0.05 -33.3% tiny trade, made room for new
B2Gold BTO.to feb'19 C$2.11 12-Set-14 C$4.05 91.9% Took 1/2 profits, reduce size
Western Copper WRN.to mar'19 C$0.80 20-Ene-19 C$0.81 1.3% Spec trade that didn't work
B2Gold BTO.to mar'19 C$2.11 12-Set-14 C$4.15 96.7% Took rest of profit.
GT Gold GTT.v mar'19 C$1.17 10-Oct-18 C$0.90 -23.1% Took loss. Story changed
NovaGold NG apr'19 U$3.84 13-Ene-19 U$4.15 -8.1% Short that didn't work, sm loss
Zinc One Z.v jun'19 C$0.47 14-Set-17 C$0.025 -94.7% clearing out dead trade
Amarillo Gold AGC.v jun'19 C$0.24 22-Ago-18 C$0.20 -16.7% clearing out dead trade
New Gold NGD aug'19 U$1.44 31-Jul-19 U$1.23 14.6% ST short win thru Q2 earnings
IMPACT Silver IPT.v aug'19 C$0.39 21-Jul-19 C$0.46 18.0% took a quick profit
Fiore Gold F.v aug'19 C$0.34 26-May-19 C$0.56 64.7% Took profit, 2q19 avg
Chakana Copper PERU.v oct'19 C$0.84 22-Mar-18 C$0.16 -81.0% Exploreco trade fail. Want space
Wesdome Gold WDO.to oct'19 C$2.37 14-Oct-17 C$7.57 219.4% Sold half, profit taking
Superior Gold SGI.v oct'19 C$1.46 8-Abr-18 C$0.47 -67.8% Failed sm spec on Au. Moved on
Amerigo Res ARG.to nov'19 C$0.91 23-Set-18 C$0.50 -45.1% worst trade of year, hefty loss
Guyana Goldfields GUY.to dec'19 C$0.94 14-Abr-19 C$0.56 -40.4% taking the loss, financials weak
Tethyan Res TETH.v dec'19 C$0.30 8-Set-19 C$0.16 -46.7% tiny trade, word of probs in co
Stocks To Follow Closed Positions 2018
Closed in 2018 closed close price
Amarillo Gold AGC.v jan'18 C$0.38 24-Mar-17 C$0.31 -18.4% Cut away losing trade
Riverside Res RRI.v jan'18 C$0.39 27-Jun-16 C$0.31 -20.5% Cut away losing trade
Eros Res ERC.v jan'18 C$0.175 1-Mar-17 C$0.16 -8.6% CEO sudden exit, not good
Excellon Res EXN.to jan'18 C$1.54 9-Oct-16 C$1.66 7.8% 4q17 poor, one too many bad qtrs
Wesdome Gold WDO.to jan'18 C$1.68 15-Dec-17 C$2.06 22.6% Near-term trade block, took profit
Sabina G&S SBB.to apr'18 C$2.06 17-Dec-17 C$1.77 -14.1% Near-term trade, bad timing, small
B2Gold BTO.to May'18 C$2.11 12-Sep-14 C$3.67 73.9% sold 25% to reduce exposure
Lara Expl. LRA.v May'18 C$0.65 11-Feb-18 C$0.58 -13.8% Spec on Brazil didn't work
Solitario XPL June'18 U$0.72 19-Mar-17 U$0.41 -43.1% Failed trade, may return in 4q18
SolGold plc SOLG.to July'18 C$0.475 19-Nov-17 C$0.415 -12.6% cut, trade didn't perform
Pan American PAAS July'18 U$17.90 1-Jun-18 U$16.30 8.9% modest win on short position
NGEx Res NGQ.to Sep'18 C$1.01 22-Oct-17 C$1.00 -1.0% Closed to reduce Argentina exp
Sandstorm Gold SAND Oct'18 U$3.73 17-Apr-16 U$4.13 10.7% partial sale to raise cash for GTT
Aldebaran Res ALDE.v Nov'18 n/a n/a n/a n/a liquidate spin out of REG
Stocks To Follow Closed Positions 2017
Closed in 2017 closed close price
Continental Gold CNL.to Jan'17 C$2.68 22-May-16 C$4.17 55.6% trade closed, profit taken
Focus Ventures FCV.v Jan'17 C$0.23 1-Jul-12 C$0.05 -78.3% Give up, a disaster trade
Wesdome Gold WDO.to Feb'17 C$1.72 28-Aug-16 C$3.00 74.4% Target hit, sold, good trade
Belo Sun BSX.to Mar'17 C$0.90 30-Jan-17 C$0.90 0.0% failed near-term flip trade
Lara Expl. LRA.v Mar'17 C$1.15 8-Apr-12 C$1.05 -8.7% cut to make room for new trade
Rye Patch Gold RPM.v Apr'17 C$0.31 2-Sep-16 C$0.32 3.2% cut for doubts & new stock
Cordoba Min. CDB.v Jun'17 C$0.75 15-Sep-16 C$0.63 -16.0% closed
Constantine Metal CEM.v Aug'17 C$0.135 9-Apr-17 C$0.28 107.4% spec trade closed, good win
Red Eagle Min. R.to Sep'17 C$0.67 13-Dec-16 C$0.27 -59.7% IKN's biggest failure in years
Starcore Intl SAM.to Sep'17 C$0.61 10-Jan-15 C$0.31 -49.2% Patience ran out
B2Gold BTO.to Dec'17 C$2.11 12-Sep-14 C$3.39 60.7% sold small portion for liquidity
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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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