6 The IKN Weekly, issue 659 — Jan 10, 2022
The IKN Weekly
Week 658 January 9th 2022
Contents
This Week: In Today’s edition, Inflation on deck and gold in The Doldrums.
Fundamental Analysis: Why McEwen Mining (MUX).
Stocks to Follow: Trilogy Metals (TMQ), Amerigo (ARG.to), Great Bear (GBR.v), Discovery
Silver (DSV.v), Minera IRL (MIRL.cse), Mene Inc (MENE.v), Minera Alamos (MAI.v).
Copper Basket: Overview, Hot Chili (HCH.AX) (HCH.v), Meridian Mining (MNO.v).
Producer Basket: Overview, five stocks compared.
TinyCaps Basket: Overview, a quiet first week.
Regional Politics: Deferred.
Market Watching: Deferred.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
In Today’s Edition
Today’s main event is a long note on McEwen Mining (MUX). We go into detail to
explain why it’s a buy at today and set to become the turnaround story of 2022. MUX is
a stock that has long-frustrated your author as, in previous years it has been difficult to
identify at the right time and price. That changes today, as finally we have the right
combination of cheap entry point and solid fundamental reasons to be long the stock.
Aside from the long anal ysis on McEwen Mining, the year begins and we see the first
week recorded in our new tracking baskets. The Copper Basket has its usual level of
content but aside those, your author decided to “get MUX right” rather than provide the
normal range of digested subjects. Today we are capitalists, so buy low and sell high.
The market week was dominated by the Fed minutes and financial macro happenings,
rather than mining news. Personally speaking not a bad thing, but it did underscore the
points raised in IKN656 a couple of weeks ago about the relative unpopularity of gold
as an investment vehicle. That’s today’s intro.
Inflation on deck and gold in The Doldrums
At some point in mid to late 2021, the world stopped looking at the US BLS unemployment
report as prime macro signal and began to worry more about the US BLS consumer price index
(CPI) report, as well as its producer price index (PPI) cousin and this coming week, both are on
deck. CPI is due out pre-open Wednesday and according to reliable sources (1) consensus this
weekend is +0.5% with core CPI the same. Then PPI due out pre-open Thursday is marked at
+0.4% with core at +0.5%.
Normal markets would suppose our current inflation hike would play to the hand of gold bullion,
traditionally considered as one of the safest hedges against inflation out there. However that
doesn’t seem to be the case at the moment and that seems to be due to the reasons laid out in
the longer intro found in IKN656 dated December 23rd. That edition may have passed you by
1
and most people would been more interested getting the final details right for their Christmas
celebrations, but this desk decided to rant about the way the modern investor has more than
just the binary choice of gold or USD as havens. Central Banks around the world are raising
rates in order to pre-empt the Fed, all those offer yield and next to the alternatives, boring old
counterpartyless (dat a word?) gold doesn’t
appeal much in today’s market. That was
underscored last week, when the Fed
minutes pointed to an even quicker start to
the US tightening period and bonds reacted
accordingly. Stock markets complained
about how Jerome Powell and his friends
were stealing the punchbowl, mining
equities were hit hard (GDX down 4.1%,
GDXJ down 5.7%) and as for gold (GC00
cash contract, right) whatever momentum
it built into the new year was slapped
down. We’re back ton revolving around
U$1,800/oz and yes, we’ve been here
before. Demand for gold as a safe haven is
not appearing the way it used to and while we sound money advocates would like it not to be
so, we need to face facts and admit price speculation in bullion has to be accompanied by real
buying if it’s going to stick. As GLD inventories continue to show…
GLD gold holdings, turn of 2021/2022 (metric tonnes)
1000
998
996
994
992
990
988
986
984
982
980
978
976
974
972
970
2
12/11/32 12/11/52 12/11/72 12/11/92 12/21/1 12/21/3 12/21/5 12/21/7 12/21/9 12/21/11 12/21/31 12/21/51 12/21/71 12/21/91 12/21/12 12/21/32 12/21/52 12/21/72 12/21/92 12/21/13 22/1/2 22/1/4 22/1/6
mt
source: SPDR GLD data
…still can’t catch a bid. That applies to this desk as much as anywhere else and, while
considering this long-term ratio chart so often used in recent intro pieces…
….I’m also faced with an uncomfortable truth: The old floor level of 6X, which held quite
literally for years, is now being summarily ignored by a financial market that may not have
anything against gold as an investment vehicle, but at the same time displays precious little
enthusiasm (if you’d pardon the pun). Gold today isn’t suffering from antipathy, it’s enemy is
apathy; it’s the subject for old fogeys like you and I, far removed from the cut and thrust of
equities or the speculative excitement of crypto. Even the forex currency markets hold far more
interest to the average investor than the thought of tucking a few ounces of the monetary
metal into their portfolio. As such, this desk is faced with the thought this weekend that the
sub-6-0X levels as seen in the above tracking chart aren’t just a temporary blip, but here to
stay and that would not bode well at all for the long-term future of metals trading or even
mining companies.
And on that happy note, the rest of today’s edition is dedicated to convincing you to buy a small
PM miner .
Fundamental Analysis of Mining Stocks
Why McEwen Mining (MUX)
Preamble
With Twelfth Night firmly behind us, this desk has officially run out of excuses not to do some
real work. Between last weekend’s edition and this, I’ve also made good on the intention of
taking a starter position in McEwen Mining (MUX) and what’s more, also added the cheapest
prices of the week showed up. Which means it’s time to explain why this desk firmly believes
McEwen Mining (MUX) to be the turnaround story of 2022 and, at its current price of U$0.90 or
thereabouts, offers excellent risk/reward value for both near and medium-term long positions.
Previous coverage on MUX
The last time these pages looked at MUX seriously was back in May last year in a series of
analyses that began in IKN624 dated May 9th. That edition carried a brief heads-up note on the
company just before it filed its 1q21 financials.
Then in IKN626 dated May 23rd we published “An analysis of McEwen Mining (MUX) (part one
of two)” and after a deferral (for other reasons) issue IKN628 dated June 6th carried “An
analysis of McEwen Mining (MUX) (part two of two)”. Please feel free to send a mail and get
copies of those editions from me if you’d like a (re)send, but to cut a long story short I’m going
to excerpt a section at the end of the final IKN628 note. At the time MUX was a U$1.44 stock
having recently rallied off its 1q21 results and we’d just spent two editions trying to find a way
of making a fundamental justification for that price (or higher if possible to make the stock a
buy). The key to MUX’s valuation at in the series was its Fox Complex in Canada, as to that
point its mediocre production and financial results seemed a long way from the ambitious plans
at MUX to turn the combination asset (Black Fox, Froome, Grey Fox, Stock, Lexam) into a long-
life, 150,000oz per year producer. In order to frame the argument, the following script and
visual aid appeared:
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
BELOW FROM IKN628
Talk of a 150,000 oz per year, long-life mine complex is a long distance from this quarter’s production of
5,200oz, but we also know the prize would be a big one of MUX can turn itself into a medium-sized
operator in Timmins. The issue this weekend is the implicit value of Fox Complex to MUX, as if we now
consider the other parts of the company and its 459.2m share count, this table shows we need to assign a
$300m NAV to Fox in order to justify the current share price.
Aggregating segment estimates at MUX
Los Azules MSC Gold Bar Mexico Fox net cash total
U$ NAV 100 110 90 30 300 15 645
per share 0.22 0.24 0.20 0.07 0.65 0.03 1.40
source: MUX data, IKN calcs and ests
To conclude, the 12 month price chart for MUX shows how the company is off its U$1.00 (and below)
3
lows, rallying recently above U$1.50 before closing this weekend at $1.44. And once again, I am not a
buyer in MUX because the value window in the stock closes so rapidly.
ABOVE FROM IKN628
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
IKN659 and 2022 back. We’ll return to a new version of that small asset valuation table at the
bottom of today’s piece, here you get a reminder that the above table from IKN628 was an
attempt to reach, or perhaps justify, the U$1.44 share price commanded at that time by MUX
but, even after assigning a U$300m asset valuation to the mis-firing Fox Complex, it didn’t add
up. Therefore, back in May/June and after almost a month of consideration on the stock, your
author walked away from MUX without buying. Now for a 12-month price chart (plus one week,
we run from 1/1/21):
The chart highlights has two red boxes: 1) the silliness around the “silver squeeze” that saw
MUX and several other usual suspects (eg First Majestic) bent out of shape for a few days by
dumb money (WallStBets/Reddit/Twitter). Then box 2) shows the period in which we took our
hard look at MUX. As seen, the call came under pressure for a couple of weeks but, once the
stock had seen its blow-off in mid-June, MUX went downhill for the rest of 2021 and without
blow-by-blow details, passing on this stock in mid-2021 was the right call. However, as per last
week my decision has changed, I’m now long MUX with two purchases already made (cost
average U$0.90, give or take a tenth), plus of course the more important matte than my
personal back pocket. The IKN Weekly believes MUX is set to become the turnaround story for
2022, so the job for the rest of today’s edition explains the change of heart but before diving in,
I’d like to round off our previous coverage as neatly as possible. Last year’s double-header MUX
anal ysis split its task into two parts; IKN626 looked at the past history of the company and the
false steps that had prevented it from fulfilling “Chief Owner” Rob McEwen’s ambition of making
MUX an S&P500 component company. Then in IKN628, we considered the present and
potential future valuation before eventually deciding not to buy. In that second note, the top
paragraph stated (and we quote), “…that to fully grasp MUX in 2021 we need to consider the
company not as a single corporate entity, but the sum of several different operations and
projects.” That’s still true in 2022, MUX is a company with several moving parts and as some
are quite separate from others, we consider it in the same sum-of-parts way today.
Recent results and expectations for 4q21 at MUX
Intro done, let’s get down to business
MUX: Assets overview
and check the financials, starting with
1200
the 30,000 foot view of the company 1100
via its long-term balance sheet charts 1000
900
but don’t worry, the looong term views 800
in these first few visuals are is only to 700
600
provide some general context, we’ll
500
soon switch gears and focus on the 400
300
important recent events. Here (chart
200
4 100
0
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 61q4 71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3
$m
current
total fixed
source: company filings
right) are assets, which we can split into fixed assets…
MUX: Fixed Assets
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
5
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 61q4 71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3
$m
other fixed
inv. in MSC
mine prop int
source: company filings
…then this sub-sector breakdown shows the current assets only:
MUX: Current Assets
120
110
100
90
80
70
60
50
40
30
20
10
0
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 61q4 71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3
$m other current
inventories
Receivables etc
cash
source: company filings
That chart above is the real reason you
get these looong term views, as MUX has MUX: Liabilities Breakdown per qtr
300
rarely had its current level of cash 280
260
treasury. Moving to liabilities, which have 240
220
evolved as seen right and, while that
200
looks reasonable and fairly benign 180
160
compared to MUX ten years ago, there is 140
120 one issue on the horizon. That’s the 100
U$50m loan from Sprott which begins to 80
60
see payback at the rate of U$2m/month 40
20
as from August this year then, after 12 0
months MUX has to pay the U$26m
balance in a final lump sum payment.
That’s a risk factor to consider today.
Enough long-term past history, here below is a closer look at the recent results charts that
11q4 21q1 21q2 21q3 21q4 31q1 31q2 31q3 31q4 41q1 41q2 41q3 41q4 51q1 51q2 51q3 51q4 61q1 61q2 61q3 61q4 71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3
source: company filings
srallod
fo
snoillim
A/Cs payable
LT liabs
other current liab
MUX: Working Capital per qtr
50
45
40
35
30
25
20
15
10
5
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3
MUX: Cash treasury position $m
80
70
60
50
40
30
20
10
0
source company filings/IKN ests
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3
$m
source: company filings
matter most; We’ll consider operations further down on a mine-by-mine basis, as overall
corporate P+L numbers give something a false reading of the reality at MUX, but the above
charts bear witness that both cash and working cap are in good shape nowadays.
Due ot the nature of the beast, consolidated financials aren’t very useful in order to best
understand MUX, but we still need to get a handle on how recent quarters have being doing
compared to its rather chequered 2018 to
2020 period. To that end, here are some
recent consolidated production numbers that
are less for comment and critique, more for
context and reference to what comes later on
in today’s note. This chart (right) shows
consolidated production in Gold Equivalent
Ounces (GEOs) and by way of a quick aside,
as MUX adjusts its gold/silver ratio on a
quarterly basis so using GEO is a reasonable
way of keeping track (unlike other
companies). The Covid-19 production dip in
2020 is crystal clear in this chart.
Next we have a quarterly breakdown chart, cutting and slicing the numbers between the 100%
MUX mines and its 49% of Minera Santa Cruz (MSC, a.k.a San José):
MUX: Quarterly GEO production
50
45
40
35
30
25
20
15
10
5
0
6
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4
source: company filings
OEG
zoK
San José 49%
Own GEOs
Assuming IKN Weekly best guesses for 4q21, we again see how 2020 was a year to forget but
once 1q21 was done, recent quarters have brought production back to (almost) where it was.
For a final overview chart before getting busy on the details at MUX, we cover shares out chart
and, after the flurry of equity raisings that happened after arrival of new-ish CFO Anna Ladd-
Kruger and culminated in February 2021 with the raising to cover the Froome development
capex, MUX has stayed at 459.177m shares out:
MUX: Shares Out
500
450
400
350
300
250
200
150
100
50
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4
source: company filings/IKN ests
serahs
fo
snoillim
GEO 000s MUX: GEO production 2018 to 2021(est)
200 El Gallo
Gold Bar
180
Fox
160
MSC (49%)
140
120
100
80
60
40
20
0
2018 2019 2020 2021est
source: MUX filings, IKN ests for 4q21
The briefest of consolidated number overviews is now done, from here on we start splitting
MUX into its component parts. Also, and even though it gets a nod and some asset value in our
discussion and conclusion at the very end, we largely ignore the currently fallow El Gallo asset
in Mexico. As El Gallo is currently back at “project” status, under care and maintenance and
delivers a low amount of residual gold production from its leach pads, we’re going to give it a
pass and focus on the real working assets at MUX so with El Gallo (or “Mexico Segment”) duly
covered, we’re left with four moving parts:
The MUX 49% holding in Minera Santa Cruz (San José) in Argentina
Its Gold Bar gold operation in The USA
Its Fox Complex gold operation in Canada
McEwen Copper and its Los Azules copper project in Argentina
So to business and, for what it’s worth, the above are presented in ascending order of personal
interest. And to give away secrets early, please be clear that the house opinion on several
aspects of MUX since last year’s coverage has changed for the better and, along with the new
lower entry price, the result is the trade opportunity MUX offers today.
Argentina: Minera Santa Cruz (San José)
First up we look at the company’s 49% ownership of Minera Santa Cruz (MSC), the JV with
Hochschild (HOC.L) in which the Peruvian company is 51% owner and operator. That small
difference in ownership makes a big difference, it allows HOC to book MSC in a different way to
that of its junior partner and as a result, the HOC attitude toward MSC hasn’t aligned well with
that of MUX over the years. In fact, go back to 2008 and 2009 and the two partners were at
constant loggerheads, with HOC trying to buy out the McEwen entity (then called Minera
Andes) and Rob McEwen famously calling HOC “the JV partner from hell”. In recent years the
relationship is calmer, but that doesn’t mean MUX is totally happy with the situation and in both
public statements and recent RegFs, MUX has made clear it would entertain a sale of its 49%
holding in the JV if the right offer at the right price came along.
The way in to this subject is to consider the way Hochschild gets to add asset value from the
exploration costs ploughed into MSC, then compare it to the way MSC gets booked by MUX. For
this we could go way back, but to keep things fresh we’ll use the period between early 2018
and early 2021, as noted in the annual reports 2017 to 2020. At the start of this period, i.e. its
2017 annual report, Hochschild booked its San José asset value at U$229.54m. Then four years
later in the 2021 annual report published February 2021, the HGOC booked asset value for MSC
was U$210.66m. That’s a drop of less than U$19m for HOC and makes sense, because even
while the mine produced around 17m oz silver and 480,000 oz gold (and even taking Covid-19
into account) via exploration and definition drilling, MSC had proved up previous inferred
resources or even brownfield mineralization into M+I resources. In total during the period, MSC
replaced around 10m oz silver and 400,000 oz gold and on that, HOC as 51% owner and
operator gets to benefit from the asset value of that work, offsetting depreciation and
amortization seen in any working mine. However MUX doesn’t get that pleasure, it has an initial
investment in MSC on its book and that’s in cash, rather than any fixed asset amount. Its an
investment that depreciates and amortizes over the quarters and years and while in theory, it
should benefit from either net profits from the mine or dividends paid to its shareholders that’s
where things get difficult. It makes zero sense for operator HOC to return large taxable net
profits on its Argentine subsidiary and as a result, HOC uses transfer pricing, which in effect
sees MSC produce good (or even excellent) cash flows, but more often than not assures the
bottom line is at breakeven or a slight net loss for its subsidiary. That means that while still
49% owner, all MUX gets for its pleasure is a deteriorating fixed asset investment, plus any
cash dividend paid. The result stacks up like this:
MUX 49% MSC: Dividend paid vs asset reduction, per qtr
8
7
6
5
4
3
2
1
0
-1
7 -2
-3
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4
U$m
Asset reduction
Dividend paid
source: MUX filings
In the last four years, the asset value of MSC
for MUX has dropped by just under U$60m
MUX: Income from investment in MSC, per annum
(assuming my $5m guesstimate for 4q21 is
correct). However, dividends paid come to just
under U$29.5m and that’s a raw deal for the
minority partner, in effect MSC costs the
company money on its balance sheet as the
cash doesn’t cover the depreciation. You may
also note that while in a normal year, the
dividends thrown off to MSC come to around
U$10m (and HOC gets those as well), the
2020 Covid-19 affected year meant thin
pickings for MUX and virtually no cash divi
payments from its 49%, a cash starvation
moment that couldn’t have happened at a worse time for the main corporate entity.
However, this assets vs dividends viewpoint does explain why MUX would be interested in
selling its participation in MSC. Currently carried at an asset value of around U$90m (IKN 4q21
estimate), if we assume the working mine is good for U$10m/year in dividend payments that
would be an attractive holding for another third party, or HOC itself would surely be interested
in making its ownership whole. MSC also owns a very large land package, including and
prospective exploration zones which neighbour on and almost wrap around the Newmont (NEM)
Cerro Blanco mine, some 20km to the South. Those areas have already shown interesting drill
results which suggest continuation of the Cerro Blanco mineralization into the MSC concessions.
Even though operator HOC has been slow to move forward on Greenfield exploration drilling,
reports in 2021 are of a more aggressive drill campaign close to the Cerro Blanco mine limits.
Long story short, while MUX carries its 49% of MSC at U$90m these days it’s clearly worth a lot
more and, depending on the deal, the previous house estimate in IKN628 of a U$110m NAV
looks too low (maybe even far too low). MUX at MSC is better valued on Hochschild’s opinion of
the asset and as they expect the mine to have a long and fruitful life, anyone buying the MUX
49% would have to pay up.
Summing up MUX’s 49% of MSC, the way we consider the asset in today’sd report is different
from the way it’s normally presented to the world, by MUX or others. MUX may not like the fact
it’s a minority JV partner, but it does enjoy talking up the GEO and attributable GEO production
it gets from San José as it typically provides half the total gold equivalent production at the
company. Without thw 20k GEO (or so), the MUX quarterly production figures would look rather
thin for this size of company (and its long-term ambitions), so the image of being a 160k GEO
producer sits well with the company no matter whether its participation in the JV is a net loser
or not. But The IKN Weekly doesn’t care about appearances. Instead, we prefer to separate out
MUX’s 49% of MSC from its other assets and consider it as a standalone asset. When we do, it’s
clear that rough 2020 aside, its main benefit is that of being a cash cow that sends U$10m or
so to MUX headquarters on an annual basis. That’s because as an asset on its balance sheet,
MSC doers no favours at all to NMUX on a quarter-by-quarter basis. However all is not lost and
majority partner Hochschild isn’t ploughing millions into resource improvement and exploration
8
538.02
648.0 482.5- 414.2 159.21
440.0-
568.11- 457.8- 715.1-
U$m
22
20
18
16
14
12
10 8
6
4
2
0
-2
-4
-6
-8
-10 source: company filings -12
2012 2013 2014 2015 2016 2017 2018 2019 2020
MSC (San José): AISC, per qtr
4301 2951 6741 8351 5541 8231 0051 6641
U$/oz MSC (San José): Gold price less AISC, per qtr
2000
1800
1600
1400
1200
1000 800 600
400
200
0
4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: MUX filings
354
1-
752 783 334 534 033 723
U$/oz
500
450
400
350
300
250 200 150
100
50
0
-50 4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: MUX filings
of its large land package just for fun. MSC is a valuable asset, San José is a valuable mine and
as (in theory at least) third parties are sniffing around considering a purchase from MUX, the
way to best understand this asset is on its potential sale value, suitably discounted. If the days
comes when MUX sells its participation in MSC, we’re sure to get an impressive ticket price
that’s way above the U$90m carry on its books today.
The Gold Bar gold operation in The USA
The situation at MSC is unusual and it takes an unorthodox angle on the anal ysis to get a
reasonable handle on its value for MUX. Fortunately, when we turn to Gold Bar things get more
straightforward as here is a 100% owned producing asset. The job is to gauge on how things
are going and to catch up on coverage, we begin by updating recent production results and as
this chart (right) shows, Gold Bar has seen a distinct improvement since IKN626 and IKN628:
Gold Bar: Prod and Sales in AuEq, per qtr
9
7.0
7.8
2.11
0.01
0.9
2.6 8.6 7.5 3.7
4.41
1.21 0.21
16
14
12
10
8
6
4
2
0
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4
AuEq Koz
Prod
Sold
source: MUX filings
The production/sales NR takes in all production quarters at the mine, including the 1q19 pre-
commercial period. Supposed to run at a rate of 50,000oz per year, Gold Bar looked on track
until 3q19 before problems set in and come the moment of the Covid-19 lockdown, it was
already showing clear signs of problems afoot. Why so? Two charts:
g/t Gold Bar: Processed grade (g/t) Gold Bar: Processed tonnes, per qtr
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: MUX filings
The processed grade chart says “not guilty” as, that small dip in Q3 aside, it has been largely
predictable. The issue is tonnages moved and that’s more serious, pointing to deficiencies in the
mining model and geological understanding of the deposit. As they came to light, the operation
was also hit by the Covid-19 lockdown stoppage and just after, MUX bit the bullet and admitted
it had got things wrong. The 2q20 production NR of July that year (2) included this sobering
script:
Mining was halted on April 1st due to concerns about the COVID-19 pandemic, and
production ramp up started on May 4th. Throughout May and June the mine only
operated on day shift as work progressed for the updated resource model, new mine
plan and addressing engineering design deficiencies. Full operations on day and night
shift are scheduled to start in August.
Pit optimizations are ongoing and detailed mine planning is underway.
Do mining companies ever say, “Okay folks, we really screwed up” out loud? That is as close as
it gets and the production dip at Gold Bar continued as seen above through 1q21, but the last
943 474
768
227
574
801 922
253 204
727 836
KMT
1000
800
600
400
200
0
1q19 2q19 3q19 4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: company filings
two quarters have seen the revised plan bear fruits and the mine getting back on track. We’re
also expecting a reasonable result from the recently-closed 4q21 and that production NR should
come at any moment. It’s at moments like these that the junior mining anal yst has to stick
their neck out and say things such as “I think Gold Bar will produce 12k ounces this quarter and
beat its top-end of 45k oz Au for the year”, only to see a production NR appear a few days later
with a lower number and a miss. It’s part of the territory but in this case, I’m less concerned on
whether Gold Bar returns my best-guess 12k oz Au or something less (there’s the possibility
things are lower, Gold Bar has reportedly changed its contractors and had a small hiatus during
the changeover).
The real conclusion to draw from the last six U$m Gold Bar: Gross profit
quarters at Gold Bar is that a) the mine was 2.95
4
going wrong b) the company hit the reset 2 0.152 0.79
button and c) things are now back on track. 0
That shows in throughput and production -2
figures above, it also shows in the financial -4 -2.334 -2.834 -2.405
-6
parameters, Gross profit (chart right)
-8 -6.577
includes mine depreciation and is the best
-10
way of showing the money drain. MUX took -12
the necessary hit in 4q20 as part of the reset -14 -12.105
process and 1q21 was still part of the 4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: company filings
turnaround, but the last two quarters have
seen positive results and we’d expect that to
continue in the upcoming 4q21 numbers. The next charts below show two ways of considering
All-In Sustaining Cost (AISC) at the mine and while U$1,600/oz still points to a high cash cost
mine, it does leave room against the average realized gold price at MUX for modestly positive
free cash flow.
Gold Bar: AISC, per qtr
2462
2177 1934 1769 1619 1618
1452
In so many words, Gold Bar has come a long way since we last looked at the company and we
give the team credit for delivering on their word and getting it back on an even keel. As for the
future, MUX has been spending on exploration at all its assets and Gold Bar has seen its share
of the aggressive spend budget. Your author is expecting fruits of that to show in the 2022
outlook that should come as part of the 4q21 production results but at this point today, it’s still
an easy call to say that Gold Bar is back on track and no longer a financial liability to the overall
company.
The Fox Complex gold operation in Canada
We move to our next focus, that of the Fox Complex in and around the Red Lake region of
Canada. In this case, the processed heads grade of mineralization clearly plays a part in the
chronic underperformance of the mine since MUX took over in 3q17. Your author recalls how, at
that time, Black Fox was sold to MUX shareholders as a 60,000/oz year asset that would be
able to expand to 150,000/oz year over time. Then came the first wrinkle, as when 2018
arrived it was guided at 50,000/oz per year.
10
6273
U$/oz Gold Bar: Gold price less AISC, per qtr
4000 156 211 175
3500 35
3000
2500 -171 2000
-586
1500 -729
1000
500
0
4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: MUX filings
8381-
U$/oz
500
250
0
-250 -500
-750
-1000
-1250
-1500
-1750
source: MUX filings
-2000
4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
Fox Complex: Processed tonnes, per qtr
100
90
80
70
60
50
40
30
20
10
0
11
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4 tse22q1
KMT
source: company filings, IKN ests
If the negatives had stopped there it wouldn’t have been so bad, but we now know they didn’t.
As head grades deteriorated and mining conditions at the ageing Black Fox asset prevented the
necessary throughput, plans went South quickly and the results are in the production/sales
chart, below. Things were already in a bad shape before the Covid-19 disruptions arrived, those
disruptions came at the worst time possible for MUX and entering 2021, the low production
scenario was clearly unsustainable.
Fox Complex: Prod and Sales in AuEq, per qtr
4.21
5.51
8.9
2.31
2.7
7.21
0.8 7.9 6.8
6.2
6.5 0.8 3.5 9.6 4.8 0.01 0.11
18
16
14
12
10
8
6 4
2
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4 tse22q1
Fox Complex: Processed grade (g/t)
8
7
6
5
4
3
2
1
0
AuEq Koz
Prod
Sold
source: MUX filings
MUX responded by taking the grabbing the bull by the horns and raising capital, the
aforementioned February 5th NRbeing the last in a line of several capital raises made by MUX.
At that time, those unexpected equity raises cast doubt over the company and IKN (Blog and
Weekly) was far from the only place making noise about the unfolding mess at MUX. Here’s
how the NR read at the time (3):
TORONTO, Feb. 05, 2021 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (the
“Company” or “McEwen”) (NYSE and TSX: MUX), announces an oversubscribed
registered direct offering with several existing and new institutional investors for the
sale of an aggregate of 30,000,000 shares of common stock at a purchase price of
$1.05 per share (the “Offering”).
“The timing of this offering was critical for two reasons: 1. It completes the funding
required to bring the Froome deposit into production later this year. Froome is our
production bridge to the future growth of the Fox Complex, where we see potential for
higher gold production, lower cost per ounce and a longer mine life; and 2. It will
strengthen our balance sheet and working capital position, which will help address our
going concern note and debt covenants,” commented Rob McEwen, Chairman and
Chief Owner.
Long story short, Rob McEwen went to market and used his name and leverage to raise
urgently required capital at a price slightly above this weekend’s price deck. The plan was to
transition operations away from the depleted Black Fox and to Froome, a higher-grading and
easier mining deposit close to the Black Fox infrastructure.
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4 tse22q1
g/t
source: MUX filings
Froome is on this area map of “Fox Complex” and clearly smaller than the main assets held by
MUX. Those begin with Grey Fox, the Stock Mine/Mill and over the long-term MUX should
eventually transition production to its large Lexam deposit, further West. MUX has been drilling
at Froome, Grey Fox and Stock this year and in all cases, drilling has yielded positive results. In
the case of immediate target Froome, they’ve firmed up the previously understood resource of
181,000oz gold indicated grading at 5.1 g/t and to the company’s credit, announced mining had
started before the planned 4q21, on September 19th.
Make no mistake, this is good news. We should see an immediate improvement in Fox Complex
production and costs now it is sourcing feed from Froome. The longer-term promises better still
as it starts to “fill the mill” with Grey Fox and perhaps even feed from Stock West, close to the
mill and with some interesting preliminary drill results in 2021, but today our focus is on what
Froome can do for MUX. In the above charts, we assume things do not start with all guns
blazing and in 4q21, Froome delivers an average head grade to mill of 4.0 g/t gold and
processing runs at 90,000tonnes, akin to the results achieved in 3q21 and the last full quarter
of Black Fox feed. However and even being cautious about mine dilution, once Froome is in
steady state 11,000 oz gold quarter is easily achievable at 4.2 g/t grade and current run rates.
From there, production growth would be all about tonnage throughput and, as Froome isn’t
expected to last for more than 2½ years, there’s every reason to suppose Fox Complex can
finally deliver the type of 15,000oz/qtr results it was supposed to give from the very start of
MUX’s ownership period. Also at this point, please note that your author is being deliberately
lowball, as 10,000oz for 4q21 and 11,000oz for 1q22 are well below theoretical numbers my
Excel model spits out. Being cautious about MUX after the way it has failed to deliver over
numerous years is the only prudent course of action but even so, our conservatively pitched
10k and 11k quarters would sit well against anything in 2020 or 2021. There is, however,
reasonable grounds to think today’s forecasts can be beaten (and beaten easily) by MUX at Fox
Complex in 2022.
For what this might mean financially, please consider these recent results from the mine
centred around All-In Sustaining Cost (AISC). Clearly, 2q20 was an unmitigated disaster and
even after that, Fox Complex is still a high quartile cost operation. The IKN Weekly isn’t trying
to sell you something MUX isn’t, ladies and gents, we don’t work like that. However and in the
same style as the smaller Gold Bar operational review above, AISC vs average realized gold
price shows there’s a profitable operation emerging from the wreckage of recent mistakes.
Black Fox: Gold price less AISC, per qtr
1644 1560 1339 1439 1423 934 1088
12
2333
U$/oz Black Fox: Gold price less AISC, per qtr
4000
553 742
3500 449 370
252 281 203
3000
2500
2000 1500
1000
500
0
4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: MUX filings
9951-
U$/oz
1000
750
500
250
0
-250 -500 -750
-1000
-1250
-1500
-1750 source: MUX filings
4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
Gross profit (and again, this includes DD&A) shows the absolute cash involved up to now has
been rather thin for a U$400m market capper, but MUX is back on an even keel at Fox and for
2021, that’s really all we could have asked. The company moved to implement a semi-
emergency plan by raising U$30m last February and pledging to bring the higher-grading and
more cost-efficient Froome deposit online. They’ve done just that, we’ll now get to see the
fruits of that labour in the upcoming 4q21 production report and 2022 guidance.
U$m Black Fox: Gross profit
6
4.072
4 2.784 2.658
2 0.24 0.707
0
-2 -0.926
-1.49
-4
-6
-6.168
-8
4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: company filings
However and before moving on to the final moving part in today’s examination of MUX, a
reminder as to who really profits from Fox Complex.
This chart shows the payments made by MUX to MUX: Black Fox royalty payments to Sandstorm
2.2
Sandstorm, owners of an 8% NSR on Black Fox (the 2
1.8
royalty also covers Froome, so no escape in 2022 1.6
1.4
folks). Those who remember Metanor’s stream with 1.2
1
SAND on Bachelor Lake will know this story, the
0.8
mine’s only winner in the last three years has been 0.6
0.4
its NSR holder. 0.2
0
Froome and its better economic parameters will
better absorb the SAND payments, but they only
add to the high cash cost nature of this mine and
that’s not going to change in the near-term. Longer-term, MUX still has its path to the type of
100k+oz/year production schedule it used to speak about, though these days the number used
tends to be 110,000 instead of 150,000. That’s for the longer-term, but our takeaway from
Froome complex in January 2022 is still positive compared to our last look six months ago. To
its great credit, the operations team at MUX has delivered the improvements promised this time
last year and without setting the world of Canadian mining on fire just yet Fox Complex is now
a better and profitable operation with a clearer pathway to further upgrades. We await news on
2022 guidance, as here at The IKN Weekly we’re pitching low and MUX may be able to surprise
to the upside on our 10k and 11k production quarter forecasts. It’s all about tonnage
throughput from here, let’s see what they think they can deliver.
McEwen Copper and its Los Azules copper project in Argentina
So far so good at MUX, since we last looked its operating segments have all improved to a
greater or lesser extent. However, we also need to admit that for a company with nearly 460m
shares out and a share price bouncing around U$1.00, its overall production profile in 2021 (as
well as 2022 in all likelihood) isn’t enough to support an elevated market cap. So be it, but after
recognizing the clear improvements at its operations we’ve now arrived at the main reason why
MUX has recently captured my attention because Los Azules and the upcoming McEwen Copper
spin-out is the reason MUX is an obvious buy at today’s levels. Developments in the last six
months around Los Azules are promising, double-pronged, they’re set to add value to MUX
shares this year and at long last, after many years of half-hearted sniffing at Los Azules
(perhaps because it dared to be “not gold”) Rob McEwen has put the right mindset towards his
large copper asset. But before diving in, please note that for clarity’s sake I’ve decided not to
abbreviate the new subsidiary’s name to “MUC” or similar, the deliberate choice in what follows
is to stick to the long-hand “McEwen Copper” when naming the entity to avoid confusion.
13
71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3
U$m
source: SAND filings
Our story starts with a few examples and excerpts of MUX releases, the first in July this year
and an NR (4) which started this way:
TORONTO, July 06, 2021 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE and
TSX: MUX) announces a non-brokered private placement financing of up to 8,000,000
common shares of its wholly-owned subsidiary McEwen Copper Inc. at a subscription
price of US$10.00 per common share, for gross proceeds of up to US$80 million (the
"Offering"). McEwen Copper currently has 17,500,000 common shares outstanding.
Then in August, the first part of the dedicated McEwen Copper closed as seen in this NR (5):
TORONTO, Aug. 23, 2021 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE and
TSX: MUX) announces that its subsidiary, McEwen Copper Inc., has closed the first
tranche of the Series B private placement offering announced on July 6th, 2021 (the
“Offering”), issuing 4,000,000 common shares at a price of $10.00 per share for gross
proceeds of $40,000,000.
Subscription for the remaining 4,000,000 common shares is available to qualified
accredited investors, subject to a $1 million minimum investment and certain other
conditions. The securities sold in the Offering are private and subject to transfer
restrictions until after such time as shares of McEwen Copper become listed on a
public exchange. The second tranche of the Offering is expected to close on or before
September 30th, 2021.
We then got more about on the financing and plans for the Los Azules/McEwen Copper spin-out
in the Conference Call for the 3q21 financials in early November and thanks to Seeking Alpha
(6), here are Ron McEwen’s prepared comments from that day:
“We felt that the fastest way to fund the advancement of Los Azules from its current
preliminary economic assessment stage and advanced it to a preliminary -- a pre-
feasibility stage was to do with private financing. We estimated that $60 million to $80
million, including contingencies, would be sufficient to deliver a pre-feasibility study. To
kick-start the financing, I personally provided a lead order of $40 million, and some
others have subsequently followed.”
Information presented, time to unpack: The first tranche saw Rob McEwen pay U$40m for 4m
shares of McEwen Copper, calved from the main MUX entity and at that time 100% owned by
MUX with 17.5m shares. The 4m newly-minted Rob McEwen shares now give him an 18.6%
share of McEwen Copper. On announcing the deal, MUX also stated that it expected to sell
another 4m shares to third party entities at the same price in September, with minimum
participation of U$1m per interested party. That deadline quietly passed, then during the 3q21
results and conference call we learned that the “financing remains open on terms previously
disclosed. The minimal order is $250,000.” We can now add to the timeline by considering the
latest news on Los Azules, the December 22nd dedicated NR entitled “McEwen Copper: Los
Azules Progress Report” (7) that informed us among other matters that “…the balance of the
financing is expected to close in January 2022.” In other words, as things stand today MUX
hasn’t managed to close on the other 4m shares priced at U$10 apiece, but despite the delay
the company is confident the placement is completed in good style this month. We’re going to
take their word on that.
That December 22nd NR also came after a three-day virtual workshop which outlined plans for
Los Azules in 2022. The main thrust of the raised cash is to fund the drilling and studies
required to turn the current project PEA into a PFS and for that, 53,000m of drilling is required
alongside the engineering, geological, geotech, metallurgy etc studies that go along with a
massive scale copper project. The NR gave plenty of photos and updates, including news that
the company was already advancing on its new access road that will allow easier to the mine
site, avoiding two high passes that were cutting access during the Andean winter months.
Alongside that, we got what was probably the most important information so, instead of
paraphrasing, you get copypaste wholesale:
The workshop started with a presentation from Whittle Consulting from Australia, who for the past
three months have been evaluating various development scenarios for the Los Azules Project. Their
14
work suggests there is considerable room to improve the economics of the project. Companies
involved in moving Los Azules to PFS are:
Bechtel Corporation, the largest construction company in America with a long history of
advancing, building and developing large copper concentrators and infrastructure projects globally,
including the recent feasibility study update on the El Pachon project approximately 75 km south of
Los Azules; and
Samuel Engineering, who will help oversee project management, controls, metallurgy and
processing plant design, is a full service multi-disciplinary project development and execution
company bringing a team with extensive large copper project experience in South America, including
past involvement at the Los Azules project; and
Stantec, a full service engineering and consulting firm, with offices in Argentina, Chile, and
Peru, including select subcontract consultants will focus on geology, resource and reserve estimates,
mining engineering, hydrology, geotechnical and the tailings, waste, and water management facility
design.
MUX has brought in four high quality companies to move Los Azules forward. Signs had been
positive before last month, but reading that in an official NR confirmed my improving opinion on
McEwen Copper and the attitude toward its project. At last, MUX isn’t trying to cut corners and
selling the project on an “as-seen” basis any more, the company (i.e. Rob McEwen) is finally
taking Los Azules seriously and, along with the substantial investment of U$80m to move it
forward, in 2022 has hired a team with the type of world-level chops required to produce a PFS
that real mining and financial people will take seriously. What we see here is exactly how value
is added to a massive, world-scale porphyry project, the serious players know that to
accumulate the big ticket price, project owners must speculate by investing the right time and
money into changing a promising deposit into something more shovel-ready. Ask the Lundins.
However, it’s one thing to add project value, another to do the thing we require and add share
price value. For that, MUX has a revised corporate plan and we now turn our attention to the
way the McEwen Copper spin-out is being structured. Theoretically, the spinout comes with an
attractive lift that should add asset value to the MUX mothership and this reason, above all
others in edition 659 of The IKN Weekly dated January 9th (i.e. today), is why I’m a buyer of
MUX. First a re-cap of the moves to date, we remind readers of August and the new 4m shares
of McEwen Copper bought by his very self, Rob McEwen. That took the shares out total from
17.5m to 21.5m. While the other 4m tranche due September didn’t happen, the declaration on
December 22nd means we can expect it to close this month and with that, McEwen Copper will
have 25.5m shares out via 8m in new shares, plus the original 17.5m MUX-owned shares.
So far so good and it means the McEwen Copper subsidiary now has a market cap of U$255m.
That’s 55c/share, compares well to the U$191.49m carry on the MUX balance sheet today and
we’re already showing financial lift, but the new number also comes with hard cash backbone,
not just a nominal asset value that only geeks like me look at. However and clearly, Rob
McEwen’s plan to add value via Los Azules doesn’t stop at today, or even with the U$40m
Tranche B raise that we assume closes this month. For one thing, the money raised is to move
the project to PFS and a higher absolute value and for another, the major corporate structure
changes are yet to appear. The whole plan is to spin out McEwen Copper and once that
happens, MUX holders will duly receive spinco shares. Details of the deal are yet to show, but
there’s nothing to stop us from speculating on the plans so, in the final part of today’s look at
MUX component parts, that’s what we’re going to attempt. Be clear that what follows is best
considered an educated guess. It comes after consideration of the trajectory of the deal set-up
to date, the numbers used from the getgo, the way Rob McEwen works, his likely desire to
reduced personal risk (while maintaining a large holding and profile in both his eponymous
companies), along with an author taking long walks and sitting quietly on sofas, thinking. While
highly unlikely to get things exactly right, this should provide a framework to consider how this
lift from McEwen Copper’s spinout should improve the MUX share price considerably.
We know MUX plans to spin out McEwen Copper “within 12 months of the deal closing”. We
also know MUX currently has 459.19m shares out and owns 17.5c of the McEwen Copper total
25.5m shares. We also know Rob McEwen owns 82.2m shares of MUX and 4m shares of the
current subsidiary. Therefore, our educated guess assumes the following:
15
For the sake of simplicity, we ignore legal fees.
Before the spinout, the McEwen Copper Spinco undergoes a 10-for-1 stock split and
goes to 255m shares out at U$1.00, rather than 25.5m at U$10.
The McEwen Copper Spinco will need capitalization out the gate. As the money raised
from the Tranche B is for McEwen Copper, that’s earmarked for the subsidiary (and if it
isn’t, Rob better have a darned good reason). We also assume half the U$80m is
burned in development costs before the spinout happens, as MUX aggressively moves
Los Azules forward towards its PFS (drilling etc)
The MUX mothership retains some of the shares and becomes a strategic shareholder.
That could be at the 10% level, but your author’s best guess is that MUX will become a
19.99% strategic. Therefore, MUX contributes 124m of its 175m shares to the McEwen
Copper Spinco and keeps 51m for itself.
However, we also assume Rob McEwen sells some of his share block into the spinco as
it is carved out, using a secondary offering. This is only an educated guess, as is the
amount of shares they might add to the public offering, but for simplicity’s sake let’s
assume McEwen adds 30m of his 40m shares to the spinco as a secondary offering and
de-risks his position.
We’re left with a pile of 154m shares to be distributed to current MUX shareholders. As MUX
currently has a touch under 460m shares out, that would allow MUX shareholder to receive one
share of the McEwen Copper Spinco for every three shares of MUX owned. In this hypothetical
case, the new structure of the McEwen Copper Spinco would look like this:
Shares out: 255m
Major holders:
MUX: 51m
Rob McEwen 10m + 27.5m (received from the 82.6m MUX shares he owns,
three-for-one basis) = 37.5m
Tranche B holders 40m (from the financing closing this month)
MUX shareholders (ex-Rob McEwen): 125.5m
Treasury after spinout: U$40m (50% left from the U$80m in MUX raised
capital)
At that point, we’ll have a newco priced at a nominal U$255m, on its way to delivering a PFS on
a massive porphyry copper project in San Juan Argentina and this is when IKN meekly submits
to MUX rose-tinted company propaganda and offers readers part of slide 4 of the latest MUX
corporate presentation (8):
Despite the dose of Hopium that comes with such a presentation slide, this desk can’t help but
concede it’s not too far from reality. The current PEA resource (using a 0.2% CuEq cut-off)…
…does come with a large amount of inferred resource and as that’s not allowed into a PFS, it
explains the size and price of the drill campaign now beginning at Los Azules. But the indicated
resource is already large and defined and as most of the higher-grading material is supergene
16
and the grade at Los Azules is of the level that makes modern projects attractive. A single
example section from Los Azules (below) cannot possibly explain the full story, but as a guide it
does show how the high-grade is most accessible:
Los Azules needs work (as Whittle points out, above) but the raw material is there all right and
project economics are also conducive to the type of elevated copper prices we enjoy in 2022
(with reason for those to go higher, of course). This sensitivity chart from the 2017 PEA
material shows how things improve rapidly from the
base case U$3.00/lb copper price used at the time. We
could continue in the same vein, with examples that
show how the IRR moves from 20% to over 30% if the
economic model uses U$4.10/lb copper instead of
U$3.00/lb, but the point should be clear by now. Costs
are up since 2017 and 2018, of course, both capex and
opex, but Los Azules offers plenty of leeway in the
spreadsheet economics and we on the outside can be
reasonably confident that it absorbs those increases
with ease.
As for the prize, anyone who looks at the market cap of
Filo Mining or Josemaria sees the type of ticket price
now commanded by companies in this zone with real
live mega-copper porphyry projects on their books. We
could also go into specific advantages of Los Azules at
this point, such as the way the deposit footprint does not impede on Argentina’s laws to protect
glaciers or that its location gives it solid political support and straightforward access to the
market for copper products (now Chile and Argentina have access agreements in place), but
today isn’t about over-egging the pudding. On the other hand, when McEwen Copper spins out
and goes live we can expwect the full-court press of marketing from the company and the
manifold reasons for its bright future.
To conclude on Los Azules/McEwen Copper, we see a future in which the planned spin-out
works for “Chief Owner” Rob McEwen as he de-risks his current U$40m exposure and maintains
a large personal position in the newco. It works for those about to come on board in the
U$40m, 4m share Tranche B set to close this month as the equity lift moving into the spinout
gives the big money an early mover advantage. But above all it works for current shareholders
of MUX, you and me, as the spinout will see the birth of McEwen Copper at a price that should
increase as Los Azules becomes a project with a serious and peer-approved PFS to its name, a
document from which it could see a sale and the big payout.
Discussion and conclusion
Despite being a complicated story with plenty of moving parts, readers already know that your
author is newly bullish on the prospects of McEwen Mining (MUX) in 2022. Today’s long note
was designed to outline fundamental backbone to this new position and that means considering
each main segment of MUX separately before stitch the pieces of the company back together.
17
However, before we get to a valuation framework you also get four necessary segments of
caution and warning:
1) The listing requirement news of last week
2) A production turnaround promise does not guarantee production results
3) The $50m Sprott loan paybacks beginning
4) The current management team has to remain in place
The final one is the most important, but let’s consider them all:
1) As full disclosure, I fully expected the NR we saw last week (9). In fact I almost mentioned
the matter last weekend in IKN658, but got lazy. Here’s how the NR starts:
TORONTO, Jan. 06, 2022 (GLOBE NEWSWIRE) -- McEwen Mining Inc. (NYSE: MUX)
(TSX: MUX) reports that it has fallen below the New York Stock Exchange ("NYSE")
continued listing requirement related to the price of its common stock.
The NYSE requires that the average closing price of a listed company's common stock
be above US$1.00 per share, calculated over a period of 30 consecutive trading days.
The Company was notified by the NYSE on January 5th, 2022 that the average price
of its common stock for the previous 30 trading days was below $1.00 per share.
In fact if you do the math (and I did), the MUX average closing price for the last 30 days to end
2021 was U$0.94, already under the line and means MUX was always going to receive its
notice. Under NYSE rules, MUX now has the next six months to get its share price back above
an average of U$1.00 for a period of 30 trading days and this is where things get better. For
one, getting 180 days max to trade above an average for 30 days isn’t so difficult, particularly if
we take into consideration today’s fundies analysis and see the brighter future in store. For
another, this is the third time MUX has been under this notice and in the previous occasions, it
quickly rose back above the U$1.00 average. There are also “easy outs”, as even if MUX came
under further pressure it would only need a reverse split to keep MUX in compliance with NYSE
rules. In effect, this market rule is more to weed out companies slipping toward corporate
death before their real world circumstance cause an embarrassing blow-up. Finally, there’s no
way Rob McEwen walks away from the NYSE anyway, so whatever happens expect MUX to get
its listing back to good standing.
2) As mentioned above, it’s something of a fool’s errand to predict production results from three
small-scale mining operations just days before the announcement and particularly when
forecasting overall production improvements. However, in MUX today I’m less concerned about
4q21’s results and we should pay more attention to both the recent trend of improvement and
the company’s 2022 guidance, as even if my numbers are spot-on it won’t change the fact that
its aggregate total is small for a U$400m+ market cap company. In fact, what I most want
from the upcoming MUX production numbers is evidence of incremental improvement in
operations, as well as positive guidance for the year ahead. After that we can squabble over a
thousand ounces here or there, but it’s secondary to our cause today.
3) As from August 2022, MUX is required to start paying back on its refi’d loan of $50m from
Sprott, with monthly $2m payments and then a large capital payback of $26m at the end of 12
months. That means cash drain, with $6m per quarter to start and a big obligation looming in
18 months’ time and, while the model shows that improved cash flow from operations should
cover things, it also means balance sheet pressure as U$36m or so arrives on current liabilities
as from end 3q22. At this stage this loan payback may or may not become a significant financial
obstacle to MUX, but as long as the company can show growth and improvement the likely
worst case would be booting forward either all or part of the debt. However, be clear that this
cash debt puts a sharper edge on the fact that MUX must deliver on its promises in 2022 and
has little margin for error (unlike previous years). I’m now long tnhis stock and looking to add
more if possible, but this trade gets active monitoring. As long as the plan is in place, all is
good. However, if signs begin to move in the wring direction, your author wouldn’t take long to
change position and sell. The big tell on this will be if MUX started to miss on targets and
promises at the quarterly reporting stages. For this trade, eyes wide open.
18
4) However and for my taste, the big weakness at MUX is the way it’s been a revolving door for
C-suite personnel and top management over the years. Aside “Chairman and Chief Owner”
McEwen, MUX has found it difficult to attract and keep top talent and the various errors in
operations at both Gold Bar and Fox Complex are testament to that. However, things have got
better over the last year and for our purposes, 2022 has three names that matter most:
Anna Ladd-Kruger – Chief Financial Officer
Peter Mah – Chief Operating Officer
Steve McGibbon – Executive Vice President of Exploration
Peter Mah, who has been at MUX since April 2020, Anna Ladd-Kruger, who joined MUX in
September of 2020 and Stephen McGibbon, who joined as (Executive) VP Exploration in April
2021 have all been instrumental in the improved corporate outlook at the company. Ladd-
Kruger has done a great job in bailing out the MUX financials, managing liquidity and providing
capital where required, Mah came to improve Gold Bar, ahs done so and then has stayed
around for Fox Complex. He’s now aided by McGibbon, drafted in to head turnaround of Fox
Complex and its transition to mining the Froome zone. So far so good here, too, FRoome
delivered before schedule being an excellent signal to the market but with with plaudits done,
the revolving door reputation at MUX means we should also place great emphasis on seeing this
team stay in place MUX is not an ordinary producer in this respect, its reputation and that of its
“Chairman and Chief Owner” comes before it with good and bad attached. At this time there’s
no formal CEO which means it’s Rob M’s baby and, on a day-to-day basis, the onus will be on
the COO, CFO and VP Ex to run the company. As long as these three key individuals stay on,
my trade will remain in good-standing (and be clear, the longer they stay the better). It’s been
“so far so good” and particularly pleasing to see the COO and CFO well into their second year of
employment at MUX, but if any one of Mah, Ladd-Kruger or McGibbon were to leave I’d
considered it an immediate and clear red flag. In real terms and unless there are clear
extenuating circumstances, if any of the three mentioned suddenly up sticks and leave I’d have
little hesitation before hitting the big red sell button.
With that list of four caveats off my chest, it’s time to consider what MUX may offer as a trade.
In fact, the NYSE listing requirement news of last week works somewhat in our favour as it
means MUX will be keenly aware it needs to get its PPS moving up, but the company already
has plenty of catalyst in place. With 4q21 production expected to compared favourably, then
2022 guidance likely bullish on all fronts (particularly Fox Complex thanks to Froome) and news
in the pipeline of the Los Azules financing and then progress reports toward the spin-out at
some point in 2022, MUX is not going to lack for news with which it can market to the masses
and create share price momentum in the weeks ahead. As for fundamentals, while it’s difficult
to place an exact number on the sum-of-parts at a complicated aggregate company like MUX,
we can at least compare the current overall valuation to its share price. Here’s a derivative
chart of the Price/Book ratio, which compares the current valuation to previous years:
2.0 MUX: Price/Book ratio
1.8
1.6 1.58 1.57
1.4 1.50 1.44
1.2
1.0 1.13 0.97 1.14 1.04 0.98 0.92 1.09 1.09
0.8 0.99 0.94 0.94
0.6 0.60
0.4
0.2
0.0
19
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4
source: MUX filings, TSX, IKN calcs
When you’re a buyer you want that as low as possible, so considering the current state of play
at McEwen Mining, in which…
Its 49% of Minera Santa Cruz (San José) is back delivering around U$10m in dividends
per year and now attracting attention from potential buyers
Its Gold Bar operation is no longer a burden on the corporate cash position
Fox Complex is over the worst and should contribute modest operating profits now that
the Froome zone is commercial and fully operational
The company is taking proactive steps at Los Azules and, to use the cliché, “unlock its
value for shareholders” via development and meaningful corporate structure changes
...the current ratio suggests MUX is at a hands-down bargain level. At its U$0.90 (or U$0.905)
close last week, today’s MUX is priced at the same relative level as most of its mediocre 2019
and 2020 financial periods, times in which things were going wrong and assets deteriorating
due to bad luck, bad decisions or a combo of the two. That’s now changed, all assets under its
control are back on track and by way of a reminder, this composite AISC chart shows how the
bad operating days of 2020 are behind the company.
MUX: AISC of divisions
20
4021 5321 3631 4301 2541
439
2951
7712
9331 6741
2642
2333
8351 9671 4461 5541
6273
9341 8231 4391 0651 0051 9161 8801 6641 8161 3241
U$/oz Au
4000
3500
MSC
3000
Gold Bar
2500 Black Fox
2000
1500
1000
500
0
3q19 4q19 1q20 2q20 3q20 4q20 1q21 2q21 3q21
source: MUX filings
Away from the Los Azules re-work, costs are the key to keeping this turnaround on track and
the last two quarters show, since we last looked deeply at MUX things have improved to the
point where San Jose, Gold Bar and Fox are all staying under the average realized price of gold
(and silver) at MUX. This is good and we haven’t even mentioned the re-worked plans to
potentially bring El Gallo Mexico back into production using a reduced capex outlay of U$25m
(almost payable from treasury today).
Valuing McEwen Mining
Even when compared to my normal reticence on trying to pin a target price on any junior
mining company these days, I’m truly loathe to attempt one for McEwen Mining (MUX). Its
moving parts are small and prone to fluctuations, all the assumed scenarios above are
conservative in nature, all come with execution risk. Aside that, this long note is more a
strategy note than a quantifiable examination of MUX, and by far the most important point to
take away is that the turnaround mentioned by Rob McEwen and others really is happening and
beginning to bear fruit. Also, any target price implies a snapshot in time and MUX has always
been a volatile beast, momentum trading could take it higher quickly and see it move into
overbought territory (for what would be the umpteenth time). However, some fundies
guidelines are required at this stage and to wit here below is an update of that simple, NAV-
based valuation chart first used in IKN628. However and unlike the previous occasion, this table
of asset prices for each component gives either a fair or a conservative reflection of the true
underlying values of each asset. Notes below:
Aggregating segment estimates at MUX
Los Azules MSC Gold Bar Mexico Fox net cash total
U$m NAV 161 150 80 30 250 50 721
per share 0.35 0.33 0.17 0.07 0.54 0.11 U$1.57
source: MUX data, IKN calcs and ests
Los Azules could be valued a lot higher if the spin-out goes to plan and then the project
starts to be valued on a post-PFS level in the same way as FIL or JOSE. However, I
plan to walk before trying to run and assuming its value at spinout is enough for the
moment.
The 49% of San José (MSC) is considered as a separate entity with a price tag for sale
to a third party. While throwing off U$10m in dividends per year its operations alone
are worth U$150m, we know HOC values its 51% far higher, then there’s the very large
concession area and exploration going on. The above U$150m is strict lowball for the
asset, in my view.
With Gold Bar no longer a cash drain, it can begin to stand alone as an asset. There’s
prospective mineralization around the mine (Tonkin, Pick, Old Gold Bar, etc) and if
momentum builds on operations the asset can pay for itself as it grows. My U$80m
valuation is not cheap, but reflects the new promise.
El Gallo has had very little mention today, but it’s still worth money and if it can
become a working mine again for as little as U$25m, replacement value alone of $30m
isn’t a stretch.
Then Fox Complex, which is very tough to value. I’ve gone with U$250m to reflect the
amount of gold ounces in the total area (Lexam, Grey Fox, etc) as well as the way it is
now set to become profitable and allow optimism to make good on its long-term plans
to get to 100koz/year.
Finally, we estimate net cash after the Los Azules placements and assign a value
accordingly.
That brings a total of U$1.57 per share in our rudimentary, which also compares reasonably to
the Price/Book chart seen just above. From the chart I argue that the current sub 1.0X level is
far too low and with all assets showing improvement, there’s no reason why MUX cannot return
to the 1.5X range seen in 2018 (as well as briefly last year)
Finally, if my sketched U$1.57 target is hit, it represents a 74% upside from the share price this
weekend. Assuming the rebound momentum begins soon with 4q21 results, 2022 guidance and
positive updates on Los Azules, that wouldn’t take a year to complete and represents very good
trading value today. One of the keys to making
money with this stock has always been to buy
while it’s ignored or out of fashion, another
reason why I’m keen on MUX providing The IKN
Weekly with another “turnaround winner” to add
to previously successful trades of this type
(SAND, WDO, NGD, etc). It’s the right time,
place and price for a low-risk and potentially high
reward trade in McEwen Mining (MUX) and as a
result, you find this author long the stock at 90c
this weekend. We leave you with the three-year
price chart of McEwen Mining (MUX), as there’s
no price in this visual that it couldn’t reasonably
revisit again in the near future.
Stocks to Follow
As the McEwen Mining (MUX) trade began unchanged, we focus on the 14 open stocks at this
time last week and of those, six were weekly winners (MAI.v, ARG.to, PA.v, SMD.v, ALDE.v,
MIRL.cse) and eight were losers (RIO.v, CMMC.to, DSV.v, TMQ, QCCU.v, APN.v, GBR.v,
MENE.v). There were three double figure percentage winners in Palamina (PA.v up 21.7%),
Minera IRL (MIRL.cse up 20.0%) and Aldebaran (ALDE.v up 11.9%) against bigger losers Mene
21
Inc (MENE.v down 13.8%) and Discovery Silver (DSV.v down 8.7%) but even among those and
the other negative performance, little true damage was done to trade levels. Frankly, it could
have been worse, considering how the Fed tried to snatch the proverbial punchbowl away from
the commodities sectors and how others in the sector were hit hard (see GDX and GDXJ).
With the addition of McEwen Mining (MUX) to the list last week, we now have 15 open positions
and that’s our self-imposed maximum. The count is balanced, with seven stocks in the green
and seven in the red, with one UNCH. It’s also nice to get rid of the 2021 closed trades and cut
the table down to its minimum size, you can find the record of 2021 hits and misses along with
all the other years in the Appendix below (and feel free to ask for the record of earlier years if
you want, I have nothing to hide and they were cut for space reasons only).
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$0.55 161.9% $1.14 tgt Aug'20, #1 idea
Rio2 Ltd. RIO.v STR BUY C$0.83 22-Apr-18 C$0.60 -27.7% $1.30 1st tgt, building now
Recommended stocks (In order of preference)
Copper Mountain CMMC.to STR BUY C$3.40 18-Jun-21 C$3.38 -0.6% Top value Cu play, overweight
Amerigo Res ARG.to STR BUY C$1.27 12-Dec-21 C$1.51 18.9% 2022 Cu bet, mgmt change
McEwen Mining MUX STR BUY U$0.90 2-Jan-22 U$0.90 0.0% 1q22 trade, turnaround story
Discovery Silver DSV.v BUY C$1.77 24-Oct-21 C$1.90 7.3% Serious Ag play, big&cheap
Trilogy Metals TMQ BUY U$1.84 15-Sep-19 U$1.59 -13.6% S32 suitor, stalled
QC Copper&Gold QCCU.v STR BUY C$0.26 25-Apr-21 C$0.31 19.2% Now drilling. Easy hold
Palamina Corp PA.v SPEC BUY C$0.295 21-Nov-21 C$0.28 -5.1% New, gold expl in S.Peru
Strategic Metals SMD.v BUY C$0.42 31-Jan-21 C$0.365 -13.1% Canada land bet+Zn in FY22
Aldebaran Res. ALDE.v SPEC BUY C$0.68 16-May-21 C$0.94 38.2% Waiting on drill assays
Altiplano Metals APN.v SPEC BUY C$0.31 17-Sep-21 C$0.295 -4.8% Cheap entry, 1q22 re-rate
Great Bear Res GBR.v hold C$15.83 26-Aug-20 C$28.24 78.4% Under offer, sold half
Minera IRL MIRL.cse hold C$0.195 22-Jul-12 C$0.09 -55.3% CEO change will move stock
Long-term non-mining hold
Mene Inc. MENE.v adding C$0.67 6-Dec-20 C$0.69 3.0% LT bet, adding slowly
Closed in 2022 closed close price
n/a
2015 to 2021 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:
Great Bear Resources (GBR.v): A small confession, as I did in fact sell a few of these last
week in order to fund a second bite at MUX. Call me deceptive if you must, but needs must as
occasions arise and the opportunity to add to my initial MUX position at a lower price and get
the cost average down to U$0.90 (give or take a tenth) when I had every intention of adding
anyway was too logical not to use.
Discovery Silver (DSV.v): It’s good to know this team isn’t watching the market to try to
time it to their advantage, I much prefer my junior development team to be worried about
developing their junior and not watching the daily PPS action. The way in which DSV
announced its annual options award on the eve of the Fed minutes and marked their incentive
options at $2.20, only to see the share price dump away from that strike just hours later means
they have better things to do than worry about every dime they can squeeze from the market
and that’s fine by me.
Aldebaran Resources (ALDE.v): A quick reminder that volume is as important as price when
it comes to sharp rallies in junior stocks. ALDE did well last week with it’s +11.9% move, but as
22
the chart indicates…
…its perennial problem of low volume didn’t change. It doesn’t take much to knock a price
down from this kind of move and while +10% is always better than -10%, it’s not the time to
start counting your money on this trade.
P.S. My Microsoft spell check wants to change Aldebaran to “Lamebrain”, which is nice.
Amerigo Resources (ARG.to): Another 5c added on the week and ARG has done everything
we’ve asked of it, so far at least. However and as the ARG IR desk pointed out to me on
Monday, the Christmas period affected my memory badly and the company has already
inaugurated its dividend policy, as disclosed on the company’s dedicated dividends page (10):
The Board of Directors of Amerigo has reached a decision to reinstate the declaration
and payment of dividends, on a quarterly basis commencing in the fourth quarter of
2021.
The 2c Canadian dividend distribution is the first for nine years, is payable to shareholders of
record dated December 20th and should be the first of many. With just over 175m shares out as
at end 2021, the C$3.5m total should be sustainable for future quarters as long as our
projections pan out.
ARG.to: Gross, operating and net profits, per qtr
25
22.5
20
17.5
15
12.5
10
7.5
5
2.5
0
-2.5
-5
-7.5
-10
23
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 tse12q4 1RTQ.fe 2RTQ.ge
U$m
Gross profit
op profit
Net Income
source: ARG data
Mene Inc (MENE.v): MENE dropped hard again, which slightly surprised me but as you can
often drive a truck through its bid/ask, it only takes one or two people determined to sell to do
these things. We await the key 4q21 production NR and that should show up next week.
Minera Alamos (MAI.v): Ding Dong, the witch is dead. As noted on the blog Thursday (8),
Osisko Development Corp (ODEV) are now fully sold out thanks to sterling work done by
National Bank, who found a buyer looking to take advantage of this golden opportunity and did
the legwork to get the cross done. We hear it could have happened before Christmas but for a
couple of legal beagle things getting in the way and both party and counter were ready to run
the large block trade for a couple of weeks, but better late than never and with the yoke of that
massive iceberg now lifted, MAI can get on and add equity value to the asset value it’s built into
the last quarter of 2021.
The next critical announcement will be the declaration of commercial production at Santana, at
which point the stock will become eligible for a new segment of instos that can only buy
officially producing companies. After that, it will be time to prod and
The Copper Basket
After one week of 2022, The Copper Basket shows a loss of 2.51% to level stakes:
company ticker price 1/1/22 Shares out Market Cap current pps gain/loss%
1 Copper Mtn CMMC.to 3.42 210.166 710.36 3.38 -1.2%
2 Oroco Res OCO.v 2.04 192.689 398.87 2.07 1.5%
3 Marimaca Cop MARI.to 3.77 88.028 316.90 3.60 -4.5%
4 Nevada Copper NCU.to 0.71 446 303.28 0.68 -4.2%
5 Western Copper WRN.to 2.00 151.426 293.77 1.94 -3.0%
6 Meridian Min MNO.v 1.18 153.735 172.18 1.12 -5.1%
7 Hot Chili HCH.ax 1.75 109.223 182.4 1.67 -4.6%
8 Regulus Res. REG.v 1.06 101.845 113.05 1.11 4.7%
9 Aldebaran Res. ALDE.v 0.84 114.495 107.63 0.94 11.9%
10 C3 Metals CCCM.v 0.16 645.379 93.58 0.145 -9.4%
11 Kutcho Copper KC.v 0.88 103.94 88.35 0.85 -3.4%
12 Doré Copper DCMC.v 0.79 66.123 46.29 0.70 -11.4%
13 Element 29 Res ECU.v 0.58 79.24 45.17 0.57 -1.7%
14 QC Copper QCCU.v 0.34 129.06 40.01 0.31 -8.8%
15 Coast Copper COCO.v 0.13 41.335 5.58 0.135 3.8%
NB: All stocks in CAD$, except HCH.ax in AUS$ Portfolio avg -2.51%
The new 2022 Copper Basket list got off to a net losing start, with eleven week-over-week
losers and just four winners from our 15 names (OCO.v, REG.v, ALDE.v, COCO.v) and no
unchanged prices on the week. We had two double figure percentage moves, with Aldebaran
(ALDE.v up 11.9%) to the positive and Dore Copper (DCMC.v down 11.4%) to the negative.
The median loser was in the 4% to 6% range and the complex followed the metal down.
On that subject, this ten day chart takes in the whole post-Christmas period and shows…
24
…that Comex March futures had a choppy week, with the Fed minutes on Thursday making the
biggest mark on the week’s trading in copper, much like the rest of the market. Here’s the top
paragraph from this Reuters report (11) to confirm the dynamic:
LONDON, Jan 6 (Reuters) - Industrial metals prices eased on Thursday after minutes
from the U.S. Federal Reserve's December meeting indicated that interest rates might
rise quicker than expected, dampening risk appetite.
A sentiment we could repeat from any number of things traded in US Dollars. However and as
seen in the scribbled chart notes, copper continues to see buyers coming back any time it’s
dinged lower and the Friday close of U$4.40/lb means zero damage done to any TA charts. As
for China news, the closely followed Caixin/Markit manufacturing sector activity reading came in
at 50.9 for the month of December, with anything over 50 indicating economic expansion.
That’s the first positive reading from this indicator since July 2021 and another signal that the
Chinese economy is coming out of its energy squeeze.
We move on, with week one of 2022’s copper inventories data:
Still no sign of relief in the big two systems, with the overall aggregate dropping by
10,482 metric tonnes (mt) to close Friday at 179,851mt. Last week we pre-empted the
start of the 1q22 re-stock, that was wrong and I spoke out of turn.
The Shanghai’s SHFE, lost exactly 9,000mt from its stocks and finished the week at
29,182mt and the ultra-low inventories continue to cast a shadow. Stocks will begin to
climb at some point this month, the question is when.
The LME wasn’t the reason for that 9k SHFE drawdown, as there was not arbitrage o
show and its own warehouse stocks lost 4,175mt. The LME action tends to take a
backseat to SHFE in the period between New Year and Chinese New Year, so no
surprise that trading was light. Stocks closed the week at 84,774mt and we remain at
historically low levels.
Once again, the Comex action catches the eye more than the big two with another
2,673mt added to its inventories, bringing the total to 65,894mt. If you’re looking for
clues as to whether The USA is willing to take on China’s dominant position in the
copper market, here’s a big one.
Now for the regular Shanghai-only inventories chart:
Shanghai Futures Exchange Warehouse Stocks, 2014 to date
400000
350000
300000
250000
200000
150000
100000
50000
0
25
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
No change from the December action, we await the re-stock and upmove which, if history is
our guide, could start at any moment:
In 2018, the lowest level before the upturn came in week one of the year
In 2019, the lowest level before the upturn came in week three of the year
In 2020, the lowest level before the upturn came in week two of the year
In 2021, the lowest level before the upturn came in week five of the year
Week one is now behind us, but with stocks at absolute lows it would be surprising (and
worrying for end-users) if the low didn’t happen before February.
We move to notes on a couple of basket stocks and we kick off the year with two of the new
names on the list:
Hot Chili (HCH.AX) (HCH.v): The newly listed HCH Dot Vee did indeed begin trading on the
Canadian boards last week and closed at CAD$1.63, but the first couple of days saw thin action
and until we get a more representative price I’m going to stick with the Aussie listed A$1.67.
However, getting a fair arb on price shouldn’t take too long as on Janauary 5th HCH announced
(12) it had hired electronic-only brokerage house ITG as market maker (at $7,500/month) as
well as a third party IR firm (Harbor Access LLC of Connnecticut at $10k/month) to provide
marketing and investor awareness services, so it won’t take long before Rick Rule gets his out.
We also saw a new director arrive, as Nicole Adshead-Bell takes her place at HCH and that
doesn’t surprise me in the least. Her arrival is not positive, neither is it a negative, it just is.
In a couple of weeks, our table above should be back to 100% Loonies, but in the meantime,
we assume Meridian’s CAD market cap is larger than that of HCH in Aussie Dollars.
Meridian Mining (MNO.v): This aggressive Brazilian copper explorer brought substantive
news to market on the first week of 2022 when
announcing (13) it had won an auction to add
neighbouring prospective concessions to its land
package. The type of news that doesn’t move
market (and in fact, MNO dropped 6c on the week)
but does catch the attention of fundies desks such
as this. The map (right) shows the added
tenements in blue outlines and the general trend is
clear, MNO wanted this land for its early stage
exploration results and will now likely try to
generate new drill targets. The scale shows they
have a lot of new land to play with, too. The
comment from CEO MacArthur closed in this way:
“With these new tenements, Meridian’s landbank
package covers almost the complete entirety of
the highly prospective Cabaçal VMS copper-gold
Belt, essentially an undeveloped metallogenic
belt, and we are probably the only company
developing such an advanced asset in the Junior
market today.”
This is the type of move you’d want from a serious
junior that’s looking to push hard in 2022 and again
points to their operating abilities in Brazil, not an
easy place to do business for the naïve and especially at the legal and administrative levels.
The Producer Basket
After one week of 2022, the Producer Basket shows a loss of 7.13% to level stakes:
26
company ticker price 1/1/22 Shares out MktCap(U$Bn) current pps gain/loss%
1 Newmont NEM 62.02 797.44 47.39 59.43 -4.2%
2 Barrick GOLD 19.00 1779 32.20 18.10 -4.7%
3 Franco-Nevada FNV 138.29 191.192 24.34 127.31 -7.9%
4 Agnico Eagle AEM 53.14 453.5 22.73 50.13 -5.7%
5 Wheaton PM WPM 42.93 450.3 17.36 38.56 -10.2%
6 Gold Fields GFI 10.99 887.72 9.04 10.18 -7.4%
7 Kinross Gold KGC 5.81 1320 7.19 5.45 -6.2%
8 B2Gold BTG 3.93 1055.6 3.84 3.64 -7.4%
9 Alamos Gold AGI 7.69 392.503 2.76 7.03 -8.6%
10 Sandstorm SAND 6.20 191.4 1.08 5.64 -9.0%
All prices and stock quotes in U$ Port. avg -7.13%
Let’s be optimistic and assume that 2022 is getting its worst week of the year out of the way
early . All ten of the components on our new list are in negative territory and there was no
escape from the carnage, as technical selling greeted the first day of trading and then the Fed
minutes bit lumps out of exactly this type of stock, ones that will be hit by rising rates and the
headwinds to gold that it infers. The quant programs didn’t waste time, the selling came from
the top down and GDX lost 4.1% on the week as well. However and ironically, our decision to
“play it defensive” this year and rely on the royalty/streamer sub-sector to add backbone to our
portfolio started as badly as it could, with three of the four biggest drops recorded by exactly
that type of PM company, Wheaton (WPM down 10.2% worst of all).
This chart, showing the five days (minus opening
ticks) of the five biggest market cappers
demonstrates how FNV and WPM got it worse
than most. They are the companies that need to
defend the highest price/earnings ratios, so it
makes sense to see their extra drops if the
market perceives sector margins under pressure.
Luckily, the market is also an ass and there’s
plenty of water to flow under this particular
bridge in 2022. Knee-jerk reactions are one
thing, but most of the negative news on rates
was already baked into PM producer prices in
2021 and with gold resilient at U$1,800/oz, there’s reason to believe it won’t be as bad as this
week one makes out.
The TinyCaps List
After one week of 2022, the TinyCaps show a gain of 2.99% to level stakes:
company ticker price 1/1/22 Shares out Mkt Cap current pps gain/loss%
Aurelius Min AUL.v 0.24 37.134 8.91 0.24 0.0%
Golden Pursuit GDP.v 0.13 34.638 4.50 0.13 0.0%
Infield Min INFD.v 0.06 48.276 2.90 0.06 0.0%
Kingfisher Met KFR.v 0.30 84.57 21.99 0.26 -13.3%
Latin Metals LMS.v 0.12 57.296 6.88 0.12 0.0%
Manitou Gold MTU.v 0.06 344.47 20.67 0.06 0.0%
Melkior Res MKR.v 0.295 24.011 7.44 0.31 5.1%
Precipitate Gold PRG.v 0.105 129.322 16.17 0.125 19.0%
Signature Res SGU.v 0.07 238.4 16.69 0.07 0.0%
Winshear Gold WINS.v 0.08 61.585 5.85 0.095 18.8%
Prices in CAD$, data from TSXV basket avg 2.99%
27
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.
Out with the old, in with the new and with one week of our new TinyCaps list featuring seven
new names from the ten had a quiet start. Six if the ten stocks remain unchanged from this
time last weekend (AUL.v, GDO.v, INFD.v, LMS.v, MTU.v, SGU.v) but the basket average tipped
to the positive thanks to three winners (MKR.v, PRG.v, WINS.v) versus the single loser
Kingfisher (KFR.v), which dropped 13.3%. The biggest winners were Precipitate (PRG.v up
19.0%) and Winshear (WINS.v up 18.8%) and they are decent sized improvements.
For what it’s worth, the feedback from subscribers on this new list wasn’t copious, but mails
arrived without any severe criticisms and all three mentioned they’d also been looking at “XYZ”
(names differed) and were glad to see it getting some soft coverage.
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
Deferred
While there have been some political and mining-related development in the region, there’s
nothing that could be classed as urgent. Also, at some point on Friday afternoon it began to
dawn on me what size of report I’d need on McEwen Mining (MUX) to get the story right and
explain why I think it’s a great trade, at some point that evening I made the executive decision
to defer the Regional Political contents until next weekend.
PS: Be long copper.
Market Watching
Deferred
Same reason as above. There are some minor events on stocks in and around the mining
world, but I’ve spent nearly all week focused on McEwen Mining and getting that story straight.
There’s nothing that cannot wait a week here, either.
PS: Buy copper.
Conclusion
IKN659 is done, we end with bullet points:
The IKN Weekly exists to provide coverage of the wonderful world of (junior) mining
and normally, we get that done via entries in its various segments. But above all it’s a
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publication based on simple capitalist principles and it’s main objective is to provide
trade ideas. Once I’d realized what was needed in order to explain why a trade in
McEwen Mining (MUX) was a good idea today, January 2022, I decided to stop
worrying about the normal content for every section of the weekly and focus on the
real job at hand.
However, next week should see The IKN Weekly back to normal. This is the second
deep dive anal ysis of an interesting corporate story in the last few weeks, with
Amerigo Resources (ARG.to) the other that taxed time and brain more than expected.
The deep dive explanations are done and we’re now in the period for 4q21 production
results, news that often comes with guidance for the year ahead. Now the Stocks to
Follow list is fully equipped with 15 open positions (and my portfolio cash is almost at
zero, we’ll be able to take a wider view and catch up on pending issues affecting the
sector, as well as the LatAm region.
Be long copper.
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. And be long copper.
I wish you good trading fortune, ladies and gentlemen.
Best, Mark
Footnotes, appendices, references, disclaimer
(1) https://www.calculatedriskblog.com/2022/01/schedule-for-week-of-january-9-2022.html
(2) https://www.mcewenmining.com/investor-relations/press-releases/press-release-details/2020/McEwen-Mining-Q2-
2020-Production-and-Exploration-Results/default.aspx
(3) https://www.mcewenmining.com/investor-relations/press-releases/press-release-details/2021/McEwen-Mining-
Announces-Fox-Complex-Growth-Funding-Secured-by-Registered-Direct-Offering/default.aspx
(4) https://www.mcewenmining.com/investor-relations/press-releases/press-release-details/2021/MUX-Creates-
McEwen-Copper-Which-Announces-80-Million-Series-B-Private-Placement-to-Advance-the-Los-Azules-Copper-
Project/default.aspx
(5) https://www.mcewenmining.com/investor-relations/press-releases/press-release-details/2021/McEwen-Copper-Inc.-
Closes-40-million-Private-Placement-with-Rob-McEwen/default.aspx
(6) https://seekingalpha.com/article/4466435-mcewen-minings-mux-ceo-rob-mcewen-on-q3-2021-results-earnings-call-
transcript
(7) https://www.mcewenmining.com/investor-relations/press-releases/press-release-details/2021/McEwen-Copper-Los-
Azules-Progress-Report/default.aspx
(8) https://s21.q4cdn.com/390685383/files/doc_presentations/mcewen_presentation.pdf
(9) https://www.mcewenmining.com/investor-relations/press-releases/press-release-details/2022/McEwen-Mining-
Addresses-NYSE-Listing-Requirements/default.aspx
(10) http://www.amerigoresources.com/investors/dividends/
(11) https://www.reuters.com/markets/europe/copper-prices-slip-us-feds-hawkish-signal-lifts-dollar-2022-01-06/
(12) https://newsdirect.com/news/appointment-of-investor-relations-and-market-making-services-for-tsxv-687337006
(13) https://meridianmining.co/wp-content/uploads/MNO_Landbank_Update_20220105.pdf
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Stocks To Follow Closed Positions 2021
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-Set-20 C$0.70 -54.8% Cut loser to reduce Au exp.
Element 29 Res ECU.v feb'21 C$0.49 7-Feb-21 C$0.54 10.2% Cut Peru exposure
Kuya Silver KUYA.cse feb'21 C$1.66 8-Nov-20 C$2.51 51.2% Cut Peru exposure
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-Abr-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
Aurelius Min. AUL.v dec'21 C$0.75 28-Jun-20 0.24 -68.0% cut end 2021, failed trade
Argonaut Gold AR.to dec'21 C$2.95 25-Jun-21 C$2.15 -27.1% cut on capex blowout
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
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.
30
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
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
31
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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