6 The IKN Weekly, issue 704 — Nov 14, 2022
The IKN Weekly
Week 704, November 13th 2022
Contents
This Week: Trade heads-up, In Today’s Edition, Copper’s perfect storm is growing, And what
of gold.
Fundamental Analysis: Western Copper & Gold (WRN.to) (WRN): Buying, Newcore Gold
(NCAU.v): Adding, Goldshore Resources (GSHR.v): Selling.
Stocks to Follow: Western Copper & Gold (WRN.to), Rio2 Ltd (RIO.v), Aldebaran (ALDE.v),
QC Copper & Gold (QCCU.v), Goldshore Resources (GSHR.v), Pure Gold (PGM.v), Minera
Alamos (MAI.v), Newcore Gold (NCAU.v).
Copper Basket: Overview, Copper Mountain (CMMC.to), Oroco Resources (OCO.v), Hot Chili
(HCH.v), Nevada Copper (NCU.to).
Producer Basket: Overview, Sandstorm Gold Royalties (SAND) (SSL.to), Gold Fields (GFI).
TinyCaps Basket: Overview, Signature Gold (SGU.v).
Regional Politics: Colombia’s forex spikes and drops, Argentina: An early look at the 2023
Presidential election field, Chile: Los Andes Copper (LA.v) Vizcachitas drill program suspended.
Market Watching: The Wesdome Gold (WDO.to) 3q22 financials: The entry point is still open,
Copper Mountain (CMMC.to): Onto the discard pile.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
Trade heads-up
It’s time to deploy treasury cash and I plan to make three trades in the days to come, assuming
the necessary and conducive market prices, of course. Two of them are purchases, one is a sale
and true to my boring form, all are known entities on the Stocks to Follow list. The purchase
loosening the purse strings is:
Buying Western Copper & Gold (WRN.to) (WRN)
The beneficiary of a rebalancing is:
Adding to Newcore Gold (NCAU.v)
And as your author isn’t made of money and needs to keep it real, a sale funds the planned
addition to NCAU:
Selling Goldshore Resources (GSHR.v)
Details on the trades in this week’s main fundies section.
In Today’s Edition
It’s time to deploy capital and shift gears, from patient stance of the last few months to
a more aggressive position in a market that seemingly came to a decision last week.
Gold looks good, as do most other precious and industrial metals, but copper looks in
prime position to make hay while a little end-year sun shines.
Due to this, we pull the trigger on a company we’ve tracked closely for several months
without buying. Western Copper & Gold (WRN) (WRN.to) is a clear buyout target for
1
the current cycle and with a catalyst moment in the near-term horizon and copper
finally making a move higher.
We also have positive news out of Wesdome Gold (WDO.to), as the weak 3q22
financial results on Thursday were received by the myopic market largely in the way
this desk expected. This leaves the stock open as a clear value trade going forward,
particularly if you watch for an entry point through the upcoming tax loss selling
season. These also the outside chance that WDO become an M&A target and we give
that a line or three, too.
But it’s not all good in the world of copper, as Copper Mountain (CMMC.to) is now
struck off the list of potential trades and the issues faced by Los Andes Copper (LA.v) in
Chile may be project-specific, but may end up throwing more shade over that country’s
mining sector.
Copper’s perfect storm is growing
Men at some time are masters of their fates:
The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings.
Julius Caesar, Act 1Sc2 ll140–143
Instead of our normal fixation on gold bullion in the intro section, we today focus on the
industrial metal that carries this desk’s optimism, the bellwether of them all, the good Doctor
Copper. Some of this intro message gets a second airing (in so many words) in today’s Copper
Basket commentary below, but that’s okay because this is a message worth repeating because
in a week of changed circumstances, the effect of both market and geopolitical events on
copper was most important of all.
All through 2022, these pages have repeated (ad nauseam) on the bullish fundamentals of
copper and the continued real demand for the metal, as well as the apparent contradictions
that marked down its market price due mostly to financial mechanisms that assumed that a
recession would ruin its demand. At some point, something had to give and last week brought a
series of events that saw copper break to the upside. In The Copper Basket section below, we
include a chart with the longer-term price action, here we focus on the last few days in a chart
with too many scribbles on it, so we’ll keep it large-sized:
That’s a move to reckon with and while some of the reasons apply to other part of our market
(we wouldn’t have seen the Dow rally 1,200 point son Thursday otherwise), there are both
metals and copper-specific issues that add the extra sauce:
First and as noted in last week’s “Master of the Universe” intro note, the Fed softened
2
its position on rates. It took a day or two for the market to react, but when it did…
..the second effect began. The market turned on Jerome Powell and his overly hawkish
press conference performance. It might have run a shudder of fear through the market
at the time, but once the dust had settled the decision was to ignore the jawbone and
go with the official Fed position.
At the same time, we also got rumours that China was about to relax its Zero Covid
policies in order to stimulate its flagging economy, rumours that were officially denied
at the time but still saw copper benefit immediately. The metal finished the week at
U$3.70/lb (HGZ22 contract) and this time last weekend, we were hoping that as much
of that pop as possible would hold into this week.
Indeed copper did reasonably well and held onto half of those rumour-fuelled gains,
then added and traded into the US CPI print in a U$3.65/lb to U$3.70/lb range.
Then came the turbocharger moment, the US CPI print of 7.7% and with enough
second-level data under that headline to convince the market that inflation was coming
under control. Off flew the market and Dr. Copper happily rode along.
Not only that, but at the same time and somewhat missed by the market headline
makers, The Fed pulled a pre-pivot pivot. Here’s how long-term reader and part-time
mailpal RD put it to this desk, via a mail received Saturday morning: “…more interesting
was that the Fed bought $12 billion at the Treasury auction. Isn't that QE? If it quacks
like a pivot, swims like a pivot and
looks like a pivot, is it a pivot?”
The centre of the market tide change
was, of course, the USD index and this
chart gives context on the (no better
word) enormous move saw post-CPI,
the type of move that doesn’t rebound
in the same pattern.
Meanwhile on the other side of the
world, copper got a specific boost via a
series of indicators (mainly from China)
that underscored its continued strong
demand. They include import data,
calls from China’s own copper
producers for the need to source more
concentrate and the news that Codelco was upping its China premium next year (see
Copper Basket for details and numbers.
Copper now had momentum and market presence, so when China announced that it
was indeed going to alter some of its Zero Covid policy rules, the reaction was
immediate.
Suddenly, copper was a trade and it
showed in both the metal (HG00, the
continuous copper contract) and the
sector-leading companies (here are
SCCO and FCX along with COPX, the
producers’ ETF). That’s the sight of new
money entering the sector and along
with the rise in the metal, adds another
reason to get longer on the underlying
juniors as soon as possible.
And what of gold
We also know last week was a good one for precious metals and with gold at the centre of that
group. This five day chart shows how gold bullion (GLD proxy) even outstripped the Dow and
3
broad markets, not bad when one of those Dow days was +1,200.
Under that context, it surely catches the eye that Wall St. weren’t the buyers of bullion. The
suits were going Risk On and bullion is far too boring for that, the data showing up in our
ongoing coverage of the GLD inventory data. Last week saw its bullion stocks drop to a new low
of 905.48 metric tonnes (mt) before finally a few buyers showed up and got Friday’s total to
910.12mt. Only time will tell whether that marks a new bottom and if it does, we’ll be bouncing
off the same level as the late 2019 rally
GLD gold holdings, 2016 to date (metric tonnes)
1350
1300
1250
1200
1150
1100
1050
1000
950
900
850
800
750
700
650
600
4
61/4/1 61/61/3 61/62/5 61/8/8 61/81/01 61/92/21 71/41/3 71/42/5 71/4/8 71/61/01 71/72/21 81/21/3 81/22/5 81/2/8 81/21/01 81/42/21 91/8/3 91/02/5 91/13/7 91/01/01 91/02/21 02/5/3 02/51/5 02/82/7 02/7/01 02/71/21 12/3/3 12/11/5 12/22/7 12/1/01 12/31/21 22/42/2 22/6/5 22/02/7 22/92/9
mt
source: SPDR GLD data
8.25 GLD: Inventory/Price Ratio, 2016 to date
8.00
7.75
7.50
7.25
7.00
6.75
6.50
6.25
6.00
5.75
5.50
5.25
5.00
61/4/1 61/61/3 61/62/5 61/8/8 61/81/01 61/92/21 71/41/3 71/42/5 71/4/8 71/61/01 71/72/21 81/21/3 81/22/5 81/2/8 81/21/01 81/42/21 91/8/3 91/02/5 91/13/7 91/01/01 91/02/21 02/5/3 02/51/5 02/82/7 02/7/01 02/71/21 12/3/3 12/11/5 12/22/7 12/1/01 12/31/21 22/42/2 22/6/5 22/02/7 22/92/9
Source: SPDR data, IKN calcs
Meanwhile and more importantly, the Inventory/Price Ratio of the GLD is down to 5.53X, which
is the lowest ratio since this desk started counting back in 2016. We’re due a bounce, that’s
doubtless now and while the ratio can change via the normal combination of relative
movements, the ratio will only bounce hard in one of two ways:
Inventory tonnage moves up sharply
Gold price drops sharply
Given the choice, I’ll take the former but the good statistician shouldn’t discount the latter.
I’d agree that more gradual reversal can come from a combination and as long as inventory
recovers, the gold price can remain roughly where it is for the time being and we’d still get a
recovery in the ratio. However, the main point is to recognize the market facts behind this
current anomaly as at a 5.53X ratio, gold has never been as relatively unpopular among the big
trading instos as it is today. That’s the message and with gold now showing every sign of
recovering in price, the lack of ownership among the big desks implies that heavyweight buyers
are about to move back in.
However, we know gold is becoming popular and even the monetary metals needs to tip its hat
to the standards of supply/demand
economics. So if the financial instos aren’t
buying the bullion, who is? Step forward
the world’s collective Central Banks, who in
3q22 bought an aggregate total of 399.3
tonnes, according to the latest data from
the World Gold Council (1). The leakage of
tonnes from GLD has ended in Central
Banks and as they are normally the
strongest of strong hand holders of bullion,
the day that Wall St decides it needs to
own physical is a day that gold really begins
to catch a bid.
Fundamental Analysis of Mining Stocks
Two purchases and a sale
Keeping powder dry is all well and good, but we are speculators at heart and a publication such
as The IKN Weekly, with a focus on the high-risk world of junior mining companies, has to start
sticking its neck out at some point. That moment is today, as last week’s CPI may well have
provided the tipping point, the moment that turns the tide in favour of many other market
sectors and sub-sectors but also our own. Along with the marked improvement in metals prices
and a weakening US Dollar, the signals are right and it’s time to act. As noted at the top of
today’s edition, I plan to make three trades in the days to come, two purchases and one sale.
All however, are conditional on price and I reserve the right to delay or defer any proposed
trade if things get far too out of whack compared to this weekend’s closing prices. Also and as
most of you are aware, I consider it a fool’s errand to pile in on the opening bell Monday and
will normally wait until the market has found some sort of order before pushing the big green
buttons on any of the following. These are the proposed trades:
Western Copper & Gold (WRN.to) (WRN): Buying
Newcore Gold (NCAU.v): Adding
Goldshore Resources (GSHR.v): Selling.
And now, unsurprisingly, today’s main Fundies section is dedicated to the details:
Western Copper & Gold (WRN.to) (WRN): Buying
This purchase shouldn’t come as a surprise to regular readers, I’ve made no bones about my
good regard for this company and the way in which, after over a decade of following the stock,
its ducks are now coming into line as a potential M&A target. Here’s a list:
Advanced development copper project, now close to “shovel ready”
Large capex, large scale and big enough to move the dial of Tier 1 miners
High quality address and coveted low political risk for eventual owner/operator
5
An obvious lead suitor in Rio Tinto (RTZ), currently 8% owner and about to make a
forward decision.
A copper price now moving in the right direction and the tendency for WRN’s share price
to break out and climb quickly when momentum builds
First a quick re-cap of Casino, even though today isn’t for picking over details with a fine
toothcomb, this note is more about the reasons behind the strategic decision to pull the trigger
and buy some shares, but a brief paragraph does no harm.
WRN at Casino is a big footprint, big capex, big company mine and one that suits RTZ well, as it
will be as interested in improving its overall corporate political risk and ESG profile by setting up
in the Canadian Yukon as it will by owning a new and large copper/gold mine. This M+I
resource chart from the recent 43-101 Feasibility Study (FS) shows a total resource of
2,259mmt grading a low 0.15% Cu and 0.18 g/t Au for a total resource of 4.45Bn lbs copper, of
which 5.08Bn lbs is in the Proven & Probable Reserve category.
That along with a total gold M+I of 14.8m oz gold, and laying in the wings are 3.1Bn lbs
inferred copper and 6.3m oz inferred gold. Over its 27 year projected mine life, casino is slated
to produce an average of 163m lbs copper and 211,000 oz gold per year. The other advantage
of scale is the cost profile and in its corporate presentation material, WRN gives a base case
cash cost of negative 80c/lb copper or, perhaps more real-world, a co-product cost of U$1.54/lb
copper and U$799/oz gold. That’s great operating margin for the eventual operator and once
again, points us to the high capex nature of this project. This is a copper mine for the big
players, the ones that can stump up the front-end costs in order to reap decades of benefit
later. Also and before moving on, as this FS is dated July 2022 and was compiled to convince
the professional eyeballs of RTZ, rather than we retail grunts on a possible pumpjob, we can
trust this 43-101 more than most. The recent inflation bubble for input items accounted for, up-
to-date opex assumptions, no “over-optimization” to improve the spreadsheet and sets of
granular data that must pass inspection at a top world mining company, rather than a suite of
bankers.
From here we step back and consider combination of strategic reasons that make WRN a buy
this weekend when at other points in its development, I’ve passed on the trade. The relative
low grade of Casino compared to its high capex ticket was always a stumbling block for the
project until recently (and without beating round the bush, it’s why I avoided the company for
many years) but in the last couple of years, there has been enough change in the market to
make Casino viable. Internally, having a fully fledged FS on Casino is a significant step forward
and show that its low grade resource works economically. Externally, the world is getting used
to re-considering lower grade copper projects, as copper prices increase and the scarcity of
independently owned copper projects remain. Since the Covid-19 pandemic, a new premium
has been placed on the lowest political risk jurisdictions and Casino’s clear geographical
advantages now outweigh the potential costs of ploughing multi-billions into a low-grade
operation. Local development around Casino has also played a key role, with a permanent
access road now being constructed into the zone and other mining developments nearby,
particularly Newmont (NEM) as it advances the neighbouring Coffee project.
WRN is a jigsaw puzzle with its pieces finally coming together and that has not gone unnoticed
by Rio Tinto (RTZ), who in 2021 invested $25m to take an 85 foothold in the company in a deal
that came with mutually beneficial terms, including the right to a board observer, membership
of the Casino technical committee and three RTZ employees seconded to the project, which
realistically means RTZ has been directing development to its own taste in the last 18 months.
Other terms to the deal include share trading standstills, but what most matters now is that the
6
deal comes to an end on November 28th, i.e. in two weeks’ time and RTZ can choose what it
wants to do and while there are several other nuanced alternatives, November 28th comes with
three main options
Step back from the project and walk away. If so, RTZ can then sell its 8% stake.
Extend the current deal by 12 months under the same terms
Potentially increase its investment and commitment to Casino, by a new investment
stake or even an offer to buy out the company
For a while, most people have assumed RTZ will take the second option and extend the current
agreement for another 12 months, a decision that would speak well of the big company’s view
of Casino and what they see, as well as suiting WRN at this point as it moves to start the
Environmental permitting track for the project. To that end, last Wednesday saw CEO Paul
West-Sells of WRN appear on the scheduled Amvest Capital webinar and the replay is available
for viewing here (2) or here (3). It was a useful show to watch, as even though the
presentation and Q&A didn’t have much new news
WRN.to: Assets per qtr
for closer watchers of the company there were a
couple of snippets and one telling moment. We
learned that with the latest drilling program done,
WRN was now concentrating its efforts on the
permitting process which, as advertised, will take all
of 2023 and into 2024. We also got an estimated
budget for the full permitting process of “between
$10m and $15m which is a pretty wide ranging
estimate, but even the high side is easily covered
by the current treasury including the expected G&A
in the quarters to come.
We also learned that the pending met work on Casino samples was done and we should get a
NR out on the results in the next couple of weeks. Nobody ever expects a met results NR to
move markets, but it’s pending work and with RTZ calling the tune, another good check mark
for the project. CEO West-Sells also confirmed we’d have a NR on the RTZ’s decision to
continue its current participation agreement on November 28th latest and while expounding on
this point, at just before the seven minute mark CEO West-Sells addressed the subject. Here
are a couple of representative quotes:
“We’re chatting with them (RTZ) now on whether that’s going to get
extended, my guess is that it is…”
“Whether they (RTZ) want to move forward with a bigger investment in the
project or maybe even an acquisition”
Later on during the Q&A,CEO West-Sells returned to the subject of RTZ’s next move and in a
telling moment, spoke about the future of the current deal and almost forgot to mention that
one of RTZ’s options would be to step back and not go any further. For someone as close to the
talks as he, it underscored the likelihood RTZ is about to use its right of extension for another
12 months, the best result for WRN as at this point, the current $2.00 share price is too low for
directors to entertain a formal acquisition offer, even at healthy bonus to market. For this desk,
optimum would be to see RTZ carry and for the moment, it’s a moot point as to whether the
bigger company takes a larger percentage of
WRN shares as the company has all the treasury
it needs to get to the other side of the permitting
track in 2024. Summing up The RTZ Factor, I
believe we’re about to get a catalyst by the end
of this month and this adds to the timing for an
entry for strategic reasons. Which brings us to
the current share price and it seems as though
I’m destined to buy WRN with a CAD2-handle,
but no matter whether the purchase happens in
7
6.82
0.01
0.71
0.12
7.82
0.61
7.53
1.61
7.03
1.12
1.22
1.42
6.41
2.42
0.5
60
55
50
45
40
35
30
25
20
15
10
5
0
81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3
C$m
cash St inv
source: company filings
CAD or USD (NYSE ticker right), the timing looks good for a momentum trade and we’ve
previously seen how WRN will rocket higher given the right macro triggers.
The bottom line: With copper having broken out in the last eight days, it’s time for your author
to extend his exposure to the metal. Though we have now officially discarded Copper Mountain
(CMM.to, see Market Watching below) as a copper trade for the foreseeable future there are
other alternatives, such as an addition to the largest copper holding Amerigo Resources
(ARG.to) or perhaps QC Copper or Aldebaran
additions, as well as other interesting potential
development/exploration trades in the space (e.g.
OCO.v). However and on consideration, WRN
checks the right boxes for my taste and brings
diversification, as much as I like the look of ARG
going forward. WRN’s advanced stage of
development, the well-understood deposit, the
enviable geography low political risk and its
strategic partner that’s about to commit further to
the project all provide an air of “right story at right
time” around the stock. I’m a buyer of WRN next
week, either on its US or Canadian ticker.
Newcore Gold (NCAU.v): Adding
Instead of a new purchase, this trade is to add to the open position in Newcore Gold (NCAU.v)
and as this rationale is simple, we do it with a bunch of bullet points:
We opened with a small purchase in late October, leaving plenty of width to add to the
position
Just the move in the price of gold back over U$1,700/oz adds to the logic of owning
NCAU shares
We note how last week, plenty of gold exploreco peers to NCAU made significant
moves and some were excellent one week gains (there’s an example right below).
However, NCAU did this:
That’s GDXJ up and NCAU flat-lining and while our target under-performed compared to
the market, for this desk it speaks more of opportunity than problem. This is a serious
company doing good exploration and development work in a low risk, mining-friendly
jurisdiction (nowhere better than Ghana on Africa’s West coast) and its Enchi project
has already demonstrated robust theoretical economics via a PEA.
Whether in the first or second flush of movers, if this gold price bounce consolidates (or
goes higher), eventually all the “serious” boats will re-float to the same level and if so,
it’s only a matter of time before NCAU rebounds. Perhaps its (larger) shareholders are
feeling a little frustrated this weekend after seeing other explorecos move up, they’ll
get their reward for patience sooner or later.
We’re about to get the next catalyst, as NCAU is scheduled to deliver its resource
8
update and while it’s still likely to the proverbial “snapshot in time” compared to the
ounces that are eventually proven up and mined from the deposit, the company has
made clear hints that the resource is about to go over the 2m oz gold level.
Therefore, with the fortune to have bought one of the early winners at the same time as NCAU,
this is essentially a pure trade spec decision to rotate cash out of Goldshore (GSHR, see below)
and into the laggard of the two. However, it’s not a laggard for the lack of quality and that’s
what makes the difference; it’s one thing to roll the dice on a dog stock that may or may not go
up with the rest of the field “just because”, another to target a laggard with strong fundies and
the credentials to turn into a true exploreco investment as time goes on, as long as the market
is good to us. We add to NCAU in the days ahead and with luck, I’ll even manage to lower my
cost average.
Goldshore Resources (GSHR.v): Selling.
This is the easiest trade of the three to explain today. Here’s a price chart (below). This small
trade was bought very recently, the trade
announced in IKN701 dated October 23rd in the
main fundies note “Buying Newcore Gold (NCAU.v)
and Goldshore Resources (GSHR.v) for leverage on
a gold sector rebound.” The sector rebound last
week affected some stocks more than others and
one of the greatest beneficiaries in percentage
terms was GSHR, which rocketed higher though as
that three month chart above also, notes, volume
dropped off as the week progressed.
The idea behind the trade in GSHR was always to
take advantage of its higher market profile and the
fact for the last year and a half, it had been tipped
and reco’d by a whole bunch of high traffic newsletters and media-seeking analysts (all at much
higher prices). As things turn out that sentiment trade worked and GSHR didn’t just move up
nicely, it shot higher in a blink of an eye and I will be crystal clear, I didn’t think for one
moment that I’d be closing this trade out so quickly. However close it I will, even at the risk of
it going higher, for four reasons:
1. It’s a quick and useful winner, but it now looks overbought. That overbuying may continue
into the week ahead and I reiterate; GSHR has been the subject of much purple prose from
high traffic letters and it wouldn’t surprise me in the least to hear of weekend updates going
out to promo this stock even higher. If so I’ll be happy to sell into the liquidity they create.
2. GSHR has plenty of bagholders at higher prices and one of those key levels is around 40c,
the last time it was heavily promo’d (by the Casey newsletter brigades, in fact). If I sell too
early then so be it, but I’d like to abefore those looking to “get out at evens” move to sell.
3. Being a likely first mover in the juniors space, I now expect other stocks to play catch-up.
Stocks just like NCAU (see above), in fact.
4. I am not a bottomless pit of money, the sale of GSHR allows me to rebalance the portfolio to
where I see better future returns.
I realize this sale goes against a tried-and-tested market maxim, how one should cut losers and
let winners run. Instead and considering the two trades opened in late October, I’m cutting the
winner (GSHR) and doubling down on the loser to date (NCAU). That’s because I think that
NCAU will move up with the pack, but it’s also understandable that it doesn’t move up with a
higher volume trader stock with plenty of coverage and a better geographical address (for the
casual observer at least, this desk is happy about Ghana’s low risk).
Stocks to Follow
Annoyingly, the house Top Pick was a week-over-week (WoW) loser. That’s Minera Alamos
(MAI.v), which dropped 1.5c and remained under selling pressure on a week which saw plenty
9
of small mining stocks make impressive moves. It wasn’t alone either, there were a total of five
WoW losers (MAI.v, ALDE.v, NCAU.v, APN.v. ELBM.v, MENE.v) and aside from MAI, it was most
annoying to see Altiplano (APN.v) lose further ground as it’s one I actively own and also one
I’m not planning on using to add to exposure. At some point I may need to give up the ghost
on that trade. To round out the negative stuff, two stocks remained unchanged on the week
(PGM.v, MIRL.cse).
Which leaves the winners and you don’t get all the list, but the biggest percentage winners in
order were Goldshore Resources (GSHR.v up 83.8% and no typos there), Palamina Corp (PA.v
up 31.3%), Rio2 Ltd (RIO.v up 20.8%), Amerigo Resources (ARG.to up 18.8%) and Western
Copper (WRN.to up 11.1%). GSHR was particularly violent and I plan to take profits on that
immediately, but the others are the type of move that happens when the metals market turns a
corner, it’s the sight and sound of money coming in from the sidelines. We currently have 17
stocks under consideration and I own shares in 13 of them. Just four are in the green.
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$0.39 85.7% $0.75 first tgt, #1 idea
RECOMMENDED STOCKS
Amerigo Res ARG.to STR BUY C$1.36 12-Dec-21 C$1.33 -2.2% CheapCu w/low downside risk
QC Copper&Gold QCCU.v BUY C$0.275 25-Apr-21 C$0.175 -36.4% Now drilling. Easy hold
Rio2 Ltd. RIO.v HOLD C$0.83 22-Apr-18 C$0.145 -82.5% Cheap on permit probs, appeal
SPECULATIVE TRADES
Chesapeake Gold CKG.v SPEC BUY C$3.07 20-Feb-22 C$2.10 -31.6% Au leverage, small trade so far
Aldebaran Res. ALDE.v BUY C$0.72 16-May-21 C$0.80 11.1% trying patience
Newcore Gold NCAU.v ADDING C$0.21 23-Oct-22 C$0.195 -7.1% Near-term spec trade, ADDING
Goldshore Res GSHR.v SELLING C$0.18 23-Oct-22 C$0.34 88.9% TAKING PROFIT
Palamina Corp PA.v SPEC BUY C$0.295 21-Nov-21 C$0.105 -64.4% Au expl in S.Peru
Altiplano Metals APN.v HOLD C$0.31 17-Sep-21 C$0.165 -46.8% Cheap entry, plan on track.
Pure Gold PGM.v hold C$0.14 26-Sep-22 C$0.015 -89.3% tiny trade, hit Ch11 wall
Minera IRL MIRL.cse hold C$0.195 22-Jul-12 C$0.095 -51.3% CEO change will move stock
A WATCHLIST OF POTENTIAL TRADES. NB: I DO NOT OWN
ATAC Res ATC.v SPEC BUY C$0.095 11-Sep-22 C$0.085 -10.5% Cheap Yukon neighbour play
Electra Battery ELBM.v WATCH C$5.31 20-Mar-22 C$3.21 -39.5% potential battery metals play
Anacortes Mining XYZ.v WATCH C$0.49 22-Jul-22 C$0.52 6.1% potential gold exploreco trade
Western Copper WRN.to BUYING C$2.41 20-Mar-22 C$2.01 -16.6% Time to add Cu exp via WRN
LONG-TERM NON-MINING HOLD
Mene Inc. MENE.v adding C$0.66 6-Dec-20 C$0.44 -33.3% LT bet, adding slowly
CLOSED TRADES IN 2022 date closed close price
Great Bear Res GBR.v Jan'22 C$15.83 26-Aug-20 C$28.58 80.5% Bought out by Kinross, print
Copper Mountain CMMC.to Jan'22 C$3.40 18-Jun-21 C$3.78 15.9% Sold 1/2 position in rebalance
Copper Mountain CMMC.to Feb'22 C$3.40 18-Jun-21 C$3.70 8.8% Sold rest on FY22 guidance
Trilogy Metals TMQ Mar'22 U$1.84 15-Sep-19 U$1.04 -41.3% killed by US permit reversal
McEwen Mining MUX Apr'22 U$0.89 2-Jan-22 U$0.82 -7.9% No 2022 turnaround, cut loss
Abrasilver Res. ABRA.v May'22 C$0.42 24-Apr-22 C$0.33 -21.4% sold to reduce Ag exposure
Strategic Metals SMD.v May'22 C$0.42 31-Jan-21 C$0.30 -28.6% trade flatlined 1.5 years
Discovery Silver DSV.v Jun'22 C$1.77 24-Oct-21 C$1.39 -21.5% Cutting Ag exp.& raising cash
Element 29 ECU.v Jul'22 C$0.58 6-Mar-22 C$0.30 -48.3% sold to cut Cu exposure
Superior Gold SGI.v Oct'22 C$0.95 3-Apr-22 C$0.24 -74.7% Q3 prod fail was last straw
2015 to 2021 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Now for a few notes on some of the covered companies:
10
Goldshore Resources (GSHR.v): SELLING. A brief line here as well, there are no excuses
not to have seen this planned trade. The money from this sale will fund the addition to NCAU.
Newcore Gold (NCAU.v): ADDING. I know that I wrote last week that there was “no need
to make a second move immediately” to this small starter position, but a week is a long time in
politics and capital markets. The theory is simplicity itself, we take the winnings from Goldshore
and apply them here.
Western Copper & Gold (WRN.to): BUYING. To complete the set, a quick line to make
sure you all see that by this time next week, WRN will be out of the Watchlist section and into
the open trades.
Aldebaran (ALDE.v): We noted the thin volume rally last weekend, so seeing ALDE drop back
9c on the week wasn’t too surprising in context. Shares in ALDE did some business on Monday
but overall the trading remained thin and we’re waiting for a real catalyst to bring more
eyeballs to this stock. The table’s notes have “trying my patience” and even though it’s one of
the few trades showing green ink, that’s still true. More trading volume needed, it’s as simple as
that.
QC Copper & Gold (QCCU.v): QCCU started the week with a bang thanks to a new set of drill
numbers with more good intercepts of copper and this time, plenty of gold in the assays. The
highlight hoels come from the South-West zone of the current conceptual pit and once again
underscore the company’s policy of “turning waste into ore” during the 2022 drill campaign.
This screenshot of the section offered in the NR (4) comes with an easy-to-read list of the best
mineralization zones of three of the holes and it’s not difficult to visualize the improvement of
tonnage and potential extra depth added to the pit outline from these results.
The other good news is that for once (at last?), the market reacted positively to this Monday
NR. It was a bit of a drag to see some Friday profit-taking on such a good day for copper as
well, but that’s the nature of the beast, I suppose. But with a few more results like this and
then the resource update due in 1q23, QCCU may finally be waking up from a long slumber
pricewise. At some point, the good work it’s done this year will get recognition.
Electra Battery Materials (ELBM): The news out of ELBM last week made me feel queasy,
uneasy, but mostly glad I hadn’t pulled the trigger on this potential trade. On Tuesday
afternoon ELBM announced it was running a “best efforts overnight priced” placement to raise
U$5.5m and Wednesday morning was the bad news:
“…pricing of its previously announced overnight-marketed public offering (the “Equity
Offering”) of units of the Company (the “Units”) on a best efforts basis at a price of
US$2.35 per Unit for total gross proceeds of approximately US$5.5 million (~CAD$7.4
11
million). Each Unit shall be comprised of one common share in the capital of the
Company (each, a “Common Share”) and one Common Share purchase warrant
(each, a “Warrant”).”
Here are the USD and CAD price charts for ELBM over the last ten days and the reaction to that
placement on Wednesday trading isn’t difficult to spot:
To cause this much damage to an equity price from a placement to raise just U$5.5m, with a
full warrant to boot, is a window on the fragility of an untested stock story in a thin market.
Perhaps ELBM also had some unlucky timing and would have found more takers if they’d waited
a week, but it’s the window on the financial situation that irks the most. It’s not as if it hadn’t
occurred to this desk that ELBM may have been tight for cash on its 2022 build and
commissioning plans, either. For example here’s a quote from IKN680, dated May 29th:
“Overall, I’m happy to watch ELBM from the sidelines now that the initial rush of
enthusiasm for the idea has washed through the US listing and for my money, the
sweet spot for purchase will be later in the year when the company is either at or close
to plant commissioning.”
Here’s another, from IKN700 dated October 16th:
“This desk’s concern is on funding of the next stage and the period ELBM will need to
reach free cash flow neutrality, which is more likely to be nearer the end of 2023 than
its beginning.”
If ELBM has to pay this price for U$5.5m, what happens if/when it needs a top-up to complete
its build –out and get its stage one ops to cash flow neutrality?
Amerigo Resources (ARG.to): A good week, more please and yes, I am glad that I got the
“Amerigo Resources (ARG.to) and its bullet proof business model” note out last week instead of
waiting until after the horse had bolted. We’re pennies away from getting back into the green
on ARG and with copper prices now threatening to blow past the key U$3.80/lb price level and
attack the 4-handle again, there’s every reason to expect this to go higher still. ARG is
producing well, its workforce is fully onside, it has all the water it requires, and at U$3.80/lb
and above, we passive stakeholders can expect either share buybacks or the bonus dividend
payments. Or both.
Minera Alamos (MAI.v): A drag and my gut says that this capped trading price continues at
least until the 3q22 financials are filed, those due in the last week of November. I will remain
duly patient, ommmm.
Mene Inc (MENE.v): I don’t mention this long-term hold very often, but Mene is now at the
right price for an addition and with the purse-strings untied next week, I may add another small
tranche if its thin market allows the trade. We’re due its 3q22 financials as well, which should
have news of its asset purchase
12
The Copper Basket
After forty-five weeks of 2022, The Copper Basket shows a loss of 46.31% to level stakes:
company ticker price 1/1/22 Shares out Market Cap current pps gain/loss%
1 Copper Mtn CMMC.to 3.42 210.166 363.59 1.73 -49.4%
2 Western Copper WRN.to 2.00 151.597 304.71 2.01 0.5%
3 Marimaca Cop MARI.to 3.77 88.118 280.22 3.18 -15.6%
4 Oroco Res OCO.v 2.04 207.033 215.31 1.04 -49.0%
5 Nevada Copper NCU.to 0.71 658.638 204.18 0.31 -56.3%
6 Aldebaran Res. ALDE.v 0.84 138.579 110.86 0.80 -4.8%
7 Hot Chili HCH.v 1.53 109.223 84.10 0.77 -49.7%
8 Regulus Res. REG.v 1.06 101.85 74.35 0.73 -31.1%
9 Meridian Min MNO.to 1.18 153.735 56.88 0.37 -68.6%
10 C3 Metals CCCM.v 0.16 645.379 38.72 0.06 -62.5%
11 Doré Copper DCMC.v 0.79 84.1 29.01 0.345 -56.3%
12 QC Copper QCCU.v 0.34 129.06 21.94 0.17 -50.0%
13 Kutcho Copper KC.v 0.88 103.94 20.79 0.20 -77.3%
14 Element 29 Res ECU.v 0.58 79.24 17.04 0.215 -62.9%
15 Coast Copper COCO.v 0.13 41.335 2.07 0.05 -61.5%
NB: All stocks in CAD$ Portfolio avg -46.31%
The rally didn’t arrive at our Copper Basket
juniors and overall, the basket only improved by The Copper Basket 2022, weekly evolution
10%
a thin 0.3% on the week. Six stocks registered
0%
losses (CMMC.to, HCH.v, REG.v, ALDE.v, KC.v,
-10%
ECU.v) and there was one UNCH stock (COCO.v)
-20%
which leaves just eight winners (OCO.v, MARI.to,
-30%
NCU.to, WRN.to, MNO.to, CCCM.v, DCMC.v,
-40%
QCCU.v), not so much for the type of week we
-50%
experienced in other sectors. Two winners were
in the double percentage figures, namely -60%
Western (WRN.to up 11.1%) and Oroco (OCO.v
up 10.6%), with QC Copper bubbling under
(QCCU.v up 9.7%). As for the losers, the thinly
traded Aldebaran (ALDE.v down 10.1%) re-adjusted after its run of the week before last after
doing a bit of volume on Monday.
It was surprising to see the lack of reaction from The Copper Basket compared to the mega-
move put in by copper. We noted the fast run to U$3.70/lb last weekend and at that time, we
hoped that it could hold on to most of that move once trading began on Monday. Sure enough,
we moved back to U$3.60/lb early week, but now much more and it soon became clear there
was buyers’ appetite at U$3.60/lb and above. Then came Thursday, the US CPI reading, the
drop in the USD and worldwide market reaction to that particular change in the playing field.
Copper was already enjoying momentum and
traders piled on, then boosted again as the
rumours of a change in China’s Zero Covid
policy became reality on Friday.
It wasn’t much, more of a crack in the dyke
than a wholesale reversal of official policy, but
the new rules for migrations quarantine (five
days in a government monitored location for
arrivals to the country instead of seven, then
three more days at your residence) and
airlines (fewer penalties if Covid cases come in
13
ts1naJ ht9naJ ht61 dr32 ht03 ht6bef ht31 ht02 ht72 ht6raM ht31 ht02 ht72 dr3rpA ht01 ht71 ht42 s1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3yluj ht01 ht71 ht42 ts13 ht7gua ht41 ts12 ht82 ht4pes ht11 ht81 ht52 dn2tco ht9 ht61 dr32 ht03 ht6von ht31
source: IKN calcs
on your route and less chance of cancellations) are the first meaningful changes and the way
forward to allow more relaxations. All good for business in China and yes, that’s copper bullish.
We stay in China for our macro news, with several subjects all copper related. The top one is
this Reuters header on Thursday (5), which stood out like a sore thumb: “Chinese copper
companies say more mining is needed to boost supply”. The headline is bullish, the contents
more so and here’s an extract:
China’s top copper producers are urging the government to mine more of the metal, at
home and abroad, as concerns grow about disruptions to global supplies, the state-
backed China Nonferrous Metals News reported.
Jiangxi Copper Co Ltd., Zijin Mining, Tongling Nonferrous Metals Group Co Ltd. and
others urged relevant authorities in a meeting on Tuesday to launch a new round of ore
prospecting as soon as possible and open a new batch of mines for development, the
newspaper reported.
The lobbying by the industry comes amid rising concern about the global supply of
copper, which is used in transport and construction, and increasingly in the fast-
growing renewable energy and electric vehicle sectors.
In Peru, the Las Bambas copper mine, owned by Chinese miner MMG Ltd., said it has
started to reduce operations due to recent blockades by indigenous communities, who
have disrupted activity on and off for months.
Above all, note the source for the Reuters note, “the state-backed China Nonferrous Metals
News.” This is the type of story that doesn’t get approved and published without the agreement
of China’s politburo and the timing, coming just after the General Assembly, suggests a
concerted move and the inference of tight supply to end-users in one of the key buying periods
is inescapable. Which is, of course, the message this desk has been banging on about for
months and all through the soft price period but when you hear it from the industry itself,
people pay attention.
In other news, we got more evidence of the demand for 2023 copper when Reuters reported
(6) the Chilean giant and world’s #2 copper producer (behind Freeport) was raising its premium
to Chinese customers from U$105/tonne to U$140/tonne for next year. That price hike is in-line
with the current premium demanded by LME at its Yangshan warehouse, according to the same
note. Also, Chinese copper concentrate imports were up 3.8% in October compared to the
same month of 2021 and finally, the much vaunted Xi financial stimulus moves are now
showing up in the real economy, with September’s total new loans in China coming amounting
to 368Bn Yuan and October’s to a whopping 615.2Bn Yuan. It’s not just the Fed that will try to
inflate its way out of trouble and the combination of US macro data and the new direction being
taken by China is the right one for Dr. Copper. The market woke up to that quickly, now it’s
time to see whether the junior coppers can play catch-up to the metal’s big shift.
And with that, we move to our regular weekly digest with data from Cochilco (7):
A change in direction last week, as aggregate copper stocks across rose by 10,166
metric tonnes (mt) to close at 186,918mt. A small overall addition, but the location is
important
That’s because 17,112mt of aggregate new copper tonnes landed at the SHFE, which
boosted its total to 76,176mt. Maybe more Russian copper arriving and maybe not, as
the LME late last week voted to allow Russian sourced metals to remain in its
warehouses.
At the LME, stocks dropped by 6,675mt to close the week at 77,875mt and what with
the LME numbers usually getting all the attention, this continuation of its sharp decline
in stocks made sure people kept talking
LME: Cu tonnage under cancelled warrant
about the tight supply situation. It also
would have been a factor in the
aforementioned LME decision to allow
Russian copper to stay, of course.
Cancelled warrants dropped by just over 7,000mt and the near parity with the
14
00142 52074 57334 00714 52045 05205 52027 52418 52926 05694 57332 52271 05761 52511 57471 52581 52862 00642 00743 57924 00914 52975 05174 05803 04441 0588 0018 5786 00864 05386 57077 05064 05883
100000
90000
80000
70000
60000
50000 40000 30000 20000
10000
0
dr3rpa ht01 ht71 ht42 1.yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3yluj ht01 ht71 ht42 ts13 ht7gua ht41 ts12 ht82 ht4pes ht11 ht81 ht52 dn2tco ht9 ht61 dr32 ht03 ht6von ht31
mt Cu
source: Cochilco
headline drop suggests that currently, contracts are being delivered to end-users and
there are fewer spoofing games being played by members.
As for the Comex, it had a sleepy week and stocks dropped by a small 271mt to close
at 32,867mt.
The first of the dedicated SHFE charts best shows last week’s stock addition. There’s more
copper available from SHFE stores now than at this time last year, which is slightly surprising.
However, it’s still very tight.
SHFE copper inventory levels, 2018 to 2022
400000
350000
300000
250000
200000
150000
100000
50000
0
15
1 2 3 4 5 6 7 8 9 01 11 21 31 41 51 61 71 81 91 02 12 22 32 42 52 62 72 82 92 03 13 23 33 43 53 63 73 83 93 04 14 24 34 44 54 64 74 84 94 05 15 25
MT Cu 2022
2021
2020
2019
2018
source: Cochilco data
Shanghai Futures Exchange Warehouse Stocks, 2014 to date
400000
350000
300000
250000
200000
150000
100000
50000
0
31'13ceD dr32 ht02 ht51 ht01 ht5tco ht03 ht52 dn22 ht71 ht21 ht6pes ts1von 102ht72ced ts12 ht71 ht21 ht7guA dn2tcO ht4ceD ht92 ht62 ts12 ht61 ht01 ht5von ts13 ht52 dn22 ht42 ht91 ht41 ht9 9102
dr3bef
ts13 ht62 ts12 ht51 ht01 0202ht5naj 0202ts1ram ht62 ts12 ht61 ht11 0202ht6ced ts13 ht82 dr32 ht81 ht21 ht7 2202dn2naj ht72 ht42 ht91 ht41 ht9
Mt Cu
|
source: Cochilco
We move to notes on some of our basket stocks:
Oroco Resources (OCO.v): OCO picked a good
week to announce another set of drill results and
while grades at its South extension are dropping off
a little, they are adding tonnage and tonnes all the
time. There are worse spec copper stocks than this
one out there (e.g. all the others mentioned in this
week’s notes) and while I was always sceptical of
its equity when at $2+ (or beyond), anything
around a Loonie is tradable and comes with
reasonably liquid volume, too.
Copper Mountain (CMMC.to): Can you see the
moment CMMC announced its quarter? Yup, me
too. More on CMMC in ‘Market Watching’, below.
Hot Chili (HCH.v): Considering that the Canadian listed HCH takes its cues from the far
greater volume of its mothership listing in Australia, and that HCH.ax was closed before copper
the metal put in its final leg up to U$3.90/lb last week, we can expect this stock to rally well
once trading begins in both countries next week.
Nevada Copper (NCU.to): Didn’t move up last week. Good. Avoid.
The Producer Basket
After 45 weeks of 2022, the Producer Basket shows a loss of 8.69% to level stakes:
company ticker price 1/1/22 Shares out MktCap(U$Bn) current pps gain/loss%
1 Newmont NEM 62.02 797.44 37.10 46.53 -25.0%
2 Barrick GOLD 19.00 1779 29.25 16.44 -13.5%
3 Franco-Nevada FNV 138.29 191.192 27.08 141.65 2.4%
4 Agnico Eagle AEM 53.14 454.904 22.15 48.70 -8.4%
5 Wheaton PM WPM 42.93 450.3 17.11 37.99 -11.5%
6 Gold Fields GFI 10.99 887.72 10.10 11.38 3.5%
7 Kinross Gold KGC 5.81 1296.5 5.59 4.31 -25.8%
8 B2Gold BTG 3.93 1055.6 3.78 3.58 -8.9%
9 Alamos Gold AGI 7.69 392.503 3.49 8.88 15.5%
10 Sandstorm SAND 6.20 223.79 1.17 5.25 -15.3%
All prices and stock quotes in U$ Port. avg -8.69%
And from nowhere, green ink reappears on our Producer Basket table. It was an old-fashioned
rip-roaring rally in the PM producer sector and all our ten charges returned gains, from the
weak +3.8% from Sandstorm (SAND) to the nosebleed vertical move from Gold Fields (GFI up
16
33.7%) as it escaped from a fate worse than corporate expansion (PAAS and AEM to thank for
that.) Eight of our ten basket components improved by double figure percentages, just SANd
and AGI (+9.5%) missing out. The average matched the benchmark GDX improvement (GDX
up 13.4%) very closely and as it turns out, our basket beat the GDX benchmark by just four
hundredths on the week. We retain our slim lead as we move into Tax Loss season, this could
go either way.
The 2022 Producer Basket: Weekly performance and
35% comparative to GDX control
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
-20%
-25%
-30%
Sandstorm Gold Royalties (SAND) (SSL.to): I had my say in this post on the open blog on
Tuesday afternoon (8), in which the obvious issue about SAND’s now over-extended balance
sheet sticks out from its financials like a sore thumb. An excerpt:
“…anyone who thinks the recent placement was a one-off is in for a surprise, it’s a
confident bet that SAND is planning to run a couple more placements in order to drop
that debt pile as quickly as possible and set itself in shape for the next wheeler deal.
Great for the executives, great for the acquisition targets, great for the brokerages and
great for the lawyers behind the scene. Great for everyone in fact…except current
shareholders.”
With the company’s track record of wanting to pay down cash debt as quickly as possible well
established and the negative surprise of
that U$92m gross proceeds placement
already setting a precedent this year, don’t
be surprised to see SAND moving to sell
more shares to the market in 2023. On
thing’s for sure; SAND will not be part of
the 2023 Producer Basket.
Here’s a ten-day chart comparing SAND
against the GDX benchmark, as well as the
two leaders in the royaltyco space. That’s a
mediocre response to a big up-week and
SAND was the worst performer on our list
of ten by some distance.
17
ts1naJ ht9naJ ht61 dr32 ht03 ht6bef ht31 ht02 ht72 t6ram ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71 ht42 ts13 ht7 ht41 ts12 ht82 t4pes ht11 ht81 ht52 n2tco ht9 ht61 dr32 ht03 ht6von ht31
The 2022 Producer Basket: Percentage difference
5.0% between GDX benchmark & basket (negative = IKN ahead)
ikn 4.0%
gdx control 3.0%
2.0%
1.0%
0.0%
-1.0%
-2.0%
-3.0%
source: NYSE, IKN Calcs
-4.0%
ts1naJ ht9naJ ht61 dr32 ht03 ht6bef ht31 ht02 ht72 t6ram ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3luj ht01 ht71 ht42 ts13 ht7 ht41 ts12 ht82 t4pes ht11 ht81 ht52 n2tco ht9 ht61 dr32 ht03 ht6von ht31
source: IKN calcs, NYSE data
SAND: Liabilities Breakdown per qtr
600
550
500
450
400
350
300
250
200
150
100
50
0
51q1 51q2 51q3 51q4 61q1 61q2 61q3 61q4 71q1 71q2 71q3 71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 tse22q4 tse32q1
U$m
LT debt
current debt
source: company filings(IKN ests
Gold Fields (GFI): The best headline I saw regarding Gold Fields last week was from South
Africa’s Business Live and “At least there’s the $300m break fee...” (9), which also reported that
the company is considering distributing the break fee as a special dividend to shareholders.
Considering the number of shares out and the typical legal friction, that may mean around
U$0.30 per paid-up share and that’s a decent windfall.
And before moving on, it transpired later last week
that PAAS had agreed with AUY to pay half the break
fee, which didn’t go down well with its shareholders.
Along with a weak reported quarter, if I were a PAAS
holder this weekend I’d be annoyed, but as this ten-
day chart shows there’s no doubt which company is
the big winner. CEO Chris Griffith got lucky, but also
made it clear his company is still in the market for
M&A deals, as seen in this interview (10):
Although the acquisition of Yamana would have
been a good way to execute on the group’s
growth strategy, Griffith stressed that it was “not
the only and won’t be the only” option available to
the company.
“We have a number of assets that are of interest to us as part of our due diligence
process. We will now, in the same discipline process, consider those other options in
time to come as part of our broader strategy,” he told journalists, but said that it was
too early to comment on what exactly the next opportunity for Gold Fields may be.
Something to consider when we get to the Wesdome note, below.
The TinyCaps List
After forty-five weeks of 2022, the TinyCaps show a loss of 39.41% to level stakes:
company ticker price 1/1/22 Shares out Mkt Cap current pps gain/loss%
Aurelius Min AUL.v 0.24 45.836 3.67 0.08 -66.7%
Golden Pursuit GDP.v 0.13 34.638 4.33 0.125 -3.8%
Infield Min INFD.v 0.06 48.445 1.45 0.03 -50.0%
Kingfisher Met KFR.v 0.30 103.007 12.36 0.12 -60.0%
Latin Metals LMS.v 0.12 57.686 7.21 0.125 4.2%
Manitou Gold MTU.v 0.06 344.57 8.61 0.025 -58.3%
Melkior Res MKR.v 0.295 24.011 5.16 0.215 -27.1%
Precipitate Gold PRG.v 0.105 129.322 10.99 0.085 -19.0%
Signature Res SGU.v 0.07 238.4 4.77 0.02 -71.4%
Winshear Gold WINS.v 0.08 61.585 3.08 0.05 -37.5%
Prices in CAD$, data from TSXV basket avg -39.41%
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 2022. 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.
18
It wasn’t all good news, as we managed to register a week-over-week loser in Latrin Metals
(LMS.v down half a penny) as that stock gets out of its placement calendar.
There was apathy on show with the three UNCH 15% TinyCaps, 2022 weekly tracker
10%
stocks (GDP.v, INFD.v, KFR.v) as well, but the 5%
other six rallied and overall, the basket average 0%
-5%
managed to take 6% from its 2022 loss to date. -10%
-15%
Top performer was Signature Resources (SGU.v
-20%
up 100.0%), so congrats to all those who filled -25%
-30%
up at a penny. Other big movers were Winshear
-35%
(WINS.v up 25.0%), Manitou (MTU.v up 25.0%), -40%
-45%
Aurelius (AUL.v up 23.1%) and Precipitate -50%
(PRG.v up 21.4%). All good.
Signature Gold (SGU.v): Context is always required and while 100% weekly gains look
spectacular on paper, the lack of trading interest in
this stock (and the final push to 2c on nothing
volume) means that there isn’t a lot of money being
won or lost at these levels. As noted on this three
month chart, we can make an argument for one
potential profitable trade if some person bought the
2.8m or so shares at a penny with the arrow in mid-
October, as those would have cost $28,000 and
would now have a paper value of $56,000. That’s
okay money for one trader and one trade, but not
the stuff that market reputations and momentum
buzz are made of. Also of course, our presumed
single buyer at a penny still needs to get out at 2c
(or above?).
So yes, percentage changes can catch the eye down at this TinyCap pennycrapper level, but
real money is what moves markets and there’s precious little of that going through SGU.
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 are strictly neutral.
Regional politics
Colombia’s forex spikes and drops
We last checked in on the rapid devaluation of the Colombian Peso (COP) three weeks ago in
the note “Colombia: On honeymoons and exchange rates” (IKN701, October 23rd). On that day
we predicted…
“…expect Colombia to make some sort of proactive move to protect its currency when
it busts over 5,000, also expect Colombia to continue to make headlines on the
international scene over policy decisions that are deemed “bad for business” and will
“deter foreign investment.”
…and sure enough, the COP peaked at a touch over 5,100 before reverting and closing last
week under 5,000 to the USD. Come Friday, Colombia’s official benchmark rate (the TRM “Tasa
Representativa del Mercado”, with Tasa = Rate and your Spanish word of the day) closed at
4,806 to the USD with mainstream media in the country running “At Last!” headlines and
talking about the drop in the US Dollar (11). However, what I got wrong was an assumption
that the Petro government would move to intervene in the market because as things have
turned out, LatAm’s newest Lefty President has left it all to free market forces.
First, the US Dollar’s nosedive last week versus currencies across the board. We knew
19
dn2naJ naJ t61naJ dr32 ht03 ht6bef ht31 ht02 ht72 ht6ram ht31 ht02 ht72 dr3rpa ht01 ht71 ht42 s1yam ht8 ht51 dn22 ht92 ht5nuj ht21 ht91 ht62 dr3yluj ht01 ht71 ht42 ts13 ht7gua ht41 ts12 ht82 ht4pes ht11 ht81 ht52 dn2tco ht9 ht61 dr32 ht03 ht6von ht31
source: IKN calcs, TSX data
that, the COP was no exception.
Second, Colombia’s own CPI reading last week came in at 12.22%, which was hotter
than expected and local analysts are now expected Colombia’s Central Bank to raise
rates further and quicker than the current pace.
Finally, it’s worth noting that the sharp drop in the USD has made plenty of negative headlines
in the Colombian press with suitable complaints and
gripes from its business community, but for one thing,
it cuts the costs of companies working the country in
USD terms (or CAD, for that matter). Secondly, there’s
a large swathe of the country population not
complaining as much as the headline-writers; US
Dollar remittances to Colombia came to U$8.8Bn in
2021 (12) and as a lot of those dollars sent to the
country come from people working abroad and
maintaining their families in good stead at home, it
means extra spending power for the lower end of the
socio-economic strata.
Argentina: An early look at the 2023 Presidential election field
It’s almost a full year before October 22nd 2023 and the expected date for Argentina’s 2023
Presidential election, but with Brazil’s election now behind and Colombia’s decided, Argentina
becomes the next leading political event in LatAm and insider the country, its shadow is already
affecting government policy. What’s more and unlike Brazil, the mining industry is likely to
become a political pawn in the larger game.
Being a long way from the vote date, the field is still uncertain though we do know at least
know the three main groupings and probable candidates for President. With that in mind, last
week the polling company Giacobbe published a survey (13) it took in early October,
interviewing 2,500 people and with a margin of error of +/-2%. Voter intention for the three
main party groupings scored as followed:
Juntos por el Cambio: 32.8%
La Libertad Avanza: 23.6%
Frente de Todos: 15.5%
This would mean that if the intention remains the same for the next year (unlikely) the top two
groupings would go to a second round run-off. Now for a quick paragraph on each group.
Juntos por el Cambio is the right wing alliance under ex-President Mauricio Macri, though we
don’t know whether Macri Hill run again. At least as likely is current mayor of Buernos Aires
Horacio Rodríguez Larreta, or perhaps the other party leading light Patricia Bullrich. The
politics are mostly standard right wing, sometimes hard right, but politics in Argentina is a
weird subject and you’ll often see left wing intervention and social programs in the policy
mix.
La Libertad Avanza is the newly formed party around the new political star on the Argentina
scene, Javier Milei. He is an economist, has a strange haircut, takes polemic positions and
views (often hard-right in flavour) but in global political terms is best described as a
Libertarian. Her has risen from nowhere in the last five years to become a leading figure and
may provide the big change to the Argentina political scene next year.
Frente de Todos (FdT) is the current government, commonly known as “Kirchnerism” from
the Nestor/Cristina surname and politically positioned to the Left, though as always in
Argentina it’s difficult to separate the politics into Standard Left/Centre/Right categories
(blame Juan Domingo Perón…a long story). Its top names are current President Alberto
Fernández who is almost certain to run for re-election. FdT also has Veep Cristina Kirchner
and current “superminister” Sergio Massa in its first ranks. While Massa is certainly a
20
President-In-Waiting, he may wait until the next cycle to make his move.
As for mining, we’re in the strange position that all three political groups support the mining
industry. That’s very good in the long-term for the sector in Argentina and that’s the main
takeaway, but between us and the next President we have a year, that’s along time in politics
and our sector of focus may well become a political pawn in the bigger game. Overall, things
are looking positive for mining going into 2023 and beyond, but we take nothing for granted.
Thus ends our first note on next year’s big LatAm Presidential election, we’ll pick this thread up
at some point in the New Year.
Chile: Los Andes Copper (LA.v) Vizcachitas drill program suspended
Thursday brought news from the ESG-challenged Vizcachitas project, owned by Los Andes
Copper (LA.v). We last mentioned this company back in August when the issue of permitting in
Chile under its new Boric government was hot and LA was held up by some as an example of a
company that got its permit to drill. But as we mentioned at the time in IKN691 dated August
14th, in fact LA was “…another example that things are bad as the company had to fight in the
courts for over four months and even then the program was cut from 250 holes to 100, as well
as demanding a list of new environmental protection measures from the company.”
What’s more, all that to permit a standard exploration drill program, no mine building in sight as
yet. The problem at LA.v and Vizcachitas is mostly due to the opposition to the project from the
local Putaendo community as explained in IKN688, dated July 24th:
“…here what the mayor Putaeando, one Mauricio Quiroz, had to say (23):
“The judgment by the Second Environmental Tribunal that agrees
partially with the mining company is incomprehensible. Its argument is
that the activities of this company are compatible with the presence of
the Andean wildcat, but there is enou0gh scientific evidence to show
the damage caused by the drilling program. Due to this and along with
our legal team, we are going to use all legal avenues to stop the
program from taking place.”
However, it’s not all green lights for LA.v, either. For one, the company had 350 drill
holes planned for the program phase, of which 99 were planned for the central
mineralized zone of Vizcachitas (presumably the others were a mix of out-step,
metallurgical, geological and condemnation). The new authorization cuts the program
down to just 55 holes in the central zone. Other restrictions include postponing
construction of an on-site camp, a program for monitoring the vizcacha and Andean
Cat population that must be approved by the relevant Chilean authority before drilling
starts, a rehabilitation plan is presented and that no dogs are allowed onto the
program site. The company will then be allowed to operate for a maximum of 12
months, at which point its permit is up for further review.
Locals have said they will now monitor the company’s activities closely with a view to
reporting any infraction and getting the program closed down. This, along with the
legal recourses already filed against the Second Environmental Tribunal decision of last
week may or may not prosper, but in the greater scheme what we now have is a clear
indication of the significant local opposition to the Vizcachitas project and in the new
backdrop to mining in Chile, that matters. It’s sobering to consider that the same town
of Putaendo, which in its vast majority is against the project located nearby, is the
same town that would have to grant a social licence to an eventual mine.
IKN704 back and as it so happens, one of the legal challenges to the current drill program came
up before the courts last week and the judge ruled in favour of the locals and against Los
Andes Copper. As a result, the drill program has been suspended until such time as the
company offers more information about its mitigation program. So far, there has been no word
from the company about the program suspension and even when asked by local press there
was no response (14), however, perhaps related is that on November 2nd the LA.v CEO resigned
(15) and was replaced by the company CFO on an interim basis.
Is this another example of the Left wing Chilean government’s crackdown on mining companies
in Chile? Well perhaps, but the Vizcachitas case has been going on for years and the project has
been roundly opposed by locals for all that time. It’s in a central mid-altitude valley that’s
21
picturesque, environmentally sensitive and (unluckily for LA.v) is also of historical interest as it
was the one used by Chilean liberation forces (under O’Higgins) to make a famous crossing of
the Andean cordillera. Locals have fought for a long time to stop its development and while I’d
agree that the new government helps their cause, the controversy around Vizcachitas isn’t
going away after Boric is gone, either. What I do know is that no matter what Queen’s Road
Capital think, I’ll take the under on LA.v.
Market Watching
The Wesdome Gold (WDO.to) 3q22 financials: The entry point is still open
Featured in the last three editions (but the brief mentions in the last two weeks don’t really
count), the argument to put this company back on the radar of The IKN Weekly came in the
note “Wesdome Gold Mines (WDO.to) and its attempted soft landing” as seen in IKN701, dated
October 23rd. That weekend WDO was a C$8.01
stock, had just spent a couple of days trading a 7-
handle and we zeroed in on the potential it had to
provide a winning trade once its 3q22 financials
we’re filed.
Those happened on time post-close Wednesday
November 9th (with its earnings call on Thursday
10th), here’s the link to the NR (16) and here’s a
ten-day comparative price chart to show how the
numbers were received (right). It was an odd start
to Thursday’s trading, as the results and ongoing
WDO Conference Call coincided with the sector-
wide rally caused by the US CPI reading. The TSX
stepped in at the open with a circuit-breaker halt and once the market had both bids and asks,
WDO began to sell off compared to the benchmark GDX and carried on doing that through
Friday. Admittedly, the Friday close of C$8.96 is almost a Loonie up on IKN701 and the original
heads-up on the cheap entry point that weekend but with 142.487m shares out, this company
is still competitively priced at a market cap of C$1.277Bn (U$963m) and even if I don’t buy
personally at the moment, expect WDO to make next year’s Producer Basket list.
In IKN701 we anticipated a cool market reception for what was always going to be a soft
quarter from the company. We got one and in fact its balance sheet went lower than even we
expected. That day, we estimated cash treasury at C$20m and working capital at negative
$17m. Last week’s results confirmed that a combination of four negative factors had hit WDO’s
plans in 2022 and as a result, its decision to expanded its revolving credit facility a couple of
months ago wasn’t just for show:
The slower than expected ramp-up at Kiena
Temporary operational issues at Eagle River (now fixed, apparently)
Cosy Inflation in mining
22
The downturn in gold prices
Call the company unlucky, a victim of circumstance, to blame for all its woes or whatever other
position you want but the fact remains that WDO was running out of money to complete the
Kiena build, so leaning on a larger revolver makes sense (especially for a company famously
loathe about running share placement financings).
80 WDO.to: Working Capital per qtr
70
60
50
40
30
20
10
0
-10
-20
-30
-40
-50
23
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 tse22q4
source company filings
srallod
fo
snoillim
So while cash held up at C$24.7m, the working cap position dropped lower than our model and
the snapshot as at end 3q22 was negative C$35.457m. No wonder they needed that expanded
revolver. However, it wasn’t the operations that did the damage, as gold sales of 27,500oz wer
pre-announced…
WDO: Gold production vs sales, per qtr
22152 00562 34152 04132 80002 00712 60002 09891 56522 75422 57303 00582 44392 00003
95514 44573
11652 00082 04272 00062 38822 00572
00544 00004
50000
45000
40000
35000
30000
25000
20000 15000
10000
5000
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 tse22q4
Ozt Au
Production
Sales
source: company filings
…and our $0.8m op earnings guesstimate wasn’t so far out from the $-3.559m result, either.
WDO.to: Operations overview chart
219.72 522.82
385.51
975.1
955.3-
22
100
90
80
70
60
50
40
30
20
10
0
-10
12q3 12q4 22q1 22q2 22q3 tse22q4
C$m
revenues
total op expenses
Op earnings
source: company filings, IKN calcs
That suggests WDO merely drew more on the revolver than expected and got on with the job
of building out the last stages of Kiena more quickly than this desk guessed. But what really
matters now is the 4q22 and then 2023 and on that, WDO brought better news to the table:
The company reiterated its guidance for 2022, which means that our previous assumption of
44,500oz gold produced in 4q22 (and 40k sold, see above) is still valid. This chart from IKN701
shows how we think WDO can get to what would be a record quarter for the company and
while it means they have to play serious catch-up on the year to make their guidance, it was
refreshing to see the company stick to its projections last week. That means its bumper
operating earnings number is still in play (we have operating earnings at C$22m and free cash
flow at C$35m using an average received C$2,250/oz gold price, lower than this weekend’s
spot) and these are production numbers WDO will be able to announce early in 2023, no need
to wait until March for the 4q22 YE financials.
WDO: Gold prod/qtr
24
71142 91391 76691 69312
63892
12632 76242 43391 65771 50471
00082
45000
40000
16000 35000
16929
30000
25000 5511
5112 8914
20000 5208
15000
10000
5000
0
02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 tse22q4
Ozt Au
Kiena
Mishi
Eagle River
|
source: WDO filings
So yes, WDO has hit a slight financial speed bump but with gold recovering and a good Q4 in
the works, it’s likely to be a temporary issue and once Kiena is accelerating through the gears in
FY23, this company becomes and different animal.
Which leaves the other angle to consider, as the drop in cash treasury may tempt a third party
into making a buyout move on one of the few remaining independent mid-tier gold producer
targets out there. The timing would be possible, as we know CEO Middlemiss would not have
been interested until Kiena had come to fruition and now we’re there, the value can be bought.
As for potential buyers, Alamos Gold (AGI) is an obvious candidate (right geography, right size)
but aside from McCluskey, maybe the newly single Gold Fields (GFI) is in the market,. We know
it wants a footprint in Canada because during the Yamana acquisition period CEO Chris Griffith
said so outright, and arguably, the eventual 200k oz /annum production schedule expected
from a fully functioning WDO is enough to move the dial for a 1.2m oz/annum producer such as
GFI. Finally, I am quite sure CEO Middlemiss’s eventual exit strategy is M&A and he has the
track record to prove that.
The bottom line to WDO’s 3q22 quarter is that while the working cap position was lower than
expected, the company is still in good shape as long as it delivers on what it has promised for
Q4. As we’ll get to know those numbers early in 2023, it’s one to put firmly on the radar as we
enter the (in)famous Canadian tax loss selling season and even if I don’t personally pull the
trigger, I plan to keep a closer eye on the development of the company in 2023 via a slot in the
Producer Basket.
Copper Mountain (CMMC.to): Onto the discard pile
On the morning of Wednesday November 9th, Copper Mountain (CMMC.to) announced (17) its
3q22 financial results numbers that were eagerly awaited by this desk as previewed in IKN698
and the note “Copper Mountain (CMMC.to): Two reasons to buy and two reasons to pass”.
Before getting to the commentary on results here’s a quick re-cap of the points made that day.
To begin with the positives, we liked 1) the balance sheet position, what with the advent of the
sale of Eva and the cash it was about to dump in treasury. We also liked 2) the mine plan as it
stood that day because, assuming CMMC delivered on guidance, it would recover in Q3 and
return to the type of strong cash flow that the Excel models for the company in Q4 and beyond.
As for the two potential reasons to pass, here’s a screenshot of that segment:
Here on the other side of the Q3 numbers, I sure am glad I pointed out the potential reasons to
pass that day in IKN699 and decided to wait. The issues hinge on the difference between
projected performance in 3q22 and the reality of the quarter, so let’s consider what CMMC was
guiding until last week. That comes from the 2q22 filings and specifically the MD&A outlook on
production for the rest of the year:
The Company expects production in the second half of 2022 to be considerably higher
than the first half of 2022 as the Company begins to mine from higher grade ore from
Phase 4 of the Copper Mountain Main Pit in July. The higher grade Phase 4 ore is
expected throughout the remainder of 2022 and through 2023.
And this for forecast costs:
The Company is increasing its AIC per pound of copper cost guidance for 2022 to the
range of between US$2.75 and US$3.25 because of the higher-than-planned AIC in
H1 2022 and inflationary pressures noted.
As production is expected to increase throughout 2022, and as there were a number of
non-recurring expenses in H1 2022, the Company expects AIC to improve for the
remainder of 2022.
In IKN699 we proceeded to crunch numbers and roughed out a reasonable scenario; that if
CMMC were going to meet its stated guidance it would have to produce around 20m lbs copper
at an AISC of around U$2.80/lb, then improve sequentially on those results in Q4. However, we
weren’t taking anything for granted because CMMC had already delivered three disappointing
quarters (including 4q21) and had something to prove with this quarter. As it turns out, we
were right to remain in “Show Me” mode before stepping into this potentially cheap stock, as
3q22 turned out to be an unmitigated disaster. No need to go through a comprehensive blow-
by-blow, a straightforward Theory Vs. Reality comparative table should be enough:
3q22 guidance model vs 3q22 filings
item Theory Reality difference
Cu prod 20m lbs 13.16m lbs 6.84m lbs
2022 Cu guide 65m-75m lbs 55m-65m lbs 10m lbs
AISC U$2.80/lb U$4.50/lb U$1.70/lb
3q22 Revs C$98m C$58.3m C$39.7m
3q22 op. profit C$15m C$-14.5m C$-29.5m
source: CMMC, IKN
Along with those, our forecast for 4q22 working capital was C$183m. That’s down to C$95m
due to the heavy miss seen in Q3, plus the assumption that Q4 isn’t going to live up to even
revised company expectations (based on 20m lbs Cu, the previous model was 24m lbs Cu).
Along with the fourth bad quarter in a row and three enormous misses from three in 2022…
CMMC: Copper production and sales, per qtr
25
274.71 268.71 290.81 978.81 439.81 428.71
350.32
217.81
625.52
105.72
515.52 696.12 604.22 614.42
396.61 193.91
422.31 784.31 152.31 398.21
31 21
30
25
20
15
10
5
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3
Mlbs Cu
Cu prod (mlbs)
Cu sales (mlbs)
source: company filings
…the company also announced the end of Gil Clausen as company head. It did so in the most
diplomatic and gentle way possible …
The Company is commencing a public succession planning process for its President
and Chief Executive Officer, Gil Clausen . Mr. Clausen has been engaged with the
Board for the past year on executive succession planning as he begins to prepare for
his long-contemplated retirement. The Company has engaged Korn Ferry to assist with
the process, which will include a comprehensive global executive search. Mr. Clausen
will remain as President and CEO until a successor is in place.
…but that’s all so much hot air after the year we’ve seen at CMMC (to which we include in
passing the weird and wonderful CFO
CMMC.to: Quarterly Earnings overview
sacking on his insider trades scandal). As
for the financials, there’s no need to run
over every chart with a full post-mortem as
you’ve probably got the picture by now,
let’s just run with two updated tracking
charts. First the P+L overview and the
model had previously predicted a gross
profit of C$23m for 3q22. Instead, we were
treated to a C$11.123m loss.
As for the balance sheet, what matters
most at this time is liquidity and the
assumption of $150m of post-Eva working capital
turned into the cruel reality of $83.6m and while
that should rise slightly at in Q4, we’re still a long
way from the type of corporate benefit CMMC
should have enjoyed from that sale.
In its conference call, CMMC assured that things
were no getting better and Q4 would improve and
while that may turn out to be true, equally it could
be another round of Jam Tomorrow from a
company that serially disappoints and seems to find
novel ways of doing so each quarter. Until such
time as its hard, booked results show marked improvement, there’s no reason to trust this
company with your money.
Conclusion
IKN704 is done, we end with a couple of bullet points:
It’s good to get back to a real purchase call, instead of beating round the bush and
dipping in toes. Western (WRN) will move to my #2 copper trade as from next
weekend, assuming of course that I get my price.
I know I’m going to get flak for selling Goldshore (GSHR) this quickly, but it’s less
cashing out and more re-balancing to boost the other spec trade.
Be long copper. Be long gold. Avoid Colombia.
I thank you in advance for any feedback. Our Top Pick stock is Minera Alamos (MAI.v). Flash
updates will be sent if required by events.
I wish you good trading fortune, ladies and gentlemen.
Best wishes, Mark
26
82.69 687.58
146.66 571.27
675.81
781.9-
321.11-
200
180
160
140
120
100
80
60
40
20
0
-20
1q21 2q21 3q21 4q21 1q22 2q22 3q22
source: company filings, IKN ests
srallod
fo
snoillim
revenues
COGS
Gross profit
240 CMMC.to: Working Capital per qtr
200
160
120
80
40
0
-40
-80
-120
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 tse22q4
source company filings, IKN ests
srallod
fo
snoillim
Footnotes, appendices, references, disclaimer
(1) https://www.gold.org/goldhub/research/gold-demand-trends/gold-demand-trends-q3-2022/central-banks
(2) https://www.amvestcapital.com/webinar-directory/wrn110922
(3) https://www.amvestcapital.com/replays
(4) https://qccopper.com/news/qc-copper-intersects-high-gold-grades-accompanying-copper-in-wide-intersections-in-
the-opemiska-deposit/
(5) https://www.hellenicshippingnews.com/chinese-copper-companies-say-more-mining-is-needed-to-boost-supply/
(6) https://www.mining.com/web/codelco-proposes-33-price-hike-for-chinese-copper-buyers-for-2023-sources/
(7)
https://www.cochilco.cl/Paginas/Estudios/Mercados%20de%20metales%20e%20insumos%20estrat%C3%A9gicos/Infor
mes-Semanales-2015.aspx
(8) https://iknnews.com/sandstorm-gold-sand-in-2023-written-in-its-balance-sheet/
(9) https://www.businesslive.co.za/fm/money-and-investing/2022-11-10-at-least-theres-the-300m-break-fee/
(10) https://www.engineeringnews.co.za/article/yamana-not-the-only-opportunity-around-says-gold-fields-ceo-2022-11-
09
(11) https://www.elcolombiano.com/negocios/precio-del-dolar-en-colombia-JB19097079
(12) https://www.bloomberglinea.com/english/remittances-to-colombia-surpass-coal-as-dollar-revenue-source/
(13) https://www.cronista.com/economia-politica/sorpresas-en-la-carrera-al-2023-una-encuesta-ubica-al-kirchnerismo-
tercero/
(14) https://www.biobiochile.cl/especial/aqui-tierra/noticias/2022/11/10/tribunal-ambiental-paraliza-sondajes-de-
minera-vizcachitas-en-putaendo-debe-precisar-plan-recoge.shtml
(15) https://losandescopper.com/news/2022/los-andes-copper-appoints-santiago-montt-as-interim-chief-executive-
officer/
(16) https://www.wesdome.com/English/investors/latest-news/news-details/2022/Wesdome-Announces-2022-Third-
Quarter-Financial-Results/default.aspx
(17) https://cumtn.com/investors/press-releases/2022/copper-mountain-mining-announces-q3-2022-financial-4814/
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-Apr-21 C$0.19 -36.7% Failed spec trade, cut loss
Cartier Res ECR.v sep'21 C$0.32 21-Mar-21 C$0.235 -26.6% Failed spec trade, cut loss
Amarillo Gold AGC.v sep'21 C$0.31 30-May-21 C$0.30 -3.2% Capex story changed: Out
Excelsior Mining MIN.to oct'21 C$0.93 10-Mar-19 C$0.53 -43.0% May return in 2022
Royal Road Min. RYR.v nov'21 C$0.155 17-Mar-19 C$0.275 77.4% Closed on Nica pol risk
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
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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-Aug-18 C$0.05 -33.3% tiny trade, made room for new
B2Gold BTO.to feb'19 C$2.11 12-Sep-14 C$4.05 91.9% Took 1/2 profits, reduce size
Western Copper WRN.to mar'19 C$0.80 20-Jan-19 C$0.81 1.3% Spec trade that didn't work
B2Gold BTO.to mar'19 C$2.11 12-Sep-14 C$4.15 96.7% Took rest of profit.
GT Gold GTT.v mar'19 C$1.17 10-Oct-18 C$0.90 -23.1% Took loss. Story changed
NovaGold NG apr'19 U$3.84 13-Jan-19 U$4.15 -8.1% Short that didn't work, sm loss
Zinc One Z.v jun'19 C$0.47 14-Sep-17 C$0.025 -94.7% clearing out dead trade
Amarillo Gold AGC.v jun'19 C$0.24 22-Aug-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-Apr-18 C$0.47 -67.8% Failed sm spec on Au. Moved on
Amerigo Res ARG.to nov'19 C$0.91 23-Sep-18 C$0.50 -45.1% worst trade of year, hefty loss
Guyana Goldfields GUY.to dec'19 C$0.94 14-Apr-19 C$0.56 -40.4% taking the loss, financials weak
Tethyan Res TETH.v dec'19 C$0.30 8-Sep-19 C$0.16 -46.7% tiny trade, word of probs in co
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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-aug-15 C$0.25 38.9% okay trade, sold on pol risk
McEwen Mining MUX jan16 U$1.09 25-jan-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-apr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-apr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-jan-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-jan-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-apr-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-apr-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
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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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