6 The IKN Weekly, issue 742 — Aug 07, 2023
The IKN Weekly
Week 742, August 6th 2023
Contents
This Week: In Today’s Edition, A day late and a dollar short, A Civic Holiday and a CPI Day,
Keep on pet rocking in the free world.
Fundamental Analysis: Amerigo Resources (ARG.to) 2q23 financials, Equinox Gold (EQX)
2q23 financials.
Stocks to Follow: Contango ORE (CTGO), Aldebaran Resources (ALDE.v), Faraday Copper
(FDY.to), Marimaca Copper (MARI.to), Minera IRL (MIRL.cse), Rugby Resources (RUG.v),
SolGold (SOLG.to) (SOLG.L), Orecap Invest (OCI.v).
Copper Basket: Overview, Element 29 Resources (ECU.v), Western Copper & Gold (WRN)
(WRN.to), Hot Chili (HCH.v) (HCH.ax).
Producer Basket: Overview, B2Gold (BTG) (BTO.to), Kinross (KGC) (K.to), Wesdome Gold
(WDO.to) (WDOFF).
TinyCaps Basket: Overview, District Metals (DMX.v).
Regional Politics: Argentina and the pro-mining consensus, Argentina: The PASO is upon us,
Ecuador: Activists win in the courts, Colombia: Nicolás and Gustavo Petro.
Market Watching: Chesapeake Gold (CKG.v) its CEO and a lesson underscored, That
SilverCrest Metals (SILV) (SIL.to) Technical Report, New Gold (NGD) Orezone (ORE.to) and
B2Gold (BTG): Misery loves company, Provenance Gold (PAU.cse) redux.
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 fundies section features two sets of 2q23 results from two of the
companies at the business end of the Stocks to Follow list. Amerigo Resources (ARG.to)
and Equinox Gold (EQX). The TL:DR is that I’m happy enough with both sets of
number, the details are below.
The summer lull is a theme that runs through this edition, as its influence shows up in
several spots and there’s no doubting the current market asthenia. Most of the time it’s
something to shrug off, but as the Market Watching section notes there are negatives
that can affect stocks large and small.
We managed to preview the last weeks’ two big political happenings in IKN741 last
Sunday and I don’t want to dive too far into the non-mining sewers, but some extra
words are required on the full-scale scandal that’s blown up in Colombia around Nicolás
Petro, son of President Gustavo, and his court testimony that could mean serious
trouble for the Petro government. Hell hath no fury like a son scorned?
Other things include notes on a good quarter out of Kinross (KGC), a bit of a rant about
goldbug worldviews and some positive funding news out of Aldebaran Resources
(ALDE.v). But there are other things besides those, there are always other things.
1
A day late and a dollar short
Due to Civic Holiday and what with one thing and another, this edition is landing on Monday
August 7th, rather than Sunday evening. Apologies for any inconvenience caused and it won’t
become a habit. However, please note that the prices of US listed stocks and other things that
traded today (e.g. DXY, USD, GDX) haven’t been altered, so it’s best to imagine it’s still Sunday
and not Monday. Not a bad thing to imagine.
A Civic Holiday and a CPI Day
We begin with a reminder that tomorrow, Monday August 7th, is Civic Holiday in Canada and
therefore its stock markets are closed for business. Next on the agenda is this week’s main
macro news, the US inflation readings with the higher profile CPI out 08:30am EST and its
sidekick PPI the next morning at the same time.
As for the CPI, according to the always reliable US Consumer Price Inflation (CPI)
Bill McBride (1), “…consensus is for a 0.2%
increase in CPI, and a 0.2% increase in core
CPI. The consensus is for CPI to be up 3.2%
year-over-year and core CPI to be up 4.8% YoY.” So now you know.
And that sits on the most recent readings as
seen in the chart (right). Please note that if the
forecasts are accurate, we’re about to see the
first notch up in the Year-over-Year rate since
the peak of June 2022 and while that makes logical sense (the rates are not compared to
monthly increments any longer), it may cause some headlines and talk of how inflation isn’t
under the complete control of the all-powerful Federal Reserve after all. To wit, please not
we’re still pencilling in the Fed’s own 2023 year-end forecast of +3.5% in December 2023, its
staging post on the way to getting the number back to 2.0% or below by 2026. Or at least
that’s what Jay Powell will tell you.
Keep on pet rocking in the free world
But there's a warning sign on the road ahead
There's a lot of people saying we'd be better off dead
Rockin' in the Free World, Neil Young, 1989
Fielding some mailbag this week, first up from reader BH who sent in a thoughtful mail on the
recent editions with little or no intro section.
“In the category of "all feedback welcome", I do not mind shorter introductory sections
on economics, Fed policy, etc. I believe the section is critical for you to place up front
your overall view of how the economic situation is likely to affect the price of metals.
That view colors the company specific recommendations that form the bulk of your
newsletter. So keep it, but I do not believe you need to lay out all your thinking on the
matter: just let your readers know your view on future metal prices and key reasons. I
read a lot of other economists making predictions on economics. No one is right all the
time and that is what makes a market. For me, I try to read the thoughts of both bulls
and bears to measure my risks.”
One of the great pleasures of this job is hearing from people who “get it” and in my opinion, BH
is exactly right on a couple of scores:
This is a publication focused on (junior) mining companies, but in order to get those
trades right we need to keep a close eye on what metals do; after all, the best PM
trade set-up in the world doesn’t survive a $200/oz sell-off in gold.
The discerning reader of The IKN Weekly understands that my opinions on the market are just
that; opinions. It would be nice to the right 100% of the time but I’m not and never will be, in
fact nobody bats a thousand in this game. Instead, the job is to offer up my view of market
matters with the implied, “That’s how I see it, what about you?” hanging on the end of any
2
4.1 7.1
6.2 2.4 0.5 4.5 4.5 3.5 4.5 2.6 8.6 0.7 5.7 9.7 5.8 3.8 6.8 1.9 5.8 3.8 2.8 7.7 1.7 5.6 4.6 0.6 0.5 9.4 0.4 0.3 2.3 5.3
10.0
9.0
8.0
7.0
6.0
5.0 4.0 3.0 2.0
1.0
0.0
12'naj bef ram rpa yam nuj luj gua pes tco von ced 22'naj bef ram rpa yam nuj luj gua pes tco von ced 32'naj bef ram rpa yam nuj luj gua pes tco von ced
source: U.S. BLS
intro op-ed. Ultimately I’m here to be disagreed with, because if you disagree it’s your duty to
fill the space it leaves with something else.
Kind of you to write in, BH sir. The other, related mailbag for today happened a couple of
weeks ago between this desk and A. Reader, and was more an exchange of several mails than
any single quotable quote. So no snippets offered but the upshot of the conversation and an
issue I haven’t managed to get out of my head since then was A. Reader wondering just what it
would take to make gold a truly popular investment again.
Now for sure, context is required as 1) central banks are leaning on gold these days and
stacking bullion in ever increasing quantities (the USA isn’t joining in, notably). Also 2) any hard
money advocate or goldbug (and there are quite a few reading these words) will defend bullion
as a smart ingredient of any long-term portfolio or net wealth component and to be clear, you
can count me in on that score. What we (A. Reader and I) are talking about and considering is
the waning interest that big money has for bullion and we only need to dial up one of our oft-
repeated GLD tracking charts to see that:
8.20 GLD: Inventory/Price Ratio, 2016 to date
8.00
7.80
7.60
7.40
7.20
7.00
6.80
6.60
6.40
6.20
6.00
5.80
5.60
5.40
5.20
5.00
4.80
4.60
3
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 22/9/21 32/32/2 32/3/5 32/71/7
Source: SPDR data, IKN calcs
To recap quickly, the thinking behind the Inventory/Price ratio is straightforward; GLD is the
biggest precious metals ETF in the world (by some distance) and though there are pretenders
these days, is still the preferred method for direct exposure to gold on Wall St. It’s not just Big
Money in GLD of course, but large funds and transactions in GLD will show up clearly in this
ratio calculation and as a result, give a decent reading on the appetite large instos and big
funds have for gold ownership.
Up to last year, this desk insisted that if the ratio of inventory tonnage held by GLD in its
physical vaults compared to the GLD price (its own proxy on gold) dropped to under 6.0X, it
signified a washout sentiment for gold on Wall St. Up to recently it worked well as a signal but
2023 has thrown out the window, as instead of bouncing off the 6.0X line the way it has before,
in 2016, 2019, 2020 or 2021, the ratio plummeted through the resistance level and these days
bounces around at 5.0X, a historic low. Mote interesting though is that long-term trend line,
something that I’ll freely admit to having ignored up to now. What this tells us is that gold isn’t
just out of fashion in 2023, it’s part of the slow but steady move away from gold as a safe
haven in the eyes of the financial world. Sentiment has deteriorated even further for large-scale
reserve ownership of gold as defensive safe haven position. Instead of gold, the big money now
runs and hides in the safety of US Treasury Bills and Bonds, we’ve known that for a long time
but recently that trend has only accelerated, with US paper deemed the best place to see out a
rough moment due to the improving yields it offers as the Fed raises base rates.
Again, this is nothing new or particularly perceptive, but what did strike this desk as noteworthy
were events around last week’s decision by Fitch Ratings to cut the USA’s credit rating (2):
Fitch on Tuesday downgraded the United States to AA+ from AAA in a move that drew
an angry response from the White House and surprised investors, coming despite the
resolution two months ago of a debt ceiling crisis.
It cited likely fiscal deterioration over the next three years and repeated down-to-the-
wire debt ceiling negotiations that threaten the government's ability to pay its bills.
It’s not the actions of Fitch that interests this desk, but the reactions of those watching and
acting on the news. Firstly the markets, which…
…didn’t seem to care much. The US Dollar is the barometer for all other US bonds (after all, a
dollar bill is nothing more or less than zero coupon debt) and while it cared about the strong
GDP data ten days ago and cared about the weak-ish jobs data on Friday, the Fitch news that
the whole of the country was at greater credit risk got a shrug of the shoulders and even
further safe-haven buying.
Nervous about The USA’s future? Well, run for cover by buying US debt paper.
It might sounds odd put like that but it’s how the market reacts to market jitters, even the ones
that threaten the US economy. Which brings me to my second point and the reason Neil Young
got quoted at the beginning, as once again it was telling to watch the rhetorical reactions of the
“gold community” (for want of another phrase) to the news out of Fitch. It’s not everyone, but
there are enough goldbugs out there who seem to actively cheer for the demise and fall of The
USA and will cheer on any type of bad news, especially if they think it will help gold move
higher (in dollar terms, which holds its own irony). It’s not the first time, as I surveyed social
media last week and read and watched reactions to the Fitch Ratings news, that gold has made
itself unpopular among the investment world simply because the modern financial structure
doesn’t want to align itself with people who’d bring it all crashing down if they had any choice.
This isn’t a small point and points to the issue my mailpal identified. It’s going to take a lot
more than just “dollar down” to make gold a truly popular investment alternative again and if
the only other alternative offered by the pro-gold community is “because to have to get ready
for Armageddon”, it’s not going to help matters at all. These days, the orthodox world of
finance considers gold as a pet rock, its proponents aren’t doing much to combat that
disparagement if the only argument for owning the stuff involves images of long lines in front of
soup kitchens.
Fundamental Analysis of Mining Stocks
Amerigo Resources (ARG.to) 2q23 financials
We covered the production and preliminary sales data from our preferred copper trade,
Amerigo Resources (ARG.to), in IKN739 dated July 16th so the financial results as posted last
Wednesday (3) didn’t come with many surprises on operational matters. However, the full
extent of the issues faced by ARG from the heavy storm that closed the MVC plant down and
knocked out power infrastructure in the region (not just for the company) became apparent on
the balance sheet and for that, we need to consider the changes to that end of its financials
more closely.
4
So let’s start with the easy bit and operationally, ARG’s numbers were close to our forecasts for
copper and such, so not going to repeat every graphic from IKN739 but a few help the
explanation run, starting with the revenues overview chart:
ARG: Gross Cu value, Cu revs and Revs total, per qtr
5
797.37
904.97
567.35 766.36 818.55
485.33
457.65 879.74
858.03
241.16 729.56 548.94 897.66 2.07 846.25 8.25 882.94
630.23
7.95 5.16
6.24
0.66 5.76
0.74
90
80
70
60
50
40 30
20
10
0
22q1 22q2 22q3 22q4 32q1 32q2 tse32q3 tse32q4
U$m Cu gross value
Cu revs
Revs total
source: company filings
Gross value of copper sold in 2q23 (U$52.8m) was close to our guess, as was the quarter-on-
quarter fair value adjustment of U$-3.521m as capper average price dropped from U$4.02/lb in
1q23 to U$3.80/lb in 2q23. So Copper revenues (U$49.288m) were very close to our guess, as
were the main charges to copper (chart below left) of the El Teniente (DET) royalty, smelting,
refining and transport. The only surprise was the revenues from Molybdenum (below right):
In its literature, ARG told us it sold 0.3m lbs Mo at an average price of U$20.76/lb and paid
royalties of U$1.007m to DET for the pleasure. All those numbers are in-line with expectation
and pointed to a quarterly Mo for the company of around U$5.2m, which was our forecast.
Instead we got moly by-product credit booked at U$2.859m and as a result, our top line
revenues on the P+L was duly affected. So we didn’t benefit from the bonus revenue levels
expected and there’s probably some sort of revenues lag that will show up as extra income in
future quarters. As such and as seen above, for the time being we’re keeping the moly credit to
the same U$5.2m level for the next two quarters and we’ll see what happens there.
Summing up, this chart that also featured in IKN739 predicted a $0.00 difference between
“main costs” at ARG and its average copper price for the quarter. We were very close…
ARG: Estimated margin/Lb Cu
52.3 80.4 38.0 74.3 44.4 79.0 61.3 32.4 70.1 82.3 23.4 40.1 56.3 46.4 99.0 36.3 01.4
74.0
81.3 05.3
23.0
93.3 08.3
14.0
64.3 20.4
65.0
18.3 08.3
10.0-
5.00
4.00
3.00
2.00
1.00
0.00
-1.00
12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
ARG: Charges to Cu revs
40
35
30
25
20
15
10
5
0
U$/lb Cu main cost subtotal
Avg Cu price
difference
source: ARG data, IKN calcs
12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3 tse32q4
U$m Transport ARG: Mo credits
smelting/refining
DET royalties
source: company filings, IKN ests
605.3
267.4 116.5 822.4
683.3 142.2 294.3
149.5
930.8
958.2
2.5 2.5
9
8
7
6
5
4
3
2
1
0
12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3 tse32q4
U$m
source: company filings, IKN ests
…with the real world result being negative one penny and that underscores our previous
assumption and forecast that on operations, despite the modest weakness in copper prices
compared to 1q23, that nasty storm and the ensuing unexpected interruption at the end of the
quarter, ARG in 2q23 would be operationally breakeven.
We see that in the P+L data and I’m going with three updated charts to show the story. Top
line revenues at U$32.036m were below our forecast of U$338m due to the unexpectedly low
number from the moly by-product. With COGs at U$35.341m total, that leaves a gross loss of
U$3.305m when we’d forecast a gross loss of U$0.2m. Annoying that I got the moly part
wrong, but the rest was in-line.
ARG.to: Quarterly Earnings overview
6
624.12
616.1
655.3-
738.8
874.31
503.3-
6.4
40.9
65
60
55
50
45
40
35
30
25
20
15
10
5
0
-5
-10
22q1 22q2 22q3 22q4 32q1 32q2 tse32q3 tse32q4
source: company filings
srallod
fo
snoillim
revenues
COGS
Gross profit
The operating loss of U$3.27m was $1.47m worse than our forecast of U$-1.8m, with ARG
benefiting from a noon-cash forex adjustment to help ease the accounting losses slightly. That
forex gain is one side of the coin as the Chilean Peso (CLP) strengthened against the US Dollar
(USD) last quarter, the other side is higher costs in USD terms and indeed, the company has
adjusted its forecast for the rest of the year (see below).
ARG.to: Gross, operating and net profits, per qtr 10.12
74.1- 41.5- 10.1-
44.31
72.3-
09.2
41.7
25
20
15
10
5
0
-5
-10
22q1 22q2 22q3 22q4 32q1 32q2 tse32q3 tse32q4
U$m Gross profit
op profit
Net Income
source: ARG data
But thing with ARG is that its DD&A charge of a little over U$5m is more about accountancy
than reality, as we’ve mentioned on several occasions before. It uses the standards set for non-
renewable resources and quite right too, but the reality at MVC is a feed supply from either DET
or the historic tailings facility that is for all intents and purposes limitless. As such, this chart
that backs out DD&A is a better snapshot of its operating margins:
ARG: The real world margin
33.21
97.71 24.02 93.22 79.61 15.22 49.52
95.3 20.0-
57.51 34.81
67.1
00.8
42.21
30
25
20
15 10
5
0
-5
02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3 tse32q4
U$m
source: ARG data, IKN calcs and ests
While that U$1.76m positive reading for 2q23 doesn’t cover the latest C$0.03/share dividend
payment (that came to U$3.71m), ARG has the balance sheet and cash buffer to absorb that
easily enough. And on that subject, time to dive into the bits of the 2q23 financials that weren’t
the same as our forecasts. That’s mainly due to
the effects of the storm, the damage it caused
and the extra capex used for repairs and for
the snap decision to bring forward the
transmission line upgrade project, take
advantage of the downtime and make MVC a
better machine in the years to come. Total
assets (right) dropped slightly more than
expected, but there’s nothing here to wring
hands about. Where the difference shows more
clearly is in its liquid assets, with cash dropping
to U$31.675m (below left), which is still more
than enough to cover everything the company
wants to do but over to the right, that red blob
on working capital looks ugly:
But it’s not as bad as it seems. This next
chart shows how liabilities have continued to
drop in the established trend of the last five
quarters and as a lot of those totals you see
are either the ongoing trade payables that
roll over in normal style, or non-cash
liabilities that are inconsequential as a going
concern. The pointy end of liabilities are the
cash debt and on that score, the chart below
shows how ARG continues to improve its
balance sheet in real terms:
This is what you get from a company that looks to the long-term and is keen on improving its
lot during times of strong copper prices. To pick one timeframe…
ARG: Debt profile
23.825.7
9.4 10.1 9.4 9.9
14.217.114.910.7
9.2 7.0 7.3 7.0 7.5 7.0 7.6 7.0
7
9.44
9.13
7.54 8.54 2.14 2.14 0.93 7.63 1.23
8.62 8.62
4.32 5.32 0.02 1.02 6.61 7.61 7.21
80
70
60
50
40
30
20
10
0
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
ARG.to: Total Assets 350
300
250
200
150
100
50
0
U$m
long-term borrowings
current borrowings
source: company data
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
source: company filings
srallod
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cash&eq Trade/Rec
Inventory other current
fixed
ARG.to: Cash and ST
80
70
60
50
40
30
20
10
0
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
$m ARG.to: Working capital
source: company filings
884.11
608.71
565.12
236.42
494.43
209.01
58.6
79.9
806.21
998.4-
0
40
35
30
25
20
15
10
5
0
-5
12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
U$m
source company filings
ARG.to: Liabilities Breakdown per qtr
200
180
160
140
120
100
80
60
40
20
0
91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
source: company filings
srallod
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snoillim
LT liab
current liab
…the Covid-19 plunge quarter saw ARG finishwith over U$51m in cash debt on its books, that’s
now down to under U$20m. I like that a lot.
The Conference Call the next morning (4) also centred on the effects of the storm and the good
work done by the team to repair and mitigate damage, as well as their decision to move
forward capex projects and take advantage of the unscheduled stoppage to improve power
infrastructure at its MVC production facility. All fine and if you want more on the corporate side
of the story, there’s a decent video available on the company YouTube channel (5) but what
matters to the numbers are that costs are now projected to rise. The prepared ConfCall notes
backed up the MD&A messaging and stated that along with the effect of higher power costs
and the stronger Chilean Peso, ARG has added 13c/lb to over 2023 cash costs projections,
moving the line from U$2.14/lb to U$2.27/lb. That’s the reason we have marked down 3q23
operational profits a little but all that would fade away quickly if copper spot prices move back
over the U$4.00/lb line in 4q23.
During the confcall Q&A, the only interesting issue arising was that of share buybacks. As seen
on the dedicated page on the company website (6), ARG has run no buybacks in the months of
June and July and CEO Aurora Davidson went into why that was. She noted that the price of
copper had dropped to under U$3.80/lb for a brief period and without saying it explicitly, it’s
clear that number is an internal threshold for the more aggressive levels of buybacks. Then by
the time copper had re-taken the line and was trading back and stable at the levels we see
today, ARG had been hit by the storm, the production interruption and the ensuing unexpected
capex draw for repairs and for the proactive improvements to infrastructure. All that’s a long
way of framing CEO Davidson’s response to the question, which was to say that (quote), “At
current copper prices we’ll take a pause” on share buybacks. That’s fair enough under the
circumstances. Nobody wants bad things to happen to a company but when they do, you also
want to be sponsoring an entity that can roll with the punches and adapt to issues. That’s what
we have in Amerigo Resources and its three-pronged strategy of capital distribution along with
the strategy of not weakening the company financially “just because” is the type that can do
just that, no mean feat for what is essentially a smallcap metals producer with a single
production facility. The upshot is that the capital distribution program to shareholders will
continue as planned:
The 3c/quarter dividend payments are unaffected and guaranteed, even if copper
prices drop further. We’ve run the numbers on this before and it would take copper to
stay under U$3.50/lb for a prolonged period for this to change.
ARG will likely return to the NCIB share buyback program once it has steadied the ship
and is through 3q23, or if copper prices improve sufficiently in the meantime. CEO
Davidson said during the ConfCall that “it’s a marathon not a sprint” on buybacks and
while I’d certainly prefer to see the share count dropping at the same speed it did in
the 2021/2022 NCIB, taking a break in order to maintain corporate financials through a
moment of unexpected stress is okay by me.
Then further down the line, copper prices of U$4.00/lb and above would be enough to
trigger the bonus dividend payments that ARG has planned, but these would (and
should) come after the NCIB program has been attended to correctly.
And that’s about it, time to wrap up the numbers on ARG.
Discussion and conclusion: It wasn’t a great quarter from ARG, let’s not try to hide the fact. We
saw costs up and production down, plus the unexpected hole in the moly credit revenues didn’t
help things. However, the quarter also shows the truly robust nature of Amerigo Resources
these days and the way it can take an unexpected hit and move on without any lasting damage
to financials. The company was keen on underscoring the pride they feel for an operational
team that responded to adversity and not only got the plant up and running quickly, but had
the presence of mind to bring forward infrastructure updates to take advantage of the
downtime to the maximum. Here at this desk, I’m going to applaud the corporate team for the
way they manage financials and do everything to build a long-term success story. Finally,
8
there’s one other big difference to the ARG story these days and we should give full credit
exactly where it’s due for the vast improvement (right). That’s the shareholder and market
image of ARG, so we again applaud CEO Aurora
Davidson for the way she is managing not only the
company, but market expectations as well. In times of
yore, if ARG had delivered an unexpectedly weak quarter
or news they were going to throttle back on the NCIB
buyback for a while, the market would have sounded the
alarm bells and the stock would have sold off. Not any
longer, these days a more educated audience
understands the corporate policy and “gets it”, that’s
100% Davidson and her style and substance of
management. It allows ARG to deliver a weak quarter
because the world understands that 1) it’s going to be a
one-off and 2) it doesn’t change any of the reasons for
ownership. The result is bargain hunters, happy to pick up shares at slightly lower prices and a
lot of market support at current levels. We wouldn’t have seen that in 2021, or even last year.
Equinox Gold (EQX) 2q23 financials (in US Dollars unless stated)
[Pre-note edit Monday: EQX dropped 3% today along with the rest of the PM
complex on a soft day for mining stocks. The sub-U$5.00 price levels look
appealing in light of our evolving long thesis, as seen below]
Today we check out the 2q23 production and financials from our preferred speculation on rising
gold prices, Equinox Gold (EQX) and this note should be considered a follow-on from the
analysis we published in IKN730 dated May 14th, when we first called “buy” on the stock and
opened the current position. In fact we got two significant NRs out of EQX last week. First up
on Tuesday August 1st EQX dedicated a separate NR to announce that its big a likely company
changing Greenstone project in Canada, owned in 60/40 JV with Orion, was still on-budget and
schedule according to all parties and the third party independent overseers. We could make
extensive quotes on this NR but I’m going to try to keep the note today focused on EQX
operations and financial results, so instead you get the (7) below for all the details:
“Greg Smith, President & CEO of Equinox Gold, commented: “The Greenstone Project
continues to advance on budget and on schedule. With most ancillary facilities
complete and transferred to the operations team and construction activities 83%
complete, our focus is shifting toward commissioning and operational readiness as we
advance to construction completion and first gold pour in the first half of 2024, and then
achieving commercial production.””
The reaction to that NR was interesting (chart right), as it came two sessions before last week’s
main event. While the mining sector was generally soft on
Tuesday and Wednesday, EQX was even worse and
dropped hard on what’s supposedly good news. The
reason? For me, the market suspected EQX was front-
running a weak quarter with a feelgood update at a
potentially suspicious time, trying to prop the stock into
earnings. As things turned out, the implied negative didn’t
occur and by the time the second quarter results were
incorporated into the market price, we got that rally you
see in the above chart on Thursday morning.
That’s the preamble, now for the real news. Post-close
Wednesday EQX announced (8) its 2q23 financials and as noted above, the market liked what it
saw. Here’s why and we first check out production. EQX makes no pre-announcement on its
quarterly production numbers and we were flying blind into the quarter by predicting a total of
just over 139,000 oz so the actual result of 137,660 oz Au produced and 138,094 oz Au sold
was right in the ballpark. That headline number breaks down like this:
9
Oz Au Los Filos Mesquite EQX: Consolidated Production, per qtr
Aurizona Fazenda
180000 RDM Castle Mtn source: company filings
160000 Santa Luz Pilar
140000
120000
20304 15500 15500
10 8 0 0 0 0 0 0 0 0 1 2 4 2 7 9 4 3 1 6 1 1 3 9 3 9 6 1 2 4 1 2 7 5 2 7 3 0 4 9 33810 1 2 5 5 6 8 8 0 5 0 1 2 5 8 4 5 7 3 9 7 32000 35000
60000 17050 34515 44953 27447 16405 21374 24000 27000
40000
20000 38856 31743 23121 40003 39574 37831 45000 45000
0
1q22 2q22 3q22 4q22 1q23 2q23 3q23est 4q23est
We’re now going to check on the six individual mine performances, updating the tracking charts
last seen in 1q23 with their Q2 numbers. And this isn’t just for show or to use up space because
one of the key elements of our trade from this point is the relative and overall health of
corporate assets. We need to consider each one and decide whether they are reasonable assets
and valued correctly. In the same way as IKN730, we start with the biggest mine and move to
the smallest but we’re also going to whip through them as quickly as possible:
1) Los Filos: Its Guerrero Mexico mine was a little light on production at 37,831oz, a little high
on costs at U$1,701/oz
EQX Los Filos: Cash costs
4000
3500
3000
2500
2000
1500 1000
500
0
Nothing dramatically bad here under the circumstances and EQX continues to guide for stronger
performance at Los Filos in the second half of this year.
2) Aurizona: Its biggest Brazil operation gave in-line results, with 28,537oz produced at an
AISC of U$1,399/oz:
No issues about these numbers and again, guidance for a better 2h23 was confirmed.
10
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
EQX Los Filos: Gold production, per qtr U$/oz
Cash Costs/oz
AISC
source: company filings
7169 19671 03571
51631
74492 97072 73823
33745
65883 34713 12132 30004 47593 13873
60000
50000
40000
30000
20000
10000
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
Oz Au
source: company filings
EQX Aurizona: Gold production, per qtr
19023
06472
84233 83473 09223
03862
38543
85214
63922 41991 90752
01833
00852 73582
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
Oz Au EQX Aurizona: Cash costs
1800
1600
1400
1200
1000
800
600
400
200
0
source: company filings
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
U$/oz
Cash Costs/oz
AISC
source: company filings
3) Mesquite: One of the original assets that created EQX in its roll-up, production at Mesquite
in California USA was in-line with expectations at 21,374 oz Au at an AISC of U$1,188/oz.
EQX: Mesquite: Gold production, per qtr
More importantly perhaps, we saw the
improvement of grade on pad during the quarter
that presages the expected production growth in
the coming quarters. The cycle time at Mesquite is
quite slow and while the return to good grade
should get production nicely over 30k/qtr in 2024,
we’re still forecasting 27,000oz for 4q23. The
company has sunk sustaining capex into stripping the mineralization and the newly the low AISC run
at Mesquite means it’s set to stay one of its more
profitable entities.
4) Fazenda: The second of its four Brazilian assets
returned a rock-solid production number of 15,479 oz Au in 2q23 and as the chart below left
shows, we’re expecting the same from this small but steady mine in the next two quarters.
However, AISC at U$1,487/oz jumped somewhat unexpectedly and that may be currency
related. Something to keep an eye on there, as a lot of EQX production depends on costs in
Brazilian Reales.
5) RDM: This is the mine that is finally being ramped back up to its full capacity after several
quarters of stymied production and this quarter was an important one, as its 12,951 oz gold
produced in the quarter at an AISC of U$1,553/oz shows the turnaround is on track.
11
12304 24863 78693 42013 71733 74132 58142 46232
07866
05071 51543 35944 74472 50461
47312
80000
70000
60000
50000
40000
30000 20000
10000
0
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
EQX Mesquite: Cash costs
Oz Au 2200
2000
1800
1600
1400
1200
1000
800 600
400
200
0
source: company filings
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
U$/oz
Cash Costs/oz
AISC
source: company filings
EQX Mesquite: average stacked grade, per qtr
13.0 92.0 24.0
75.0
27.0
52.0 83.0 54.0 44.0 03.0 84.0 74.0 02.0 42.0 74.0
0.80
0.70
0.60
0.50
0.40
0.30
0.20 0.10
0.00
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
g/t Au
Fazenda: Gold production, per qtr
4434 45931 81151 69181 47171 03131 89551 99441 14741 26331 43271
40302
58651 97451 00551 00551
22000
20000
18000
16000
14000
12000
10000 8000
6000
4000
2000
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3 tse32q4
Oz Au EQX Fazenda: Cash costs
1800
1600
1400
1200
1000
800
600
400
200
0
source: company filings, IKN ests
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
U$/oz Cash Costs/oz
AISC
source: company filings
EQX RDM: Gold production, per qtr
0073 87591 80081 86081 89451 98041 08851 26331
0617 6856
12301
1708 2436
15921
22000
20000
18000
16000
14000
12000 10000 8000
6000 4000
2000
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
Oz Au EQX RDM: Cash costs
2500
2000
1500
1000
500
0
source: company filings
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
U$/oz
Cash Costs/oz
AISC
source: company filings
EQX has expectations for more from RDM in the second half of 2023 and beyond, looking for
production of over 50,000 oz this year which means it needs to get back to 17k oz/qtr by 4q23.
RDM was a dose of clear good news for the company and if things go to plan, that AISC should
drop in the quarters to come.
6) Santa Luz: The final producing asset and its newest operation continued its steady and
correct start as it climbs toward its expected maximum rate of around 17k oz gold per quarter.
The AISC came in slightly higher than expected, echoing the result from Fazenda.
U$/oz EQX Santa Luz: Cash costs
EQX Santa Luz: Gold production, per qtr
3000 Cash Costs/oz
AISC
2500
2000
1500
1000
500
0
4q21 1q22 2q22 3q22 4q22 1q23 2q23
source: company filings
EQX 2q23 Financials: Consolidated revenues of
U$271.6m were an operational record for EQX (we
set aside the one-time gain from selling Mercedes
to Bear Creek in 4q221) and once $48m or so of
DD&A is backed out, Mine Operating Income came
to $30.714m and operating income (after G&A and
exploration) $14.072m. Those numbers were generated from an average gold price of
U$1.962/oz and with gold staying in that price
range, the expected production increases in the
second half of 2023 should bring down overall
costs on a per-ounce basis and improve margins
further.
We mustn’t lose sight of the basic fact that EQX in its current, pre-Greenstone set-up is a high
cash cost entity and even when Greenstone comes online and is fully operational (end FY24 if
things go well) our forecast is for an AISC that won’t drop under U$1,400/oz. So if you’re
looking for the lowest cash cost player out there go somewhere else, but the attraction of EQX
and this trade has always been the combination of a large annual gold production (over 500k
oz, moving to 800k oz with Greenstone) and the leverage one enjoys if and when gold prices
break the U$2,000/oz level and move higher.
12
012
1555
48171 08641 58441 12351
Oz Au
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
1q22 2q22 3q22 4q22 1q23 2q23
source: company filings
EQX: Revenues vs Prod Costs
7.922 8.641 2.622 9.931 1.542 7.251
2.183
5.512 2.322 4.251 6.422 7.071 1.542 8.881 2.952 2.861 1.432 2.271 6.172 7.291
U$m
450
Revenues
400
op ex
350
300
250
200
150 100
50
0
1q21 2q21 3q21 4q21 1q22 2q22 3q22 4q22 1q23 2q23
source: company filings
EQX: Mine Operating Income, per qtr
291.34
390.58 96.79 802.46
442.44 292.14 496.54
63.99 594.82 499.61
934.7
759.13 164.41 417.03
110
100
90
80
70
60 50 40
30
20
10
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
U$m EQX: Operating income, per qtr
source: company filings
519.33
743.45
116.47
380.01
509.13
419.31
116.12
340.97
70.31 843.3- 595.21- 81.31 536.1 270.41
U$m
90
80
70
60
50
40 30 20
10
0
-10
-20
20 20 20 20 21 21 21 21 22 22 22 22 23 23
1q 2q 3q 4q 1q 2q 3q 4q 1q 2q 3q 4q 1q 2q
source: company filings
EQX: Current assets per qtr
1200
1100 1000
900
800 700 600
500
400
300
200
100
0
13
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
source: company filings
srallod
fo
snoillim
What we want to see from EQX at the moment are mines that are working, valid, profitable in
their own right and can justify their current carrying value. The only slight doubt on all those
scores is with the big Los Filos (and always will be, its geographical location in Guerrero and
history of issues with the local population are not going to go away) and that’s part of the risk
one takes in this trade, but aside that the EQX assets are all performing well.
This leads us to the balance sheet and the crux of the valuation issue at EQX. We know that
Greenstone is on time, on budget and should start production mid-2024. We also know that
EQX has drawn down the last U$127m of its revolving credit facility recently and that, along
with its reasonable cash and liquidity situation, topped up by modest but useful operating
profits on a corporate level, ensure there will be no problem with finishing the build-out and
getting free cash flow positive at Greenstone. At that point, EQX will become a bigger and far
more valuable company.
EQX: Assets
other current cash & eq
With the recent drawdown, we expect total assets to top $4.25bn by next quarter and book
value at $2.43Bn, or U$7.76 per share. The big liabilities position is an issue, but with
performing assets at all six of its operations (plus Greenstone), there’s virtually zero chance of
seeing any impairments in the near future and the company can fully justify its intrinsic
valuation. Working cap is in good shape, EQX will be able to cover the covenant terms of the
debt and execute on its growth plans.
Once that debt begins to get paid off in correct style and liabilities drop, it’s difficult to see how
its equity valuation doesn’t rise in tandem and the
first stop should be a return to a price/book value
of a simple 1.0X. That’s something we predict will
happen by mid-2024 as long as the final months
of the Greenstone build go as planned. Therefore,
this chart (right) isn’t just the BV/share tracker, it’s
also a reasonable proxy on the share price target
and with EQX at U$5.06 this weekend, offers a
very attainable +53.6% price target on this stock.
96.096
1.0702 9.9702 7002 4.7202 3.0602
1.2782 7.5092 1.4082 8.4882 3.5103 2.2903 3.1023 6.9613 3.2923 0043
4500
4000
3500
3000 2500
2000
1500
1000
500
0
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
U$m
fixed other current
cash & eq
source: EQX filings
EQX: Liabilities Breakdown per qtr
2000
1800
1600
1400
1200
1000
800
600
400
200
0
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
U$m 800 EQX: Working Capital per qtr
LT liab 700
current liab 600
500
400
300
200
100
0
source: company filings
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
source company filings
srallod
fo
snoillim
EQX: Book Value per share (USD)
55.3
66.5 96.5 07.5 89.5 91.6
28.7 57.7 85.8 43.8 78.7 55.7 66.7 46.7 86.7 67.7
10.0
9.0
8.0
7.0
6.0
5.0 4.0
3.0
2.0
1.0
0.0
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
P/BV
source: TSX, EQX filings
There are three main risks to this trade:
Los Filos: It’s one of its big producing mines and is always going to have the shadow of
elevated political and social risk around it. EQX needs Los Filos to produce well between
now and the start of Greenstone.
Greenstone: All is fine to date and I have to admit, it’s impressive to see a large scale
mine civil works project remaining on time and budget under the current macro
circumstances. So well done to EQX and to the EPCM contractor G Mining so far, but if
there’s any issue on the last lap that wil hit the share price.
The price of gold: The other two above are latent concerns, the big one at EQX is the
price of gold as its high cost per ounce will always leave the stock vulnerable to a sharp
downturn in the gold price, especially as it has stacked its balance sheet with financial
debt it must service. Obviously, this is a double-edged sword and in fact, the whole
premise of this trade is to use EQX as our speculative trade on gold going higher, as the
leverage of those high costs will give better bang-per-buck if gold adds 5% or 10% to its
price in the quarters to come. However you must be clear and go into this trade with
eyes open, as the downside potential isn’t just significant, a big drop in the price of gold
could wipe out this equity completely.
The bottom line: Equinox Gold (EQX) delivered good news to market last week, as Greenstone
continues on time/budget and its operating mines are all performing to an adequate level. The
stock rallied slightly on the news but it continues to be behest to the movements in the price of
gold. However, its financial situation is good and barring some catastrophic drop in the price of
gold, Greenstone is now looking good and its remaining U$170m or so of pro-rata capex is
easily covered by the EQX balance sheet.
I like this trade for what it is, a leveraged speculation on the price of gold. I’m also aware of the
risks and EQX isn’t about not become a Top Pick, it’s a vehicle with a specific task in my wider
portfolio. Happy holder and as long as gold does what we all think it’s going to do and break
U$2,000/oz definitively, the chances of making 50% on the investment are high.
Stocks to Follow
The lack of interest in the mining sector shows in all three of our main tracking sections this
week, with the TinyCaps slot offering the exception that proves the rules among its larger sized
brethren. Here in the Stocks to Follow list it was a case of the majority losing ground on the
week but with no massive losers and mostly a case of losing a couple of pennies or a
percentage point and staying inside established trading ranges, all on moderate volume. There
were just five week-over-week winners on the list and all of them from the lower reaches of the
14
table (ALDE.v, MIRL.cse, MARI.to, RUG.v, MENE.v) and of those, the biggest percentage winner
by far was Minera IRL (MIRL.cse up 200.0%), which looks more impressive than it is (see
below). The other big move up was from Mene Inc (MENE.v up 19.4%), which was more to my
personal taste. Two stocks were unchanged on the week (NCAU,v, OCI.v) which leaves 14
losers but the only bigger loser was Libero (LBC.v down 10.0%, or 0.5c in real money).
Summing up, it was an odd week. It’s not good to see your (paper) net worth drop of course,
but in this environment and with the summer lull now with us, I found it difficult to get annoyed
with the overall performance of the portfolio and in particular, those stocks carrying most of my
junior money (MAI, ARG, SOLG, EQX etc). I was also a buyer last week and I like buying at a
discount.
Glad to say that with the jettisoning of Goldshore (GSHR.v) we’re back to 20 stocks in our table,
the self-imposed maximum number and with CTGO moving from Watch List to owned stock, I
hold shares in 15 of them with just five left in the waiting room, a better ratio. A worse ratio is
eight are in the green on their cost averages, 12 are in the red. Working on that.
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$0.305 46.7% $0.75 first tgt, #1 idea
RECOMMENDED STOCKS
Amerigo Res ARG.to STR BUY C$1.36 12-Dec-21 C$1.56 14.7% Main Cu trade, top fundies
SolGold SOLG.to STR BUY C$0.265 19-Feb-23 C$0.27 1.9% Cu in Ecuador, M&A tgt
QC Copper&Gold QCCU.v BUY C$0.265 25-Apr-21 C$0.165 -39.6% delayed MRE now due end Q3
Equinox Gold EQX SPEC BUY U$4.46 30-May-23 U$5.06 12.6% Au leverage trade, trading well
Faraday Copper FDY.to BUY C$0.79 26-Mar-23 C$0.82 3.8% USA based Cu exploreco
Contango Ore CTGO BUY U$18.70 30-Jul-23 U$18.30 -2.1% new purchase IKN741
AbraSilver Res. ABRA.v BUY C$0.36 4-Dec-22 C$0.28 -22.2% added for last time Mar'23
Western Explor. WEX.v BUY C$1.87 9-Apr-23 C$1.20 -35.8% Au spec in NV USA
Newcore Gold NCAU.v SPEC BUY C$0.205 23-Oct-22 C$0.15 -26.8% Financing closed, bottom in
Rio2 Ltd. RIO.v BUY C$0.83 22-Apr-18 C$0.25 -69.9% Cheap on permit probs, appeal
SPECULATIVE TRADES
Orecap inv OCI.v SPEC BUY C$0.04 20-Nov-22 C$0.035 -12.5% corp revamp, new strategy
Aldebaran Res. ALDE.v SPEC BUY C$0.72 16-May-21 C$0.90 25.0% now in drill assay season
Minera IRL MIRL.cse avoid C$0.195 22-Jul-12 C$0.015 -92.3% run into ground byCEO, AVOID
A WATCHLIST OF POTENTIAL TRADES. NB: I DO NOT OWN
Marimaca Copper MARI.to WATCH C$3.65 26-May-23 C$4.23 15.9% Likely buy, want cheap entry
Latin Metals LMS.v WATCH C$0.15 11-Sep-22 C$0.115 -23.3% Peru&Arg prospect generator
Surge Copper SURG.v WATCH C$0.11 18-Jun-23 C$0.115 4.5% tinycap Cu in BC Canada
Libero Copper LBC.v WATCH C$0.065 2-Jul-23 C$0.045 -30.8% Watching for Arg drill permit
Rugby Resources RUG.v WATCH C$0.06 26-Mar-23 C$0.055 -8.3% tinycap Cu in Colombia
LONG-TERM NON-MINING HOLD
Mene Inc. MENE.v adding C$0.63 6-Dec-20 C$0.43 -31.7% LT bet, adding slowly
CLOSED TRADES IN 2023 date closed close price
Altiplano Metals APN.v jan'23 C$0.31 17-Sep-21 C$0.17 -45.2% delayed and will dilute soon
Western Copper WRN.to mar'23 C$2.02 13-Nov-22 C$2.32 14.9% sold on reduced M&A prob.
Chesapeake Gold CKG.v may'23 C$3.07 20-Feb-22 C$1.75 -43.0% Closing on legal action news
Amerigo Res ARG.to may'23 C$1.36 12-Dec-21 C$1.48 8.8% sold 20% to raise cash
2015 to 2022 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Now for notes on some of the covered companies:
Contango ORE (CTGO): POSITION OPENED. Further to last week’s main note, we do as
we said. If I had better timing I could have got in at under U$18.50, but I’m not going to beat
15
myself up about my bad micro-timing after waiting so long and getting the dollar number right
beats getting the cents spot on, as well. It was reasonably easy to buy shares in CTGO last
week, likely the product of that 240,000 overallotment facility still being open. Meantime we
also got the webinar on Wednesday morning at which company CEO Rick van Alphabet
confirmed that all was in order at Manh Choh, its end of the build capex was fully covered and
the project was proceeding on schedule (something we also heard from 70% owner and
operator Kinross (KGC) (K.to) when it reported its quarter on Wednesday afternoon). You can
see that event on this link (9) and once Manh Choh is done, you’ll get to hear what the
company plans for Lucky Shot.
Aldebaran Resources (ALDE.v): Let me get my two petty gripes out the way: Firstly, volume
perked up on Tuesday and Wednesday after last week’s NR on financing, but once again fell
away by the end of the week. Secondly, as volume has and continues to be the weak link in this
story, it’s not going to be improved by selling another large tranche of shares into the tight-
hand corporate and insto sponsors of ALDE. The lack of volume stops ALDE from becoming a
valid trade option for those market participants looking for ways to play the copper market and
that’s a pity.
Okay, gripes done and on Tuesday ALDE came out with more strongly positive news (10), a
combination non-brokered private placement that sees the four entities most closely connected
with the funding of ALDE buying shares. Here’s a list:
South32 is buying 8,528,756 shares at a price of C$1.01, by which its strategic
partner position in ALDE moves to 14.8%
Original sponsor Route One (who have been backing this team since the Antares
days) is buying 8,200,000 shares priced at C$0.88
Altar optioners and JV partner South32 is buying 1,462,000 shares priced at C$0.88
Management is adding to their own position and showing more skin in the game,
adding an aggregate of 400,000 shares also priced at C$0.88
Do the sums and that’s 18,590,756 new shares for gross proceeds of C$17,468,604, which puts
the new total count at an IKN estimated
172.55m shares out and bring in enough
ALDE.v: Shares outstanding
treasury to cover all company activities in 2023 200
180
and 2024, unless of course they start
160
accelerating development significantly at Altar 140
120
next year (and if so, there’s likely good news and
100
reason to do so, therefore not an issue). Here 80
60
right is how the share count has risen from
40
under 80m just after Covid, to where we are 20
today but even though the count has risen 0
significantly, we shouldn’t see any more dilution
for a while.
This is all good for ALDE (bar my petty gripes
above) and the insto interest in the stock and its story is a strong endorsement of what the
team is doing at Altar. The stock price did well and even though it gave up 6c on Friday as the
market staggered into the (long Canadian) weekend, the news got its deserved good reception
from the market and ALDE even looked like
breaking the Loonie line for a while. Finally and
while cogitating on the news and how to write it up
this weekend, I found myself playing around with
chart time scales and once we focus out and
consider the whole post-Covid span, ALDE has been
pretty constructive price-wise. That’s not a Filo
Mining chart for sure, but neither is it Regulus and
it’s clear which of the group’s companies has been
the better horse to back.
16
91.ram ey91.nuj 91.pes 91.ced 02.ram ey02.nuj 02.pes 02.ced 12.ram ey12.nuj 12.pes 12.ced 22.ram ey22.nuj 22.pes 22.ced 32.ram ey32.nuj tse32.pes tse32.ced
source: company filings, IKN ests
Faraday Copper (FDY.to): Somewhat annoying
that FDY couldn’t hold onto its gains of the week
before last, but at least a look at the ten-day chart
provides some logic (right). We want out-sized
moves from our leveraged juniors and that’s we
got into the previous weekend, but juniors also
need momentum and market buzz to keep a rally
going, especially at this time of year when fewer
people care about the vagaries of the junior
mining world (or even fewer than normal, better
said). In that way overbought became oversold
and there were a few bargain hunters buying at
the 80c line end week.
FDY is in the right frame to do well if/when copper breaks U$4.00/lb to the upside. It’s why we
own it, after all.
Marimaca Copper (MARI.to): The MARI situation is somewhat different, however: No
sellers. If a seller shows up of if copper sinks, we may see sub-U$4.00 prices again but if not,
that’s looking more and more like a hard floor level.
Minera IRL (MIRL.cse): While the 200% gain seen in
Minera IRL (MIRL.cse) looks spectacular, in effect it’s
only a penny as the stock moved from 0.5c to 1.5c. Also
true of its volume traded, for example the 3.19m shares
that changed hands on Friday looks a lot but at these
prices, it’s less than C$50 in cash. For context, around
2,700 share volume in CTGO does the same money. The
reality of MIRL continues to be this chart, a company
ruined by its highly suspect management team and on
the cusp of losing its only asset of worth, through sheer
incompetence.
Rugby Resources (RUG.v): It took six weeks, but on
Wednesday RUG announced the successful closure (11) of its 5c per unit placement (unit =
share + full warrant at a 15c strike) and managed to sell a touch under 23.5m units for gross
proceeds to $1.17mnot bad considering it was aiming for $1m. So with money in the bank,
we’re looking to the company to re-start its promising Cobrasco drill program and finish the
hole it started way back when.
SolGold (SOLG.to) (SOLG.L): The advantage of buying at the right price (we opened end
February, you may recall) is that it gets easier to hold a stock through quiet periods. We know
that from the ongoing ennui of our Top Pick Minera Alamos (MAI.v), there’s a miniature version
going on in SolGold (SOLG.to) today. By dialling up the YTD chart of its main London listing
(right), we see how interest in the name has faded in the rup-up to the August 20th election
17
despite SOLG having recently secured its key stability
agreement with the government of Ecuador (something
any future government cannot overturn or suspend,
unlike the recent fun with executive decrees (see
Regional Politics below).
However, this strikes me as the calm before the storm
and once we have a better idea of the political landscape
in Ecuador’s near-term and medium-term future, we can
expect interest to pick up once again. Easy to hold and
those with an eye for a bargain may want to add at these prices, it’s basically my own cost
average after all.
Orecap Invest (OCI.v): I owe you (and myself) a detailed update and review of OCI, it’s
been a while since this small position pennyshoot got a mention and it’s had some interesting
news come through as well, from closing its investment in Awalé (ARIC.v) to bringing in new
officers to run the show. There’s no real rush to do so, however, so I’m going to wait until it
posts its next quarterly filings (probably end August), collate all the information and put it into a
single note, rather than piecemeal matters for such a small market cap stock. For the time
being, I’ll point you to its latest corporate presentation dated July 21st if you’d like more on the
overall situation (12).
The Copper Basket
After thirty-one weeks of 2023, The Copper Basket shows a loss of 4.39% to level stakes:
company ticker price 1/1/23 Shares out Market Cap current pps gain/loss%
1 Solaris Res SLS.to 6.44 146.599 958.76 6.54 1.6%
2 Marimaca Cop MARI.to 3.22 88.226 373.20 4.23 31.4%
3 Western Copper WRN.to 2.41 151.597 288.03 1.90 -21.2%
4 Arizona Sonoran ASCU.to 1.92 105.96 179.07 1.69 -12.0%
5 Aldebaran Res. ALDE.v 0.78 172.551 155.30 0.90 15.4%
6 Hot Chili HCH.v 0.78 119.455 155.29 1.30 66.7%
7 Oroco Res OCO.v 0.91 213.438 149.41 0.70 -23.1%
8 Faraday Copper FDY.to 0.54 175.2 143.66 0.82 51.9%
9 Regulus Res. REG.v 1.10 124.509 107.08 0.86 -21.8%
10 Pan Global Res PGZ.v 0.46 212.145 64.70 0.305 -33.7%
11 Kodiak Copper KDK.v 1.12 56.2 43.27 0.77 -31.3%
12 QC Copper QCCU.v 0.165 162.815 26.86 0.165 0.0%
13 Element 29 Res ECU.v 0.16 86.966 13.91 0.16 0.0%
14 Libero Copper LBC.v 0.155 93.869 4.22 0.045 -71.0%
15 Atacama Copper ACOP.v 0.16 35.94 4.67 0.13 -18.8%
NB: All stocks in CAD$ Portfolio avg -4.39%
A mildly negative week for The Copper Basket on modest volumes, nothing special to report
this week. There were nine week-over-week winners (SLS.to, MARI.to, OCO.v, ASCU.to,
ALDE.v, HCH.v, REG.v, KDK.v, ACOP.v) but none
of them were big moves, whereas the six WoW 12% The Copper Basket 2023, weekly evolution
losers (WRN.to, PGZ.v, FDY.to, QCCU.v, ECU.v, 10%
8%
LBC.v) included three double figure percentage 6%
drops in Element 29 (ECU.v down 11.1%), Pan 4%
2%
Global (PGZ.v down 10.3%) and Libero (LBC.v 0%
down 10.0%) and that made the difference to the -2%
-4%
overall basket average. -6%
-8%
-10%
18 ts1naJ ht8naJ ht51 dn22 ht92 ht5bef ht21 ht91 ht62 ht5raM ht21 ht91 ht62 dn2rpA ht9 ht61 dr32 ht03 ht7yam ht41 ts12 ht82 ht4nuj ht11 ht81 ht52 dn2yluj ht9 ht61 dr32 ht03 ht6gua
source: IKN calcs
The week in copper started well when the metal briefly broke U$4.00/lb to the upside (on its
main futures contract, at least) but the
level couldn’t hold and there continues to
be a lack of buyers and the Chinese
“we’re not paying that” line in the sand
seems to be holding. So copper slipped
back again and while its closing price is
still decent and profitable for any
reasonable producer out there, the
speculative cash still isn’t around this
corner of the market. That’s as much
August doing August things as any
verdict on the true state of underlying
demand. Roll on Labor Day.
The early week move was on speculation
that China was about to roll out its long-
rumoured stimulus package and enthusiasm for that story waned when all that came from
Beijing was official sounding silence. The rally was then firmly banged on the head by hard
data, when on Tuesday the China Purchasing Manager’s Index reading for the month of July
came out at 49.2, disappointing the market. According to ING (13), that reading was below
both forecast consensus (50.5) and the level which implies equilibrium, which means Chinese
PMI data has given four straight months
of contraction since the much-vaunted
China Manufacturing Purchasing Managers Index (PMI)
spike early year (that we covered closely 54
at the time). The updated chart (right) 53
with its cut-down Y-axis shows that bump 52
clearly, the time when the combo of late 51
2022 stimulus and the sudden end of 50
Covid Zero in China brought a surge in 49
production and growth that hasn’t 48
followed through as yet. 47
46
Once the Chinese data has been baked in,
copper proceeded to follow the ups and
downs in the US Dollar and didn’t show
much of its own accord. By the end of the week, the market was again talking up the potential
of China proceeding and announcing that elusive stimulus package, but perhaps it’s best not to
hold one’s breath on that potential upside catalyst any longer. We now move to our weekly
review of copper inventories, data supplied by Chile’s Cochilco:
The Summer Doldrums are undeniable. The aggregate copper in the world’s three
official stocks systems rose by 4,316 metric tonnes (mt) last week to close Friday at
166,767mt, movements that are even less interesting when we start to consider details.
On the face of it, the 9,138mt drop in stocks from Shanghai SHFE warehouses last
week, leaving the total at 52,152mt, looks like a big move and plays into this desk’s
narrative about dwindling copper stocks on the Chinese East coast. But…
…over at the LMS, stocks rose by 14,900mt to close the week at 79,325mt. Most
importantly, 8,350mt of that total was copper that landed in its South Korea warehouse
system (plus 1,775mt in its Taiwan warehouses) and its looks like arbitrage out of SHFE
to me. Even with the best and most bullish of viewpoints, this week is a noisy dataset
that doesn’t indicate trends. Cancelled warrants remain ultra low, at just 375mt.
Comex stocks finally put in a drop, down 1,446mt to close the week at 39,606mt.
That’s the first week in very many that stocks have corrected down.
The dedicated SHFE charts show that drop to just over 50kmt and yes, it’s bullish as a visual
19
0202naj bef ram rpa yam nuj luj gua pes tco von ced 1202naj bef ram rpa yam nuj luj gua pes tco von ced 2202naj bef ram rpa yam nuj luj gua pes tco von ced 3202naj bef ram rpa yam nuj luj
source: China PMI
but until we hear about Chinese end-users having difficulty in sourcing physical, it’s more likely
to be arbitrage between SHFE and LME, pieces moving round the chess board.
SHFE copper inventory levels, 2018 to 2023
400000
350000
300000
250000
200000
150000
100000
50000
0
20
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 2023
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 ht51 ht7 ht03 dn22 ht71 ht9 ts1von ht42 ht71 ht01 dn2tcO 7102ts1naJ ht62 ht81 ht01 dr3ced ht52 102ht72rpa ht91 ht11 9102
dr3bef
102ht82rpa ts12 ht31 0202ht5naj 202ht92ram ts12 ht31 0202ht6ced ht82 dr32 ht51 ht7 202ht03naj ht42 ht71 ht9 3202
naJ
ht62 ht81
Mt Cu
|
source: Cochilco
Now for notes on a couple of basket stocks.
Element 29 Resources (ECU.v): We noted in IKN741 last weekend that ECU.v hadn’t
managed to close its $2m financing and that “…two full months have passed since that
placement was announced, therefore the lack of news is its own signal.” As if by magic, this
showed on Monday (14):
Vancouver, British Columbia — July 31, 2023 – Element 29 Resources Inc. (TSXV:
ECU) (OTCQB: EMTRF) (BVL: ECU) (“Element 29” or the “Company”) announces it
has terminated the non-brokered private placement offering previously announced on
May 30, 2023.
The Company intends to complete a new, non-brokered private placement (the
“Financing”) of up to 13,333,333 units of the Company (the “Units”) at a price of $0.15
per Unit for aggregate gross proceeds to the Company of up to $2,000,000.
Each Unit issuable under the Financing consists of one common share in the capital of
the Company (a “Common Share”) and one non-transferable Common Share purchase
warrant (a “Warrant”). Each Warrant is exercisable for one Common Share (a “Warrant
Share”) for a period of 24 months following the Closing Date at an exercise price of
$0.25 per Warrant Share.
Lest there be any doubt, it’s a tough market out there. So instead of raising $2m by selling
11.111m units at 18c with a half warrant priced at 27c, ECU is selling 13.333m units at 15c with
a full warrant marked at 25c. In response ECU sold down to 16c on the week and is back to
UNCH on the year.
Western Copper & Gold (WRN) (WRN.to): Last week we bemoaned as to whether there’s
a more frustrating copper junior out there. This week we report that WRN continued to display
painful negative divergence from the pack. It’s not the first time it’s done this, as the chart
(right) comparing the stock to the main copper ETF COPX shows. However, this time WRN has
decided to take a dive while the rest of the market rebounds and in the period before the key
moment at the end of this year, when Anglo supposedly decides whether to continue with its
strategic relationship…or not.
Honestly, I don’t know what to make of this relative
weakness on low volume. However, it’s worth watching
because WRN has a track record of sharp and quick
rallies, so the traders reading this should keep it on
their copper target radar and watch volume. I wouldn’t
be averse to a quick fliptrade, so even though you
almost certainly know, by way of full disclosure I have
no position here at the moment.
Hot Chili (HCH.v) (HCH.ax): For some reason only known to Australians, the proposed name
change from its current crass and unfunny title to the mooted “Costa Copper” was voted down
at the AGM, so we’re stuck with an antipodean’s idea of amusement for the foreseeable future.
Also, HCH isn’t wasting time in spending the U$15m it raised for Osisko Gold Royalty (OGR) in
exchange for a 1% NSR on all copper and 3% on all gold produced at Costa Fuego, as this
week it announced (15) the start of the next round of drilling, a 30,000m campaign that will
have development of the Cortadera target as #1 priority on its list. By the end of this phase,
we’ll likely know whether the company’s floated idea of making Cortadera fully open-pit (and
therefore hiking upfront capital) will happen. If you ask me (and you’re not, but I’m going to
tell you anyway) it’s highly likely that the so-far lightly drilled Cortadera moves from open
pit/block cave to a fully open pit mine plan as the PEA moves to PFS.
The Producer Basket
After 31 weeks of 2023, the Producer Basket shows a gain of 1.23% to level stakes:
company ticker price 1/1/23 Shares out MktCap(U$Bn) current pps gain/loss%
1 Newmont NEM 47.20 799 32.66 40.87 -13.4%
2 Barrick GOLD 17.18 1761.54 29.05 16.49 -4.0%
3 Agnico Eagle AEM 51.99 488.9 23.74 48.56 -6.6%
4 Wheaton PM WPM 39.08 451.963 19.86 43.94 12.4%
5 Kinross Gold KGC 4.09 1256.1 6.22 4.95 21.0%
6 Alamos Gold AGI 10.11 393.1 4.59 11.67 15.4%
7 B2Gold BTG 3.57 1074.567 3.43 3.19 -10.6%
8 Hecla Mining GFI 5.56 610.491 3.21 5.25 -5.6%
9 Eldorado Gold EGO 8.36 185.73 1.72 9.24 10.5%
10 Wesdome Gold WDOFF 5.53 147.526 0.76 5.15 -6.9%
All prices and stock quotes in U$ Port. avg 1.23%
A negative week for the precious metals miners, which took their cue from the drop in gold
(GLD proxy down 0.92% week-over-week) and sold off in general terms (GDX down 2.7%,
GDXJ down 3.8%), though there were some bright spots among the drudgery. Of our list of
ten, eight were losers and we’re not listing those, instead two cheers for the two week-over-
week winners Kinross (KGC up 1.9%) and Wesdome (WDOFF up 1.4%). To the downside, the
worst of the losers was B2Gold (BTG down 7.3%) which failed to impress with its 2q23
earnings. Our tracking charts show two things:
1) The sector is only just positive on the year. That’s not great, especially when you
21
consider the context of a gold price that ended 2022 at U$1,814/oz (London Fix) and
the same register has gold at U$1942.45/oz this weekend.
2) We clawed back some of the lag to our GDx benchmark, but we’re still have to find 2%
or so to take the lead, something we haven’t done all year. Humph and harrumph, not
for notes on three of the component stocks.
The 2023 Producer Basket: Weekly performance and
comparative to GDX control
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
B2Gold (BTG) (BTO.to): You kind of feel something isn’t quite right when the earnings report
comes with a shouty NR cover headline. The was the case last Wednesday when I read the BTG
NR header (16), “B2Gold Reports Q2 2023 Results; Strong Q2 2023 Operating Results Position
B2Gold to Achieve 2023 Annual Guidance; First Half of 2023 Cash Operating Costs and All-In
Sustaining Costs Both Below 2023 Guidance Ranges”.
Strong.
Achieve.
Costs below ranges.
Okay Clive, but once the words were done the
numbers told this desk that the 6c EPS (a 14X
forward PE) wouldn’t win awards, its sales at
U$470m were flat compared to 1q23, costs had
risen and there’s a continued balance sheet drain
in 2023, likely Back River showing the first signals
of what it will do to corporate financials for the
next couple of years. The market reaction the next
morning was not a surprise (right) and it may
have been unfortunate timing to report on a down
day during a down week for the gold complex, but
luck is luck. Thus ends a very brief note on an uninspiring quarter from BTG, we now move to
more positive matters with a short write-ups on the two basket winners on the week.
Kinross (KGC) (K.to): One of only two of our ten that managed to improve on the week and
that was all about its decent 2q23 earnings results it reported on after the close on Wednesday
(17), August 2nd. The only slightly strange thing is how the market slept on the results Thursday
and didn’t rally KGC in relative terms until Friday, apparently waiting for a positive gold day to
buy the good numbers.
Results were driven by operations and a 27%
improvement in margins compared to the
previous quarter, with operating earnings at
U$237.8m and net earnings U$151.0m (slightly
higher for adjusted net earnings). This chart
shows those earnings of a per share basis and
while I was more impressed by the 19c/share
operating result, this is a widely held miner with
US generalists and will be held to account on its
22
ts1naJ ht8naJ ht51 dn22 ht92 ht5bef ht21 ht91 ht62 ht5raM ht21 ht91 ht62 dn2rpA ht9 ht61 dr32 ht03 ht7yam ht41 ts12 ht82 ht4nuj ht11 ht81 ht52 dn2yluj ht9 ht61 dr32 ht03 ht6gua
The 2023 Producer Basket: Percentage difference
between GDX benchmark & basket (negative = IKN ahead)
4.0%
ikn 3.5%
gdx control 3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
source: NYSE, IKN calcs ts1naJ ht8naJ ht51 dn22 ht92 ht5bef ht21 ht91 ht62 ht5raM ht21 ht91 ht62 dn2rpA ht9 ht61 dr32 ht03 ht7yam ht41 ts12 ht82 ht4nuj ht11 ht81 ht52 dn2yluj ht9 ht61 dr32 ht03 ht6gua
source: IKN calcs, NYSE data
KGC: Op and Net earnings per share
20.0-
60.0-
11.0-
50.0-
80.0 70.0
50.0
10.0-
90.0
50.0
31.0-
90.0-
21.0
70.0
91.0
21.0
0.25
0.20
0.15
0.10
0.05
0.00
-0.05
-0.10
-0.15
12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2
U$m
op earnings
net earnings
source: company filings
bottom line EPS, so that 12c (14c adjusted) is as close to a 10X PE as dammit is to swearing.
What really matters at Special K, however, is the
balance sheet and liquidity in this period where the
Kinross: Working capital breakdown
world is looking at what it does with its Great Bear
1800 acquisition and how it’s going to fund development.
1600
As this chart next chart (right) shows, the cash 1400
position (U$478.4m) as at end 2q23 has held 1200
1000
together, but overall working capital has drained in
800
2023 as the bonds that were set to mature in 600
early/mid 2024 moved onto current liabilities. That 400
200
was tackled by KGC in the period starting just before
0
the end of the Q2 period and closed just after, when
(18) it raised U$500m in a new 2033 bond and is
now in the process of using the money to extinguish
the U$500m 2024 liability…or in plain English, they’ve booted the debt 10 years down the road.
It’s been a successful refinancing too and this shows on the chart as we expect working cap to
rebound in good style at the end of the current
quarter.
With a book value/share of U$4.97 and its stock
closing at U$4.95 this weekend, Special K is
almost exactly 1.0X book and in reasonable
shape financially, certainly better than many
predicted after arguably over-paying for Great
Bear and then committing to at least five years
of expensive development at the project
(probably more). What we do know is that
operations delivered well in 2q23 and with its
Tasiast upgrade close to complete, the company
may be on the way to disproving Mark Bristow’s disparaging assessment of its assets last year
(likened to something dog owners clean up on a regular basis). A good quarter and Kinross
deserved its rally.
Wesdome Gold (WDO.to) (WDOFF): It wasn’t until Twitterpal Mike Barnes pointed me
toward last week’s tape of WDO that I noticed what he’d noticed; there seems ot be some
stealth accumulation in the stock. The sudden interest that somebody, somewhere has in
owning WDO started on Thursday afternoon and while the stock sold off with the rest of them
in the last house on Friday (daytraders doing their
thing?), the pattern of accumulation shows most
easily when you lay the Canadian listed stock against
GDX(J) over the two days (right). This quiet interest
comes just days before WDO is due to report its
quarter, that’s this coming Thursday August 10th,
post-close. Get the details and a link to the Friday
morning ConfCall link here (19). I’ll be on this one, as
the key to WDO in 2023 is its development of Kiena
and the “adjusted timeline to full production” is
approaching the moment of truth. WDO needs to
deliver full production from its second mine in 1q24,
or else.
The TinyCaps List
After 31 weeks of 2023, the TinyCaps show a gain of 19.89% to level stakes:
23
12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
U$m
other working cap
cash&eq
source: company filings
Kinross: Book value per share
03.5 73.5 64.5 73.5
51.6
71.5 29.4 58.4 18.4 78.4 69.4 79.4
6.5
6
5.5
5
4.5
4
3.5
3 2.5
2
1.5
1
0.5
0
02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 tse32q3
U$
source: company data
company ticker price 1/1/23 Shares out Mkt Cap current pps gain/loss%
Aurelius Min AUL.v 0.07 49.787 1.00 0.02 -71.4%
Coast Copper COCO.v 0.045 64.001 2.88 0.05 0.0%
District Metals DMX.v 0.075 86.891 12.60 0.145 93.3%
Latin Metals LMS.v 0.13 69.962 8.05 0.115 -11.5%
Manitou Gold MTU.v 0.02 344.568 18.95 0.055 175.0%
Nine Mile Metals NINE.cse 0.29 57.025 6.84 0.12 -58.6%
Palamina Corp PA.v 0.08 65.285 9.47 0.145 81.3%
Precipitate Gold PRG.v 0.075 130.367 9.78 0.075 0.0%
South Star STS.v 0.55 32.755 16.38 0.50 -9.1%
Viva Gold VAU.v 0.14 106.721 14.94 0.14 0.0%
Prices in CAD$, data from TSXV basket avg 19.89%
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 2023. 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.
TinyCaps, 2023 weekly tracker
The TinyCaps list is putting up more of a fight than the 50%
45%
others and managed to move up nearly 5% last week
40%
on the back of five winners (COCO.v, DMX.v, NINE.cse, 35%
30%
PA.v, PRG.v) versus three losers (LMS.v, STS.v, VAU.v),
25%
with the two frozen stocks (AUL.v, MTU.v) unchanged. 20%
15%
MTU has now been swallowed by Alamos gold (AGI)
10%
and will stay that way, but AUL.v may start trading 5%
0%
again if it manages to file its financials. You never
know. The biggest move of the week by some distance
was the 31.8% added to District Metals (DMX.v) and
that’s the featured stock today.
District Metals (DMX.v): I saw the NR out on Monday, “District Receives Approval of
Sågtjärn Mineral License Applications in Central Sweden”
(20) and other than “Well done you got your papers”
didn’t think much of the news. So I was surprised when
(ten day chart right) DMX sprang 32% at the bell on
decent volume, less surprised when it dropped back from
the early 14.5c to close at 12c that day, then surprised all
over again when the next four days saw that first price
point consolidate. The stock closed up 31.8% on the
week and this second YTD price chart (below) shows that
the last time we saw this level was on the way down, just
after Sweden’s parliament had ratified its moratorium on
uranium prospecting and scuppered the grand plans at
DMX.
24
ts1naJ ht8naJ ht51 dn22 ht92 ht5bef ht21 ht91 ht62 ht5raM ht21 ht91 ht62 dn2rpA ht9 ht61 dr32 ht03 ht7yam ht41 ts12 ht82 ht4nuj ht11 ht81 ht52 dn2yluj ht9 ht61 dr32 ht03 ht6gua
source: IKN calcs, TSX data
Here’s part of last week’s NR…
“…Bergslagen Metals AB (a 100% owned Swedish subsidiary of District) has received
approval from the Bergsstaten (Mining Inspectorate) for the Sågtjärn nr 101 and 102
mineral license applications to explore for copper, zinc, lead silver, gold, molybdenum
and cobalt over a 4,068 hectare (ha) area located in the Jämtland and Västernorrland
Counties in central Sweden.”
…and this time, DMX is on the hunt for metals Sweden allows to be mined. That’s good (though
the CEO couldn’t help mentioning he though there was still a chance for its U exploration.
Apparently, that’s enough to rally this stock this much, though it’s worth noting that DMX also
gets plenty of market bandwidth via a slick online social media promotion campaign and that
type of radar certainly helps. Just for one of many, it’s something (PAU.cse, see below) could
do well to learn.
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
Argentina and the pro-mining consensus
This desk has hammered on “Argentina is mining friendly now” for a quite some time now,
probably just after the current Alberto Fernández admin came to power, definitely when put
Guillermo Moreno was in charge of the sector, and certainly long before it became a fashionable
thing to say in polite industry circles. The latest chapter of this makeover has been to see how
the big Presidential election has shaped and to point out that no matter who wins in October
(well, November, it’s bound to got to a second round run-off) we’re going to get another
mining-friendly government.
But you don’t have to take my word for this, instead take it from Alejandra Cardona, President
of arguably the important business grouping in the country, the Argentina Chamber of
Commerce (CAEM). She gave an interview to Argentina’s business newspaper Ámbito Financiero
(21) and part of the Q&A saw her address this very subject. Here’s a translation of that
segment:
Reporter: What do you think of seeing the large majority of candidate speaking in
favour of mining?
Alejandra Cardona: It’s not usual, in Fac. I’d say to you that it’s the first time that it’s
happened and it’s something we often remark on here in the Chamber (of Commerce).
Each candidate has their own ideology, but all of them talk about mining and this is
something we’ve paid attention of. The candidates from the main platforms speak in
favour (of mining). I haven’t listened to the (extreme) left wing, but a few years ago
when a mine closed in Jujuy they demanded its re-opening so that the workers could
stay employed.
Reporter: How do you explain this change?
AC: Previously mining was almost a taboo subject, I think because it was used to
25
polarize ideologies. There were those of a certain ideology who were in favour, and
others against. Previously mining was thought of as something bad, but today that’s
gone and every side has its own point of view. But the vast majority look on the mining
and energy sectors as ones that can contribute to improve the country’s situation, via
investment and exports, but also the potential at a world level for electro mobility and
the time of lithium. Investment become employment, supplies, strong regional
economies and everything in provincial Argentina seems to have been eternally
postponed. It’s a very Federal agenda and the governors of the provinces have done a
lot of work, even when the political tides change.
Reporter: Do you see the same level of acceptance and social licence among the
general population?
AC: There are provinces such as Chubut where mining is difficult to promote. In other
such as Mendoza, there are some very valuable projects that face regulatory
restrictions. And then there are focal points of conflict in some indigenous
communities, such as what’s happening in Jujuy or Catamarca. But fortunately, in
Argentina the majority of districts don’t have any levels of conflict (toward mining).
There are other countries where social conflicts are much worse, or others that have
problems with illegal mining such as Colombia. (In Argentina) there are three places on
the map that concentrate some 30 mining projects. Previously, the conversation was
“mining yes or mining no”, today it’s a question of how and being more environmentally
conscious.”
Argentina: The PASO is upon us
A reminder that next Sunday, August 13th 2023, is Argentina’s first date with the election
booths as the country votes in its PASO election, its version of primaries that will decide who
gets to be a candidate and what parties can go to the main election in October.
The vote is mandatory for all Argentine citizens (though optional for 16 and 17 year olds, or for
anyone over 70) and there will be a lot in play internally for all parties and candidates, as the
PASO elections are also the best voter intention poll you’ll ever get for the October election.
However, the big race is to decide who become the Presidential candidate from the right wing
PRO/Juntos por el Cambio party run by ex-President Mauricio Macri. It’s between Patricia
Bullrich (Macri’s preference) and mayor of Buenos Aires city Horacio Rodríguez Larreta and with
a week to go, most commentators say it’s going to be tight and too close to call before the day.
With the right current holding a modest lead over the Left wing government and the
independent Libertarian candidate Javier Milei in the general vote, there’s a lot at stake and one
thing the Macri party is keen on doing is showing a united front, up to and including having
both Bullrich and Larreta attending the same vote day meeting and getting the news together
on who moves forward and who is left behind…a bit like a beauty pageant .
We’ll have news on the result in next weekend’s edition, plus early analysis on what the PASO
means for the future and who is best placed to become the next President of Argentina.
Ecuador: Activists win in the courts
Last week in the note “Ecuador: Activists continue to use mining as a campaign issue” we
outlined the moves being made by CONAIE and other anti-mining organizations against
outgoing President Guillermo Lasso¿’s decrees that were designed to push through community
“prior consultancy” hearings and let the national government award their (long awaited)
permits. And sure enough, the anti-mining entities made headlines during the week when the
country’s Constitutional Court issues a preliminary ruling in their favour. Here’s Mining Dot Com,
because suddenly and unlike the week before last, it wasn’t so difficult to find normal wire news
reports on this:
Ecuador’s constitutional court has temporarily suspended President Guillermo Lasso’s
decree allowing environmental consultations for mining and oil projects, which sought
to speed up permitting before the end of his term this month.
Popular referendums are a necessary step for any mining company hoping to obtain
an environmental license in Ecuador.
In its decision, the court sided with the country’s largest indigenous organization,
CONAIE, who challenged the decree issued in May. The group argued the executive
26
failed to consult with local communities before “imposing” a norm they qualified as
“unconstitutional”.
That note continues here (22) and notes the two mining projects in question are the
Curipamba/El Domo run by Adventus (ADZN.v) and Salazar (SRL.v, then the Toachi project run
by Atico Mining (ATY.v), the same ones we featured last weekend that were the focal point of
violent clashes between protesters and the forces of law and order. This issue isn’t going away
and with the election now upon us, the on whether to award these projects their permits will
surely be taken by the incoming government, whoever they may be. If, as we suspect, mining
is going to become a chess piece in the larger game of politics currently playing out, the
chances of success for those permits is diminished.
Before leaving the subject of Ecaudor, three quick reminders:
Next Sunday August 13th is the big live debate between all candidates. Unlike many other
presidential races, this live show is likely to be very influential in the election result
Then on August 20th is the election, current likely to go to a run-off between the Correa
candidate Luisa González and A.N.Other.
But also on August 20th, there’s a meaning ful moment for mining when the Chocó Andino
region (that includes the capital, Quito) has its referendum vote on whether to ban or not
mining activity from its region. As things stand, that vote is likely go against the mining
sector and is bound to put bad optics on mining in Ecuador, event though the referendum is
only legally binding in that one area with very little mining activity to date.
Colombia: Nicolás and Gustavo Petro
In last week’s edition we mentioned the problems faced by Nicolás Petro, son of President
Gustavo Petro and a political leader in his own right in the Atlantico region of Colombia, who
had been arrested on corruption and bribery charges. At that point this was already a serious
and damaging scandal for the President, as the arrest and charges implied that his party had
been receiving funds from some shady characters.
However bad it looked this time last weekend, it pales into comparison with the full scale
scandal that has erupted since then. At his court hearing that’s best understood as an
arraignment (or initial declaration), Nicolás Petro declared he would use the “State’s Evidence”
system in Colombia (“Colaboración Eficaz”, “Useful Collaboration” I suppose) and make detailed
confession in return for not being remanded in jail (where he fears he would be killed by his
new enemies. He then took 10 hours to outline the depth of the corruption and slush money
he’d been involved with, named no fewer than 27 people as part of the corruption ring
including known narco gang leaders, well-known businesspeople and high profile regional
politicians. Nicolás Petro admitted that he’d received large sums of Money from the list of
names of people, but the international headline-making moment was when the lawyer speaking
on behalf of Nicolás Petro stated for the record, (quote translated): “Some of this money was
kept for himself, but…some of the income, the money, was invested in the (Gustavo Petro)
presidential election campaign of 2022.” To add to the mess, Nicolás Petro also stated to the
court via his lawyer that the Petro campaign also received unreported campaign funds from
those high-profile businesspeople. All this is totally illegal in the country and while both Petro
father and son have since insisted that the current President was not aware that dirty money
had entered and was being used by the campaign, the maelstrom didn’t and will not stop as his
opponents call for a full inquiry into his party’s funding and find out who knew what. In fact it’s
difficult to believe Petro senior was unaware of the origins of some of this money, but it’s also
easy to believe that as long as they all stick to the deny-deny-deny route, he’ll be able to ride
out this storm.
After all, as one of his stalwart allies stated after the scandal blew up, there’s a long list of
Presidents in Colombia that have been connected with narcocash over the years, but nothing
ever happened to them. They include Samper and the Cali cartel, Uribe and the confessions of
ultra-right wing paramilitary groups, Santos and Zuluaga for their near-certain involvement with
27
the Odebrecht “Car Wash” scandal or most recently, the connection between the last President
Ivan Duque and the infamous narcotrafficker “El Ñene Hernández”. The difference is that Petro
is a left-winger and won’t be able to enjoy the same amount of institutional protection as those
previous names, so that may be the extra ingredient that causes Petro to fall. We’ll see, but so
far and however bad it looks today, this one is probably survivable. Finally and for those who’d
like to go deeper into the subject and why Nicolás Petro seems to have few qualms about
dropping his own father right in the smelly stuff, this published this weekend (23) in Colombia’s
biggest current affairs media channel, Semana, and by one of its star reporters, has an
interview with Nicolás Petro and managed to get him to talk about a lot of the details behind his
strained relationship with his father. It’s in Spanish and a long read, a complicated story that
goes into Petro junior’s troubled personal life and its repercussions, the type of thing for
political junkies only. However, it’s clear Nicolás Petro is exacting some sort of revenge on his
father for things he’d previous said and done.
Market Watching
Chesapeake Gold (CKG.v) its CEO and a lesson underscored
On Wednesday August 2nd, a stock we held until May this year as a speculative bet on gold
and leverage to the metal’s potential upside, Chesapeake Gold (CKG.v), gave us this news (24):
“VANCOUVER, B.C. – Chesapeake Gold Corp. (“Chesapeake” or the “Company”)
(TSXV:CKG, OTCQX:CHPGF) today is announcing that the Company’s President and
Chief Executive Officer, Alan Pangbourne will be stepping down from his role at the
Company effective 1st November 2023 for personal reasons. Mr. Pangbourne will
continue to support Chesapeake as President and CEO in the coming months to
ensure a smooth transition. The Company will commence an executive search and
announce the CEO replacement in due course.
“On behalf of the Board, I would like to thank Alan for his significant contributions and
commitment to the Company over the past 2 and half years” stated P. Randy Reifel,
Chesapeake’s Executive Chairman. “Alan has played a key role in leading the
company and the development of the new technology as we move towards developing
the Metates Project.” The Board wishes him well with his future endeavours.
To remind readers, we bought into CKG specifically because of the arrival of Alan Pangbourne
to the company. He took over in January 2021 and came with his privco, Alderley Gold Corp,
and the plan was to adapt its technology to turn the troubled Metates project around.
Previously burdened by a very high ticket price for capex due to the processing facility and
large throughput it would need to offset the low average grade of the very large Metates
resource, Pangbourne’s plan was to turn Metates into a low cost heap leach mine that would
adapt the oxidation techniques used for large copper heapleachers for the sulphide gold
mineralization at the project.
The key to the plan was to show that the mineral would oxidize to a sufficient level and for this
CEO Pangbourne ran a host of column leach tests and promised results by early 2022. We on
the outside (yours truly included) sat back, understood the plan and gave him time. Then that
timeline got pushed out to mid 2022. Then when mid-2022 came and went, we eventually got
news of partial results that Pangbourne said were a staging post on the way to the final results
required. All this time the stock didn’t move much and while underwater on the trade, it wasn’t
a massive holding or paper loss in real terms and not that difficult to hold through, given the
millions of ounces that could be unlocked at Metates. However, the continued missed
milestones were more than a little suspicious.
Personally speaking, the last straw came in May when the company announced it had hit legal
problems with the rights for part of the concession with the government of Mexico and
fortunately, that was enough to see me throw in the towel, sell at a loss and walk away. I’m
glad I did, because last week’s news that the person at the centre of this novel method to
unlock Metates was leaving means only one thing: his plan has failed. As a result the stock
price did this last week (chart right) and frankly, the only surprise in that chart is to see that the
28
dump got bought up on Thursday and Friday and rallied a little after the drop.
And so to the moral of this story: I consider myself lucky to have missed the worst of this story
and by saying lucky, that means I’m cognizant of my poor judgment on this trade. My
suspicions were already raised as 2022 became 2023 and CEO Pangbourne was appearing on a
series of webinar and YouTube (pay2play) slots giving reasons and excuses as to why the
column leach testing was taking longer than originally planned, but stayed long the stock
because the results were apparently “pending” and once they were in, the company would be
able to go ahead with its drilling as part of the plan to move the PEA to PFS stage and
demonstrate a viable and economics mine plan.
That was my mistake: Though the amount of money involved was never great and the trade
was always framed as a high risk/high potential reward speculation, it’s still undeniable that
they blew through promise timeframe after promised timeframe on the key ingredient of the
plan, those column leach results and while CKG did, I kept holding. It was only when the added
extra of concession holding issues showed that I dumped the shares and without that push, I
may well have still been long last week and taking a bigger loss.
The bottom line: The adage is an old one and there’s nothing original about my use of it, but
thatr also means it’s tried and tested: WHEN IT COMES TO JUNIOR MINING COMPANIES,
ESPECIALLY EXPLORECOS, IF THE STORY CHANGES WALK AWAY. I didn’t do that when CEO
Pangbourne kept delaying those leach column results and though I saw the risk increase as the
months ticked by, didn’t do anything about it. It bears repeating (to myself as much as anyone
else reading) that when push comes to shove, the only thing a company with no top line
revenue has is a story. That story can be good, bad or indifferent, it can be backed up by data,
by third party reports, by reputations of those involved or whatever else but ultimately, that’s
all an exploreco has in order to raise capital and stay
in business. So if that story changes from the one
used to pitch and secure working capital in the first
place, it means the plan has gone wrong and we, on
the outside, won’t get to find out the details until it’s
too late. It’s not so important to me that the CEO’s
grand plan to revive Metates didn’t work, as I knew
the risks going in. Neither is it important that I got
lucky and sold for other reasons before the reality of
Pangbourne’s strategy became apparent, what
matters is that I watched the timeline for met results
stretch and stretch again, the single most vital
element of the whole story, and did nothing about it.
That SilverCrest Metals (SILV) (SIL.to) Technical Report
In IKN741 last weekend, we previewed the Technical Report drop that SilverCrest Metals (SILV)
(SIL.to) had planned for Monday, with its accompanying Conference Call the next morning.
That announcement came after the bell, so here’s how the market reacted to the news:
29
Ouch. And double-ouch if we recall that SILV had
already shown weakness against peers into last
week’s news (right). We finished the note last
weekend by stating this desk’s neutral position on
SILV, but also the reason for watching last week’s
filing and here’s that segment again:
“SILV has kept its cards close to its chest on the
contents of this 43-101 and if things aren’t as
bad as the market apparently fears, SILV stock
may be in for a rally as from Tuesday morning.
However and equally, we should be ready for
further selling if SILV announces post-close
tomorrow that Las Chispas costs and/or
production are changing for the worse compared
to the model we have.”
Not much doubt which way that one fell. Anyway, this isn’t a big update and there’s no change
in the position of this desk, even with that drop figured in. As most readers know, I’m not a big
fan of silver exposure and my (underwater) holding in AbraSilver (ABRA.v) is as far as I want
to go (and ABRA reminds me most weeks of my disdain for silver trades ), so adding via an
injured silver producer isn’t high on my personal agenda at the moment. If anyone’s interested
enough about a deeper dive on SILV and running the numbers on what we’d want to see from
here to see the stock price rebound, ping me a mail. Enough interest will get me to do some
work, instead of being lazy about SILV.
New Gold (NGD) Orezone (ORE.to) and B2Gold (BTG): Misery loves company
Two stocks that got mentioned in last week’s edition, one from this week’s Producer Basket,
same results all round:
NGD was down another 7.8% last week (and down 13.1% over the two weeks that
included its poor 2q23 results)
BTG dropped on Thursday from its own ho-hum set of 2q23 results
As noted last week, ORE.to has had a tough time from the fall-out of rising political risk
in West Africa and that continued
We also add GDX (gold line) as reference to show that all three under-performed the market,
even though it was a down week for everyone. So for disparate reasons the three stocks
mentioned all dropped hard (and we could add SilverCrest Metals (SILV) to the mix as well, but
we covered that story above). The reason for this small segment is to note how the market is
pouncing on any weakness and finding reasons to liquidate positions, a sure sign of a bear
market in miners (no matter what the gold price might do). When sentiment is positive, miners
can easily shake off a mediocre quarter (NGD, BTG) or the shadow of bad CSR news gets
bargain hunter buyers. That’s not the case in August 2023.
30
Provenance Gold (PAU.cse) redux
This time last week we were “Watching the wires on this ticker” for drill assay news and we
didn’t need to wait long, as just a few hours after IKN741 was published on the morning
Monday July 31st Provenance Gold (PAU.cse) came out with a cracking hole (25) under the
headline “Provenance Gold Drills 16.8 Meters of 13.04 g/t Gold within 114 Meters of 3.1 g/t
Gold from Surface at Eldorado”.
Yup, that one counts and the table included made for even better reading:
Put that into the assay interval machine to step out the two high grade lengths of the hole and
you’re still left with a residual of 0.793 g/t gold over the other 53.4m and as they
say in the world of heapleaching, “that’ll run”. So this is a valid hit and though
PAU didn’t release details of the other two holes it deemed “non material”
because they’re twinning historic holes (slightly odd, no reason not to publish)
hole 7 is enough for anyone.
Put it another way: Though certainly not an apples-to-apples comparison, 114.3m
of 3.1g/t gold would not have looked out of place in a Snowline Gold (SGD.v) NR
out of Rogue. And this is a sub-C$10m market capper. Under the circumstances,
the effusive officers’ comments in the NR are wholly justified:
Project Manager Steve Craig explained “Hole ED-07 is a huge success and it is
exceptional because of the fully mineralized length of 114 meters and its overall
high gold values that were found.”
CEO Rauno Perttu stated “This is exciting because our newly found high grade
mineralization in and below the historically projected gold volume suggests that
our current and future drilling could increase this gold volume substantially.”
Which leaves just one small detail, the lack of price move: Yes indeed the stock jumped nicely
to 11c at the open on Monday with volume at the bell, then went on to trade at 12c over the
next day and a half, but as you can see the interest quickly waned and PAU limped into the
weekend at 10.5c, still up on the week but hardly a blow-out result and certainly no reflection
of the great promise now coming from the drill assays at Eldorado.
And that fits neatly into our house scenario, as we’ve identified the Achilles’ Heel of this story as
a lack of funding and know that some way or how. PAU needs to raise cash in the near future
and top up treasury. For sure it won’t need much and in a different market it would have been
more difficult to keep a lid on the price move, but we all know the funding market is tight and
those with money will drive their hard bargain. We therefore urge PAU to go to market, get the
31
raising done sooner rather than later and take the welter burden off the equity. Once the
company has financial breathing space, it will be able to get a real reaction from the stock price
the next time Eldorado delivers this type of outstanding drill assay.
Conclusion
IKN742 is done, we end as usual with some bullet points:
Amerigo Resources (ARG.to) returned an unimpressive 2q23, but it was acceptable
under the difficult circumstances faced by the company and its response to the storm
damage has been excellent. The most likeable thing about it all has been the market
reaction, which these days has a better understanding of the long-term value on offer
and is ready to buy any dip. A great little company and an all-star CEO.
I like the look of Equinox going forward, but only as long as I like the chances of gold
going higher. It’s a good risk/reward alternative at the moment, but you need to be
aware of the downside potential. That much financial debt and that high cash cost
profile would get hurt badly by a big gold dump.
Provenance Gold (PAU.cse) has real chances one it gets its treasury in order. One to
watch closely and, if you’re into sponsoring explorecos via placements, it’s one you
should put on your 2023 short-list as there’s a window ready to open.
It was a good quarters from Kinross, we now get to see whether Wesdome can impress
in the same fashion. I hope so, it’s not part of the 2023 Producer Basket just for show.
Thanks for allowing me to send this a day late without your complaints. For those of
you interested enough, we’ve been enjoying some good personal news at home and it
made a quick entry on Twitter (or X, if you must) over the weekend. It was nice to
have a less stressful Sunday as a result, but back to normal next weekend.
As for this week’s late arrival, another effect of sending this on Monday is a dose of
Parkinson’s Law, “Work Expands To Fit Time Available.” I found myself tinkering with
what was a brief note on Amerigo and an even briefer one on Equinox, and turned six
pages of script into 12 without really noticing. I have a terrible tendency to waffle.
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
Footnotes, appendices, references, disclaimer
(1) https://www.calculatedriskblog.com/2023/08/schedule-for-week-of-august-6-2023.html
(2) https://www.reuters.com/markets/currencies/dollar-shaky-after-us-credit-rating-downgrade-2023-08-02/
(3) https://amerigoresources.com/_resources/news/nr-20230802.pdf
(4) https://amerigoresources.com/compliance/earnings-calls/
(5) https://www.youtube.com/watch?v=_cx7U3G3OBo
(6) https://amerigoresources.com/investors/share-buybacks/
(7) https://www.equinoxgold.com/news/equinox-golds-greenstone-project-on-schedule-on-budget-3/
(8) https://www.equinoxgold.com/news/equinox-gold-reports-second-quarter-2023-financial-and-operating-results-
32
delivers-record-production-and-revenue-during-the-first-half-of-2023/
(9) https://www.youtube.com/watch?v=sdXxqfJU6nE
(10) https://aldebaranresources.com/news-releases/2023/aldebaran-announces-additional-strategic-investment-from-
south32-as-part-of-a-c-17.5-m-financing/
(11) https://financialpost.com/globe-newswire/rugby-resources-ltd-closes-oversubscribed-non-brokered-private-
placement-2
(12) https://orecap.ca/site/assets/files/2670/1oci_ppt_draft_7_19_2023_1.pdf
(13) https://www.hellenicshippingnews.com/the-commodities-feed-copper-drops-from-three-month-high-after-weak-
china-manufacturing-data/
(14) https://www.e29copper.com/news/element-29-terminates-previous-offering-and-announces-new-private-placement-
financing-of-up-to-2-million
(15) https://www.prnewswire.com/news-releases/hot-chili-commences-30-000m-drill-programme-at-costa-fuego-copper-
gold-project-301892432.html
(16) https://www.b2gold.com/news/b2gold-reports-q2-2023-results-strong-q2-2023-operating-results-position-b2gold-to-
achieve-2023-annual-guidance-first-half-of-2023-cash-operating-costs-and-all-in-sustaining-costs-both-below-2023-
guidance-ranges
(17) https://www.kinross.com/news-and-investors/news-releases/press-release-details/2023/Kinross-reports-strong-
2023-second-quarter-results/default.aspx
(18) https://www.kinross.com/news-and-investors/news-releases/press-release-details/2023/Kinross-announces-US500-
million-unsecured-10-year-notes-offering-to-refinance-its-outstanding-notes-due-2024/default.aspx
(19) https://www.wesdome.com/English/investors/latest-news/news-details/2023/Wesdome-Announces-Second-
Quarter-Production-Results-Provides-Conference-Call-Details/default.aspx
(20) https://www.districtmetals.com/news/district-receives-approval-of-sgtjrn-mineral-license-applications-in-central-
sweden-
(21) https://www.ambito.com/economia/alejandra-cardona-es-la-primera-vez-que-todos-los-candidatos-presidente-
hablan-mineria-n5786760
(22) https://www.mining.com/ecuador-court-halts-referendums-on-mining-oil-projects/
(23) https://www.semana.com/nacion/articulo/nicolas-petro-fue-laconico-y-dijo-que-cree-que-su-papa-el-presidente-
gustavo-petro-no-lo-quiere-el-para-mi-era-mi-superheroe/202322/
(24) https://chesapeakegold.com/chesapeake-announces-management-update-2/
(25) https://www.provenancegold.com/20230731-provenance-gold-drills-16.8-meters-of-13.04-gt-gold-within-114-
meters-of-3.1-gt-gold-from-surface-at-eldorado
Stocks To Follow Closed Positions 2022
Closed 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
Goldshore Res GSHR.v Nov'22 C$0.18 23-Oct-22 C$0.34 88.9% Quick profit taken
Palamina Corp PA.v Dec'22 C$0.295 21-Nov-21 C$0.08 -72.9% Clear-out of underperformer
Pure Gold PGM.h Dec'22 C$0.14 26-Sep-22 C$0.015 -89.3% tiny trade on vh risk, went Ch11
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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-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
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
34
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
Stocks To Follow Closed Positions 2018
Closed in 2018 closed close price
Amarillo Gold AGC.v jan'18 C$0.38 24-Mar-17 C$0.31 -18.4% Cut away losing trade
Riverside Res RRI.v jan'18 C$0.39 27-Jun-16 C$0.31 -20.5% Cut away losing trade
Eros Res ERC.v jan'18 C$0.175 1-Mar-17 C$0.16 -8.6% CEO sudden exit, not good
Excellon Res EXN.to jan'18 C$1.54 9-Oct-16 C$1.66 7.8% 4q17 poor, one too many bad qtrs
Wesdome Gold WDO.to jan'18 C$1.68 15-Dec-17 C$2.06 22.6% Near-term trade block, took profit
Sabina G&S SBB.to apr'18 C$2.06 17-Dec-17 C$1.77 -14.1% Near-term trade, bad timing, small
B2Gold BTO.to May'18 C$2.11 12-Sep-14 C$3.67 73.9% sold 25% to reduce exposure
Lara Expl. LRA.v May'18 C$0.65 11-Feb-18 C$0.58 -13.8% Spec on Brazil didn't work
Solitario XPL June'18 U$0.72 19-Mar-17 U$0.41 -43.1% Failed trade, may return in 4q18
SolGold plc SOLG.to July'18 C$0.475 19-Nov-17 C$0.415 -12.6% cut, trade didn't perform
Pan American PAAS July'18 U$17.90 1-Jun-18 U$16.30 8.9% modest win on short position
NGEx Res NGQ.to Sep'18 C$1.01 22-Oct-17 C$1.00 -1.0% Closed to reduce Argentina exp
Sandstorm Gold SAND Oct'18 U$3.73 17-Apr-16 U$4.13 10.7% partial sale to raise cash for GTT
Aldebaran Res ALDE.v Nov'18 n/a n/a n/a n/a liquidate spin out of REG
Stocks To Follow Closed Positions 2017
Closed in 2017 closed close price
Continental Gold CNL.to Jan'17 C$2.68 22-May-16 C$4.17 55.6% trade closed, profit taken
Focus Ventures FCV.v Jan'17 C$0.23 1-Jul-12 C$0.05 -78.3% Give up, a disaster trade
Wesdome Gold WDO.to Feb'17 C$1.72 28-Aug-16 C$3.00 74.4% Target hit, sold, good trade
Belo Sun BSX.to Mar'17 C$0.90 30-Jan-17 C$0.90 0.0% failed near-term flip trade
Lara Expl. LRA.v Mar'17 C$1.15 8-Apr-12 C$1.05 -8.7% cut to make room for new trade
Rye Patch Gold RPM.v Apr'17 C$0.31 2-Sep-16 C$0.32 3.2% cut for doubts & new stock
Cordoba Min. CDB.v Jun'17 C$0.75 15-Sep-16 C$0.63 -16.0% closed
Constantine Metal CEM.v Aug'17 C$0.135 9-Apr-17 C$0.28 107.4% spec trade closed, good win
Red Eagle Min. R.to Sep'17 C$0.67 13-Dec-16 C$0.27 -59.7% IKN's biggest failure in years
Starcore Intl SAM.to Sep'17 C$0.61 10-Jan-15 C$0.31 -49.2% Patience ran out
B2Gold BTO.to Dec'17 C$2.11 12-Sep-14 C$3.39 60.7% sold small portion for liquidity
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Stocks To Follow Closed Positions 2016
Closed in 2016 closed close price
Phoscan Chem FOS.to jan16 C$0.28 29-mar-15 C$0.265 -5.4% Buyout trade, bot but poor deal
True Gold TGM.v jan16 C$0.18 23-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
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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