6 The IKN Weekly, issue 772 — Mar 03, 2024
The IKN Weekly
Week 772, March 3rd 2024
Contents
This Week: In today’s edition, Just another manic PDAC Monday, More Songs About Rates and
Gold.
Fundamental Analysis: Western Copper & Gold (WRN) (WRN.to): Coffee in the Casino.
Stocks to Follow: Western Copper & Gold (WRN.to) (WRN), SilverCrest Metals (SILV)
(SIL.to), Ero Copper (ERO.to), Pan Global Copper (PGZ.v), Minera Alamos (MAI.v), Rio2 Ltd
(RIO.v), Newcore (NCAU.v), SolGold (SOLG.to), Marimaca Copper (MARI.to), Contango (CTGO).
The Copper Basket: Overview, Solaris Resources (SLS.to), Element 29 Resources (ECU.v), QC
Copper & Gold (QCCU.v), Arizona Sonoran (ASCU.to).
The Producer Basket: Dundee (DPMLF), Newmont (NEM). Eldorado Gold (EGO) (ELD.to).
The TinyCaps Basket: Overview, Awalé (ARIC.v), Latin Metals (LMS.v), Palamina Corp (PA.v).
Regional Politics: Ecuador: The referendum is on, Argentina: No Mining Secretary yet, but…,
Colombia: A legal precedent of note.
Market Watching: Argonaut Gold (AR.to): Avoid.
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
I spend most of today’s edition trying to convince you there’s a clear money-making
opportunity in Western Copper & Gold (WRN) (WRN.to). Last week we called buy on
the corporate changes, this week we try to thrash out a target price and it would only
take my conservative ballpark comes to pass for a great looking near-term trade.
The news from Colombia last week underscores its ambivalence toward mining, not
only in the victory the country scored in its battle to keep the Páramo de Santurbán
from large-scale mining development (MINESA et al), but also by the reaction from
President Petro and his government.
On the subject of difficult ESG and CSR, last week saw another round of conflicting
messages from those opposed to the Warintza project in Ecuador and its owner, Solaris
Resources (SLS.to) and I spend far too many inches trying to go through the episode in
this week’s edition of The Copper Basket.
Gold had a good Friday, as did most things that are heavy by the bucketful thanks to
the market’s new resolve that yes indeed, rate cuts are on the way. We see it in share
prices (perky just before PDAC, should help the bar sales) and we consider it in today’s
intro. If the move is to be believed, we should get a repeat in the days to come and
gold prices higher than U$2,100/oz for the first time if we don’t include those spikes
that didn’t hold.
There are earnings reports of note due this week, with Ero Copper (ERO.to) set to be
good and Argonaut Gold (AR.to) set to be painful. Personally, I’ll be watching the “likely
in line” results from SilverCrest (SILV) (SIL.to) as the Jekyll & Hyde metal may now be
a trade. And this company looks like one of the best alternatives to run with it.
1
Just another manic PDAC Monday
"C'mon, honey, let's go make some noise"
The Bangles, 1985
The great and the good have plenty to do in the week to come. In other news, mining
executives and those connected to our sector of focus meet in Toronto for the industry event of
the year so expect a whole bunch of NRs tomorrow Monday morning. With luck, some of them
may even contain news. Sic transit gloria mundi does not mean that Gloria feels ill on the bus
on Mondays.
As well as PDAC running to March 6th (followed as usual by The Curse of PDAC, which this year
is scheduled to start March 7th) this week also brings significant US macro events. First up,
Wednesday and Thursday sees Fed Chair Jerome Powell appear before the U.S. House Financial
Services Committee for the Semiannual Monetary Policy Report to the Congress, always good
for a sound bite or two. Then comes centerpiece on Friday, the US BLS Employment Report for
the month of February which currently has consensus for the headline numbers of +188k NFP
jobs added and unemployment at 3.7%, according to house friend Bill McBride (1). Any
weakness seen in either of those numbers compared to consensus would indicate a weaker US
economy than expected and a higher likelihood of rate cuts in the near future. And we do more
on that below.
More Songs About Rates and Gold
So check out mister businessman
He bought some wild, wild life
On the way to the stock exchange
He got some wild, wild life
Talking Heads, 1986
Your author tries not to say the same thing every weekend, as tempting as it might be to bang
the drum on gold all the time but our messaging has been clear on this subject on several
occasions, from pointing to the Fed’s need to start cutting rates in 2024 and how it would feed
gold prices, to calling “phooey” when the silliness of rate rises were floated at an incredulous
market in February, to noting how resilient gold prices have been as they hold and hold the
U$2,00/oz line despite the weakness seen in other metals and most recently, the intro to
IKN770 two weekends ago when stating it clearly:
“…any student of the market knows by now that the Fed has no choice but to start
cutting rates as 2024 rolls out. The debate is now on whether it’s going to be March or
a little later, but as far as gold is concerned there’s no point in sweating that small
stuff.”
And before we get to the point, even last weekend’s intro, K.I.S.S. on copper, that focused on
the most important industrial metals rather than the most important precious metal highlighted
the effect that eventual Fed rate cuts would have on the metals complex, which applies to gold
the same as before. Therefore, Friday’s gold price move was both welcome and logical:
We didn’t need the Fed making some loud announcement; all it took was a data set and a
couple of Fed talking heads to make a public declaration of the logical conclusions and not for
2
the first time, this desk finds that at such moments it’s useful to overlook the high falutin’
business channels and go with mainstream headlines in order to feed on the narrative they
want you to believe. Here’s CNN (2):
The Fed’s favored inflation gauge eases to slowest pace in more than two years
New York CNN — Rising prices continued to loom large in January, but new data released
Thursday showed that inflation is still on a downward — albeit bumpy — path toward the Federal
Reserve’s 2% target.
The Personal Consumption Expenditures price index was up 2.4% for the 12 months that ended in
January, a slowdown from December’s 2.6% increase, according to Commerce Department data
released Thursday. The closely watched core PCE index that excludes energy and food edged
down to 2.8% from the 2.9% annual rate seen in December.
As for gold’s reaction, this report out just after the PCE reading put it succinctly (3), even
before the U$2,050/oz prices became U$2,080/oz and above:
Gold price (XAU/USD) is anticipated to deliver a bullish close for the second straight week. The
precious metal strengthens in Friday's early New York session as investors hope the expected
decline in January's United States core PCE Price Index data would allow Federal Reserve (Fed)
policymakers to favor interest-rate normalization in the June policy meeting.
And what does the Fed think about all this? We’ve mentioned previously that Cleveland Fed
President Loretta Mester is regarded as one of the inside voices most aligned with Jerome
Powell (8):
Mester reiterated her December forecast of three rate cuts in 2024, suggesting that this
remains a plausible scenario if the economy progresses as she expects. “Right now
that feels about right to me if the economy evolves as I anticipate it will,” she stated.
So even if March cuts have been tacitly withdrawn, the bunkum about the Fed not cutting rates
this year has been demoted to the most hawkish commentators and the consensus this
weekend is for three cuts in 2024, the first in June. That’s more than enough for the market to
make its move and the treasury yield dump triggered what we saw in gold (we need to
remember gold price moves in our modern world are not actions, they are reactions to larger
things). Which is where we are today, with gold back at the price level we saw at the start of
2024, those halcyon days when inflation was firmly under control and we were about to get six
or eight rate cuts as the soft landing became reality.
Or not exactly, because despite gold’s resilience this year we’ve seen the continued selling
down of the monetary metal in financial circles. We know that its net buyer clients these days
are Central Banks around the world, but at least in part they are being fed by the Wall St sellers
who have continued the constant selling pattern seen in 2023 and just in the first two months
of this year GLD inventory has dropped by 55 metric tonnes. Gold gets sold down by Wall St.
4.80 GLD: Inventory/Price Ratio, 2024 YTD
4.75
4.70
4.65
4.60
4.55
4.50
4.45
4.40
4.35
4.30
4.25
4.20
money looking for yield, but despite the selling it has retained its value in US Dollars. With
Friday’s big clue about rates rolling over, the market quickly reacted and showed that instead of
yield money may start chasing gold higher as it bakes in the classic theory of dropping rates.
After that, time will tell as to whether This Time Really Is Different and we get the desired Soft
Landing but either way, gold would be higher than today.
3
32/21/92 32/21/13 42/1/2 42/1/4 42/1/6 42/1/8 42/1/01 42/1/21 42/1/41 42/1/61 42/1/81 42/1/02 42/1/22 42/1/42 42/1/62 42/1/82 42/1/03 42/2/1 42/2/3 42/2/5 42/2/7 42/2/9 42/2/11 42/2/31 42/2/51 42/2/71 42/2/91 42/2/12 42/2/32 42/2/52 42/2/72 42/2/92
GLD gold holdings, 2024 YTD (metric tonnes)
900
890
880
870
860
850
840
830
820
Source: SPDR data, IKN calcs 810
800
32/21/92 32/21/13 42/1/2 42/1/4 42/1/6 42/1/8 42/1/01 42/1/21 42/1/41 42/1/61 42/1/81 42/1/02 42/1/22 42/1/42 42/1/62 42/1/82 42/1/03 42/2/1 42/2/3 42/2/5 42/2/7 42/2/9 42/2/11 42/2/31 42/2/51 42/2/71 42/2/91 42/2/12 42/2/32 42/2/52 42/2/72 42/2/92
mt
source: SPDR GLD data
Fundamental Analysis of Mining Stocks
Western Copper & Gold (WRN) (WRN.to): Coffee in the Casino
NB: We use the Canadian TSX ticker priced in Loonies as our focus this week, rather than the NYSE ticker
The decision to buy Western Copper & Gold (WRN) (WRN.to) as seen in IKN771 last weekend
didn’t come after weeks of consideration or diligent tracking of the recent development at its
flagship project. That normal way was cast aside and instead we jumped on the news that
there had been a significant change at the top of the company. The news that the long-term
CEO Paul West-Sells had been replaced by Sandeep Singh of Maxit and other places (West-Sells
moved to President) was a notable shift and as explained in IKN771 last weekend, enough to
make the stock price move hard two Fridays ago. It was also enough for your author to open
the purse strings and make a move on what is, in effect, a risk trade of renewed M&A
speculation.
So far at least, the trade is working. We go with the Canadian WRN.to chart as that’s the
version I bought and to sum up the last few days of news and reaction:
WRN.to this weekend: C$1.74
Before the announcement: C$1.27 (now up 37.0%)
Last weekend: C$1.50 (now up 16.0%)
Suffice to say that I’m happy with the purchase to date, particularly as the market slept on the
news Monday and I got my personal money in at a
very reasonable C$1.52. As a slight aside and to
200 WRN.to: Shares Out
ease into the subject today, with 166.087m shares 180
out this weekend (including the entry purchase 160
made by new CEO Singh) WRN currently runs a 140
120
market cap of C$289m (U$213m) and with an
100
IKN-estimated C$30m in cash treasury and very
80
little in the way of liabilities, it’s in good shape to 60
pay for all budgeted plans this year. That little 40
intro and check on the market cap brings us to 20
0
what this second note on WRN is all about: This
desk received a small flutter of mail from you
people out there and to fuse the messages into
one, the question was a fair one: What’s WRN
worth today? If we can frame that, we can get an idea of the prize new CEO Sandeeep Singh is
tilting at and what kind there might be from this weekend’s C$1.74 in Canada. And to do that
we need to get a handle on its flagship project, Casino.
Some Casino numbers
To reiterate one of the points made last week, one of the reasons I walked away from a
potential trade during 2023 was the messaging from the WRN/RTZ partnership of “More Work
4
71q4 81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 tse32q4 tse42q1
source: company filings
serahs
fo
snoillim
Budgeted”, Rio Tinto (RTZ asking for more technical drill holes in specific places in order to
further its knowledge of Casino. That’s really annoying, because for one thing Casino as a
project has been around for what seems like forever and for another, it already has all the 43-
101 economic studies done, with Pre-Feas dating back as far as 2013 and a full feasibility study
(the basis of many of our numbers and charts today published in 2022. Once those are done,
for sure some pernickety major with high standards can commission this-or-that extra study but
if they can’t come to a decision on whether they want the property or not, there’s something
amiss. Therefore, seeing new strategic partner RTZ kick the ball down the road not once but
twice and defer a proactive decision smacked of a major using the junior as its b*tch (pardon
my French) and allowing this to go on into the indefinite future. For examples of how a junior
share price drifts and does nothing when quasi-controlled by a major that doesn’t want to
commit see Agnico and Cartier Resources (ECR.v) or Buenaventura at Regulus (REG.v, there
are plenty more out there. So the trade decision last weekend was called on Singh’s arrival and
the way the WRN board has woken up, changed tack, eschewed the milquetoast leadership of
Paul West-Sells and was clearly looking to bring this to a conclusion. After all, a merchant
banker/insto type such as Singh is not put at the helm of a advanced project and doesn’t
invested $3m of his own cash just to advance his own geological knowledge of the Canadian
Yukon. Therefore, we need to know what Singh wants to sell to RTZ and that’s Casino. Also as
noted last weekend we’ve looked at this project more times than I’d care to mention over the
years, so today the job is to remind of size and scope, then hopefully get a handle on project
economic and using those to frame the “what’s it worth” guesstimate.
We start with the obvious, what we know about the resource. April 2022 saw WRN and its third
party compilers give us a comprehensive 43-101 Feasibility Study and that document forms the
basis of what follows. While the resource dates back to before the inflationary pulse that we all
know about by now, it’s still a reasonable place to start our numbercrunch even though plenty
of the input prices need due adjustment to reflect the reality of 2024. Anyay, here’s the
overview resource table as stolen from the company’s latest corporate presentation dated
March 2024 (8):
Using base prices of U$3.50/lb copper and U$1,650/oz gold (as well as U$22/oz silver and
U$12/lb moly for the two minor payables, mentioned in passing), the resource has a measured
and indicated resource of 2.49Bn tonnes grading 0.14% copper and 0.18 g/t gold for 7.64Bn lbs
of contained copper and 14.8m oz gold. We’re going with the M+I resource to outline the size
and scale of Casino, but for the record 6.86Bn lbs of the copper and 10.3m oz of the gold as
seen above is held as Proven and Probable Reserves, so there’s plenty of confidence about its
economic status. That despite its obvious weak point for the casual observer, that of the low
grade. Indeed, Casino is best understood as a low grade bulk tonnage copper/gold project and
would not work on its low copper grade alone, the gold is a necessary an important part of the
revenues mix (the corporate title isn’t just for show, after all).
From here on in we now lean heavily on the 2022 Feasibility Study published on Casino by M3
Engineering in August 2022 (effective date June 13th), starting with this small table from the
executive overview of the 408 page tome (right). Here the
estimated capex for Casino comes to C$3.617Bn, with
sustaining capital for its 27 year projected mine life adding
another C$751m for total LoM capital costs of C$4.369Bn
and the first thing to note is that the study uses Canadian
Dollars as its baseline. The second is to readily admit that
the capex estimates plugged into a 2022 FS are almost
certainly out of date, as since that time we’ve had the well-
documented inflationary pulse run through our sector which
5
has pushed up costs across the board, both for capex and opex (and we don’t need to re-hash
that subject too much, it’s likely understood by all readers). So here’s the IKN hack on Capex
for today’s overview:
When the WRN FS uses Canadian Dollars, we use US Dollars.
It’s simple, likely too simple and it might not capture all cost rise hikes, especially for a project
that will take four years to build out from its eventual green light decision and is still going
through its permit approval process with the Yukon authorities (YESAB). But it’s a reasonable
guesstimate for a FS published two years ago and certainly more realistic than taking that
C$3.617Bn number at face value. Therefore we’re going to ballpark Casino as a U$3.617Bn
capex mine.
Now for its production and to do that, we could run the whole 27 years of production, make
cash flow calculations and NPV it to our heart’s content. Instead, we’re going to try to keep this
real world, not try to second guess copper prices or interest rates in the year 2035 or 2040 and
focus on the first ten years of production. Here are the expected copper and gold production
numbers as per the 2022 FS:
WRN: Casino copper production, first ten years
Once again, we underscore that Casino is less a copper mine, more a copper and gold mine
(with silver and moly providing minor by-product kickers). What we also see in these charts is
that once the initial “starter pit” higher grade material is processed, the mine settles into a
rhythm of producing around 180m lbs (80,000 tonnes) of copper per year. Now, that’s not bad
but neither is it the production of a World Class copper mine such as La Escondida (1m+ tonnes
per year) or the Cerro Verdes (300k to 400k per year) of this world and effectively, may not be
the size required by Rio Tinto, one of the world’s biggest mining companies to move its dial.
Which again points us to its gold production because when that’s added, the “copper
equivalent” in dollars becomes more attractive to Tier 1 entities.
Now for the cash generated by that annual production schedule and for our purposes today, we
use this price deck:
Copper: U$3.80/lb
Gold: U$2,000/oz
Moly: U$15/lb
Silver/ U$22/oz
In other words, an approximation to spot metals price deck with some conservative leeway.
6
9.891
1.682 9.142
9.802 8.381 4.971 0.671 0.771 3.561 3.671
Mlbs Cu
WRN: Casino gold production, first ten years
350
300
250
200
150
100
50
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS YEAR
000,983 000,844 000,804
000,043 000,443 000,723 000,592 000,592 000,582 000,392
Oz Au
500,000
400,000
300,000
200,000
100,000
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS YEAR
WRN: Casino gross revs by metal, first ten years
0.877
9.557
0.698
1.7801
0.618
0.919
0.086
0.497
0.886
6.896
0.456
9.186
0.095
9.866
0.095
7.276
0.075
1.826
0.685
0.076
U$m
2500 Ag revs
2250 Mo revs
Au revs
2000
Cu revs
1750
1500
1250 1000
750
500
250
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS
Here we see how important gold really is to this project's economics, as gross metal revenues
from gold are close behind those for copper in most years. In our focus period of the first ten
years of its 27 year production life and using the above price deck,, copper accounts for 44.6%
of gross metal value, gold covers 40.4%, moly 13.0% and silver 2.0%.
That’s the top line, now for costs and as you’d expect from a full-strength FS, there are dozens
of line items and assumptions. We’re putting them into the four major buckets order to get to
an operating cost total and therefore annual operating profits for the mine (to get to a net
Mining costs: i.e. out there in the pit)
Concentrator costs: i.e. processing at the mil
Other mine costs: A long list, including G&A, TC/RC, transport, refining for
gold/silver and other
Royalty etc: The big two here are royalties due on the mine (aside the Yukon mining
royalty) and carbon tax offsets, there are a couple of other minor items as well.
Here’s the chart:
U$m WRN: Casino costs breakdown, first ten years Royalty etc
1100 other mine
1000 concentrator
mining
900
800 135 111 120 118 120 120 120 120 116
700 105
251 227 208 194 191 190 190 184 190
600
201
500
400 311 300 306 299 291 291 293 296 301
300 241
200
100 207 212 229 233 241 252 252 251 251 243
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS, IKN inflation adjustment
Again using our ballpark “FS Loonies are IKN Greenbacks” assumption, operating costs peak at
just under U$910m for Year 2 then settle into a range just above U$850m per annum and
remain fairly constant (according to the FS, at least). So from here we can subtract one from
the other and get to an annual operating income:
WRN: Casino metals revs, costs, op inc, first ten years
7
4.8861
7.357 7.439
9.7722
6.909
4.8631
4.1502
5.668
9.4811
3.5461
0.768 3.877
3.4551
2.258 0.207
3.9351
8.358 6.586
8.3451
8.258 0.196
2.0851
6.458 6.527
7.3551
2.158 5.207
1.9351
8.058 2.886
U$m
2600
2400 total metal revs
Total prod costs
2200 op inc
2000
1800
1600
1400
1200
1000
800
600
400
200
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS, IKN inflation adjustment
Once again, our price deck assumes some bonus profit in the early years due to better “starter
pit” grades that aim for faster capital payback, then the mine settles into a rhythm of offering
operating profits of around U$700m per
WRN: Casino Capex + Op Inc, first ten years
year. We then get to this (right). The FS
uses cash flow, rather than the more
expensive cost total that gets us to operating
income, in order to estimate the speed of
capital payback and ensuing project profits
over time. After due consideration I’ve gone
this way to add a conservative layer to our
0933- 4082-
5341-
152-
825 0321 5191
6062
2333
4304 3274
U$m
5000
4000
3000
2000
1000
0
-1000
-2000
-3000
source: WRN 2022 FS, IKN inflation adjustment
-4000
0 1 2 3 4 5 6 7 8 9 10
estimates, so if we assume Capex at U$3.617Bn (around $300m of that happens during Year 1)
and production and revenue as per our model, capital breakeven happens during Year 4. We
get to year ten and the mine has cleared over U$4.7Bn (pre tax) and with another 17 years of
profitable operations to look forward to, it won’t be too difficult to find the estimated U$751m in
sustaining capital, even if that rises substantially over time.
As for price sensitivity, this chart runs the same production and cost numbers on a range of
metals prices, from a “stress test” case of U$3.00/lb copper and U$1,700/oz gold to an optimist
case using U$4.50/lb copper and U$2,200/oz gold, to bonanza levels of U$5.00/lb copper and
U$2,500/oz gold (which many of us anticipate at some point, it’s worth adding).
U$m WRN Casino: Capex - Op Inc at various metals price decks, first ten years
10000
At U$3.00Cu/U$1,700Au
8000 At U$3.50Cu/U$1,900Au
At U$3.80Cu/U$2,000Au
6000 At U$4.00Cu/U$2,100Au
At U$4.50Cu/U$2,200Au
4000 At U$5.00Cu/U$2,500Au
2000
0
-2000
-4000
-6000 source: WRN 2022 FS, IKN calcs
0 1 2 3 4 5 6 7 8 9 10
The results are fairly good here, with even the stress test case returning a cumulative total of
U$2.035Bn over our sample ten year period, the base case at today’s approximate metals prices
gives the aforementioned U$4.723Bn, then our optimist case U$6.803Bn and bonanza case
U$8.827Bn really bringing in the money. However, we need to consider this project from RTZ’s
(or whoever eventually buys and builds it) point of view as there’s an opportunity cost of capital
to consider and these days, using a NPV 5% discount rate isn’t just a question of theory we can
apply to capital borrowed from banks. With US treasury bills paying what they do, even cash
held in treasury at a major mining company pays good interest without having to commit it to
the vagaries of building and running a new mine.
There are, of course, a thousand way of cutting and slicing this cake but to model the averages,
this chart shows what happens when you invest U$3.617Bn in Casino and then get the returns
from a constant U$3.80/lb copper and U$2,000/oz gold over 20 years, compared to the returns
from putting that cash into Treasurys and getting a flat 5% interest rate over the same period.
U$Bn Casino vs T-Bills
14
12
cumulative returns
10
5% interest
8
6
4
2
0
-2
-4 source: IKN ests and calcs YEAR
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Though simplified, this is the essence of Net Project Value (NPV) and under these criteria, it
takes RTZ (or other) 12 years to get its money back and after 20 years, NPV stands at
U$3.11Bn. We can take this a stage further and consider the total 27 year life of mine (LoM)
and add in another line assuming an 8% interest rate (or in this case, cost of capital as even T-
Bills won’t pay this much) and while the 5% discount tallies closely to the 2022 FS assumption
8
U$Bn Casino vs T-Bills: 27 years
30
25
cumulative returns
20 5% interest
8% interest
15
10
5
0
-5 source: IKN ests and calcs YEAR
1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627
The 2022 FS calculates pre-tax NPV at a 5% discount at $5.768Bn and as that uses cumulative
cash flow, rather than our model of operating profit, it’s a fairly close tally to our total of
U$4.64Bn. However, use 8% and we see that Casino’s returns will never catch up to the
interest returns over the total mine life, a sobering thought for those that think large-scale
projects such as Casino will sell to majors for billions of dollars.
All this is a long-winded way of getting to the crux of the problem at WRN Casino:
It’s a big tonnage, low grade mine
Its annual copper production is modest compared to mines of this size and
throughput
Gold production helps mitigate the issue
Opex is reasonable and margins on production are acceptable (thanks to the gold)
However, its low-ish annual production and long mine life dilutes returns due to the
time value of money
That’s not the right mix to attract a world level mining company like RTZ and as competitive as
Casino might be in opex and gross margins, the baseline issue of low grade is not easy to
overcome. The logistics of the large, dispersed mineralized zone makes it difficult to up
tonnages and lower mine life to get the metal out more quickly, the low grade means annual
production doesn’t move the dial for the size RTZ (or those with similarly deep pockets) prefer.
And that’s where Coffee comes in.
Coffee
The other key point in the decision to buy WRN last week was the
news that Coffee, owned by Newmont (NEM) and located literally
next door to Casino (see right), is now officially up for sale as part
of NEM’s asset disposal cycle. See the Producer Basket section of
IKN771 last weekend for more on what I think of the numbskulls
running NEM, but that’s not the point here and about 30 seconds
looking at that simple map (right) is enough to see the potential
synergies of combining Casino and Coffee.
Coffee has its own history and is not a copper project, instead its
all about gold. It was developed by a junior called Kaminak back in
the day and sold to Goldcorpse in 2016 for too much money, then
Goldcorpse was bought by NEM and, if we skip over a couple of
chapters of internal NEM politics regarding the project, here we
are today. The last time it was measured in public Coffee boasted
a Measured and Indicated (M+I) resource of 53.9 million tonnes
(mt) grading 1.23 g/t Au for 2.14m oz of contained gold, with an
extra 7.3mt of inferred grading 1.01 g/t adding an extra 230,000
oz gold to the resource. The mine plan Goldcorpse bought (literally
and figuratively) presumes a mine life of just under ten years, with an average annual
9
production of 202,000 oz per year when running at full speed, implying an 87% recovery of the
M+I gold resource (though NEM says it’s around 81% in its latest resource report). The public
43-101 report from 2016 estimated LoM AISC at U$550/oz, that was when gold averaged
around U$1,300/oz. That AISC has obviously changed since then, but the project should still
offer robust operating economics on paper thanks to the improved market price for gold.
Background done, now we’re going to take a couple of stabs in the dark and turn rocks into
money as somebody, somewhere is going to pitch the obvious at RTZ or other: Buy Casino, buy
Coffee, build them both, enjoy cost synergies and bigger production footprint, make lots of
money and what could possibly go wrong? Once again, we’re not privy to the detailed technical
information that can offer better economics in differing trade-off scenarios, but we can make a
few educated guess to put us in the ballpark. We assume:
An eventual developer (RTZ or other) buys both projects and builds them out
concurrently.
The projects as stand start on the same year
Therefore Coffee improves consolidated production for the first ten years, at which
point it’s depleted and the mine continues on Casino-Only production.
If so, this happens:
Copper production doesn’t change, but gold production runs around 200k oz per year higher
than previously expected an most interestingly, makes Casino/Coffee a 500k oz/year gold mine
(with a strong copper kicker). This consolidated project becomes a gold/copper mine for the
first ten years and if we apply our base case metals prices (U$3.80/lb Cu, U$2,000/oz gold)
51.2% of gross revenues come from gold and 36.5% from copper, with moly and silver making
up the rest:
Casino & Coffee: Ten year gross revs by metal
10
0.459
9.557
0.0021
1.7801
0.2221
0.919
0.8801
0.497
0.4901
6.896
0.6501
9.186
0.699
9.866
0.4001
7.276
0.4001
1.826
0.499
0.076
Casino & Coffee: Ten Year copper production
U$m
Ag revs
3000
Mo revs
2750
Au revs
2500
Cu revs
2250
2000
1750
1500
1250
1000
750
500
250
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS, IKN ests & calcs
If you compare the above chart to the table representing Casino-Only from earlier in this report,
you’ll note that once in steady state production gross revs now total around U$2Bn per year, up
from the approx U$1.5Bn/year for Casino-Only. That’s significantly higher cash flow.
Next up are costs and the charts we offer below are admittedly rough guesses, but we know
Casino & Coffee would offer plenty of synergies to capex (roads, camp, leach facilities, tailings,
9.891
1.682 9.142
9.802 8.381 4.971 0.671 0.771 3.561 3.671
Mlbs Cu Casino & Coffee: Ten year gold production
350
300
250
200 150
100
50
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS, IKN ests and calcs
000,774 000,006 000,116 000,445 000,745 000,825 000,894 000,205 000,205 000,794
Oz Au
700,000
600,000
500,000
400,000 300,000
200,000
100,000
0
1 2 3 4 5 6 7 8 9 10
source: WRN 2022 FS, IKN ests and calcs
etc) and unit cost of opex (G&A, transport, etc) would also benefit. So we make reasonable
adjustments to opex, then add U$300m to the Casino-only capex bill in order to build Casino
and Coffee at the same time. Here’s how annual operating income comes out:
Casino & Coffee: Ten years of revs, costs and op income
11
4681
0401
428
2852
0311
2541
7542
0311
7231
3502
0311
329
0691
0311
038
1491
0311
118
0591
0311
028
4991
0311
468
8891
0311
858
7491
0311
718
U$m
3000
total metal revs
Total prod costs
2500
op inc
2000
1500
1000
500
0
1 2 3 4 5 6 7 8 9 10
spiurce: WRN 2022 FS, IKN ests and calcs
Our model spits out more exact numbers (it’s Excel, after all) but it’s best to remain ballpark
and if so, we can state that in general terms Casino-Only was generating operating income of
around U$700m per year once in steady state, while Casino and Coffee is good for around
U$800m in these first ten years. That makes for significantly faster capital payback and the
implied NPV improves as well:
Casino & Coffee: Ten Year Capex + Op Inc
0063- 6703-
4261-
692-
726
7541
9622
8803
3593
0184 7265
U$m
6000
5000
4000
3000
2000
1000
0
-1000
-2000
-3000
-4000 source: WRN 2022 FS, IKN ests and calcs
0 1 2 3 4 5 6 7 8 9 10
By the end of Year 10, at which point Coffee is assumed depleted (highly unlikely though,
there’s bound to be more resource to discover) our total is U$5.627Bn, just over U$900m
higher than when the model assumed Casino alone. This difference assumes the higher capex
required for adding Coffee to the build-out and more than covers any assumed purchase price
for WRN and Coffee.
So how much is WRN worth?
We get to the whole point of this run-through of the numbers behind WRN, as the arrival of
Sandeep Singh makes the plans at WRN crystal clear and as we’ve tried to sketch out, the
opportunity to buy Coffee from Newmont at the same time and build a mine that runs 500k oz
gold per year as well as decent copper (and moly) revenue lines would make more strategic
sense for a big mining company. But before we frame our target price, let’s consider what’s
NOT going to happen as back in 2016, Goldcorpse paid C$520m (U$406m at the time) for
Coffee when buying Kaminak. These days that looks like a very high price tag for a little over
2m oz gold and as NEM plans to raise around U$2Bn from its disposal sale with Coffee just one
of eight assets on the block (and hardly the most valuable to boot) it doesn’t seem as though
Palmer & Co expects to recoup the money Goldcorpse paid for it eight years ago.
But our task is to value WRN and chew over what the shares available would be worth if Singh
gets his way and for that, we need a realistic price tag. Here’s how I see it and while certainly
subjective (and I’m willing to hear your pushback on any of these assumptions), I’m also trying
to err to the conservative side and leave wriggle room for profits even if any of my criteria are
off the mark.
NEM wants to dispose Coffee and we know that WRN, with its decision to appoint Singh as CEO
has made its intentions clear, is also ready to accept the highest offer. Putting the two assets
together and developing them makes plenty of economic sense, with our ballpark showing the
two mines capable of generating around U$900m in extra profits over the first ten years of the
complex (i.e. until Coffee is due to deplete), even after our presumed higher capex bill for the
double development. We can therefore theorize that if a purchaser can secure both Coffee and
Casino for less than U$900m it gets a better deal than buying Casino alone but in practice, I’m
sure the buyer would want a larger difference to justify the capital outlay and help with the all-
important capital payback period. Finally, WRN Casino and its 7.6Bn lbs copper and 14.8m oz
gold M+I is worth more than the 2m and bits oz gold at Coffee, then again the capex bill is
vastly different for the former as well and, as the numerical run-through above shows, selling
WRN today means taking a small fraction of the NPV in order to get one’s print and leave
enough for the buyer to justify their purchase.
That’s the frame and considering the timing with the Coffee disposal, the synergies that would
attract bids from companies that like the idea of producing 500k gold per year and that Singh is
here to sell the gig and not to develop it to its highest possible value, here are my guesses:
NEM sells Coffee for U$200m
WRN sells Casino (or itself) for U$400m
Be it RTZ or other, those prices would leave around U$300m in net synergies and if we assume
my numbers at U$3.80/lb copper and U$2,000/oz gold are right, would generate U$900m more
in operating profit come the end of the ten year period. In other words, Coffee makes Casino a
viable project a developer and justifying the near U$4Bn outlay if both are developed is easier
than justifying the U$3.6Bn for Casino alone. NEM knows that, Singh knows that, RTZ knows
that and any other suitor now talking to Singh knows that as well.
At 166.1m shares out, U$400m is just over U$2.40, or C$3.25 at today’s forex. With WRN.to
closing at C$1.674 this weekend, that implies an upside of 86.8% and that would be more than
enough to satisfy my near-term dreams of a quick payout, thank you very much. Now for sure
I’m not going to get everything I want on that but even if WRN sells at C$3.00, a figure that
looks eminently gettable considering the wriggle room, that would be 72.4% higher than this
weekend and nothing to sniff about.
The bottom line: Last weekend we called BUY on Western Copper & Gold (WRN) (WRN.to) on
the news of a clear change in corporate strategy. The trading week has reinforced our belief
that WRN is now on the block and ready to sell to the highest bidder, so this weekend we’ve
considered the underlying numbers, tried to outline what the simultaneous sale of NEM’s Coffee
might mean, and come to a ballpark target price for WRN assuming if attracts an offer. While
RTZ is obviously the favourite to buy and in some way or form will get first refusal on whether
it wants to move on the asset, it won’t be the only potential buyer out there and as we’ve seen
above, by combining Casno and Coffee we could see a consolidated operation that produces
over 500,000 oz gold per year for ten years (the apparent benchmark for Tier One assets,
according to Mark Bristow at least). Considering that Singh’s arrival is almost certainly about
precipitating a deal, we should expect a deal sooner rather than later but, by the same token,
we can’t shoot for the moon on price targets and there are sure to be long-term shareholders
who complain (bitterly or otherwise) about the money being lef ton the table by any deal struck
in 2024. However, we’re here for the deal not for Casino’s entire NAV and our framework
above, loose as it might be, shows a roadmap to a sales price of around C$3.00, maybe a little
higher. As a speculative owner looking for the same near-term flip that price would suit me fine
and it’s enough to attract the dealmaker to the C-suite.
Last week’s purchase has been justified by the market, but be clear that if you’re not on yet you
haven’t missed out on good profits if Sandeep Singh can make it rain. WRN is for sale and with
12
Coffee to bolster the project economics, the right price would be a win-win for buyers in the
week ahead and the eventual owner/operator of a working Casino.
Stocks to Follow
We now have 16 open positions on our Stocks to Follow list and of those, 10 were week-over-
week winners (MAI.v, EQX, RIO.v, WRN.to, ADZN.v, CTGO, NCAU.v, ERO.to, SILV, MENE.v),
three were unchanged on the week (ALDE.v, MIRL.cse, PAU.cse) and three were losers
(SOLG.to, PGZ.v, MARI.to). The winners included double figure percentage moves in Newcore
Gold (NCAU.v up 33.3%), new holding Western Copper & Gold (WRN.to up 16.0%), Contango
ORE (CTGO up 12.5%) and our Top Pick Minera Alamos (MAI.v up 10.9%), which is good to
report. However, the three losers include two larger losses taken by SolGold (SOLG.to down
11.5%) and Pan Global Resources (PGZ.v down 9.1%), so it wasn’t all sunshine and roses.
We currently have 15 open positions, that number goes up to 16 when WRN joins the list next
weekend but will still leave plenty of space for other purchases or new Watch List names, as
our ceiling is 20. Just four are in the green and that continues to suck.
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 45.2% $0.75 first tgt, #1 idea
RECOMMENDED STOCKS
Equinox Gold EQX STR BUY U$4.42 30-May-23 U$4.38 -0.9% Leverage trade at U$2k/oz Au
Rio2 Ltd. RIO.v BUY C$0.83 22-Apr-18 C$0.365 -56.0% Permit approved, rebounding
SolGold SOLG.to BUY C$0.22 19-Feb-23 C$0.115 -47.7% Avged down Feb'24
Pan Global Res PGZ.v BUY C$0.17 19-Feb-24 C$0.15 -11.8% Feb'24 new Cu trade, cheap
Marimaca Copper MARI.to BUY C$3.05 26-May-23 C$3.55 16.4% Quality Cu developer
Western Copper WRN.to BUY C$1.52 26-Feb-24 C$1.74 14.5% Special situation purchase
Adventus Mining ADZN.v SPEC BUY C$0.285 7-Jan-24 C$0.235 -17.5% EIA permit received, now dev
Contango Ore CTGO BUY U$18.70 30-Jul-23 U$18.06 -3.4% FY24 production, now moving
Newcore Gold NCAU.v SPEC BUY C$0.205 23-Oct-22 C$0.16 -22.0% Showing signs of life
SPECULATIVE TRADES
Aldebaran Res. ALDE.v SPEC BUY C$0.72 16-May-21 C$0.69 -4.2% drilling again
Minera IRL MIRL.cse avoid C$0.195 22-Jul-12 C$0.02 -89.7% leaving list soon (good)
A WATCHLIST OF POTENTIAL TRADES. NB: I DO NOT OWN
Ero Copper ERO.to WATCH C$18.94 22-Oct-23 C$24.07 27.1% High quality Cu prod, cheap
SilverCrest Met SILV WATCH U$5.62 21-Jan-24 U$5.22 -7.1% potential silver trade end Q1
Provenance Gold PAU.cse WATCH C$0.085 8-Oct-23 C$0.08 -5.9% Idaho gold drill play
LONG-TERM NON-MINING HOLD
Mene Inc. MENE.v adding C$0.63 6-Dec-20 C$0.265 -57.9% LT bet, adding slowly
CLOSED TRADES IN 2024 date closed close price
Amerigo Res ARG.to Jan'24 C$1.36 12-Dec-21 C$1.34 -1.5% reduced Cu exposure
Fortuna Silver FSM Jan'24 U$2.92 13-Aug-23 U$3.09 3.4% Time ran out on NT trade
Argonaut Gold AR.to Jan'24 C$0.42 17-Dec-23 C$0.395 -6.0% NT specflip closed on poor Q4
2015 to 2023 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Now for notes on some of our covered companies:
13
Western Copper & Gold (WRN.to) (WRN): POSITION OPENED. We do this stock above,
here we note our fortuitous opening price as taken on Monday, mark position, offer up the five-
year price chart of WRN.to to show what sort of moves it can make given the right
circumstances and speculation on an eventual buyout, then move on.
SilverCrest Metals (SILV) (SIL.to): Showtime at SILV. First here’s a copypaste from this Jan
2rd NR (5) to remind you that the SILV 4q23 and year-end financials are set to drop on March
6th, with the conference call scheduled for the next morning, Thursday March 7th:
Fourth Quarter 2023 Conference Call:
A conference call to discuss the Company’s Q4, 2023 operational and financial results will be
held Thursday, March 7, 2024 at 8:00 a.m. PT / 11:00 a.m. ET. To participate in the conference
call, please dial the numbers below.
Date & Time: Thursday March 7, 2024 at 8:00 a.m. PT / 11:00 a.m. ET
Telephone: Toronto: +1-416-764-8624
North America Toll Free: 1-888-259-6580
Conference ID: 58528537
Webcast: https://silvercrestmetals.com/investors/presentations/
Back when writing up SILV in IKN767 dated January 28th and putting the company on our
Watch List, we pointed to March 6th as a key moment in its trade potential for 2024. Here’s
another copypaste, this time a shameless self quote of how the conclusion passage began:
Bottom Line: As from next weekend SilverCrest will be on the IKN Weekly Watch List. I cannot
justify buying a silver stock at the moment, even one that’s producing at a healthy profit and
getting half its revenue from gold. However, there’s every reason to believe SILV’s price action will
be driven by its financial results in 2024 rather than its production numbers that are set to be flat
and a continuation of what we’ve seen in the previous two (three?) quarters.
If I get to write the script, SILV flat lines in this current U$5.50 to U$6.00 range from now to its
earnings report in March, then begins to rally and momentum increases as 1q24 confirms the
regularity of its production this year. The market begins to look upon SILV as a veritable cash cow
and speculation begins on which company might take it out (First Majestic has crippled itself and is
probably not in the right condition to move on SILV any longer, but it’s the right size for Pan
American (PAAS) and they need a real flagship silver operation, that’s for sure). Then if silver puts
in a run (and that’s always possible with the Jekyll & Hyde metal) there’s all sorts of upside left in
this stock and my U$8.20 target comes into play.
Okay, you’re right, I don’t get to write the script. Which is why SILV needs to go on the Watch List
as from now, in order to consider its moves compared to silver the metal and spot any potential
trade windows, e.g. in the days before what I believe will be a positive catalyst 4q23 financial
report and guidance, early March.
14
IKN772 back and that gets re-hashed because it’s still my valid position. Also, SILV hasn’t
traded in the range I imagined but instead offers even better value for those on the outside
looking in. That affords the potential of watching SILV deliver market pleasing numbers on
Wednesday evening and even after a rally it would be a very good value purchase on its fundies
…BUT! But but but…this potential trade is still predicated on the main known unknown, that of
the silver price. Friday was good for gold (and silver), but that doesn’t mean we’re about to
break out from the depressed price deck seen so far this year.
Ero Copper (ERO.to): I continue to wait for weakness that doesn’t come. Along with SILV,
ERO is another of our Watch List stocks that reports its Q4 next week, in this case on March 7th.
As outlined last weekend, we’re expecting good backward-looking results and eye-catching
forward guidance.
Pan Global Copper (PGZ.v): This traded soft at
the end of last week but I’m not reading too much
into it, as Friday was just 72,000 shares traded and
a tinycapper is allowed to lag a sector rebound on
occasion…the hot money doesn’t reach all the way
down on the first day of a tide change and there
will always be laggards playing catch-up later.
Minera Alamos (MAI.v): A reminder of the deep
value on offer at this current price deck came on
Friday, when MAI responded readily to the sector
uplift with its own pop on decent volume as bargain
hunters moved in. In other news, earlier in the week MAI President Doug Ramshaw was the
star in one of the 6ix Dot Com “Fireside Chat” series, a 37 minute video you can watch here
(6). He shares background to his own story and interest in the mining sector, the Minera
Alamos team and projects, a little on the future and what to expect from MAI (the part on Cerro
de Oro got me opening my MAI scratchpad and making a couple of notes), but for this desk the
most interesting part comes roughly in the middle of the show when he gives a nuanced view
of the current state of play in Mexico and its political risk for mining companies. Tune in to
listen to an experienced mining operator give the good and bad of the reforms proposed by
Mexico, how this fits in with the election year now in progress, as well as views that can see
both sides of the story and explain them eloquently. For what it’s worth, I fully agree with all
his views on Mexican politics and its current effects on the mining sector and FDI.
Rio2 Ltd (RIO.v): The same kind of commentary on RIO.v as MAI.v above, it was good to see
it rise with the tide on Friday and bargain hunters recognizing the deep value here. As for news,
we’ve had nothing for a while and RIO.v doesn’t have PDAc on its agenda, but company chair
Alex Black tells this desk that they will give us an update on affairs “in the next couple of
weeks”. Top on our list of inquiry will be news or signals on the company’s efforts to put its
financing package together, as in a perfect world that will be tied down before the end of Q2,
ready for deployment in the second half of the year once the Chilean weather window opens
after the Andean winter subsides.
Newcore Gold (NCAU.v): Why did this stock suddenly wake up?
The company announcement (7) of new landholdings last week, including a
region on the new concession space that would theoretically be perfect for
any eventual tailings facility at Enchi?
The ongoing metallurgy work that outlines this company as one of the more
“serious juniors” out there?
That Osino Resources recently reminded the world how Chinese capitals
companies are looking to buy gold projects in Africa (even though Namibia is
a long, LONG way from Ghana)?
15
Word from corporate interviews that its updated PEA will soon be with us?
The stock price got so cheap and ignore that it wouldn’t take much in the way
of new interest and buyers to move it this much?
Gold over U$2,000/oz will eventually attract long-term bargain hunters?
All the above?
For whatever reason, NCAU finally found some bidders last week and rose by a cool 33.3% to
16c, with buyers arriving on Thursday and enough
follow-through on the gold rebound day Friday to
keep the trajectory going. Fine by me and for
what it’s worth, I think this move is perfectly
understandable given what we know about NCAU
and Enchi, definitely on one of the better gold
projects in the Western bulge of Africa and
importantly, located in a politically low risk
country…compared to many of its neighbours,
anyway. I’ve been through this company’s fallow
period and not made a big fuss about the low
valuations for good reason, as its size and
development, as well as potential exploration
upside, allows patience to be applied.
Not in any hurry to sell, that won’t change if the price stays here or moves back to a 2-handle.
SolGold (SOLG.to): It turns out the recent weakness is likely due to a London based MSCI
Small Cap Index dropping the stock in its most recent re-weighting, with the change coming
into effect end February. It means MSCI have been obligated to drop around 5m shares into
the market in the last two weeks. So, two things to state:
1. These index weightings come and go and while it’s a near-term pain, especially for a
stock that’s out of fashion and trying to get some momentum back, their effects are
not permanent.
2. I made a mistake by not realizing this two weeks ago and would have waited to add
closer to the weighting close date if I had realized. My only excuse is not having a
finger on the pulse of the London market, but I should have known better in this
case and checked there for potential reasons for recent weakness.
Not for the first time, I’m left reflecting that this trade is not my finest moment as an anal yst.
So here we are way down at 6p and fractions, but on the bright side London was closed before
the rump of the rebound manifested itself in Americas trading on Friday and we’ll probably get
delayed positive effects once the main London SOLG ticker opens for business tomorrow.
There was, however, another potential source for the negative sentiment last week as SOLG
announced two new faces for its board of directors (8) and while Mr. Charles Joseland’s arrival
to strengthen its financial/corporate/technical side is reasonable, I’m more interested in the CV
as presented last week of Mr. Jian (John) Liu
Mr. Jian (John) Liu brings over 30 years of private investment advisory experience to the SolGold
board, with a diverse background spanning multiple sectors, including mining, energy, technology,
consumer, and healthcare. He previously worked as a partner at Valuestone Advisors for mining
investments, as an advisor at Jiangxi Copper Corp for its overseas M&A projects, as a partner at
Greenwoods PE Funds, as a director at Mousse Partners and Actis, and as an associate at Merrill
Lynch Direct Investment Group. His experience includes assisting portfolio companies in strategy
formation, fundraising, investing and corporate governance. Mr. Liu's academic credentials
include an MBA from the University of British Columbia in Canada and a B.Sc. in computer
science and engineering from Shanghai Jiaotong University in Shanghai, China, underscore his
exceptional qualifications and expertise.
16
Nothing says “Our strategy to sell to the Chinese hasn’t worked” like bringing in a new expert to
help them sell to Chinese capitals and I got an overwhelming feeling of “back to square one,
guys?” on reading this last week.
Marimaca Copper (MARI.to): Though not the type of NR to move markets, I like the news
out of MARI last week (9) about its plans to start exploration on its “non Marimaca” concession
areas, particularly the one that house geologists are most excited about, Sierra de Medina
(SdM). Here’s how MARI CEO Hayden Locke put it at the start of his NR comments:
“While the MOD continues to advance toward production in partnership with Mitsubishi
and Ausenco, we are extremely excited about reigniting the exploration pipeline for
Marimaca. Over the past 6 months, Sergio Rivera, VP Exploration, and his team have
completed a comprehensive review of the historical data, and the resulting
reinterpretation paints a compelling story for discovery potential, particularly at SdM.
There’s plenty more in the NR, including maps and strategy outlines, so consider this little note
in IKN772 as the start of your MARI DD this week and not the end. I’d add that we know MARI
is now in the heavy lifting phase at its flagship project and 2024 is the year it does all the
technical, infill, condemnation work that’s required for a full FS, very little of that brings new
news to the market before the 43-101 is compiled and published. By pivoting to earlier stage
targets, MARI opens up the potential for real discovery news to wake up weary and cynical
market watchers (e.g. me) as well as offering the type of “cherry on top” that eventual
acquirers often look for in their buyout targets (nothing like a prospective “extra” to give the big
company geologists the chance to shine add value and impress their C-suite bosses). The other
eventual corporate line is to get a good second string project that turns into a spinco, allowing
grunts like us “free shares” in the spinout entity when the main project gets sold. What we do
know today is that MARI is getting zero squat zip nada value added to its share price by SdM or
any of its other early stage targets so if only for that, we should applaud this initiative.
In trading, MARI was down a penny on thinnish volume, trying and failing to hold at $3.70.
Contango ORE (CTGO): Even after Friday’s bounce, CTGO continues to offer tremendous
fundamental value, so I once again bang the table at U$18 and shake my head in mystery and
bewilderment that you could have bought some at U$16 just days ago.
The 25,000 or so in shares that caused the run on Friday may not seem much, but in cash
terms those trades represent about 3X the cash traded in Top Pick Minera Alamos (MAI.v) on
the same day. Something to think about.
The Copper Basket
After nine weeks of 2024, The Copper Basket shows a loss of 3.89% to level stakes:
17
company ticker price 1/1/24 Shares out Market Cap current pps gain/loss%
1 NGEx Minerals NGEX.v 7.16 186.824 1487.12 7.96 11.2%
2 Solaris Res SLS.to 4.13 179.221 698.96 3.90 -5.6%
3 Los Andes LA.v 11.80 29.53 336.35 11.39 -3.5%
4 Marimaca Cop MARI.to 3.43 93.11 330.54 3.55 3.5%
5 Hercules Silver BIG.v 1.38 231 191.73 0.83 -39.9%
6 Arizona Sonoran ASCU.to 1.75 109.17 136.46 1.25 -28.6%
7 Aldebaran Res. ALDE.v 0.89 169.819 117.18 0.69 -22.5%
8 Faraday Copper FDY.to 0.63 175.97 87.99 0.50 -20.6%
9 Oroco Res OCO.v 0.375 222.86 86.92 0.39 4.0%
10 American Eagle AE.v 0.26 108.87 57.70 0.53 103.8%
11 C3 Metals CCCM.v 0.61 61.885 31.56 0.51 -16.4%
12 Kodiak Copper KDK.v 0.58 63.93 30.05 0.47 -19.0%
13 QC Copper QCCU.v 0.12 173.7 20.84 0.12 0.0%
14 Element 29 Res ECU.v 0.18 106.25 14.34 0.135 -25.0%
15 Camino Min COR.v 0.07 206.66 12.40 0.06 -14.3%
NB: All stocks in CAD$ Portfolio avg -3.89%
It wasn’t a big week for copper explorecos, but it was a good week overall and our basket
average pulled back a few of the clicks lost two
weeks ago thanks to eight winners (SLS.to, LA.v, The Copper Basket 2024, weekly evolution
4%
BIG.v, ASCU.to, FDY.to, CCCM.v, KDK.v, AE.v)
3%
versus six losers (NGEX.to, MARI.to, OCO.v, 2%
1%
QCCU.v, ECU.v, COR.v) and one that remained
0%
unchanged (ALDE.v). There was one double figure -1%
-2%
percentage loser in Camino (COR.v down 14.3%) -3%
and one double figure percentage winner in -4%
-5%
Hercules (BIG.v up 10.7%), but the win registered -6%
by Kodiak (KDK.v up 9.3%) deserves a place on -7%
the podium.
All this came in a relatively flat week for the price
of copper, though Friday’s uplift of all things commodity did improve the spot price by a few
cents and sentiment considerably more than that. So instead of the near-term chart, we zoom
out and offer the 2024 YTD visual on the May’24 Comex contract (we’ve shifted from March
now) to back up the argument offered in this week’s curated comment, below the chart:
That line comes from our regular mancrush, Andy Home of Reuters who (for my money) hit the
nail on the head in his weekly industrial metals column entitled “Copper super-bulls bide their
time in the options market”. As usual there’s a lot of data offered and it’s well worth a full read
so use the link (10) below, but essentially Home brings market data that backs up the house
18
ts1naJ ht7naJ ht41 ts12 ht82 ht4bef ht11 ht81 ht52 dr3raM
source: IKN calcs
view that the current market for copper wants for direction but the longer-term view is bullish
to a tee. His main argument is that futures contracts are basically neutral in the ear-term
(despite the steep contango that continues), but contracts for longer-dated deliveries (e.g.
December 2025) are heavily biased to toward longs. Here’s part of the conclusion section from
Home’s note:
It's not hard to see why longer-term investors have fled the chop of the short-term
futures action for the quiet of the far-dated options market.
Copper is locked in an extended pattern of indecision, caught between a negative
macro outlook and a more positive micro picture of supply disruption and buoyant
green demand.
It's that combination of constrained supply and fast growth in energy transition demand
that is top of mind for funds looking for higher prices once the macro gloom lifts. And in
some cases much higher prices, judging by some of high-strike call option positions
taken.
So if you're wondering where all the super-bulls have gone, they've not left, just moved
down the forward curve, betting on a much brighter copper future.
Moving on, it’s the end of a month and we check in on the long-term copper inventory charts. The spike in
SHFDE inventories has come on time, but this year sees more copper in LME and Comex warehouses
than this time last year and the result is the highest aggregate copper inventory since mid-2021.
Key Cu inventory aggregate, 2012 to date
1000000
900000
800000
700000
600000
500000
400000
300000
200000
100000
0
19
21.naJ ram yam luj pes von 31.naJ ram yam luj pes von 41.naj ram yam luj pes von 51.naj ram yam luj pes von 61.naj ram yam luj pes von 71.naj ram yam luj pes von 81
naj
ram yam luj pes von 91
naj
ram yam luj pes von 02
naj
ram yam luj pes von 12
naj
ram yam luj pes von 22
naj
ram yam luj pes von 32naj ram yam luj pes von 32naj
Mt Cu
Comex
Shanghai
LME
source: Cochilco
Meanwhile, we see the shift toward SHDE stocks as usual in the ratio chart
Copper inventories: percentage held per exchange
90
80
70
60
50
40
30
20
10
0
21.naJ ram yam luj pes von 31.naJ ram yam luj pes von 41.naj ram yam luj pes von 51.naj ram yam luj pes von 61.naj ram yam luj pes von 71.naj ram yam luj pes von 81
naj
ram yam luj pes von 91
naj
ram yam luj pes von 02
naj
ram yam luj pes von 12
naj
ram yam luj pes von 22
naj
ram yam luj pes von 32naj ram yam luj pes von 32naj
LME Shanghai Comex source: Cochilco
That’s the monthly check done, now for the weekly copper inventories health check with data
from Cochilco:
Another big move in copper inventories, typical for the time of year. Aggregate stocks
in the world’s three official systems rose by 32,044 metric tonnes (mt), to close at
362,198mt this weekend.
The Shanghai SHFE was the big move again, the third of this Chinese New Year period.
This time stocks rose by 33,164mt to close at 214,487mt. See below for more.
The LME trend of declining stocks continued, this time with a modest 1,525mt drop that
beings this weekend’s total to 121,375mt. Though relatively small compared to the
chunks landing in SHFE warehouses, it’s notable in its own right and the additions came
into its European warehouses.
The Comex added a small 405mt of copper to close at closed at 26,336mt. No biggie.
The dedicated SHFE charts show the annual spike, right on time and so far at least, the first
chart shows how it’s tracking what happened in 2019 quite faithfully. The lower chart gives a
better feel of the comparative strength of the spike and we’ll get some sort of resolution on the
real state of end-user appetite in the next couple of weeks, as we look for the peak. If stocks
stay under 250,000mt the world will consider that price supportive, anything above 300kmt
would start to cast doubt on real demand and therefore any price upside.
SHFE copper inventory levels, 2019 to 2024
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 2024
2023
2022
2021
2020
2019
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 8102ht72rpa ht91 ht11 9102
dr3bef
9102ht82rpa ts12 ht31 0202ht5naj 0202ht92ram ts12 ht31 0202ht6ced ht82 dr32 ht51 ht7 2202ht03naj 22ht42rpA ht71 22ht9tco 3202
naJ
ht62 ht81 ht01peS dr3ceD ht52
Mt Cu
|
source: Cochilco
Now for notes on a couple of our basket stocks:
Solaris Resources (SLS.to): This is going to take more column inches than I’d like because
of the need to provide long extracts from two communiqués for necessary context. Our subject
is the latest round of “Community Wars” at Solaris, a subject that often comes to a head around
PDAC time. On Thursday we heard that the association which leads opposition to its Warintza
copper project, the Shuar Arutam People (PSHA), had filed a complaint in Canada against SLS.
Here are couple of extracts from the cover mailer, that went out via the Canadian mining
watchdog body Mining Watch (11):
(Sucúa – Ottawa – Oakland / February 29, 2024) – Today, the Shuar Arutam People (PSHA) filed a
complaint against Solaris Resources Inc. (TSX: SLS) before the British Columbia Securities Commission over
its failure to continuously disclose material information to shareholders regarding its Warintza mining project
which overlaps PSHA’s titled territory. In spite of PSHA's explicit and continuous rejection of the Warintza
project, Vancouver-based Solaris has kept moving forward with its mining plans in the Amazon, one of the most
biodiverse areas on the planet. The complaint comes just days before the biggest mining conference in the
world, the annual trade show of the Prospectors and Developers Association of Canada (PDAC) to be held
March 3-6 in Toronto. Solaris, in the past, has used PDAC to showcase its “Warintza model” of community
engagement as industry best practice.
According to the complaint, the company has been disclosing partial information regarding its relationships with
Indigenous communities opposing the project, and fails in its obligation to regularly disclose Ecuador’s political
and legal risks that may impede development of mining activities. The complaint also shows Solaris’ failure to
formally disclose material risks indicates a lack of compliance with its obligations, and may mislead current and
prospective investors, which warrants a deeper investigation.
As recognized by the Ecuadorian government, PSHA is the legal representative body of 47 communities with
collective land title and ancestral possession of 232,500 hectares of territory in the Cordillera del Condor region
of Ecuador’s Amazon, and site of Solaris’ flagship Warintza copper-gold project. PSHA has repeatedly
expressed its opposition to the project. The government has failed to consult them as required by the
Ecuadorian constitution and international Indigenous Rights obligations, nor has their consent for the project
been obtained.
Instead of addressing the full scope of its legal Free, Prior, and Informed Consent (FPIC) obligations, Solaris
Resources has chosen to emphasize a "Strategic Alliance" with just two communities in the area, Yawi and
Warintz, causing division and internal conflicts. However, it's important to note that neither of these communities
can enter into a process of consultation or provide consent for land that is part of the collective PSHA territory.
This has led to misleading implications for investors, suggesting that the company has secured the necessary
"social license" to operate. This lack of FPIC puts the viability of the project at risk and opens the door to future
litigation, similar to legal injunctions that have paralyzed neighbouring mining projects.
I hope you got all that, but basically the PSHA reiterated its long-standing opposition to the
project and this time, filed a complaint against the company with the BCSC to coincide with
PDAC. Then on Friday SLS countered the PSHA with its own release (12) and again, some
excerpts starting with the title:
Solaris Announces Cooperation Agreement with Interprovincial Federation of Shuar Centers and the Alliance for
Entrepreneurship and Innovation of Ecuador
March 01, 2024 – Vancouver, B.C. – Solaris Resources Inc. (TSX: SLS; OTCQB: SLSSF) (“Solaris” or the
“Company”) is pleased to announce a trilateral cooperation agreement with the Interprovincial Federation of
Shuar Centers (“FICSH”) and the Alliance for Entrepreneurship and Innovation (“AEI”) of Ecuador, with the
signing ceremony to take place over PDAC. The agreement aims to promote the economic and social
development of Shuar communities represented by FICSH, including the communities of Warints and Yawi
which host the Warintza Project on their lands, with programs in health, education, skills training,
entrepreneurship, innovation and sustainable mineral resource development.
FICSH is the highest authority and largest Shuar indigenous organization legally established by statute of the
Ministry of Social Welfare of Ecuador in 1964 and includes 50 associations comprising 500 Shuar communities
and approximately 143,000 Shuar indigenous people.
AEI is an independent non-profit dedicated to promoting entrepreneurship and innovation as the basis for the
productive development of Ecuador. The organization represents a network of public, private and academic
actors of which Solaris has been a member since 2021.
Key Programs:
Health: training and support for the provision of medical services in remote communities in cooperation with the
Ministry of Public Health
Education: training and support for the development and delivery of intercultural education in remote
communities with the Ministry of Education
Production: training and technical assistance related to productive agricultural and business development,
project management and accounting
Artisanal mining: environmental, safety and technical training and support for the formalization of artisanal
mining in FICSH territories
Mr. Froilan Juank, President of Yawi Center and member of the Board of Directors of the Strategic Alliance,
commented, “The Shuar communities of Warints and Yawi support this agreement which follows from our
request for FICSH to represent us and our interests and extend benefits to other member communities. We
reject the false statements made by foreign non-governmental organizations (NGOs) and the Shuar Arutam
People’s Associations (PSHA) which ignore our voice and speak against our interests. We are the legitimate
registered owners of the Ancestral Lands on which the Warintza Project resides and we have the right and have
chosen, through our General Assembly, to participate in the project through our Strategic Alliance and Impact
and Benefits Agreement.”
Mr. David Tankamash, President of FICSH, commented, “Our work aims to improve the quality of life and
access to opportunities for our member Shuar Centers. We support the Warints and Yawi communities and
reject the efforts of foreign NGOs who act against the will and interest of our members. This agreement, which
has been approved by the will of the FICSH General Assembly, is important for inclusive and sustainable
mineral resource development. The Solaris model proves the Shuar nation can partner in development
opportunities on our lands. We deserve the opportunities indigenous nations have in other parts of the world
and foreign NGOs must respect our choices.”
Again a long copypaste, but required as SLS is promoting agreements from two main places, plus a third
naitonal trade association less connected with the region. The company has had the support from the Warints
and Yawi communities since they began there, this time they’ve brough in the FICSH as a regionwide body that
has historically been supportive of mining projects (e.g. they were
pro-Mirador mining project as far back as 2018.
So what’s going on? In this latest round of Warintza
ping-pong we have three groups:
The immediate local community next to the
Warintza project, supporting SLS
The larger PSHA that runs the Shuar Arutam
region, against the project
An even larger association, FICSH, voicing
support for the local community position and the
mining company.
In order to frame this, here’s a map (right) that shows
the three entities, with the two small villages next to the
21
Warintza project supportive, then the region around them against the project. That’s the way
it’s always been at this project, but this time SLS has brought in the region-wide authority to
voice its own support, as FICSH represents all the cantons (regions) in colours on that map.
However, a careful reading of the SLS NR shows a notable difference between the Yawi Center
president…
“We reject the false statements made by foreign non-governmental organizations
(NGOs) and the Shuar Arutam People’s Associations (PSHA)”
…and this from the larger FICSH:
“We support the Warints and Yawi communities and reject the efforts of foreign NGOs
who act against the will and interest of our members.”
The former has been in long-standing conflict with PSHA, while the latter represents them all
and won’t criticize the PSHA, only going as far as rejecting the position taken by NGOs and not
mentioning PSHA, as that is also a body it supports.
The bottom line: The SLS strategy from the start has been “Divide And Conquer”, the standard
playbook used by Canadian mining companies in South America and one we’ve pointed to many
times previously. Nothing new here, it didn’t work at Santa Ana for Bear Creek, it hasn’t worked
in many other places, it’s not working here. The decision to “concentrate CSR” (i.e. offer plenty
of money) to the small local communities and ignore the regional opposition from the larger
and politically important group allows the company to make good looking statements in English
to those who don’t know any better, but the issues with the wider and politically powerful PSHA
has never gone away; if anything, it’s got worse.
This move by SLS to bring in FICSH and get the support from the association that covers the
entire region as seen in the map above, known as Santiago Morona, is a smart addition to its
cause, there’s no doubt about that. We should also note that FICSH has previous form on
supporting mining projects, such as back in 2018 (13) when voicing its support for the Chinese
capitals Mirador project, despite the strong opposition it faced from local communities around
the site. Getting the Yawi Center (focal point locals) and FICSH (region) on its side is smart PR,
but it still doesn’t override the simple fact that in order to advance Warintza to production it
needs a social license and that can only come from the regional authority PSHA, not the two
small local villages or the large Santiago Morona region covered by FICSH, but the “Territorio
de Pueblo Shaur Arutam” comprised of six associations (namely the Nunkui, Sinip, Santiak,
Mayiak, Churuwia, Arutam) that cover the 49 population centres inside the red line on that map
above, the very people most opposed to the project. So PDAC is showtime for SLS and in the
days to come it gets the phot op of papers signed in front of cameras by the representatives of
the two small villages (the Yawi Center) and the macro region (Santiago Morona), but nothing
that moves the dial on its real permitting bottleneck.
Element 29 Resources (ECU.v): A trifecta of news from ECU last week that started on
Monday evening and a big management shake-up
(14). The main change is the exit of President, Chief
Executive Officer and director Steve Stakiw, who is
being replaced at CEO by Chair and company
founder Richard Osmond. Along with that move,
other leavers are Paul Johnston as VPEx and
directors Peter Espig director and Michael Doggett,
while one of the three vacated director seats is filled
by the arrival of Robert (Bob) Willis to the board.
Then came part two of the three NR blast on
Thursday (15):
February 29 2024 – Element 29 Resources Inc.
(TSXV: ECU) (OTCQB: EMTRF) (BVL: ECU) (“Element 29” or the “Company”) is
pleased to announce the appointment of Manuel Montoya as the Company’s Chief
Technical Officer.
22
Richard Osmond, President and CEO remarked, “Manuel’s long and deep experience
exploring and making discoveries in Perú is a welcome addition to Element 29. As part
of the GlobeTrotters team that made the initial discovery of our Elida deposit and
Atravezado target at Flor de Cobre, he can hit the ground running as we aggressively
advance these highly prospective copper projects.”
When that NR dropped I pinged Chair/CEO Osmond, who told me he was very happy about
getting to work with Montoya again. On pressing, he also admitted that Stakiw had been retired
due to the lack of movement on the company projects to date. Then Friday evening post-close
brought the kicker (16) and this time., you get nearly all the NR:
Element 29 Receives Environmental Permit for Flor de Cobre Copper Project and
Announces Partnership with GlobeTrotters on Exploration Activities
March 1, 2024 – Element 29 Resources Inc. (TSXV: ECU) (OTCQB: EMTRF) (BVL:
ECU) (“Element 29” or the “Company”) is pleased to announce that it has received
environmental permit approval for exploration drilling at its wholly-owned Atravesado
porphyry target on the Flor de Cobre copper project, located in southern Peru.
The permit, known as a Declaración de Impacto Ambiental (“DIA”), allows the
Company to drill from a maximum of 40 drilling platforms. Following approval of the
environmental permit, Element 29 requested approval from the Peruvian General
Mining Bureau (“DGM”) for the Authorization to Initiate Exploration Activities (“AIEA”),
which is a normal course step that triggers Peruvian authorities to evaluate the effect of
exploration activities on the local community. The outcome of this evaluation will
establish whether there is a need for a prior consultation process (“Consulta Previa”).
In parallel, the Company is negotiating a surface rights agreement with the local
community. After completing these steps, the Company expects that Peruvian
authorities will be able to issue approval of the AIEA.
Partnering with GlobeTrotters on Exploration
The Company plans to partner with GlobeTrotters Resource Group (“GlobeTrotters”), a
private exploraton company focused on project generation in South America.
GlobeTrotters has been actively exploring in Peru for more than 10 years and
responsible for the initial discovery of the Company’s flagship Elida porphyry Cu-Mo-
Ag deposit and the Atravesado porphry Cu target at Flor de Cobre. The plans are to
utilize GlobeTrotters’ technical expertise in Peru to advance the Company’s portfolio of
highly prospective porphyry Cu projects and share operational resources to potentially
significantly cut costs. The plans to partner with GlobeTrotters, the largest shareholder
of the Company, complements the appointment of Manuel Montoya as Chief Technical
Officer (see February 29, 2024 press release).
Richard Osmond, Chairman and CEO, commented, “The receipt of the Atravesado
target DIA on our Flor de Cobre project is an important step towards drilling this highly
prospective target. Our Peruvian team has worked diligently on both permitting and on
gaining a better understanding of the Atravesado target. We anticipate receipt of the
drill permit by Q3 2024.”
Mr. Osmond continues, “The planned partnership with GlobeTrotters fits perfectly with
our strategic plans to reduce corporate costs and focus our efforts as much as possible
on advancing our portfolio of highly prospective Peruvian porphyry copper projects in
one of the top mining jurisdictions globally.”
That’s good news and you get the extended NR because both points are important:
Not only is GlobeTrotters the entity from which Element 29 was born, it’s also a private
geological company with the highest reputation inside Peru and responsible for many
discoveries. Secondly, getting EIA permits for the Atravesado target, the zone we’ve known for
a long time as the juiciest and most prospective zone at Flor de Cobre, is the first piece of good
news we’ve had from that project for over two years. Please note that in order to start drilling
the company still needs agreement from the local community and with this piece in place, I’m
quite sure this new team has been put together with that objective in mind. So it’s good to see
23
ECU doing something about its inertia and shaking up the C-suite, new CEO Osmond’s job now
is to get green lights from the community at Atravesado and get the drills turning there.
QC Copper and Gold (QCCU.v): Wednesday saw a long-overdue announcement from QCCU
(17):
Toronto, ON – February 28, 2024 – QC Copper and Gold Inc. ("QC Copper" or the
"Company") (QCCU:TSXV | QCCUF:OTCQB) is pleased to announce the appointment
of Guy Le Bel as its President. Guy brings significant mining and operational
experience to the QC Copper team at a time when the Company is pivoting toward the
engineering and economics of its flagship Opemiska copper project.
Guy Le Bel has been around the mining scene for a long time and has the CV required for the
job. Aside the jobs mentioned in the QCCU NR, he also has time spent in various junior
explorecos and has seen moments of failure in those, such as when heading Aquila Resources
into its permit denial for Back Forty. That was a concern when I contacted QCCU head honcho
Stephen Stewart on hearing the news Wednesday and paid attention to his reply. He said that
Le Bel had been a possible to lead QCCU for several months and along the way, had
“auditioned him” in an ad hoc way on the corporate, technical and social set-up at and around
Opemiska. New President Le Bel fit in well with the team and got approval from local leaders,
all went well, which is what you’d want to hear from a Quebec-based mining exec with his track
record and long history in the sector (which for the record includes working for a time at
Opemiska).
Personally, I’ve been advocating for CEO Stewart to start spreading himself less thinly around
all the Ore Group companies and find executives to fill leadership roles for nigh on two years.
However, getting the right person for the right job isn’t a case of flicking on a switch and I also
know Stewart is (rightly) picky when it comes to headhunting, but delegation beats control
freak in these situations and while it took some time to find the person for QCCU, I’m counting
last week as “better late than never”. Wishing M. Le Bel bonne chance at his new job and hope
he adds plenty of value to the 400,000 incentive options with a 13c strike that have come with
his appointment.
Arizona Sonoran (ASCU.to): A simple observation and not one I think is particularly tradable
at this time, just something I have on my mind:
1) ASCU is talked up and/or recommended by quite a few of the “usual suspect” high
traffic newsletters.
2) ASCU seems to do well at or just after some of the better known trade shows when
said writers are present and happy to interact with attendees (that’s putting it as
diplomatically as possible).
3) Once this “trade show influence is done”, ASCU has then faded and reverted to the
downtrend on this 12 month chart.
4) PDAC is with us now.
The company’s rather lacklustre “snapshot in time” PEA did for the share price a couple of
weeks ago, it’s now back on that trend line and with some heavy volume just behind it.
24
The Producer Basket
After 9 weeks of 2024, the Producer Basket shows a loss of 9.19% to level stakes:
company ticker price 1/1/24 Shares out MktCap(U$Bn) current pps gain/loss%
1 Newmont NEM 41.39 1152.6 36.81 31.94 -22.8%
2 Barrick GOLD 18.09 1761.54 26.32 14.94 -17.4%
3 Agnico Eagle AEM 54.85 496.54 24.64 49.62 -9.5%
4 Franco-Nevada FNV 110.81 192.119 20.55 106.99 -3.4%
5 Pan American PAAS 16.33 364.439 4.70 12.89 -21.1%
6 Lundin Gold LUGDF 12.64 237.68 2.85 12.00 -5.1%
7 Hecla Mining HL 4.81 617.768 2.29 3.71 -22.9%
8 Eldorado Gold EGO 12.97 202.472 2.19 10.83 -16.5%
9 Dundee PM DPMLF 6.43 183.278 1.29 7.03 9.3%
10 Wesdome Gold WDOFF 5.83 148.95 1.02 6.85 17.5%
All prices and stock quotes in U$ Port. avg -9.19%
The Friday gold price rebound brought relief across the board and lifted all boats, nicely timed
to boost spirits at PDAC next week for sure. Our basket of ten stocks saw seven winners (NEM,
GOLD, PAAS, HL, EGO, DPMLF, WDOFF), one unchanged stock (LUGDF) and two losers (AEM,
FNV), a count that would have looked a lot worse if it weren’t for the Friday rally. The two
losers were small as were most of the winners, the only real outlier being the 7.7%
improvement in Dundee Precious Metals (DPMLF). As for our semi-serious competition against
GDX over the year, we lost a little ground to the benchmark but the lead is still healthy.
The 2024 Producer Basket: Weekly performance and The 2024 Producer Basket: Percentage diff. between
4% comparative to GDX control GDX benchmark & basket (negative= IKN ahead)
1.5%
2% 1.0%
0% 0.5%
-2% 0.0%
ikn -0.5%
-4% gdx control -1.0%
-6% -1.5%
-8% -2.0%
-2.5%
-10%
-3.0%
-12% -3.5%
-14% -4.0%
source: IKN calcs -16%
Jan1stJan7th 14th 21st 28th feb4th 11th 18th 25th Mar3rd
Dundee Precious Metals (DPMLF): I’m a bit late in catching up on the Dundee story, what
with our focus on the big names like Newmont and Barrick in the last couple of weeks, but
better late than never. Back at the start of the year when choosing DPM (or DPMLF as we’re
using, to keep things in USD) as one of our ten to beat the GDX in 2024, we listed three main
reasons for the pick and here they are again:
1) The company had a great 2023, showing significant improvement in operations and
financials
2) At just over U$1Bn, it’s the right size to add leverage to our basket of ten stocks
compared to the GDX benchmark
3) Its recent announcement to buy Osino caused the stock to drop and while we can
debate as to whether DPM is overpaying for the junior, the bad news for the share
price is now baked in and once the deal closes (due March) we’re likely to see a re-rate
wherever the gold price is at that time. However, if gold does what we’d like it to do
and move higher still in Q1, DPM is going to look smart for having moved on a deal to
add a big project to its books at the right time.
Those three criteria have stood the test of the first two months of the year, but in the third case
not for the reason first expected. Yes operations have shown good continuation from its
successful 2023 and yes, the relatively small size compared to peers has amplified the
25
ts1naJ ht7naJ ht41 ts12 ht82 ht4bef ht11 ht81 ht52 dr3raM
source: IKN calcs, NYSE data
advantage it has offered with peer-beating results. However, we managed to reap benefit from
the Osino buyout for different reasons:
The stock was trading in lockstep with the GDX (i.e. negatively) until we got news from its
target acquisition Osino that it had received a superior offer. That turned out to be from
Chinese capital Yintai (18) and at C$368m, clearly superior to the C$287m offered by Dundee.
When DPM formally announced it would not use its right to put in a superior offer on Feb 20th,
the stock jumped back the way you see in the chart above and when we add the good
exploration results it announced on Feb 26th form its Čoka Rakita development project in
Serbia, including headline numbers of 81 m of 50.57 g/t Au and 0.15% Cu (that’s good enough
for any mining company (19), the result is the market-beating month you see above. So far so
good for this pick and along with WDO at the bottom, one of the rare mid-size producers in the
green for 2024 to date.
Newmont (NEM): Plenty of amusement from the five minute Q&A done by NEM CEO Tom
Palmer for Bloomberg last Wednesday (20). He kicked off by referring to NEM’s share price:
“Our stock is at a once in a generational price” (sic), which may be poor grammar but is also
only true if your generations don’t include the last times (plural) NEM traded at U$30, such as
between 1998 and 2004, 2009, 2013 to 2016, 2018 and briefly in 2019. He really ought to
know his own stock price movements better than that. He then went on to explain that the
previous week, in which the company had cut the dividend
and announced divestments and cost cutting measures “A
big week for Newmont” and a thrusting style and tone that
would suit a junior mine CEO perfectly, but sounded like a
spoof from the persona at the helm of the world’s #1
goldie. But what’s really funny was his timing, because his
interview may have nailed the bottom:
They tell me a successful career in business is as much
about lucky timing as anything else. This ten-day chart
shows NEM putting in a bigger bounce than most others,
but over the ten days it’s still painfully lagging peers,
including its main rival Barrick. I just can’t get over what NEM is doing with such a BS merchant
at the helm, he sounded ridiculous in that Q&A and I need to pay more attention to this over-
promoted circus barker. Is this what happens when the sector role model ends up being Robert
Friedland?
Eldorado Gold (EGO) (ELD.to): As reader WV and others know, I fully intended to run a
closer analysis on EGO this weekend and highlight the reasons why I think this could be a great
way to play the midcap PM sector in 2024. However, the note on new position Western Copper
& Gold (WRN.to) (WRN) has taken preference for today and rather than dilutee my time, at
some point on Friday afternoon I decided to defer on EGO and run the numbers next week.
26
The TinyCaps List
After 9 weeks of 2024, the TinyCaps show a gain of 7.62% to level stakes:
company ticker price 1/1/24 Shares out Mkt Cap current pps gain/loss%
Aston Bay BAY.v 0.065 221.5 26.58 0.12 84.6%
Awalé Res ARIC.v 0.135 67.27 8.75 0.13 -3.7%
District Metals DMX.v 0.170 106.98 34.77 0.325 91.2%
Endurance Gold EDG.v 0.18 150.136 18.02 0.12 -33.3%
Kirkland LDC KLDC.v 0.100 88.625 7.53 0.085 -15.0%
Latin Metals LMS.v 0.075 71.476 6.08 0.085 13.3%
Palamina Corp PA.v 0.130 71.285 6.42 0.09 -30.8%
South Star STS.v 0.750 48.8 32.70 0.67 -10.7%
Surge Copper SURG.v 0.090 219.21 17.54 0.08 -11.1%
Viva Gold VAU.v 0.120 118.384 13.02 0.11 -8.3%
Prices in CAD$, data from TSXV basket avg 7.62%
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 (though this year I’m making one clear exception and one rule
stretcher). 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, our task is to trawl through the TSXV and find companies that are small but with life in them. The vast
majority of tinycap stocks are broken stories, 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 2024. This connects to the company’s “unbroken” status, as we
want news and potential catalysts from companies with projects that can work.
Decent management if possible. When you are down among the little guys it doesn’t pay to be too
choosy, but still I preferred companies that have teams or people with good peer reputations.
The TinyCaps basket average rebounded last week despite there only being four winners
(BAY.v, DMX.v, LMS.v, SURG.v) versus six losers
(ARIC.v, EDG.v, KLDC.v, PA.v, STS.v, VAU.v), as TinyCaps, 2024 weekly tracker
12%
the winners included big percentage moves in Latin
10%
Metals (LMS.v up 30.8%), Aston Bay (BAY.v up
8%
20.0%) and let’s include District Metals (DMX.v up
6%
12.1%) in the mix, all stronger than the larger
4%
losers seen in Viva Gold (VAU.v down 12.0%) and
2%
Palamina (PA.v down 10.0%). These are the size
0%
and type of exploreco stories that can move and
pop hard in and around PDAC time, so seeing 20%
moves may be pleasant but they’re not so
surprising while volumes and daily trading in
absolute dollars remain low. So not the longest edition of The TinyCaps basket today but we
may get to report on peppy news and market moves post-PDAC, next weekend.
Awalé Resources (ARIC.v): We got a NR from ARIC this week (21) announcing the end of
its current drill program, including some 21 holes totaling around 4,000m. The samples are in
the labs and CEO Andrew Chubb stated in the accompanying video (22) that assays should start
coming back to the company “mid to late March”. That video is worth your time, some 27
minutes in which CEO Chubb talks up what he saw in the drill core during his recent one week
visit and while he sounded upbeat on all three of the main targets that make up Odienné,
namely BBM, Charger and Lando, he seems to have a particular soft spot for what he’s seeing
at the latest discovery BBM and thinks it may be good for 2m oz on its own, as well as copper,
silver and moly kickers. The infill and extension holes put into BBM in this program (adding to
the original four discovery holes) “are looking really nice”, he says.
27
ts1naJ ht7naJ ht41 ts12 ht82 ht4bef ht11 ht81 ht52 dr3raM
source: IKN calcs, TSX data
Latin Metals (LMS.v): A big percentage move last
week, but scratch the surface and you’ll see that it
was more about a stock that bounced from the
bottom to the top of its long-term flatline trading
channel (see 12 month chart right) on volume that
amounts to about $20,000 in cash on the week. That
small cash moved the implied market cap around
$1.5m, which is some sort of definition of leverage
(though not a great one). Far more heat than light
and until we get some solid news on either a new JV
on one of its properties or a permit approval from
Argentina, don’t expect much else.
Palamina Corp (PA.v): As previewed just last week, February 29th brought news (23)
confirming PA’s plans to drill what they consider to be one of the most prospective zones of its
big Usicayos property in South Peru soon. They’re calling it the SDO zone, they include drill
maps and geological interpretation of the target in the NR (go check it out) and on a strategic
level, the comments from company president Andrew Thomson sum the NR up well enough:
“Palamina’s upcoming drill campaign will test the heart of the SDO zone, where the
highly prospective SDO East zone hosts two outcropping Mantos that can be traced
over an 800-metre strike length. We have seen evidence in the field that there may be
at least two other mantos in the area with the potential to host widespread gold
mineralization. Drilling is scheduled to commence once the rainy season is over and
will test the four target areas identified to date at SDO.”
The rainy season in this area normally abates during March (though it can stay damp during
April), so expect a NR to tell us that the drills are turning soon enough. The holes won’t be so
deep, so as long as logistics and turnaround times remain normal we should have first assay
results in May, maybe June. Be clear, this is one that’s well worth keeping an eye upon as
despite the original lackluster results from the first zone drilled at Usicayos a couple of years
ago, this remains a highly prospective area and one look at a concession map will tell you that
majors are also interested in what might be under the ground here. This drill program by PA
will be watched by pocketbooks large and small. High risk yes obviously, but this is the type of
exploreco that can run if the Truth Machine hits something nice.
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
Ecuador: The referendum is on
Last week Ecuador’s Constitutional Court approved the “Consulta Popular y Referéndum de
Ecuador de 2024”, i.e. the referendum called by new President Daniel Noboa and its eleven
approved questions that, for the main part, seek to give his executive new powers to combat
the rise in organized crime. The vote has been set to happen on April 21st and most of the
questions are aimed at changing the rules and laws for crimes, prisons and give the armed
forces more direct powers against criminal organizations involved in narcotrafficking and other
illegal activities that are behind the sharp rise in violent crime in the country. Most of the eleven
questions are directly related to internal security issues and don’t come under the scope of The
IKN Weekly, but one question is worth mentioning and while the exact wording is important in
Spanish (the Constitutional Court is keen on making each question sound as neutral as possible,
this translation will suffice for our purposes:
Do you agree that the Ecuadorian State recognize international arbitrage as a method
of solving controversies regarding contractual or commercial investment?
If passed, this will bring Ecuador back in line with international standards of arbitration and
would recognize bodies such as ICSID/CIADI for any eventual industrial dispute. However and
28
more widely, the referendum will look to cement Noboa’s credentials as an effective President
and the quick calling of the vote is in his favour, as his honeymoon period has extended and his
moves against organized crime to date largely applauded by Ecuador. Though not a mandate
vote as such, it will strengthen his position and efforts to move other law bills through a divided
Congress.
Argentina: No Mining Secretary yet, but…
… we may be about to get an announcement and if the rumour is confirmed, it would be good
news for the sector.
Four weeks have passed since IKN769 and the note “Argentina: A political ambush and a
Mining Secretary sacked” when President Javier Milei took revenge on his Congressional
opposition’s move to block his big “Omnibus Law” package by sacking a few people from his
cabinet, including Mining Secretary Flavia Royón (due to her affiliation with Salta Governor
Gustavo Sáenz, one of the people figures the political ambush). We still don’t have a
replacement named but in the last few days, a strong rumour (24) has done the rounds about
Alberto Carlocchia being named as her replacement as soon as PDAC is done. If confirmed,
Carlocchia would be a popular choice as ex-head of Argentina’s main Chamber of Mining, the
CAEM, as well as a long track record in the country’s mining sector. He also surprisingly
resigned from his current post as head of IR and corporate secretary of the tinycap junior
Patagonia Gold, so that fits as well. He’s been a strong advocate for the industry in Argentina
for many years, understands the issues facing companies in the country and has often spoken
against government policy, so if he were given a role inside an admin that’s trying to
revolutionize the country he’d have the means to do something proactive. However, his
candidacy is not yet a done deal and also in the running for the job of Mining Secretary is Pablo
Rutigliano, the current President of the Latin America Lithium Chamber of Commercee.
Colombia: A legal precedent of note
There were plenty of reports on the news Friday that the International industrial tribunal court,
ICSID/CIADI, had ruled against the suit brought by Red Eagle Mining against the government
of Colombia regarding its Vetas property in the Páramo de Santurban, Colombia. After reading a
few of them, I’ve decided to offer you my translation of this one (25) as it gets over the
importance of the ruling in as few words as possible:
In a significant verdict, the Arbitration Tribunal of the International Center for Settlement of
Investment Disputes (ICSID/CIADI) has ratified Colombia's commitment to the preservation of its
ecosystems by confirming that it did not violate its Free Trade Agreement (FTA) with Canada in the
case against the multinational Red Eagle Exploration Limited, known as Red Eagle.
The case arose from Colombia's ban on mining in ecologically sensitive Páramo ecosystems, with a
special focus on the Santurbán region. Red Eagle had brought a legal suit seeking compensation of
approximately U$130m, arguing that the government’s position represents an indirect expropriation
of its investments in the area according Article 810 of the FTA.
However, the Court dismissed the claims and agreed with Colombia's position that the prohibition of
mining activities in the Páramos constitutes a legitimate exercise of the country's right to regulate in
the interest of the country, specifically in matters related to environmental protection.
Notably, the tribunal decision recognized that measures adopted by Colombia did not constitute
expropriation of Red Eagle's investment. Furthermore, it stated that its measures did not violate the
minimum standards established in the FTA, since the company was aware of the potential of mining
being banned in Páramos when making its investments.
Importantly, the court recognized the technical complexity and democratic process behind the
delays in the delimitation of protected areas, reinforcing the legitimacy of the actions taken by the
Colombian government.
This decision represents a significant victory for Colombia and its commitment to the protection of
the environment and well-being of the country. This ruling highlights the validity and good faith of
the measures implemented by Colombia to preserve valuable Páramo ecosystems, a natural
resource of critical importance for the biodiversity and well-being of local communities and the
country as a whole.
29
The three judge panel ruled 2 to 1 in Colombia’s favour (interestingly, the British judge chosen
by Red Eagle ruled against the mining company, while the third judge, an Argentine, was the
dissenting opinion) and not only means Red Eagle doesn’t get its U$130m, but also sets two
important precedents:
Other suits against Colombia regarding the failure to permit projects in the Páramo
region now face an uphill struggle. They include Galway Metals, Eco Oro and you can be
sure that MINESA and its Soto Norte project will now think twice before trying to force
the country to do something via international legal channels.
Perhaps most importantly, it states that Colombia has the right to make decisions against
mining permits in favour of the environment. That’s bad news for all contested projects in
the country, Páramo or otherwise.
The decision will also go down well in the Petro government, as pointed out in this report on
the decision in national news media Semana (26). We quote (translated):
“The Tribunal decision in favour of Colombia also goes along the (political) lines of the
government of President Gustavo Petro, which he ratified in the municipality of Málaga
during his visit to the Santander region last February 13th. On that occasion, he made
a clear announcement and assured his audience that mining operations would not be
permitted in the páramo. He said, “No matter what it costs, we will no permit mining in
the Páramo de Santurbán.”
He continued: “But the government position regarding Santurbán is the same as before
the electoral campaign, during the electoral campaign and now as the elected
government, and that is there is not going to be gold mining operations in Santurbán
because we have to protect the páramo and, fundamentally, the water supply of
millions of people who lives on either side of the páramo.”
Then this Friday morning and a couple of hours after the announcement, President Petro took
to Twitter (27):
“A great national triumph. We stopped the loss of territory by defending our Caribbean
sea* and now we have managed to defend our páramo against greed. The nation and
life have triumphed.”
*A reference to the Hague international tribunal decision from last year in which the court ruled in favour of Colombia
and against Nicaragua regarding disputed territorial waters.
Market Watching
Argonaut Gold (AR.to): Avoid
We’ve covered this story quite closely in the last few months and even tried a speculative trade
around the turn of the year, so it’s only right to run this update to make the situation as clear
as possible: AVOID ARGONAUT, DON’T TRY THIS NEW LOW PRICE, IT DROPPED LIKE IT DID
LAST WEEK FOR VERY GOOD REASONS, WALK AWAY AND DON’T LOOK BACK. That’s the
TL:DR covered, now for some details and a quick reminder of our recent coverage of in
Argonaut Gold (AR.to) (ARNGF):
IKN757 dated November 19th ran “Argonaut Gold (AR.to) (ARNGF) and an impending
trade set-up”, which set the scene for a potential risk/reward trade timed to take
advantage of the calendar.
IKN761 dated December 17th 2023 ran “Buying Argonaut Gold (AR.to) (ARNGF)”, which
pulled the trigger on the trade. The aim was to trade around the guidance from the
company at the time, enjoy a share price bounce from good Q4 production numbers
and/or upbeat guidance on the key Magino start-up.
IKN766 dated January 21st 2024, in which we quickly closed down the trade and sold, as
explained in “Argonaut Gold (AR.to) (ARNGF) 4q23 production” that day. It was an easy
call to do so as well, with nothing cheer out of Magino and overall production results that
fell short of expectations.
30
With the background in place, here’s what happened last week:
Ouch. The big drop came on this news release (28), “Argonaut Gold Announces 2024 Guidance
and Provides Operational Update” and there is a lot of pain in this 2024 guidance table as
provided by AR in last week’s NR, I’m just going to highlight seven items. The red numbers
mark the spots, the explanations below:
1) Magino processed grade. Here’s how AR explained the forward guidance in its own notes:
“..gold grades to the mill are expected to be 5 to 10% lower than presented in the
Technical Report over the next 2 to 3 years due to higher anticipated dilution resulting
from lower ore selectivity.”
You notice the odd datapoint? Its guidance is for 2024, but the notes wants you to consider
“the next 2 to 3 years” and that’s because its processed grade guidance of 1.1g/t to 1.2 g/t is
between 12.4% and 19.7% lower for this year, according to the same Techincal Report they
quote. This is the kind of data massage AR has decided to use in this update.
31
2) Magino AISC: At between U$1,650/oz and U$1,800/oz, that’s very high compared to the plan
and as costs are supposed to drop as 2024 plays out, that means the front end cost is going to
be high. In effect, they admit there will be no profit from the mine in the next couple of
quarters even in a best case scenario.
3)Magino Capital Expenditures: In the 43-101 Technical Report, total capex for this year was
set to come in at U$33.1m, with most of that sustaining capital. This new budget assumes
between U$78m and U$81m. Add this to the well documented capex overrun that has only
grown since the re-set.
4) Florida Canyon AISC: The other nasty surprise in this update was the cost guidance for AR’s
#2 mine, with capital works (U$39m to U$40m) now planned for this year that will hike AISC to
well over gold spot.
5) San Augustin AISC: And before we get to the consolidated numbers, worth noting that AR’s
#3 asset is hardly cheap either, guided to between U$1,800/oz and U$1,900/oz.
6) The above combo, plus the residual production from El Castillo and La Colorada (which has
also moved to care and maintenance this year) gives a consolidated AISC guidance of between
U$1,950/oz and U$2,050/oz…basically $2k/oz and the sound of a company admitting it won’t
make any money this year.
7) What’s really worrying is that this is an AR which was supposed to move into harvest mode
this year and begin paying down its large cash debt, however the company has decided to
guide sustaining capital at over U$100m and total capex top end of U$166.3m.
The major issue is the consolidated AISC, as it tells us AR is not going to generate the cash it
requires to pay down debt. Indeed, in declarations after last week’s NR Argonauts CEO said
they were looking to refinance its debt position. Her even tried to put a positive spin on that
news, saying they were “looking at various options”, as if it were something that would be to
the company’s advantage. Well yes, I suppose it is if the only other alternative it loan default
and the handing over of its assets to creditors (the term loan is tied to Magino), but the signal
of more bad news to come for equity holders could not be clearer.
The precipitous drop to Friday’s close of 24c didn’t come as a great surprise under the
circumstances and within margins of error, it was why I dumped my speculative position in
January on those mediocre Q4 production results and took a small loss. However and be clear,
though 24c is a new all-time low and a sharp drop from the previous floor, don’t be fooled into
believing that it can’t get any worse because yes, it most certainly can. With 1.08Bn (with a B)
shares out, this is still a C$250m market cap company and considering the state of its balance
sheet, that equity may come under further pressure when (and not if) AR refinances its debt
because in these stressed position…
Magino misfiring
Florida Canyon likely overworked in 2023 for front end cash flow
The other mines between breakeven and on C&M
Cash debt with quarterly payments now due
Thin treasury
Plans for Capex this year that far outweighs its available means
…the refi won’t be cheap.
The bottom line: The NR last week is one of those ominous warnings tyou sometimes get
before the hammer comes down on a junior miner. This week’s Q4 results won’t be great but
we already knew that (and got out the way in January for that very reason) but AR would still
have had a chance if it could put together a decent and profitable 2024. With cost guidance
now where it is, that’s effectively impossible and anyone purchasing this stock in the days to
come will be running on hope, not mathematics or financial reality. Avoid.
32
Conclusion
IKN772 is done, we end with just one bullet point because I want you to get as keen on this
potential trade as I am:
The early success of our new trade on Western Copper & Gold (WRN.to) (WRN) is a
strong signal that our take on the news ten days ago is the right line. This week’s main
event shows there’s plenty of upside left in the event of a buyout deal and with new
management ready to force the hand of its major partner (instead of playing its
lapdog), the scenario will soon occur to a wider audience. Be on WRN before then, as
Casino-Coffee will be a good mine. Get long WRN and make some money in 2024.
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/
(2) https://edition.cnn.com/2024/02/29/economy/pce-inflation-spending-january/index.html
(3) https://www.actionforex.com/live-comments/541911-feds-mester-inflation-fight-continues-yet-three-rate-cuts-still-
expected-in-2024/
(4) http://westerncopperandgold.com/wp-content/uploads/2024/02/WRN_Corporate_Presentation_March_2024-3.pdf
(5) https://www.silvercrestmetals.com/news/2024/index.php?content_id=532
(6) https://www.youtube.com/watch?v=7geseXorEtA
(7) https://newcoregold.com/news/newcore-gold-announces-addition-of-omanpe-prospecting-license-and-completion-of-
an-updated-environmental-and-social-baseline/
(8) https://www.accesswire.com/viewarticle.aspx?id=837294&lang=en
(9) https://marimaca.com/marimaca-announces-2024-regional-exploration-strategy-sierra-de-medina/
(10) https://www.reuters.com/markets/commodities/copper-super-bulls-bide-their-time-options-market-2024-02-
27/?s=03
(11) https://mailchi.mp/miningwatch/indigenous-shuar-launch-complaint-in-bc-against-solaris-resources?e=c7bc8b1ac2
(12) https://www.solarisresources.com/news/press-releases/solaris-announces-cooperation-agreement-with-
interprovincial-federation-of-shuar-centers--and-the-alliance-for-entrepreneurship-and-innovation-of-ecuador
(13) https://historico.mineria.gob.ec/la-ficsh-y-exsa-fortalecen-alianzas-de-cooperacion/
(14) https://www.e29copper.com/news/element-29-resources-announces-director-and-officer-changes
(15) https://mailchi.mp/e29copper.com/news-element-29-announces-initial-mineral-resource-estimate-for-elida-
15358103?e=11f69919cd
(16) https://mailchi.mp/e29copper.com/news-element-29-announces-initial-mineral-resource-estimate-for-elida-
15651291?e=11f69919cd
33
(17) https://qccopper.com/news/qc-copper-and-gold-appoints-guy-le-bel-as-president/
(18) https://www.reuters.com/markets/deals/chinas-yintai-gold-buy-canadian-gold-exploration-firm-osino-272-million-
2024-02-25/
(19) https://dundeeprecious.com/news-media/news-releases/dundee-precious-metals-announces-new-results-from-
7848/
(20) https://www.youtube.com/watch?v=isddEfk1bv0
(21) https://awaleresources.ca/2024/02/29/awale-resources-announces-completion-of-drilling-at-the-odienne-project/
(22) https://www.youtube.com/watch?v=cn302_yNWcE
(23) https://www.palamina.com/news/2024/2/29/palamina-preparing-to-drill-the-heart-of-45km-long-orogenic-gold-trend-
at-the-usicayos-gold-project
(24) https://www.redimin.cl/argentina-caputo-considera-nombramiento-de-alberto-carlocchia-como-secretario-de-
mineria/
(25) https://prensamercosur.net/01/03/2024/colombia-triunfo-de-colombia-en-defensa-del-medio-ambiente-tribunal-
arbitral-confirma-legalidad-de-medidas-contra-red-eagle/?doing_wp_cron=1709302032.1525011062622070312500
(26) https://www.semana.com/nacion/articulo/atencion-colombia-gana-pleito-a-minera-canadiense-red-eagle-
exploration-limited-se-salvo-el-paramo-de-sabturban-y-se-evito-pago-de-millonaria-suma/202410/
(27) https://twitter.com/petrogustavo/status/1763580544304947595
(28) https://www.argonautgold.com/files/doc_news/2024/02/26/ar-press-release-guidance-2024_v22_final.pdf
Stocks To Follow Closed Positions 2023
CLOSED TRADES IN 2023 date closed close price
Altiplano Metals APN.v jan'23 C$0.31 17-Set-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-Dic-21 C$1.48 8.8% sold 20% to raise cash
Amerigo Res ARG.to oct'23 C$1.36 12-Dic-21 C$1.21 -11.0% sold 10% raise to cash
QC Copper&Gold QCCU.v oct'23 C$0.265 25-Abr-21 C$0.12 -54.7% sold raise to cash
Faraday Copper FDY.to oct'23 C$0.79 26-Mar-23 C$0.68 -11.4% sold raise to cash
AbraSilver Res. ABRA.v oct'23 C$0.36 4-Dic-22 C$0.28 -22.2% sold raise to cash
Orecap inv OCI.v oct'23 C$0.04 20-Nov-22 C$0.03 -25.0% sold raise to cash
Western Explor. WEX.v nov'23 C$1.87 9-Abr-23 C$0.60 -67.9% poor trade, cutting loss
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
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Stocks To Follow Closed Positions 2019
Closed in 2019 closed close price
Atico Mining ATY.v jan'19 C$0.55 24-Jul-16 C$0.32 41.8% patience ran out, made room
Candente Copper DNT.to jan'19 C$0.075 3-Aug-18 C$0.05 -33.3% tiny trade, made room for new
B2Gold BTO.to feb'19 C$2.11 12-Sep-14 C$4.05 91.9% Took 1/2 profits, reduce size
Western Copper WRN.to mar'19 C$0.80 20-Jan-19 C$0.81 1.3% Spec trade that didn't work
B2Gold BTO.to mar'19 C$2.11 12-Sep-14 C$4.15 96.7% Took rest of profit.
GT Gold GTT.v mar'19 C$1.17 10-Oct-18 C$0.90 -23.1% Took loss. Story changed
NovaGold NG apr'19 U$3.84 13-Jan-19 U$4.15 -8.1% Short that didn't work, sm loss
Zinc One Z.v jun'19 C$0.47 14-Sep-17 C$0.025 -94.7% clearing out dead trade
Amarillo Gold AGC.v jun'19 C$0.24 22-Aug-18 C$0.20 -16.7% clearing out dead trade
New Gold NGD aug'19 U$1.44 31-Jul-19 U$1.23 14.6% ST short win thru Q2 earnings
IMPACT Silver IPT.v aug'19 C$0.39 21-Jul-19 C$0.46 18.0% took a quick profit
Fiore Gold F.v aug'19 C$0.34 26-May-19 C$0.56 64.7% Took profit, 2q19 avg
Chakana Copper PERU.v oct'19 C$0.84 22-Mar-18 C$0.16 -81.0% Exploreco trade fail. Want space
Wesdome Gold WDO.to oct'19 C$2.37 14-Oct-17 C$7.57 219.4% Sold half, profit taking
Superior Gold SGI.v oct'19 C$1.46 8-Apr-18 C$0.47 -67.8% Failed sm spec on Au. Moved on
Amerigo Res ARG.to nov'19 C$0.91 23-Sep-18 C$0.50 -45.1% worst trade of year, hefty loss
Guyana Goldfields GUY.to dec'19 C$0.94 14-Apr-19 C$0.56 -40.4% taking the loss, financials weak
Tethyan Res TETH.v dec'19 C$0.30 8-Sep-19 C$0.16 -46.7% tiny trade, word of probs in co
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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