6 The IKN Weekly, issue 783 — May 20, 2024
The IKN Weekly
Week 783, May 19th 2024
Contents
This Week: In today’s edition, Canada summer is here, HODL and more HODL.
Fundamental Analysis: Red Pine Exploration (RPX.v): Conference Call and trading call,
SilverCrest Metals (SILV) (SIL.to) 1q24 financials.
Stocks to Follow: Orecap Inv Corp (OCI.v), IMPACT Silver (IPT.v), SilverCrest Metals (SILV),
Pan Global Resources (PGZ.v), Aldebaran Resources (ALDE.v), Ero Copper (ERO.to), Minera
Alamos (MAI.v), Western Copper & Gold (WRN.to), Rio2 Ltd (RIO.v).
The Copper Basket: Overview, American Eagle (AE.v), Oroco Resource Corp (OCO.v), Kodiak
Copper (KDK.v), QC Copper & Gold (QCCU.v).
The Producer Basket: Overview.
The TinyCaps Basket: Overview, Awalé Resources (ARIC.v), Surge Copper (SURG.v),
Endurance Gold (EDG.v).
Regional Politics: Mexico: Sheinbaum red hot favourite with two weeks to go, Argentina: The
RIGI, a mining conference and copper news.
Market Watching: Extra thoughts on recent sales (ADZN.v) (SOLG.to) (EQX), Testing myself
on exploration stage copper companies (Part One).
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
With the wild time in the copper market last week, we dedicate seven pages to The
Copper Basket this weekend and mull over what went on, what it means and what we
can expect in the days to come. The TL:DR is “keep dancing until the music stops” but
obviously, there’s more than that to say. And it’s odd to think that W.H. Auden has
been dead for over 50 years and is hardly mentioned these days, one of the finest
brains of the 20th century.
On the subject of copper, this week sees the start of a tracking exercise and small
personal challenge in the Market Watching section. With the rising interest in the sector
and the highly volatile opportunities we find at the bottom of the copper pile in the
pennycrappers, the task is to track 32 copper exploreco companies, good and bad,
large and small, to see which do best from now until the end of the year in our new
high metal price environment.
Today’s main fundies section does two things. We first consider the evolving story at
Red Pine Exploration (RPX.v) in light of what we learned last week via its updated NR
and conference call on Wednesday, then we check in on our main silver trade
SilverCrest Metals (SILV) (SIL.to) on the advent of its 1q24 financials and tweak our
financial model here and there to come up with a new target price for the stock. The
TL:DR on that one is that I’m very pleased with the way this trade is going.
Awalé Resources (ARIC.v) came out with some significant news last week that meakes
the company more attractive as a speculation going forward. See the TinyCaps basket.
Other things, too. There are always other things.
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Canada summer is here
To our Canadian readership, wishing you all a Happy Victoria Day, or Patriot’s Day, or May Two-
Four (don’t drink too much) or even Fête de Dollard if so inclined, enjoy your long weekend and
the fact that your summer has arrived. For others, a reminder that tomorrow May 20th
Canada’s stock markets are closed for business.
HODL and more HODL
But I am constant as the Northern Star,
Of whose true fixed and resting quality
There is no fellow in the firmament.
Julius Caesar, Act 3, Sc1 ll60-62
Four weeks have passed since the last time I took up space in the intro section to re-state the
most important strategy point for 2024 and here’s how that note, entitled, “Keep HODLing”,
closed out:
The Fed is still trying to jawbone itself back into control, the market is concerned about
ongoing inflation and there are even a couple of yahoos ready to call Fed rates higher
now, rather than lower. Despite all that, gold has added another U$50/oz to its price in
USD and there’s no real reason to expect the trend to change, so you task as a metals
and mining speculator is to make sure you’re locked and loaded and stay that way. It’s
not just the same message as one or two weeks ago, it’s the same as all year and the
words in IKN776’s intro note “Gold continues to rally without the aid of capitalism” sum it
up:
“…the bottom line to this week’s intro is the same as before; this is the time to be
long gold, HODL gold and make sure your mining “leverage plays” are in place. Until
further notice, don’t complicate your life.”
So keep HODLing, ladies and gents. That’s all.
So IKN776 rolls into IKN779 rolls into today’s edition, IKN783 and its getting to the point
where’s I’m worried that the bulk of the thoughts, analyses and reports on goings on and
happenings in the world of metals, mining and the political moves that can affect them are little
more than scribbling in the margins. Is there a point in you paying good money to receive this
missive every weekend if its only real message, the one that will make you the real coin in
2024, is “Buy Miners Hold Them and Make Profits”?
I’m serious. Yes for sure the exceptional moves in silver and copper last week were fun to
watch (for us longs at least) and gold was no slouch either, which means they didn’t happen in
a vacuum. However, the market set-up for “HODL metals, HODL miners” is to expect the
unexpected and last week’s market is symptomatic of the bigger picture. We all know the
frictionless market is a chimera and that, by definition, means the market will go through
phases of resistance and breakout such as the ones we witnessed last week, it’s par for the
course. And that’s the pep talk for this month done with, the itch will probably return for a
scratch around mid-June, let’s get on with some real work.
Fundamental Analysis of Mining Stocks
Red Pine Exploration (RPX.v): Conference Call and trading call
I didn’t expect to run a main fundies feature on this company for three editions on the trot, but
here we are and today should be the last one of these, from now on we can track the goings on
in Red Pine Exploration (RPX.v) in the Stocks to Follow section and its Watch List status. So first
we catch up with the price action, via a twenty-day chart that takes in the entire span of the
recent drama:
2
We’re not here to re-hash events covered up to and including last week, instead we’re going to
focus on last Wednesday, which saw RPX publish this NR (1) and then later in the day, run a
conference call on its contents. Hosted by company Chair Paul Martin and incoming CEO
Michael Michaud, its objective was to lay out what RPX knows about the assay results
manipulation to date, as well as try its hardest to assuage the market and try to bolster
confidence in its work and the Wawa project. As the price chart above shows, once the knee-
jerk reaction around the time of the ConfCall was done the stock traded at 9.5c for the rest of
the week, better than the 8c to 8.5c we saw previous to Wednesday so to some extent, the
team did its job and has stopped the worst of the bleeding, but neither did we get a full-force
rally or any signs of volume coming in to push it higher.
We’re going to concentrate on the ConfCall today as it reiterated the NR contents as well as
adding more via comment and observation from its speakers and usefully, RPX has published a
transcript of the event which you can find on this link (2). It was interesting to be given the
transcript so soon after the event, as along with its contents and the format of the ConfCall it
added up to what was a tightly scripted and carefully worded message. Take for example the
way in which RPX laid the blame for the corrupted assay results on the clear culprit:
“These fraudulent actions occurred after the delivery of the assay certificate to
the former CEO, and before they were delivered to the senior management
team for uploading into the resource model.”
An object lesson in telling everyone the obvious without saying it directy. That “tightly scripted”
feeling and the lack of opportunity to ask questions on the call is worth bearing in mind as we
consider more of its contents. The majority of ConfCall time was taken by Chair Paul Martin,
who went over some of the events and made plenty about the time taken and effort made by
the current team to get to the bottom of this mess in the last few weeks. He also underscored,
as did Michael Michaud later, that the resource as stands is only partially affected by the
overstated resource. RPX aimed at damage limitation and to raise listener sympathy for the
team now sorting through the mess. However, when it came to details it’s as much what RPX
didn’t say as what it did, because in spite of being as open as possible on the cause and effect
of the assay manipulation, there were gaping holes in the sequence eof events. For sure they
gave us dates on the time frame for the assay manipulation (2015/2016 and then 2022/2023)
we also know the departure date of the CEO (Feb 2024) and the moment the senior member of
staff informed the board of the results of the data review (April 2024). However, things are
rather vague aside those dates and it’s highly unlikely to be mere coincidence. From the
ConfCall, we know the following and I quote directly:
“The initial discovery of the manipulation was not the result of a formal
investigation, rather, it was related to one assay datapoint that was missing,
causing an updated certificate to be requested from the assay laboratory, and
send (sic) directly to a staff member. By chance, when a database
comparison occurred, a difference was noted.”
Good information yes, but we are not told when this happened. They may want us to assume
the “initial discovery” were recent but it’s juts as likely to have been before the departure of the
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CEO and if so, we now have a motive for his suddent departure. It’s not a great leap of logic to
suppose that one of the geology team contacted the assay lab directly, received the
information, noted the discrepancy, then in all innocence contacted then-CEO Quentin Yarie to
ask for his input. At that point, Yarie would have realized he’d been rumbled and resigned. This
sequence would allow Chair Paul Martin to state what he did in during last week’s carefully
scripted ConfCall:
“And as I have received many inquiries asking if the departure of the former
CEO in February 2024 was related to the manipulated assays. I will repeat
here, what I have said to all, that his departure was in no way associated with
this matter as we had no knowledge of this until well after his departure.”
According to our supposed timeline that point, Yarie knew and others in RPX didn’t, so as far as
management understood “his departure was in no way associated” and could legitimately
accept the CEO resignation without realizing the real nefarious reason behind it. Chair Martin
then said this in the ConfCall:
“Following the discovery of the assay reporting inconsistency, staff
immediately commenced a review of other assay results to determine if this
was an isolated incident.”
It’s fair to say that the review likely commenced soon after the original discrepancy were
discovered, but after that all we know is that it went on for a while and, come the end of April,
on conclusion it reported to the Chair.
“When the review pointed to multiple instances of inconsistencies between the
certified assay results received and the corresponding assay results in the
Company’s database, a senior staff member notified me on April 30, 2024 of
the situation.”
Let’s recap:
Yarie leaves before or after the discovery of an assay discrepancy
A review begins
It goes on for a while, perhaps two months
On April 29th Alice Murphy joins the RPX board as AGI nominee
On April 30th the review officially ends
The Chair receives the review results and tells the world
I submit to this audience that there’s NO WAY Chair Paul Martin would have kept himself
deliberately in the dark about the information gleaned in the ongoing investigation, but until the
review staff completed the report and delivered it to the board he didn’t have to say anything
and let’s be clear, that suited his cause. Also note that the same Feb-to-April period is when
incoming CEO Michael Michaud was approached and eventually hired and, as noted last
weekend, if I were approached for a CEO role after the old boss had suddenly resigned for no
apparent reason, my first question would be “Why did he leave?”. Without a good answer to
that I would never have accepted the role on April 22nd, just two weeks before the whole show
started. Martin knew about the assay discrepancies, he would have to say enough to Michaud
to convince him to take the job, there’s no way these two were out the loop before the
investigsation was completed. And we again highlight the date of the initial report, April 30th, is
precisely one day after Alamos Gold (AGI) had suddenly decided to use its right to nominate a
director to the board of RPX aftwer standing aside for three and a half years. Once again, if I
were Alice Murphy arriving in an oversight role for 13.5% shareholder AGI (not to mention with
a close personal relationship with AGI Chair Paul Murphy), the very first thing I’d want to know
would be “Why did Yarie suddenly leave?”. We’re then supposed to believe that the
investigative team coincidentally wrapped up its investigations and brought its official report to
Chair Martin the very next day, at which time he finally felt the need to tell the rest of the
world. It’s tooth fairy stuff. And that’s about it for the contribution of Chair Paul Martin to the
ConfCall, aside from something toward the end of his stint that sat badly:
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“The values reported are the unmanipulated assays results. However, these
10 holes were included in the selective manipulated assays to make them
appear even stronger. I scratch my head about all these changes, especially
when the underlying assays were already strong.”
This is the only time the careful script lapsed into false naivete but unfortunately, once is
enough to set off alarm bells. The way in which the “timeline without a timeline” was tightly
scripted tells me that RPX spent time and effort on the script for last week’s ConfCall. Let’s also
note in passing that they avoided any questions from the floor, citing an ongoing OSC review as
an excuse (that doesn’t stand up, there was nothing against them accepting questions).
It’s not that difficult to put piece together a motive for ex-CEO Yarie’s actions. As the altered
results are selective and mostly in zones where RPX was trying to extend the known Surluga
mineralization (e.g. Minto), the likely reason revolves around grade continuity and the task of
hanging together a mineable resource. We know the current resource is out of date, but things
such as cut-off don’t tend to change much as both costs and gold prices increase and in this
case, the 2018/2019 resource uses a cut-off of 2.7g/t for Surluga and 3.5g/t for Minto. It’s
supposition on my part of course, but finding economic resource at specific cut-offs is one thing
and hanging together a mineable resource is quite another, so if specific assays in strategically
important places come in at sub-economic or even marginal levels, it can affect the
prospectivity of the target. We need to recall that RPX under ex-CEO Yarie used its drill results
and go to the market to raise significant amounts of money, including from Alamos (AGI) in
2019 and then after in the list we laid out last weekend:
The big re-structuring, project funding and share consolidation when RPX gained control of
100% of the Wawa project in April 2021
An $8.4m bought deal closed in November 2021
A $5.5m bought deal in September 2022
A $7.75m private placement in May 2023 (which brought in the insto Merk Investments LLC
as a 9.9% strategic investor)
The sale of a 1.5% NSR to Franco-Nevada in August 2023 for $6.75m
A C$5.2m bought deal in December 2023
It would have been a lot easier to convince the sophisticates on that list to fund RPX if it could
point to targets around Surluga, e.g. Minto, that were showing not only good resource numbers
but the type of continuity and regularity of grades and widths to present a straightforward mine
plan. So when Chair Martin said he was “scratching his head” as to why Yarie did what he did, I
rolled my eyes. It’s the economy, stupid.
The floor was then taken by incoming CEO Michael Martin, who stated the single most positive
thing of the whole event; that he was fully on board and would indeed take up his position as
new CEO:
“Paul also mentioned that we still believe in the potential of the asset. This is
the reason that I joined Red Pine, why I am on the call today, and why I am
eager to commence my role as CEO of the Company.”
And that’s good. Above and beyond the assay alteration scandal, we’ve taken Michaud’s arrival
at RPX a net positive for the company and said as much in IKN781. He’s exactly the type of
well-respected figure with deep experience of the type of geology in this region that Wawa and
RPX needs as it moves to unlock the potential of the project, including the most advanced
Surluga zone but also the multi-targets around the rest of the property. This is what Michaud
did to unlock the resource at Eagle River UG for Wesdome and if he can do it again here, he’s
going to add tremendous asset value to the company. The confirmation that Michaud isn’t
backing out is the most likely reason for the price rally while the ConfCall was going ahead and
it’s wholly good to hear it from the horse’s mouth, but he then went on to say this:
“I have completed my only (sic) due diligence on the asset before accepting
the role and during the assessment of the impact of the manipulated assays
5
on the project resources and potential. My assessment is that the many
positives of the property that attracted me remain intact.”
Again, there’s no way he didn’t know about the ongoing investigation into assay discrepancies
when accepting the job on April 22nd, just eight days before the end of the investigation. He
would have been crazy to accept the job without asking the “Why Yarie Leave?” question and
Chair Martin would have been mad not to tell him.
Put this all together and it’s difficult to come to any other conclusion than the one we
hypothesized last weekend. No matter the exact timing of Yarie’s departure and no matter
exactly when that chance database comparison occurred and the difference noted, we’re left
with this in late April:
Michaud accepted the CEO job on April 22nd
RPX would have come clean with him beforehand and Michaud would have been
personally satisfied that he could still take the job starting July
Alice Murphy was nominated by AGI on the back of a Wesdome (WDO) person
arriving to lead the company
Murphy arrived on the 29th and if worth her salt (and she certainly is) would have
asked the same “Yarie?” question.
All hell breaks loose the next day as the report is coincidentally delivered to the RPX
board
Discussion and conclusion
On the one hand, I feel as though I’ve spent way too long on this stock over the past three
weeks but on the other, it wouldn’t have my attention if it were a mere “sector gossip” or
mining scandal story.
Last week we supposed that going forward, RPX would have to play nice with AGI and its other
insto holders that had bought shares (or in the case of DFNVm and NSR under somewhat flase
pretenses and what we heard in the ConfCall last week confirms that view. I wouldn’t go so far
as to say that Michaud and Martin were hiding the investigation and the assay discrepancies
from the public realm, that’s way too harsh and I’m 100% sure they would have announced
and explained the issues at some point. These people are not crooks and not part of or party to
any of Yarie’s shameful deeds. However, it’s difficult to avoid this loose conclusion:
Michaud’s appointment was announced April 22nd
This arrival of a Wesdome Guy raised eyebrows at strategic holder and regional rival
Alamos Gold
After three and half years of passivity and to RPX’s surprise, AGI decided to use its
right of a seat on the board in light of Michaud’s arrival
Alice Murphy asked and was told about the Yarie issue
RPX lost control of the timing of the announcement about the discrepancies
And May 2024 has turned out like it has for the company
We also need to state clearly that the current situation suits AGI nicely. For one thing they have
a cheaper stock as a potential M&A target, for another RPX will have to play very nicely with all
large holders, AGI very much included, in order to keep them onside and avoid any legal mess.
With that in mind, we should now look forward towhat “New RPX” under CEO Michaud might
have to offer, as we know there will be a resource update in the second half of the year, we
also know the company will need a new round of financing. Put those two together and the
conclusion is there’s no need to jump on to RPX right now. On that score, the last words of
CEO-elect Michaud as the ConfCall wrapped up really resonated:
After what’s happened, I don’t expect people to blindly trust me regarding the
positive aspects of the property and its future; however, please give us the
time to do the work and report back.
That message was not aimed at you and I, the retail grunts looking to turn a quick speculative
profit. That was Michaud looking McCluskey straight in the eye and saying “We’ll play nice if
6
you’ll play nice. We’ll work on the resource update give you a good price for continued
sponsorship when the next financing comes around and keep Ms Murphy fully in the loop.
Meanwhile, no lawsuits please. No silly accusations about who-knew-what-and-when, no trying
to claw back previous placements and while you’re at it, have a word with FNV and Merk.”
Therefore and to conclude, I think Martin and Michaud did a good job in steadying the ship last
week. They don’t want to accept questions about the dirty details and the exact timeline of how
the Yarie mess went down because I’m sure there are a couple of inconvenient details they’d
rather not air in public, I’m also sure that the arrival of Alice Murphy to the board upset a
tentative plan to disclose the problems without derailing it completely. After all, Martin and
Michaud have truth on their side and they are clearly committed to remedying the situation and
getting RPX and Wawa back on track. At that point, Michaud can step up and do the things he
was brought in to do, i.e. take the resource as stands (or as will stand when the resource
update is published in Q3), raise capital and put his considerable geological and mining
experience to bear on Wawa in order to unlock the resource that he, and many others, believe
is there to be discovered. All that means I am not yet a buyer of RPX and will wait until we see
the resource update and the inevitable financing round that will come with it before making a
proactive decision. That might also mean I pay more than this weekend’s 9.5c for my shares,
but that’s okay because it’s just as likely the stock flatlines from now until then.
Therefore Red Pine Exploration (RPX.v) is and will remain a valid member of our
Watch List until further notice. Those readers with more risk tolerance than your yellow-
bellied chicken of an author may want to consider
RPX at sub-10c prices as a potential rebound play
before the 2024 resource update arrives under new
CEO Michaud, most likely in the third quarter of this
year. The IKN Weekly position is that there’s plenty of
reasons to see RPX flatline until then and even if
wrong, downside risk won’t diminish until RPX gets to
close another round of financing without coming
under legal pressure from current holders. We leave
you with the RPX price chart from 2018 to present,
which is basically how long I’ve been watching this
stock without buying any shares. So far at least,
waiting and watching has been the right call.
SilverCrest Metals (SILV) (SIL.to) 1q24 financials (in U$ unless stated)
Our main silver trade reported its 1q24 financials last week (3) and the news was generally
good, with strong earnings and a balance sheet that improved beyond house expectations. As
SILV pre-reported production and some sales data in mid-April (see IKN779), we had a decent
framework dfor the quarter already, last week was more about the company adding details on
final sales, delivering on costs, providing guidance for the rest of FY24, etc. So to TL:DR it…
SILV delivered on sales
Costs were higher than we expected, but in-line with market expectations
Financial results were robust, cash generation strong
Guidance for the rest of the year was good and SILV is probably under-promising
on production, which allows for a potential beat on the annual forecasts
Now for some numbers and charts to flesh that out, starting in the most obvious place:
SILV: Quarterly Earnings overview
7 7.2 8.0 9.1
8.04
3.41 5.62
0.85
4.22
6.53
0.26
7.32
3.83
8.36
4.62
5.73
3.16
4.42
9.63
6.36
2.62
5.73
U$m
80
revenues COGS Mine Op. Inc
70
60
50
40
30
20
10
0
3q22 4q22 1q23 2q23 3q23 4q23 1q24
source: company filings
Top line revenues of $63.646m were pre-announced to within a one decimal, no surprise. Costs
of $26.169m were higher than our $23.5m guessimate and the only negative to come out of
the repoirt. We’d pitched lower expecting a drop in unit costs compared to Q4 and a lower opex
as the mill processed less material in the quarter, but as things turned out the first quarter of
the contractor changeover at Las Chispas, with the new contractor deploying in the first half of
this year, saw costs ratchet up. We’ve adjusted out model accordingly (and more on that
below). That gives us a Mine Operating Income of $37.477m which is reasonable.
That’s all the backward-looking we do today, as from now we consider both the 1q24 numbers
and what we can expect for the rest of the year. Guidance was maintained and SILV noted that
grade was programmed to drop back to the guided average of just under 400g/t Ag from the
slightly higher levels seen in 1q24, that due to the deliberate decision to mine higher grade in
Q1 in order to counter the lower mill throughput. The guidance and the impression given was
that of regularity, so these charts go the K.I.S.S. method of same/same production of both gold
and silver for the rest of the year.
The next chart shows the breakdown of top line revenues by metal for 1q24, with silver re-
taking the main revenue generator and we expect that to continue at our estimated price deck.
For the quarters to come in 2024 we assume:
2q24: Silver U$27/oz average, gold U$2,250/oz
3q24: Silver U$278oz average, gold U$2,300/oz
4q24: Silver U$30/oz average, gold U$2,400/oz
And that shows like this:
SILV: Calculated revenues by metal, per qtr
8
66.1202
86.62
82.13
86.62
23.53
82
28.53
38.13
23.92
9.03
7.23
48.13
8.73
55.23
2.93
23.43
24
90
80
70
60
50
40
30
20
10
0
22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
SILV: Silver production & sales, per qtr
U$m
Au calc revs
Ag calc revs
source: company filings, IKN calcs
If you want to accuse me of lowballing those estimates, that's fine by me as the idea is to bake
in surprises to the upside, rather than the downside. This is where we expect SILV to bring a
difference to market, the raw power of higher silver and gold prices that gives us estimates top
line revenues of $69.6m in the current 2q24, $71.7m for 3q24 and $76.3m in 4q24.
41.0 1
63.1 54.1 35.1 72.1 4.1 4.1 4.1 4.1
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
Moz Ag SILV: Gold production & sales, per qtr
prod
sales
source: company filings
00411 00241 00431 00541 00161 00051 05141 05141 00341
20000
18000
16000
14000
12000
10000 8000
6000
4000
2000
0
22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
Oz Au
prod
sales
source: company filings
SILV: Quarterly Earnings overview
7.2 8.0 9.1
8.04 3.41 5.62 0.85 4.22 6.53 0.26 7.32 3.83 8.36 4.62 5.73 3.16 4.42 9.63 6.36 2.62
5.73
6.96 5.52 1.44 7.17 0.42 7.74 3.67 5.42 8.15
80
70
60
50
40 30 20
10
0
22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
SILV: EPS and Mine Op Inc per share, per qtr
U$m
revenues COGS Mine Op. Inc
source: company filings
71.0 10.0 21.0 81.0 81.0 42.0 61.0 62.0 12.0 62.0 42.0 52.0 32.0 52.0 42.0 03.0 82.0 23.0 92.0
53.0
0.35
0.30
0.25
0.20
0.15 0.10 0.05
0.00
22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
U$/share
EPS
MOI
source: company filings, IKN calcs
The above charts show our estimates for Mine Operating income and in the per-share variety
we add estimates for bottom line EPS, even though we’re more interested in the MOI for
benchmarking the quarters.
Over at the balance sheet 1q24 came in as expected, but again the real story about SILV is the
expected improvement for the year ahead. SILV in 2023 got its mine running and then adjusted
mid-year, now with the operation running smoothly we expect SILV to go into cash collection
mode.
SILV: Assets Breakdown, per qtr
600
550
500
450
400
350
300
250
200
150
100
50
0
That makes these two charts the important ones and, while cash dropped to $71.085m at end
Q1 due to the company paying its $30m tax bill (as scheduled), that drop won’t last long and
we now forecast SILV to leave 2024 with $160m treasury. However, that’s only half the story as
working capital will likely impress even more, as SILV continued to collect bullion inventory.
This is the aspect of SILV that most don’t realize at the moment, it’s going to go into full Cash
Cow mode this year and accumulate serious liquidity as Las Chispas runs at full tilt and the
operations optimize costs under its new contractor.
So with 4q23 qnd 1q24 now in the books, it’s time to adjust our valuation model considering
the slightly higher cost regime than previously expected, countered by our reasonable bullish
price deck as seen above. The model is basically the same because SILV laid out its production
and cost regime in great detail in its 43-101 technical report last year and that provides the
same template, but details and tweaking in light of new price decks help refine our model and
lead to a new price target.
The main changes are the assumed price decks, as below:
The base case has moved to U$25/oz silver and U$2,200/oz gold (as I would have
already sold if metals prices drop to those levels again)
The standard case has moved to U$28/oz silver and U$2,300/oz gold
The spot price has moved to U$30/oz silver and U$2,400/oz gold
The blue sky case has moved to U$35/oz silver and U$2,500/oz gold
9
02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
U$m SILV: Liabilities Breakdown per qtr
120
110
100
90
80
70
60
50
40
30
20
10
0
source: company filings
02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
U$m
LT liab
current liab
source: company filings
SILV: Treasury, per qtr
260
240
220
200
180
160
140
120 100 80
60
40
20
0
02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
U$m SILV: Working Capital per qtr
source: company filings
68.621 96.222 33.391 43.671 55.971 26.061 17.641 70.921 198.47 464.17 553.69 33.811 67.621 82.841 081 802 252
300
250
200
150
100
50
0
02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3 tse42q4
source company filings
srallod
fo snoillim
Along with the new price decks we’ve dropped total annual throughput slightly, adjusted
recovery percentages upward to match recent results and adjusted costs upwards to take into
account what we now know, all with a conservative slant that may over-estaimate the bad
stuff. We then apply to our model and here’s how revenues come out:
SILV: 2024 Production and Metals Revenues (U$m)
Price $2,200/oz Au $2,300/oz Au $2,400/oz Au $2,500/oz Au
Deck $25/Oz Ag $28/Oz Ag $30/Oz Ag $35/Oz Ag
thruput (mt/yr) 432000 432000 432000 432000
Ag grade (g/t) 400 400 400 400
Ag prod(Moz) 5.45 5.45 5.45 5.45
U$/oz 25 28 30 35
silver revs 136.1 152.5 163.4 190.6
Au grade (g/t) 4.10 4.10 4.10 4.10
Au prod (oz) 55,813 55,813 55,813 55,813
U$/oz $2,200 $2,300 $2,400 $2,500
gold revs 122.8 128.4 134.0 139.5
Tot gross revs 258.9 280.8 297.3 330.1
TC/RC+NSR 25.5 27.6 29.3 32.5
Top line sales 253.7 275.2 291.4 323.5
Sources: SILV data, IKN calcs and estimates
From there, here’s our adjusted model income statement:
SILV: 2024 Condensed Income statement forecast (U$m)
Four 1 2 3 4
Price $2,200/oz Au $2,300/oz Au $2,400/oz Au $2,500/oz Au
Decks $25/Oz Ag $28/Oz Ag $30/Oz Ag $35/Oz Ag
Tot gross revs 258.9 280.8 297.3 330.1
TC/RC+NSR 25.5 27.6 29.3 32.5
Top line sales 253.7 275.2 291.4 323.5
COGS 51.8 51.8 51.8 51.8
Depreciation 22.0 22.0 22.0 22.0
SGA+R&D 17.0 17.0 17.0 17.0
Op income 162.9 184.4 200.6 232.7
Interest (2.0) (2.0) (2.0) (2.0)
Workers Part. 13.2 14.9 16.2 18.8
Tax 41.0 46.3 50.3 58.3
Net income 110.8 125.2 136.0 157.6
Shares out 146.94 146.94 146.94 146.94
EPS 0.75 0.85 0.93 1.07
Sust. Capex 40 40 40 40
FCF 1.18 1.27 1.35 1.49
Sources: SILV data, IKN calcs & estimates
By running with U$30/oz silver and U$2,400/oz gold to represent the current price deck, we
expect annual operating income to reach a cool $200.6m and net income at $136m. We then
apply that to a new price multiple of 14X, up from the previous assumption of 12X to take into
account the fast rise in market interest in precious metals stocks, something we expect to
snowball as the larger players zero in on companies that are truly profitable, not just those that
talk a good story but fail to move revenues to the bottom line (there are plenty of those):
10
SILV Sales and earnings Target price & valuation data for SILV based on
Price deck 1 2 3 4 current price deck (U$30/oz Ag, U$2,400/oz Au)
Sales (U$m) 254 275 291 324 12-month target $12.96 based on 14x EPS at
Sales growth 8% 6% 11% Upside to target 38% U$30/oz Ag & U$2,400/oz Au
EPS 0.75 0.85 0.93 1.07 Mkt cap (U$m) $1,386 Enterprise value $1,330
FCF 1.18 1.27 1.35 1.49 P/sales (1) 5.04 EV/sales (1) 4.83
P/E (1) 12.5 EV/EBITDA (1) 7.2
P/E (2) 11.0 EV/EBITDA (2) 6.4
P/E (3) 10.2 EV/EBITDA (3) 6.0
This gives us a new price target of U$12.96, representing a 38% upside compared to this
weekend. As for sensitivities, even if you don’t think the rally lasts, interest fade and metals
prices drop back a notch to U$2,300/oz gold and U$28/oz silver, SILV’s strong revenue and
profit generating capacity means we can still model a conservative target of U$10.22 at a 12X
multiple.
SILV tgt sensitivities on EPS & Metals Decks (in USD)
Price Deck 12x EPS 14x EPS 16X EPS
1 (2.2k Au, 25/oz Ag) $9.05 $10.55 $12.06
2 (2.3k Au, 28/oz Ag) $10.22 $11.93 $13.63
3 (2.4k Au, 30/oz Ag) $11.11 $12.96 $14.81
4 (2.5k Au, 35/oz Ag) $12.87 $15.02 $17.16
source: IKN calcs & ests
And as you can see, if the rally continues SILV shares could easily move a lot higher.
The bottom line: I’m happy with the way this investment is working and for a little more on
that, see Stocks to Follow below. With the information of the last two quarters now in and the
rapidly evolving market for both silver and gold, it’s
time to hike our price target to better reflect what’s
going on out there. SILV isn’t a pennycrapper silver
stock that can double in a fortnight if things go well,
instead it’s as close to a Blue Chip company as you
could ever desire in the silver space. With Eric Fier
and his team now about to dedicate the rest of the
2024 exploration budget to the search for new and
larger resources at Las Chispas, if they hit and find
new mineralization that starts to extend its mine life
even our upwardly adjusted price target could get
left in the dust.
We close with the 12 month price chart, acting as a reminder that we could have been on SILV
at much lower prices if we hadn’t hummed and hawed the way we did as from August last year
and out first coverage of the stock. Better late than never.
Stocks to Follow
One stock was down on the week (MIRL.cse) and four others were unchanged (PGZ.v, OCI.v,
PAU.cse, MENE.v), which means the Stocks to Follow list had a good week. We’re not listing all
eleven winners, but a rundown of the biggest movers is in order, so we start with the biggest
11
percentage win from Aldebaran Resources (ALDE.v up 20.0%) and follow with Rio2 Ltd (RIO.v
up 18.4%), IMPACT Silver (IPT.v up 17.0%), Minera Alamos (MAI.v up 15.5%), Contango ORE
(CTGO up 12.9%), Red Pine Exploration (RPX.v up 11.8%), SilverCrest Metals (SILV up 10.8%)
and Ero Copper (ERO.to up 10.5%). In other words, half of our list shows double figure gains
and included in the list are nearly all of my personally biggest positions. It was a good week
and of all the stocks on there, the only one to throw real shade on the parade is Pan Global
(PGZ.v), which failed to move with the copper crowd and seems to be stuck under the 20c line.
We have 16 open positions on the list, with 13 of those open trades money. Eleven are in the
green, one is unchanged since inception, four are in the red.
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$0.41 95.2% $0.75 first tgt, #1 idea
RECOMMENDED STOCKS
Rio2 Ltd. RIO.v BUY C$0.80 22-Apr-18 C$0.58 -27.5% Momentum now building
SilverCrest Met SILV STR BUY U$6.90 31-Mar-24 U$9.41 36.4% Quality silver/gold producer
Pan Global Res PGZ.v BUY C$0.19 19-Feb-24 C$0.19 0.0% 3 adds,big position,cheap Cu
Marimaca Copper MARI.to BUY C$3.05 14-Jan-24 C$4.15 36.1% Quality Cu developer
Western Copper WRN.to BUY C$1.57 26-Feb-24 C$2.09 33.1% M&A trade,placement annoying
Orecap Inv OCI.v BUY C$0.06 4-May-24 C$0.065 8.3% Exposed to several good jrs
Contango Ore CTGO STR BUY U$18.70 30-Jul-23 U$21.33 14.1% Production re-rate in Q3
Newcore Gold NCAU.v SPEC BUY C$0.205 23-Oct-22 C$0.31 51.2% Cheap Au in West Africa
SPECULATIVE TRADES
Aldebaran Res. ALDE.v SPEC BUY C$0.72 16-May-21 C$1.20 66.7% into FY24 news season now
IMPACT Silver IPT.v SPEC BUY C$0.30 14-Apr-24 C$0.31 3.3% Silver spec, added IKN783
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$32.51 71.6% May drop from list.
Red Pine Expl RPX.v WATCH C$0.08 4-May-24 C$0.095 18.8% Special situation, poss trade
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$0.20 -68.3% 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
Equinox Gold EQX May'24 U$4.42 30-May-23 U$5.57 26.0% Took sm.profit, disappointing
Adventus Mining ADZN.v May'24 C$0.305 7-Jan-24 C$0.445 45.9% bot out, nice win
SolGold SOLG.to May'24 C$0.22 19-Feb-23 C$0.165 -25.0% ran out of patience
2015 to 2023 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Now for notes on some of our covered companies, starting with a couple of impromptu adds I
made last week. It’s not normal policy on these pages to buy stuff without announcing the
trades first, but as these are already open trades and the market last week demanded prompt
decisions and action, it’s what I did.
Orecap Inv Corp (OCI.v): ADDED: Though the rough idea was to pick some up at 5.5c if
possible, the way the market was running last week made the 6c level attractive and while
there wasn’t much liquidity, it was possible to pick up some shares with a bid and some
patience. So I did.
12
OCI.v: Marketable Secs, Investments in Assocs, Cash
value
ticker shares owned(m) PPS C$m Cents/share
AE.v 11.68 0.74 8.65 3.5
AE.v warrant 0.10 0.44 0.04 0.0
ARIC.v 8.33 0.74 6.17 2.5
ARIC.v warrant 4.17 0.14 0.58 0.2
QCCU.v 5.06 0.15 0.76 0.3
MIS.cse 24.71 0.035 0.86 0.3
subtotal 17.06 6.9
Cuprum 1.475 0.6
subtotal 18.54 7.5
Est.cash 1.50 0.6
Total 20.04 8.1
At 247.714 S/O
IMPACT Silver (IPT.v): ADDED. First we cover the news and last week, the company’s
highly annoying C$6.2m provate placement was due to close on Wednesday 15th, but before we
could get these this happened on Monday (4):
IMPACT Silver Upsizes Financing to $8.2 Million Non-Brokered Private Placement
IMPACT Silver Corp. (TSX-V: IPT) (OTC PINK: ISVLF) (FSE: IKL) (“IMPACT” or the “Company”)
is pleased to announce it is amending and increasing its previously announced non-brokered
private placement from $6,200,000 to gross proceeds of up to C$8,200,000 (the “Offering”) due to
increased investor interest.
The revised financing has been increased to $5,000,000 from the sale of 18,518,518 units (the
“Standard PP Units”) at a price of C$0.27 per Standard PP Unit, up from the original proposed
$3,000,000 and 11,111,111 Standard PP Units. Each Standard PP Unit is comprised of one
common share and one full share purchase warrant (each a “Warrant”) with each Warrant
entitling the holder thereof to acquire one common share of the Company (a “Warrant Share”) at a
price of $0.34 per Warrant Share for a period of 24 months from its date of issue.
The LIFE financing units remain unchanged at $0.28 per LIFE unit, each comprised of one
common share and one-half of one Warrant for gross proceeds up to $3,200,000 (the “LIFE
Offering”). All other terms from the Company’s press release announcing the LIFE Offering and
Standard PP Unit Offering on April 30, 2024 remain the same.
In other words, it became $2m more annoying as the self-serving management team dilutes
shareholders even further in order to guarantee their paychecks for the next couple of years.
Despite this extra layer of insult that adds to the injury of this unnecessary placement, I did
indeed add to my position last week when silver started
running and for the reason, I quote myself from IKN781
dated May 5th, when commenting on the initial $6.2m raise
and the resulting price drop:
“However, and this is the most annoying part of all, the
mere fact that IPT’s self-serving management decided
to run this discounted placement doesn’t invalidate my
own trade theory and I’m forced to amdit that, while
underwater, it’s just as likely to make me money as
long as silver runs through U$30/oz and does what
many think it’s going to do as 2024 rolls out.”
And sure enough, when the mania began IPT was
uninhibited by the drag of the new shares or the
mediocrity of those printing them. There was plenty of 27c
and 28c stock for sale that got an immediate return come
the Friday close. IPT caught up quickly and as a reminder
of the real reason I’m long this rather marginal and
mediocre silver producer, a look at the long-term chart
shows the type of mania spike it can put in.
13
SilverCrest Metals (SILV): We do lots of SILV above in the main fundies section today, here a
brief word on how much I enjoyed watching it rally last week. The reflection and while
compiling the Q1 financials report above had me going back to IKN776 dated March 31st 2024,
the opening coverage note and while doing so, reflecting on how long I’d tracked the stock
without buying it. The IKN776 note “Buying SilverCrest Metals (SILV) (SIL.to)”, listed the
previous coverage including
IKN745 dated August 27th 2023 in the main fundies note “SilverCrest Metals Inc (SILV)
(SIL.to): Considering the financials” a U$4.83 stock
IKN767, dated January 28th 2024 and the note “SilverCrest Metals (SILV) (SIL.to) 4q23
production” U$5.62 stock
If I were a bigger silverbug I’d have bought back then instead of having a $6.90 cost average,
but that’s not a problem. The better lesson is to be ready, willing and able to pay up at the
right time because our 36% gain has come very quickly by being on silver just before its best
moment of 2024. And that will do for me.
Pan Global Resources (PGZ.v): Among the
fun and frolics of the move in metals and the
whizzing and banging created by as whole
bunch of smallcaps as they reacted to silver,
copper, gold or what-have-you, PGZ did this
(right). And that’s annoying. It’s also good for
the ego, because when explorecos started
moving up sharply last week I caught myself
doing some personal back-patting for my
addition to this position a couple of weeks ago.
“Nice timing Mark, well done, now sit back and
watch it reward you.” Sure enough, PGZ spent
nearly all last week in the red and only
managed to crawl back to UNCH in the last
hour of Friday (while a whole bunch of copper stocks were going bananas, see The Copper
Basket below for some examples of strange fruit).
Aldebaran Resources (ALDE.v): For some stocks, doing 50k shares a day and then topping
out the week 150k traded on the Friday (in fact 193k if you include the non-TSXV transactions)
wouldn’t be anything of note, but at ALDE it’s good news and worthy of putting in front of your
eyeballs. This ten-day hourlies chart (right) shows how last week was notably more active than
even the week before (with those very decent drill results we considered in IKN782 as well as
media appearances from the team). Volume is one of the main missing ingredients in this story
and with copper doing what it’s doing and the
company’s “virtual open day” coming up at the
end of May, we might be on the verge of the
long-awaited moment when ALDE becomes
truly tradeable and starts to reflect its size,
scale, prospectivity and something of its real
value at market.
Back when I was pulling my hair out about this
stock in 2023, I said I’d happily take C$1.20 or
so as an exit price and sell for the moderate
profit. But now with copper nuedging U$5.00/lb
and the outside, non-mining world starting to
look on the sector, that isn’t going to happen.
Holding through for at least a while longer and
if the May gig does something to its radar aming people looking for an undervalued opportunity
in the copper space, that lack of liquidity may finally (FINALLY!) work in our favour.
14
Ero Copper (ERO.to): I’m thinking about dropping
ERO from the Watch List and not because it’s
disappointing. Quite the contrary, it’s been one of the
best performing stocks in percentage terms on the
list and even a series of three lackluster quarters
hasn’t stopped its inexorable rise higher. Instead,
we’re now at a price point that prices ERO to near
perfection and unless it reverses dramatically, I
simply cannot see myself buying any and what’s
more, it’s now a near U$2.5Bn market capper and for
a publication that focuses its efforts on junior miners,
that’s difficult to justify as a full open position. Hey, if
I bought this it would only be another step up the
ladder to buy Eldorado Gold (EGO), a stock that has risen but still looks cheap and unlike
ERO.to, runs positive working capital even as it builds its next mine .
ERO.to: Working capital
500
450
400
350
300
250
200
150
100
50
0
-50
15
91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
$m
source company filings
Minera Alamos (MAI.v): And suddenly it broke out:
I chose a two month chart for illustration purposes even though we long-suffering MAI holders
know that timescale could have gone back a lot longer. VBut here we are, the darned thing
finally caught bids, it ran through the seller that’s been playing the trading range with size and
if you look closely, it even did a sneaky little backtest of the 34c line two Fridays ago before
confirming the move early last week before making it to the 4-handle again.
And hey, I’m just as susceptible to sentiment as the next guy so this move has also got me
enthused about taking the close look at MAI and its financials, slated for the end of this month
when it drops its 1q24 numbers (and we welcome Ms. Sheinbaum as Mexico’s President-Elect,
see below for more on that). I’ll wait until then.
Western Copper & Gold (WRN.to): I’m getting used to small heart-sink moments with “New
WRN” under Sandeep Singh, the latest came last week with this regulatory filing (5):
VANCOUVER, B.C. Western Copper and Gold Corporation (“Western” or the
“Company”) (TSX: WRN; NYSE American: WRN) is pleased to announce that
Raymond Threlkeld, Robert Chausse and Sandeep Singh will stand for election as
directors at the Company’s upcoming annual general and special meeting.
And though interim and likely outgoing Chair Bill Williams gave us a mouthful of corporatese to
welcome the gentlemen, “…reflects the growth and
strategic initiatives of the Company… collective wealth of
experience and technical, operational and financial
acumen…”) all this says to me is “usual suspects bedding
down for a nice time”. The likelihood of a quick resolution
to the true opportunity afforded by this trade, i.e. a sale to
the highest bidder, got slightly less likely in the near-term
and I’ll bear that in mind while monitoring its progress
through Q2. There are a lot of alternatives for your copper
exploreco dollar these days (see Market Watching today
for examples), there’s no need to stay tied to this trade if
there isn’t going to be a Coffee/Casino deal. We did well to
catch its big run in February and March, since then WRN has lagged (chart right).
Contango ORE (CTGO): I am seriously behind on necessary coverage on this stock and owe
you more than a few lines, what with its friendly takeover of Highgold Mining (HIGH.v) and the
proximity to its first production out of Manh Choh. I’m
going to get to this soon, promise. For what its’
worth, on running some numbers and perusing the
effects of the M&A, the HIGH buyout looks somewhat
dilutive but with this market of rising gold and new
optimism, the world may well start rewarding RvN
and CT%GO for its long-term vision soon.
Rio2 Ltd (RIO.v): DO NOT TOUCH THE CONTROLS!
Suddenly running well, RIO has been pure
accumulation mode on no news ever since the
company did its marketing rounds in Toronto.
The Copper Basket
After twenty weeks of 2024, The Copper Basket shows a gain of 19.41% to level stakes:
company ticker price 1/1/24 Shares out Market Cap current pps gain/loss%
1 NGEx Minerals NGEX.to 7.16 186.824 1864.50 9.98 39.4%
2 Solaris Res SLS.to 4.13 179.221 973.17 5.43 31.5%
3 Marimaca Cop MARI.to 3.43 93.11 386.41 4.15 21.0%
4 Los Andes LA.v 11.80 29.53 307.11 10.40 -11.9%
5 Hercules Silver BIG.v 1.38 231 205.59 0.89 -35.5%
6 Aldebaran Res. ALDE.v 0.89 169.819 203.78 1.20 34.8%
7 Arizona Sonoran ASCU.to 1.75 109.17 180.13 1.65 -5.7%
8 Faraday Copper FDY.to 0.63 175.97 140.78 0.80 27.0%
9 Oroco Res OCO.v 0.375 222.86 101.40 0.455 21.3%
10 American Eagle AE.v 0.26 116.75 86.40 0.74 184.6%
11 Kodiak Copper KDK.v 0.58 63.93 38.36 0.60 3.4%
12 QC Copper QCCU.v 0.12 173.7 26.06 0.15 25.0%
13 C3 Metals CCCM.v 0.61 61.885 25.37 0.41 -32.8%
14 Element 29 Res ECU.v 0.18 106.25 17.00 0.16 -11.1%
15 Camino Min COR.v 0.07 206.66 13.43 0.065 -7.1%
NB: All stocks in CAD$ Portfolio avg 19.41%
16
It wasn’t one-way traffic because it never is,
The Copper Basket 2024, weekly evolution
but just two week-over-week losers (OCO.v, 25%
AE.v) and two unchanged stocks (LA.v, COR.v) 20%
means eleven winners and that’s a good week 15%
by any standards. Not going to list them all, 10%
instead let’s give a cheer to the biggest movers
5%
and from the top down, it’s Kodiak Copper
0%
(KDK.v up 35.4%), Aldebaran Resources
-5%
(ALDE.v up 20.0%), Arizona Sonoran (ASCU.to
-10%
up 16.2%), QC Copper (QCCU.v up 15.4%),
Faraday Copper (FDY.to up 14.3%) and NGEx
Resources (NGEX.to up 11.4%). Not a bad little
harvest and notably, they include several stocks that have traded badly so far this year and
decided to snap back last week.
That all adds up to a basket average that kicked on considerably last week, adding nearly 6%
to close at +19.41% for the year. Now for thoughts on copper-the-metal, starting with an
excerpt from IKN782 last weekend:
“…last weekend’s call of “I also think we’re going to see U$5.00/lb+ prices in the latter part of this
year” and not in the near future is still the IKN Weekly roadmap, but I’m also aware of phrases
such as “climbing a wall of worry” and “Chicken Little Sky Falling In”. The current bull run has been
strong and won’t come to a grinding halt on demand, even less likely because some mouthy
newsletter writer points out some real economy logic…”
This weekend in IKN783:
So much for my “five dollars later this year” and “still worried about a correction” milquetoast
pathetic nonsense. Copper didn’t move higher last week, instead it blasted higher and in many
ways led the charge of the entire metals complex and while I’m wide open to criticism for being
pallid about copper’s prospects in May (rightly so), I’m also happy to see the action as I remain
long the metal in no uncertain terms. However, last week gave plenty of classic signals of being
a price top, in the near-term at least and for that we need to look a little closer. For that job
I’ve picked a two month chart because it rams home to me, personally, just how much things
have changed since my daughter was born, as its weird to think copper has been under the
U$4.00/lb line since then. Then we see the
strong rally through April and early May
that got our benchmark futures contract
fluctuating between U$4.50/lb and
U$4.60/lb and it’s around then that I
started to voice concerns about the rally
being driven by pure market speculation
and without much grounding in the real
world of copper supply and demand.
17
ts1naJ ht7naJ ht41 ts12 ht82 ht4bef ht11 ht81 ht52 dr3raM ht01 ht71 ht42 ts13 ht7rpA ht41 ts12 ht82 ht5yam ht21 ht91
source: IKN calcs
However, it’s one thing to voice concerns about a top forming and another to understand that
the rally wouldn’t come to a grinding halt on the demands of a mouthy newsletter writer, which
is why we stayed long and vowed to continue to dance until the music stopped. As seen, the
music got louder last week.
For a better look at the fun last week, we now zero in
on Ground Zero of the squeeze and this visual (from
here (6)) showing the fun and games midweek. It
features the Comex contract spread, from spot (left)
to the long-dated and thinly traded futures contracts
three and five years into the future. I’ve added a
couple of notes to the visual, first to show that spot
was trading higher than the futures on Monday 13th.
At this point the curve was still steep and reflected the
constant buying pressurel we’ve seen in copper
basically all this month, but it was still in the realms of
“normal bullish”. Then came Tuesday and the start of
the squeeze, which shot the premium to where you
see it on the chart.
It’s one of those moves you watch from the sidelines
and think “somebody’s in trouble”, “fund blowing up”,
“who’s scrambling to cover?” and considerations of
that ilk. Down in the trenches of the Comex (LME,
SHFE and other) they’d have known precisely who and
why, that’s fair enough but we on the outside looking
in also have a classic, though retroactive, signal to
help time matters. The truism of “if it’s headline news
it’s too late” works well at times like these and for
straightforward capitalist reasons; as far as possible,
those profiting from the discomfort of a large market player will keep information to themselves
until there’s no more profit to have. Then, with the trade is run and the profit taken, they’ll
have time/inclination to talk to their market friends, friends of friends, fund managers, analysts,
reporters etc and only then do the headlines appear such as Exhibit A below, a Reuters note (7)
that first made the wires at 08:17am ET on Wednesday March 15th:
“Trafigura, IXM caught in Comex copper short squeeze as prices hit record”
As always, please read the entire note for the entire impression, but here’s how it started…
Commodity traders Trafigura and IXM are looking to buy physical copper to deliver
against large short positions on US exchange CME where copper prices soared to
record highs on Wednesday, five sources with direct knowledge of the matter said.
…and here’s another snippet from further down:
“Copper supply, demand fundamentals in the US, while not unsupportive, probably
don’t justify such extremes, suggesting something else is happening in the paper
market,” said CRU analyst Robert Edwards.
And another:
However, the problem is half of the available copper in LME registered warehouses is
of Russian origin and cannot be delivered into the CME system.
Elsewhere, several Chinese copper importers had redirected shipments to the United
States, according to two of the sources.
Reuters above is one of many as the copper issues spilled out from our insulaer world and into
the mainstream of financial reporting. Let’s add one more from a place that Wall St reads so
here’s Bloomberg and “Copper Short Squeeze in New York Is Rocking Metals Markets”, (8) and
that’s good ol’ Bloomie managing to hit all the magical headline words in one shot. Here’s an
excerpt:
18
The source of the disruption is a short squeeze that has driven up prices on the Comex
exchange in recent days. The premium fetched by New York copper futures above the
London Metal Exchange price has rocketed to an unprecedented level of over $1,200
per ton, compared with a typical differential of just a few dollars.
The blowout in that price spread wrong-footed major players from Chinese traders to
quantitative hedge funds, some of whom are now scrambling for metal that they can
deliver against expiring futures contracts.
That Bloomie note goes on to comment that this type of physical squeeze “becomes more likely
amid the low inventory environment” and that’s also true, which got this desk thinking about
the way we’ve watched the odd inventory pattern at LME’s New Orleans warehouses for at least
a year. In 2023 we watched a build-up in stock at what’s been called the Roach Motel of copper
warehouses, as its geography and distance from the main Asia markets makes it a place where
excess inventory tends to land
and then stay where it is. This LME New Orleans copper inventory
incomplete chart shows the
levels of 90kmt we saw at the
end of 2023 after it had built all
year, then around Christmas
there was a trend change. At
first I shrugged my shoulders on
this one, but as January turned
to February its continued drop
got the occasional “hey,
something’s going on here”
comment from this desk,
normally in the weekly inventory
track section (below). Where we
are today, with New Orleans having returned essentially all the 2023 stock build back to the
market, is indicative of the tight market for physical in North American over a longer period, not
just last week. Therefore, when Trafi and others bit the bullet, knew they’d have to procure the
metal, take their loss and went to market to do so, the thin inventory made covering purchases
even more difficult and therefore, expensive.
We stress, the main takeaway from last week’s action that we on the outside looking in need to
extract, is that the near-term top is likely in. The big move came as they always come with an
uptick in market interest, a sudden raft of reports on the squeeze and of course, opinions from
all sides (this one included, I’m nothing superior in that respect). Last week in copper was the
coming together of several market factors, one of those archetype “perfect storm” moments,
mixing the nitro of a backdrop of a copper bull run and its established long-term bullish
narrative, now becoming the standard position toward the metal in generalist financial spheres.
With the stage set, the glycerine was added by the US decision to restrict physical copper
imports and as the futures cycle came to one of its regular deadlines, a large player (or two)
that had bet “Zig” and had been watching the market slowly but surely “Zag” for a while
suddenly felt the ground shift and, in a decision of likely prudence, moved to cover and take
their loss. However, the fast rising bullish sentiment and the lack of physical copper available in
the geographical zone in which it needed to deliver saw an almighty short squeeze form and
the result is what you see in that price chart, above.
Then came the action on Thursday and Friday, which was generally supportive of the U$5.00-
or-abouts levels but the drop off in volume compared to the midweek panic was clear. That’s
indicative of the protagonist having escaped already and speculators moving in and while the
cost paid by IXM, Trafi et al was obviously high, it’s likely to have been paid almost in full.
As we draw this long Copper Basket section to a close, we add another opinion of last week’s
happenings via the op-ed published by house mancrush, Andy Home of Reuters on Friday,
entitled “Ferocious CME copper squeeze presages future turbulence” (9). As is often the case
19
00998 57749 57639 52409 00978
00556
05273 57762
57021
0528 0555
100000
90000
80000
70000
60000 50000
40000
30000
20000
10000
0
ht21
voN
ht91
von
ht42
voN
ts1
ceD
ht7
ceD
4202
ht5
naJ
ht92
beF
ht5
lirpA
dr3
yaM
ht01
yaM
ht71
yaM
MT Cu
source: Cochilco, LME
with a Home note it covers a lot of related subjects and is virtually impossible to excerpt for
gist, so please read it all. This part gives a little flavour:
The problem is the type of metal that's available. Half of the LME's on-warrant inventory at
the end of April was Russian brand metal. The second largest component was Chinese
metal.
Neither Russian nor Chinese producer brands are deliverable against the CME contract and
in the case of Russian metal, it wouldn't matter anyway after the U.S. government banned all
imports in its April sanctions package.
A simple arbitrage transfer of stocks between exchanges isn't going to work, meaning the
physical re-routing of units to the United States could take some time, delaying the
realignment of CME and LME prices.
CME spreads and price have eased since Wednesday but the U.S. cash contract was still
trading around $500 per ton higher than London on Friday morning.
MORE MONEY
Even copper bulls concede that the market has run ahead of physical supply-chain reality.
Some sort of correction is due, although it may have to wait until the immediate long-short
battle is over.
But there will be no shortage of speculative buyers on any pull-back in price. A market that
has just hit the headlines for making record highs is only going to attract more attention.
Overall, the Home position is that copper is likely to become a volatile trade considering the
sheer amount of speculative money now entering its arena, that’s easy to agree with and while
Home is always trying to seek the middle ground as a base metals reporter, it’s not difficult to
read between the lines of his latest note and see that he too thinks we’re at some sort of near-
term top. However and to be crystal clear, we also agree with his assessment of this being a
VERY volatile and unpredictable situation and thinking a near-term top is likely is not the same
as thinking copper stocks are about to drop hard. So let’s finish this ramble through the week in
copper with some practical advice siummed up by the well-worn market saying, KEEP DANCING
UNTIL THE MUSIC STOPS. Be prepared for a reversal in copper, don’t immediately assume your
stocks go into freefall if it returns to U$4.70/lb or so and ignore the extreme noise on either end
of the argument, be they hurting bears or charging bulls. Or, as W.H. Auden wrote in 1936 in
“Death’s Echo”:
Dance, dance for the figure is easy,
The tune is catching and will not stop;
Dance till the stars come down from the rafters;
Dance, dance, dance till you drop.
Now for a connected subject, as we dial up this week’s closing positions in world inventories
with data from Cochilco (who for what it’s worth, upped its average copper price for 2024 this
week to U$4.30/lb from the previous U$3.85/lb guesstimate…and even then is probably still
way behind the curve):
The overall downtrend continued, but only just as the total from the three official world
futures systems came to 412,573 metric tonnes (mt) this weekend, down a modest
784mt on the week.
The Shanghai SHFE copper stocks remain stubbornly at 290,376mt, with the high stock
levels continuing into May and much longer than expected.
LME stocks added a very thin 200mt to move up to 103,650mt, a virtual UNCH with the
2,700mt lost in New Orleans stocks countered by a 3,275mt add to Asia warehouse
stocks (mostly into Taiwan).
Meanwhile, Comex stocks again dropped by a chunky amount and given the backdrop
in futures trading recently, that makes sense. Its stocks dropped 1,444mt to close at
18,547mt. Comex doesn’t carry much inventory compared to the big two, so it’s notable
in the light of last week’s trading that its stocks have dopped by 8,722mt in April and
half of May, data that fits with what we’ve witnessed in LME New Oreleans
The dedicated SHFE chart shows the continuation of the stockpile in its warehouses.
20
SHFE copper inventory levels, 2019 to 2024
400000
350000
300000
250000
200000
150000
100000
50000
0
21
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
We’ve said it before and will say it again, the signal being flashed here isn’t one that fits with a
worldwide shortage of copper and the bizarre price action witnessed last week was all about a
couple of trading houses having to cover physical deliveries to North American clients. Andy
Home in his note mentioned the way in which “Commodity traders Trafigura and IXM are
reported to be diverting metal to the United States to cover positions”, another clue that the
price spike we saw last week won’t last. However, the sheer weight of cash entering the copper
space may turn out to trump the realities of the real world once again in the days ahead, so to
reiterate the default position to make absolutely sure you’re on the same page:
A reversal would not surprise me.
I will remain long copper via my stock trades.
And will not complicate my life
Now for notes on some of our basket stocks:
American Eagle (AE.v): It took until Friday afternoon, but the upsized C$8.2m financing has
now closed and AE is cashed up and ready for its 2024 drill campaign. In trading, the 2024
copper story of the year (so far) let others around it play a little catch-up, as all eyes are now
apparently on the drill program rather than the market for copper explorecos.
Oroco Resource Corp (OCO.v): I try hard not to repeat myself on this stock, because all I
seem to do is put the boot in and it gets boring for me, let alone you people out there. But the
point we made in IKN758 dated November 26th and underscored in IKN764 dated January 7th.
Back in late November we knew OCO was running low on cash and were ready for the near-
inevitable announcement of an equity raise, but in our own words, $2.5m placement announced
that week “…(wasn’t) going to fund this company for long and implies that OCO will go back to
market in the first half of 2024 for more.” Then in IKN764 we reported on OCO running another
small funding, this time for $1m at 40c, which might stop the gap for a while but doesn’t relieve
the obvious issue at the company. We then saw the other side of OCO as the copper price
started to run and the stock improved on the back of its well-oiled online promotion channels,
but as we can see in the chart (right) the rally reversed and in the last couple of weeks
managed to studiously ignore sector strength. We now know why (10):
VANCOUVER, British Columbia – (May 16, 2024) Oroco Resources Corp. (TSX-V: OCO, OTC:
ORRCF) (“Oroco” or the “Company”) is pleased to announce that it has entered into an agreement
with Red Cloud Securities Inc. to act as lead agent and sole bookrunner on behalf of a syndicate of
agents (collectively, the “Agents”) in connection with a best efforts, private placement (the
"Offering") for gross proceeds of C$6,000,000 from the sale of 13,333,333 units of the Company
(each, a “Unit”) at a price of C$0.45 per Unit. Each Unit will consist of one common share of the
Company (each, a “Unit Share”) and one half of one common share purchase warrant (each whole
warrant, a “Warrant”). Each Warrant shall entitle the holder to purchase one common share of the
Company (each, a “Warrant Share”) at a price of C$0.65 at any time on or before that date which is
24 months after the closing date of the Offering.
The Agents will have an option, exercisable in full or in part, up to 48 hours prior to the closing of
the Offering, to sell up to an additional 2,222,222 Units for additional gross proceeds of up to
C$1,000,000 (the "Agents’ Option").
At that price compared to the recent run, we should expect OCO to fill the placement and
overallotmen, so that’s 15.555m units and C$7m in gross proceeds to make the treasury
position more like one that can run a drill campaign this year. However, we underscore that the
raising was inevitable and all you need by way of explanation for the under-performance in
May. This weakness is one of the reasons I avoided OCO as a vehicle on copper, which means I
missed out on the run during the Mariusz promo pump. A small price to pay, as the real moral
of this story is to underscore the point we’ve been making about this stock long before that
first, small November 2023 placement. Even if you are more forgiving than I and can set aside
the mediocreeconomics in its October 2023 PEA, its obvious weak point has been clear. With
just under half its PEA resource in the inferred category, OCO has a lot of heavy lifting to do to
get this resource to a place where it can put together a valid PFS. That takes money and time,
neither of which are on the OCO agenda.
You cannot infill a big open pit system on a couple of million. Sorry.
You cannot find a buyer of this project on a PEA. Sorry.
Sadly, its true believer adherents have been told otherwise by the paid pumper Mariusz and if
you put these words in front of their faces tomorrow, they have too much bias ingrained to take
any notice. In fact, if you wait two years and show them these words, they’re likely to swear
blind that the delays, the dilution and the lack of a buyer stepping forward all happened for
other reasons and that the deal is going to happen any day. It is the way it is.
From time to time we are all guilty of the soft Stockholm syndrome that happens when you’re
holding a bag on a stock whose story you believe. I’m no different and I’m aware how easy it is
to point to the mote in the eye of
Kodiak Copper (KDK.v): This may be sheer coincidence, as there were multiple copper
company stock charts moving up last week, but it’s worth putting the whole of the KDK May
15th NR (11) in front of your eyes, because…
May 15, 2024 – Vancouver, British Columbia – Kodiak Copper Corp. (the “Company” or “Kodiak”) (TSX-V:
KDK, OTCQB: KDKCF, Frankfurt: 5DD1) announces that it has engaged the services of ICP Securities Inc.
(“ICP”) to provide automated market making services, including use of its proprietary algorithm, ICP
Premium™, in compliance with the policies and guidelines of the TSX Venture Exchange and other
applicable legislation. ICP will receive a fee of C$7,500 plus applicable taxes per month, payable monthly in
advance. The agreement between the Company and ICP is for an Initial Term of three (3) months and shall
be automatically renewed for subsequent one (1) month terms (each month called an “Additional Term”)
unless either party provides at least thirty (30) days written notice prior to the end of the Initial Term or an
Additional Term, as applicable. There are no performance factors contained in the agreement and no stock
options or other compensation are being granted in connection with the engagement. ICP and its clients
may acquire an interest in the securities of the Company in the future.
ICP is an arm’s length party to the Company. ICP’s market making activity will be primarily to correct
temporary imbalances in the supply and demand of the Company’s shares. ICP will be responsible for the
costs it incurs in buying and selling the Company’s shares, and no third party will be providing funds or
securities for the market making activities.
ICP Securities Inc.
ICP Securities Inc. (ICP) is a Toronto based CIRO dealer-member that specializes in automated market
making and liquidity provision, as well as having a proprietary market making algorithm, ICP Premium™,
that enhances liquidity and quote health. Established in 2023, with a focus on market structure, execution,
and trading, ICP has leveraged its own proprietary technology to deliver high quality liquidity provision and
execution services to a broad array of public issuers and institutional investors.
On behalf of the Board of Directors
Kodiak Copper Corp.
…that news came at the same moment as the
start of the rally you see in this 10-day chart:
As mentioned in recent editions, KDK has failed
to catch the market’s attention in any way,
shape or form from its development of MDN in
the last couple of years so it’s difficult to
imagine that the stock rallied on fundies. What
we did get was a 35% improvement in one
week, the biggest move on our list in a week
22
that saw a lot of big moves. Please note that ICP Securities was hired by Fireweed Metals
(FWZ.v) to provide the same type of service on May 2nd, exactly one day before FWZ CEO
Brandon McDonald “was retired” and the Lundin Group took over the reins of FWZ from
Discovery Group. Here we see Kodiak, another Discovery Group company, hiring the same
people. Wheels within wheels…
QC Copper & Gold (QCCU.v): While there are plenty of
other copper exploreco stocks to point to for Friday rallies on
volume, this one sticks out because at 15c, it’s right on the
ceiling of its long-term resistance level and if QCCU manages
to capitalize on the momentum next week, it could move
quickly into the 20c.
Be clear I’m slightly biased in this case, as I’ve owned QCCU
stock before, I like the company and its main Opemiska
project, I like the team (part of Ore Group), I think it’s
extremely undervalued compared to its assets and I’m not fazed by the talk of community
issues based around having to move some of the Chapais town infrastructure to accommodate
the open pit. And of course I also have some limited exposure to the stock today thanks to my
monetarily small and new position in Orecap (OCI.v, see above). So fliptraders looking for a
scalping opportunity: WATCH THE VOLUME IN QCCU because that’s all it really needs from here
for a real breakout, nothing much stopping it from 22c or even 25c if it does,
The Producer Basket
After 20 weeks of 2024, the Producer Basket shows a gain of 22.61% 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 50.41 43.74 5.7%
2 Agnico Eagle AEM 54.85 497.971 34.91 70.11 27.8%
3 Barrick GOLD 18.09 1756 31.41 17.89 -1.1%
4 Franco-Nevada FNV 110.81 192.119 24.68 128.48 15.9%
5 Pan American PAAS 16.33 364.439 7.92 21.74 33.1%
6 Hecla Mining HL 4.81 617.768 3.77 6.10 26.8%
7 Lundin Gold LUGDF 12.64 237.68 3.50 14.74 16.6%
8 Eldorado Gold EGO 12.97 202.472 3.28 16.19 24.8%
9 Dundee PM DPMLF 6.43 183.278 1.50 8.21 27.7%
10 Wesdome Gold WDOFF 5.83 148.95 1.29 8.67 48.7%
All prices and stock quotes in U$ Port. avg 22.61%
23
Headsup because we did in fact have a week-over-week loser among our ten precious metals
producer stocks, so a boo and a hiss for Lundin Gold (LUG.to) which dropped by 0.7% and alos
lost sixth place on our market cap league table to the biggest mover of our list, Hecla (HL up
14.0%). The others were winners as well, with silver exposure doing the best. That’s why we
included a little this year, after all. Our basket average is now +22.61% for the year and 3.71%
ahead of the GDX benchmark, which is a pretty decent result for four and a half months. More,
please.
The 2024 Producer Basket: Weekly performance and
30% comparative to GDX control
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
I’m still behind on coverage of these stocks and will get to them. But not this week.
The TinyCaps List
After 20 weeks of 2024, the TinyCaps show a gain of 91.13% 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 28.80 0.13 100.0%
Awalé Res ARIC.v 0.135 85.319 63.14 0.74 448.1%
District Metals DMX.v 0.170 106.98 47.07 0.44 158.8%
Endurance Gold EDG.v 0.18 150.136 21.77 0.145 -2.8%
Kirkland LDC KLDC.v 0.100 88.625 8.42 0.095 0.0%
Latin Metals LMS.v 0.075 71.476 7.50 0.105 66.7%
Palamina Corp PA.v 0.130 71.285 9.98 0.14 7.7%
South Star STS.v 0.750 48.8 29.28 0.60 -20.0%
Surge Copper SURG.v 0.090 219.21 30.69 0.14 144.4%
Viva Gold VAU.v 0.120 118.384 15.39 0.13 8.3%
Prices in CAD$, data from TSXV basket avg 91.13%
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.
24
ts1naJ ht7naJ ht41 ts12 ht82 ht4bef ht11 ht81 ht52 dr3raM ht01 ht71 ht42 ts13 ht7rpA ht41 ts12 ht82 ht5yam ht21 ht91
The 2024 Producer Basket: Percentage diff. between
GDX benchmark & basket (negative= IKN ahead)
2.0%
ikn 1.0%
gdx control 0.0%
-1.0%
-2.0%
-3.0%
-4.0%
-5.0%
source: IKN calcs -6.0%
ts1naJ ht7naJ ht41 ts12 ht82 ht4bef ht11 ht81 ht52 dr3raM ht01 ht71 ht42 ts13 ht7rpA ht41 ts12 ht82 ht5yam ht21 ht91
source: IKN calcs, NYSE data
The basket average shot higher by 26.5% on the week thanks to the combined efforts of seven
winners (BAY.v, ARIC.v, DMX.v, EDG.v, KLDC.v, LMS.v, SURG.v), three unchanged stocks (PA.v,
STS.v, VAU.v) and no losers. Of course, that type of massive jump in the average means there
were some big winners among the ten, so hats off to Surge Copper (SURG.v up 57.1%), Awalé
Resources (ARIC.v up 23.3%), Endurance Gold (EDG.v up 20.7%) and Latin Metals (LMS.v up
19.1%) for doing the heavy lifting. Almost as notable, we now have no fewer than four of our
ten charges in the 2024 list in “bagger” territory, i.e. 100% up or more…sometimes a lot more.
Awalé Resources (ARIC.v): Before anything, a quick reminder that ARIC began the year at a
market cap of C$9.08m and now, with the recent controversial placement closed and the news
last week that pushed the price back into the 70s, it’s a C$63.14m market capper and an
absolute certainty to be left off the 2025 TinyCaps basket.
Now for the news and there are two NRs to report, starting with the May 15th news (12) that
JV Partner Newmont (NEM) has completed the terms of Phase 1 of its optioning and the JV now
moves to Phase 2. We remind readers that this JV covers the Odienné Project in Côte d’Ivoire
but does not include the wider concession area around the flagship target, which remains 100%
ARIC. That means NEM is now 51% owner of Odienné and that moves to 65% (with a right to
buy another 10% to get to 75%) if NEM funds another
U$10m and the JV defines a resource of at least 2m oz
gold. Both of those are highly likely, given what we now
know about the high grade hits in recent assays. Before
moving to the main event, we also note that even
though NEM now has the right to become project
manager, ARIC reported last week that its team is still
leading the exploration.
Now for the reason the stock did this what you see in
the price chart (right), the NR that dropped a day after
on May 16th (13). Here’s how it begins:
Vancouver, BC – (Newswire – May 16, 2024) Awalé
Resources (TSXV: ARIC) (“Awalé” or the “Company”) is pleased to welcome two new members
and the appointment of current member Stephen Stewart as Chair of the board of directors. Mr.
Robin Birchall and Mr. Derk Hartman will be stepping down from their positions, allowing for
Awalé to welcome Mr. Anthony Moreau and Mr. Karl Akueson as new directors.
This is excellent news for the company and any speculator considering it as a potential trade.
Back in IKN779 dated April 24th we outlined the reason for corporate discontent at ARIC and the
reason for the way it dropped off a price cliff, as not only did the company decide to run a
placement at 62c to raise $11.5m but reliable word was that the chair, Robin Birchall, had
refused another source of financing at 80c in order to give the deal to his friends at Canaccord.
And to make matters worse, as we put it in IKN779…
“…to place the cherry firmly on top of this sordid cake just hours before the deal was
announced three company insiders didn’t simply file insider sales, but they late filed
them. Chair Robin Birchill exercised 200k of his 12c options and liquidated them all for a
gross profit of $140,600, CEO Andrew Chubb sold 298,400 shares at 83.5c for a
$249,164 payout and Derk Hartmann joined the fun, selling 100k of his own shares at
83.5c for gross proceeds of C$83,500.”
At the time we pointed the finger directly at Birchall and his sidekick and wondered just why
CEO Andrew Chubb had gone along with them in selling shares. We also stated that without a
clean-up at board level ARIC shareholders had something of a Sword of Damocles over their
heads, waiting for the next moment when this board screws them over for the own ends.
Therefore, the news that Birchall and Hartmann were out last week is a strong positive, what’s
more it means the reputable and morally straight Stephen Stewart takes over as chair. With
this, there won’t be any more anti-retail shenanigans going on and as the price chart shows,
the market has quickly come the the same conclusion.
25
I got into contact with the new Chair of ARIC, Stephen Stewart, who was kind enough to
answer all my questions in a frank and open manner. We also agreed to what could go on the
record, so it’s fair to say that ARIC heard and took note of the clear displeasure from
shareholders about the financing and how it went down. Once the financing was closed, the
board convened and decided that the best course for the company would be a board refresh
and with two good replacements in Mr. Anthony Moreau (representing Orecap, with Stewart
stepping fully into the neutral role as Chair) and Karl Akueson, a Côte d’Ivoire citizen with a
deep knowledge of the company and its project zone. The resignations were in good faith,
meanwhile and despite his error in allowing the placement to go through in the unsavoury way
on the back of his share sales (for which he provided a reasonable explanation) CEO Chubb will
continue as CEO and retains the trust and backing of the reconstituted board.
That’s that done, but if you want more than the on-record description above I strongly suggest
you check out this link (14) and go read what Vukasin Pekovic, someone very close to the
current ARIC set-up and one of the shareholders that brought about significant strategic
changes at the company before its 2024 success began, has to say about the events of last
week. Suffice to say that his views fully back up our previous intel gleaned on ex-Chair Birchill
and leaves one with an optimistic view for the future of Awalé under its new team. Finally and
without knowing exactly where I heard this from, I’m sure that CEO Chubb has learned a
valuable lesson or two from the events of the last couple of months and I’m willing to cut the
man some slack. He wouldn’t be the first geologist to walk into the world of junior explorecos
as a CEO and then get an up-close lesson in “the ways of
the market”, let’s say. With a good person now at the
helm of ARIC to oversee corporate matters in a correct
way, CEO Chubb will be able to focus on his own best
skillset and do the geology work that ARIC needs for its
future.
Bottom line: The news from ARIC was very good, I was
pleasantly surprised to see the changes at board level
and it makes the company a far more attractive package
for those looking to speculate on drill assays this year.
We know Odienné is a live prospect and the long-high
grade hits that shot the stock from under 20c to over 80c in March may be the start of
something great. With NEM as funding partner, an essential free carry to 25% of the project
and 100% control over the very large concession area surrounding the JV ground (plenty of
new targets already generated and money with which to drill them), even though the market
cap is up to over U$50m there’s still a lot to like at these price levels. At the moment I have
personal exposure via Orecap (OCI.v) and its 11.68m shares of ARIC, but with the board and
management changes I’m now more interested in taking a direct position here. Let’s see how it
trades in the next couple of weeks before making any decision, there’s a lot going on in the
gold market and we’re still months from the next assay result.
Surge Copper (SURG.v): Remember my little fantasy last week about SURG perhaps being a
tradeable stock in the 12c to 15c price range? Oh dear:
26
This is what happens when a small copper exploreco gets picked to be a speculative vehicle in a
metals boom. The group behind SURG, i.e. the same as the recently successful Adventus, have
the marketing nous and the story they can sell, that of “big copper in BC Canada” is a good
one. So the shoe fits, but last week was very little to do with its fundies and all about being in
the right place at the right time, pushing the marketing buttons and adding a bit of luck to set
the wheels in motion.
Endurance Gold (EDG.v): Another feature of speculative
bullish markets is when the world turns upside down and news
of equity financings sees stocks move higher, instead of
dumping. That happened to EDG when on Tuesday it
announced (15) fully subscribed placement for 20m units at
20c (unit = share + half warrant with a 32c strike) to raise
gross proceeds of C$4m, with the market appreciating that
buyers are willing to pay above market for their entry point
and the way the book was full before it was announced. EDG
rose 20% as a result and we await the closure to find out
when the cash is going into the ground.
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
Mexico: Sheinbaum red hot favourite with two weeks to go
Understood as the Gold Standard in polling in Mexico, the Mitofsky studio ran its latest survey
on the upcoming Presidential election on 1,600 people in a face-to-face Q&A between May 3rd
and May 6th and the results came out last Tuesday. Here’s a link to the report (16) for those
who want the full 13 pages, here’s the screenshot with the pay dirt:
The “effective preference” result puts Claudia Sheinbaum of the outgoing MORENA government
coalition and the dauphine of current President AMLO is 23.8 points ahead of main rival from
the (mainly) right wing coalition Xóchitl Gálvez, with the only other candidate, Jorge Álvarez
Máynez a long way back in third. This won’t come as a surprise to regular readers of The IKN
Weekly and while the lead has closed very slightly since the last Mitofsky survey, the lead is
way more than Sheinbaum needs and it would take a minor miracle to stop her from becoming
President Elect in two weekends’ time, on June 2nd.
Argentina: The RIGI, a mining conference and copper news
Away from the headline grabbing President Milei, his seemingly endless round of photo
opportunities and the near-univerally positive coverage he gets in English language press,
there’s a lot of politicking going in Argenitna these days. The main event isn’t the headline
inflation numbers or whether the country can get more money out of the IMF, but the debate
over the so-called “Pacts of May”, Milei’s latest initiative to get a package of deep reforms
through Congress that for a while looked like sticking to schedule, but after pushback from the
Senate is now expected to arrive in some shape of form in “June or July” (in Argentine Spanish,
that translates as “July at the earliest”.
27
This is of direct concern to us, because one of the major sticking points in the reform package
is the “Régimen de Incentivo a las Grandes Inversiones” (Regimen of Incentives to Large-Scale
Investors) known to the world as RIGI. This project would bring significant tax breaks and other
advantages to any company investing more than U$200m into a project in the country, no
duties on imports of capital goods, as well as access to preferential exchange rates to the Peso.
The law is aimed at the agro, infrastructure, oil & gas, energy, technology and mining sectors
and with a range of tax breaks and benefits, it goes without saying that the mining lobby is
pushing hard for its passage. However, both left wing groups and small/medium sized
businesses strongly oppose the measures and the bill is now stalled in the upper house
(Senate) until further notice, which means that if it gets through there’s going to have to be
some modifications.
Away from the national scene and moving to specifics about mining, this coming Tuesday 21st
May to Thursday May 23rd sees the 10th edition of the "San Juan International Mining Expo",
organized by the mining media channel Panorama Minero and arguably the biggest event in
Argentina’s annual mining calendar. It’s held in the mining flagship province of San Juan, is
expected to being in around 15,000 attendees from the country and the outside world and
usefully (also unusually, I discovered it yesterday) for those on the outside looking in the event
even has an English language version of its web page. So find that here (17).
The year’s event will have more eyes on it than usual, with the national government of Javier
Milei putting special emphasis on the conference and among other things, it will feature the first
public speech from the new national Mining Secretary, Luis Lucero. However, the main event is
likely to be “The Copper Working Group Agreement” (Acuerdo por la Mesa del Cobre) which is
set to bring together six provincial governors for an official signing ceremony to promote the
development of copper mining projects in the country. Those governors are; host Marcelo
Orrego of San Juan, Raúl Jalil of Catamarca, Alfredo Cornejo of Mendoza, Gustavo Sáenz of
Salta and Carlos Sadir of Jujuy. Expect reports of this meeting and signing ceremony to make
sector headlines in the week to come, we’ll watch for reaction and report back next weekend.
Market Watching
Extra thoughts on recent sales (ADZN.v) (SOLG.to) (EQX)
The changes and portfolio rebalancing of a couple of weeks ago in the Spring Clean that
marked 15 years of The IKN Weekly included the sale of three positions, namely Adventus
Mining (ADZN.v) SolGold (SOLG.to) and Equinox Gold (EQX). With two weeks gone and what
we’ve seen in the market since then, I’d like to add an extra thought or two to each closed
trade with the benefit of hindsight.
First up, Adventus Mining (ADZN.v) as this is the one that I shouldn’t have sold so quickly,
having got out at C$0.445 for a respectable win in just over three months of holding. However
and since then, the stock has run higher on the metals rally and this weekend sits at 52c and
I’ve left significant money on the table. That’s not a good thing, but I’m going to claim
mitigation by noting that at the time of selling, we already knew that chances of a third party
competing for ADZN had dwindled to near zero and from that moment on, it was a quasi-silver
stock thanks to its friendly buyout by Silvercorp (SVM). Here’s how I put it in IKN781:
“…a third party interloper is now very unlikely indeed and in effect, anyone holding ADZN
is doing so either for the minor theoretical arbitrage or, more importantly, for the silver
exposure offered by holding SVM as these two stocks will now trade in near lockstep. As
I have enough silver on my plate at the moment with exposure to SILV and IPT, it’s an
easy call to sell these shares now and raise some treasury.”
I therefore made a call on having enough silver exposure via SILV and IPT and sold the ADZN
shares which 20/20 hindsight sees as a mistake, what with silver at U$31.50/oz or so this
weekend and SVM dragging ADZN to new highs. So be it, not my greatest moment as a trader
but I’m not going to cry too much, I got my win.
28
Now for the real reason I wanted to mention these three sales. In the case of Equinox Gold
(EQX) I was out at U$5.57 and after last week’s rally, particularly the reaction EQX put in on
Friday, it’s now slightly higher at U$5.66. As for SolGold (SOLG.to), I wanted out at 17c and
only got 16.5c, but even that looks good this weekend as the stock closed for Canadian trading
Friday at C$0.155. So one is slightly up since my sale and one is slightly down, but they have
something in common that’s far more important: I’m relieved to have sold.
Regular readers will know that I haven’t been happy with either trade for several months and
even though I managed to time an addition in both stocks at their recent lows, conviction levels
in both trades were low. In the case of SOLG, the trade turned bad quickly and stayed that
way, in the case of EQX the frustration stemmed from the way it failed to rally as gold moved
through the U$2,000/oz line, only showing its “leverage to gold” at $2,200/oz and above.
However, I soldiered on in both trades and those additions to average down helped out.
It’s only on selling that I realize my life (quite literally) is better without those shares in my
portfolio. While looking down at my radar list, the relief of not having to wonder why EQX is
sticking when others are moving on, or the low volume fo the SOLG Canadian listing while its
London ticker seemingly moves in the opposite direction to the majority of copper explorecos,
behest to a failed social policy and ignored by previous suitors BHP. I’m not immune to internal
bias and sometimes, one needs to get out of a stock in order to realize that it had been around
in your portfolio far too long, doing as much psychological damage as financial. And to pardon
the pun, there’s even a silver lining with the exit of Adventus, as along with the sale of SOLG
I’m now out of Ecuador I don’t have to worry about exposure to the Mini Basket Case country
any longer. I wasn’t planning on hanging around there once the elecitgon fun began, but being
out early makes it easier. Things are going to get worse there as 2024 rolls out, not better.
Testing myself on exploration stage copper companies (Part One)
Here’s a new thing that I plan to run for the rest of this year, designed to do two things:
1) Track the relative performance of a 32 exploration stage junior mining companies
with copper as principle target.
2) Judge of how good or bad my own judgment is of these stocks and projects,
compared to their performance from now until the end of the year.
The set up is fairly simple, via this table as seen here. As for the categories and scoring system
(for want of a better phrase), see the notes below:
Putting myself to the test on copper juniors
Company Ticker Project Proj. Quality PPS May 17th IKN Value Score
Pan Global PGZ.v Escacena 5 0.19 8
Marimaca MARI.to Marimaca 7 4.15 7
Western Cop WRN.to Casino 5 2.09 7
American Eagle AE.v NAK 8 0.74 7
Filo Corp FIL.to Filo 10 26.66 7
Aldebaran ALDE.v Altar 6 1.20 6
Faraday Cop FDY.to Copper Creek 7 0.80 6
Hercules BIG.v Hercules 7 0.89 6
QC Copper QCCU.v Opemiska 5 0.15 6
NGEx Min NGEX.to Helados 7 9.98 5
SolGold SOLG.to Cascabel 5 0.16 5
Hot Chili HCH.v Costa Fuego 5 0.97 5
Regulus Res REG.v AntaKori 7 1.72 4
Surge Copper SURG.v Berg/Ootsa 4 0.22 4
Arizona Son ASCU.to Cactus etc 7 1.65 4
Oroco OCO.v Santo Tomas 4 0.455 4
Chakana PERU.v Soledad 3 0.10 3
Kodiak KDK.v MDN 3 0.60 3
Los Andes LA.v Vizcachitas 5 10.40 3
Solaris Res SLS.to Warintza 5 5.43 3
Atex Res ATX.v Valeriano 5 1.41 3
Copper Fox CUU.v Schaft Creek 2 0.42 2
Cordoba Min CDB.v Alacran 3 0.47 2
29
C3 Metals CCCM.v Jamaica/Peru 3 0.41 2
Camino Min COR.v Chapitos 3 0.065 2
Trilogy Met TMQ.to UKMP 4 0.65 2
Kutcho KC.v Kutcho 2 0.20 2
Northern Dyn NDM.to Pebble 2 0.415 2
Panoro Min PML.v Cotabambas 3 0.12 2
Libero LBC.v Mocoa 4 0.395 2
World Cop WCU.v Escalones 2 0.305 1
Alta Copper DNT.to Cañariaco 3 0.71 1
source: TSX/V data, IKN calculations
Notes:
The first three categories are reasonably self-explanatory. You have the name of the
company, its ticker and its main project. I’ve chosen companies that have copper as their
main focus and most of the time there’s a clear flagship project, but in some cases the
project is copper/gold and in others, there are more than one project on which we need
to hang the overall valuation and rating.
Next category is “Project Quality”: Scored on a 1 to 10 basis with 10 the best, this is a
personal evaluation of the project held by each company and is mostly based on its
geology and resource, but does take into account other factors such as country political
or social risk. Feel free to disagree with me on the scores as seen, that’s your prerogative
and if you’d like to discuss why I’ve rated those scores, you know the address.
Next is this weekend’s share price of each company. An important column, as it marks
the starting price for the “competition” that will run for the rest of the year.
Finally comes The IKN Value Score. Colour coded from best (green) to worst (red), these
are my best guesses on the relative value of each company and how it will fare in the
next six months. We’re going to track these by adding a column on the first of each
month (i.e. the next appearance will be in IKN785 dated June 2nd) and showing the
percentage improvement or deterioration of each stock, running them on a league table
with the bext moves at the top and the worst moves at the bottom. Will do the same for
the closing prices on the first of each month (July, August. September…December and
end 2024) and each stock will move up or down depending on how well it has done.
In other words, as the months progress we’ll easily be able to see whether my best guesses in
the Value Score column, colour coded to track them easily, turn out to be accurate or a load of
rubbish. If things go well for me there will be a concentration of green colour near at the top of
the table, but if things go badly the whole thing becomes a random mix, or we see a
preponderance of orange and red colour codes at the top of the league table.
If that’s not too clear, don’t worry because when the second installment arrive in IKN785 and
we have the first changes in positions, all will become clear (I hope). As for the real objectives
here, yes it is planned as an amusing way of putting my own judgment and criteria towards
these stocks to the test, but the project is more about the tracking of 32 explorecos, market
caps large and small, through what promises to be a volatile and interesting moment for copper
and its dependent companies. Now that the first main move in the metal is in and the world is
watching its movements more closely, the idea is to observe which types of copper exploreco
stock performs best. Will it pay to “go with quality” as is my personal wont and put your money
in the best companies and projects most likely to become mines? Or will th best returns come
from the dog stocks with unloved projects with marginal economics and poor community
relations? Or perhaps a blend of the two? All will be revealed in due course, so look out for the
first month scoreboard in two weeks’ time when we take the pulse of our 32 charges by noting
the percentage change in their share prices and tracking the biggest winners. And losers.
Conclusion
IKN783 is done, we end with bullet points:
30
Too much Red Pine these last three weeks, but now we have a handle on the situation
and things are likely to calm down, the work done may well pay dividends later in the
year. No rush to own, but firmly on the radar now.
The metals breakout last week was a lot of fun. More please, dance til the music stops.
QC Copper & Gold (QCCU.v) may finally get its day. It would be about time.
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://redpineexp.com/red-pine-provides-update-on-assay-results-for-wawa-gold-project-2/
(2) https://redpineexp.com/wp-content/uploads/2024/05/Script-Final-May-15-2024.docx.pdf
(3) https://www.silvercrestmetals.com/news/2024/index.php?content_id=540
(4) https://impactsilver.com/investors/news/impact-silver-upsizes-financing-to-8.2-million-non-brokered-private-
placement/
(5) https://www.westerncopperandgold.com/news-and-resources/news-release/proposed-nominations-to-strengthen-
western-copper-and-golds-board/
(6) https://twitter.com/polan13/status/1790830390548304189?t=KE0oK1LYavZWvdvMoMx_yw&s=03
(7) https://www.mining.com/web/trafigura-ixm-caught-in-comex-copper-short-squeeze-as-prices-hit-record/
(8) https://finance.yahoo.com/news/copper-short-squeeze-york-felt-205550295.html
(9) https://www.reuters.com/markets/commodities/ferocious-cme-copper-squeeze-presages-future-turbulence-2024-05-
17/?s=03
(10) https://orocoresourcecorp.com/news/oroco-announces-brokered-private-placement--for-gross-proceeds-of-c60-
million
(11) https://kodiakcoppercorp.com/kodiak-engages-icp-securities-inc-for-automated-market-making-services/
(12) https://awaleresources.ca/2024/05/15/newmont-advances-to-phase-2-of-earn-in-on-the-odienne-project-jv/
(13) https://awaleresources.ca/2024/05/16/awale-resources-announces-board-changes/
(14) https://twitter.com/VukasinPekovic/status/1791605378771304772
(15) https://endurancegold.com/news-releases/endurance-gold-announces-fully-subscribed-non-brokered-private-
placement/
(16) https://drive.google.com/file/d/10e52Mg6UVevKMCoAlA49xRWxL3c1DTs3/view?usp=sharing
(17) https://www.exposanjuan.com.ar/en
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
31
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
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
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Sandstorm Gold SAND Aug'20 U$7.76 10-May-20 U$9.37 20.7% Profit taken, good trade
Integra Resources ITR.v Aug'20 C$2.23 13-Aug-18 C$5.40 142.2% Profit taken, good trade
Wesdome Gold WDO.to Aug'20 C$2.37 14-Oct-17 C$14.82 525.3% last 1/2 of big win closed
INV Metals INV.to Sep'20 C$0.40 17-May-20 C$0.45 12.5% Cut all Ecuador exposure
Cartier Resources ECR.v Nov'20 C$0.155 3-Aug-18 C$0.25 67.7% Exact close price TBA
Tinka Res TK.v Dec'20 C$0.195 19-Apr-16 C$0.195 0.0% Closed on a round trip fail
2015 to 2019 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Stocks To Follow Closed Positions 2019
Closed in 2019 closed close price
Atico Mining ATY.v jan'19 C$0.55 24-Jul-16 C$0.32 41.8% patience ran out, made room
Candente Copper DNT.to jan'19 C$0.075 3-Aug-18 C$0.05 -33.3% tiny trade, made room for new
B2Gold BTO.to feb'19 C$2.11 12-Sep-14 C$4.05 91.9% Took 1/2 profits, reduce size
Western Copper WRN.to mar'19 C$0.80 20-Jan-19 C$0.81 1.3% Spec trade that didn't work
B2Gold BTO.to mar'19 C$2.11 12-Sep-14 C$4.15 96.7% Took rest of profit.
GT Gold GTT.v mar'19 C$1.17 10-Oct-18 C$0.90 -23.1% Took loss. Story changed
NovaGold NG apr'19 U$3.84 13-Jan-19 U$4.15 -8.1% Short that didn't work, sm loss
Zinc One Z.v jun'19 C$0.47 14-Sep-17 C$0.025 -94.7% clearing out dead trade
Amarillo Gold AGC.v jun'19 C$0.24 22-Aug-18 C$0.20 -16.7% clearing out dead trade
New Gold NGD aug'19 U$1.44 31-Jul-19 U$1.23 14.6% ST short win thru Q2 earnings
IMPACT Silver IPT.v aug'19 C$0.39 21-Jul-19 C$0.46 18.0% took a quick profit
Fiore Gold F.v aug'19 C$0.34 26-May-19 C$0.56 64.7% Took profit, 2q19 avg
Chakana Copper PERU.v oct'19 C$0.84 22-Mar-18 C$0.16 -81.0% Exploreco trade fail. Want space
Wesdome Gold WDO.to oct'19 C$2.37 14-Oct-17 C$7.57 219.4% Sold half, profit taking
Superior Gold SGI.v oct'19 C$1.46 8-Apr-18 C$0.47 -67.8% Failed sm spec on Au. Moved on
Amerigo Res ARG.to nov'19 C$0.91 23-Sep-18 C$0.50 -45.1% worst trade of year, hefty loss
Guyana Goldfields GUY.to dec'19 C$0.94 14-Apr-19 C$0.56 -40.4% taking the loss, financials weak
Tethyan Res TETH.v dec'19 C$0.30 8-Sep-19 C$0.16 -46.7% tiny trade, word of probs in co
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
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Cordoba Min. CDB.v Jun'17 C$0.75 15-Sep-16 C$0.63 -16.0% closed
Constantine Metal CEM.v Aug'17 C$0.135 9-Apr-17 C$0.28 107.4% spec trade closed, good win
Red Eagle Min. R.to Sep'17 C$0.67 13-Dec-16 C$0.27 -59.7% IKN's biggest failure in years
Starcore Intl SAM.to Sep'17 C$0.61 10-Jan-15 C$0.31 -49.2% Patience ran out
B2Gold BTO.to Dec'17 C$2.11 12-Sep-14 C$3.39 60.7% sold small portion for liquidity
Stocks To Follow Closed Positions 2016
Closed in 2016 closed close price
Phoscan Chem FOS.to jan16 C$0.28 29-mar-15 C$0.265 -5.4% Buyout trade, bot but poor deal
True Gold TGM.v jan16 C$0.18 23-aug-15 C$0.25 38.9% okay trade, sold on pol risk
McEwen Mining MUX jan16 U$1.09 25-jan-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-apr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-apr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-jan-16 U$2.96 43.7% closed good near-term trade
Sandspring Res SSP.v mar-16 C$0.195 18-oct-15 C$0.32 64.1% Hit tgt, took profit
Teranga Gold TGZ.to mar-16 C$0.54 15-feb-15 C$0.60 11.1% disappointing trade
B2Gold BTG mar-16 U$0.85 13-jan-16 U$1.30 52.9% Separate trade on B2, hit tgt
Dalradian Res DNA.to mar-16 C$0.67 27-oct-13 C$1.00 49.3% Hit target, sold, good win
HudBay Min. HBM may-16 U$4.10 03-apr-16 U$4.36 -6.3% Short trade, poor timing
Nevada Sunrise NEV.v may-16 C$0.185 28-feb-16 C$0.23 24.3% V. small, no big deal either way
Richmont RIC jun-16 U$7.60 01-may-16 U$9.30 22.4% near-term trade, profit taken
INV Metals INV.to jul-16 C$0.25 03-apr-16 C$0.95 280.0% Trade closed on time
HudBay Min. HBM aug16 U$4.98 09-jun-16 U$4.80 3.6% short trade covered, no big deal
Miranda Gold MAD.v oct-16 C$0.125 03-jul-16 C$0.10 -20.0% tiny spec trade, didn't work
Avino G & S ASM nov-16 U$2.00 21-oct-16 U$1.40 -30.0% Abandon trade on bad bot deal
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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