6 The IKN Weekly, issue 787 — Jun 17, 2024
The IKN Weekly
Week 787, June 16th 2024
Contents
This Week: Trade heads-up, In today’s edition, Juneteenth, Summer comes early.
Fundamental Analysis: Catching up with Menē Inc (MENE.v) (MENEF).
Stocks to Follow: Bear Creek Mining (BCM.v), IMPACT Silver (IPT.v), SilverCrest (SILV)
(SIL.to), Minera Alamos (MAI.v), Orecap Invest Corp (OCI.v), Contango ORE (CTGO).
The Copper Basket: Overview, Element 29 (ECU.v), NGEx Resources (NGEX.to), Arizona
Sonoran (ASCU.to), Oroco Resource Corp (OCO.v), Kodiak Copper (KDK.v).
The Producer Basket: Overview.
The TinyCaps Basket: Overview, Palamina Corp (PA.v).
Regional Politics: Bolivia: Evo declares himself a legitimate candidate, Guatemala: Bluestone
Resources (BSR.v) has its EIA revoked, Mexico: Mining lobbies the incoming Sheinbaum
government, Peru: Looking to permit mining projects, Argentina: RIGI passes.
Market Watching: AbraSilver (ABRA.v) RIGI and BCM, Contango ORE (CTGO) runs a
placement.
I remind subscribers that no part of this newsletter can be copied, reproduced or
given to any third party without the express permission of the author.
This Week
Trade heads-up
Though not a new call as such, today’s edition is a refresher on your author’s “Will Add MENE”
(MENE.v) position. Today’s main fundies section, you may want to read it just for the change of
reading about a non-mining company that’s run in a financially sound way. Both novelties to
our normal sector of focus.
In Today’s Edition
Today’s main event is dedicated to Menē Inc (MENE.v), the only non-miner we carry
and cover here at The IKN Weekly. It’s an overdue note and covers events over the last
three quarters or so, and comes at a time when the share price has been beaten down
heavily. In other circumstances and with other companies, for example your average
badly run tinycap exploreco, its price action would signal a broken stock and impending
doom but in this case, there’s an obvious opportunity now opening up in a stock I’ve
covered for too many years and without much success, but its place on the radar may
now offer reward. Aftyer revisiting the numbers I like the look of MENE.v more than I
expected to and will add shares in the weeks to come.
Though lost in the week’s predominantly negative sentiment for metals and mining
companies, the key base metal of them all, copper, had a better week. Or less worse if
you prefer, as it stopped the bleeding and managed to remain largely UNCH on the
week despite smack talk from people who were cheering it over U$5.00/lb less than a
month ago. As usual, we try hard to take the middle path and see the forest for the
trees and though it’s not a certainty the selling is over, it looks like a bottom is forming
around this U$4.50/lb level. That’s this week’s Copper Basket and that price level gets a
mention in today’s intro, as well.
The lawmaking fun and games in the Basket Case country came to a head roughly on
time last week and while it needed some amendments to get through, President Milei’s
“Ley Bases” omnibus law package inclucing the key RIGI FDI law project got its
1
passage through Argentina’s Senate on Wednesday evening. The mining market didn’t
react much, but it should because this is seriously good news for large scale projects in
Argentina. That’s in Regional Politics, with a smattering of mentions in other places.
As for portfolfio stocks, Contango (CTGO) came out with a nasty surprise, Minera
Alamos (MAI.v) weighed heavy on my heart and Orecap is beginning to look cheap
itself, not just because it’s a useful vehicle to cover two hotpot drill plays this year.
Juneteenth
We remind readers about this coming Wednesday, Juneteenth National Independence Day, a
Federal Holiday in The USA and as such, the world’s most important stock markets will be
closed for the day. The Canadian TSX/V markets operate as normal but expect low volumes and
directionless trading that day. Things get back to normal on Thursday.
Summer comes early
“Consider well the proportion of things.
It is better to be a young June bug
than an old bird of Paradise.”
Mark Twain
At least from the view of this desk, last week’s market felt for as though the standard summer
doldrums had arrived, the market was already yawning and dreaming about the Hamptons or
their cabin in the middle of nowhere, or a beach with large fruity rum punches served by large,
fruity barefoot waiters. And part of the sensation was watching a large bunch of no-hope
explorecos drop in the same way as they popped back in April. There are exceptions of course
and on both ends of the spectrum. Some companies that don’t have a chance of becoming
mines are still attracting bids and holding on to gains…
…other companies with great projects got sold down mercilessly…
…but with exceptions to prove the rule, decent companies have managed to retain stocks spent
last week on the downhill slope, with thin bids and sellers willing to take any price to get out of
the rash decision they made, six or eight weeks ago (examples below). Such is the way of the
mining sector. As for gold and copper, the world also seems bored and grumpy about prices
that stick above U$2,300/oz and U$4.50/lb respectively, which I find weird. For the necessary
2
perspective, all you need to do is look back to January 1st
2024 when spot gold was U$2,074/oz and copper
U$3.88/lb and ask the average metals trader whether
they’d be happy with the metals trading 11% and 16%
higher respectively. And don’t even get me started on
silver up 23% 2024 YTD.
We metalheads are a mob of half-glass empty grumps,
after all. But there is good news amongst the negativity
and over-stated gloom, as the lower the bar is set for PM
and BM producer stocks, the better things will look when
their Q2 results start hitting the wires. Those should begin to trickle in with production results
from most serious PM operators as from the second week in July and once people realize these
mining companies have seen their costs peak and are now raking in the cash from the fat
margin to spot, we should see sentiment for the bigger names pick up again. That, at least, is
the plan and why I’m now a buyer of stocks such as Bear Creek Mining (BCM.v), IMPACT Silver
(IPT.v) and other beaten down disreputable dogs. In other words, now is the time for bargain
shopping but with Q1 results now all in, a couple of weeks before the next round of the cycle
begins and the feeling of summer laziness now settling over the mining space, it’s also a time
when this publication can catch up on work it should have done a long time ago, but shuffled to
the back of the pile. I normally allow myself one edition per year of the “not so much mining”
variety and today’s the day, as we focus efforts on the one company on our Stocks to Follow list
that’s not a miner. It’s still in the precious metals space and it’s still an interesting company
though, no matter that it’s been beaten up at market this year.
Fundamental Analysis of Mining Stocks
Catching up with Menē Inc (MENE.v) (MENEF) (in Canadian Dollars unless stated)
A grain of gold will gild a great surface,
but not so much as a grain of wisdom.”
Henry David Thoreau, Life Without Principle
Here’s an update report that should have been written quite a while ago but, as things have
turned out, it may be a fortuitous delay. The only non-mining company we carry and cover at
The IKN Weekly, today’s note on online 24k jeweller Menē Inc (MENE.v) covers several bases:
It’s overdue: As briefly noted last weekend, I’ve let too much time pass since last
covering or updating on this company. This is through no fault but my own, I have no
excuses and as in the last few weeks I’ve received
mails from a few of you asking about the company, my
laziness was wearing thin.
It’s a deeply underwater trade. A quick look at any
price chart, for example this two year example (right),
shows the company’s share price is not in a good place.
It’s been a while since I added a small tranche to my
own holdings, have done so in the past to average
down but even so, my personal cost average of 63c
means I’m 66.7% down on this weekend’s price of 21c.
It’s not a dead story. Despite the selling and recent
lackluster financial results, MENE.v at its current share
price offers plenty of value and recent trading even suggests near-term signs of life.
Therefore, with the market for mining companies seemingly entering a quiet period and the
macro backdrop ready to move in its favour, today’s the day and we catch up with MENE.v,
with our focus being a careful look at what’s been going on at the company strategically and
financially. We begin with our standard structure topbox:
3
Class A shares out: 110.342m
Class B shares out: 149.489m
Total shares out: 259.831m
Options: 7.969m
RSUs: 3.0m
Fully diluted shares: 270.8m
Current share price: C$0.21
Market Cap: C$54.56m
Approx cash per S/O: 2.6c
All prices are in Canadian Dollars unless stated, USD/CAD forex assumption 0.75x
Share count, officers, insiders: Before we dive in, today’s report doesn’t include the normal
share count evolution chart because recently, the total has hardly budged. There were a couple
of small increases earlier on but, in the last few years it’s stayed close to its current 259.8m
total and as that’s highly unlikely to change in the foreseeable future, there’s no need for the
visual. Now for the real work and we begin with notes on the above share structure as one
person, namely co-founder and Executive Chair Roy Sebag, holds tight executive control over
the company. Each Class A share is worth 20 votes on agenda items at company meetings (e.g.
the AGM), that’s not likely to change and he owns 82.48m Class A shares. For many years Exec
Chair Sebag also held a fixed amount of 7.154m Class B shares, again passively, but notably
and for the first time in a long time he has recently been active at market, picking up (or
perhaps better said mopping up) some 137,000 shares under the 20c price level to bring his
holding to 7.279m. Those two holdings translate to over 70% of total votes at the company.
The other large shareholder of note is Goldmoney Inc (XAU.to), the financial services company
also co-founded by Roy Sebag, which owns 12.26m Class A shares and a large 81.58m Class B
shares (that’s 54.6% of the Class B total) for a total of 13.9% of voting rights. Along with those
large holders, we should also mention co-founder Diana Widmaier-Picasso (yes, one of his
daughters) who brings artistic directorship chops to the company and owns 12.6m Class A
shares, 10.7% of voting rights. Between them, these three cover 93% of voting rights at MENE
so if anyone has thoughts about getting activist about its recent poor share price performance,
think again. Finally we mention Josh Crumb, close associate of Roy Sebag at Goldmoney and
other places and now the driving force behind Abaxx Technologies, a successful recent entrant
in the energy transition financial market (an interesting story, that one). A director at MENE.v,
Crumb owns 3.1m Class A shares and a small amount of the Class B.
As for officers, last year saw a major change at the top when Roy Sebag handed the CEO role
over to one Vincent Gladu in September 2023. The NR blurb that came with the move (1) noted
Sebag’s decision to step down as CEO and bring in new talent, with the most important
strategic message a little further down coming from Exec Chair Sebag’s comment on the move:
“Vincent is the leader that Menē needs at this stage of the Company’s life. What is required over the next 3-5
years is a disciplined operational focus and a refreshed go-to-market strategy that will allow the business to
scale and reach more consumers who are inspired by our jewelry and its intrinsic value. Vincent has been
working by my side as Interim Chief Operating Officer to Menē since the Spring of 2023. During that time, we
have crafted a detailed 3-year strategic plan for the business that I believe is quite realistic. Some of the work
outlined in this plan has already begun as we look to position Menē for sustained, profitable growth.”
The main takeaway from that are the numbers, “three to five years” and “three year
strategic plan”. The company isn’t looking for short-term gains and we as shareholders in
2024 should understand that. As for new CEO Gladu, here’s his biog as ripped from the
corporate website:
With over two decades of experience in design, business strategy, sales and operations, Mr. Gladu joined Menē
in 2023 to lead the company through its next stage of growth.
Previously, Mr. Gladu was a Vice President at goeasy Ltd. (TSX:GSY), a leading Canadian financial services
company, where he built and grew the company’s online and brick & mortar Point-Of-Sale Financing business.
Prior to goeasy, Mr. Gladu held progressively senior roles at TD Bank (TSX:TD), where he led Innovation and
Corporate Strategy for the insurance division, Rayonier (NYSE:RYN), where he led the development and
commercialization of new technologies and Deloitte, where he advised Fortune 500 companies on growth and
go-to-market strategies.
Mr. Gladu holds an MBA from the Rotman School of Management at the University of Toronto and degrees in
industrial and product design.
4
That looks like a good fit for this type of company and as Sebag had clearly decided to lighten
his own workload for his own reasons, it was a logical step to bring in a CEO with an aligned
vision for the company and move to Executive Chair. The arrival of Gladu has already brought
significant changes to the way the company is run at a corporate level and those show up in
the financials. With three quarters now reported since his arrival and the strategy alluded to by
Exec Chair Sebag has started to roll out. For that, we now take a close look at the corporate
financials and today we use more of the background data than we’ve done before because the
devil (or the angel) is in the details:
Balance sheet: We begin with one of the strongest points in the MENE story and frankly, the
main reason I’ve persisted in this losing trade. The assets and liabilities overview charts show
significant changes since CEO Gladu took over. On the assets side (below left), the big change
is the drop in inventory and short-term investments in the last two quarters. From a level that
normally fluctuated between $15m and $19m, 4q23 saw inventory drop to $7.61m and while
that increased slgihtly to $8.89m as at end 1q24, that's still a big change. As for short-term
investments, they've dropped to near zeo from a previous $5m to $6m level.
MENE.v: Assets, per qtr
40
35
30
25
20
15
10
5
0
The reason for the drop can be seen on the liabilities chart (above right), as borrowings
dropped to zero at the end of last year. This is the second time MENE has moved to reduce
debt liability, having paid off its C$10m note from a seed backer at the start of 2021 and in
practical terms, MENE is now run as a debt-free company. This time around, here’s what
happened to the financials in 4q23:
MENE made the decision to pay down its debt with friendly lender XAU and that’s fair enough,
it’s a cost-cutting exercise that saves this type of money per year in interest expenses on the
loan:
2020: $364k
2021: $225k
2022: $325k
2023: $311k
A good move to save money, as long as it
doesn’t affect business or normal liquidity. These
charts show cash & inventory (right) and below
right equity, the GAAP compliant metric that’s a
decent proxy to what we mining grunts normally
use to gauge current financial pressure and
liquidity, i.e. working capital.
5
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
MENE.v: Liabilities Breakdown per qtr
$m
cash inventories ST Inv other
source: company filings, IKN ests
143.9 659.9 515.01 792.01 714.9 76.9 119.9 124.01 689.01 395.01 719.11 474.11 484.21 277.9 847.9
22
20
18
16
14
12
10
8 6
4
2
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
source: company filings/IKN ests
srallod
fo
snoillim
note payable
other liab
borrowings
MENE.v: Cash & inventory
17.5
2.1
10.132.103.0 8.7
4.35.1
9.1
3.03.33.6
7.5 11.6 8.8
4.4 1.1 5.5 1.91.6
8.16.9
7.31
3.21
9.41 6.51 6.21
5.9
2.01
3.41
0.71
9.71 4.71 7.12
5.81 3.41
3.21 6.71
9.41
2.61 0.91 9.81 6.7 9.8
35
30
25
20
15
10
5
0
81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
$m inventories
cash
source: MENE filings, IKN ests
Like any other luxury goods retailer, the MENE
business cycle means it has to build inventory
into the key holiday season sales period (Q4,
Christmas and all that) and into 3q23 we see
that build along with the cash draw down as the
company turned treasury into gold and that
metal into jewelry. Then in Q4, the decision to
liquidate short-term investments and some
inventory levels dropped the overall figure, but it
has raised cash so overall, with the resulting
drop in debt, the equity levels remained all-but
unchanged. A closer look at inventories (below)
shows where they’ve been cut and this time,
there’s been little or no replenishment of finished goods this time around, a clear strategic
decision. We’ll check on sales in 1q24 in a moment, but it seems that the lower inventory didn’t
affect business. It’s tempting to add some conjecture and suppose that one of the strategic
changes is to speed up the fabrication process (MENE has had larger production space since
late 2022), using a quicker turnaround on orders to cut inventory carry and improve efficiency.
It would fit with both the figures we’re seeing on the charts, the corporate decision to run a 3-5
year strategy and the arrival of a fresh face as CEO, but before rushing to judgment we’ll have
to see how MENE does in the next big selling season in 4q24.
MENE: Inventories per qtr
6
294.7
186.01
939.21 814.11
165.11
981.8
533.7
709.01 708.21 754.21 990.31
489.41
8.41 273.21
531.11
606.11 458.21 177.11 534.41 616.51
509.5
372.5
24
22
20
18
16
14 12 10
8
6
4
2
0
81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
MENE.v: Equity per qtr
C$m
Raw Mat. Work in Prog
Finished Goods Supplies
source: company filings
Before moving on, a quick return to how equity
compared to “net working capital” at the company,
a non-standard metric but one that gives a clearer
idea of true financial liquidity. As you can see,
working cap runs slightly under equity but there’s
very little in it and at over $14m, there’s no
problem here as long as MENE can change cash
into gold in a timely manner and sell its resulting
produce. A negligible risk, as gold is the epitome of
fungible.
Production and operating results: We’ll start
with top line revenues, as it sets the scene nicely.
Also please note, while compiling today’s report I originally pencilled in some reasonable
forecasts for most metrics for the next couple of quarters, but after due consideration removed
them from most (not all) of the charts. Unusually for an investment thesis, the case for MENE
ownership is best considered with a backward look at financials, rather than the near-term
future
123.41
188.21 791.21 913.01
279.51 201.71 310.61 526.51 189.61 659.51 831.81 964.71 289.61 752.71 91.71 189.51 518.51
20
18
16
14
12
10
8 6
4
2
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
source company filings/IKN ests
srallod
fo
snoillim
MENE: Equity vs Net working capital
22
20
18
16
14
12
10
8
6
4
2
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
C$m
Equity
net working cap
source: company filings
MENE.v: Revenues per qtr
40.1 93.1 99.1 15.3 37.2 64.2 22.3 56.4 61.5 44.3 24.5
11.7 02.7
57.5 23.5
05.8
53.7
58.5 50.5
76.8
51.7
89.4 92.4
68.6
38.4
10
9
8
7
6
5
4
3 2
1
0
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
C$m
source: company filings
Anyway, we take in the 4q23 top line revenue of $6.86m and $4.83m for 1q24. Both are
significantly lower than the same quarter of last year and that’s not good, you want your retail
stock to increase sales not see them deteriorate, and here are the reasons given by the
company for 4q23 sales:
The Company has experienced a decrease in revenue and gross profit, which is largely due to the macro-
economic environment which was characterized by higher interest rates and the spectre of recession, which
muted sales in the luxury market, material increases in the price of gold, which had a negative net effect on
sales, as well as an increase in online marketing competition and resulting advertising costs.
And here’s the equivalent passage from the 1q24 literature:
The Company has experienced a decrease in revenue and gross profit, which is largely due to the prevailing
macro-economic environment, which muted sales in the luxury market, as well as material increases in the price
of gold, which had a negative net effect on sales. Furthermore, a major promotion was run in March of last year
which materially contributed to revenues, whereas this year, a more muted promotion was run at the end of
March and into April.
Very similar messages and it is at least understandable, as MENE’s 24k gold jewelry is far
from the only luxury good that’s hit a sales wall in recent times. The underlying sales metrics
show where the issues are and here come those charts. Total gold sales at 45kg were the
lowest for the Q1 period ever (which includes Valentine’s Day) and the joint lowest since the
infamous Covid Quarter. Average grams of gold per quarter were slightly lower (though no
disaster)…
MENE: Precious metals sales in Kg, per qtr
…and customer orders, while clearly down on the same quarter of last year, were slightly higher
than 2q23 and 3q23. But the weakness shows mosty in “units sold per order” at 1.32, the
lowest ever total.
In sum, customers are still buying the same type of product but instead of two baubles for their
keychain or rings for their fingers, it’s one. That’s recession behaviour and it was not part of the
plan at MENE. At this point, we could offer any number of quotes from previous years’ financials
to show the company had other plans but will limit it to just one, this from the 2020 year-end
report:
“Fiscal 2020 was a monumental year for Mene,” said CEO Roy Sebag. “We achieved our goal of CAD 20 million
[$16.1 million] in annual revenue and began to transition to an economically sustainable business model. Our
business continues to grow rapidly into 2021.”
7
96 93 65 67 97 66 26
89
08 66 65
79
37 84 54 96 54
110
100
90
80
70
60 50
40 30 20
10
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
source: MENE filings
)tP
ronim
htiw(
uA
gK
MENE: Avg grams Au per unit sold
93.01 39.7 04.9 08.8 60.01 71.9 18.9 66.9 72.01 15.9 00.9 44.9 72.9 21.9 20.9 04.9 40.9
11
10
9
8
7
6 5
4 3 2
1
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
source: MENE filings
uA
smarg
MENE: Customer orders, per qtr
7514 0972 4643 4745 7605 7734 3514 4856 7045 7493 5714 5946 8394 0563 5443 7974 8573
8000
7000
6000
5000
4000 3000 2000
1000
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
MENE: Units sold per order
source: MENE filings
06.1 67.1 27.1 85.1 55.1 46.1 25.1 45.1 44.1 67.1 94.1 85.1 95.1 44.1 54.1 35.1 23.1
2.0
1.8
1.6
1.4
1.2
1.0 0.8 0.6 0.4
0.2
0.0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
source: MENE data
The CEO comment goes on to state that it expects
MENE “…to earn healthy returns on capital in 2021 MENE: Annual sales
and beyond”, but it didn’t work out that way. We
did see incremental sales growth in 2021 and 2022
but that hit a wall last year and with this annual sales chart (right), I do pencil in a best guess for
this year base don what we saw in Q1, of $22m.
That’s a long way from the story I bought into and
laid out in previous reports, but it’s also the cruel
reality of MENE today. It’s true for the entire luxury
sector, though, and at this point we take a slight aside. As some of you know, it so happens
that your author’s hobbies include a keen interest in watches and while not exactly an apples-
to-apples comparison, what the wrist watch world does offer is a lot of solid data on sales and
so forth, particularly at the luxury end of the market. There’s an entire industry tracking this
information and one of the best is WatchCharts dot com and that site’s industry benchmark
index, its Rolex Market Index. You are welcome to check out the input data and weightings
used by WatchCharts on this link (2) and while you’re there, play with different timescales of
the chart presented below.
I’ve gone with the 12 month lapse, one that
shows and overall 8.1% drop Year-Over-Year, but
extend that to two years and it goes to over 22%
and to underscore, this isn’t some amateur’s
index, instead it’s carefully compiled data and
reliable enough to be used by most watch market
commentators and financial entities such as
Morgan Stanley in its annual Swiss watch market
report (very good reading for a nerd like me,
fwiw). Anyway, the point to make isn’t difficult,
times have changed significantly since the post-
Covid boom days and the whole of the luxury
retail sector has been feeling the pinch, MENE or
Rolex or all points in between. However, you may
also notice in that Rolex Index chart what looks like a recent floor level and modest rebound
from lows and in the past month, watch retailers of all types have been quietly reporting a
slight uptick in interest in luxury goods. It’s not much, in the case of Rolex the index is up 0.5%
in the past month, but it is something and to delve a little deeper, particicpants in the world of
high end auctions (Sotheby’s eyc) have also reported increases, not only in physical business
but the number of items now beating estimates when the hammer goes down. Summing up
this anecdotal insert, it’s not something to bet the farm on but there does seem to be money
returning to the luxury sector and if so, MENE is in good shape to benefit.
Summnig up so far, we know sales at MENE have been lower than both our expectations and
those of the company, we also have a handle on why that might be. Moving to the other end of
any retail operation and this chart shows quarterly costs at MENE, broken into the two main
components:
8
39.7
60.31
31.12 77.62 19.92 92.32 00.22
C$m 40
35
30
25
20 15
10
5
0
2018 2019 2020 2021 2022 2023 2024
source: company filings, IKN ests
MENE.v: Costs breakdown
127.1
441.4
582.1125.2
133.1
548.3
319.1
914.5
35.1
664.5
34.1
422.4
614.1
270.4
248.1
984.6
656.1
393.5
296.1
123.4
454.1
729.3
651.2
726.6
315.1
924.5
334.1
394.3
996.1
343.3
893.2
591.5
1.2
396.3
10
9
8
7
6
5
4
3 2
1
0
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
$m
COGS operating exp
source: company filings,IKN ests
MENE reports a COGS number that is essentially the price of the gold it bought. Those are in
the red columns below, then “operating expenses” covers a list of items it needs in order to do
business including (deep breath) advertising, promotions, professional fees, personnel related
expenses, distribution and processing costs, office G&A, technology and development (it has a
website to run), depreciation, amortization, stock based compensation and forex adjustments
(breathe out). Those add up and you see its total in the grey columns, above. This gives us a
“gross profit” number and that’s always been in the positive, as seen in the chart below left, in
which I’ve included results way back to its first operating quarter in 2018 to prove the point.
Then to the right we see the gross margin run by MENE on sales, which has a constant
benchmark level of around 22% to 24% (with the occasional anomaly)
Gross margins are all well and good but we live in the real world, so the better metric to judge
real profitability at the company is its “operating income”, adding in the op-ex to the COGS.
Here are those results since 2020:
MENE.v: Operating income, per qtr
9
807.0- 763.0-
742.0
222.0-
702.0
1.0
71.0-
761.0 792.0
261.0- 133.0- 811.0-
12.0
750.0
947.0- 137.0- 469.0-
1
0.8
0.6
0.4
0.2
0
-0.2 -0.4
-0.6
-0.8
-1
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
MENE.v: Gross profit
2.4
2.2
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
C$m
source: company filings
We didn’t see those “healthy returns on capital” predicted by then-CEO Roy Sebag in, but at
least in the 2021 to 2023 period MENE ran at or around breakeven. It legitimately became an
established retailer in this period, buiding a customer base and brand. However, the three
recent quarters stick out like the proverbial sore thumb and we need to consider what’s been
going on. To begin, let’s again quote the 4q23 and 1q24 literature from the company regarding
operating expensese:
4q23 opex: Operating expenses as a percentage of revenue has increased by 10% over the last quarter as
critical management capability was added, which included additional stock-based compensation benefits to
support the business’ strategic long-term objectives.
1q24 opex: Operating expenses as a percentage of revenue has increased by 22% YoY as critical management
capability was added, which included additional stock-based compensation benefits to support the business’
strategic long-term objectives.
Be it QoQ 10% or YoY 22%, the message is the
same. This next chart breaks down op-ex into its
four main components and unlike most others,
adds a couple of best guesses for the quarters to
come. Looking backward first, while there has been
some increments in the core costs in
distribution/processing and personnel (we live in
81q1 81q2 81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
$m MENE: Gross Margin percentage
source: MENE filings, IKN ests
6.91
7.62
1.92
8.32 1.42
6.62
4.32 6.32
6.62 1.62
2.22
5.32 1.42
9.92
1.22
3.42 5.32
40
35
30
25
20
15
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
%
source: company filings, IKN calcs
MENE.v: Opex breakdown, per qtr
3
2.5
2
1.5
1
0.5
0
02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3
C$m
advertising&promo personnel rel.exp
dist.centre/process other
source: company filings, IKN ests
the inflationary environment that we know full well), the main changes have been in advertising
and “other”. Meanwhile and after due consideration, we forecast that the next couple of
quarters will see op-ex drop back.
First advertising and this chart (right) shows the
long term spend. Back when it began, the company
used a fairly standard marketing method of adverts,
sponsorship of events etc but as 2019 became
2020, MENE slashed its advertising budget to the
bone and based its model on word-of-mouth and
internet propagation. It was a strategic decision and
for a whle seemed to be working, but the
stagnation in sales seems in recent quarters
suggests something else needs to be done. That
brings us to 1q24 and while a $271k spend is hardly a king’s ransom compared to the budgets
run by big luxury goods houses, it is a departure from recent quarters in this company and
again, suggests a strategy change by its new CEO. As for “other”, if we zoom in on the last few
quarters and break down the data further, the main culprit becomes clear:
MENE.v: Opex breakdown, per qtr
3
2.5
2
1.5
1
0.5
0
10
32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3
advertising&promo personnel rel.exp
professional fees dist.centre/process
C$m stock-based comp G&A
forex (gain) loss technology & dev
D&A other
source: company filings, IKN ests
Again, there has been some cost inflation personnel and distribution, but the main event is
Stock Based Compensation and that’s not so surprising. MENE had to attract the right CEO (and
it changed up its CFO earlier in 2023 as well) and offering talent the right incentive package is
important. However, we don’t expect MENE to dole out the incentive options evey single
quarter (and hey, it’s a non-cash item as well) which is why you get the 2q24 and 3q24
estimates as well, which predict opex to return to a touch under $1.7m. To round off this
section on operational results, and with the thought of slightly lower costs at the company
going forward, we make a return to the previous operating income chart and add the house
forecastrs for the next two quarters (and I’m not going to pull this trick again). As you can see,
we’re not expecting miracles or massive profits, but even under our assumption of slow sales in
2024 MENE is still financially stable and not about to lose much. That requires the context of
balance sheet, so here comes an enhanced repeat of just one of the charts from the above set,
showing working cap/equity and showing the strong liquidity position the company enjoys.
MENE.v: Operating income, per qtr
807.0- 763.0-
742.0
222.0-
702.0
1.0
71.0-
761.0 792.0
261.0- 133.0- 811.0-
12.0 750.0
947.0- 137.0- 469.0- 52.0- 3.0-
1
0.8
0.6 0.4
0.2
0
-0.2 -0.4
-0.6
-0.8
-1
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1 tse42q2 tse42q3
MENE.v: Advertising expenses, per qtr
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
C$m
source: company filings
To get the full picture, scroll up again and medidate on the near-zero liabilities MENE now
holds, its cash position and consider just how many small loss, or breakeven-ish quarters it
81q3 81q4 91q1 91q2 91q3 91q4 02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
C$m
source: company filings
MENE: Equity vs Net working capital
would be able to support (hint: loads). For sure it 22
20
needs to maintain a level of normal business
18
liquidity and without some funds tied up in 16
14
inventory (i.e. gold bullion) it won’t be able to make
12
its pretty things, but those are side issues and do 10
8
not detract from the obvious; this is a financially
6
solid company with a strong balance sheet. 4
2
0
Discussion. We’ve now mentioned it twice in this
note, but we now expand on the subject of MENE’s
good financials and conservative approach to
growth because it’s the keystone of the investment
going forward. This always been one of the main attractions of MENE as an investment vehicle
and despite the poor performance of its equity in recent times, it’s still true today. The subject
would invariably come up during conversations with Exec Chair Sebag, who was clear about
building financial security into his business model and, once the company had an established
sales platform and had stopped fracturing cash the way all start-ups must (let’s say around
2021), would build a company that could handle financially rough waters. Those waters came
along and, in 2023, the drop in sales in luxury goods, be it at Menē Inc, Rolex, or any other
house, scuppered plans for further growth. For sure some blame can also be laid at the door of
the company for a development model that may now have adapted quickly enough or used the
most efficient methods to get the company’s good in front of its target audience (e.g. how does
“word of mouth” and inside magazine features in Italian Vogue etc compare to placement with
the high traffic Instagram influencers in our modern and thrusting world?), but the change at
the top and the announcement of a new three to five year strategy fits into what we see in the
company financials. And we stress, the strong balance sheet allows MENE that most precious of
commodities, the time in which it can roll out its revised plans. The costs of the re-work are
now baked in, the new CEO has his options and the savings from the debt extinguishment will
now become apparent, we’re also now seeing slightly more spend on advertising and while
results are not yet known, it also points to the rolling out of this new strategy.
Which brings us to the sharp end of this report, its share price action. We’ve already dialed up a
long-term price chart at the start of the note and seen how it’s been a painful and soul-sapping
grind lower over the past couple of years. Also please note that along the decline I have on
occasion added small tranches of shares, maybe a thousand or two at a time, thereby quiety
lowering my cost average. However recently I’ve stayed away from the buy button as the stock
took on a more obvious Falling Knife dynamic, on the one hand waiting to see if it would put in
some sort of bottom and for another, scratching my head and wondering whether the whole
edifice was about to tumble. The constant selling was a drag and from time to time had me
doubting whether MENE would survive as a company but every time that happened and I
opened up the financials, that strong balance sheet would stare back and say “No, this is going
to survive”. That doesn’t excuse or explain the one-way share price traffic and yes, a smarter
mark would sell at 35c and buy them all
back (or more) in the last couple of
weeks, but value investor is what value
investor does.
That all said, here right is a chart
showing the recent action and in the
space of the last month, MENE saw
selling accelerate and push the stock
down to 15c. That’s when Exec Chair
Roy Sebag seems to have muttered to
himself “enough is enough” and has
moved to buy up shares at under 20c.
On June 5th, 25,000 at 17c
On June 7th, 25,000 at 14c
11
02q1 02q2 02q3 02q4 12q1 12q2 12q3 12q4 22q1 22q2 22q3 22q4 32q1 32q2 32q3 32q4 42q1
C$m
Equity
net working cap
source: company filings
On June 12th, 50,000 at 14c
On June 14th (i.e. last Friday), 37,000 at 13c
While 137,000 shares is a drop in the bucket next to his other holdings, it’s still the first time in
years that we’ve seen Sebag actively buying stock in his own company and a signal for others.
Firstly he has full confidence in the company and its future and secondly, that he’s not going to
let the mark-to-market value of his holding drop any further. That bottom ticked the Friday
trading and came on high volume, as the above chart shows. It has the signal and smell of a
fund or insto that has thrown in the towel on its final shares after a period of quiet dumping
and while we don’t know who that is, there were several high profile Canadian investors who
bought into the MENE story when it started in 2019 and 2019. Any of those could have enough
shares to have caused the recent slow drip damage plus last week’s capitulation-style volume.
While not exactly bigtime activism, the signal was clear and when added to the stated strategy
that considers MENE over the next three years, rather than three months, it makes a lot of
sense to see Exec Chair Sebag move and buy stock at these depths and while few people are
looking.
The bottom line: The current Menē Inc (MENE.v) situation and story is not the one I signed
up for when buying my initial position in late 2020 and then adding slowly along the way. At the
start it was a growth story in the right place at the right time, an innovative product with web-
only sales and a smart, level-headed business model run by an experienced and successful
entrepreneur that knows how numbers work. It looked set for expansion and had the potential
to disrupt the larger retail precious metals jewelry business, but the last couple of years have
brought inertia rather than growth, consolidation rather then dynamism. It’s understandable to
see initial investors walk away as the story becomes a longer-term proposition (and we all know
what the junior mining bagholder trope, “I’m not worried, I’m a long-term investor” really
means). Faced with a stagnating sales base something had to be done and last year MENE did
so, bringing in a new CEO with the right credeneitals and mapping out where it wants to be in
the long-term, rather than trying to beat itself quarter over quarter.
At another company or entity that might mean serious financial trouble, but because MENE was
structured on a rock solid balance sheet that could take the knocks if need be, this turnaround
comes at very small cost, aside from the drop in equity prices. This company is financially
sound for the indefinite future and will be able to run at breakeven-or-thereabouts for years,
not just a few quarters, if necessary. MENE.v today has an established customer base, a solid
financial situation and a new team looking to use the baseline formed by a sales downturn in
theluxury sector to its advantage. The companies that survive downturns are the ones that
emerge and grow on the other side and with time on its side granted by that balance sheet, the
normal rule of “if the story changes, walk away” does not necessarily apply.
The other thing MENE has today is a very cheap share price. Personally speaking it’s not a
particularly large investment position so far, even after the multiple small additions and while its
descent to the current 20c-or-abouts level is no fun, it’s not been a loss that keeps me up at
night. However, it does mean that MENE has stayed on my radar and with the trading action
we’ve seen this month and Roy Sebag stepping in to lead the rebound from sub-15c lows last
week, it looks attractively priced and it’s certainly not the time to sell, that’s the easiest decision
to make this weekend. Which leaves the debate between buy (add) or hold and with the boss
guy stepping up and things nowhere near as bad as they seem from the basic stagnantion in
sales and continued small bottom line losses, I’m inclined to start adding again. The major
caveat, aside the fact that I’ll be buying into a company that will probably return at least two
more small operating losses before showing true rebound improvement, is that away from
specific moments such as the (presumed) turn point of last week, traded volume can be very
thin in this company and it can be difficult to get in or out, even when trading a modest five
figure amount of shares. The float is low due to all Class A shares and around 60% of Class B
shares being held by insiders who aren’t going away anytime soon and that leaves a thin
market for the rest of us. However (and with Roy Sebag now awake and buying), it also
suggests leverage that can cut both ways and it wouldn’t take much open market support for
the stock to see it ping higher.
12
So after due consideration I’m going to start adding to my MENE position again at these levels
and doing some more effective averaging down in the position. This looks like the bottom to me
and while it may well revisit the teens prices, support from serious insiders has finally arrived,
the company is financially strong and considering its sales downturn coincides with nearly all
peers in the luxury goods market, MENE is set to
become a good bet if and when that same market
comes out of its downturn again. I am a buyer of
Menē Inc (MENE.v) (MENEF) at current levels of 20c
or less and will look to bring my cost average down
more substantially in the days and weeks to come.
We leave you with the standard 12 month price
chart, but this time mostly for the volume tracker at
the bottom of the visual that shows the recent selling
that apparently came to a head last week.
Stocks to Follow
It was an annoying week for the Stocks to Follow list and for my personal portfolio, worse than
it should have been thanks to a couple of weak stocks. The basic headcount is six winners from
the 17 listed stocks (SILV, MARI.to, WRN.to, ALDE.v, ERO.to, MENE.v) including the best
performances from Mene Inc (MENE.v up 20.0%) and Aldebaran (ALDE.v up 9.0%), three
unchanged stocks (OCI.v, NCAU.v, PAU.cse) and that leaves eight week-over-week losers
(MAI.v, RIO.v, PGZ.v, BCM.v, CTGO, IPT.v, MIRL.cse, RPX.v). While most of those losers were
smallfry, the hits taken to Contango ORE (CTGO down 21.1%) and Top Pick Minera Alamos
(MAI.v down 7.6%) both hurt and turned what would have been a basically neutral week into a
clear loser. Humph and harrumph.
With the addition of Bear Creek Mining (BCM.v) we now have 17 open positions on the list, of
which I own shares in 14 and three are being watched as possible trades. Nine of the sixteen in
the green, one unchanged since inception and six 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$0.305 45.2% $0.75 first tgt, #1 idea
RECOMMENDED STOCKS
Rio2 Ltd. RIO.v BUY C$0.80 22-Apr-18 C$0.485 -39.4% Momentum now building
SilverCrest Met SILV STR BUY U$6.90 31-Mar-24 U$8.12 17.7% Quality Ag/Au, U$12.96 tgt
Pan Global Res PGZ.v BUY C$0.19 19-Feb-24 C$0.165 -13.2% 3 adds,big position,cheap Cu
Marimaca Copper MARI.to BUY C$3.05 14-Jan-24 C$3.83 25.6% Quality Cu developer
Bear Creek Min BCM.v SPEC BUY C$0.365 10-Jun-24 C$0.36 -1.4% New risk spec on Ag & Au
Western Copper WRN.to BUY C$1.57 26-Feb-24 C$1.68 7.0% M&A trade, gone off boil
Orecap Inv OCI.v BUY C$0.06 4-May-24 C$0.06 0.0% Exposed to several good jrs
Contango Ore CTGO STR BUY U$18.70 30-Jul-23 U$18.76 0.3% Production re-rate in Q3
Newcore Gold NCAU.v SPEC BUY C$0.205 23-Oct-22 C$0.335 63.4% Cheap Au in West Africa
SPECULATIVE TRADES
Aldebaran Res. ALDE.v SPEC BUY C$0.72 16-May-21 C$1.09 51.4% into FY24 news season now
IMPACT Silver IPT.v SPEC BUY C$0.30 14-Apr-24 C$0.26 -13.3% Silver spec, added IKN783
Minera IRL MIRL.cse avoid C$0.195 22-Jul-12 C$0.025 -87.2% leaving list soon (good)
13
A WATCHLIST OF POTENTIAL TRADES. NB: I DO NOT OWN
Ero Copper ERO.to WATCH C$18.94 22-Oct-23 C$27.86 47.1% Hi-quality but no longer cheap
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$0.21 -66.7% 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 just a few of our covered companies this week:
Bear Creek Mining (BCM.v): POSITION OPENED. When I bought on Tuesday I thought
that lady luck had cut me a slice of good fortune but, by the end of the week, I was shrugging
my shoulders again. To remind readers, the plan was to
send IKN786 as usual on Sunday, buy some BCM on
Monday and spend the week playing with the kids* but,
as things turned out last weekend got complicated and
IKN786 didn’t get finished until Monday evening.
Therefore my buy day was also set back until Tuesday
and because of that, I managed to get in at the low of
36.5c that day and as a result, caught the bottom instead
of paying something around 39c on Monday (and I would
have, 40c was my ceiling). Sure enough, off it shot and
pinged the 4 handle the very next day, which had me
feeling slightly sheepish as claiming your cost average as
the lowest price traded is the kind of thing that sets my
yellow flags off when reading other people’s investment journeys. Therefore, it was a mix of
majority resignation and a hint of relief on Friday when BCM sold down to as low as 34.5c
before buyers emerged to close it out at 36c, which means we start this new position with red
ink. So be it. I also got more feedback on this new trade than expected and quite a few of you
think I’ve lost my marbles for buying this stock. I like that, I also respect it as it took me quite a
while to get used to the fact this company I’ve hated on for almost a decade was now a good
trade on silver and gold. I’m aware of the risk, but the potential reward for either an outright
sale of Corani a market that realizes Corani is a potential sale, while Mercedes finally reaches a
steady state and positive free cash flow, is large. And to be clear, as things stand today (and
after that horrid placement and dilution), I now prefer BCM as my risk/reward play on silver to
IMPACT Silver (IPT.v). SilveCrest is still the way forward and carries the most weight, though.
And that’s quite enough first person singular for one week, it’s only just admissible in stock
notes when laying out a new trade but there is a limit.
*Well, not all week with the kids, but definitely more time than I did on Monday. We still had fun, though.
IMPACT Silver (IPT.v): One of the many stocks that
were down a little without causing real portfolio pain.
Howev er and as mentioned above, the combination of
the irritating share placements recently run by IPT
(partly closed last week) and the surprisingly good
view that Bear Creek Mining (BCM.v) offered on close
examination means that, in my eyes going forward,
14
this will be the third string silver trade and as such, the most likely to be cut if the market goes
against silver too much.
SilverCrest (SILV) (SIL.to): To round off the triumvirate of silver stocks, SILV traded very
well last week and beat the median benchmarks fairly easily. With about three weeks to go
before it reports its production numbers for Q2, I’m looking for a steady state number and
continued wide margins on both its silver and gold.
Minera Alamos (MAI.v): No bones about it, this drop hurt:
After all that work to get MAI out of the vice-like trading range with a mid-30c ceiling and the
momentum that grew throughout May, vanished like an old oak table (2a). There seems to be a
combination of factors at work…
The reversal in the gold price
The Sheinbaum election victory and generalized scaremongering about what it
means for mining
The new money in MAI that believed the above and cannot understand what gold
up 300 then down 100 really means
The skittish nature of established market players
…but the result is depressing, no matter how much “logic” you can find. The silver lining is the
rally on Friday that brought the price back over the 30c line (but only just). For those of you not
into the stock yet, this is a crazily cheap price and please, fade the Sheinbaum scary stories,
she’s going to be way nicer than aMLO was.
Orecap Invest Corp (OCI.v): A most interesting
NR out of OCI early last week (3), updating potential
and current shareholders alike on the pogress at its
privco holding, Cuprum. There were two main
messages; Firstly that Cuprum’s 100% owned Thierry
project in ON Ca has a 43-101 compliant resource
and a PEA dating back to 2021 (fairly recent, but we
know input costs and copper prices have changed
since then) based on the underground resource as
seen in the top table of the three offered in the NR
(right). As the plan expects 567m lbs copper
produced over 14 years at 4,000tpd, we’re talking
about a relatively small operation with production
around 41m lbs copper per year, we can also assume
there are certain issues such as metallurgy, as the
produced to contained copper ratio suggests a
recovery rate of around 66% of the in-situ metal
(between mill recoveries and mine dilution).
15
However, there’s also a large open pit resource (the K1-1 zone) as well an inference from
historical work that it can grow larger, which gives Thierry a second reason to be interesting.
We also know from the NR that in May, Cuprum completed a C$1.2m financing at 12c haerd
dollar and 15c flow through, giving the OCI 29.5m share holding an implied value of $3.54m.
That’s quite a jump from the 5c/share valuation we were assuming previously and also gives a
reasonable overall line item for this asset on our OCI tracker table, which now looks like this:
With AE.v and ARIC.v either slightly down or treading water in the last few weeks (according to
your own taste) and QC Copper back lower, the new valuation for Cuprum adds significant
value to the company’s liquid asset portfolio at an opportune moment. Our ballpark calculation
is now a valuation of 8.1c/share for OCI, comparing favourably to this weekend’s 6c.
OCI.v: Marketable Secs, Investments in Assocs, Cash
ticker shares owned(m) PPS valueC$m Cents/share
AE.v 11.68 0.65 7.59 3.1
AE.v warrant 0.10 0.35 0.04 0.0
ARIC.v 8.33 0.65 5.42 2.2
ARIC.v warrant 4.17 0.45 1.88 0.8
QCCU.v 5.06 0.135 0.68 0.3
MIS.cse 24.71 0.035 0.86 0.3
Curprum privco 29.50 0.12 3.54 1.4
subtotal 20.01 8.1
Est.cash 1.50 0.6
Total 21.51 8.7
At 247.714 S/O
We’ve noted previously that it would only take one good hole from either the aE.v or ARIC.v
project to shoot this tinycap higher (or perhaps even much higher) and with the backbone of
asset value it has in other places, OCI looks a good way of playing a couple of 2024 hotpot drill
stories without sticking one’s neck out very far and risking serious downside. Even after adding
recently, I suspect I don’t own enough of these shares.
Contango ORE (CTGO): A heavy and painful drop, we take a few extra colum inches to talk
about the placement announced by XCTGO last week, what it did to the stock price and
whether it’s changed my attitude toward the trade in Market Watching, below.
The Copper Basket
After twenty-four weeks of 2024, The Copper Basket shows a gain of 8.89% 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 1614.16 8.64 20.7%
2 Solaris Res SLS.to 4.13 161.833 684.55 4.23 2.4%
3 Marimaca Cop MARI.to 3.43 93.11 356.61 3.83 11.7%
4 Los Andes LA.v 11.80 29.53 292.35 9.90 -16.1%
5 Aldebaran Res. ALDE.v 0.89 169.819 185.10 1.09 22.5%
6 Hercules Silver BIG.v 1.38 231 164.01 0.71 -48.6%
7 Faraday Copper FDY.to 0.63 204.72 163.78 0.80 27.0%
8 Arizona Sonoran ASCU.to 1.75 109.17 144.10 1.32 -24.6%
9 Oroco Res OCO.v 0.375 236.911 88.84 0.375 0.0%
10 American Eagle AE.v 0.26 116.75 73.55 0.63 142.3%
11 Element 29 Res ECU.v 0.18 106.25 30.28 0.285 58.3%
12 Kodiak Copper KDK.v 0.58 63.93 30.05 0.47 -19.0%
13 QC Copper QCCU.v 0.12 173.7 23.45 0.135 12.5%
14 C3 Metals CCCM.v 0.61 61.885 16.71 0.27 -55.7%
15 Camino Min COR.v 0.07 206.66 11.37 0.055 -21.4%
NB: All stocks in CAD$ Portfolio avg 8.89%
16
The Copper Basket average lsot another 1.9% on The Copper Basket 2024, weekly evolution
25%
the week and while it wasn’t all one-way traffic,
20%
there was enough pain in the nine losers
15%
(NGEX.to, SLS.to, LA.v, BIG.v, ASCU.to, OCO.v,
10%
CCCM.v, KDK.v, QCCU.v) to beat out the four
5%
winners (MARI.to, ALDE.v, AE.v, ECU.v), with
0%
two that stayed unchanged (FDY.to, COR.v). All
-5%
the double figure moves were to the downside,
-10%
namely C3 Metals (CCCM.v down 20.6%), Oroco
Resources (OCO.v down 10.7%), Solaris
Resources (SLS.to down 10.6%).
The drop in equities is understandable, even as copper-the-metal showed a reasonable
bottoming pattern. We’ve moved to the Comex September contract (HGU24) for our indicative
price chart as we’re closing in on the July close and majority volume has shifted to this contract.
The red box shows last week in the context of
the last two months with the “Treafi Spike” to
over U$5/lb and the subsequent selling, so it
was a refreshing change to see copper catching
a bid an remaining at/around the U$4.50/lb
level last week (and notably, the earliest of
trading was also the low price of the week).
There’s nothing in that chart to say “immediate
rebound and new highs imminent” but then
again, we don’t need that. A little calm in the
copper market would go a long way in helping
equities, calm negative sentiment and allow the
fundamentals of what margins would do to
boost quarterly profits if copper sold at U$.450/lb for the rest of the year.
As for your carefully curated copper commentary of the week, I enjoyed this op-ed by Clyde
Russell, the Asia Commodities and Energy Columnist at Reuters with decades of experience
covering his beat, entitled “China's vast copper overhang will clear, one way or another” (4).
Here’s an extract in which Russell covers the recent “Trafi Spike” (the house caught short):
At the same time that China was amassing its stockpile, the rest of the world was engulfed in
what now appears to have been a bit of irrational exuberance, as the London benchmark contract
hit a record high of $11,104.50 a ton on May 20.
Part of the price surge related to a short squeeze in the United States, with traders scrambling to
find enough copper to cover positions.
But now the physical market is likely to catch up to what has happened in the paper market.
While Chinese and Russian copper will not go to the United States, it is likely that copper from
other producers will, and China will pare back imports of refined metal.
Chinese exports are also likely to increase after a modest start to the year, which saw exports of
copper cathodes coming in at 283,978 tons in April, down 14.8% from the corresponding month in
2023.
That followed a reduction of 14.9% in March exports, although cathode shipments in the first two
months were up 20.6% on the year.
Overall, it is likely that China's imports of refined copper may ease in coming months, although
what may be more marked is a shift in where the metal is coming from, with arrivals from Russia
expected to remain elevated.
It is also likely that China's surplus metal will find its way to global markets over time, which in turn
should result in the London copper price continuing to stabilise at levels closer to around $10,000
a ton, with the contract having ended at $9,944.50 on Wednesday.
For what it’s worth the $10,000 a ton number he mentions uses UK script, means metric and
works out at U$4.54/lb, but the wider point he alludes to is more important. He recognizes the
increase in stockpiled copper in China and expects it to work down (as noted in the title) and
supposes that will see copper exported by China in the near future (the concentrate comes in,
the produced cathode finds buyers in other places) but this assumes a continued low demand
inside the country. This desk is not so sure and as the weeks tick by, there’s no real reason why
17
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source: IKN calcs
China national end users aren’t stepping up to the plate and buying aside from the price. We
know they stocked up in 2023, we also know there’s an increase in scrap imports into China
and we opine those have combined to allow the end user flexibility and turn copper into a
buyer’s market, at least in the near-term. But that will come to an end and Russell’s view
reminds this desk of a way we’ll be able to gauge true end-user appetite in the next few
months. If Chinese cathode exports rise, that will indicate continued subdued demand internally
and a cap on prices but if that expected export spike of excess tonnage fails to materialize, we’ll
also know the SHFE and LNE stockpiles will diminish as Chinese companies come back and start
buying. That will be bullish for metals prices in the medium-term, before the much anticipated
structural supply deficit kicks in as 2024 becomes 2025.
Now for our regular weekly taking of the world copper inventories pulse, data from Cochilco:
Another net add to the world’s copper inventory, but this time it was a slight 319 metric
tonnes (mt) to close at 474,212mt. With SHFE possibly having peaked, we may finally
be seeing a peak in the 2024 numbers. Better late than never, I suppose.
The SHFE finally registered a week-over-week draw down, but at 6,211mt to close at
330,753mt it’s still not much and doesn’t repreresent an obvious trend changed, not yet
anyway.
The LME sent us the same message as last weekend, only more so. Overall it added
10,125mt to its copper inventories with 11,450mt of that into Asia, countered only by
small draws in its European and North American warehouses. This weekend’s total is
133,925mt
The Comex also sent the same signal as last weekend, with another 2,937mt leaving its
stores to close the week at just 9,534mt. That’s low.
The dedicated SHFE chart shows that modest 6,2kmt chunk taken out of the total, but also the
context of abnormally high stocks for the time of year, that hasn’t changed much.
SHFE copper inventory levels, 2019 to 2024
400000
350000
300000
250000
200000
150000
100000
50000
0
Now for notes on some of our basket stocks:
Solaris Resources (SLS.to): after its Zijin strategic failed, SLS went to market to sell shares
and last week the placement closed (5) with the company issuing 11.018m shares at C$4.90 a
shot for gross proceeds of $54m. The next day we had the latest drill assay results from
Warintza and the market mostly sniffed at the headline cut of “81m of 0.73% CuEq within
544m of 0.50% CuEq from Surface”, the same NR announcing that the banked money allows it
to double its 2024 drill campaign to a planned 60,000m, which wasn’t a surprise. The market
sniffed at the assay results and walked away unimpressed and the stock dropped accordingly.
I was also asked during the week for a potted synopsis of the CSR issues faced by the company
replied this way (below). While the ending may be polemic and overly dramatic, it’s not out of
the question and I don’t see why we can’t underscore the potential negatives in the same style
as the way Solaris spins things to the positive.
18
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
The indigenous community in the region is the Pueblo Shuar Arutam (PSHA). They comprise 47
communities and aorund 11,000 people, which doesn't sound like much but this is deep jungle and
they are millenial inhabitants there. The PSHA is an autonomous government with legislative
control over the region. They have opposed the presence of mining exploration and development at
Warintza since the year dot and that hasn't changed.
One of the communities in the PSHA is Warints, the village next to the Warintza project. Warints
gets work and monetary benefits from the project and that's who SLS wheels out in front of the
world to sign agreements, claim good community relations, etc. But come the day (and to simplify
for clarity), consider that Warints will have 1 vote against 46 that will vote against the project.
The company and the national government tries its very hardest to ignore PSHA and its position,
but their right to autonomy is legal and clearly laid out in both national organic laws and the
Constitution. Put another way, any permit awarded to SLS will be a case of forcing a project on
people who don't want it. And at this point, it's worth understanding that this project is very remote
and would be open to physical attack by people who know how to live in the jungle, have vowed to
oppose it to the death and wouldn't think twice about killing a few outsiders to make the point.
For more reading on the PSHA and the antipathy it holds toward Warintza and Solaris, try this
English language link (7).
Element 29 (ECU.v): The thin volume spike
continued into early week and, impressively, peraked
at 39c on Tuesday morning on the trade of 10,000
shares, ECU then returned to 28c, traded a couple of
times at 28.5c the same day and then fsailed to trade
for the last two days of the week. That’s thin, all right.
All on no news, too. It won’t be the last weirdly
trading exploreco we’ll ever see.
NGEx Resources (NGEX.to): With its high-profile
ownership roster and exposure to Argentina, I thought NGEX.to would be one of the stocks at
the front rank of gains from last week’s RIGI law
project passage, but it was not to be and instead
it was one of the bigger losers, down 9.1%. The
chart (right) shows how C$10 has become an
obvious obstacle to the stock and while there’s no
knocking its success from the lows at the start of
4q23, I’m not surprised to see it stalled out. It was
getting rather expensive, considering it sits firmly
behind Josemaria on the Lundin development
pipeline and Filo in excitement.
Arizona Sonoran (ASCU.to): Arguably the most disappointing stock on our list, ASCU has
once again and turned tail on recent gains. Last week didn’t help when it announced the latest
drill results, including moderate asseys as seen here
ECW-246: 1,463 ft (446 m) @ 0.31% CuT
ECW-243: 987 ft (301 m) @ 0.34% CuT
ECW-245: 1,033 ft (315 m) @ 0.28% CuT
ECW-241: 852 ft (260 m) @ 0.38% CuT
ASCU was keen to note all holes shows “continuous mineralization, but those grades are “meh”
at best. Another odd thing from the NR was a CEO comment from George Ogilvie, who pointed
out that discovery cost at the flagship Cactus project “…is under $0.01/lb, and therefore telling
us to continue drilling until that cost begins to increase."
19
That’s the kind of “we’re just going to keep drilling indefinitely” comment markets don’t like
(Pan Global (PGZ.v) seems to suffer from the reception as well=, I’m not sure I want a CEO
that explicitly tells shareholders that this is going to
take some time.
Oroco Resource Corp (OCO.v): That’s another
round trip for OCO shares, its 2024 YTD now
unchanged after having been up in early April by
almost 100%. Something for momentum traders to
remember if copper starts heating up again, though
OCO has also taken a leg down due to the market’s
over-reaction to the Sheinbaum win in Mexico.
Kodiak Copper (KDK.v): KDK isn’t waiting for its
upsized $6.6m placement to close before spending
money, last week announcing (8) its 2024 drill campaign of 10,000m into six targets. Neither
large nor small, we will at least get newsflow later this year. Normal stuff.
The Producer Basket
After 24 weeks of 2024, the Producer Basket shows a gain of 11.90% to level stakes:
company ticker price 1/1/24 Shares out MktCap(U$Bn) current pps gain/loss%
1 Newmont NEM 41.39 1152.6 47.05 40.82 -1.4%
2 Agnico Eagle AEM 54.85 497.971 31.99 64.25 17.1%
3 Barrick GOLD 18.09 1756 28.15 16.03 -11.4%
4 Franco-Nevada FNV 110.81 192.119 22.32 116.18 4.8%
5 Pan American PAAS 16.33 364.439 7.25 19.89 21.8%
6 Lundin Gold LUGDF 12.64 237.68 3.27 13.74 8.7%
7 Hecla Mining HL 4.81 617.768 3.21 5.20 8.1%
8 Eldorado Gold EGO 12.97 202.472 2.99 14.77 13.9%
9 Dundee PM DPMLF 6.43 183.278 1.43 7.80 21.3%
10 Wesdome Gold WDOFF 5.83 148.95 1.18 7.93 36.0%
All prices and stock quotes in U$ Port. avg 11.90%
A quiet week for the larger producers and while the basket average dropped by 0.86%, all
moves in either direction were small. Three of the ten were up week-over-week (NEM, AGI,
PAAS) and the other seven down (GOLD, FNV, LUGDF, HL, EGO, DPMLF, WDOFF), with the
biggest up Newmont (NEM up 1.1%) and the biggest down Hecla (HL down 2.6%). Small stuff,
though the GDX did slightly better than our basket and the lead is cut to 4.16%. Still healthy
enough.
The 2024 Producer Basket: Weekly performance and
30% comparative to GDX control
25%
20%
15%
10%
5%
0%
-5%
-10%
-15%
Still keeping it brief in this section for the time being. It doesn’t need me.
20
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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%
-6.0%
-7.0%
source: IKN calcs -8.0%
ts1naJ ht7naJ ht41 ts12 ht82 ht4bef ht11 ht81 ht52 dr3raM ht01 ht71 ht42 ts13 ht7rpA ht41 ts12 ht82 ht5yam ht21 ht91 ht62 dn2nuj ht9 ht61
source: IKN calcs, NYSE data
The TinyCaps List
After 24 weeks of 2024, the TinyCaps show a gain of 63.44% to level stakes:
company ticker price 1/1/24 Shares out Mkt Cap current pps gain/loss%
Aston Bay BAY.v 0.065 248.82 27.37 0.11 69.2%
Awalé Res ARIC.v 0.135 85.319 55.46 0.65 381.5%
District Metals DMX.v 0.170 106.98 36.91 0.345 129.4%
Endurance Gold EDG.v 0.18 150.136 24.77 0.165 -8.3%
Kirkland LDC KLDC.v 0.100 88.625 4.87 0.055 -45.0%
Latin Metals LMS.v 0.075 71.476 6.79 0.095 26.7%
Palamina Corp PA.v 0.130 71.285 11.05 0.155 19.2%
South Star STS.v 0.750 48.8 30.74 0.63 -16.0%
Surge Copper SURG.v 0.090 284.79 42.72 0.15 66.7%
Viva Gold VAU.v 0.120 118.384 19.53 0.165 37.5%
Prices in CAD$, data from TSXV basket avg 63.44%
This section attempts to track the tinycap mining sub-sector of the market, our ten companies
chosen under the following criteria to put together a list representing the state of play in the
sub-sector of tinycap exploration company stocks. At least, that’s the plan.
Market capitalization of under $20m (though this year I’m making one clear exception and one rule
stretcher). They have to be tiny. In two cases I’ve stretched the window a little and allowed sub-U$20m
market capper in that are just over the C$20m level, but the spirit is unaltered.
A “non broken” stock price and project story. There are literally hundreds of tinycap juniors of the right
size, our task is to trawl through the TSXV and find companies that are small but with life in them. The vast
majority of tinycap stocks are broken stories, either traded to death on the exchange or with projects that are
a bust or with entrenched management more interested in their monthly paycheck than anything else.
Likelihood of meaningful newsflow in 2024. This connects to the company’s “unbroken” status, as we
want news and potential catalysts from companies with projects that can work.
Decent management if possible. When you are down among the little guys it doesn’t pay to be too
choosy, but still I preferred companies that have teams or people with good peer reputations.
The TinyCaps took another sizeable hit last week and out representative list was reasonably
typical of the negativity out there, with nine losers
out of ten and just one escaping the pain, UNCH
TinyCaps, 2024 weekly tracker
return in Aston Bay (BAY.v). That looks bad at first 100%
90%
sight but overall, the hits weren’t massive and the 80%
biggest drop in District Metals (SMX.v down 70%
60%
11.5%) would be big in the multi-billion dollar 50%
market cap world of Tier 1 and 2 miners, but it’s 40%
30%
not that much of a deal down here at the bottom 20%
end. Most losses were small, a penny or three to 10%
0%
five percentage points. Could have been worse.
Palamina Corp (PA.v): Some low level news
from PA as it has snagged concessions in the
North of Peru, neighbouring the large areas being explored by Hannan. Meanwhile, we await
the start of drilling at PA’s main gig in the South of Peru, Usicayos, which will make or break the
stock price this year. One good thing is our decision to wait for this price to come back to us
before deciding on whether to risk the drill assay trade. Having peaked and traded at 19c and
19.5c for four days at the ned of last month, PA is down to a mofre attractive 15.5c and if the
market drudgery sentiment is the new normal, we may well see 13c or 14c soon. At that level
the risk/rewaerd balance becomes more interesting. This one may well make the Watch List, at
the very least.
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.
21
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source: IKN calcs, TSX data
Regional politics
Bolivia: Evo declares himself a legitimate candidate
Further to last week’s coverage of the growing political crisis in Bolivia, last week’s meeting of
around 30,000 MAS party faithful, the vast majority supporters of Evo Morales, met as
scheduled in Cochabamba (town of Villa Tunari, filling its football stadium). President Luis Arce
and his team were invited, but shocked nobody by not turning up and later denouncing the
meeting as illegitimate and not something MAS officials should take seriously.
Evo disgrees. This news report headlined “Evo Morales: We’re going to win to save Bolivia””
and includes plenty on what went on, including this soundbite, “We have complied with the
rules, it’s only due to a political decision that they do not allow us to hold Congress”, referring
to the MAS party and the meeting that day. As for the results of the day according to Evo and
his camp, Evo made a list on his TwitterX account (9) and without delving too deeply into
Bolivian politics, the main points were to approve Evo as candidate for the for the 2025
elections and warn the world that he and his supporters would take “drastic and radical
measures, such as marches, strikes and blockades, if the government tried to stop him.
Guatemala: Bluestone Resources (BSR.v) has its EIA revoked
As noted in recent editions of The IKN Weekly, specifically in IKN780 dated April 28th in the
note “Guatemala: Bluestone Resources (BSR.v) is in trouble” and then more recently in IKN785
dated, June 2nd in the note “Bluestone Resources (BSR.v): A wild ride and still an obvious
short”, the aforementioned BSR.to was heading
for permitting trouble with the new government of
Guatemala. Sure enough, the results dropped on
Friday when in a press conference (10) called
jointly by the Minister of Mining and the Minister
of the Environment, the government of President
Bernardo Arevalo revoked the EIA permit for BSR’s
controversial Cerro Blanco gold project (photo of
the proceedings right, with the Mining Minister at
the podium having just taken over from the
Environment Minister, standing behind him).
We’ve gone over the dubious way in which Cerro
Blanco obtained its licence in January this year, in
the final days of the outgoing government of
Alejandro Giammattei. We’ve also outlined the
issues that have shown since then and noted the
government’s ongoing investigation, so today we’ll cut to the chase and list the reasons why
Guatemala has revoked the EIA and will now request that BSR re-submits its application.
According to the two ministers:
The EIA amendment study presented in 2021 was to change from underground workings to
open pit. In the words of the government, this means the application should have been for
an “entirely new and different from the original project”, not the more simple adaptation EIA
for which the company applied.
The application was masked under a file number used for other companies, making it
difficult for the relevant government authority to recognize that the application for an EIA
amendment was not the correct one.
According to the government, some of the official rubber stamps and signatures in the
permit application and eventual permit award are false.
In the permit award in the Janaury 2024 paperwork, one of the key signees apparently
signed their initials on specific documents. However, this person stopped working at their
post in December 2023 and could not have drafted or signed the resolution. He was in fact
on vacation at the time and when he was informed, filed a criminal complaint against his
own office.
22
Over 900 pages of the original Cerro Blanco project file have apparently gone missing.
Along with the revocation of the EIA permit, the government on Friday also announced its
Environment Ministry had filed criminal proceedings against the previous head of the
government’s Environmental and Natural Resources Management office, for abuse of authority
and presumed corruption. According to the minister, his eventual arrest and testimony will help
clear up if any corruption took place and at what level in the chain of command in the previous
government.
As for BSR, we called this a short in April and called it a short two weeks ago, as well. It’s still
exactly that but this time, it’s going to prove it.
Mexico: Mining lobbies the incoming Sheinbaum government
There has been no lack of commentary on the big victory scored by now President-Elect Claudia
Sheinbaum and that includes the mining industry, with the sector now laying out its case for
better treatment under the incoming government than it has received during the six years of
AMLO. Forbes Mexico collates several interviews on Mexico media channels with mining voicdes
in one place and covered a lot of subjects and people, so if you like your reports long and in
Spanish here’s your link (11). From the menu, here we’ll go with the segment dedicated to
Karen Flores, the Director General of Mexico’s most important mining trade association,
CAMIMEX (The Mexico Chamber of Mining) who said (quote translated)
“(The incoming government and the sector should)work to bring judicial clarity and strengthed the
regulations in the sector; not aiming for prohibitions, instead regualations that work with best practices of
responsible mining and world class sustainability.”
Also
“The mining is not just a key sector to create a sustainable future for the national economy, but it’s a pillar
of well being and development for 6969 communities located in 212 municipalities and three million
families depend on this activity.”
That’s a typical line taken and it’s not a big intellectual jump to see that being used with the
next secretary of mining, whoever President-Elect Sheinbaum chooses. On that, we still have no
word but there’s a rumour doing the rounds (and I’ve heard it twice now, from different
sources) that Sheinbaum is going to pick a popular pro-mining figure to leasd her ministry.
Whether that rumour is true, false, salad or duplicity remains to be seen.
Peru: Looking to permit mining projects
Even while the voter approval of both Congress and President continue to hit rock bottom in
Peru (Congresss is at 9% approval and President Dina Boluarte’s latest approval rating is 5%,
the worst since the disastrous Belaunde government 45 years ago) and the threat of extremist
populism grows on the horizon in the shape of Antauro Humala (2026 elections aren’t that far
away), the current government is doing everything it can to play nice with FDI and as metals
mining products represent 62% of all country exports (copper 32%, gold 19%, the others add
11%), our sector of focus is top of its list.
The push these days is to improve the infamously slow permiting track in Peru mining and red
tape bureaucracy, known locally as “tramitology” and to be fair to the latest Minister of Energy
and Mining Romulo Mucho, things have become a little better at MINEM in recent months since
he took his post just before PDAC. The spotlight is now on its sister ministry, that of the
environment, and the MINAM (with an A) Minister Juan Carlos Castro last week announced (12)
a push in his area to free up delayed project permits. In a presser last week he outlined that at
present, MINAM has received applications for 93 projects, 32 of which are for mining projects
with a ticket value of around U$18Bn.
According to the Minister, the regulatory framework to speed up the permitting process has
been in place since 2021, it's a question of implementing it and the key is to present permit
applications to several offices concurrently (e.g. culture, water, forestry), rather than waiting for
one office to approve its part and then moving the application to the next area. In the Due to
this the government has just issued an executive decree that changes two key aspects of the
process. Firstly, any application must be accepted or rejected in a maximum of five days, else
23
be automatically accepted. Secondly, environmental evaluations by distinct offices must happen
simultaneously. The minister concluded by saying that most permits for mining projects can be
awarded in a lapse of between eight months and a year under the new initiative.
Argentina: RIGI passes
Further to last weekend’s preview, the debate on Milei’s cornerstone law package, the “Ley
Bases” went ahead in the Senate on Wednesday. The eventual final vote happened that same
evening (which is fairly rapid in Argentine terms) and was tight, with the Senate seats voting 36
to 36 and allowing the head of the Senate, Milei’s Veep Victoria Villarruel, to exercise her
casting vote and the bill duly passed.
Also as expected, the Ley Bases didn’t pass as presented to Senate and the government had to
do some horse trading on clauses and terms. For RIGI, in order to get the votes the
government changed a couple of minor matters, firstly by restricting the plan to fewer economic
sectors and secondly by stipulating that at least 20% of the FDI capex for any project must be
spent with local suppliers. As mining is one of the sectors still included and any project worth its
salt will require large scale capital spending at a local/regional level anyway (away from
imported capital goods), neither of those will greatly affect the plans of big mining. There’s also
a new 45 day revision clause on any project entering RIGI, which allows regional governments
a small period of time to reject any given project before it becomes official, inserted to allow a
veto before the project becomes subject to international tribunal law (e.g. ICSID/CIADI). As for
the terms of RIGI, once signed into law its main benefits for FDI projects of U$200m or more
are:
Corporate tax ceiling of 25% for the next 30 years. At the moment, corp tax
in Argentina is 35%.
Sales tax reimbursement of capital goods brought into the country (and
supposedly on a fast track basis)
Export taxes reduced to zero for all exports that come as a result of the
original capital investment
There are other items, but those are the ones that really matter. The reaction from the mining
sector cannot be called euphoria, with some buying in some Argentina exponed stocks but not
as much as could have bene expected. Aldebaran (ALDE.v, see Stocks to Follow) did okay but
on the whole, reaction was muted though against the
somewhat negative backdrop for mining stcosk last week.
If this news has dropped in late April or early May I
suspect it would have got a more bullish reaction. As for
commentary from South America’s mining people, we
haven’t had much out of Argentina mining authorities yet
but the news of RIGI passing the Senate was welcomed by
the sector. It was left to the General Secretary of the
Chile/Argentina Chamber of Commerce, one Rolando
Dávila Rodríguez, who summed it up well enough and has
a role that will be important as a liaison between the
mining sectors of the two countries in the years to come,
even though he’s not a A-lister. He said RIGI’s approval was (13) “A very important moment for
foreign investment in Argentina.” And that’s true.
Market Watching
AbraSilver (ABRA.v) RIGI and BCM
As far as mining is concerned, most of the interest around the approval of the RIGI law project
in Argentina last week has been about the large-scale copper projects in the country, such as
the new flagship Vicuña zone controlled by The Lundins (Josemaria, Filo, NGEX etc), or perhaps
projects such as Taca Taca (First Quantum), Pachón (Glencore, with Antofagasta apparently
24
sniffing around), Los Azules (McEwen Copper) or Aldebaran at Altar (and why not add in my
own play on the idea?). However, the law applies to all large-scale projects with a capex ticket
of at least U$200m and that means the Diablillos silver/gold project in Salta provincecshould
eventually qualify. As such, I’ve received a couple of mails from you people asking whether I’d
revisit ABRA in light of the Argentina news.
And the answer is no. Well, to be exact the answer is that yes, I recently revisited ABRA while
doing the re-filtering (dat a word?) that ended with my new appreciation of Bear Creek Mining
(BCM.v) at current levels and at the moment, I prefer others. But thanks for asking.
Contango ORE (CTGO) runs a placement
On the one hand, if the drop in the price of a stock I own is the worst thing that happened to
me last week, then I live a comparatively fortunate and comfortable life. Ion the other hand,
this is the worst thing that happened to me last week:
Worse than the dive taken by Minera Alamos (MAI.v), even though that cost me more money
than CTGO. The reason behind the waterfall you see in that 10 day chart above is this:
Contango ORE Announces Underwritten Public Offering of Common Stock
June 10, 2024 FAIRBANKS, Alaska--Contango ORE, Inc. (“Contango” or the “Company”) (NYSE
American: CTGO), today announced it has commenced an underwritten public offering (the
“Offering”) of (i) shares of its common stock and (ii) accompanying warrants to purchase shares of
its common stock.
Ugh. That cover NR was followed the next day with the agreed terms.
FAIRBANKS, Alaska, June 11, 2024--Contango ORE, Inc. ("Contango" or the "Company") (NYSE
American: CTGO), today announced the pricing of its previously announced underwritten public
offering (the "Offering") of 731,750 units (the "Units") of the Company at a price of $20.50 per Unit.
Each Unit consists of (i) one share of the Company’s common stock and (ii) one-half of one
accompanying warrant. Each whole accompanying warrant is exercisable to purchase one share of
the Company’s common stock at a price of $26.00 per warrant, exercisable for a period of 36
months.
So that’s 731,750 units at U$20.50 apiece, with each including a share and a half warrant
priced at U$26. We knew that would whack the price of a stocks at nearly U$25 in the minutes
before the announcement on Tuesday, but instead of stopping at the U$20 level CTGO tumbled
further and faster, eventually closing under U$19 and just pennies away from our own cost
average level.
Why so? For one thing, the surprise. As noted in our recent analysis of CTGO, it was set to go
into negative working cap territory for while as the front end of the loan came off, but the
expected cash flow from Manh Choh would cover all eventualities and was set to throw off
enough to move on development and exploration of its pipeline assets (Lucky Shot and Johnson
Tract, assuming the correct closure of its merger deal with Highgold (HIGH.v). Here are a few
of the charts from the latest analysis, no adjustments made for this $15m deal (yet):
25
60 CTGO: Cash treasury per qtr
55
50
45
40
35
30
25
20
15
10
5
0
We also took into account the expected lag between first pour of the Manh Choh material at the
Kinross (KGC.to) Fort Know mine and when the cash would arrive at CTGO, but even so the
numbers stood up. And clearly, this desk was not the only one to be surprised by this deal as
the reaction of the market went above and beyond the ticket price. As a result and with the
terms known, I shot a brief mail to CTGO CEO Rick Van Nieuwenhuyse and here’s how his reply
came back, served as such:
Hi Mark,
I appreciate your email and wanted to write you a quick note regarding our decision to finance the
company. This decision was the result of discussions with our lenders (ING & Macquarie) relating
to the proposed acquisition of HighGold. Their ‘ask’ was for us to raise additional equity to cover
them off for costs related to closing and carrying costs of HighGold for ~1 year. I did not want to
lose a year of exploration and advancing JT and Lucky Shot so the financing was necessary to
keep our 5 year plan to develop these assets into cash flowing operations with production of
200,000 annually. As it relates to the financing terms itself, I will highlight that it’s a high-quality
book consisting of a majority long only and specialist fundamental investors. We had been in
discussions with the majority of the investors over several weeks and so the pricing negotiations
were based on 3 and 30 day VWAPs, which were $24.15 and $21.65, respectively. The discount of
the issue price using 3 day (24.15) and 30 day (21.65) VWAPs to spot was 15% and 5.3%,
respectively. The shares ran up at close on Monday, which made the terms seem a fair bit worse
than what was negotiated. Our Use of Proceeds was a blend between working capital build up and
exploration, resulting in $15M being the number we landed on.
Aside from the Lenders request from a financing, our decision to finance for exploration is mostly
related to timing of cash inflows that come from Manh Choh. We have our first batch gold pour set
for early Q3, but it takes a month before we actually get any cash back to Contango. The proceeds
from the first batch are primarily ear-marked for the Peak JV working capital build-out and so we
don’t anticipate realizing any significant cash inflow until the 2nd batch. In order to execute on our
business plan of delivering Lucky Shot in ~3 years and Johnson Tract in ~5 years, we want to get at
least one drill program accomplished this drill season, if not two. With JT, the drills are already at
site with HighGold’s team in place and so it makes the most sense for us to conduct a modest drill
program there, which supports advancing JT to the next phase which is planned for 2025. In order
to effectively mount a drill program now, we have to commit to drills, fuel delivery and helicopters
now and will have to temporarily finance HighGold (which is essentially out of money). Our debt
26
12_ced 22_ram 22_nuj 22_pes 22_ced 32_ram 32_nuj 32_pes 32_ced 42_ram tse42_nuj tse42.pes tse42.ced tse52.ram tse52.nuj tse52.pes tse52.ced tse62.ram tse62.nuj tse62.pes tse62.ced
source: company filings/IKN ests
srallod
fo
snoillim
CTGO: Working Capital per qtr
50
40
30
20
10
0
-10
-20
-30
-40
12_ced 22_ram 22_nuj 22_pes 22_ced 32_ram 32_nuj 32_pes 32_ced 42_ram tse42_nuj tse42.pes tse42.ced tse52.ram tse52.nuj tse52.pes tse52.ced tse62.ram tse62.nuj tse62.pes tse62.ced
U$m
source company filings/IKN ests
CTGO: Liabilities, per qtr
110
100 90
80
70
60
50
40
30
20
10
0
12_ced 22_ram 22_nuj 22_pes 22_ced 32_ram 32_nuj 32_pes 32_ced 42_ram tse42_nuj tse42.pes tse42.ced tse52.ram tse52.nuj tse52.pes tse52.ced tse62.ram tse62.nuj tse62.pes tse62.ced
CTGO: Assets, per qtr U$m
110
100 90 LT liabs
80
current liabs 70
60
50
40
30
20
10
0
source: CTGO filings/IKN ests
12_nuj 12_pes 12_ced 22_ram 22_nuj 22_pes 22_ced 32_ram 32_nuj 32_pes 32_ced 42_ram tse42_nuj tse42.pes tse42.ced se52.ram tse52.nuj tse52.pes tse52.ced se62.ram tse62.nuj tse62.pes tse62.ced
U$m
fixed
other current
cash
source: company filings/IKN ests
financiers want us to maintain certain covenant ratios and minimum cash balances – so having a
little more money in the till just makes good financial sense – especially in these turbulent markets
and any unforeseen mine start-up challenges. We are still finalizing what our exploration
program(s) will be for this summer, and plan to update the market next week.
I am a significant shareholder in the Company and so dilution is something I do pay close attention
to. By my calculations it will amount to ~6.5% dilution (excluding warrants which would generate an
additional $9.5M at a $26 strike price) of the combined company. This equity raise was the prudent
thing to do to address the items covered off above. If you would like to discuss further, please don’t
hesitate to reach out. I would be happy to get on a phone call to discuss further.
Kind regards,
Rick
For the record, I’ve always had a cordial and friendly relationship with the guy. WE’ve even
eaten food together (some fresh and impressive Alaska salmon) so there’s no bad blood here,
just a couple of people who know each other and speaking frankly. Here’s how I replied, typos
and all and including naming Johnson Tract incorrectly:
Thanks for the long answer.
I appreciate you're a large SH, but you're also salaried by CTGO, you have a career invested in
this, the longest of long term outlooks and you were also aware of the need for thus dilution when
heading into the HIGH acquisition, reconciled with it as part of the deal terms. It came as no
surprise, whereas the neg 20% price drop today tells us all that you are in a very small minority on
that.
Whereas me, i'm a buy-low-sell-high retail grunt that's seen the momentum created by the
successful build out of Manh Choh and the market's gradual recognition that Johnsons Tract is a
smart deal for the corporate pipeline blown out the water by news coming out of Left Field. Having
run the numbers, including the lag to 1st cash from Ft Knox, it's still an unexpected and unpleasant
surprise predicated on a preference (no more) to get on with drilling project #2 this year, plus some
comfort cash.
And i'm way too bored by jr miner "surprises" at this stage in my career. It's the norm in this sector,
not the exception, so perhaps i was a little foolish in considering CTGO exceptional.
Best, Mark
So now you know. He replied after that, but as it wasn’t particularly work related or add any
dalient details there’s no need to go any further. As for what I now think of the deal: It could
have been worse, but the terms and conditions are one thing and thr optics quite another.
There was no hint that this was a soft condition of the HIGH deal and having run the numbers
(and again, to make sure) the only difference is being able to run everything they want to at
Lucky Shot, plus have some comfort cash in treasury, instead of keeping things lean a few more
months and hitting the ground running and going hard with a filled treasury cheat come the
thaw in 2025. The market felt the same and the issue with this is, will we be able to trust CTGO
again not to dilute its tight share structure and thereby lose more of the main advantage it
offers to the retial player. On paper RVN is right it’s only a nominal 6.5% dilution and in terms
of my own expectations, I could rightfully look to sell at U$28 instead of my penciled in U$30 ,
previously mentioned. But it’s the optics that have blown this out the water and that $26
warrant puts an overhang on the stock and gives people reason to sell early.
The bottom line is: Yes I’m still a holder of CTGO and will remain so for the time being, but the
momentum gained has evaporated and it’s now less likely to see the stock run on news of the
first pour and first serious production out of Manh Choh. I appreciate the company’s position
and their desire to grow is laudable, but it’s another case of not being aligned with the
shareholder base, particularly the smaller players such as I who largely dictate the market price
through small trades. So overall I’m somewhat disappointed and annoyed this weekend, but
nowhere near the level of pain I felt when the news scuppered the share price last week. The
fundies on this trade are still good and the upside potential is obvious, the only change is that
my sights for a sale and a profit take will likely be set a little lower.
Conclusion
IKN787 is done, we end with bullet points:
27
If MENE.v under 20c is good enough for Roy Sebag, it’s good enough for me.
We didn’t talk much silver this week, but that has the look of a lead indicator at the
moment. Volatile last week, if it can regain U$30/oz it would be a bullish signal.
I’m happy with the price I got for Bear Creek Mining (BCM.v)
The market seems to have underestimated the RIGI approval news out of Argentina
last week. If the penny drops, stocks like Aldebaran will really benefit.
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://mene.com/world-of-mene/investor-relations/mene-appoints-ceo-president
(2) https://watchcharts.com/watches/brand_index/rolex
(2a) https://www.imdb.com/title/tt0526717/characters/nm0570570
(3) https://orecap.ca/news/orecap-updates-on-cuprum-corp-ontarios-largest-copper-resource/
(4) https://www.reuters.com/markets/commodities/chinas-vast-copper-overhang-will-clear-one-way-or-another-russell-
2024-06-13/
(5) https://www.solarisresources.com/news/press-releases/solaris-closes-54-million-in-financing
(6) https://www.solarisresources.com/news/press-releases/solaris-reports-81m-of-073-cueq-within-544m-of-050-cueq-
from-surface--announces-major-expansion-of-2024-drill-program-supported-by-record-productivity
(7) https://www.iccaconsortium.org/2017/03/31/el-pueblo-shuar-arutam-de-la-cordillera-del-condor/
(8) https://kodiakcoppercorp.com/kodiak-begins-2024-exploration-program-at-its-mpd-copper-gold-porphyry-project/
(9) https://www.palamina.com/news/2024/6/10/ixv7m9nelbs20jqy4eetjein7kmhz8
(10) https://twitter.com/evoespueblo/status/1800231559959577040
(11) https://www.france24.com/es/minuto-a-minuto/20240614-guatemala-revoca-por-anomal%C3%ADas-licencia-
ambiental-a-mina-canadiense
(12) https://www.forbes.com.mx/mineros-piden-a-sheinbaum-fortalecer-su-sector-que-dicen-abandono-amlo/
(13) https://energiminas.com/2024/06/12/minam-tiene-en-agenda-entregar-certificaciones-ambientales-a-32-proyectos-
mineros-por-us-18-mil-millones/
(14) https://www.tiempodesanjuan.com/economia/rigi-la-camara-chileno-argentina-subrayo-el-impacto-positivo-la-
mineria-san-juan-n377465
(15) https://www.contangoore.com/press-release/contango-ore-announces-underwritten-public-offering-of-common-
stock-2
(16) https://www.contangoore.com/press-release/contango-ore-announces-pricing-of-15-million-underwritten-public-
offering
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
28
Orecap inv OCI.v oct'23 C$0.04 20-Nov-22 C$0.03 -25.0% sold raise to cash
Western Explor. WEX.v nov'23 C$1.87 9-Abr-23 C$0.60 -67.9% poor trade, cutting loss
Stocks To Follow Closed Positions 2022
Closed in 2022 date closed close price
Great Bear Res GBR.v Jan'22 C$15.83 26-Aug-20 C$28.58 80.5% Bought out by Kinross, print
Copper Mountain CMMC.to Jan'22 C$3.40 18-Jun-21 C$3.78 15.9% Sold 1/2 position in rebalance
Copper Mountain CMMC.to Feb'22 C$3.40 18-Jun-21 C$3.70 8.8% Sold rest on FY22 guidance
Trilogy Metals TMQ Mar'22 U$1.84 15-Sep-19 U$1.04 -41.3% killed by US permit reversal
McEwen Mining MUX Apr'22 U$0.89 2-Jan-22 U$0.82 -7.9% No 2022 turnaround, cut loss
Abrasilver Res. ABRA.v May'22 C$0.42 24-Apr-22 C$0.33 -21.4% sold to reduce Ag exposure
Strategic Metals SMD.v May'22 C$0.42 31-Jan-21 C$0.30 -28.6% trade flatlined 1.5 years
Discovery Silver DSV.v Jun'22 C$1.77 24-Oct-21 C$1.39 -21.5% Cutting Ag exp.& raising cash
Element 29 ECU.v Jul'22 C$0.58 6-Mar-22 C$0.30 -48.3% sold to cut Cu exposure
Superior Gold SGI.v Oct'22 C$0.95 3-Apr-22 C$0.24 -74.7% Q3 prod fail was last straw
Goldshore Res GSHR.v Nov'22 C$0.18 23-Oct-22 C$0.34 88.9% Quick profit taken
Palamina Corp PA.v Dec'22 C$0.295 21-Nov-21 C$0.08 -72.9% Clear-out of underperformer
Pure Gold PGM.h Dec'22 C$0.14 26-Sep-22 C$0.015 -89.3% tiny trade on vh risk, went Ch11
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
29
Great Panther GPR.to Aug'20 C$0.60 21-Jun-20 C$1.10 83.3% Profit taken, good trade
Jaguar Mining JAG.v Aug'20 C$0.42 21-Jun-20 C$0.65 54.8% Profit taken, good trade
Sandstorm Gold SAND Aug'20 U$7.76 10-May-20 U$9.37 20.7% Profit taken, good trade
Integra Resources ITR.v Aug'20 C$2.23 13-Aug-18 C$5.40 142.2% Profit taken, good trade
Wesdome Gold WDO.to Aug'20 C$2.37 14-Oct-17 C$14.82 525.3% last 1/2 of big win closed
INV Metals INV.to Sep'20 C$0.40 17-May-20 C$0.45 12.5% Cut all Ecuador exposure
Cartier Resources ECR.v Nov'20 C$0.155 3-Aug-18 C$0.25 67.7% Exact close price TBA
Tinka Res TK.v Dec'20 C$0.195 19-Apr-16 C$0.195 0.0% Closed on a round trip fail
2015 to 2019 annual closed positions in appendices below, 2009 to 2014 closed positions in editions IKN553 or earlier
Stocks To Follow Closed Positions 2019
Closed in 2019 closed close price
Atico Mining ATY.v jan'19 C$0.55 24-Jul-16 C$0.32 41.8% patience ran out, made room
Candente Copper DNT.to jan'19 C$0.075 3-Aug-18 C$0.05 -33.3% tiny trade, made room for new
B2Gold BTO.to feb'19 C$2.11 12-Sep-14 C$4.05 91.9% Took 1/2 profits, reduce size
Western Copper WRN.to mar'19 C$0.80 20-Jan-19 C$0.81 1.3% Spec trade that didn't work
B2Gold BTO.to mar'19 C$2.11 12-Sep-14 C$4.15 96.7% Took rest of profit.
GT Gold GTT.v mar'19 C$1.17 10-Oct-18 C$0.90 -23.1% Took loss. Story changed
NovaGold NG apr'19 U$3.84 13-Jan-19 U$4.15 -8.1% Short that didn't work, sm loss
Zinc One Z.v jun'19 C$0.47 14-Sep-17 C$0.025 -94.7% clearing out dead trade
Amarillo Gold AGC.v jun'19 C$0.24 22-Aug-18 C$0.20 -16.7% clearing out dead trade
New Gold NGD aug'19 U$1.44 31-Jul-19 U$1.23 14.6% ST short win thru Q2 earnings
IMPACT Silver IPT.v aug'19 C$0.39 21-Jul-19 C$0.46 18.0% took a quick profit
Fiore Gold F.v aug'19 C$0.34 26-May-19 C$0.56 64.7% Took profit, 2q19 avg
Chakana Copper PERU.v oct'19 C$0.84 22-Mar-18 C$0.16 -81.0% Exploreco trade fail. Want space
Wesdome Gold WDO.to oct'19 C$2.37 14-Oct-17 C$7.57 219.4% Sold half, profit taking
Superior Gold SGI.v oct'19 C$1.46 8-Apr-18 C$0.47 -67.8% Failed sm spec on Au. Moved on
Amerigo Res ARG.to nov'19 C$0.91 23-Sep-18 C$0.50 -45.1% worst trade of year, hefty loss
Guyana Goldfields GUY.to dec'19 C$0.94 14-Apr-19 C$0.56 -40.4% taking the loss, financials weak
Tethyan Res TETH.v dec'19 C$0.30 8-Sep-19 C$0.16 -46.7% tiny trade, word of probs in co
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
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Lara Expl. LRA.v Mar'17 C$1.15 8-Apr-12 C$1.05 -8.7% cut to make room for new trade
Rye Patch Gold RPM.v Apr'17 C$0.31 2-Sep-16 C$0.32 3.2% cut for doubts & new stock
Cordoba Min. CDB.v Jun'17 C$0.75 15-Sep-16 C$0.63 -16.0% closed
Constantine Metal CEM.v Aug'17 C$0.135 9-Apr-17 C$0.28 107.4% spec trade closed, good win
Red Eagle Min. R.to Sep'17 C$0.67 13-Dec-16 C$0.27 -59.7% IKN's biggest failure in years
Starcore Intl SAM.to Sep'17 C$0.61 10-Jan-15 C$0.31 -49.2% Patience ran out
B2Gold BTO.to Dec'17 C$2.11 12-Sep-14 C$3.39 60.7% sold small portion for liquidity
Stocks To Follow Closed Positions 2016
Closed in 2016 closed close price
Phoscan Chem FOS.to jan16 C$0.28 29-mar-15 C$0.265 -5.4% Buyout trade, bot but poor deal
True Gold TGM.v jan16 C$0.18 23-aug-15 C$0.25 38.9% okay trade, sold on pol risk
McEwen Mining MUX jan16 U$1.09 25-jan-15 U$1.20 10.1% sold due to lack of value
Lake Shore Gold LSG.to feb-16 C$1.10 07-apr-15 C$1.69 53.6% bot out, sold early in process
Atacama Pacific ATM.v feb-16 C$0.19 26-apr-15 C$0.40 110.5% sold for a double on big pop
New Gold NGD feb-16 U$2.06 24-jan-16 U$2.96 43.7% closed good near-term trade
Sandspring Res SSP.v mar-16 C$0.195 18-oct-15 C$0.32 64.1% Hit tgt, took profit
Teranga Gold TGZ.to mar-16 C$0.54 15-feb-15 C$0.60 11.1% disappointing trade
B2Gold BTG mar-16 U$0.85 13-jan-16 U$1.30 52.9% Separate trade on B2, hit tgt
Dalradian Res DNA.to mar-16 C$0.67 27-oct-13 C$1.00 49.3% Hit target, sold, good win
HudBay Min. HBM may-16 U$4.10 03-apr-16 U$4.36 -6.3% Short trade, poor timing
Nevada Sunrise NEV.v may-16 C$0.185 28-feb-16 C$0.23 24.3% V. small, no big deal either way
Richmont RIC jun-16 U$7.60 01-may-16 U$9.30 22.4% near-term trade, profit taken
INV Metals INV.to jul-16 C$0.25 03-apr-16 C$0.95 280.0% Trade closed on time
HudBay Min. HBM aug16 U$4.98 09-jun-16 U$4.80 3.6% short trade covered, no big deal
Miranda Gold MAD.v oct-16 C$0.125 03-jul-16 C$0.10 -20.0% tiny spec trade, didn't work
Avino G & S ASM nov-16 U$2.00 21-oct-16 U$1.40 -30.0% Abandon trade on bad bot deal
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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