AceofKY

Thoughts on PDAC 2013 · Crowd was very good – just as many as last year. I believe that the conference organizers did a better job of handling the crowd because it seemed like lines (such as coat check, food lines, etc.) were much shorter this year. · I had expected to see some empty booths due to junior explorecos not being able to make the trip. However, I was wrong. All the booths were full. There is a good chance the PDAC is the last gasp for many of them as it was noted that over 30 companies exhibiting had less than $200k working capital left. · Exploration activity seems to be slowing with the downturn in finance for the sector. There seemed to be many more junior Geos looking for a job than I remember from previous years. · I met multiple people who were “First Nations Representatives” (consultants/mediators, etc) of one sort or another. This seems to be turning into a big industry. Not sure what to make of that. · Toronto is still cold as hell in early March and I don’t understand why PDAC doesn’t move this convention to Cancun or somewhere warm. I did learn why the conference is held at this time of year. In the old days the explorers up North could work in winter (water was frozen) or summer (via boat) but not when the ice was breaking up in early March. Hence – they had nothing better to do then go to the conference. · The big “World’s biggest mining party” on Tuesday night (sponsored by Renvest this year) was even more crowded than last year. The Dave Murphy band is awesome, but they’re going to have to do something to reduce the crowd next year (or move it out of the Royal York). Keeping the students out would be a good start, I think. · I attended several of the newsletter writer presentations. I had kept some notes but unfortunately lost them when someone picked up my binder (probably by mistake) during the party on Tuesday night. Here are the ones I remember: o Ian McAvity – believes we’re only weeks or maybe days from a bottom o Taylor Thoen – this was a new speaker this year. Apparently she is a tv personality (not a gold/investing expert) in Canada and does a lot of CEO interviews. I enjoyed her presentation and remember that her website is: www.ceoclips.com. Also she was better looking than all the other newsletter writers combined. o Chris Berry and at least one other speaker were bullish on uranium o Keith Schaefer was bullish on oil refineries along the Mississippi River corridor. o Rick Rule – was in typical form (no powerpoint needed). His thesis was that the good stuff is cheap enough even though the sector as a whole will still trend down for a while. He likes PGMs (i.e. Sprott’s new physical fund) and gave a plug to Friedland’s new promo Ivanplats (Friedland apparently gave a presentation at PDAC but I missed it unfortunately). · Here are notes from either presentations or conversations with companies: o Hecla announced its bid for Aurizon on Monday morning and Phil Baker gave his presentation that morning. Supposedly the offer is accretive on all the metrics except for EPS which won’t turn accretive till 2014. There was (supposedly) no quid-pro-quo with respect to keeping Aurizon management or Board members in the merged company. I didn’t see his presentation but apparently Alamos CEO McClusky slammed Hecla pretty hard afterward. o Midas Gold – this project looks interesting but I’m worried it will take a long time to get permitted o Silvercrest – this story keeps getting better and better. The expansion of Santa Elena is underway and an updated resource estimate & production schedule will be forthcoming. I was originally skeptical about the low grade La Joya project but I’m now confident that they have a plan to develop it successfully. Metallurgy still needs to be confirmed, I think. Production should double for Silvercrest with the Santa Elena expansion and then double again when La Joya is brought online. I already have a large position (due to ~500% capital gains over the past years) or I’d be buying more of this one. o Sandstorm Gold – Nolan Watson promised he would never do another deal similar to the Entrée/Mongolian deal due to significant shareholder complaints. o Continental Gold – I first became aware of this Columbian project at last year’s PDAC but didn’t buy in as I thought the market cap was too high. The price has come off some since then but I think it’s still in that “boring” part of the construction/development phase where the stock price continues to drift down. The project itself is very high grade and they are spending a lot of money developing it right now. This is one to keep an eye on for next year. o Rob McEwen/MUX – still promoting his S&P 500 by 2015 goal. I don’t think he’s going to achieve that in the timeframe left with no better assets then what he has. Still trying to sell the big copper project. Will need more financing for the gold projects this year. Not interested in a stream deal and was critical of mining companies who resort to this type of financing. o Rambler – their production dropped somewhat early in the year due to some equipment problems. The solution is not yet in place but shouldn’t be very expensive. The loan with Sprott will be renewed/refinanced as they can’t pay it off yet. The hot IR chick from last year is no longer with them (big disappointment for me.) That’s about all I’ve got time to write up.

Kinross gives up 70% of Fruta Del Norte upside: http://www.kitco.com/pr/1267/article_12052011163649.pdf These do not look like good terms to me.

Bubb, That's what I thought too when the acquisition was announced. But Tasiast keeps growing exponentially. M&I resources are already past 16.5MM ounces. When I was a Rio Narcea shareholder back in ~2006 this was a sub 1MM oz deposit. I'm still mad at the RNO directors for selling what has turned out to be a world class asset so cheaply. So now I'm starting to wonder if Kinross knew what they were doing with this acquisition after all. I'm going to be reassessing Kinross in the near future.

I believe $15.9MM of the negative working capital is a liability related to warrants that will be non-cash?? I've been selling Columbus as it looks like they're having difficulty executing the buy-out. I don't want to be stuck with Columbus if the transaction doesn't go through - would rather hold SFEG here so I'm taking a little loss.

Interesting thread. Charlie, you mentioned that some of the investors weren't particularly good at analyzing fundamentals. Did any of the investors achieve their wealth via technical analysis of equities or markets in general?

Hi folks, I haven't posted here in a very long time just due to being very busy with running my business. I was fortunate enough to see Dominic at PDAC and resolved to try to come back here more. Hopefully everyone is doing well. Here is what I currently have in my portfolio in order of largest to smallest positions: 1. Gold Resource Corp (GORO): I've sold about 1/3 of my position since this went up about 500-600% for me. Pretty expensive stock now. Pays a monthly dividend. 2. Fronteer Gold (FRG): This equity is being taken over by Newmont but I'm still holding to get the free shares of the spinoff company. Probably not worth buying now that the takeover has already been announced. Watch for the spin-off explorer that will be called "Pilot Gold" and run by the same guy Mark O'dea. 3. Hecla (HL): This is a good mining company in the Silver Valley & Alaska, primarily silver but also big amounts of gold, lead, and zinc. I think they are still undervalued and I wouldn't feel bad about buying some right now. 4. Alacer Gold (ASR.to): Gold miner in Turkey & Australia. Probably still a buy but not spectacularly undervalued. 5. Silver Wheaton (SLW): This is a good company but very expensive. I wouldn't buy it now. My position came from the takeover of Silverstone several years back. I've been selling this position down. It will basically track the price of silver with approximately 1.5x leverage. 6. Santa Fe Gold (SFEG.ob): A junior gold/silver miner in Western U.S. I think this company is a good buy right now but their performance is still unproven so it could go either way. If they are successful it will be a 3 to 4 bagger at least. They are currently taking over Columbus Silver and I've been buying shares in the latter to capture a few % in arbitrage. 7. Nevsun (NSU): This is a copper/gold miner in West Africa. I bought more of it in the past few weeks as the price took a big dip. I'd say it is a buy anywhere under $8/share. 8. Rambler (RAB.v): This is a copper/gold junior building a mine in Newfoundland. I've been buying it over the past couple months. Be prepared to wait for a couple years for the payoff. Very small and illiquid. 9. Rio Novo Gold (RN.to): Junior gold miner in Brazil that I just became aware of after the PDAC conference a couple weeks ago. I think it's a buy. 10. Silvercrest (SVL.v): This is a junior silver/gold miner. I'd rank it a hold right now as the price has already gone up substantially. Performance still unproven. Good luck to all, Ace

Are we going to bust through that quadruple or quintuple top this time?

I like the metrics too. Here are my figures: US$/oz P&P - $476 US$/oz M&I - $354 US$/oz M&I&I - $270

The juniors are finally moving. Let's hope this is not a dead cat bounce. We may have to retire this thread soon! It feels good to be back in the green again for the year, especially since the broader markets were down today.

Perhaps Longview Capital Partners is worth consideration - Ticker "LV" on the TSX I haven't done any research yet, but at least their investee list is manageable. Nevada Copper is the real deal; a good long-term investment. The others I'm not familiar with: LV Portfolio: Buffalo Gold Finavera Gas MacArthur Minerals Oriental Minerals Waratah Coal Nevada Copper AMI Resources Inc. Pacific Coast Nickel Corp. Pencari Mining Corporation Cue Resources

We've already had huge falls in base metal stocks and some base metal prices as everyone is pricing in a recession.Check out this link (click on "metal producers") for charts that show that the money flow into the base metal stocks has turned around and is now going up. Will prices follow? http://www.willain.com/EV/index.html

The boat hasn't even fueled up yet. I have several juniors down 20-30%, and one down 50%, and that's from where I bought them which was well off of their highs. Volume is still low to non-existent. Look at SRZ.to, for example. They are fully financed and will be producing concentrate by the end of this month. They should FREE CASH FLOW somewhere around 25 to 30million THIS YEAR. Their market cap is only $100 million, and a big chunk of that is cash in the bank. Granted, SRZ is a high cost miner, is very highly leveraged to zinc price, and they have some debt. But by approximately mid '09 they should have a process in place to recover gallium and germanium which will drive their cash costs of zinc production very low. Management owns a significant chunk of the shares, and the CEO just bought another 10k on the open market. SRZ's costs are all denominated in $US. And who really thinks zinc price is going down with the world's central banks flooding the economy with freshly manufactured $$?

Many juniors, and certainly most exploration stocks, ARE dependent on large amounts of financing. However, there are also many that are near-term producers that already have enough financing in the bag to carry them through to positive cash flows. These juniors may be helped by a tightened financing environment, since it will reduce the amount of mines coming online in the future. Just because they haven't extracted the gold yet doesn't mean that it's not worth anything. The majors will pay over $200/oz for a good-sized proven deposit in a safe area. One rule of thumb is not to buy a junior for more than 10% of in-situ deposit value. Any company can fail. The most important factor in determining whether a gold mining junior will fail or not is the price of gold which can and has (in the past) gone down to very low levels. So to say that it's better to buy gold because a gold miner may go bankrupt is not really good logic. In general and over the long term, buying a gold miner gives you leverage to the price of gold - similar to options but without the timed expiration. The reason for this is that companies are valued based on anticipated future profits rather than the price of the underlying commodity. A 10% rise in the price of gold may yield a 20% rise in the miner's profits (and vice versa.) Also, a good well-managed mining company can still generate shareholder value over the long term even if metal prices stagnate or fall (as long as they don't fall too far.) GORO, I think, will be able to make nice profits even if gold goes back to $600-700/oz. That being said, lately the miners have lagged gold's price rise, the explanation of which is the purpose of this thread. One thing is for sure: the junior mining market is NOT an efficient market. The market caps of these companies fluctuate much, much more than typical large-cap stocks. I'm not sure if anyone has ever attempted to calculate the average beta of, say the CDNX versus the S&P500 but I suspect it has a beta of at least 2 or more. It gives you an opportunity to find values that just isn't possible if you're dealing with companies like Proctor & Gamble or GE.

Stillwater is up about 60% since I posted this a couple weeks ago. If I had bought it, it would have went down 60% instead.

Most of them are much better values now than they were at the end of July 07 or Oct. 07! But, generally speaking, the gold juniors didn't sell off nearly as hard as the base metal juniors. I think GORO is a slam dunk for a double here once they reach full production in a year and a half or so. Possibly a triple if drill results keep coming in good. My base metal favorites (SRZ.to, GMC.to) got beat into the ground over the last few months, but I still think they're both good buys. Also, I like Victory Nickel (Ni.to) at current prices even though it didn't fall much. I guess my feeling is that the Fed is going to try to inflate its way out of this financial crisis. Thus, I'm not too concerned about holding base metal stocks. At some point, they will need to be sold when the fed no longer has the tools or the political mandate to continue devaluing the dollar, but I don't think we're there yet. What we really need are some acquisitions by the majors to reignite the market in base metals. Ni.to and GMC.to are excellent takeover prospects, in my opinion.