PROFITING & POSITIONING:

OPPORTUNITIES TODAY AND

PREPAREDNESS FOR TOMORROW

GOLD WILL GO…BUT WHAT TO DO TODAY?

We are all here because we believe gold will rise again, on some timeline to some height That’s great…but waiting for the bull is boring. And profitless. And unnecessary! There are ways to profit in the interim by taking advantage of patterns, promotions, and events. And there is work to be done. The bull market may not start for months or may already be underway; we won’t know until we can see the beginning in the rearview mirror. Now is the time to position: buy stocks based on specific medium and long term goals.

WHY I THINK GOLD WILL GO US economy anemic

US markets slowing (financial engineering can only do so much) – smart money already looking elsewhere for opportunity

Gold showing ability to gain despite US dollar strength

Inflation rising…or rampant, depending what you believe

It’s time. Demand is constant. Financial confidence is waning.

HOWEVER…

The gold bull stories are worn out (if global debt pushed investors to gold, the yellow metal would be way higher today than in 2011)

QE has investors accustomed to ‘easy’ market returns – speculation not in favour

Army of volatility traders push back against every gold gain

There’s no rush: would take a major black swan event to create a rush into gold

OTHER METALS WILL FOLLOW The world works on metals. They will rise again…but some sooner than others. Copper: supply-demand is pretty well matched, as usual, but many tonnes of supply could be turned back on quickly. Not expecting near term strength. Zinc: supply is falling and demand rising. New production is very limited. Near to medium term strength. Uranium: nuclear build out, led by China, is boosting demand. Supply will be insufficient in the medium term. Others of interest: platinum, lithium

POSITIONING NOW My portfolio operates in three sections:

1.  Short term trades: stocks I buy with a plan to sell in a weeks-to-months timeframe to capitalize on seasonality, news events, or promotion pushes

2.  Medium term buys: stocks I am accumulating because I they will rise first and fastest as mining recovers

(they already are à)

2.  Long term holds: stocks with significant

(but currently unrecognized) underlying value that will outperform during the bull ride

SHORT TERM TRADES – BECAUSE PROFIT IS THE POINT

Three ways to find profit before the real rally begins:

1.  Seasonality: Sideways markets are made of ups & downs. Mining’s ups & downs are predictable. Identify the pattern, determine how to lock in good leverage, buy at the right time, sell as soon as certain gains are gotten

2.  News events: Resource estimates, economic studies, drill results, and permits can all generate share price moves. Buy ahead of news, sell soon after.

3.  Promotion pushes: Some companies promote consistently. Others go on promotion pushes, spending several weeks telling/selling their stories. The effort can really pay.

SEASONALITY IN GOLD

When 5, 15, and 30-year charts line up that well…we have a pattern.

Gold’s strong seasons are Jan-Feb and Aug-Sept.

We saw that this year – great January and great October (slightly delayed because of Fed rate raise uncertainty)

Mid-Dec to mid-Mar outperformed the rest of the year 13 of last 14 years. Twice the Venture achieved multiples of its yearly gain during the season. Five times it gained in the season despite losing in the year. Three times it provided outsized share of year’s gain.

SEASONALITY IN GOLD STOCKS

IT JUST HAPPENED Gold’s second season was delayed this year (Fed uncertainty) but it happened: from mid-September to mid-October gold gained 7%. Equities provided leverage! •  Gold Miners (as per GDX) rose 29%

•  Junior Gold Miners (as per GDXJ) rose 21%

Silver did even better, gaining 13%

•  Silver Miners (as per SIL) rose 26%

•  Junior Silver Miners (as per SILJ) rose 34%

GDX

SILJ

Barrick: 31% EDV: 31% Tahoe: 28%

PROFITING OFF TIMING •  Find the pattern •  Identify stocks with leverage •  Buy based on timing

•  Sell once certain gains are achieved

At the start of last ‘season’ (between mid-Nov and Christmas) I bought and recommended a list of gold explorers, developers, and miners The season happened quickly this year. Gold peaked on Jan. 22nd – two months earlier than usual! But that’s ok because by then we had already executed sells (full or partial) on 5 stocks, locking in gains and lowering cost bases. Ex: Kaminak. Bought at $0.70. Sold 1/3 on Jan. 14th at $0.90 (up 29%). Cost base now $0.60 – reduced risk but maintained exposure.

PROFITING OFF PROMOTION Some companies spread their stories consistently. Others do a whack of promotion in a short time. Both methods have merit. But a promotion push can create significant share price response.

Excelsior Mining (TSXV: MIN)

Traded $0.20 - $0.26 for 10 months while MIN worked to derisk the project

May-July: company announced metallurgical results, resource update, and hydrology results – and started talking & actively recruiting new investors

Share price almost doubled on promotion push

PROFITING OFF NEWS The market remains unreliable, but news no longer means a liquidity event Instead, good news from good companies is getting rewarded. Buying in expectation of news can really work.

Pretium Resources (TSX: PVG)

High-grade Brucejack project in BC.

Sept 1: receives all permits Sept 15: secures $540M debt financing package

PVG shares up 36% since Sept 1, up 49% since mid-July

LOOKING AHEAD 20 or 40% gains are OK…but we invest in this sector for more! Short-term profits help us stay in the game, but don’t forget the bigger goal. Now is the time to position for when the upswing really begins.

Usual route: buy major miners because they offer the first and best leverage to gold However, I see things happening differently this time…

Investors still remember how badly the majors bungled it last time. Risky projects, massive debts, and cost creep became share price losses that still sting. To avoid those pitfalls, investors are gravitating to mid-tier miners.

MEDIUM TERM BUYS: WORK THE MID-TIER ADVANTAGE Carry less debt: Total, of course, but also per share and relative to cash flow

Lower risk of cost creep: With only 1 or 2 mines, management can keep a close eye. G&A costs also easier to contain (ex: legal costs for a major with operations around the world climb quickly)

Can benefit from specific situations such as exchange rates: Majors operating in multiple currencies are buffered from today’s exchange rate advantages, but a mid-tier with one Canadian operation or two Australian mines is getting a 25% lift.

Taking advantage of downturn: Mid-tiers with cash have been the buyers as majors have divested assets. Many are good mines that were simply too small.

MID-TIERS ARE ALREADY ADVANCING

Barrick Gold (TSX: ABX)

Ugly. Good leverage to gold’s October gains, sure, but ugly overall.

Busy cutting $2B of capex over 2 years

Goal to reduce debt by $3B this year

Good AISC of US$860/oz. is drowned out amongst debt and spending

Detour Gold (TSX: DGC)

Responded to gold’s October gains…but has been rising all year!

Operates the Detour Lake mine in Ontario

Investors loving its controlled costs (US$1,030/oz. AISC in Q2), low risk operation, and Canadian dollar exposure

ß Goldcorp

Klondex Mines à

ß Kinross

Lake Shore Gold à

ß Yamana

Alacer Gold à

BIFURCATION WILL CONTINUE

Mid-tier operators with low risk assets in weak currency environments will outperform major miners I’m not saying Exclude majors from your portfolio! They will generate good returns too, but not really until generalist investors rotate into gold…which will take some time yet.

OTHER MEDIUM-TERM BUYS Near development assets: projects that have answered most/all key questions around permitting, engineering, infrastructure, and jurisdiction, have strong economics, are sensible to build, and offer good exploration upside will be the first to get bought out or built Ex: Kaminak, Dalradian Companies where a mid-tier has taken a stake – foot in the door. Ex: Eldorado recently bought 15% of Integra Gold, Alamos recently bought out Carlisle Goldfields Companies with exposure to zinc and uranium. Supply/demand fundamentals say zinc has to rise in the medium term; when it does, the very few equities with exposure will provide strong leverage. Same goes for uranium, though the timeline is a bit longer. Ex: Nevsun, Uranium Energy, Nexgen

LONG TERM HOLDS Short-term trades to profit today are great Medium-term buys for leverage when the rally gets going are also great

But don’t neglect the long term: keep your eyes peeled for cheap value stocks you can sock away. •  Cream of the crop explorers (Auryn Resources, Pilot

Gold, Rockhaven Resources) •  Well-managed project generators (Eurasian Minerals)

•  Miners with controlled costs, manageable debt, and growing production (B2 Gold, Newmarket Gold)

Buy and forget – unless to sell some on seasonal peaks to lower cost base

BOTH EASY AND HARD This ain’t rocket science…but the hard part is keeping up with it all. Timing: •  Predictable and not (this year October instead of August)

•  Have to pay attention and get out

News or promotion:

•  Have to know! Need to track companies, know people

Medium-term buys: •  Many mid-tiers to choose from – need to dive deep to select

•  Near-development assets must be derisked – need to ask all the right questions

Long-term holds:

•  Essential to identify the best of the best

I will have a Speakers Tables in the Exhibit Hall tomorrow morning and I will be around the

conference for the rest of the week.

gwen@resourcemaven.ca www.resourcemaven.ca

Thank you!