Ed's comments in his letter TDVThe Ugly Arguably the ugliest part of our investment strategy in 2018 turned out to be my favorite cheap exploration pick, Cascadero Copper Corp (CCD:TSXV), although many of our explorer picks this year, including Goldquest and Mexican Gold have languished too, and as you can see in the charts above, so has the entire exploration sector (as reflected in the CDNX). We began recommending the stock at a nickel in 2016 when the gold stock rally got underway and bought it up to 15 cents in the following two years. The shares sank to 3 cents this year (I first recommended it at 5 cents in 2016) after management dropped the ball on financing its portfolio of Argentine exploration and development prospects, and then engaged in destructive infighting that jeopardized the company’s financial position. It was a total upset. www.DollarVigilante.com 27 The company has terrific assets. And management simply let the ball drop. The most positive thing I can say about this story today is that it is not over, and perhaps, that for such an ugly position, our recommended weighting for these highly speculative stocks is still comparatively low. I have some good news and some bad news to report, however. First, the bad news. The company’s president and CEO, Judith Harder, passed away this week trying to fight off an unfortunate cancer. I’m still in shock about the announcement. Both very unexpected and sad. I have no words to express it, or her dedication to making sure that our investors were looked after. She was a wonderful person to the end. The company announced that it, ...has not yet had an opportunity to appoint an interim president and chief executive of icer. A new president and chief executive of icer, mutually acceptable to the company and InCoR Holdings PLC, will be appointed, as contemplated by the binding term sheet between the parties that was announced by the company on Dec. 10, 2018. A second negative is that the company is wrapping up a deal - its second such distressed deal and at a similar market valuation - which will dilute its shareholders further down to only 40%. On December 10 th , Cascadero announced a binding term sheet whereby InCor Holdings PLC will acquire a 30% interest in CCD’s Argentine subsidiary (CMC), which holds practically all of its properties, for US$1.5 million. That puts the valuation of all the projects on a 100% basis at about C$5 million, a total steal. Its current enterprise value at 3c (CAD) is about C$6.5 million,so why should we buy the thing at this point if nobody else thinks it is worth more? Right? Because the company is distressed. It is without management or a plan. Without anyone doing anything, no matter what we think it is worth, the valuation will never be realized without further development of the assets. Somebody has to do something. Another reason is the general mood on exploration stocks stinks. So the answer is that we believe this is a distressed asset sale, that these assets deserve higher valuations, and that they will realize those higher valuations when new management comes in with money to push the projects further. It is pointless to complain about the terms of the deal in judging the merits of owning the stock here. In effect, they have sold off 30% of the assets in exchange for new management and direction. www.DollarVigilante.com 28 If they didn’t do the deal it would have languished and maybe faded into obscurity. There is upside to this in that the more the merrier, and anything is better than nothing happening. The downside has probably almost disappeared at this point, except for the risk that they may still consolidate the shares in order to complete a new financing… something that regulators tend to require, but which screws shareholders. That’s not a prediction. There are reasons to believe they won’t. But I just don’t know because I don’t know InCoR very well. What I know is that they were brought in by David Dreisenger, an engineer who works for Search Minerals (SMY:TSXV), a Rare Earth Element deal with a similar share structure and price (i.e., almost 200 million shares outstanding and trading at 3.5 cents) as Cascadero. Dreisenger has been part of the UBC team that has been studying the metallurgy of Cascadero’s Taron Cesium deposit. InCoR Holdings controls Search Minerals and is increasing its stake to ~29% right now through a convertible debenture. InCoR is a private limited liability company incorporated in the UK in 2013, controlled by a businessman who lives in Monaco named George Molyviatis (he owns between 25 and 50 percent of co and is its largest shareholder according to a UK government database) who appears to have an investment banking history in Australia, or contacts there perhaps. Its other directors reside in Switzerland and the Czech Republic. In its latest annual financial statements (2017) InCoR reported that it had the opportunity to use a lead technology in a deal to acquire 10.7% of the shares of LeadFX (LFX:TSX), which is trying to raise $150 million to build a new refinery for its mine in Western Australia. InCoR also holds investments in Kodal Minerals, Tin Shield, BESRA Gold, AXIOM Mining, and InCor Energy Materials Ltd. I couldn’t find out how deep its pockets are as the company reported losses of 4.6 and 2.9 million euros in 2016 and 2017, net cash outflows of 2.1 and 1.2 million euros, and holds negative equity and net liabilities of almost 5 million euros. Wherever it gets the cash flow to buy the assets it seems like InCoR itself is a tax loss vehicle. Regardless, Search Minerals has good management, and InCoR seems to have access to capital. As part of the deal with Cascadero, InCoR has agreed to subscribe for a private placement consisting of 15 million units of the company to comprise of a share and a warrant priced in accordance with the policies of the TSX Venture Exchange. Securities issued in the private placement will be subject to a four-month hold period. When the private placement closes the company will have a new president and CEO, but I don’t yet know who that will be. The main deal is binding but the whole transaction is still subject to due diligence. It is expected to close at the end of January, by which time we should know who is leading it, and whether there will be a share consolidation or not. The development plan may still take a few months to emerge as the new management will have to sort out the priorities and learn about some of the important nuances. I am keeping it in the TDV portfolio and still regard the shares as a buy. If they consolidate their stock (i.e., a roll back) and the general market environment remains weak for exploration shares it could still fall back to the equivalent of 1-2 cents before anything gets going. But I’m happy to soak that up as much as possible below a nickel. Try not to pay more than a nickel at the moment until the deal closes at the end of January. I say “try” because the market is very thin and any scent of interest can push it up to 7 or 8 cents, which is still probably cheap in terms of what I think it is ultimately worth, but if it is too early those values won’t hold. So be cautious and try to get what you can at these low numbers. It might not be a $2 stock anymore (potentially www.DollarVigilante.com 29 - based on my original analysis) but it could still be a 50 cent stock or a $1 stock when the gold cycle kicks in and management has advanced one of their projects to either a PEA or Feasibility Study. That’s still a 10-20 fold gain if we are right about the assets. I was wrong about the previous management and it is unfortunate that this has happened, but I suggest investors view it as an opportunity.