On Friday, there was an attempted coup of the Turkish government. While the coup was quickly thwarted by government forces, effectively maintaining
the status quo; in our view this has increased the risk profile for foreign mining companies operating in Turkey. We expect that this increased risk
is likely to negatively impact the stocks Monday morning. Those that essentially have pure-play exposure, like Alacer Gold (TSX:ASR) or key projects
within the country like Eldorado Gold (TSX:ELD, NYSE:EGO) and Pilot Gold (TSX:PLG) are likely to be the most impacted.
Why the failed coup increased the political risk of operating in Turkey? While the coup attempt was quickly thwarted, it highlights
the ongoing changes to Turkey’s politics that have seen power being consolidated with the President, Erdogan, and his party, the AKP. Early on, in
the aftermath of the failed coup, this trend appears to be continuing. While it cannot be certain the impact, this shift to a more authoritarian system
is going to have on the business environment longer-term, the increased uncertainty should increase the countries risk-profile, negatively impacting
companies that operate there. We expect this increased risk profile to be priced into stocks on Monday morning.
All companies in Turkey may be impacted; ASR, ELD and PLG likely to be hardest hit
. While, there are a number of companies with projects
and mines in Turkey, we expect Alacer Gold (TSX:ASR), a producer whose only asset is in Turkey, to see its share price most impacted. As well, the
majority of Eldorado Gold’s (TSX:ELD, NYSE:EGO) production comes from Turkey and Pilot Gold (TSX:PLG) has a significant asset in Turkey, are both likely
to see share price declines on Monday. Other companies likely impacted include Aldridge Minerals (TSXV:AGM) and Centerra Gold (TSX:CG). See Figure
1, for more extensive list of companies with projects in Turkey.
Red Cloud Klondike Strike Inc. is registered as an Exempt Market Dealer in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick,
Nova Scotia, Prince Edward Island, Newfoundland & Labrador, and the Yukon. Part of Red Cloud Klondike Strike Inc.'s business is to connect mining
companies with suitable investors that qualify under available regulatory exemptions (the "Red Cloud KS Business"). Red Cloud Klondike
Strike Inc., its affiliates and associates, and their respective officers, directors, representatives, researchers and members of their families (collectively,
"Red Cloud KS") may hold positions in the companies mentioned in this publication and may buy or sell, or buy and sell their securities
or securities of the same class on the market or otherwise. Additionally, Red Cloud KS may have provided in the past, and may provide in the future,
certain advisory or corporate finance services and receive financial and other incentives from issuers as consideration for the provision of such services.
Red Cloud KS has prepared this publication for general information purposes only, NOT as part of the Red Cloud KS Business. This
document should not be considered a solicitation to purchase or sell securities or a recommendation to buy or sell securities. The information provided
by Red Cloud KS for the purposes of this publication has been derived from sources believed to be accurate, but cannot be guaranteed. Opinions or analysis
contained in this publication may be subject to change and Red Cloud KS does not undertake to advise the reader of such changes. This publication does
NOT take into account the particular investment objectives, financial situations, or needs of individual recipients and other
issues (e.g. prohibitions to investments due to law, jurisdiction issues, etc.) which may exist for certain persons. Recipients should rely on their
own investigations and take their own professional advice before investment. Red Cloud KS will not treat recipients of this publication as customers
or clients by virtue of having viewed this report.
Company Specific Disclosure Details
1) A member of Red Cloud KS team has visited/viewed material operations of the issuer.
2) In the last 12 months, Red Cloud KS has been retained under a service or advisory agreement by the subject issuer.
3) In the last 12 months, Red Cloud KS has received compensation for investment banking services.
4) Red Cloud KS or a member of the Red Cloud KS team or household, has a long position in the shares and/or the options of the subject issuer.
5) Red Cloud KS or a member of the Red Cloud KS team or household, has a short position in the shares and/or the options of the subject issuer.
6) Red Cloud KS or a member of the Red Cloud KS team own more than 1% of any class of common equity of the subject issuer.
7) A member of Red Cloud KS team or a member’s household serves as a Director or Officer or Advisory Board Member of the subject issuer.