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5/25/13

Congratulations, Serafino Iacono...

...on your marriage today to María Paola Mejía Suárez.

5/24/13

The Friday OT: Daft Punk; Random Access Memories (Vanderway Edit)

A remix from heaven

Barrick's (ABX) halt connected to $16m fine imposed by Chile for Pascua Lama environment snafus

But we'll find out more soon, for sure.

UPDATE: As reported in plenty of places in Chile today (Googly newsfeed here), Chile's Environmental Superindentency agency has paralyzed the already halted Pascua Lama project and imposed an approx $16.4m  fine on the company's wholly owned Nevada SPA company for envirommental rulebreakings. If this is the reaosn for the halt today (and it looks very likely), the news is already largely baked in while the fine, though large, is a drop in the bucket of an $8.5Bn (with a B) initiative. Kinda looks as though ABX is playing the news a bit with this halt.

UPDATE 2: The Silver Wheaton (SLW) wrinkle, as noted by kind reader M and relayed from the SLW website:
Barrick has provided Silver Wheaton with a completion guarantee, requiring them to complete Pascua-Lama to at least 75% of design capacity by December 31, 2015. During 2014 and 2015, Silver Wheaton will be entitled to the silver production from the currently producing mines to the extent of any production shortfall at Pascua-Lama, until Barrick satisfies the completion guarantee. If Barrick fails to satisfy the requirements of the completion guarantee, the agreement may be terminated by Silver Wheaton. In such an event, Silver Wheaton would be entitled to the return of the upfront cash consideration of US$625 million less a credit for silver delivered up to the date of that event. 
Certainly worth considering, what with the delays to date and all that. 


Agnico Eagle (AEM) (AEM.to) continues its 2013 spending spree in juniors

Yesterday saw the latest in a line of strategic investments made by Agnico Eagle (AEM) (AEM.to) in TSX listed junior mining companies, as AEM has decided to pay $11.25m to buy 7.5m units of Probe Mines (PRB.v) at $1.50 a shot (1 unit = 1 share + 3/4 warrant at $2.10 with a 2 year shelf life). As PRB.v closed at $1.41 yesterday we can expect a rally on this news, but more interesting is that this is the fourth such deal AEM has made with a junior in the last few weeks, so let's see how the other three have been getting on:

The first was on March 19th, when AEM paid $12.96m for 9.6m units of ATAC Resources (ATC.v) at $1.35 a shot (unit = 1 share + 1/2 warrant at $2.10, 18 month shelf life). Here's a chart:


Hmmm, not so good. ATC has suffered through the gold drop and is now at 99c. It's expensive exploring in The Yukon, they tell me.

The next was April 9th, when AEM paid $24m for 29.97m units of Sulliden Gold (SUE.to) at 89c apiece (unit = 1 share + 0.7 warrants at $1.31, two years to play). Here's how SUE.to has done in 2013 so far, with the date of the deal marked.

Well, not so bad considering just how bad the market's been during the gold sinkages of mid-April and then mid-May (as long as you consider that Shahuindo is never going to happen of course....but hey, details, since when have you needed to build a project in order to be a successful junior player, right Stan?). However, we do note that AEM's price was 89c rather than that day's market price and SUE.to is still a tad under that number. 

And to complete the set, April 23rd saw AEM's move into Kootenay Silver (KTN.v) via a 6.25m unit deal at 76c a shot that cost a total of $4.75m (unit = 1 share + 1/2 warrant at $1.08, two years playtime). The last chart here:


Again AEM paid over market price at 76c and will immediately start on about its long-term planning if you ask them. But we note the rally that managed to avoid the May sagging and repeat that there are a lot worse looking one month charts in the juniors today (and I should know, I own a few of them). 

The bottom line is that we're looking at a company strategy here, with AEM buying into beaten down juniors that offer up (in the company opinion) interesting projects at macro-induced discounts. We also note that AEM's been buying into tiny fractions under the 10% barrier in each of the names, too. The pattern is clear enough. Whatever you might think of the companies that AEM has bought (personally I think the're making a big mistake with SUE for political risk reasons), the rest are deals about which I can shrug my shoulders and say "well, at least the timing isn't bad".



Chart of the day is...

...tha gold/copper ratio again:


Your humble scribe's obsession with the the monetary versus industrial metals ratio continues and today it's all about the right hand side of the chart and what seems to be the beginning of a reversal. The pleasant thing about chartwatching is that you can see whatever you want to see in the squiggly lines (to the point where they've spawned a whole sub-industry).

5/23/13

Daft Punk: Random Access Memories

The best new music I've heard in years.



Listen to this music, it's superlative.

Despite having a chart that looks like this...


...Exeter Resources (XRC.to) (XRA) is still overvalued by nineteen cents per share. Here's the mathematics for your consideration:

Share price today: 72c
Working cap per share: 53c 
Value of fixed assets: Fuck all.
Result: Overvalued by nineteen cents per share (y'see, toldyaz)

It's the power of Canaccord (well, ex-Canaccord)

The potential for a class action suit against Aurcana Corp (AUN.v)


Below is the piece that first appeared in The IKN Weekly issue 206, dated April 14th 2013. By way of context, back in Novermber 2012 I bought Aurcana Corp (AUN.v) at $1.07 and for a little little while the trade showed green, but the stock then started its downhill run and via a Flash update just before IKN206 came out I sold the position at 55c for a big percentage loss. 

So I made a trade and lost. Shit happens, all that etc, however the post today isn't about a dose of them there sour grapes (it's only money, after all) and more about how I'm sick and tired of having to listen to, read and pay attention to liars and scumballs in the mining industry such as Lenic Rodriguez, Pres/CEO of Aurcana. What we have in this case isn't a subjective opinion that he's a liar either, as the company's own words make it abundantly clear that AUN.v told outright falsehoods to the market in December 2012. As such, and considering the hefty share price drop between then and now, AUN.v looks ripe for a potential class action suit (a legal recourse that's finally gaining some traction in Canada, glad to say).

Oh by, the way, that thing liar Rodriguez said about not needing cash during the YE company conference call? Well, as of this week RBC seems to agree with your humble scribe that AUN.v will in fact need to raise more cash, as it was one of the reasons cited by RBC during its downgrade of AUN.v to "underperform" on May 21st. Anyway, have a read of the piece in IKN206 here and decide for yourself if there's a civil case to answer. Personally, I think there's an abundance of evidence.

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Aurcana Corp (AUN.v): Position sold
To call myself disappointed with the Aurcana (AUN.v) 2012 YE financials is an understatement, as the Flash update of Friday morning (see appendix 1) should have pointed out clearly. The position sold as per Friday and the loss is taken so there won’t be a massive post-mortem here today. However, a few notes on just why, above and beyond the outright lies that AUN.v has used on the market, we don’t like the look of where AUN.v sits financially today follow.

Here bulleted are some of the items included in the company news release of December 14th 2012 (3) and between the bullets are updates, dating from last week, on how the information released on April 11th(4) compares to the original news:
  • The assets at the Shafter Mine are ready for their intended use and the plant is now operating on a continuous basis at an average rate of 600tpd.
According to last week’s results, commercial production has not been achieved at Shafter.
  • Processing of lower grade open pit ore, initially mined during the plant commissioning and testing phase, has been discontinued. The plant is currently processing higher grade underground ore exclusively.
The company reported in its NR that ore at 5 oz /t Ag was currently being mined, lower than the ~8oz/t average for the underground material. It also stated in the ConfCall that until the CCD circuit is installed (supposedly happening “gradually through 2013”) recoveries are running at 50%.
  • The Shafter Mine currently employs 152 personnel allowing for a continuous operation. Additional underground miners have been recruited and will join the Shafter mine in January 2013, as the Shafter mine ramps up.
During the conference call, CEO Rodriguez admitted that the company was still short of staff, talking about 15 extra heads needed to bring Shafter up to 600tpd and that one problem had been high staff turnover. To combat this problem the company is now building living accommodation for employees.
  • Aurcana has implemented a production ramp up plan to gradually increase production towards the phase I planned capacity of 1,500tpd, as mining operations proceed.
On December 14th the mine was apparently running at 600tpd. Last week, some 118 days after the wholly false announcement of commercial production, it was running at 560tpd.
  • As part of the ramp up plan, the installation of additional thickener tanks, increasing the processing capacity of the plant, will be commissioned early Q1, 2013. In addition, upgraded filters will be installed in Q2 2013.
Those installations have been delayed. Also, additional filter presses are needed but won’t arrive until 2q13 or become operational before 3q13.

As well as those points, it was also clear that AUN has dropped its grand plans for M&A type expansion. Back in 3q12 the company said it was in talks with another Mexico producer for a merger (we guessed at Scorpio at the time), but the message last week was that AUN would be concentrating on its organic growth. It’s unsurprising given the share price weakness between then and now of course, because its lack of cash and serious paper closes the door.

Aside from the untruths told and now admitted, there are financial ramifications to the delayed timeline for Shafter. This chart shows our forecasts for overall working capital at AUN during FY13 which assumes steady state production and post credit at La Negra, Shafter that runs at 600tpd in 2q13 and moves up to 1,000tpd by year end (using 5oz/t silver and average 70% recoveries) and an average $29/oz realized price for silver. On the ConfCall, CEO Rodriguez (after some prompting) admitted that the 2013 capex budget for AUN would be around $20m, which according to our model means that AUN is likely to go working cap negative for a while before recovering at the end of the year. It does have a credit line in position that will be more than enough to cover cash flow needs for a near-term period, but the problem here is if silver doesn’t maintain a $28/oz average, AUN does more than just go through a couple of quarters without profit; it runs out of cash.

On the ConfCall, CEO Rodriguez said that the company wasn’t planning any further equity raises but quite frankly, with a track record like his there’s no reason to believe him. As AUN is now about to enact its reverse stock split which will cut the shares out total eightfold (putting it at 58.4m s/o) and the share price to over $4, a rollback of this sort smacks of a company preparing to raise more cash via equity. Given the thin state of cash holdings forecast for this year and the slipping in timelines for expansion, I’d say a dilutive round of raising in 2013 is far more likely than the two-faced Rodriguez would like us all to believe.


Anyway, it’s all rather too much like sour grapes from me on this trade today. I’m now out and not going back until things have substantially changed at AUN. That would include a complete change in top management as I’ve been fooled once by these people, so shame on them. Next time would be fool on me. But there is one more thing I’d like to share here, which is the price chart for AUN since December 14th, date of the apparent “commercial production” that turned out to be a tissue of lies. It was due to this announcement that its promised timeline was being kept that AUN remained in the IKN portfolio. Since that time the stock has sunk, from a December 14th close of $1.04 to the current 56c. That’s $224.3m in market cap wiped from the stock and in my personal view, that leaves plenty of room for compensatory actions from those who have lost money on this deal due to the lies and deception of company officers. I for one know that I wouldn’t have held on this long if AUN hadn’t announced its “achievement” of commercial production on December 14th.

Peru's prior consultancy law: A user's guide

Your humble scribe's humble mailbox humbly suggests that there is a certain amount of confusion regarding Peru's "prior consultancy" law, the initiative introduced by the Ollanta Humala government to give more say to locals affected by large civil works projects such as new mining operations. So even though we've gone over this issue previously, to clear things up a bit...

1) The law means that those involved with new projects, both company and government, must consult with communities potentially affected by the project if said community is deemed "indigenous".

2) However, most locals are now considered run of mill inhabitants rather than "indigeous". For example, when Ollanta Humala was running for President he told Peru that all Quechua speaking areas and populations would be regarded as indigenous and be given the right to prior consultancy. Now, his government says they're not and don't have the rights promised and if you think this has pissed a few people off recently, you'd be right.

3) What's more, even communities officially recognized as indigenous are now being told that they're not. For example, the Cañaris community around the Candente Copper (DNT.to) Cañariaco project, despite having been officially deemed indigenous by the government of Peru in 1956 and despite having documentation handed down from  the years 1714 and 1744 calling their locality (and we quote) "common lands of the indigenous population of San Juan Bautista de Cañaris", are now told that they're not indigenous. This is because they firmly oppose the construction of the mine, but it goes without saying that the government would be happy to call them indigenous if they liked the idea of a fucking big hole being dug where they live.

4) But the funniest bit is that locals actually think this prior consultancy law gives them some sort of right to stop a project from being permitted, when in fact it doesn't. According to the law, the government is in its rights to listen to all the protests and complaints, then ignore them completely if it doesn't like what it hears and go permit and approve the project anyway.

5) Which means that Ollanta Humala is a bit of an asshole and that Peru is setting itself up for some interesting choices, such as "how many protesters does the government shoot dead before it gives up on trying to impose its will on people that don't want a mine built where their village sits?"

There you go, hope that's clear now.


Aurcana (AUN.v) speaks!



We have this today from Aurcana (AUN.v) big cheese, Lenic Rodriguez:

In regard to recent events, Mr. Lenic Rodriguez, Aurcana's President and Chief Executive Officer would like to address the following message to investors: 
"The decrease in Aurcana's share price over the last few months and especially the last few days has been disappointing and we strongly believe does not reflect the true value of Aurcana's two mines, our solid fundamentals and our growth profile.  
"I would like to reaffirm today, that there has been no fundamental changes and there is no undisclosed material changes regarding our mineral resources or ability to operate the mines that in management's opinion would justify the recent drop in the Company's valuation. We have operating mines located in politically stable jurisdictions, able to produce silver at a relatively low total cash cost. This is an important strategic advantage especially in a lower silver price environment today. With concrete progress at the Shafter mine, and continuous improvements at the La Negra mine, we will be working hard to regain investors' confidence, while aiming to deliver positive results from both of our mines.

"Thank you for your confidence in Aurcana Corporation."
And after a quick run through the Ottotrans™...

In regard to recent events, Mr. Lenic Rodriguez, Aurcana's President and Chief Executive Officer would like to address the following message to investors:
"The decrease in Aurcana's share price over the last few months and especially the last few days has been disappointing and we strongly believe does not reflect the true value of Aurcana's two mines, our solid fundamentals and our growth profile. It does, however, relfect on the company's management team pretty accurately
"I would like to reaffirm today, that there has been no fundamental changes and there is no undisclosed material changes regarding our mineral resources or ability to operate the mines that in management's opinion would justify the recent drop in the Company's valuation and that those fuckers over at RBC who pulled the plug on their reco really screwed the roost. We have operating mines located in politically stable jurisdictions, able to produce silver at a relatively low total cash cost and the fact they don't make us any profit at all isn't our fault, obviously. This is an important strategic advantage especially in a lower silver price environment today and if we ever get Shafter running at commercial levels the way we said we had it in December last year, the company might even be worth something. With concrete progress at the Shafter mine, and continuous improvements at the La Negra mine, we will be working hard to regain investors' confidence, while aiming to deliver positive results from both of our mines.

"Thank you for laughing at Aurcana Corporation, it's about freakin' time."

Ah, that's more like it.

Chart of the day is...

...the Nikkei, five day: I believe this is what they call 'profit taking'. Right?

And now, goldbugs and 'toldyasos'. Extremely annoying combo, coming your way today.

5/22/13

Chile trade data

Balance of payments, monthly 2008 to date, here:


Imports and exports, monthly 2008 to date, here:

After spending the afternoon checking on matters Chilean for other reasons, your humble scribe thought that these charts have ended up being pretty enough to share. Make of them what you will. 

bargains

As documented in the weekly over the last couple of months, your humble scribe has been trying to avoid "bargains" in the junior sphere, those companies that suddenly looked cheap compared with prices of the last couple of years due to the gold/industry sag. It hasn't been hermetic resistance and I have picked up a few shares of this'n'that along the way, but the recent trades have nearly all been small-sized and near-term flip strategies, not the longer-term investment timescale and mentality usually preferred. But most of the time I've been able to slap my fingers away from the buy button and so far at least, that's been the right call.

Take for example Colossus Minerals (CSI.to), which is one I've been watching carefully and even expressed disappointment that I didn't buy at the "right" time in early March (just before ARC Fund took its big bite at around $2.50). It looked wrong for a while, but the big gold downdrafts of April and then May took a heavy toll on CSI stock and then, yesterday, the company announcement that it was raising $25m in a $1.60/share bought deal confirmed that staying on the sidelines was very much the right call. 


There are financings and there are financings, but raising 25 large at a time when CSI is supposed to be ramping into near-term production and at these new low prices does not, as the financial saying goes, "have good optics".

As Gary Tanashian said in NFTRH239 last Sunday, “This is not a time to be guessing. It is a time to be right by not being wrong.”

Go read "The Desperate, Deceptive Measures Penny Stock Scammers Use to Dupe Investors"

I'm a bit late to this, as the post was published on May 15th and it's only just come to my attention (via this Columbia Journalism Review article), but anyone, I mean anyone daft enough to even consider, for one short minute, that a speculative investment in any type of mining company listed on the US OTC market might be good idea should go read Brian Richards of The Motley Fool and his article "The Desperate, Deceptive Measures Penny Stock Scammers Use to Dupe Investors" right now.

It's all about Goff Corp (GOFF.pk) (GOFF), a company that your humble scribe wrote on as a possible short trade in The IKN Weekly issue 205 (pasted out below), but sadly there was no borrow available and I failed to get a trade or the obvious profit. However that and the specific company GOFF is somewhat beside the point, as the Brian Richards' excellent article is more about the way you should avoid all these stocks, every last one of them. There's a lot of good information and a glimpse or two of what goes on behind the curtain of this sordid industry as well. Go read it.

Meanwhile, here's that paste-out of the script in IKN205, dated April 7th:

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Goff Corp (GOFF) (GOFF.pk): An obvious pump and dump scam, a possible short
Before we look at this company, a little context is required. Due to the nature of what I do (mostly for the stuff on the blog, I’d expect) there’s a fairly regular supply of suggestions and ideas from readers (both known to me previously and new arrivals) on companies that look scammy, pumped and generally shortable ideas. I read them all (and thank you for them, feedback and ideas always welcome) but when it comes to the US OTC or US pinksheet companies, it takes an exceptionally scammy looking one to get me out of a mere “well that’s one to avoid” attitude and to a level of “Hey, let’s see if we can short this one, it’s so obvious it hurts”. For one thing, in my book just about anything that’s a mining stock and only listed on the OTC is a default avoid situation and I have better things to worry about than to wade through all the silly pissant listings and pie-in-sky promises on offer over there. But occasionally a company will stand out from the pack as particularly nasty and we’ve had one already this year, namely US Graphite (USGT) that was pumped to nearly $1 before collapsing as it was bound to do. Luckily it was also possible to get a borrow on a few shares and so we rode the collapse down and made a profit.

That’s a little background and now down to business, as thanks to reader ‘JE’ another screamingly obvious p&d scam has come up on the radar. The name of the company is Goff Corp (GOFF) (GOFF.pk) and the scam is based around a wholly-owned subsidiary of GOFF, Golden Glory Resources. Rather than claim credit or originality, I reprint here the mail that kind reader JE sent in for my consideration:

“A junior miner called Goff Corp (GOFF.OB) and their wholly owned subsidiary, Golden Glory Resources, have been mention in two recent Seeking Alpha articles (21) and (22). Apparently, Golden Glory has a gold prospect in Colombia. The 43-101 is here (23). Try not to laugh too hard. Of course there is a steady stream of press releases (24). SEC filings also make interesting reading (25). According to the last quarterly report, Goff has $5653 in assets and $25,564 in liabilities, signed by one Gary O’Flynn on 20 Feb.(Google name for some more intrigue). Mr Flynn was the President, CFO, Secretary, Treasurer, and director of Goff at that time. Also chief cook and bottle washer.  Mr Flynn, evidently anticipating the need for cash for legal fees, sold 108,750,000 shares of Goff to one Warwick Calasse on 26 Feb for $25,000. Mr Calasse also assumed all of the above titles. And on 15 March, the promo began and the price took off. Current market cap is $164 million and rising. I haven’t dug any further, but it is obviously a scam.”

First thanks to JE, who is somebody who knows his way around the juniors scene well. Next, his ‘obviously a scam’ is almost an understatement when you note for example how the “intriguing Gary O’Flynn” has recently been charged with attempted murder (26). Next let’s consider the new man in charge, Warwick Calasse, who is currently 30 years old and to quote his resumé “From 2006 to 2010, Mr. Calasse held various training and management positions with horse farms and stables in the United Kingdom and Zimbabwe”, or in other words this company with a market cap of around $210m is in the hands of an ex-stable lad who bought about 30% of the shares less than two months ago for $25k. The main property in Colombia does at least have the backing of a 43-101, but on reading the thing it becomes clear just how early stage and risky it is, besides the fact that this OTC doesn’t have the money or the permits (or the manpower for that matter) to drill and develop in anything approaching a formal way And to cut a long list of evidence short, on checking the web it quickly becomes clear (27) that GOFF is being pumped by the type of bucket shop that’s inevitably behind these short-lived shooters. Evidence of a pump and dump? We got it.

There are two questions that matter here:

1)      How much higher will GOFF go before the plug is pulled and it goes to zero?
2)      Can we get a lend and go short?

The first is the lesser of the two, because even if GOFF moves from (let’s say) 60c to (let’s say) a buck or even higher, its return trip to zero is already a sure thing. No folks, it’s the second one that counts as these OTC pumps aren’t easy to trade to the short side.


I’m going to try and get myself short next week but on initial scouting last Friday (when I didn’t get any) I know that this one isn’t going to be easy; more difficult in fact than USGT, despite the multi-million share daily volume (that’s its own red flag by the way, with nearly all the trading happening between accounts run by the scamsters who are playing ‘find the lady’ with the world). This short trade is a potential winner but it’s not going to be anywhere near as easy to go live on the short, due to the poor nature of its market. However, I’m going to try and get some and will report back next week on success/failure. The end.

Burning rubber

Attention mine managers everywhere. On May 7th in a ceremony during a mining conference in Buenos Aires, Argentina, the Japanese tire company Bridgestone presented the ops guys at the Pirquitas mine (Silver Standard (SSRI)) with a plaque to congratulate the company for squeezing 20,000 hours of mine life from their tires, specifically the 20.00R49 VRLS E-4 large truck tires.
The Bridgestone lackey said (translated), "Recall that on average the life of our tires is between 10,000 and 12,000 hours, and that this company (Pirquitas) has reached 20,000 hours. This achievement, will be reported back to Bridgestone HQ in Japan, as it is probably a record not only in Argentina but worldwide."
So there you go mine manageration peoples, beat that. Lets just hope it's only you reading this post and not the CEOs of your companies, too.


Chart of the day is...

...the US Dollar (USD) index, weeklies:


Dear Mr. Sinclair, 
I write to you regarding your previous repeated claims of dollar destruction, as they seem to be are a little overdue and as such I'm interested in getting your opinion on what seems like an error. However I understand that you probably remain convinced that yours is the right path and that it is only a matter of time before you are indeed proven right. Therefore, the real question is about the calendar year and whether the current Gregorian system used by the Western world is, as some of us are beginning to suspect, part of the conniving and systematic hoodwinking used by the fractional fiat banker world leaders in order to subjugate we the cannon fodder.Your opinion is awaited. 
Big kiss, Otto.

5/21/13

The next important update from Trevali (TV.to) on its Santander mine

After today's effort from Trevali (TV.to), your humble scribe humbly predicts this as the next offering:

VANCOUVER, BRITISH COLUMBIA--(Mock-It-wired - June 15, 2013) - Trevali Mining Corporation ("Trevali" or the "Company") (TV.TO)(TREVF)(4TI.F) provides an important update on significant developments on its Santander Mine production update.
SANTANDER MINE UPDATE
Trevali reports that the company has received an important consignment of paperclips from a supplier, procuring this vital administration element at a discounted price after making a thorough search of the local market. President Mark D. Cruise comments, "We are pleased that this cost saving will streamline our efforts at Santander as we await the start of zinc production at the Santander mine, which is still on time and under budget despite anything we might have said in 2010, 2011 or 2012. The paperclip procurement is expected to positively affect administration labours in the next two financial years." 

Additionally, Trevali is very pleased to announce the definitive start of a small shop selling chocolate and other confectionery to workers outside the mine gates, which gives them something to do while we await the start of production. And before you ask, no we're not worried in the slightest that at the current zinc price the mine will run at a loss for an extended period even after the mine starts operating. Why did you ask? What's it got to do with you, anyway?

About Trevali

The false teeth football protest

Are other parts of the world still throwing tomatoes, eggs, shoes at people in protest? Oh, how passé of you all, because these days false teeth are the thing.



The scene is the match between Belgrano and Argentinos Juniors last night, a match which Belgrano won 3-1 and put Arg. Jrs in relegation trouble. Their team took abuse from supporters due to this, including some guy who threw his set of dentures at the manager. All on the 34sec video up there, for your viewing pleasure and dee lek tay shun.

A flash update...

...was sent out to subscribers just after the opening bell this fine and crisp Tuesday morning. Belt'n'braces post done.

Chart of the day is...

...the gold/copper ratio, 12 months:


Just about the most interesting metals chart out there right now.

Dear Dorothy Kosich

Thanks for quoting me and all that, but you have a factual error in your note. I'm not a geologist, never have been, never will be and unlike other bullshit commentary merchants of this crazy segment of world industry who try to make out otherwise, have never tried to pretend to be one. In fact, I have been told by true members of the band of rockbanging reprobates that the only resemblance I have to a geol is the manner in which I take my alcoholic beverages. 

And by the way, if you're going to quote someone you should also provide a link. 

5/20/13

The Colombia peace process

Want to know how talks have been going between the government of Colombia and the FARC? Adam Isacson of WOLA has just published the latest in his series of peace process updates and it's jam packed with all the fine-grained detail you'll ever need. English language and a better digest than anything written in Spanish, for that matter. High recommendation.

Well well well; manacle my hands and feet, tickle me with a feather and call me Dolores

PMs are rallying.


They were just waiting for me to get back to the office, obviously. Pretty promise, won't leave again.

Spain-Chile immigration chart del día

An interesting little datapoint in Chile's La Tercera newspaper today:


And the obvious reaction from politicians? Yup, they're worried about a big influx of foreigners stealing local people's jobs and are now pushing for tighter immigration controls. My how times change.

UPDATE: Iwnattos kindly sends in this



Thank you, sir.


Returns on investment

Reader 'TWs' mail this morning was all about capex blowouts in South American gold mining and how Barrick's (ABX) now infamous capex blowout at Pascua Lama (Chile/Argentina) stood head and shoulders above the capex hike seen at Goldcorp's (GG) Cerro Negro project (Argentina...Santa Cruz, to be exact). So of course your humble scribe checked out the latest and yes, Cerro Negro's construction ticket has indeed climbed from $750m to $1.35Bn recently, but that's still not bad at face value when considering it's a gold deposit that has more than doubled in size already (we're up to 5.74m oz Au, with very decent silver kicker). But then we scratched at the numbers a little more, and...
  • For one thing, GG started out at Cerro Negro by paying U$3.4Bn for then owner, Andean Resources. 
  • And back then, post-credit cash costs were going to be $60/oz Au, nowadays they're slated at $350/oz.
  • Then there's the timeline overrun, with GG now indicating that Cerro Negro won't start producing until 2014. As there's no capex budgeted in 2014 for Cerro Negro (yet), that smacks of more moolah to spend before the thing goes FCF+ too.

So we throw all that together with the 5.74m oz Au and what do we get?
  1. Acquisition cost of $592/oz
  2. Capex cost of $235/oz (and likely to climb a bit more)
  3. Production cash cost of $350/oz (post credits, GG dixit)
  4. Total: U$1,177/oz  (even before we start fiddling around with time value of money and reasonable discounts therein)
Well, with that kind of price tag per ounce we're just glad Cerro Negro is in a nice, safe mining jurisdiction that's approved by the world community for its economic and political stability as well as its low inflation rates. Oh...wait...






Mining PRs and the Ottotrans™, part 71



Top of the morning to you, as we start the week with the seventy-first episode of our occasional series that tries its jolly hardest to take the guff and nonsense written in mining news releases and translate it into something from which normal human beings can derive some understanding. Today's example comes from Stillwater Mining (SWC):


BILLINGS, MT--(Marketwired - May 20, 2013) -STILLWATER MINING COMPANY (NYSESWC) (TSX:SWC.U) today announced the election of Brian Schweitzer, the former governor of Montana, as Chairman of the Board. Governor Schweitzer, elected to the Board at the Company's Annual General Meeting of shareholders on May 2, 2013, replaces Frank McAllister as Chairman. Mr. McAllister, who has served as Chairman and Chief Executive Officer (CEO) of the Company since 2001, will continue in the role of CEO and President of the Company during an interim period while the Board seeks a suitable candidate to succeed him. A committee of the Board has been established to carry out the CEO search, which will begin immediately. 
Stillwater's new Chairman, Governor Schweitzer, observed, "Stillwater Mining Company is favored with unique, high quality mineral assets in Montana which hold tremendous promise for the Company's future. I am honored to have the privilege of working with this new Board of Directors, which includes individuals with long experience and diverse perspectives on the mining industry. Together with the Company's dedicated and outstanding Montana-based workforce, I believe the Company's prospects for the future are exceptionally bright." 
Reflecting on his experiences as Chairman of the Company, Mr. McAllister noted, "I have taken immense pleasure from the many warm associations I have enjoyed during my service as Chairman of Stillwater Mining Company. Stillwater has a wonderful workforce and world-class operations. I welcome Governor Schweitzer as the Company's new Chairman, and I firmly believe that under his leadership, Stillwater will achieve new heights in its performance. I look forward to working with the Governor and the new Board as we complete this leadership transition." 
About Stillwater Mining Company


And this is what it means:

BILLINGS, MT--(Marketwired - May 20, 2013) -STILLWATER MINING COMPANY (NYSESWC) (TSX:SWC.U) today announced the election of Brian Schweitzer, the former governor of Montana, as Chairman of the Board. Governor Schweitzer, elected to the Board at the Company's Annual General Meeting of shareholders on May 2, 2013, replaces Frank McAllister as Chairman. Mr. McAllister, who has served as Chairman and Chief Executive Officer (CEO) of the Company since 2001, will continue in the role of CEO and President of the Company during an interim period while the Board seeks a suitable candidate to succeed him. A committee of the Board has been established to carry out the CEO search, which will begin immediately. 
Stillwater's new Chairman, Governor Schweitzer, observed, "Stillwater Mining Company is favored with unique, high quality mineral assets in Montana which hold tremendous promise for the Company's future. I am honored to have the privilege of working with this new Board of Directors, which includes individuals with long experience and diverse perspectives on the mining industry. Together with the Company's dedicated and outstanding Montana-based workforce, I believe the Company's prospects for the future are exceptionally bright." 
Reflecting on his experiences as Chairman of the Company, Mr. McAllister noted, "I have taken immense pleasure from hanging on to my job against all odds these last couple of years, but my decision to waste hundreds of millions of company dollars on a piece of worthless llama pasture in Argentina has nailed me in the end. Stillwater has a wonderful workforce, world-class operations but a really fucking stupid bunch of idiots that doesn't have the first clue about international political risk at board level. I welcome Governor Schweitzer as the Company's new Chairman and I firmly believe that under his leadership, Stillwater will sell Altar or at least write it down to the price it's really worth, which is zero. I look forward to gardening." 
About Stillwater Mining Company


The IKN Weekly, out now



IKN211 has just been sent to subscribers. Better late than never. And by the way, if you haven't seen that movie yet you are missing a real gem.

5/19/13

Peru presidential approval ratings: Ollanta takes a hit

Peru's benchmark pollster Ipsos/Apoyo is out with its regular monthly survey on Ollanta Humala and all his friends, here's the updated headline chart:


The 46% score this month is five points worse than last month and a bit of a jag down, with the chatterers blaming Venezuela (of all things) and the way in which Humala dared to congratulate Maduro among reasons for the decline. That's the type of weird round-the-margins stuff that happens in the cruise phase of a LatAm presidency and not much to read into it. However, now looming on the horizon is the verdict set to be handed down by The Hague on the maritime limit dispute with Chile and as most Peruvians believe the International judgey people and assembled beaks will support the Peru argument, the real result is bound to affect public opinion one way or the other. His wife Nadine gets 55%, by the way. Down five points as well.