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2/8/14

The Legatum Prosperity Index, 2013

I'm a little busy with my own weekend writing at the moment, so I've only scanned the main tables of the 2013 Prosperity Index report, compiled as always by Legatum. Here's the link to the report and it's normally well worth a full read.

We note Uruguay is top of the LatAm countries, in 30th place. Then comes Chile (35th), Panama (40th) and Argentina at 45th beating out Brazil (46th). 

A quiz on the legend of Brent Cook

Iwnattos has your four quiz questions on Brent 'The Legend' Cook right here.

2/7/14

Brokerage desk jocks are kneejerk dumbasses who might read the morning newsflow but don't know what the fuck they're looking at half the time

Evidence here:



IKN's SSRI post from Feb 4th here. Hindsight and all that, it was pretty obvious that SSRI was getting the better end of this Marigold deal. Foresight is the tricky one though, right?

Bear Creek (BCM.v) news

Bear Creek (BCM.v) has taken the formal legal step of starting arbitration proceedings against the country of Peru over the Santa Ana snafu, part of a forward corporate strategy that your humble scribe has commented upon previously. In short BCM may or may not have a case, but their decision to tie the future of Santa Ana to the future of Corani, as the company did last year when announcing the EIA approval of the bigger project was stupidity squared. Also in the same NR, this:
Recent media in Peru have reported false accusations by an individual distant from our communities wherein Bear Creek Mining officials supposedly paid locally elected officials based on an alleged document showing an agreement between the company and politicians in the Corani District.   The alleged document is falsified from our duly registered, official agreement as disclosed in April, 2013 (see news release dated April 14, 2013).   Police in Peru are investigating these claims and Bear Creek has both encouraged and is cooperating fully in this process. 
Just in case you ever wondered if people actually read this humble corner of cyberspace, and all that. You seriously believe they'd bother to write something if it had stayed in Spanish language media only? Anyway, that sounds like a pretty strong response to the bribery accusations we relayed the other day and knowing a bit about how these contracts are drawn up, it's sounds like a situation that's a little strange but certainly not beyond the realms of possibility.

Gold up on the weak jobs number, but...

...it's hardly a massive rush to hide behind the moneymetal, either.


The chart there looks quite dramatic but what we see is a base of 1262, a spike to 1272, and now up $5 from the pre-level at 1267. So, up five dollars...a wash (so far). Frankly, not much compared to the two dimes downspike in the USD on the same news. BLS jobs report NR here

UPDATE ten minutes later. It's still pre-open (22 minutes to go) and gold's given up all the gains, now 1260.

2/6/14

Gold Resource Corp (GORO) news

Breathtaking brass neck from the Reids today. Here's the filing and here below is the body of the text with your author adding a bit of red bold type and underlining, just for funnies:
Item 1.01. Entry into a Material Definitive Agreement
On January 31, 2014, the Audit Committee of the Board of Directors of Gold Resource Corporation (the “Company”) approved a consulting arrangement with William Reid, the Company’s former Chairman and Chief Executive Officer and a shareholder beneficially holding greater than 5% of the Company’s outstanding common stock. The Company entered into a written consulting agreement with Mr. Reid, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein. The Company agreed to retain Mr. Reid on a month-to-month basis for $15,000 per month to assist the Company with identification and development of potential new mining projects. The agreement is terminable at any time by either party. 
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Effective February 1, 2014, and pursuant to approval by the Compensation Committee of the Board of Directors, certain executive officers of the Company received an increase in the annual base salary set forth in his respective employment agreement with the Company. Chief Executive Officer and President Jason Reid’s annual base salary was increased to $600,000 per year, Chief Operating Officer Rick Irvine’s annual base salary was increased to $350,000 per year and Chief Financial Officer Joe Rodriguez’s base salary was increased to $250,000.
Or in other words, the person who just retired is being brought back on to look for new mining projects that the company can't afford, while the people now running the shop are fed up with trying to give themselves worthless options, so this time they're simply ripping more cash out of treasury for their own back pockets, despite overseeing a 12 month stock price performance that looks like this...


...and running a company that can't turn a net profit to save its life.


A list of legendary people

A handful, all from different sectors of human activity and history.
  • Robin Hood
  • Albert Einstein
  • Buddha
  • Madonna
  • Maria Callas
  • Pablo Picasso
  • William Shakespeare
  • Jane Austen
  • Diego Maradona
  • Nelson Mandela
  • Joan of Arc
  • Brent Cook
  • JP Morgan
  • Mahatma Ghandi

Wait up? Brent Cook?!?!?!?

Yes indeed, our very own cuddly whitebearded geologist is now part of humanity's great pantheon, thanks to this Gold Report article. 

And PDAC less than a month away, too. Gold Report people, you have no idea what kind of shit you've just laid on the poor guy.



Aurcana Corp. (AUN.v): I love these guys

Here's the NR, here's a chart:


Special NR highlights include:

  • Lots of "We're Great! We're just Great!" at the top.
  • Production compared to 4q12 but no mention of 3q13, hmmm, wonder why?
  • Silver equivalent only, we're left to guess just how much of that is copper and zinc and stuff
  • Then....oh, a fire. And a breakdown. Details, man.
  • And...errr...we need some money to spend on new machinery.
  • But we're setting a guidance figure for 2014 AND THIS TIME WE MEAN IT. In fact, Lenic even has the chutzpah to mention a guidance for 2015. You really can't make this shit up.

Waterton the patsies

For more than a few months, PS Dave over at VancVenture has expounded on his theory that Waterton (e.g. Waterton Precious Metals Fund) are a bunch of patsies with a failing business model. I wasn't so sure, took the opposite side and in the end let my end of the discussion drop, privately agreeing to disagree with him. However, it's looking as though he was right and I was wrong on this one and by way of illustration, let's take the case of Atna Resources (ATN.to) in 2014 as a marker. Here's the chart...


...and what we've seen in the period is:

1) The stock rallies along with the market.
2) January 31st ATN announces a $22m loan deal with Waterton, which will be used to pay off the $18.1m ATN loan held by Sprott Resource Lending and leave some working cap in hand.
3) ATN stock drops on the news (and you kinda maybe perhaps and could get the feeling it was already telegraphed to "certain people" on the 30th).

This isn't really about the trials and tribulations at Atna (their snafu at Pinson is well documented). It's about the way in which the Sprott dudes managed to extricate their cash from the company, which was one of the more obvious sell signals of our time. Today's NR underscores that.

So yeah PS Dave, I'm with you on this one now. Meanwhile, cash strapped juniors looking for a line of credit in order to pay management's bloated monthly paychecks move forward diligently on their exciting drilling prospect should get in touch with Waterton, they seem to be willing to do a deal....just throw them a  few cheap warrants or something.

UPDATE: PS Dave has his latest on Waterton, specifically about the ATN deal, here. He goes off on a slightly different tack but it's still a case of liar's poker here. Who's zoomin' who?

This thing the US Dollar has with 81.5

You noticed it too, yeah?


Not surprised.

Chart of the day is...

...silver, dailies:


The consensus in the metalblabbersphere is that silver has bottomed. I agree.

That doesn't mean it has to immediately jump to $25/oz or wherever else you want to pitch it; it could stay in this $19/$20.50 range for quite a while.

2/5/14

The four reasons why there was nothing about Argentina's finances in your EngLang biz media today

1) The official exchange rate strengthened: ArgP$7.95 = U$1.00, six cents up from yesterday.

2) The unofficial exchange rate also improved 10c, to ArgP$ 12.50.

3) The Central Bank's international reserves position improved by U$10m

4) English language bizmedia coverage of Argentina is run by bullshitters, liars and assholes.

Bear Creek Mining (BCM.v) accused of bribing the Mayor of Corani

That's what the report says. Here's a bit of translation:

Puno: Document reveals millionaire agreement between mining company and mayor of Corani, Edmundo Guerra
February 5th, 2014 
According to the agreement dated April 15th 2013 in Lima by the mining company Bear Creek Mining, Edmundo Guerra Cáceres and citizen Michel Francois Portier Balland, the second clause states that the company, represented by Elsiario Almiro Antúnez de Mayolo Ramis, commits to pay the persons mentioned the sum of two million Nuevo Soles (approx U$712,000) from 2013 until the project is profitable. 
Also, in the third clause of the contract the mining company agrees to pay Guerra Cáceres Michel Portier 2% of profits from the fifth year of production onwards, with this personal benefit being to explain, persuade, induce, convince and give reason to the population affected by the project, as stipulated in clause four of the contract.


The people raising the complaint against the mayor say they have checked out the signature and fingerprint on the contract and attested it to be that of the mayor. Also, according to the reports the contract specifically states that the cash payments are personal ones to the mayor and the other person mentioned, not payments made by the company to community programs or works. If that's not the definition of a bribe to a government official, I'd like to know what is.

Disclosure: No current position in BCM.v, though I have owned the stock at other moments. Last owned in September 2013.


Iron Mountain (IRM) stock may come under pressure today

Iron Mountain (IRM) is a U$5Bn market cap data storage and protection company and owns the warehouse that caught fire this morning in Buenos Aires, Argentina and which caused the death of five firefighters who were battling the blaze. According to the company spiel, the storage facility was fully protected against such incidents, with "total protection against incendiary events, a hydration systam, sprinklers, strict humidity control and an early warning detection system to prevent fires" in all its establishments.

Something tells me that might not have been the case today.

UPDATE: Now confirmed eight dead. Now nine, this is awful.



2/4/14

A question and an answer

The question: I received this mail (redacted a touch to protect both guilty and innocent). This kind of thing happens every now and again. The question comes at the end.

"I am a private investor who does a lot of junior mining stock (Canadian) analysis, has its own database and publishes on SeekingAlpha.com as [redacted]. Recently I met a CEO of a junior mining company [redacted] who referred to your blog as hilarious but very critical as well, he thought I would love it. Boy was he right, and I love your style! Kept laughing over your "owly" comment (o rly) and numerous other things and comments. But your critical comments on a lot of juniors are just about right most of the time (no need to abandon the entire sector though as you suggest one time;) so I think it is of great value to me.

For now, I am planning on building some kind of reputation on SA first, and after that building my own website, as I want to redevelop myself from [redacted] to junior mining research and investment as I think it's a much more fascinating universe. A serious website is priority number one, so no pump 'n dump or "you give me a ton of warrants and some shares and I will write something positive for your IPO" kind of thing. I know a very good writer from SA on O&G, he wants to team up with me with his own site. He makes money by providing custom analysis for funds etc. Not worked out how I'm going to make money out of it but if my quality is good enough this will develop in a natural way I guess, as true quality is scarce in junior mining I noticed. Only Cookie and Kaiser seem to fit the bill IMO. 
Bottom line: is there any possibility to connect my future site to yours, and what would it cost if you of course would allow it in the first place?
Like to hear from you,
Cheers!
[redacted]



The answer: No, fuck off.


UPDATE: Setty is a nicer spirit than I, and offers this link






The Argentina "Dolar Blue" (unofficial dollar forex rate) chart, 2014 year to date




It started the year at ArgP$10.15 to the dollar (all data from @dolarblue and here too)

The day of the Central Bank move, aka "deval day", it was at 12

It shot to 13, then pulled back

It's now 12.60 at time of writing.

The chart is the chart

I've mentioned this on these pages previously, but it's getting a re-airing today anyway. In the Altiplano region of Bolivia and Peru the growing season for the main crop, potatoes, relies on a tight time window before the cold season reappears. It's also dependent on the rainy season (Dec-March) arriving on time, because a late start to the rains would mean the potatoes won't grow quickly enough before the frosts arrive. That would mean a significant yield reduction and although our modern times mean food gets transported around more easily, go back a few years it was often the difference between full bellies and really long periods of hunger, even starvation.

The timely arrival of the rainy season is, therefore, a big thing for Altiplano and there's a lot at stake if the rains arrive late. This means that if the rains don't come on time, the local shamans (or yatiri, as known locally) are called upon to help speed things up. There are several rainmaker/rainbringer ceremonies done by Altiplano shamans, but the classic one is connected with frogs. What people noticed thousands of years ago was that just before it rained, frogs that lived next to lakes etc would all start croaking in unison. It therefore made sense to catch a frog or two and make them croak, as that would bring the rains on. Therefore, the most popular rainy season ceremony is based around shamans making frogs croak because when they do, the rainclouds react in the way they're supposed to. Perfectly logical, right?

And that's all you need to know about charting and technical analysis of stock prices, folks.

Silver Standard (SSRI) (SSO.to) notes

On the Marigold mine deal: I think it's made a smart purchase at the right price.

My interest in the company also went up a notch or two a few days ago, when reading (got to it late) that of its pared down $22m exploration budget for 2014, it was going to spend a chunky $6.5m on the Berenguela project in southern Peru. It just so happens that many mining people in Peru unconnected with SSRI think highly of that project and it's been a bit of a headscratcher for many that the thing has been left undeveloped for so many years. The strong copper kicker from the rock makes the economics solid, the engineering looks simple enough (in theory), political risk and community relations in that microzone of Peru have improved a lot in the last two or three years and it could easily become a very profitable 2m oz Au per year mine.

Pirquitas isn't doing badly and the recent financial upheavals in Argentina will help it on the costs side. Though I need to look more closely, because it's been a while since doing any real work on this thing.

I don't own SSRI, though it probably deserves a revisit and some decent DD work now. Treasury position good enough even after paying cash for Marigold, debt position looks manageable. Looks quite cheap on a first pass.


Re. Argentina (and an excerpt from IKN247)

We note with interest that Argentina's forex is improving against the dollar this morning (8.06 last night, 8.03 over the weekend, 8.01 today), which of course means that it won't make any headlines in your English language bizmedia...can't possibly say anything positive about the country, or anything that might contradict the forecasts of immediate country destruction vomited out by the truckload last week now, can we?

Anyway, this below is an excerpt on the country from IKN247 last Sunday.
I’m not out here defending this government with gusto, sword and shield. I am saying that the coverage has been twisted out of all proportion in the last few days and has the look of a world trying desperately to cause a crisis, rather than report on one. I don’t think Argentina is in great shape but it’s not that bad, either. If I were a bonds trader I’d be very interested in picking up some of those Argentine BODEN15 dollar bonds, which ended Friday paying 19% on paper that matures next year. On the other hand, those who wait for blood in the streets before buying are going to be disappointed in Argentina 2014 vintage; this country isn’t anywhere near its 2001 state of despair yet and isn’t going to collapse in the year ahead, no matter how much The Economist would wish otherwise. Meanwhile, if the rumourmill only has a quarter of its facts right (10) (11) (both Spanish language links and only really useful for people who know their Argentine politicos) we’re likely to see measures from the CFK government to counteract last week’s negativity. There are still plenty of tools at the country’s disposal today, which again marks the current situation as very different from the ordeals of 2001/2002.
UPDATE: Your humble scribe immediately receives pushback from those who are expert at reading headlines and then making the media language their own. In this case the line is "BUT THE COUNTRY RESERVES ARE STILL DROPPING!". This was also covered in IKN247 and though I'm not going to paste the whole piece out (it moves to reaction from the mining community, an altogether different and much smaller subject), here's one other segment from the note to illustrate:
Much of the attention is taken up by Argentina’s International Reserves position (as although a mere symptom and not the cause it’s an easy one to follow, while the real baseline problem of the government’s fiscal deficit requires a working knowledge of the country and its day-to-day economy) and the thrust of all arguments against the country (do we have to suffer “Don’t Cry For...” headlines every time?) went along the lines of “it gets to zero and the place implodes”, or some such.

Chart of the day is...

...the gold etf (GLD) versus the silver etf (SLV), 2014 year to date:



Self-explanatory.

2/3/14

Heard on Wall Street


That special Gold Resource Corp (GORO) moment when...

...the jock Wall Street desk trader jumps in a buys a stack of the company because...

1) he* needs to hedge his port with gold names because his boss just barked at him
2) gotta get me some gold miner exposure, whole market's dropping and that sector's rising, man
3) look, GORO's a gold miner
4) and it has the word 'gold' in its corporate name. Cool.
...but later sees that...


Oh.

*this time it's "he", as women are never as fucking stupid as these dudes

Gold makes a safe haven move

The tiresome debate seems never ending, but this...


...is undoubtedly money moving into gold for safe haven reasons. If want more evidence see the gold/silver ratio, which busted 65X this morning. 

Gold The Fear Trade: it's back.

Next Please! Luna Gold (LGC.to), the latest bought deal

Luna Gold Corp. (TSX:LGC)(LGC.TO)(OTCQX:LGCUF) ("Luna" or the "Company") is pleased to announce that it has entered into an agreement with a syndicate of underwriters pursuant to which they have agreed to purchase, on a bought deal basis, 16,950,000 common shares (the "Shares") at a price of $1.18 per share for gross proceeds to the Corporation of approximately $20 million (the "Offering"). The Offering will be conducted through a syndicate of underwriters co-led by Cormark Securities Inc. and Canaccord Genuity Corp. 
The net proceeds of the Offering will be etc etc here

And that's a serious discount to market.


The last time this thing traded at $1.18 was July 17th last year.

Results

In Costa Rica, Luis Solis and Johnny Arana have taken the first two spots of the Presidential election, both around 30% and they'll go into a tight-looking run-off for the big job. Villalta and his new movement faded into a distant third (~17%) and is out of the running now, but may have a role to play as kingmaker.

In El Salvador, Salvador Sánchez Cerén is leading in the count (about 25% done and has a shot at winning the whole thing in the first round. If not, he'll go into a run-off with Norman Quijano, in second spot right now. Still SSC will be big favourite for the win if a round two is needed.

In New Jersey, Floyd Mayweather apparently bet $10.4m on the Denver Broncos to win. That's a lot of money. (UPDATE: And now apparently he didn't)

And River beat Boca 2-1

UPDATE: El Salvador's going to a 2nd round. With 80% of votes counted SSC is stuck at a touch under 49%; close but no cigar.

2/2/14

The IKN Weekly, out now



IKN247 has just been sent to subscribers. I'd like to recommend Variety's appreciation of Philip Seymour Hoffman, which you can find here. RIP, sir.