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4/12/14

Colombia's oil production: Growth inertia

Colombia's March 2014 oil production numbers were delivered by the country's oversight body ANH yesterday and here's how the 977k barrels of oil per day average stacks up against previous months' production:

NB: Please note the cut-down Y-axis

Colombia got to and above its desired 1m bbl/day level last year, but there's a real sense of things rolling over now. Here's how the year-over-year production chart shows that more clearly:


The three four* moves are the big growth spurt from 2008, the consolidation, the smaller growth redux based around 2013, the relapse today. All historical stats from the ANH website.


*fear, surprise, ruthless efficiency and an almost fanatical devotion to the pope and nice red uniforms ohhh i'll come in again

4/11/14

Confirmed: Peru's gold production is falling off a cliff

Peru announced metals production for February 2014 today and the one that really catches the eye is the one they stuck at the bottom of the news release, away from scanning eyes.

The previous month's gold production (January 2014) was the worst registered in a decade at 11,089.19kg (that's 355,029 troy ounces for you madam/sir), which has just been followed today by the second worst month in a decade, of 11,097.36 kg (355,290 ozt).




Peru's gold production is crashing and burning.

The Friday OT: ZZ Top; Cheap sunglasses

From the BBC's Old Grey Whistle Test. Can't quite place the year but I remember watching the show (or its re-run) on an old, battered portable TV many moons ago.


Billy Gibbons is in 2nd gear for most of the song, but he gives us about 20 seconds of his best shred and that's more than enough to make you want to hit the play button. Natural talent, he has it.

Sulliden (SUE.to): Not even Pierre Lassonde? Ah well...

Here's Justin Reid, stuffed suit stand-in for Bharti very important and dynamic and independent President of Sulliden Gold (SUE.to) on November 1st:
"What you'll see over the next couple of months is that we will roll in a debt package of between $50M and $60M, which will provide all the capital we need for construction."

And that couple of months....has now stretched to five and a half months with no news at all. And Franco Nevada (FNV) visited Shahuindo as well so it's not for the want of trying, obviously. Y'know, I'm starting to get the feeling that you might not be able to trust the word of this junior gold mining executive Justin Reid. Darnit, and sketchy officers are so rare in this sector.

Aldrin Resource Corp (ALN.v): Swirling weirdness and nefarious stuff (i.e. IKN publishes when others just whisper about it all)

We have several moving parts around Aldrin Resource Corp (ALN.v) at the moment and the sum total is more than a little fishy in its odour:
  • And behind the scenes, according to at least a couple of IKN sources who'll remain anonymous but have decent contacts with the fetid pool of characters in the Vancouver exploreco cesspit, our old pally pal Gordon Brent Pierce is apparently calling the shots (pun?) on the whole caboodle. Word is that Mr More wasn't ever much more than a front for Pierce (banned by the regulatory bodies and in schtuk in both Canada and the USA for the wholesale ripping-off of markets and investors) and now there's some sort of seismic shift going on in one of the few active Canadian listed companies he has left under his power.

IKN isn't sure how it all fits together yet (but your humble scribe is working on that one). However, there's enough to publish this little scandal-gossip post and the presence of Gordon Brent Pierce isn't some fantasy either; he's there, pulling strings and doing dirty things. So the call goes out to the BCSC (who are regular readers round here even if they don't want to admit it in public) if they're not on the case already, to take their collective fingers out of their collective rectums and do something useful for a change, instead of combing 43-101s for the slightest mis-use of wording. 

PS: dear hockeyguy123, thanks for pasting out every single word of this post on stockhouse, you ignorant self-entitled asshole.

PRD Energy (PRD.v) inside sales

Don't let it worry you, oh Flock of Katusa. There's probably a logical explanation:



From here

Chart of the day is...

...three years of the Gold/Silver ratio:



And they wonder why your humble scribe prefers gold to silver. The ratio broke 66X this morning, by the way. It's like everything that Eric Sprott promised you, but in reverse.

4/10/14

Today's in-depth market news: Zinc producer Milpo predicts higher zinc prices

Today Milpo, large Peruvian zinc producer own by Brazil's Votorantim, predicted higher zinc prices this yearIn other news, The Gold Marketing Board's latest market analysis points to higher gold prices in the near future and considers that everyone should have 5% of their net worth in gold. A spokesperson for Apple (AAPL) told assembled reporters that she prefers Apple computing products to any other company's computing products. Papa John, founder of Papa John's Pizza, let slip that his preferred pizza brand is Papa John's. Both Oral-B and Colgate got together in a joint press conference to tell people that it's a smart idea to change their toothbrush every three months.  The Optician's Society of America advises all citizens to get a sight test every 12 months. The peanut marketing board announces new scientific research that shows extra nutritional benefits of eating peanuts. Sarah Lee, world famous chocolate cake manufacturer, has also revealed that eating chocolate cake is good for you. And the Bitcoin appreciation society confidently predicted that Bitcoins would soon trade at $2,000 each. 

The Economist does Peru, version 2014


It's one of those wide-sweeping pieces that tries to condense a lot of issues into a limited space (TE has a strict word limit on this type of report, which doesn't help). It's off-base on some things e.g. Humala being 'reclusive', when that's only a Lima-centric opinion and in fact Humala is out visiting plenty of provinces, opening new projects, speaking at social program gatherings etc, so maybe just maybe he doesn't have that much time to pander to the chattering classes in the way they'd prefer.

But overall it's a good note and gives a fair overview of the challenges facing the country at the moment, particularly in the run-up to the regional elections in October. Worth a read, you'll be generally up to speed on the country afterwards.

So according to the North, Argentina is this nutbar, screwed-up country that's going down the drains...

...right up to the moment when there's big money to be made by going into JV on a bigass oil project with the State. And then it's a good place to do business. Via Dan Cancel of Bloomie, here's the link that explains how Chevron (CVX) and Argentine State oil company YPF have agreed to stick another 170 holes into the Vaca Muerta shale concession. 

Money talks, bullshit walks. Or put another way, while you're reading bullshit on Argentina real money people are making big moves there. Think about it.

Goldcorp (GG) should win with this one

Goldcorp increases offer for Osisko to C$7.65 per share in cash and Goldcorp shares

VANCOUVER, April 10, 2014 /CNW/ - GOLDCORP INC. (TSX: G) (NYSE: GG) today announced that it intends to increase its previously-announced offer to acquire all of the outstanding common shares of Osisko Mining Corporation ("Osisko") (TSX: OSK, Deutsche Boerse: EWX) to C$7.65 per Osisko share for a total consideration of approximately C$3.6 billion (the "Offer").

Osisko shareholders who tender to the offer will be entitled to receive 0.17 of a Goldcorp common share plus an increase in the cash portion of the Offer to a total of C$2.92 for each Osisko common share. The Offer represents a premium to the closing price of Osisko on April 9, 2014 and a superior alternative to the other proposal.

Whole thing here

PwC Report on Mining

Preferred blog Junior Gold Miner Seeker has found a very decent report out of PwC on mining. The 2014 Global Mining Deals Outlook / 2013 Review, dated Feb 2014. You can get yours right here.

4/9/14

Silver Standard (SSRI) (SSO.to) 1q14 production and sales

NR here, chart here:


Cash flow: It's overrated anyway.

Bloomberg is good on copper today

I lay into Bloomie's Latam coverage on occasion, so it's only fair to shout out the good stuff too. This report on the current dynamics of the copper market, put together by reporter Matt Craze covering the CESCO industry bash in Santiago, Chile, has Codelco CEO Thomas Keller as the main feature but gets opinions from other corners of the sector as well, bullish and bearish arguments are examined, plus it's clear that Craze has done his homework because there's plenty of solid data delivered in the report, too. Here's an extract:
China, which now consumes more than 40 percent of the world’s copper, will continue to grow between 6 and 8 percent a year, meaning the market may return to deficit if mining companies don’t execute on new projects, Keller said. 

“We still think Chinese growth is going to continue, maybe with lower percentages than in the past, but with increases that in absolute terms or tonnage terms are still very significant,” he said. “We haven’t had any cancellations and there’s still lots of interest for our refined copper.”
This is a very good piece of business reporting, it's recommended reading.

Responding to mailbag: The case for going long Metanor Resources (MTO.v)

It goes something like this:
"I like that it's produced over 12,000 ounces of gold this quarter, even though I'm fully aware that Metanor (MTO.v) produced over 12,000 ounces of gold in its last quarter and made a loss. I know that it has a crapload of financial liabilities to pay down. I'm aware that it's lost a whole heap of its cash flow potential from selling that stream. And I'm aware that this company has diluted its share count given any opportunity to raise cash or pay down debt by emitting paper and has generally fucked its shareholders up the ass for years on end by promising and failing to deliver on so many occasions it numbs the brain even to think about it. But maybe this time it's different, maybe it's a buy."
In other words, don't ask me about Metanor people, yeah?

A Flash update...

...was sent to subscribers a few minutes ago, on this fine and sunny Wednesday morning, pre-opening bell.

Chart of the day is...

...copper, longer view with scribbles and things:

4/8/14

Timmins Gold (TMM.to) puts in a good quarter

This is probably why Bruce Bragagnolo didn't want to sell his company at some deep discount to Clive "Don't Tell em About The Dead Miners In Nica" Johnson of B2Gold last year. Timmins has just put in a good production quarter in 1q14 and here's the evolution of the gold sales chart to prove it:


(Gold sales are very close to gold production number at TMM.to). And here's how that looks on the revenues front...


...and that's an IKN estimate of U$47.25m (which will be very close, you watch) and that'll be a record revenues quarter when they round to producing the financials.

Serra Pelada: Sandstorm $SAND (SAND) (SSL.to) takes over negotiations

You want to know how things are going with the Serra Pelada fubar, don't you? Well of course you do, so here the latest from local bizrag Notícias de Mineração Brasil (Brazil Mining News) (translated). Hope Nolan Watson likes it in Brazil, looks like he's going to get used to the place.

The CEO of Sandstorm Gold, Nolan Watson, met last week with representatives of the Cooperative Mining Prospectors of Serra Pelada (Coomigasp) to discuss the Serra Pelada gold and palladium  project in Para State. Sandstorm is the majority shareholder in Colossus Minerals, JV partner with Coomigasp in the Serra Pelada Mineral Development Company (SPCDM).
 
Nolan Watson is a Canadian wunderkind entrepreneur known for his contribution to financial innovation in the mining sector. At 26 he was appointed CFO of Silver Wheaton, where he developed a business model based on advance purchase of precious metals at fixed prices. It raised $ 1 billion which made it into the largest streaming company in the world. 
The meeting took place in Curionópolis (Para) and was attended by the negotiation intermediary Marcos Alexandre Mendes, COOMIGASP miners' representatives Gildásio Vieira and José Antônio Vieira, lawyer Marques Ivaldo, the JV legal team, and Francisco Carlos Oliveira Lima who is technical advisor and production manager Coomigasp production. 
According to Francisco Carlos Lima, the CEO of Sandstorm CEO said the intention is that mining company builds a new relationship with Coomigasp and the Curionópolis community. He took the opportunity to say that the new board of  Colossus is working on a restructuring. 
Watson presented the name of a new board member of Colossus in Brazil, who is Canadian, but the name has not been disclosed. Brazil Mining News (NMB) contacted Sandstorm in Canada but was told that only John Frostiak, director and chairman of the board of Colossus can talk about the development. During the meeting , the negotiation intermediary submitted the proposals and demands of Coomigasp, which include the correction of the percentage participation in the project to 49% for cooperative and 51 % for the mining company, as per the original agreement. 
The cooperative also asked for the handing over of technical design data to Coomigas. "Coomigasp is partner in the project, but does not have access to data" said the aide. The trustee also requested that conditions be satisfied in relation to the treatment of water in the region and community care programs for the elderly population. " The elderly population in the region is very large, especially the miners who came and stayed for years here," said Lima. 
According to Lima, Watson promised to think about the proposals and come back to Brazil after the 15th of April, at which time another meeting with the Cooperative will be scheduled. 
The Sandstorm representative said that it is looking for new partners to finance the continuation of the Serra Pelada gold project .

Political risk in Guerrero Mexico as an example of wider mining risk themes

Here's one of the sections from IKN256, out last Sunday

Guerrero Mexico and a more general point about community risk
On many occasions, these pages have been used to call “danger” on the political and community risk levels for Guerrero State, Mexico. The precarious nature of risk there was brought home to the mining world last week, when Goldcorp (GG)) announced (11) that its Los Filos mine had been blocked by locals protesting against the company’s refusal to negotiate a better deal with the landowners. This is one we did on the blog at the time last week (12) and from that, this translated passage explained the community position quickly and neatly:

Since 2007, the 176 Ejidatarios (members of the "Ejido" landowner group) receive 2.5 ounces of gold for every hectare of the 1,200 hectares of land that Goldcorp rents, although the rent was agreed two years after the start of formal operations.
On Sunday March 30th, an assembly of the Ejido Commission was called to discuss renegotiation terms for the contract with the Canadian company, at which the corporate representative Francisco Ballesteros Corrales was present.
Although the vote was not unanimous, the assembly authorized representatives to seek an improved deal with an initial offer of 6 ounces.
On Monday morning the offer was lowered to 4.5oz with the intention to reach an deal, however the proposal was rejected by company executives. Due to this, from 6am today the inhabitants of Carrizalillo decided to block access to the large scale mine.

In other words, the locals want more from the company (the larger back story is that they’ve apparently twigged on that the land they’ve rented is going to be useless afterwards and GG’s pledges for community sponsorship have turned out to be more talk than action, so getting more now is the only way they have of levelling the playing field...according to the locals at least), the company doesn’t want to give more to the locals. As it happens, I don’t know who’s in the right and in the wrong in this particular case, but I know for certain a couple of things:

  • There’s no reason at all to believe the locals’ position and consider them the guardians of absolute truth.
  • There’s no reason at all to believe the mining company’s position and consider it the guardian of absolute truth.

A lot of these political and community disputes get wrapped up in greater environmental concerns, but scratch the surface and most (not all, but most) are driven by financial greed. That works on both sides. This one looks a classic example to me so the NGO’s and the pro-mining members of Congress can use this new one as their latest political football, but it will all blow over when GG and the ejido owners reach a mutually acceptable deal (and they will...eventually).

The larger issue, and one that underscores just how tough Guerrero is for a mining company, is that there are always going to be problems, grievances and annoyances between mining companies and locals. Always, every mine in the whole world. Most are minor, some are legitimate complaints that get addressed, others are legit and get ignored, others still are outright scandals that need the big world media spotlights shined upon them. Thing is, a mining company’s specific geographical location makes a big, BIG difference to the political risk it entertains. Take for example Goldcorp’s Marlin mine in Guatemala, which is hated by the locals around it but carries on and produces regardless. That’s because it’s in a location and a country that makes it difficult for locals to take direct action and block roads without getting into trouble quickly. However, Guerrero is a tougher place altogether, one of those “self governing” (that’s using as diplo a term as possible) regions which the national government and its police/army hold little or no sway. In Guerrero, if you piss off the locals they can stage a very effective roadblock and keep it in place until you’re forced into a deal. At Marlin, or San Luis Potosi Mexico, or Central Peru, or Middle Cauca Colombia or just about all of Chile or plenty of other places, less so. Good community relations starts with winning and earning the respect of locals, but it doesn’t stop there. Keeping them onside is a constant task and if things go wrong, the specific region’s characteristics play a big part, too.

I predict GG will give in to the local’s demands and give them 4.5oz/hectare soon. Meanwhile, those of you long Torex, Cayden, Newstrike and other juniors developing in Guerrero State, the events of last week should give you pause for thought. The person who told you “Buy it because it’s in Mexico and Mexico is miner-friendly” needs to buy an atlas and a history book.

Nicolás Maduro video interview

This 11 minute English language video interview between The Guardian and President Nicolás Maduro of Venezuela is either very interesting for those of you who follow world current affairs, or must-watch material for anyone into LatAm politics. It covers a wide range of topics, that's for sure.

UPDATE: Nicely done, Guardian: You can read the whole interview in Spanish.

Argentina: Amateur hour is over

You may be wondering why you haven't been hearing about the Argentina financial crisis via your preferred biz newswire recently.


The main reason is that there never was one. As that chart illustrates, just after the currency devaluation (Jan 23) when the screamfest and "direct to hell" commentaries were being peddled by supposedly serious biz media sources, the gap between the official dollar and the black market dollar was ArgP$5.10 (the official at 8, the "dolar blue" at 13.10). Yesterday, the official dollar closed at 8.01, the dolar blue at 10.70.

In other words, amateur screamtime is over and the bullshit artists have moved on because in the same way that no news is good news, when it comes to Argentina econ good news is no news. In English language reporting at least.

Chart of the day is...

...gold:


For the purpose of perspective.

4/7/14

There was this whole "What's wrong with Newmont?" (NEM) $NEM thing earlier this year...

...when the company was smacked down in February and badly underperforming peers. So now that NEM's positive on 2014 and Barrick (ABX) has slipped into the red YTD, we should expect the same talk about that company, right?


Right?

Message to subscribers, re delivery of IKN256 yesterday Sunday

The Weekly went out correctly yesterday. However, a handful of you have written in with "Did it go out? Not received this end" type mails already. This has happened before and could be connected with some ISP or mail service tweaking its filters, which can send wanted mails to the trash or spam files. Or it could be a cyberspace burp that has delayed things. Therefore:

1) Check your trash or spam files. You might find the Weekly there and what's more, you might find more mails that you normally receive there too.

2) If the Weekly hasn't reached you yet feel free to write in, I'll send it again no problems.

Have a pleasant Monday.

Midas Gold (MAX.to): Four thousand, eight hundred and fifty-eight words

That's how long the NR out of Midas Gold (MAX.to) this morning is. And this is the only thing that matters in the whole Tolstoyfest:
"...we have completed much of the physical work required to support the preliminary feasibility study... With the later than planned receipt of some of the studies' results and some variability of results from initial assumptions used in the PEA, this process is taking somewhat longer than anticipated..."
A question, IR people: Is being plug dumb stupid part of the job description, or did you have to learn the skill once hired? 



The IKN Weekly, out now


Yes, world of web, I am old enough to remember saying to a 
schoolfriend "256k RAM? Wow!" without a hint of irony.

IKN256 has just been sent to subscribers. GORO, RIO, FCV, other things too.

4/6/14

The Seismic Gap: Why North Chile/South Peru should expect a big earthquake soon

Like it or not, last week's Iquique quake wasn't the end of the current series of regional earthquakes, not by a long chalk. You get a lot of coverage of what's called "the seismic gap" in local Spanish language media (in the way in which proximity focuses the mind, etc) but decent reporting in English is less common so thanks go to reader JT for sending in this link which does a very good job of explaining what it is and why the region should expect an even bigger quake in the near future. Here's your excerpt:
Initial analyses conducted by GFZ seismologists have shown that there is no sign that tension in the earth' crust has significantly decreased: "So far tension has been released only in the central section of this vulnerable zone," Oncken further explains. The series of earthquakes began on March 16 with a 6.7-magnitude earthquake. Although the main earthquake with a magnitude of 8.1 broke the central section of the seismic gap of a length of some 100 kilometres, two large segments further north and south remain intact, and these segments are able to cause strong earthquakes with a high risk of ground shaking and tsunamis.Oncken: "This means that the risk of one or even several earthquakes with a magnitude clearly above 8 still exists." Furthermore, the location and magnitude of the aftershocks suggest such a scenario.
Whole piece here, worthy reading.

Your logical fallacy is...

...included in this very useful, downloadable poster. Covers all the main bases.

Venezuela: The opposition sees the country's problem, offers its solution

The opposition to President Maduro's government has spoken clearly on the problem in Venezuela:


And now it's come up with a radical solution to the problem:


You see? Completely different.