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8/15/14

In this weekend's IKN Weekly...

...the main event will be to explain just why the market was so plug dumb stupid to have sold off First Majestic Silver (AG) (FR.to) this week, because its financials were pretty good once you start peeling away the headlines and quick-takes. We'll also check out the Rio Alto (RIO.to) (RIOM) numbers, as well as other things from the companies covered and owned. We'll also get to the bottom of all this Bear Creek Santa Ana malarkey, see what silver's doing compared to gold, worry about copper and other things besides.

It's a Friday post-bell junior miner news release

Not only that, it's from our old pals at Metanor (MTO.v):

VAL-D'OR, QUEBEC--(Marketwired - Aug 15, 2014) - Metanor Resources Inc. ("Metanor") (TSX VENTURE:MTO) announces that it has received a summons to appear in Court, November 10, 2014, in Senneterre (Quebec) to respond to charges of criminal negligence in relation to the accident which occurred in October of 2009 at the Bachelor Mine.
Metanor strongly believes that these charges, filed 4 years after the accident, are groundless and it is confident that the facts will clearly show the absence of any wrongdoing. Metanor adds that a settlement was reached, through its insurers, with the all of the families involved in 2013, putting an end to all ongoing civil claims.
About Metanor

Ah, good ol' Metanor.

The Friday OT: Smashing Pumpkins; Galapogos

Because it's beautiful, that's all.



Butch Vig got a great vocal performance out of Corgan for this track, as well as layering a complex arrangement over a relatively simple song. Reasons why I much prefer this studio version to any of the live recordings out there.

Peru's dramatic drop in GDP growth: just 0.3% for June 2014

The June GDP figure for Peru is out and it's by far the worst since the 2008/2009 financial crisis, reading  just 0.3%. Here's the chart, with stats from Peru's official beancounter officer INEI:


Incredibly, Finance Minister Luis Miguel Castilla still has a job. That's basically because he's Nadine's favourite. And de-facto Prez Nadine is married to the Head of State. And that's how banana republics work.

Rule One™ matters

Yesterday, your humble corner of cyberspace pointed out this simple yet profound fact of Rule One*, using four example stocks to illustrate matters. Let's see how those four have got on, with the junior PM ETF (GDXJ) as our benchmark in grey shade:



Any further questions?



*make a profit

Chart of the day is...

...copper, dailies:



Being a copper bull at the moment, the moves of the last few days have come as a bit of a bummer. A slight rebound this morning (as PMs go South) may hold more clues and does bring a little relief. As usual, not jumping to conclusions.

8/14/14

Beats me where all these Canadian brokerage anal ysts get their deep DD information from

Exhibit One: IKN Post dated August 12th 2014:

Bear Creek (BCM.v), arbitration, Peru, Santa Ana: The REAL need to know is simple (and not the BS long-winded-means-nothing-hot-air need to know) 
I read the NR this morning, eyes rolled, decided not to say anything. But having just received the 5th mail on the subject, here's the need-to-know in one line: 
The regional elections in Peru are on October 5th. 
Ok? We clear?

Exhibit Two: Scotia Daily Mining Scoop, dated August 14th 2014 (i.e. today). Extract with redaction*
Bear Creek Mining Corporation: Commencing Santa Ana Arbitration (BCM-CN, SP...Trevor Turnbull): Bear Creek requested arbitration proceedings under the Canada-Peru Free Trade Agreement with respect to its Santa Ana silver project...Trevor does not expect a response from the government or progress on negotiations with the upcoming regional and municipal elections on October 5.

Exhibit Three:


*to protect Scotia client-sensitive information

Told you enough times about how good Frank Bajak of AP is, now you might even believe it

This humble corner of cyberspace has long recognized Frank Bajak of AP as top of the heap when it comes to reporting the news from South America. Now it's official: He's won the Cabot Prize and here come the extracts
"... those being honored include Frank Bajak, chief of Andean news for The Associated Press; Tracy Wilkinson, Mexico bureau chief for The Los Angeles Times; Paco Calderon, cartoonist with El Heraldo de Mexico, and Giannina Segnini, until recently the editor of the investigating team of La Nacion in Costa Rica. 
Columbia said Bajak is "fast on the keys when news is breaking, then quick to provide insightful background to the events."

Nobody deserves this more than Bajak. Full kudos, sir.

PS: Follow his twitter feed right here

B2Gold (BTO.to) $BTG and its crazy G&A

Seriously The Clive, WTF?

W.T.F.?

Here's a chart that maps out the quarterly G&A at B2Gold (BTO.to) (BTG):


For one thing, a G&A that runs at $7m a quarter, i.e. $2m a freakin month, is a nautical mile too high for this size of company. What is this, gold taps in the rest rooms or something? But for another, check out the main reason behind the spike to the staggering $13.094m just reported by BTO in 2q14. We quote directly from the MD&A:

In the six months ended June 30, 2014, G&A expenditures include discretionary cash bonus amounts totalling $3.8 million (Six months ended June 30, 2013 - $3.0 million).

In other words, BTO's good about filing a $11.5m net loss, of which $3.8m is "discretionary cash bonus amounts". That translates as "very large cheques for fat cats at the top", just in case you weren't aware.

The Clive, you're taking the piss. Your normal G&A burn is stupidly expensive, your cash bonuses are a direct insult. And you file net losses, too. All this on top of the never-ending insider selling of stock by you and your directors. But Clive, we do agree on one thing; you obviously think the investment community is fucking stupid and permanently ready to be ripped off. The difference is that I don't act on that obvious conclusion for my own ends.

Rule One

Congratulations Rio Alto holders (RIO.to) (RIOM), your U$875 market cap company made $15.2m in Q2. That's 9c/share and a decent return, especially as your company nearly doubled in size since Q2 ended and these results were published due to the Sulliden takeover. 

You made a reasonable net profit and fulfilled your obligations under Rule One* for a producing mining company. It's a rule which applies to any company producing anything anywhere and is the cornerstone of capitalism. Sadly, many mining companies forget this.

Congratulations Silver Wheaton (SLW) holders, your U$9.7Bn market cap company made $63.5m in Q2. Which is 18c/share and a clear miss, but at least you pass Rule One* for a producing mining company.

Congratulations (?) Argonaut (AR.to) holders, your $625m market cap company made $2m in Q2. Which scrapes you by on Rule One* but you know how crappy that is. These things cannot continue, as Fortuna Silver holders know from yesterday. But hey, a profit's a profit, right? 

However B2Gold (BTG) (BTO.to) holders, your U$1.82Bn company fails Rule One* in Q2 to the extent that you need to scroll all the way through its very long and excuse ridden NR to find out how bad it was. The net loss was U11.52m, or 2c/share (to save you the bother). And yes, you'll read a whole bunch of reasons why you can ignore this quarter's numbers from both company and the hoards of lapdog anal ysts that cover B2. And if you're stupid enough you'll believe them, too. Big fat fail from The Clive, period.

*Make a profit

8/13/14

Luna Gold (LGC.to) chooses its fall guy

And it's Peter Mah, the (now ex) COO. Here's the NR, here are the contents and IKN highlights a couple of lines:

VANCOUVER, BC--(Marketwired - August 13, 2014) - Luna Gold Corp. (LGC.TO) (LGC.TO) (LGCUF) ("Luna" or the "Company") today announced that Peter Mah has resigned from the positions of Executive Vice-President and Chief Operation Officer ("COO") of Luna Gold.
"We would like to thank Peter for his contributions during his tenure at Luna Gold. We wish him the best in his future endeavours," commented Geoff Chater, President and CEO, Luna Gold.
In July, the Company engaged JDS Energy and Mining Inc. ("JDS") to provide operational and technical support to address mining and processing deficiencies at the Aurizona Mine. JDS will provide site management services and work with Luna employees to stabilize and improve operations, including operator training and the implementation of mining and processing best practices. JDS is a contract mining services firm providing engineering, construction, procurement and management solutions internationally (www.jdsmining.ca)
About Luna Gold Corp.

See dat? "Oh, thanks Pete, don't let the door hit you on the way out. Now, let's get some professionals in to sort out this snafu". Presumably, picking a fall guy was part of the deal LGC.to struck to get more cash out of Sandstorm (SAND). Debatable whether it'll change anything, but enough for Nolan.

Yeah you're right, that's exactly what I think of Nolan. Anyway, just for the record and old times' sakes here's the screenshot of Peter Mah's biog over at the LGC.to website, as it's about to go permabyebye.

BREAKING (UPDATED): Unconfirmed reports that Brazil presidential candidate Eduardo Campos was in the air crash in Brazil today

Party leader of Partido Socialista Brasileiro (PSB) (socialist party) and candidate for the big job, Eduardo Campos, was apparently on the copter Cessna plane that crashed into a residential area of the city of Santos this morning.

Will update if confirmed or denied.

UPDATE: Beginning to look this way. 

UPDATE 2: The Twitter account of Donna Bowater, EngLang journalist in Brazil, is a good place to get up to the minute news on this unfolding story. For those of you with enough Portuguese, this Google News feed will keep you informed quickly (along with hitting F5)

UPDATE 3: Sources now telling Reuters that yes, Campos was on the crashed plane. Oh crap.

UPDATE 4: Brazil's O Globo says he died in the crash.

A Flash update...

...has just been sent to subscribers, 45 minutes or so after the opening bell on this fair Wednesday morning. Adding to a position. All of a sudden, this is an interesting market.

Your murdered Colombian journalist of the day

His name is Luis Carlos Cervantes, he worked for a a local radio station "Morena FM" as well as a correspondent for the regional news media Teleantioquia Noticias and as reported in many places in Colombia yesterday and this morning, the basic circumstances of his murder are as follows:

  • He was subject to death threats for four years (some reports say five years), due to his reporting at the time on corruption in local political circles and on the activities of far right wing paramilitary groups in the Antioquia region of Northwest Colombia, where he lived. Due to the seriousness of the threats, he had been under official police protection.
  • Three weeks ago, on July 24th to be exact, his police protection was withdrawn. The reason seems to be connected with the fact that at his most recent job he was little more than a music DJ (he changed tack at the station after a previous death threat and when a grenade exploded just yards from the radio station in 2013).
  • Soon after the police detail was withdrawn, he was visited by a known member of the far right wing 'Urabeños' (now also sometimes known as 'Los Úsuga'), the paramilitary group that's also deeply into narcotrafficking, protection rackets, etc.
  • After refusing to give the Urabeño member some information he was after, he began receiving text messages that told to leave the area within two hours or face the consequences.
  • He asked that his police protection be reinstated, but nothing happened.
  • Yesterday afternoon he was shot dead by an unknown assassin. Another dead journalist in Colombia.

The thing about press freedom is that you hear a lot of protests and wailing from journalists and countries when those very same journalists get to tell you their press freedom is being suppressed, which is kind of contradictory when you think about it. It's underscored when a case such as  Luis Carlos Cervantes comes up, because you never hear from the reporters and journalists who are seriously under threat because they're just too damned afraid to say anything. Right up to the day that it's too late, but you still don't hear about the events except in pissant blogs such as IKN because these stories aren't from the right countries, they don't fit into pre-packaged agendas, they're not interesting to the people who supply you with the news which pretends to inform you about South America.


8/12/14

Fortuna Silver (FVI.to) $FSM 2q14 results

There's slightly more in this one than yesterday's succinct and wholly accurate post on EDR.to's 2q14 (which was far more realistic than the "in line with expectations" stupidity from just about every house anal ysis out there; explained today's drop to your client base yet, lapdogs?). But today's isn't that one, today's post is about Fortuna Silver (FVI.to) (FSM), on the back of tonight's filing of 2q14 results. 

Assets at $330.791m for 2q14 show like this compared to previous quarters. Cash is down but Equivalents are up due to what looks like FVI tucking cash into an interest paying account or something (time deposit, probably). No problems here.

Liabilities have moved up a bit, but not a biggie, because...

...what really matters here is working capital and that's a decently liquid position. However, we can see that FVI has had trouble in adding to its current assets via this chart and we're still creeping up rather slowly.

That's because of this, the way revenues and costs leave little in the way of mine operating profits for a company with a near $800m market cap these days. FVI at $6.27 a share is trading at a 12X foward multiple to mine operating earnings (not EBIT, not post-tax earnings) and that does look expensive.

This is confirmed by the net earnings chart. FVI seems to have been given a pass for quite a long time on these lacklustre bottom line numbers because of its growth profile and all that. Well folks, here we are with the back end of the throughput upgrades at both Caylloma and San José done and these net figures are still languishing. You net $2.87m and you're worth $790m? Something isn't right here.

And this chart, which shows equity (or Book Value "BV" if you prefer, defined as all assets minus all liabilities) per share and then the ratio between BV and its share price at end each quarter (plus tonight in the "now" column) rams this message home. FVI is a good operator, but its share price looks for all the world like it's got ahead of itself. 

So yeah, I think FVI is a near-term short trade on the back of a somewhat disappointing quarter. Put me down for it revisiting $5.50 soon, assuming silver stays roughly where it is. Also put me down for all the house anal ysts giving it the "hey, not so bad" bullcrap and then the stock going South tomorrow anyway.

Big sulphuric acid spill at a big copper mine in Mexico

The Grupo Mexico / Southern Copper (SCCO) Buenavista mine is the place and AP also reports that the company tried to keep the spill under wraps for a full day. Water supplies have been polluted already.

This is of course the very same company that wants to build the Tia Maria copper mine in South Peru.

Bear Creek (BCM.v), arbitration, Peru, Santa Ana: The REAL need to know is simple (and not the BS long-winded-means-nothing-hot-air need to know)

I read the NR this morning, eyes rolled, decided not to say anything. But having just received the 5th mail on the subject, here's the need-to-know in one line:

The regional elections in Peru are on October 5th.

Ok? We clear?

Brazil: A dwarf with money

The quick backstory (check the Googlybox for the details)
  • Israel does its Gaza thing
  • Brazil criticizes Israel
  • Israel's Foreign Minister retorts, calling Brazil "a diplomatic dwarf"
  • Hilarity ensues

So far so normal for 2014 (and no, you're not getting any op-ed on Israel/Gaza from IKN) but today's development is worthy of note on these humble pages. Haaretz has the story and here's how it kicks off:
President Reuven Rivlin apologized on Monday night to Brazilian President Dilma Rousseff for the Foreign Ministry’s criticism of her decision to recall Brazil’s ambassador from Tel Aviv to protest the fighting in Gaza. High-ranking Jerusalem officials said that Rivlin gave his apology, which went against the Foreign Ministry’s stance, because of a great deal of pressure from officials of Israel Aircraft Industries, who are dealing with a large tender in Brazil.

In other words, money talks bullshit walks once again. 

h/t the perma-good news source @elizondogabriel


A Flash update...

...has just been sent to subscribers, bright and early on this Tuesday morning and an hour and bits before the opening bell. It's about the True Gold (TGM.v) deal with Franco Nevada (FNV) and Sandstorm (SAND).

8/11/14

Two word analysis of Endeavour Silver (EDR.to) (EXK) 2q14 result

It sucks.

Let me tell you who's been calling the broad markets accurately

In the last couple of weeks, Iwnattos has been calling the broad markets accurately. Yes I know you have to wade through the cat gifs and tiptoe past the suspect taste in music [edit: so poor he features Coldplay] but with those minor tasks complete, his posts on the movements in the larger volume squiggly lines (Dow, S&P, bonds, Vix, things of that ilk you people apparently care about) have been smart recently. Perhaps because he's upped the level of his own influences, perhaps he's a genius after all, perhaps just lucky. I'm not sure of the cause, but the effect works so go have a look and decide for yourself.

Checking in on the Gordon Brent Pierce pump job Aldrin Resources (ALN.v)

Remember all those fun and games in April? When Aldrin (ALN.v) shares shoot higher when it starts a drill campaign, a director resigns and another insider (known as the front man for one of Vancouver's worst financial bullshitters Gordon Brent Pierce) is the recipient of attentions of a drive-by shooter. So let's see how Aldrin's got on since then:


Oh, that well.

Hey, I wonder  who was selling in that 'liquidity event' when the world suddenly had a fad about buying ALN stock?

Ram Dass to the rescue

It was Saturday evening, I was trying to concentrate on numbers and trying to write the Weekly. But couldn't, because the people across the road were having a wild and drunken birthday party and had brought in a pair of massive speakers that churned enough bass to make my windows rattle from 50 metres away. Not only that, their taste in music was extremely annoying. Not happy, not concentrating, not getting the job done. In one word, angry. Then this link shows up and at the end of the excerpt from one of the Ram Dass books comes this:
"When you get frustrated because something isn’t the way you thought it would be, examine the way you thought, not just the thing that frustrates you. You’ll see that a lot of your emotional suffering is created by your models of how you think the universe should be and your inability to allow it to be as it is."
And Ram Dass gets my supremely overactive ego in check for what seems like occasion number one hundred. I get back to work, the Weekly gets written and sent on time. Thank you again, Ram Dass.

So how was your weekend? Hope you had a good one.

You have heard about the seven miners killed in Peru in July 2014. Haven't you?

After all, these days when mining companies care so much about their employees, their image, the people around them and their health & safety track records, you were bound to pick up the news that:
  • Three miners at the 'Virgen de Guadalupe' mining company in Oyon were killed in an accident on July 8th. Their names were Silverio Rivadeneira, José Clemente Martel and Rolando Cosme.
  • At Pan American Silver's (PAA.to) (PAAS) Huaron mine, Dither Perez was killed while at work on July 16th. The official cause of death category being "intoxication, asfixiation or absorption of radiation".
  • Then on July 24th, Julio Vargas, Franklin Puertas and Yurema Tintaya met their deaths while working at the Cerro Lindo mine, owned and operated by big Peruvian mining company Milpo, a subsidiary of Brazil's Votorantim.


What, you heard nothing about those accidents from the companies involved or the press? Not even Pan American Silver (PAAS) (PAA.to) and its investor relations department? My, how strange...

In which case there's only one solution, to download the official Peru mining ministry PDF and read all about it yourself, from here.

8/10/14

The IKN Weekly, out now



IKN274 has just been sent to subscribers. With 34 pages and nearly 15,000 words, it's fun for all the family and guaranteed to break the ice at parties.



press the button, it vomits.

Supermoon

With all the waxing (pun intended) about the so-called Supermoon, strong recall comes of The Lotus Eater by Somerset Maugham.
"It was full moon the first time I came to Capri," he went on reflectively. "It might be the same moon as tonight."
"It was, you know," I smiled.
He grinned. 
Written in 1935, as some things never change. The moon, for example. 

Good ol' interwebs has the whole short story here and its worth your time too. A great read.

Your Yahoo! News Twitter hack of the day

It's here until it disappears, though of course we have the screenshot:

The Future of Disney

Via the evergood Mex Files, your author's eyes are drawn to this work by Mexican artist José Loaiza, including this image:


Plenty more from where that one came from, right here