It has been a while since I proffered a rant, but you hit a nerve with your piercing jab at Detour Gold. Nicely done.For some reason, the gold industry has been congratulating itself for finally providing a metric that properly reflects the “cost of business” – AISC. The base-metals industry ran with their C1, C2 & C3 costs which cover the cost of doing business beyond the cash costs routinely reported by precious-metals producers prior to 2013.Based on the glories of the KISS principle, the only important aspect of any business is how much cash there is at the end of the day; the big thinkers then figure how to employ that cash for growth. Because you are well versed on the topic, I only offer rhetorical questions regarding AISC:1. Why isn’t the initial CAPEX a part of the cost equation? Is that a sunk cost? DD&A reflects that.2. Why isn’t payment of debt principal and debt interest a part of the equation? Debt principal and DD&A are, in a way, related, but not the interest.3. If a convertible bond is floated to provide working capital, when it is paid off, cash or shares, why isn’t that part of the cost? Or amortized over its life to production?4. Aren’t taxes a part of the cost?Note that any CFM for a proposed project is on a 100% equity basis; moreover, exploration & development costs are indeed considered sunk costs and are not part of the NPV and IRR calculations (given the timeline, only few projects would meet minimum hurdles if it were otherwise). So be it. However, it is absolutely amazing to see the effect of debt service on the NPV & IRR in a CFM, especially when payments are deferred during construction. That is missing from nearly all analyses.So, on a FCF-basis Detour Gold lost about $3M (includes tax payment); when the DD&A is included, they lost over $44M. The obvious conclusion is that the cost to make this mine was not worth it, at least based on this Q’s results. Personally the -$3M is important to me, especially since this company is a 1-trick pony with a large debt payment coming due.
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Kicking baseline, best played at Woofer Eleven.
They're now telling the world that the Ollachea community is split 50/50 on the whole deal. Seriously, they're that desperate.
And now, nothing.
- Daryl Hodges gets paid $15,000 per month for his "consultancy agreement", the money paid to his own company "Ladykirk Capital".
- The contract has no end date. That means if it's not cancelled, Hodges gets $15,000 a month indefinitely.
- If the contract is cancelled, Hodges gets a windfall payment of $500,000 plus one year's worth of monthly fees, i.e. $680,000. If he's fired, if he resigns, if there's a change of control at the company, he gets this payment whichever way. The terms of the agreement are such that he can claim his cash no matter the way he is separated from IRL.
- He got $100,000 when the COFIDE bridge loan deal was closed. He'll get another $150,000 when the COFIDE project financing is eventually closed, all that despite not doing a thing for the deal, before or now.
- It's not tied to performance at all. It's just paid, open-ended, forever.
"...just four and a half months later, in a re-filing of its company quarterly financials, the three properties bought with $2.25m worth of shares have boosted JFI's asset value by over $14m."
"...the first thing is to note the way JFI luckily managed to re-value its biological assets to the tune of $18m in the space of just three months, without adding a single pine cone to their asset, and in that way managed to add a $21m non-cash revenue item to their P+L which allowed them to declare an annual profit of $5.8m."
Detour Gold (DGC.to) just reported its 3q15 and here's my favourite bit:
Gold sold: 126,241 oz
Average realized price per Oz Au: U$1,164
All In Sustaining Cost per Oz Au: U$1,071
Difference between two: U$93/oz
Total revenue difference: + U$11.74m
Net loss: US$44.3m
Adjusted net loss:U$13.3m
Hey, d'ya think that All In Sustaining Cost might not mean what you thought it meant? Perhaps?
But Canada won't care, because DGC is the default bull story and nothing negative can ever be said about it. These sycophants need their winner and DGC is the designated blue-eyed boy...ever since CNL.to blew up in their faces, anyway. Expect warm'n'fuzziness in their brokerage notes mañana.
NGE.v has done this due to the latest Daniel Ameduri paid-for BS pump job:
Now comes the dump. You have been warned.
Dedicated to reader M, currently in transit:
A: Hey, nice watch!
A: What brand is it?
A: Patek Philippe.
A: Tag Heuer.
We could continue.
Minera IRL (MIRL LN) SUSPENDED – Please vote to sack the board of Minera IRL Limited. We believe they are not working in the best interest of shareholders
- We view today’s statement as potentially disingenuous and potentially misleading for investors who might not know more about the current situation at Minera IRL.
- The board of Minera IRL Limited report that the company has applied to delist from the TSX in Canada. TSX are to initiate an expedited delisting review for failure to comply with the TXS’s continued listing criteria.
- It is our view that news of this review plays very neatly into the hands and strategy of the Minera IRL Limited board who appear unusually keen to allow the company to delist in each market on any regulatory pretext.
- The statement also points out that the company’s admission to AIM will also be automatically cancelled should the shares be suspended for a period of six months. While this is strictly true, we believe the board should be focussed on making more effort to reinstate the shares and to prevent delisting on AIM and the TSX.
- Today’s statement claims that “due to the actions undertaken by the manager of its Peruvian operating subsidiaries, there was a temporary compromise of control of those entities”.
- It is our view that Diego Benavidez, who runs Minera IRL SA, is acting in the best interests of Minera IRL’s shareholders and the Peruvian community, whose support is essential. Mr Benavidez has sold gold held by Minera IRL SA with funds being used to ensure that Minera IRL SA and Limited meet its obligations in Peru in order to prevent a potential default situation. There is no sense of any shortage of cash within the business.
- We also view the statement of cancelling the admission to AIM as scaremongering and potentially misleading as we, again, view the situation as eminently resolvable.
- We believe that the Board of Minera IRL Limited are not working in the best interest of shareholders to resolve the issues which might lead to the cancellation of its listings.Conclusion: We conclude that shareholders should post their votes at the forthcoming EGM in favour of changing the board as petitioned.* SP Angel analysts are expressing their own views and opinions in this analysis. SP Angel has no corporate connection with Minera IRL or its subsidiaries. SP Angel holds no shares in Minera IRL and does not have any current financial arrangements with the company.
In the last Straight Talk I stuck my neck out suggesting that we had reached market bottom. Rick Rule says that he’s too clever to call a bottom….and that’s probably wise. It’s certainly not as egregious as Greenspan saying you don’t know you’re in a Bubble while you’re in it….but to my mind the signs of a tentative, cautious pickup are there. In the last day or two Reservoir Minerals and Goldquest both released great drill holes and picked up some traction. This wasn’t possible a month ago.
Right here on this 38 second Youtube (or on this link)
IKN, once again providing useful and practical education.
This out this morning. My thanks to reader AW for the headsup. Original link here
Minera IRL (MIRL LN) SUSPENDED – VOTE FOR EGM resolution to replace directors of Minera IRL
- It is rare that as analyst we offer advice on the voting of EGM resolutions. It is even rarer that we should offer this advice so publicly.
- We have considered statements made by the company Minera IRL (London) and Minera IRL SA (Peru) a subsidiary of Minera IRL in London.
- Minera IRL SA (Peru) are proposing to replace the board of Minera IRL (London) with a set of new directors – we agree with their strategy and with believe this is in shareholders’ best interests.
- A former ceo, Daryl Hodges, was recently ousted in a shareholder vote – we believe shareholders cast their votes correctly in this move.
- Minera IRL (London) are trying to sack Diego Benavides, a founder of the company alongside the late Courtney Chamberlain.
- The board are going through a legal process in Peru to sack Mr Benavides on undisclosed evidence from a ‘whistle-blowers’ hotline in Peru – we believe this is the wrong thing to do as we see Diego Benavides as a dedicated, loyal and critically important character in the running of the mining operation in Peru and important in terms of community relations.
- We see the Corihuarmi gold mine and Ollachea gold project as valuable assets which the company should maintain and progress.
- We do not see the actions of the Minera IRL (London) board as indicating the best strategy for building shareholder value.
- We suspect the board may be happy to allow the default and closure of the Corihuarmi gold mine and the potential sale of the Ollachea gold project which we do not see as being in shareholders’ best interests.
- We view the posting of the ‘Notice of EGM and Posting of Circular’ in an RNS on Friday afternoon in the UK at 2.30pm as designed for investors to miss this announcement.
- We see the holding of the EGM in Toronto as being contrary to the interests of many UK based shareholders who might wish the EGM to take place in London.
- Votes must be cast and received by Computershare in Jersey by 24 November for UK shareholders.
- Minera IRL (London) has published information in Friday’s circular in an attempt to discredit Mr Lema and Mr Jorge Ramos who are proposed as directors of Minera IRL (London) board.Conclusion: We believe Minera IRL shareholders should support Diego Benavides and the new proposed directors in the EGM vote to reconstitute the board.* SP Angel analysts are expressing their own views and opinions in this analysis. SP Angel has no corporate connection with Minera IRL or its subsidiaries. SP Angel holds no shares in Minera IRL and does not have any current financial arrangements with the company.
- Let’s imagine you’re Sherpa and you sign a contract to be the intermediary in this COFIDE/IRL deal (a position that’s completely normal in the world of Peruvian finances in fact, plus Sherpa isn’t some fly-by-night company but is well-established and run by a respected local businessman).
- In such a situation, you sign a contract with both parties and one of the things you want is to have an exclusive right on the deal, so that’s in the contract too.
- Now let’s imagine you’re Hodges and you ask Benavides “Does Sherpa have an exclusivity contract with COFIDE”? The answer is, of course, yes.
- Then you as Hodges go to COFIDE and ask whether Sherpa was an exclusive agent of COFIDE. You know the answer already of course. COFIDE tells you that “No, we don’t have exclusive agents”. What you don’t ask is whether in this specific contract and deal there’s an exclusive agent, because you don’t want the answer to that question.
- You then get to write that paragraph in an EGM proxy NR, a few months later, after being very careful with wording and agreeing on what you want to suggest to the world in late-night meetings with your lawyer friends.
PS: If you're holding Argentina bonds this weekend, prepare to have a very good day tomorrow.
UPDATE: With 84% of votes counted Scioli now has a slight lead, with 35.7% to Macri's 35.3%. But that doesn't change the fact that this is an enormous upset result that very few people saw coming (again, your author included, I thought Scioli had a real chance of winning the whole thing today). And Macri will be favourite going into round two, while Scioli will bank on not having the Anibal Fernandez yoke around his neck in BsAs Prov. Hell's bells it's going to be one doozy of a run-off campaign.
IKN337 has just been sent to subscribers. B2Gold and Minera IRL this week, basically.
ps: Oops, half a dozen spelling mistakes in the IRL piece: Somehow the non-proofed version went out. I'll fix it tomorrow