start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)

7/2/16

The top three most visited IKN posts this week are...

...in reverse order:

Third Place: "Your weekend math break" though to be fair, I think 50 or so of the hits were just from me, I've re-watched this so many times. "Do I cut pizzas for a living? No."

Second Place: "The Asanko (AKG) short report". A post that takes you to the K2 Assoc hit-piece on Asanko (AKG). The report clearly had some effect on AKG during the week, as the stock dropped (down 8.9% on the US Dollar ticker) while most others in the mining sector rose sharply thanks to the gold pop. Then again, K2 says the thing has a potential 90% downside, not just 9%. We'll see on that and the first acid test will surely be AKG's 2q16 production numbers and guidance, coming soon to the NR near you.

First Place: "Sell Dalradian Resources (DNA.to) (from IKN372)", which means a piece of the Weekly is the most popular note on the blog once again, probably because I'm not making much of an effort on the blog these days.

The list of surprises goes on

Brexit wins
Iceland wins
Wales wins
Novak loses

The GOP convention this month could be more interesting than most editions.

UPDATE: However, some things never change. Germany win a penalty shoot-out (they haven't lost one since 1976).

7/1/16

The Friday OT: Nils Frahm; More (from Late Night Tales)

I fell asleep to this song last night, slept soundly and dreamed of beauty. Now it's your turn.




Jon Hopkins gave this an expanded audience via his Late Night Tales and I'm one of those sets of new ears. Glad to have discovered Frahm too, a wonderful world away from your average electronic music mediocrity.

In The IKN Weekly this weekend...

...another brand new stock reco on an exploration stage mining company (and by the way, last week's reco is up by nearly 40%). Last week's reco was a simple story and this weekend's is another one, though slightly different in aspect; This time it's a case of getting on before an almighty promo pump starts, which will be soon. I'd rather take money away from the scumballs than from the naive.

Naughty naughty Asanko Gold (AKG): Selective disclosure is illegal

IKN knows the Canadian regulatory authorities read this blog (OSC, IIROC etc) and this post, ladies and gentlemen of those offices, is for you. Canada Day or not, time for you guys to pick up the phone and ask Peter Breese and his merry band a few pertinent questions.

We noted earlier this week that an insto known as K2 Associates published a report on Asanko Gold (AKG) (AKG.to). We know that K2 are short AKG and we know their publication is one of those known as a "hit piece", providing the public with (what they say) is evidence that the stock is overvalued. Also for what it's worth, this desk has had a few exchanges with other houses and anal ysts since then and there are a range of view out there, from "it's a BS report" to "they have a point". Finally, I would like to make clear that I have no position or opinion on AKG, IKN is strictly neutral

But now for the reason for today's post: It has come to light that after the K2 report was published, AKG held a conference call for anal ysts. However, the ConfCall was not made public, it was invitation only, there is no record of the ConfCall happening and the company almost certainly gave this small and select band (let's call them "the friends of AKG") material information that has not yet been made public. That's the kind of cheap trick that calls into doubt the reputation of any company, not just a producing miner current under attack from people who accuse them of hiding facts from the public. It's also illegal, as Newcrest found out to its chagrin when it was fined for giving selective disclosure in 2014 (and in that case Newcrest could almost be called innocent and making a genuine mistake).

This latest twist potentially explains why AKG is down in New York trading today when just about anything else in the mining sector is up.




IKN ad revenues update

We haven't done one of these posts for quite a while and I know a few of you are interested in the subject, plus there's been a sea-change in the cash brought in by the Google adverts on this blog and things are different from the last time we made mention, so here goes:


Last month (June 2016) revenues from the little adverts you see on these pages reached U$260.30, which is the best number since 2011. That's also a big change from the middle of last year when , for reasons unknown, revenues slumped to under $100/month on a couple of occasions. 

I don't know the exact reasons for he improvement in earnings, but I think it's because of 1) more viewers of the blog (there's been a big uptick in viewing figures in 2016) and 2) Google getting its act together on mobile device adverts and scoring more revenue from hand-held screens. The interesting bit is the second one, because that would make GOOG the stock a decent buy coming into earnings season if this small and completely anecdotal example is emulated across the market.

And finally, there's no need to write in and mock, I know $100 or $200 a month is hardly a king's ransom and not the kind of cash that changes anyone's life. But it's enough to pay household bills, it feels like 'free money' this end and I'm enough of a numbernerd to care about datasets. Which is why I bother.

One hundred years ago today

There were other days and other battles of course, some of them (e.g. Verdun) had already happened, but the first day of The Somme, July 1st 2016, has gone down as the emblematic slaughter of the First World War. It would be very easy to add to the mountains already written but it would bound to be trite in nature so rather than any extra words of mine, we'll go with some immortal ones from somebody who lived and died in the trenches.

Strange Meeting
Wilfred Owen (1893 - 1918)

It seemed that out of the battle I escaped
Down some profound dull tunnel, long since scooped
Through granites which Titanic wars had groined.
Yet also there encumbered sleepers groaned,
Too fast in thought or death to be bestirred.
Then, as I probed them, one sprang up, and stared
With piteous recognition in fixed eyes,
Lifting distressful hands as if to bless.
And by his smile, I knew that sullen hall;
By his dead smile I knew we stood in Hell.
With a thousand fears that vision's face was grained;
Yet no blood reached there from the upper ground,
And no guns thumped, or down the flues made moan.
"Strange, friend," I said, "Here is no cause to mourn."
"None," said the other, "Save the undone years,
The hopelessness. Whatever hope is yours,
Was my life also; I went hunting wild
After the wildest beauty in the world,
Which lies not calm in eyes, or braided hair,
But mocks the steady running of the hour,
And if it grieves, grieves richlier than here.
For by my glee might many men have laughed,
And of my weeping something has been left,
Which must die now. I mean the truth untold,
The pity of war, the pity war distilled.
Now men will go content with what we spoiled.
Or, discontent, boil bloody, and be spilled.
They will be swift with swiftness of the tigress,
None will break ranks, though nations trek from progress.
Courage was mine, and I had mystery;
Wisdom was mine, and I had mastery;
To miss the march of this retreating world
Into vain citadels that are not walled.
Then, when much blood had clogged their chariot-wheels
I would go up and wash them from sweet wells,
Even with truths that lie too deep for taint.
I would have poured my spirit without stint
But not through wounds; not on the cess of war.
Foreheads of men have bled where no wounds were.
I am the enemy you killed, my friend.
I knew you in this dark; for so you frowned
Yesterday through me as you jabbed and killed.
I parried; but my hands were loath and cold.
Let us sleep now ...

It's so bullish out there, that...

...the market has even decided that Primero Mining (PPP) can make money now.

 
That's as impressive a signal as they come.

Anyway, happy birthday Canada. You get to play catch-up on Monday when the USA does happy birthdays.

6/30/16

Guatemala: Today El Tambor....

...and tomorrow, who knows?

Yesterday the Guatemala courts ruled that the El Tambor (aka La Puya) gold mine in Guatemala, owned by private US company Kappes (KCA), must be closed and its licence suspended because it did not have the necessary "social licence permit", in other words formal permission from its local community to operate.

For the record, Tahoe Resources (TAHO) at Escobal doesn't have that piece of paper, either. Consider it next in the firing line.

Ralph Rushton leaves Gold Group

The Simon Ridgway empire, that is. Just so you know.

Light aircraft

We like, therefore we share. Thanks due to reader PK.

In Race To The Bottom news...

...the British Pound (GBP) does the obvious the moment that the CenBank chief says the obvious:







At least we don't get President Boris, thanks to the nefarious "Et Tu Brute" Gove, who read the cowardice of Johnson correctly. We should be grateful for small mercies, though the way in which Boris Johnson played lead lemming and then stops at the edge to watch his fellow citizens make the big drop...that's fun.



Porter Stansberry now shorting Almaden Minerals (AMM.to) (AAU)

With the stock at U$1.56, this morning Porter Stansberry has decided to put "buy to" price of U$1.30 on the stock, effectively calling short on Almaden to the people that rocketed the junior up from its sub-dollar levels when he started this BS-pump. Unsurprisingly AMM is selling off this morning on the news.

6/29/16

Argentina's new 500 Peso banknote

As from tomorrow, June 30th 2016, this goes into circulation in Argentina (front and back shown):


The new 500 Peso banknote takes over from the 100 Peso note as Argentina's biggest denomination note and it's about time, too. With the forex standing at ArgP$15.29 to one US Dollar, it means that up to today the biggest note, the 100, had the buying power of U$6.54 and people either had to credit card even for small-scale purchases or carry around bulky wads in their pockets.

Anyway, the new 500 has a U$32.70 equivalent and makes more sense. Nice picture of a jaguar on it too, a resident of the far North of the country.

Continental Gold (CNL.to): The Ron Stewart factor

One of Canada's most respected anal ysts, Ron Stewart of Dundee upped his target on Continental Gold (CNL.to) yesterday afternoon, calling the investment opportunity "compelling" along the way. The reaction:






Don't mess with the best, the best don't mess.

Dalradian (DNA.to) and your lyin' eyes

Via mail, your humble scribe was accused of "waaaaay over reacting" (sic) on the call to sell Daradian Resources (DNA.to) made Sunday evening, due to the new political risk uptick, and the advice move any cash in DNA to other mining places. Let's examine evidence:



And said evidence suggests that dumping a five day 14% underperformer isn't so much of an over-reaction, more a smart call. One can only assume the "waaaaay over reacting" (sic idem) comes from a DNA long who is either ignorant or nervous. Or both.

PS: Galantas Gold (GAL.v) is 20% down since Brexit, too.

6/28/16

The Asanko (AKG) short report

To be clear, I have no position in Asanko (AKG) (AKG.to) and that's unlikely to change, therefore I have no dog in this race.

That said, via kind reader L here's the link to the short report on AKG published today by K2 Associates, who are short AKG and think there's a potential 90% downside on the stock. After reading their thesis, I'm forced to say that they may have a point. Go take a look.

Ten days of Lara Exploration (LRA.v)

Even by Agora's pumphouse standards, this is getting ridiculous:


Got any thoughts on that, beloved IKN house mascot parrot?



Agreed. And though IKN warns that it's not the prettiest image, here's a link for those of you who would like a GIF-based commentary on the LRA price action.

Andrew Kaip of BMO's poor analysis of Sandstorm Gold is confirmed...by BMO

In the post "When sellside brokerage anal ysts get it totally wrong, BMO and Sandstorm (SAND) (SSL.to) edition", we noted how Andrew Kaip of BMO vastly underestimated the upside potential of SAND by sticking a 12 month U$4.50 target price on the stock, a price that was taken out the very next day. We summed up by saying:

1) Kaip won't get into trouble for this because he basically called the stock higher and it went higher. Anal ysts face flak on those rare occasions they're daft/brave enough to call sell on a stock, not buy (or that ultimate get-out phrase, "market perform" linked to a tepid upside percentage call).

2) But it's not a "market perform" at all, it's obviously a "market outperform". He's done his readers a disservice by not getting them into a stock that moved 13.9% in the space of one day.

3) This can only mean that Kaip hasn't read SAND correctly. There's something very wrong with his basic assumptions and, as a public service, IKN invites said anal yst to consider just why he's got the call on this stock so obviously wrong. He may become better at his job from such a period of necessary introspection.

Therefore, the thronging masses here at IKN Nerve Centre had a good old guffaw and chuckle when reading the NR out of SAND yesterday announcing its U$50m bot deal, which starts like this (IKN highlights and bold-types for fun):
Sandstorm Gold Ltd. ("Sandstorm" or the "Company") (NYSE MKT:SAND)(TSX:SSL) has entered into an agreement with a syndicate of underwriters co-led by National Bank Financial Inc. and BMO Capital Markets (the "Underwriters") pursuant to which they have agreed to purchase, on a bought deal basis, 11,236,000 common shares of Sandstorm (the "Common Shares") at a price of US$4.45 per Common Share, for aggregate continues here.

And no warrants on that. In other words, BMO is happy to buy SAND shares at U$4.45 when its house target is U$4.50, which can only mean one of two things:

1) It as a brokerage is happy about offering its clients a 5c mark-up on a U$4.45 stock (or 1.1% once the holding period is done).
2) The people higher up at BMO don't agree with their own anal yst.

Guess which one is more likely?

Lundin Gold (LUG.to): The share count begins its upward climb, plus a re-visit of IKN370

In light of the news out of Lundin Gold (LUG.to) yesterday that it's running a bought deal to raise just under $95m (gross proceeds including the over-allotment facility which will fill, be in no doubt), your author returned to read the last piece he penned on the company, in IKN370 dated June 12th that took a better and closer look at one of the mysteries of LUG.to, its total State burden it will need to pay to Ecuador in order to play mining at Fruta del Norte (FDN).

It was a long-ish note and I'm not going to re-print it all but here's how it ended, including a price chart to that date.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx



"The bottom line, after having done some real investigation into the subject rather than guesstimating, I’m still left with having to make some educated guesses but we can say that the 29% effective rate over LOM mentioned by CEO Hochstein may turn out to be somewhat optimistic, but it's not going to be far out. If I had to bet (and I don’t) I’d be careful about making too many offset assumptions about the profit sharing to corporate tax, then not assume that IVA rebates will be in the post quickly, but there’s every reason to believe LUG in Ecuador will have an effective tax rate in the low 30s %. That’s pretty competitive to peer countries and if Ecuador can offer the stability and long-term miner-friendliness that President Correa espouses, they’ll be fine.




However, it doesn’t take away from the fact that even with this lower rate of tax in real terms, LUG.to at FDN has just offered up to the market a project with economics that don’t sparkle. And this after Ecuador reportedly made plenty of concessions to LUG during negotiations and is taking a much softer stance towards FDI projects such as this, which underscores just why Kinross decided to walk away in its time at FDN when Correa was playing hardball.



When I ran the numbers earlier this year in the NOBS report of IKN357 dated March 13th, I couldn’t help but come to the conclusion that under the circumstances, with a key Feas Study in the works and then the hunt for capital to build its mine afterwards, LUG.to shares looked expensive for what they were. Since then we’ve seen gold jump, the bull market for mining companies take off, LUG got a positive price jolt when Porter Stansberry pumped the stock to his big list of investors and now the FS is here. Next we have the capex raise which, if you believe the press will start at U$820m, may be a lot higher (16) and come in two phases, first U$120m to U$140m round of equity, then at U$700m commercial (probably debt) facility. That’s a lot of raise for a U$445m market cap company to support and the way in which the FS assumed a 5% discount rate isn’t helping the optics of the raise and its real burden on the project. What we do know for sure is that LUG is currently running on fumes and will HAVE to raise its cash soon, because for one thing it’s part of the terms of agreement with the government of Ecuador and for another, they’ve just taken out a $5m bridge loan with main sponsors the Lundins to tide treasury over. And $5m isn’t going to last very long here.



This weekend’s CAD$5.62 share price for 101.3m shares (and that new small bridge loan) still looks expensive, sorry and all that, it’s not for us smallfry retailers until we know how much the bigboy financiers are going to extract for their kind patronage. I expect the share price to continue weakening and $5.25, even under $5, looks in the cards. End."


xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

That's enough June 12th script and back here today June 28th, I can't help reflecting that the already proven and convicted securities fraudster Porter Stansberry has been trying to make himself a new BFF in he shape of Lukas Lundin (by the way, hi Jack! Thanks for reading! How's your work experience going under Ron? Best to your pops), what with the timing of his blatant pump call on this stock just before the period in which LUG needed to start the raising process. But on the other hand, what with gold's rise since then I don't think there's much downside in this stock from here, certainly not as much as Itinerant's rather neophyte short call on the stock late last week. People, if you're going to short a mining stock don't make it one that can score you 20%, make it one that has a heap of debt already on board and a serious chance of being sliced in half, or make it one that's an empty box being held up by rah-rah noise with a real chance of going to zero. LUG isn't either of those and what's more, its all-star cast of names and the undoubtedly strong deposit itself will mean it's not going to run out of friends (and using the WFT argument to short the stock at $1,300/oz gold when the WFT doesn't even kick in until U$1,480/oz, that's just plain silly, Sinking Alpha people). The best guess here is that LUG goes into inertia mode and fiddles round its current PPS during the capex raising and build-out stages. It's going to be a boring stock and if you want boring you're in the wrong sector of the market.

PS: Hey Porter! How's that defamation suit coming along against me? Keep in touch on that one now, won't you? But you know you can't add anything to it from this post today, because "convicted securities fraudster" is exactly what you are, scumball.

6/27/16

Top Google search queries in England today

What is The EU?
Where is Iceland?
How to play football.

Sell Dalradian Resources (DNA.to) (from IKN372)

A segment from IKN372, out last night:



Dalradian (DNA.to) and Brexit
Fallout from the UK’s decision to vote Leave last week will come in all shapes and sizes. In the great scheme of things what follows here is a tinysmall consequence compared to the massive issues now on the table such as EU membership, the new political leaders of parties in the UK, et cetera and so forth. But it is our focus subject and we’re also talking about a company we’ve covered on these pages as well as traded (with reasonable success too), Dalradian Resources (DNA.to). Though small, this is a practical consequence of the Brexit vote and our field of interest, so here goes.

It's way too early to be dramatic about the future of Northern Ireland and the ramifications from the Brexit vote result are only starting to show. Therefore I am not talking about clear negatives such as a return to hard borders between North and South, the vote for a reunification of Ireland (though Sinn Fein will push that agenda as from tomorrow in the Irish parliament, it's the party's basic raison d'etre after all), a split from the UK nor even more stressful things such as troops on the ground to quell any resumption of sectarianism (the Catholic/Protestant issues of the country aren't counted in decades but in centuries, yes things are much better now but multi-generational conflicts can be tough to extinguish completely).

I am not considering any of the potential bad cases, for Northern Ireland in general or Dalradian specifically as they are too far in the future to consider seriously for a junior mining company investment. However we must be clear, what this does do is add a significant amount of political uncertainly to business investment in Northern Ireland and that includes DNA. In our focus company's case it's worse, as right now DNA is on the permitting track and in the period when it wants political and authority certainty, from which it goes to market to raise capital (or sells to the highest bidder). Who will be governing the land in two years' time? In five? That's the timescale a mining project such as Curraghinalt needs. What will the laws be? Will previously awarded permits be recognized? Will local grievances become louder? What will the exchange rate be for the pay of workers at the mine? How much tax will the company pay? A hundred other unknowns have suddenly shown their head above the parapet. The Curraghinalt deposit and project is one thing, but its political situation has suddenly taken a turn for the worse. The IKN Weekly's recommendation is to avoid exposure to Dalradian Resources (DNA.to) until such time as the political future of Northern Ireland is better understood. Yes, that means sell if you still own shares and as a post-script, that call goes for other Northern Ireland exposed companies such as Galantas Gold (GAL.v). Even in a best case situation DNA (and GAL and others) aren’t going to benefit as much from the safe haven interest in gold as other juniors, transferring any cash from these to other similar stocks working other countries is a simple and practical call.


Regarding political risk

You may be interested to learn that on this bright and pleasant Monday morning, the biggest story in South America is not Brexit, or the EU's trails, or the UK's political crisis, or the market's slump. It's that Leo Messi has announced he won't play for Argentina any more. And it's top story by mile in all countries, not just Argentina. So, splain me again how South America is such a risk-laden place to invest and the North is the place for investment peace of mind and low political risk, will you?

Past performance does not guarantee future results, but...

...I don't care, HudBay's (HBM) going under U$4:



I've even heard some crazy talk about HBM being a buyout target. The only people who could think that are numbskulls who've never bothered to open this dog's balance sheet.

Pet Rock update

Jason Zweig still getting paid for writing in the WSJ, is he?


6/26/16

The IKN Weekly, out now




IKN372 has just been sent to subscribers. A new trade is the main event, plus laughing at the stupid Brits. Because they're very stupid and there comes a time when all you can do is laugh.

And well done Chile.

Your Sunday evening British Pound update

Another BOHICA* moment for the GBP coming your way.






The waste of space Osborne is due to speak to the world before the LSE opens tomorrow morning, though anything he says apart from "I resign" will be empty words. The man who tried to scare Brits into voting Remain by threatening an emergency budget cannot apply that now, he'd be laughed out the room.

IKN's prediction for Monday: The world gets used to the idea of a UK out of the EU, no panic in the big stage, no crash, but London will start to sink all by itself. If isolation is what they want, isolation is what they will get.

*bend over here it comes again