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8/27/16

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

...in reverse order:

Third Place: "More on the SRK Toronto office". And what's more, a neat twist was applied by SRK itself on Friday evening.


Second Place: "Orezone (ORE.v) more zone". That resource dumpage.

First Place: "Wesdome (WDO.to) and gold porn". Because I can snark and moan all day, but there's nothing to beat a bit of gold porn.

8/26/16

Orezone (ORE.v) and SRK Toronto: Wowsers

I don't think I've ever seen something like this before. These SRK people must be soiling underwear on the potential consequences. And surprise surprise, post-close Friday too:

TORONTO, Aug. 26, 2016 /CNW/ - SRK Consulting (Canada) Inc. is releasing the following in response to Orezone Gold Corporation's ("Orezone") news release of August 22, 2016.
BACKGROUND
SRK Consulting (Canada) Inc.'s Ontario office ("SRK") was involved with the Bomboré gold project from 2008 through to early 2013. SRK initially audited two mineral resource models generated by Orezone and subsequently generated two additional mineral resource models based on progressively larger exploration data sets. The first three mineral resource models were each supported by published technical reports in November 2008, November 2010 and October 2012, respectively. The April 2013 mineral resource model prepared by SRK is the last reported mineral resource model, and it is informed by exploration data to November 2012.  
The April 2013 model was used in a preliminary economic assessment for the Bomboré gold project completed in March 2014 and a feasibility study completed in April 2015.
COMMENT
The August 22, 2016 news release stated that a new mineral resource model update is currently being completed and will be publically released in September 2016. SRK understands that considerable additional exploration data (including 57,258m of exploration drilling) has been generated by Orezone subsequent to November 2012. 
The new mineral resource model is not yet complete and SRK has not yet been able to review any aspect of the model. In addition to the application of a different dataset, it is anticipated that the new mineral resource model will be based on updated geological wireframes, updated variography, alternative estimation methodologies and reporting / classification assumptions. For example, to differentiate between gold mineralization and waste the 2013 model applied a geology-based domaining strategy, compared to grade shells that are reported to have been used in the new model.  It is also expected that the application of revised metal prices, and the exclusion of certain satellite deposits will contribute to a different outcome to that of the April 2013 model.
SRK applied a rigorous QA/QC procedure for the 2013 mineral resource model and looks forward to the opportunity to review and provide comment on any differences that cannot be explained by new data, alternative estimation methodologies and new assumptions.
ABOUT SRK CONSULTING

NR here.

The Friday OT: BT; Tripping The Light Fantastic

We are not taxing you this week with deep lyrics (repeat "trip hey yeah" seven times, you've nailed this song) complex riffs or overarching melodies. This week's edition of The Friday OT is music specifically designed to stimulate the brain's addictive pleasure centres and it does the job crazily well.



Trip
Hey
Yeah

Dedicated to MV.

Chart of the day is...

...the change in physical bullion at GLD in 2016:



It started at 642.37mt
It's now 956.59mt
It's up by 314.22mt

At today's gold prices the difference is worth around U$13.44Bn.

8/25/16

Wesdome (WDO.to) at Kiena

Hello, hope you're having a pleasant day. At this end of the pipe I've been having all the fun, immersing myself in Wesdome (WDO.to) Kiena mine data and things on the back of yesterday's impressive news release from the company. A total wonkfest datacrunch that's kept me away from doing several other things today, including snarky posts on the blog.

But it's all worth it because these numbery things aren't just for fun, they're for profit too. By the look of the way the stock's reacted to the news today...



...that nice Mister Market guy thinks the news has added about U$33m to the value of WDO. And that's the most interesting bit y'see, because I'm pretty sure Mr. Market is wrong. I think it's worth a lot more than that.

All will be explained in IKN381, out Sunday.

UPDATE post-close: Probably just a coincidence.



Goldcorp (GG) share price unaffected by the Reuters exclusive

Whatever else you might make from the Reuters exclusive about Goldcorp's (GG) selenium leakage problem at its Peñasquito mine in Mexico, one thing's for sure; it hasn't affected the share price at all:


Yes GG dropped hard yesterday but so did all the sector. As you can see there, GG is lockstep with the XAU index the last five days.

Chart of the day is...

...copper, weeklies, with one line drawn on it:




Copper moves up from here and it'll bring in plenty of spec trades in the producers.

8/24/16

Wesdome (WDO.to) and gold porn

I think we can safely say "good hole". From here.




One year ago today...

...on August 24th 2015 the Board of Directors of Minera IRL, led by its then Executive Chairman Daryl Hodges, decided to fire Diego Benavides from the company. 

Today, one year on from that event, Diego Benavides is still the President of Minera IRL SA. The board of directors has been completely replaced. And Daryl Hodges is a marijuana salesman in Toronto. 


More on the SRK Toronto office

Following on from the IKN post yesterday. IKN claims no credit for the following, it's information from mail sent out by Clarus Securities this morning August 24th (this desk merely gets wind of such things from nebulous corners of the universe). Clarus did the legwork and deserve the kudos, but what they found is more than enough to share to a wider audience and will certainly be of interest to anyone with a position in Dalradian Resources (DNA.to). In the words of Clarus...


Resource estimate for DNA, RMX and ORE done by SRK consulting Toronto.
Oy Leuangthong did the geostatistics for both DNA and ORE  
Glen Cole did resource geology for RMX and ORE

And here's a screenshot of the main body of the mail:




Probably just coincidence, innit guv.

Checking in on the K2 Associates Asanko Gold (AKG) short

What with the sudden weak market for precious metals names this week, the random and often disjointed thoughts of your humble scribe turned to the well-publicized short position in Asanko Gold (AKG) (AKG.to) taken out by the jolly chaps at K2 Associates and revealed to the market in late June. Let's see how that's been getting on since then by comparing the AKG squiggly line to that of the Gold & Silver Index (XAU):



Answer: Moot. Nothing to report. No biggie. Undecided. Though we should note that K2 certainly built at least part and perhaps all its short position before the June 28th date when it published its hitpiece report, so they'd probably be able to claim a small win on the trade to date. 

IKN was, is and will remain neutral on this whole affair. But it's a fun one, so an eye will be kept on proceedings.

Producer mining stocks are at buyable prices...

...for the first time in a while.

By which this humble corner of cyberspace refers to the mining sector, rather than any single company. It's becoming easier to buy the sector, or buy the usual suspect stocks, or buy the ETFs and that's a good thing, life becomes easier and there's more time for the important things in life such as ice-cream or books or quality music or stamp collecting or bricklaying because there's no need to spend hours poring over dozens of operating miner stocks trying to find the undervalued one, the name the hot money missed as it melted into the sector and took valuations from reasonable, straight through overbought and directly to the "Are they serious?" sillynumbers that assumed gold would be at U$1,500/oz by Thursday tea-time and that Keith Neumeyer's theory on the Gold/Silver Ratio holds more water than Anne Elk's on the Brontosaurus (clears throat).

I'm sure the newswires will hang the correction on Jackson and his hole. The real blame is with dumbasses believing the breathless marketing hype and paying too much money for things. The capital market is now handing over the usual timely lesson.

PS: Of course it goes without saying that none of the above applies to the stocks I currently own, which to a name are still wildly undervalued and today being unjustly dumped by crazy idiots without an ounce of market nous or common sense. Thank you for your attention, please return to your August.

8/23/16

IMPACT Silver (IPT.v) is drilling again! Hoorah!

The IMPACT Silver (IPT.v) 2q16 results NR was published just a few minutes ago and aside from the expected mediocrity of its financials (another net loss and NO! YOU! CANNOT! IGNORE! DD&A!) the beady and sneaky little eyes of IKN were drawn to this line further down the page:
"With the proceeds from the Q2 2016 financing, the Company will begin surface and underground drilling programs in the fourth quarter."
Well that IS good news for the company, is it not? After all that time not drilling IPT is going to drill again and of course the tendering process for the drilling is going to be absolutely open and transparent with all drilling companies operating Mexico welcome to bid and the most competitive offer chosen from the stack. Why anyone should think that Energold (EGD.v) is going to get another automatic uncontested juicy contract from IPT is beyond my ken. Right, Mr. Frederick W. Davidson President & CEO of IPT.v?

Or if you like here's how we put it in IKN377, dated July 31st 2016:


Between 2011 and 2016, IPT returned a mine operating profit of $14.687m. But then $9.023m of that has gone to EGD, the major cause behind the mine operating profit turning into an overall operating loss over the period (not to mention the net loss). Put another way, in the two “good years” of 2011 and 2012, IPT returned Mine Operating Profits of nearly $17m ($12.9m in 2011, just over $4m in 2012). It was after the big positive results in 2011 that the big money was spent by IPT with Energold, those $8.3m in drilling bills. It’s fair to say that EGD has benefitted far more from operations at IPT’s mines than its shareholders. But that may just be a coincidence, of course.

PS: Frederick W. Davidson is also President & CEO of EGD.v
PPS: IPT.v rents office space from EGD.v

Today's post-close commentary on today's stock market action is brought to you by...

...The Kinks:



It's August.

Orezone (ORE.v) more zone

It's getting to the point where these things become so freakin' obvious and the bullshit so blatant that the elephants in the room go un-noted even by this humble corner of cyberspace, I'm skipping over outlandish consequences of the pisspoor quality of work done in the mining sector and taking them as read when they really should at least be documented somewhere. So after a few mails yesterday and today, plus the realization that few places other than IKN are crass and basic enough to do the job, here's a short follow-up post on the Orezone (ORE.v) resource revision yesterday that makes the two points that need to be made, concisely and clearly.

1) HEY, ANOTHER SRK TORONTO MESS! We out here are losing count of the number of poor resources signed off by this office. The potential for a company-killing malpractice suit is now looming large.

2) HEY, NICELY TIMED FINANCING! Hey, have lead brokers RayJames and NatBank come out with the same type of damning report we saw from BMO (dropped to 75c tgt, dropped to mkt perform)? No? Whyever not?


And that's enough.

Warren Dick: "Can the gold industry avoid the sins of the past?"

This piece by Mineweb editor Warren Dick is absolutely spot-on correct, as is the main player in the report, Nick Holland of Gold Fields (GFI). Here's an excerpt:

“How is it possible that companies can drop their stay-in-business capital so much when their operating costs have stayed reasonably constant?” asks Holland. “I believe that they have merely deferred capital that is going to come back, because if you want to sustain the business into the future, you need to spend that money. That for me is a little bit of a concern.”

We’re still early in the precious metals cycle

This from the intro to IKN380, out last Sunday evening.


We’re early in the cycle

If you haven’t seen the 29 minute round table discussion video (1) I stuck on the blog last week featuring Brent Cook and Joe Mazumdar of Exploration Insights, John-Mark Staude of Riverside Resources (RRI.v)  (a company I currently own) and Morgan Poliquin of Almaden (AMM.to) and Almadex then do so, it’s one of the better ones I’ve seen recently and there’s plenty of intelligent insight from all four participants to get your mining brain working.



But of all the comments made perhaps the best for me came from Joe Mazumdar who pointed out that, so far at least, mergers and acquisitions in the mining space in 2016 have been 1) friendly and 2) nearly all pure-paper deals, with either very little of no cash component at all.  That’s a great point, one of those market generalities that’s easy to spot and shows that we’re still early on in this current cycle. Along with Morgan Poliquin confirming the IKN view that there really has been sea-change in the mining sector and this current rally isn’t about relief in a bear, it truly is a change of trend, Mazumdar’s observation tells us something simple; that mining companies haven’t started to fight between each other for the next round of assets and once they do, the friendly all-share type of M&A that goes through without fuss or mess will become the exception rather than the rule. To the fore will come paper+cash deals, all-cash deals, hostile bids out of the blue, third party interlopers, target companies finding White Knights (to save their own boardroom hides) and all other stripes of mergers and buyouts.



We’re now two months on from Brexit and gold has just been through another soft and quiet week, with more selling of bullion from GLD to add to the wall of worry (955.9mt as at this weekend) and the edge taken off silver’s run as it drifts back up to 70X. We’ve even had a few of the braver anti-goldbug commentators piping up and telling us that gold’s a waste of time. Again. Pay no heed, nothing goes up in a straight line, August has gone quiet and what’s more, it’s done so at the top of the current gold range rather than at the bottom. Most of the time the advantage in capital markets is skewed enormously in favour of the larger player but there are some times and circumstances in which being small and nimble offers an edge, as noted below I’ve been taking the opportunity to top up on positions thanks to the opportunities offer by smaller weaker hands and impetuous traders. I suggest you do the same, because when gold breaks U$1,400/oz you’ll have to pay more. Make no mistake, Joe Mazumdar is right about where we are in the current mining cycle and anyone bailing now on quality names with longer-term futures is making a big mistake. This has only just begun.



x

8/22/16

"Hiroshima" By John Hersey

This morning I was reminded about arguably the greatest single piece of journalism in modern history, 'Hiroshima' by John Hersey, in part because we're just ten days away from the 70th anniversary of its publication. So being a member of This Modern World and with an 80 minute plane ride to do, I loaded it into Pocket and for the first time in too many years read it again today.

It hasn't lost an ounce of its impact. If you've read it before you'll know it's worth revisiting. If you haven't read it before it cannot be recommended too highly, the report that literally changed the world.

Peru: The new government lays out its plans for mining (from IKN380)

A small sample from yesterday's 28 page edition of The IKN Weekly, IKN380, where the real work gets done round here.



Peru: The new government lays out its plans for mining

On Thursday the new Cabinet Chief, Fernando Zavala, went to Peru’s new Congress in a key moment for the new government. According to the law he needs to get approval for all Ministerial positions from the Congress by vote and to do that, must go and explain what they plan to do. As Peru’s Congress is under an absolute majority of the opposition Fujimorista (FP) party (Keiko lost to PPK in the run off by a whisker) that’s not necessarily a given vote.



I won’t go into every aspect and issue covered, we’re here for mining so that’s the subject to cover today and as Zavala laid out the government’s plans for the sector (14). I took away three things. A soundbite or two for mining friendly headlines, the extended quote that lays out the PPK vision for mining and the new measure this government plans to bring in to help move projects forward (all eyes on Tia Maria, a test-case if ever there were one). All translated from the Spanish by these hands.



The soundbites:

“A modern Peru needs sustainable mining”.

“Mining investment is welcome”.

We like those.



The extended quote: “We will generate the conditions which allow our rich natural resources to be converted into products of higher value, not only via foundries and smelters but also through mining clusters that invest in the care of the mining environment, investigation, innovation and automization of the sector.”



The new measure: There are other reforms in the pipeline which are aimed at the small private miner/mining company, such as the phasing out of the use of mercury in gold extraction. But when it comes to our focus the big reform will be the “Adelanto Social”, best translated as the “Social Advance Payment” which reminds me of the way Ecuador requires mining companies to invest and give money to local communities for civil projects before the mine gets going. In Peru, exploration stage companies will also be required to lay down cash for new local works, though presumably the scale will be small (and let’s face it, most decent junior explorecos in Peru already have these types of plans, certainly the ones I invest in).



Orezone (ORE.v) takes "The IKN First Law of Mining News Releases" to another level

Here a reminder of the IKN First Law of Mining NRs, which states the following:

"The IKN First Law of Mining News Releases: Considering that anything contained in a mining news release is presented in the best possible way for the company in question, any piece of information contained in a NR that comes across in any way negative means the real news and/or events behind it must be very, very bad indeed."

But today that goes to the Nth degree thanks to Orezone (ORE.v) and its NR before the open today Monday, which didn't even need the main body of the NR to comply with the spirit of The First Law. ORE.v managed to nail it in the title line!

"Orezone Bombore Project Resource Revision"

Oh my stars. Anyone long ORE.v reading that in their e-mail title line gets a dose of white cold face-drain. And when they finally pluck up the courage to click on the mail and open it up, 30% of the gold has disappeared into thin air and the CEO telling us that "...this news is an unfortunate set back...".

Gotta love 43-101.

Starcore Intl (SAM.to) production results for quarter ended July 2016

Starcore Intl (SAM.to) produced 4,207 AuEq in the quarter just closed, a number that stacks up like this:

And that kind of sucks, frankly. It should have been more and this...

NB: Please note cut-down Y-axis

...is the main reason for the miss. As subbers know I'm long this one, so boo-hoo me. On the other hand, the lower operating costs from the low tonnage throughput and the better prices for gold mean this level of production makes SAM.to profitable for the quarter. Not the end of the world.

And it seemed so easy when they pitched the idea to Porter Stansberry, too

Nautilus Minerals (NUS.to) has a small place in the heart of your humble scribe, as it was the utter BS pumpo ran by Porter Stansberry on this wildest of mining companies which opened my eyes (and many others) to the scamster Porter and his manner of ripping off poor saps, left right centre. Back then Porter took the $1 stock that was NUS and pumped it up as high as $3 before the dump began and the idiots who pay him for investment advice were left holding his friends' large bag. Today it's a 14.5c stock. A detail.

Anyway, that was then and this is now and NUS.to provided us with news this morning and once you cut through all the intro stuff and talk about that-and-that way of raising cash for the grand plan, the paydirt finally arrives:
  • Staff reductions will include the departure of the following members of the Company's executive management team by September 2, 2016:
    • Shontel Norgate, Chief Financial Officer;
    • Kevin Cain, Vice President -- Projects;
    • Jonathan Lowe, Vice President -- Strategic Development and Exploration; and
    • Karen Hauff, General Counsel / Company Secretary.

So, wholesale layoffs in the office. As the Black Knight so wisely said, just a fleshwound. As for the timeline, back in the last corporate presentation they told us that wet testing of equipment would start in 1h16. And now...
The Company previously disclosed that in the event that the required funding is secured and the Company is able to continue development of the Solwara 1 Project, the schedule would be delayed. The Company has now secured the necessary bridge financing to facilitate the time required to secure that additional required funding. If the additional required funding is secured by June 2017 and subject to ongoing detailed planning, the Company could be in a position to commence the initial deployment and testing operations at the Solwara 1 Project by the end of Q1 2019.


Oh, another three years? Bummer. Still, it's unlikely to get set back any further than that, right?





c

8/21/16

The IKN Weekly, out now


IKN380 has just been sent to subscribers. We update and raise target price on a covered stock and look at a potential silver trade. Yeah, me and silver, hoodathunkit eh? I'm not a buyer yet thought, far too much of a coward.

GMO: " Who will replace Mackenzie at BHP?"

Another great edition of Global Mining Observer out today, so click this link and read all about Andrew Mackenzie's woes at BHP. Plenty more besides.

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

...in reverse order:

Third Place: "Guatemala: Mining royalty payments set to increase (from IKN379)". An excerpt from last week's subscriber weekly, they tend to be popular and this one was topical too.


Second Place: "Goldmoney Inc (XAU.to) 2q16 financials". A look at a part of the numbers behind this growth start-up that the company bury right down at the bottom of the filings. You would have thought physical assets would have been up sharply. Most interesting and this post got the amount of hit count that would normally win the week, but...

First Place: "Mark Bristow, CEO of Randgold (GOLD) "on charity safari"". Most interesting of all, even though this post only went up Friday evening after the closing bell (when IKN readership figures normally drop and stay low over the weekend) this post has turned out to be the most popular of the week and by quite a distance, too. Mark Bristow's Randgold (GOLD) can claim all the social and environmental responsibility it likes, but when the CEO proudly poses next to the elephant he's just shot dead with a rifle it paints a different corporate attitude. This Mark Bristow exposé is the week's must-visit IKN post, hopefully it gets plenty of eyeballs in London too.