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9/24/16

Radio Raheem



"Let me tell you the story of Right Hand, Left Hand. It's a tale of good and evil. Hate: it was with this hand that Cane iced his brother. Love: these five fingers, they go straight to the soul of man. The right hand: the hand of love. The story of life is this: static. One hand is always fighting the other hand, and the left hand is kicking much ass. I mean, it looks like the right hand, Love, is finished. But hold on, stop the presses, the right hand is coming back. Yeah, he got the left hand on the ropes, now, that's right. Ooh, it's a devastating right and Hate is hurt, he's down. Left-Hand Hate KOed by Love."

The stand-out character of the magnificent movie. Bill Nunn RIP and that's the double truth, Ruth.

PS: The clip:


 

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

...in reverse order:

Third Place: "Argentina: The Veladero mine causes political pain (from IKN384)". Basically because Lawrie Williams gave it a re-boot. Which was nice.


First Place: "Gold porn". Basically because you all like the gold porn photos and always will. Mmmmm, shiny things.....mmmmmmm

9/23/16

The Friday OT: Joaquin Sabina; Contigo

The most drop dead heart-smashing love song ever.



Let us be clear, lovers of the tongue of Cervantes, the guy who can write lines like these...

"Porque el amor cuando no muere mata, 
                                     porque amores que matan nunca mueren"


...is simply a genius.

Apart from The Friday OT later on...

...there will be no posting on this blog today.

For secret reasons.

9/22/16

Dunnedin Ventures (DVI.v) never gets mentioned on CEO.ca

This is one reason:


This is the other, from October 2016.


“Chris Taylor’s Dunnedin Ventures Inc. (DVI), down one-half cent to 4.5 cents on 220,000 shares, is facing a dissident shareholder and a threatened proxy fight. The company’s former special adviser, Allan Barry Laboucan, says he was “pushed out of Dunnedin” but plans a return. Mr. Laboucan is best known as an “editor, writer and show host” with Allan Barry Reports, his on-line tout site. A year ago Mr. Taylor, Dunnedin’s president and chief executive officer, appointed him as a special adviser. Appointments are usually gushy affairs, and Mr. Taylor lauded his new adviser as “one of the most well-rounded diamond industry experts in Canada.” He did not back up the claim, limiting his description of Mr. Laboucan’s experience to his frequent guest appearances on business television programs seeking his opinions on resource companies and market trends, his role as “chief market commentator” with Agoracom.com, as well as his work with Allan Barry Reports.
Mr. Laboucan is certainly not returning the puffery. He now says in an Allan Barry Reports blog entry that Mr. Taylor “had little experience in diamonds” when Dunnedin began working its Kahuna diamond project in Nunavut last year, adding that “he is unfit to lead the company any longer.” Mr. Laboucan says he made his “concerns about the board and the leadership” of Dunnedin known to the company’s board of directors, after which they “chose effectively to dismiss me.” That hardly seems a surprise, since Mr. Laboucan says he wants to change the board of directors, appoint himself president and CEO, and bring in a new team experienced in diamonds and with skills complementary to his own. He then delivers a final insult to Mr. Taylor’s crew, saying he feels Dunnedin’s efforts were “more about the board of directors trying to build a stock promotion than a diamond mining company,” adding that he believes the “science of what we have discovered shows we have a world-class diamond project.”
Presumably he means the science of what Shear Diamonds Ltd. discovered in the mid-2000s as that now defunct company was responsible for the discovery of the narrow but rich Kahuna, Notch and PST kimberlite dikes. Shear never completed a resource estimate based on its work but Dunnedin did, declaring a 3.1-million-tonne inferred resource at Kahuna, averaging 1.04 carats per tonne, with another 921,000 tonnes inferred at Notch, averaging 0.90 carat per tonne. (PST, the smallest and richest of the tree dikes at 2.18 carats per tonne, does not have a resource estimate as yet.) Ultimately, whoever holds control of Dunnedin next year will have to raise several million dollars to advance Kahuna in a meaningful way since a lot of drilling and bulk sampling will be needed to prove or kill the project.”

Allan Barry (who is not a geologist nor an engineer nor a qualified financial analyst, but sure likes to pretend to be all three for his audience of neophyte innocents) is so keen on hunting out bullshit stock promoters? He should look in a mirror.

Galane Gold (GG.v): Seems legit, guv

One day some company will pay a research company for a report and they'll put a "hold" or "sell" reco on the company. Not.

This hit the wires at 07:55m today:



And now, this:

Bless 'em.

In The IKN Weekly this weekend...

...there will be the usual assortment of many things. There will also be a piece directed at investors (not onanist stockflippers) which will explain why an investment (rather than a pump flip or near term diceroll) in Riverside Resources (RRI.v) is a smart idea in the current 3q16 and 4q16 time window.

Yamana Gold (AUY) (YRI.to) hasn't been telling the truth about its massive legal problems in Argentina

Who remembers back to the court case between Yamana (AUY) (YRI.to) and Ricardo Auriemma over fees that Señor Auriemma said were due to him from dealing he had with Northern Orion (which was bought out by YRI)? Not many of you I'd expect, because Peter Marrone would prefer you didn't have it on your mind when it comes to his company. But you may remember this March 2015 NR in which YRI said that the case had been ruled in favour of the company and against Auriemma:
  
TORONTO, ONTARIO--(Marketwired - March 3, 2015) - YAMANA GOLD INC. (TSX:YRI)(NYSE:AUY) ("Yamana" or "the Company") today announced that the Commercial Court of Argentina has annulled the previously announced award granted to Ricardo Auriemma ("Auriemma") in the litigation between Auriemma and 0805346 B.C. Ltd., a subsidiary of the Company which was formally known as Northern Orion Resources Inc. The effect of the annulment is that the previously announced award is cancelled and has no further effect.
The annulment vindicates the Company's consistently maintained view that the award has no valid basis and is without merit.
 That sounds all done and dusted, right? 

Wrong

It takes a bit of snuffling around the Argentine judiciary website, but hit the right buttons and put in the right keywords* and you get to the Yamana vs Auriemma case page. And there you see this:


Now that's interesting! For a case which was supposedly over (according to the smooth corporate image-makers at YRI at least), there has been a lot of activity in September. For example, this extract from one of the docs which is in Spanish of course, but you see the names and the date stamp:



So why is this decent fodder for an IKN blog post, you ask? Well dear reader, if you start reading the recent rulings and depositions (as I've been doing this morning) you soon see that far from this case being closed, it's recently gone against Yamana and they're now on the hook for a sum as high as U$110m. In fact the decision favouring Auriemma is now a done deal, all the lawyers are doing now is haggling over the amount that YRI will have to pay him, because one side wants to use Pesos, the other side dollars, one side no accrued interest the other side yes, etc etc.

So let's see now: Agua Rica's a bust, Suyai will never happen and now Alumbrera is going to cost the company multi-millions. Peter Marrone really REALLY screwed up by walking into Argentina like a greenhorn.




*mail me if you're interested in getting to the exact spot, instructions can be provided.

Another Canadian pump and dump unwinds

Colorado Resources (CXO.v):



This one was loudly pumped by the purveyors of bovine excrement at CEO.ca non-stop for months, getting all the newbies and greenhorns hot and lathered about all the millions they were going to make (off free info on a freakin' chatboard!!!) and then...for some reason... it all suddenly went quiet at CEO.ca about CXO (i.e. Tommy's ringleader crew were quietly selling). Cut to today and the near-inevitable news release that makes it clear the wonder-project isn't the next Red Lake after all. My, what a shocker.

This is how these two-faced delinquents have always worked their sordid trade. They'll pretend to be your friend forever if you let them. Well "forever" may be a stretch, more like until your back pocket runs dry.

UPDATE: Reader JB helps the cause by sending in this Dilbert strip. Thank you kindly, sir.


It's time for the Pacific Rim (now OceanaGold (OGC)) versus El Salvador verdict...

...in the years-long arbitration between company and country at the ICSID/CIADI tribunal. We're about to find out just how stupid OGC was to get involved with this and "pick up a bargain".

Verdict due any day now.

Frank Holmes Says

The Leo Messi groin injury is bullish for gold. 


This is of course a developing story.

Chart of the day is...

...copper, hourlies, for obvious reasons:




Doing much better than gold off yesterday's Fed decision.

9/21/16

Frank Holmes Says

The use of chemical weapons is bullish for gold. 


This is of course a developing story.

Gold porn

Royal Nickel is the company and yup, that's VG all right. I hear they're selling specimens. By the looks of things they won't be cheap.

The strike that Gran Colombia Gold (GCM.to) isn't telling you about

So far:
  • 5,000 small scale miners in Segovia out on strike and protesting in the streets because GCM won't negotiate in good faith and are trying to make them out as illegals.
  • Now joined by another 1,000 from the nearby town of Remedios, striking in solidarity.
  • The contracted miners of GCM have either stayed away from their jobs for fear of reprisals, or they've stayed inside the mine site in order to work on. Absentee rate is approximtely 50%
And zero from the company. This is how Frank Giustra/Serafino Iacono treat their shareholders and the market in general. They can't stomach failure so try to pretend it doesn't exist.

UPDATE: 12 hours later GCM finally put out a highly spun NR on the events. Nothing to do with IKN shining a light on your nefarious ways this morning though, right Fino?

Chart of the day is...

...the Kitco live gold chart, frozen in time just after the NYMEX open:



The market has decided what the Fed will do. Now we get to scan for the wording.

It seems Lawrie Williams is a regular reader of IKN

Which is nice. Here's an extract from this:

"As is often the case with Latin American mining stories, our principal source for this information is sometimes irreverent blogsite Inca Kola News (IKN) which is not shy about publishing facts that the mining companies would rather were swept under the table and not publicized to a wider audience. Firstly I should add that IKN is not some anti-mining website, but one aimed at those investing in Latin American mining in general, and one that has proved remarkably successful in digging up both positive and negative stories about mining operations across Central and South America."

Full thing here.

9/20/16

Barrick (ABX) "begs enormous forgiveness" for the Veladero spill

Here's the video of Juan Bautista Ordóñez, chief executive of Barrick Argentina, eating a large plate of crow and willing to say anything to get his mine back working. And yes, "begs enormous forgiveness" is a direct quote (translated).

But if ABX cared that much, how come the accident happened on September 8th and they tried to keep it secret, before finally getting in front whistle-blowers and reporting the accident on September 14th? On freakin' whatsapp! You kind of get the feeling ABX suddenly realizes how how deep this particular tank of excrement is.

Frank Holmes Says

The Jolie/Pitt divorce is bullish for gold. 


This is of course a developing story.
 

GLD gold holdings, 2016 to date

Reader 'WR' send in the link to this piece of Bloomberg stupidity entitled, "Funds Dump Gold at Fastest Pace Since May as Fed View Shifts" in which my favourite quote is...

"Speculation is mounting that Fed officials, in a statement scheduled for release on Sept. 21, will signal that higher U.S. interest rates are on the way"
...because you could apply that line to just about every FOMC for the last year and a half. Therefore to buck against our post-truth era and add some facts into the debate, here's a look at the GLD inventory holdings in 2016 to date to get a better handle on that "gold dump":

My my, going out of fashion fast aren't we?

Wesdome (WDO.to), sellside anal ysts and a Tuesday morning pre-bell rant about NAV-based price targets

This morning, Barry Allan of Mackie Research has upped his target on Wesdome Gold (WDO.to) to CAD$2.95 (from CAD$2.75), using what they call a "Risked Net Asset Value (NAV)" concept to do so. What they do is say something along the lines of, "We think that the "Unrisked" Wesdome NAV is CAD$2.41, but we're going to add 54c to that and make our new target CAD$2.95 by taking into account the other things it's doing that we can't really value well because we're not clever enough". In other words, if the risky part of WDO blows up in its clients face and the stock drops they can say, "Hey dude, we told you it was risky!". 

In other words, another no-balls sellside call and that on top of the vague pseudo-math bongo-bongo concept of NAV, which is one of the worst conceptual tools used by sellside anal ysts to make what they do sound impressive. In fact IKN tackled this very subject and on this very stock three weeks ago on August 28th in The IKN Weekly edition IKN381 when taking a good hard look at WDO and the influence of the Kiena discovery:

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Valuing Kiena

This is where the rubber hits the road. The question of finding a quantitative valuation for a mine that may become a producer and throw off CAD$20m or CAD$30m per year in profits for ten years. Or a lot more for longer, or less for less. Or may not ever open. The profit potential is clear enough but for my taste any positive free cash flow from Kiena is too far in the future to base a valuation for the asset as things stand today, so the only way forward is to find an asset value for the mine. And the major problem here is this equation:



NAV = MSU

(Net Asset Value equals Make Shit Up)



It’s one of my major pet hates of the mining anal ysis world, anal ysts who pick any old number out the sky to value “A Thing” in order to justify their preferred target price for the stock. It’s way waaay too easy and way waaaay too common to see subjective “because I say so” valuations at the top of an equation that magically turn into some kind of objective demonstration of logical truth once the math has been applied and a target price generated at the bottom of the stack of numbers. It grates on me like no other subject, it’s the whoredom of sell side anal ysis writ large...and now I’m about to use the same type of guesses to value Kiena and eventually WDO.
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Bakc to the present day and the point is: If you're going to use NAV to stick a valuation on stock, Barry Allan of Mackie or anyone else, get off the fence and make your call. You're supposed to know more about this valuation gig than the people who read you, you don't have the moral or professional right to offload the decision onto your clients by offering them them two NAVs and asking them to take their pick thereby covering your ass later if your call goes awry.

Bottom line: Sell side anal yst, grow a pair. End of rant, have a pleasant and rewarding Tuesday kind reader.

UPDATE: Reader 'R' sends in this cartoon, which is perfect:



x

Dundee upgrades B2Gold (BTO.to) (BTG) to buy...

...this morning, with a new CAD$4.50 share price. That's the advantage of downgrading to neutral in July, being neutral on the stock before it ran that $100m at-the-market share starting August 12th, being able to get clients back into this sector-leading stock now that its effects have washed through. Dundee is paying BTO well.

It doesn't matter how boorish its CEO might be, B2 is a good gold mining stock. Way of the world.

Chart of the day is...

...zinc (6 month spot price) which dropped under the magical, mythical, religion-making U$1.00/lb level yesterday for about an hour and a half before bouncing back.



We're at U$1.025/lb or so at time of writing.

9/19/16

Quote of the day...

...comes from President Mauricio Macri of Argentina in his speech to the NYSE:




IKN offers its considered comment to that statement:



Argentina: The Veladero mine causes political pain (from IKN384)

This isn't just Barrick's problem any longer, the mess they're making at Veladero is causing headwinds that will see all mining companies that want to work in Argentina suffer. This from IKN384 this weekend.

The funniest bit: The way the North ignores the problems and then how it will throw its arms up in despair and blame commie-level NGOs when they suffer massed protests and get their permits refused later. 


Argentina: The Veladero mine causes political pain
On Thursday September 15th Barrick (ABX) announced (8) that operations at its Veladero mine in San Juan province Argentina had been suspended due to an incident on September 8th, namely a block of ice which damaged one of the pipes at its tailings facilities which caused “a small quantity of solution” to be spilled. All well and good, now for news that matters:

  • ABX took six days to report the incident to authorities and only did so because they’d heard one of their employees was going to blow the whistle. In fact they informed authorities via a Whatsapp message at 10pm September 14th. Crazy.
  • ABX did not suspend operations, a local judge suspended them with immediate effect on hearing the news. And it’s noticeable how ABX only said “solution” in its NR, no mention of the real problem word “cyanide”.
  • The ensuing uproar from the local town of Jachal was only to be expected, as this is the same mine which had a far more serious spillage last year. On that occasion ABX tried to keep it quiet, then underplayed the severity of the incident and only weeks later was it confirmed that the spill had indeed reached the local water supply. Veladero is hated in the town and the calls for it to be permanently closed are now very loud.
  • San Juan Governor Sergio Uñac and his provincial mining minister Alberto Hensel were due to travel to China for the China Mining conference, but on hearing the news they cancelled the trip and Uñac travelled instead to Jachal. In Jachal he gave a town hall meeting and news conference, but he was also treated to a rough reception (9) that included being spat upon and getting eggs thrown at him (an Argentine standard response in these circumstances, for what it’s worth).
  • On Friday evening mining minister Hensel held a press conference (10) to state that no cyanide contamination had been found by first inspection (which we note happened a full week after the incident). He also stated that the mine would remain closed until ABX came up with a plan to improve its working practices that would have to be signed off by both local judges and Governor Uñac. That same day Uñac said that operations at Veladero would not renew until he was “...certain that Barrick Gold went about its business with absolute respect for the environment and for the mining code”. Translation: He is livid that Barrick waited a week before telling anyone.
As this well-written op-ed (11) in San Juan newspaper “Tiempo de San Juan” noted, the presser was held at midnight on Friday and the only reason politicos do that kind of thing at that time of night is as a damage limitation exercise. The op-ed is entitled (translated) “Mining: And now who could defend it?”, a fair pulse-take of the mining sector’s image in both San Juan and the wider Argentina this weekend and notably, written by a famously pro-mining journalist in San Juan who is now reconsidering his own position. Once again a pollution incident in Argentina that’s brushed off in the Northern hemisphere and English language press as no big deal has been taken far more seriously in country (I’m told that “Veladero” was the number one trending topic on Twitter the next day and even made the world top ten for a while). All this at the same time as Barrick hiring George Bee to start up the Lama side of Pascua Lama, which just so happens to be in San Juan province too. Be in no doubt, no matter whether the spillage was ultimately small or large the optics of this event are terrible for mining in Argentina and Veladero is turning into a gift from the heavens for anti-mining activists up and down the country.



Vampire Squid on FOMC

GS says "no hike". I agree

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  • After the August employment report we had thought a rate increase at this month’s FOMC meeting had slightly better-than-even odds. However, Fed officials made no concerted effort to raise market expectations over the last two weeks, and the FOMC almost never surprises with a hike. As a result, we now see very low chances (<5 a="" font="" increase="" next="" of="" rate="" week.="">
  • The skewed odds should not be taken for a unified committee, however. By our count, seven FOMC participants would prefer to raise the funds rate next week, and two seem to be leaning that way. In these situations, the FOMC will often use the post-meeting statement to help forge a compromise. We should therefore expect a more hawkish tone in the statement and press conference.
  • While we expect some tough talk, our best guess is that the statement will be sufficiently noncommittal to keep markets unsure about the prospects of a rate hike this year—in part because the timing of the November meeting limits the committee’s ability to provide very strong signals. Shifting to a “nearly balanced” risk assessment could keep markets on notice, but this phrasing has been absent since December, possibly reflecting Chair Yellen’s own preferences. It’s a close call, but we think the committee will probably use different language.
  • In the Summary of Economic Projections (SEP), we look for lower GDP growth for this year and a reduction in the longer-run estimate. Projections for unemployment and core inflation will likely be unchanged. Reflecting the discussion among policymakers about low equilibrium rates, we expect the “dot plot” to show a slower pace of funds rate increases over the coming years, with the 2017 and 2018 median dots falling by 50bp—though this is also a close call.
  • After another large downshift in the dots, can we still say that the FOMC is executing the plan it laid out in December, or has its strategy fundamentally changed? While we have been surprised by some of the recent communication, our view remains that the committee’s basic framework has not changed. Markets remain skeptical, however, and Chair Yellen may need to articulate where she stands in the post-meeting press conference.


c

EI does LUG

Right here


9/18/16

The IKN Weekly, out now


 turn on, tune in, drop out

IKN384 has just been sent to subscribers. There are 15,167 words and 29 pages in this week's edition, which is kind of average. And beware Argentina, not just in tennis.