The Daily IKN email digest, get all daily posts sent to you next day (& no ads)
...to yesterday's exclusive report on the identity of The Angry Geologist. See here.
Here at IKN we lost count of the number of times Arizona Mining (AZ.to) promised to deliver its PEA for Taylor by the end of 1q17.
And here we are at the end of 1q17 and....crickets.
Well, good that we csn take these people at their word, isn't it?
From the album 'Immunity', this ten minute chunk of wonderful.
...and their dismal failure yesterday.
...has just been sent to subscribers, 11am on a grey Thursday. Adding.
...plus ça change, plus c'est la même chose:
Gran Colombia Gold (GCM.to) and the power of share consolidation
My thanks to A. Reader for the nudge on this little note, which can be subtitled “A lesson in what poor management, excessive financial debt and over-promise/under-deliver can do for your share price”.
Even before the end of 2012 it was clear that Gran Colombia Gold (GCM.to), the Serafino Iacono trainwreck of a mining company, had plenty of problems because its share price had already tumbled by around 80% since the start of 2011. But instead of going for the big numbers its shares traded for the in 2009 to 2011 period, I’m going to go for the modest 35c share price it typically traded during most of and at the end of 2012.
Then in mid-2013 GCM announced (15) a 25-to-1 share consolidation. In other words, if you owned 25 shares of GCM, that was suddenly converted into one share.
Life went on though the next three and a half years until this week, when the company announced (16) it had received shareholder approval to run another share consolidation, this time 15-to-1. Yes, those shares you owned before that were shrunk 25 times have just been shrunk another 15 times or in other words, if you owned 375 shares of GCM at the beginning of 2013, in just a few days’ time that will be down to just one share, no buying or selling.
As GCM is currently trading at-or-around 10c, when the 15:1 rollback is official we can reasonably expect each single share to be worth $1.50. So let’s do a little theoretical calculation by imagining this reasonable situation:
- At the end of 2013, you bought 3,750 shares of GCM at 35c apiece.
- Due to the double effect of the two rollbacks since then, those 3,750 shares have become just 10 shares.
- At the time, you paid approximately $1,312.50 for your share.
- They are now worth $15.
And if you think that’s bad, consider how much money Frank Holmes lost for his Global fund when he waded bigtime into GCM stock in 2009 and 2010 (and also told everyone else to do the same on many many occasions), paying a typical $2.50 to $3 a share at the time.
Finally, do of course expect a big round of promo pumping on the back of the consolidation when it’s finalized so do yourself a big favour; make a note of the people telling you that GCM.to is a great opportunity, having that little list to hand may save you a lot of money in the future.
The permit's only four months late, but better than never I suppose. Expect RPM.v to move up at the open on its news today. Read it here.
UPDATE: Reader 'MP' notes the details from the NR:
"... a tenacious gold producer with a bright future..."
I don't think I have ever seen a gold producer characterized as "tenacious" in a news release! Gotta love the IR department...
Indeed. I can see Bill Howald and he team overseeing operations now...
Could be a lot of fun. Steelhead has run out of patience with Belanger.
- Fortuna Silver (FVI.to) (FSM) down 19% in 2017 year to date.
- Tahoe Resources (THO.to) (TAHO) down 19% in 2017 year to date.
- Endeavour Silver (EDR.to) (EXK) down 17% in 2017 year to date.
- First Majestic Silver (FR.to) (AG) down 1% in 2017 year to date
- Great Panther Silver (GPR.to) (GPL) down 5% in 2017 year to date.
- IMPACT Silver (IPT.v) down 6% in 2017 year to date.
- Silver One Resources (SVE.v) down 38% in 2017 year to date.
"The projected manganese (“Mn”) content of the final zinc concentrate is 1.32%, in line with the preliminary metallurgical test work."
As previously disclosed, Arizona Mining has done initial bench-scale metallurgical work on the various types of ore found at the Taylor deposit which does not yet reflect cleaner stages, regrinds or any optimization, which may reduce the manganese levels. The same initial results show very low iron and cadmium contents and negligible mercury and arsenic, which are other common undesirable elements.Initial work indicates a manganese content of approximately 0.1% in the lead concentrate and approximately 1.3% in the zinc concentrate. As previously noted, the penalties for a zinc concentrate containing 1.3% manganese are estimated to be $12 per dry metric tonne versus the zinc concentrate value of over $1,100 per dry metric tonne at a $1.00 per pound zinc price. This equates to approximately 1% of the estimated concentrate value and is therefore immaterial.
“We would be prepared to purchase as much of the zinc concentrates, at market, without penalty, as we could.”
Graña y Montero (GRAM): A heads upIt’s not really the normal remit of The IKN Weekly so it’s not going to be a long note, but I think it’s worth a few lines by way of a heads-up and perhaps a starting point for your own DD, so here goes.As noted on several occasions in the last few weeks on these pages, particularly in the ‘Regional Politics’ sections, the big Peruvian construction and civil works company Graña y Montero (GRAM) has bit hit very hard by its connections to the Lava Jato/Odebrecht corruption scandal that’s been making waves all over South America. Just one look at its 12 month share price (it trades as GRAM on the NYSE) is enough to see the effect of being dragged into the corruption mess and being actively connected with the bribes paid by Odebrecht to high ranking individuals in Peru, up to and including ex-President Alejandro Toledo.However, there’s now reason to believe GyM is going to survive this mess and as such, it may be a decent “blood on the streets” buy for consideration. The combination of factors:1) The El Niño weather crisis currently hitting Peru hard will need clean-up and plenty of reconstruction later. There is no better placed company to do that work than GyM.2) The corruption scandal is beginning to be yesterday’s news in Peru and the sensation that GyM isn’t going to collapse (the country’s own private “too big to fail”) is growing. The 10% rise in the stock on Friday bears testimony to that.3) The latest word, being reported in Peru this weekend (17), is that as well as the recent change at the very top of the company and the resignation of the three main company leaders, we’re about to get a complete change at the board of director level with new (and we assume uncontaminated) blood coming in to lead the company out of the hole it’s created for itself.Up until this scandal hit, GyM was one of the most highly regarded companies of any type in Peru. With a direct employment roster of up to 40,000 people, as well as untold numbers of indirect jobs depending on it, it’s one of the biggest employers in the country too. The way in which the tide is turning, plus the “fortunate” arrival of the most severe and damaging storm period for the last two decades in Peru, may make the stock an interesting trade. You need to do your own DD on this one though and check the company numbers carefully, consider this a place to start, not a reco to buy.
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.
Through the unknown, unremembered gate
When the last of earth left to discover
Is that which was the beginning;
At the source of the longest river
The voice of the hidden waterfall
And the children in the apple-tree
Argentina: Lipsticking the pigLast week in London, Argentina’s Finance Minister Nicolás Dujovne appeared at a conference organized by the Argentina/UK chamber of commerce and the Argentina Embassy called “Plan Minero 2017”, at which those assembled extolled the virtues of the country’s mining sector and the opportunities it affords today (8).“I urge you to find the motivation to invest in Argentina. You will be welcomed”, said Dujovne to the representatives from the world level mining companies at his presentation and he backed up this wish with his ten main points on what has improved in recent times. Here they are:
- Macri has “normalized” the Argentine economy
- There is now one normal, free floating exchange rate
- The bond holdout court case is now resolved, which has allowed Argentina access to the world debt market again.
- Its INDEC stats office now produces reliable data.
- The tax haven forgiveness program which has seen dollar savings held in quasi-illegal offshore accounts come back into the country and bolster reserves.
- The process of “disinflation”, which according to Dujovne has brought inflation back down to 18% annual.
- Economic recovery, which according to Dujovne has seen Argentina move out of recession in 4q16.
- Job creation which, again according to Dujovne, has seen jobs created at a rate of 25,000 per month recently.
- The improvement in public sector accounting (a cute way of saying “less corruption”).
- Lower overall taxes, estimated by Dujovne to be 1.5% less than in 2015.He also told them that the Macri government’s plan was to see Argentina GDP grow in the long-term at between 3% or 4% per annum, a rate that could be sustained over many years.Now some of those points are valid, such as the improvements made to the exchange rate mechanism and the dropping of the 5% export tax for mining products. Others are rather cherry-picked, for example the claim that inflation is down to 18% annualized when that’s just one study from a range that put 2017 inflation forecasts at between 18% and 22% (and there’s a lot of evidence to say it’s at the upper end at the moment, including the latest inflation measurements just out). Others still are rose-tinted specs stuff, such as claiming unemployment is dropping (highly massaged figures there, the truth is that in the 2016 recession plenty of jobs were lost or became lower-paid) or there is less corruption in Argentina today, a bit like saying a standard nuclear bomb is less dangerous than an H-bomb. And in ironic timing, his claim that the INDEC stats office came on the very same day a court of law ruled that the INDEC data during the CFK government was totally reliable (in a case brought against the country by index-linked bonds holders who claimed they were due more money because INDEC rigged inflation data). What’s more, the new INDEC is now at the centre of a small scandal when it was discovered the people collecting price data weren’t bothering to go to the full range of shops and supermarkets and just using numbers they saw in shop windows next to their subway stations on the way to the office. So much for the new capitalist work ethic.But what really amused your author was the total lack of mention of the “Federal Mining Agreement”, the grand plan of the Macri government to bring a level playing field to the whole of the country and by-pass the provincial problems that companies have had forever in the country. That’s because the whole plan, pushed hard all through 2016, has been quietly dropped by the Macri government because it cannot get the “anti-mining” provinces on board. The whole plan (as predicted on these pages) was a total waste of time/money, the ineffectiveness of the country’s Mining Ministry is writ large against this failure and it points once again to the most basic of truths about mining there; whatever national-level advantages Argentina thinks it has, any mining company worth its salt knows that without a welcome and agreements at provincial level you cannot do mining business in the country, period. In real terms, that means Navidad (Pan American), Agua Rica (Yamana), Suyai (Yamana), San Jorge (ex-Coro, now those Russian guys) and a whole host of other projects located in anti-mining areas will never happen.And all this is aside the problems faced by an increasingly unpopular Macri government coming up against the mid-term elections (starts August, big votes in October), because all this good will and future projection of a rosy future would all be for naught if Macri’s party is beaten at the polls later this year, we would be in immediate dead-duck presidency world. In short, IF Macri does well at the polls in October and IF the country shows real signals of macro-economic improvement, you may see big mining companies start to commit to Argentina. Until then all these conference talks and optimistic presentations are an exercise in lipsticking a pig. Argentina is still a basket case country like no other, I care not if you prefer the policies of the current President to the previous one.
Nolan? Pierre? Randy? You guys like these things, form an orderly queue now.
1) Anyone who has investigated the sector carefully (e.g your humble scribe a few years back, the last time this silly sub-sector was pumped to the mouthbreather end of the market) will know that the producers have no sway at all over the supply side of the Co equation. That's something tightly controlled by the refiners and, the China black box aside, that means Freeport and Glencore. The big players have a good thing going with cobalt and they're not going to let anything as radical as free market economics ruin that for them.2) There are a few dedicated cobalt mines around the world, but the lion's share of the stuff is produced as a by-product, not a product. In that way it's similar to silver, a metal with a price these days driven by the ultra-low costs of being a by-product (we've discussed this before, in August 2016 to be exact). But it's even worse for Co because it's a purely industrial metal, it doesn't even have the rabid guns'n'freedom idiots to back it up. The upshot is that 99.9% of these "cobalt opportunities" that Spott and others will "suggest" to you don't have a snowball's in hell of prospering because they'll never be able to compete on price when the big boys slam the door.
"It’s thus extremely important to speak with a qualified investment professional before jumping into the sector."
Please cast your mind back to this, kind reader:
Now consider this:
Here's the link, here's a translation:
The inhabitants of the municipality of Cajamarca, on the West side of the department of Tolima, voted this Sunday to say No to gold mining in its territories. In this way they have opposed the La Colosa mining project owned by the multinational AngloGold Ashanti.The bulletin number 10 of the national electoral body stated that the No vote had won with 97.92% of votes, i.e. 6,165 votes. For Yes there were only 76 votes. There were 41 blank votes and 14 annulled votes.Since 8am this morning the 18 voting locations were open across the municipality, with a total potential number of voters of 16,000. The result of the vote now obliges the municipal council to adopt the necessary measures to prohibit mining in its territory.
Hoorah, pip pip and top hole old sports, the intrepid AW has regaled us all with another GMO.
Check out this, "Who is The Angry Geologist?"
And this, "Carving Up Anglo".
Both of those are way too cool. Go read.
Dear StanFuck the fuck right off Stan Sudol, you and your worthless website that just scrapes content off other people and gathers all the clicks for itself. Don't you even think of ripping off IKN like you do other sites in your desperate attempt to fill your parasitical den of plagiarism with content. The day that Reuters, Bloomberg, Globe & Mail, Mining Weekly and every other channel you cheat out of traffic slaps a cease and desist order on your sorry, freeloading ass will be a good day for the internet. Fuck the fuck right off and never come back to IKN.Love, Otto.