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4/28/15

More junior mining incest: Starcore (SAM.to) snuggles up Cortez (CUT.v)

These two companies have plenty of directors in common and the smaller one (CUT.v) is out of cash, so we are presented with another consolidation move this morning:
VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 28, 2015) - Starcore International Mines Ltd. ("Starcore" or the "Company") (SAM.TO) is pleased to announce the signing of a letter of intent with Cortez Gold Corp. ("Cortez") (TSX VENTURE:CUT) (the "LOI") that would see Starcore acquire all of the outstanding securities of CUT in an all-share transaction (the "Transaction") to be completed pursuant to a court approved Plan of Arrangement under the Business Corporations Act (British Columbia). Under the terms of the planned acquisition, each CUT shareholder would receive three Starcore common shares for every one CUT common share held. 
Cortez owns the Altiplano gold and silver processing plant in Matehuala, Mexico.

Whole thing here. This is the third (count 'em up) M&A move made by SAM.to recently. Beginning to see any trends appear, kind reader?

4/27/15

First Mining Finance (FF.v) makes a move

And it's on Coastal Gold (COD.v), owner of one of my favourite ticker symbols and a lump of Newfoundland with gold in it.

TORONTO, ONTARIO--(Marketwired - April 27, 2015) - COASTAL GOLD CORP. (TSX VENTURE:COD)(FRANKFURT:CY41) ("Coastal Gold" or the "Corporation") announces that it has received an unsolicited offer (the "FMF Offer") from First Mining Finance Corp. ("FMF") (TSX VENTURE:FF) to acquire all of the outstanding common shares of Coastal Gold (the "Coastal Gold Common Shares") for 0.122 common shares in the capital of FMF for each Coastal Gold Common Share by way of a plan of arrangement under the Business Corporations Act (Ontario) (the "ProposedTransaction").

Whole thing here

COD.v is has a deal in the pipeline with Sulliden Mining Capital (SMC.to) (don't do deals in Afghanistan, Kazakhstan or Bhartistan) that values it at a ticket price of $4.06m. If we take FF.v's 41c close tonight as the benchmark, this deal values COD.v at nearly 8.5m. That's a big jump.

PS: The interesting thing here is Bill Pearson of COD.v, one of Stan's cronies. Wonder how he's going to explain to the world that an offer double that of SMC's is not as good as Bharti's incestuous relations.

Barrick (ABX) reports its 1q15, IKN has its own angle

"In order to be successful, one must project 
an image of success at all times."
Buddy Kane, American Beauty, 1999


This evening Barrick (ABX) reported its 1q15 and the mining anal yst world is currently poring over all the numbers (fwiw ABX missed by a bit but it's merely a mediocre quarter, not outright bad this time). You're bound to get the results cut and sliced in a dozen different ways over the next 24 hours by every single house imaginable so rather than beat on the same boring cookie-cutter drum, this humble corner of cyberspace has decided to highlight something that was blaringly conspicuous by its absence this time around:



Seems like that nice Buddy Kane John Thornton doesn't like talking about the (white) elephant in the room any more, not like that Mister Jamie did.  Complete mystery as to why that might be.

Guatemala lives in interesting times

This report is a reasonable English language round-up of the weekend in Guatemala, as thousands of people demanded the resgination of the country's President and Veep. Those of you exposed to Guat pol risk should be on this issue.

Gold and the FOMC: start the dance

A very interesting start to the week. Dollar flat, oil flat and gold...


...doing this. Miners leading the metal, too. That's not supposed to happen before Janet & Co pronounce.

And now for your aural entertainment, IKN presents No Good (Start The Dance) by The Prodigy. 

Mining executive deaths in Mongolia (from IKN311)

Here's a short piece from yesterday's Weekly, IKN311

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Mining executive deaths in Mongolia
The news that Khan Resources Chair Jim Doak had died while on a business trip to Mongolia was another in the line of death news out of the Canada mining industry last week (22) but as A. Reader with a memory pointed out, it's not the first time a Canadian mining executive has met their fate while in that country. Mr. Doak was in Mongolia to demand from its government the payment due to Khan Resources  after it won international tribunal proceedings against the state. Here's how the Globe & Mail put it:

Khan had been engaged in a prolonged legal battle with the Mongolian government over a uranium project. Last month, an international arbitration panel ruled that the government should compensate the company for cancelling uranium licenses in 2009 and expropriating property where Khan had planned to develop a mine. The company said the compensation award, plus interest, totalled $103.8-million (U.S.) as of the end of March.
Company officials, including Mr. Doak, held talks this week with government representatives in Ulan Bator. During those talks, the company demanded full payment of the award and vowed to take enforcement action.

It's interesting (I think that's the word) to compare the untimely death of Mr. Doak to a case in 1999, when one Armand Beaudoin died of an apparent heart attack while in Ulan Bataar, Mongolia (23) (24) (25). The mining prospector, mover and shaker Beaudoin was in dispute with the government of Mongolia over a resource deal. According to an anecdotal (though wholly reliable) report supplied to your author last week, once dead of the heart attack Beaudoin's body was dragged out of his accommodation and into a open courtyard by police.

Any resemblance to the fate of Jim Doak, also in Mongolia at the time of his death after looking in good health on BNN TV just a couple of weeks before flying out there, also dead from a suspected heart attack in his hotel room and also while in dispute with the government of Mongolia over a resource deal...well, it's purely coincidental.

However fair is fair and there are differences as well. On checking up, Beaudoin was described to your author as "shady" by more than one person and was apparently mixed up in the Bre-X scandal in the 1990s before coming totally unstuck in Mongolia at the end of that decade. Meanwhile, the recently deceased Mr. Doak had a far better personal reputation in the industry but was also considered a fearless voice and unafraid to ruffle sector feathers. His naked body wasn't put on by public display last week, either. Small mercies.


The Oyu Tolgoi copper deposit, now on the way to being a fully fledged mine, shows the exceptional geological potential of Mongolia and there are many other examples, with gold, uranium and coal deposits being particularly attractive. Miners have been queuing up to do business here since the laws were changed to allow in FDI in 1997, but stop-start resource nationalism moves (sometimes very heavy handed (26)) and near-legendary levels of institutional corruption have remained in place, leaving Mongolia with a Wild West reputation to this day. Those companies betting their future on this country are in a higher risk bracket than most. 


Serious CUM talk

Copper Mountain (CUM.to) just gave us another set of sticky, messy numbers with a net loss so bad you feel like grabbing a tissue and wiping your hands clean after handling the financials.

But its problem isn't the nasty bottom line losses, the problem is its pathetic operating margins.




What CUM has is a crapload of financial debt that it took out with a bunch of Japanese banks and that happens to be in US Dollars. What with the Loonie going South bigtime against the Greenback recently, the amounts owed on that US Dollar debt suddenly balloons in Canadian Dollar terms and CUM.to (which for its own stupid reasons has decided to keep on reporting in Loonies) has to adjust that on the P+L. Hence it registers a small operating profit and a big net loss.

But the worry is that this perenially underperforming company isn't showing better operating margins. Costs keep eating into too much of that revenues number and we should be seeing better margins from a company that pays in Loonies but sells its wares in USD.

The debt on the CUM books is heavy, but most of it doesn't come due until the next decade and the next two years are very light in repayments. The company has financial time and isn't going to feel a cash crunch, but it's been a poor operator for way too long and its management team has to come under deserved scrutiny one of these days, you can't get a pass like this forever.

If I were Mitsu, I'd look for the moment to buy these jokers out and then put in a team that can actually run this company. One thing's for sure, if copper rebounds the Loonie will go with it and you'll suddenly see eyepopping net profits coming from this one. If they ever get those shitty costs under control, anyway.





4/26/15

The IKN Weekly, out now




IKN311 has just been sent to subscribers. 13,600 words on 28 pages. Grab that land.