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7/22/14

Comparing the USA's SEC to Canada's OSC/BCSC/etc, Pretium Resources $PVG edition

The USA's SEC:

SEC Charges Investor Relations Executive With Insider Trading While Preparing Clients’ Press Releases
07/22/2014 10:45 AM EDT
The Securities and Exchange Commission today charged a partner at a New York-based investor relations firm with insider trading on confidential information he learned about two clients while he helped prepare their press releases.
The SEC alleges that Kevin McGrath sold his shares in Misonix Inc. upon learning that the company continues here

And with that topical reminder of what a real securities commission does on a daily basis, we move to yesterday afternoon's trading and today's news from PVG and Canada's OSC, BCSC etc:

Argentina: Is it or is it not a default?*

Today July 22nd sees a key meeting between Judge Griesa and the "holdouts", or "hard-done by bondholders who deserve justice" or "vulture funds" whatever other name you want to put to Singer, NML and friends. According to the northern English language press, if Griesa doesn't change his pari passu-based position, allow a stay and let the 92-and-bits percent of bondholders that accepted the revised haircut terms a few years ago receive interest payments, come the end of this month when the grace period ends Argentina will be in default. 

That above is a bit of a mouthful, but long story short all your hear in the English press on the subject, "Argentina Facing Default" etc. As a result, we again heard from Argentina's cabinet minister Jorge Capitanich this morning who insisted (and I've lost count how many times he's used this official government line in the last weeks) that whatever happens Argentina will not be in default of its debt, because Argentina has paid its dues. Which brings us to the question: Will Argentina be in default come August 1st if nothing changes? Points to make:
  • Argentina says it has paid. Which is true, it has indeed deposited the cash it owes for interest payments to the non-holdouters at the relevant banks. Therefore, says Argentina, if you pay you can't be in default. That's a position that has plenty of common sense and logic on its side (for further reading and backing, try the Webster's dictionary definition of the word "default").
  • However, Judge Griesa and assembled says that unless Argentina pays everybody, including the holdouts, then it's breaking its contract and nobody gets paid any more. That's the essence of his pari passu judgment of a couple of years ago and the problem set up by the Supreme Court ratification of his call in June this year, the one that's brought it all to a head.
  • In other words says Griesa/NML etc, Argentina has paid the people it wants to pay, it hasn't paid everyone. Whereas Argentina says it's paid everyone it has an agreement with but also wants to reach a negotiated agreement with the holdouts, so until that time let's put a freeze on the current judgment (the 'stay' it's looking for) until such time etc etc.
  • So in the eyes of Argentina it's not going to be in default because a pesky judge stopping the money from flowing is the real culprit, while in the eyes of Griesa/NML etc Argentina will be in default because if you're going to pay you have to pay everybody else you're breaking the deal. In their eyes, Argentina's selective payment to 92% is the same as deciding to pay 0% or 50% or 25% or 80% or whatever else portion, they're not in a position to choose who does and doesn't get paid. 
  • Therefore, the use of the word "default" in this matter is now in the eyes of the beholder. It's moved from an objective matter of law to a subjective matter of justice. Argentina's position will be, in essence, "It's not default because the law's an ass". NML/Griesa etc position is "It is default because the law says it's default" and importantly, the fact that Griesa has frozen payments to the vast majority of non-holdout bondholders who agreed to Argentina's haircut terms years ago is beside the point. 


So yes, Argentina is facing default in the eyes of the law because when it comes down to it, like it or not, Griesa IS the law, he's an octagenarian Judge Dredd and to add to the weight of his Dreddness, since June 2014 he's had the US Supreme Court on his side. For sure Argentina can claim the USA has no right to pass judgment on a foreign sovereign state and on that it may have a point, the country might even claim Griesa is in the pocket of the vulture funds, but the fact remains that when it signed up to the bonds deal it did so saying that the US courts would rule on any disagreement and hey, here we are. We've seen the term "technical default" bandied around as well, which tries to add nuance and differentiate between the binary situation. Sadly (and on this I fully agree with Capitanich and the Arg govt) it's a meaningless term because the bottom line is that Argentina is facing default, plain and simple undiluted default. It may be unjust and in fact I firmly believe it to be unjust, but since when did the law care about a priori justice? Laws do not create justice, laws change due to justice. So, nice and clear here:

Yes, if nothing changes Argentina's going into default.

P.S. For my Argentine friends now tuning in: Quien hace la ley hace la trampa.

*With apologies for using a question mark in the title line, it was difficult to avoid this time even though it comes across as one of those annoying 21st century clickbait hooks

Fortuna Silver (FVI.to) (FSM) $FSM insider trading

Hey, you remember back on the morning of July 10th when IKN noted Fortuna Silver's (FVI.to) (FSM) 2q14 production as pretty good, but also that the decent numbers looked fully baked into the share price at the moment? Well, looks like the company insiders agree:


The share price was $6.47 the morning of the numbers. It's $6.11 now. Just sayin'. Screenshot of the insider selling chart from here.




Chart of the day is...

...two years of the Gold/Copper ratio:


It's quiet out there. Perhaps...a little...too quiet.

7/21/14

Sulphuric acid

If you didn't know, even at the best of times it's not easy to get your hands on really solid fundamental research on the sulphuric acid market (or sulfuric acid, if you insist). That's why I've dedicated a decent slug of my day to reading this really great report out of Chile's Cochilco on the country's supply/demand situation for the acid of choice in the world of copper. It's a great article, full of detail and you may be interested to learn that Chile expects to turn to net surplus  for H2SO4 come the year 2020.

Mining wonks will like this link.


Pretium (PVG) $PVG (PVG.to) set to raise...

...about three months' worth of working capital. NR here.

Good job nobody got tipped off about it, right Quarterbrain?

New Peru law weakens environmental safeguards

An important report from AP/Wapo. Here's how it kicks off

Dozens of international groups, the United Nations, and even Peru’s own citizen ombudsman are objecting to a new law that weakens environmental protections in the Andean nation even as it prepares to host international climate talks this year. 
The law, aimed at increasing investment, strips Peru’s six-year-old environment ministry of jurisdiction over air, soil and water quality standards, as well as its ability to set limits for harmful substances. It also eliminates the ministry’s power to establish nature reserves exempt from mining and oil-drilling. 
The nation pocked by more than 300 major mines already offers the industry incentives unmatched in the Americas, even by mining-friendly Chile and Mexico. 
Enacted July 11 by President Ollanta Humala after limited debate in Congress, the new law also further streamlines environmental reviews for new projects, and, for the next three years, lowers by half the maximum fines for all but the most serious of environmental violations. 
At the same time, it re-establishes tax breaks for big mining multinationals, which already enjoy such (continues here)

San Gold (SGR.to) and Kerr Mines (KER.to)

Not really my usual stomping ground way up North, but the news today demands a little recognition on the blog and a general comment of WHAT THE FUCK????

Lemme get this one straight: In June the ex-CEO of Kerr Mines joins Sans Gold as its new CEO. Then a month and a bit later, Sans Gold decides it's in the best interest of it and its shareholders to join forces with a company that has 1.3 billion (with a B) shares out, no cash, and has been melding itself together with other no-hoper Moose Pasture owners like Bear Lake and American Bonanza (that last name a particularly ironic choice). Ah, whatever happened to the heady days when Rice Lake was the new Red Lake...

That phrase occasionally used on these pages about how you gringos will buy anything comes to mind today. Applicable in spades.

UPDATE: Brian Quast of BMO today sent out one of the most succinct and wonderful notes to clients I've seen for a while regarding the deal. Here's what he said (yup, it's the whole thing):

  • Kerr Mines had a cash balance of ~$4M vs. ~$5M in debt as of Dec. 31, 2013 and currently has a market capitalization of ~$40M. BMO Research will consider valuation impacts when the definitive agreement is executed and the exchange ratio is set.

Brevity is the soul of wit. Nicely done, Quast.