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4/26/17

Sandstorm buys Mariana

Woah! Here's the chewy bit:


Under the terms of the Combination, Mariana shareholders will receive 28.75 pence in cash and 0.2573 of a Sandstorm share for each one Mariana share held. The Combination values Mariana at approximately 110 pence per Mariana share based on the closing price of US$4.04 per Sandstorm Share on the NYSE MKT and a currency exchange rate of £0.7788 per USD, on April 25, 2017.
The terms of the Combination represent a premium of approximately 84% to the closing price of 59.50 pence per Mariana share on April 25, 2017 and a premium of approximately 88% to the 20-day VWAP per Mariana share.
If successful, the Combination will result in Mariana shareholders, together, owning approximately 19.0% of the ordinary share capital of the Combined Group.
Sandstorm holds 8,980,243 Mariana shares, representing approximately 7.0% of the issued ordinary share capital of Mariana, and Mariana warrants over a further 4,490,122 Mariana shares.

4/25/17

Crapstone Mining (CS.to) 1q17 financials and that "costless" collar

Dear reader, cast your mind back to November 9th, the day Crapstone Mining (CS.to) announced it had hedged a large chunk of its production for the next year and a bit:
VANCOUVER, Nov. 9, 2016 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (CS.TO) today announced that it has entered into zero-cost collars for 43,000 tonnes of copper with settlements between January and December 2017 at a minimum of US$5,025 and a maximum of US$5,585 per tonne of copper. There was no cost to Capstone to put this protection in place.
Oh how we laughed when Darren 'drop the' Pylot told us there was no cost, it was protection, it was zero cost. In IKN's words that day...
"...those of you wondering why all the gross profits have suddenly disappeared from the CS.to 1q17 and 2q17 results will receive a sharp lesson in just how "zero cost" this all is."
...and on fact we didn't even have to wait until the 2017 numbers showed up, the effect was felt in the 4q16 numbers. So with the 1q17 financials posted tonight and two quarters booked since this executive decision was enacted, we can check on just how much the device is hurting the company. We do that via checking on the "gain/loss on derivatives" line item in the P+L and here's a chart on that:

 Before Darren Pylot put his "costless" collar hedge on copper production in place, CS.to reaped a small dividend on other minor instruments. But with the hedge in place, as soon as the price of copper busted out of the upper end of the range (around U$2.54/lb) it caused and is still causing Crapstone significant financial losses, a total booked of $43.742m in just two quarters. And be clear, these are not fictitious, accountancy, non-cash losses. These are real cash losses and they literally involve writing cheques to the counterparty, cash that would otherwise have made it to the company treasury.

In short, the reason CS.to has files a 1q17 operating profit of $16.759m but a net loss of $7.395m and the reason its cash treasury position dropped by nearly $19m in this first quarter is due to the blithering idiots pretending to be intelligent executives making dumbass decisions as they fail to run this joke of a copper producer. The end.




The GMO piece on diamonds, De Beers and Stephen Lussier is a bona fide tour de force

In the post earlier today we featured two of the pieces in the latest edition of Global Mining Observer, but didn't point you to the major event, the interview on the evolution of the diamond market with Stephen Lussier of De Beers. I kind of left it to last to read because the diamond sector has never really been my thing, but it turns out to be the best single article that's ever come out of GMO. I've now read the whole thing twice and I'll go back to it a again later, too.

Insightful, intelligent and top class prose to boot, Alex W has out-done himself. You have to read this so do so by clicking this link.

Continental Gold (CNL.to) gives us an update

This morning Continental Gold (CNL.to) gave us one of those "hello we're here stop selling our shares please" NRs that didn't work, the stock is down another 6% as your humble scribe writes these words. Add that to the performance so far this year and...

...there's no doubt about it, you just gotta laugh about the way Louis Lobito Little Wolf James of Scamsberry / Casey Research told you to buy it on January 18th this year (after telling you to sell it in January 2016 when it was a $1.40 stock...bless him).

But leaving monkeys with dartboards aside, what is it with CNL recently, why has it been going down like a porn star at a stag night? Well for me the answer is to look at today's NR with the eyes of a newbie to the story, albeit a newbie who knows their way around the financial world. Such a person would see this in the top paragraph...
"With the senior secured debt facility in place, the Company remains funded for its 2017 planned activities with approximately $100 million in available cash and liquidity and remains on track for first gold pour in early 2020."
...and surely think:

1) Took $100m in debt 
2) Good for 2017
3) No production until 2020
4) So how are they going to fund 2018 and 2019???

And there's the rub. Why own this company now while it's owned by the banks? Why not wait until the end of the construction process when we'll know more about whether this mine will work? 

Still, never mind, CNL are conducting a site tour this week, Sprott, and Oppenheimer and a bunch of others in attendance with Ari and Don Gray leading the tour. We should get another round of pumpy pumpy from the sell side whores soon enough.

Why is it that nearly all mining stocks are going down...

...except the two I want to buy/add?

“The Clintons are family friends, I just want to leave it at that.”

Robert Giustra is featured in the latest edition of the best publication in all of the mining forever, Global Mining Observer. Read about Giustra's connected world of Russian oligarchs, France's hot favourite for President Macron, and the Clintons. Of course, the Clintons. That's linked here.

Also don't miss GMO's review of the book on the gold industry written by one Pierre Lassonde, way back in 1994. That's here.

The Copper Mountain (CMMC.to) financial disaster zone

The company formerly known as CUM (tcfka-CUM), Copper Mountain (CMMC.to), reported its 1q17 financials last night and in the NR this morning, was quick to trumpet its sales of $74.1m and net earnings of $7.1m (4c/share). Sound like strong financials, no? Stock will rally, no?

Nope, sorry, it's complete bullshit because there's no way O'Rourke and his collective band of mediocrity are going to point you to the reality of tcfka-CUM's financial disaster area. To do that you need to care enough to download its Reg F and when you do, even if you ignore the house of pain that is the Statement of Cash Flows there's no way you can ignore the dog's dinner balance sheet



They made a net profit of over $7m, but cash dropped and working cap went deeply into negative territory and the reason is down there at the bottom. Yes indeed madame and sire, tcfka-CUM has real and nasty cash debt to pay back at the rate of around $13m a quarter (which happens to be around $13.7m/qtr for the next three quarters of 2017), so how making less than $8m/qtr in operating profit (at U$2.65/lb copper, you're not going to see that average in Q2) is going to help the cause is beyond my ken.

It also beats me why this utter dog remains popular with the Canadian retail community, the only reason I can think of is that it's propped up by rah-rah boys and bought by people who wouldn't even know how to access SEDAR, let alone read and understand a company's financials. This company has 133.1m shares out and at its current share price, a market cap of $126.4m. Its true equity value is zero, unless of course copper prices come to the rescue. If they do tcfka-CUM goes up (but then again so do a whole lot of copper miner shares). If they don't, this company is destined to implode. Math says so.

This Angry Geologist piece on Barkerville Gold (BGM.to)...

...isn't just good geology and mathematics, it's damned funny too. Read it here.

Pirsig

I first read Zen and the Art of Motorcycle Maintenance 26 years ago and though I'm not sure it changed my life, it certainly woke me up at the right time. 


Hold quality undefined.




Robert M. Pirsig, Sep 6 1928 - April 24 2017. RIP.

UPDATE Tuesday: The Graun has published a decent obituary of the man, here.

4/24/17

Dalradian (DNA.to). Galantas (GAL.v). Northern Ireland Police. Explosives. Mailbag.

Your humble scribe receives mail this morning from reader 'GA', a nice lady who has agreed to let me reproduce this part on the blog:
"...do you think the GAL news affects Dalradian?  They use explosives don't they?  Do Northern Ireland not like Canadian miners and are stopping them with this?"
For the record GA is currently a holder of DNA.to stock and I'm not. Answer: To begin, DNA uses explosive to a certain extent in its current exploration phase, but they'll really need explosives a lot if/when the mine goes into production. As for the question my best guess, after reading the last couple of NRs from GAL.v carefully, is that there's more than meets the eye about the Police Service of Northern Ireland (PSNI) decision not to play ball with GAL.v and its Omagh mine. There are two things that stick out:

1) There may be specific problems between the mining company and the police (or locals) and this is a way they've found of putting the kibosh on the project. If so, DNA isn't likely to suffer in the same way.

2) There's a payment issue which seems to revolve around the failure to close on the "cost-recovery agreement" (i.e the police want the mine to pay for their time). The way GAL.v frame it, stating that other mines don't have to pay so why should they, suggests this may be a new policy at the PSNI. If so then yes, this could well become an issue further down the line for DNA.

Either way, it certainly doesn't help the political risk perception of working in Northern Ireland. All that and Brexit, too.

Galantas Gold (GAL.v): Chalk up another success for "The IKN First Law of Mining News Releases"

Remember this post back on April 13th, less than two weeks ago? In it we noted that Galantas Gold (GAL.v) says its tunnel development was "temporarily on hold" while they work out a deal with the Northern Irish police on explosives handling, but the problem "is not expect to exceed one month". This set off the red flags at this humble corner of cyberspace because around here, we have the tried and tested First Law of Mining NRs which goes like this:
"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."

Cut to the wee small hours of this morning and the latest NR out of GAL.v. Read it here and there's plenty in it, but the pay dirt is this:
Galantas Gold Corporation ("Galantas" or the "Company") (TSX VENTURE:GAL)(AIM:GAL) has received notification that the Police Service of Northern Ireland ("PSNI") will not provide its required anti-terrorism cover in regard to blasting operations required for mine development at the Omagh Gold Mine.

The First Law of Mining NRs told you to stay away. This morning GAL.v is already 16% down and we'd wager there's a lot lower to go.

4/23/17

The IKN Weekly, out now



IKN414 has just been sent to subscribers. As for the Cessna 414, I'll let my pal and mega-pilot "W" explain all:
Everybody loved it because it was roomy and comfortable and, for the time, had good cruise performance.  However the airplane was really quite underpowered and in today's world not many pilots are still comfortable flying them.  If you lose an engine right after takeoff you can only manage about 300ft/minute climb rate on the remaining engine, which is not a lot when you consider minimum safe speed is about 120kts.  And then only if you were careful about weight and balance, if not get ready to meet your maker.

He has IKN421 reserved, too. What a total propellerhead nerd.