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11/19/09

Petaquilla Minerals (PTQ.to): IKN Weekly subscribers knew

A lot of talk about Petaquilla Minerals (PTQ.to) yesterday on the release of this NR that saw the stock more than double. As regulars round here know, PTQ.to is LatAm's worst mining company and is headed up by a convicted drug trafficker and all-round nasty piece of work....but business is business. Here's an excerpt from The IKN Weekly, issue 27 dated November 1st 2009.

FYI, there were two charts that went along with the analysis that you may or may not be able to see on this paste-up, but they are simple price charts dated YTD to October 30th and the weekly 5min chart for that same week ending Oct 30th...nothing out of the ordinary.

This week's IKN30 will take a closer look at the company and I'm telling you right now that the fat lady ain't singing on this one yet and anyone thinking it's a slam dunk from here may be in for a very nasty surprise.

Anyway, here's the Nov 1st piece that marked subscribers' cards:


Panama: New life for the Petaquilla trainwreck?

Sometimes news falls into either the Politics or Markets categories and the choice of where to put it is not black or white. Here’s an example. It’s also an example of when I feel obliged to put personal opinions to one side and to point out a trading opportunity to the subscriber base.

Petaquilla Minerals (PTQ.to) is a stock that has been given a lot of coverage on the IKN blog and not one word of it has ever been positive. However, this trainwreck of a company may have just been given a lease of life by the new Martinelli government. In a report on Thursday (2) (3) the government is supposed to be holding informal talks with PTQ that will allow the company to move into production in exchange for a higher tax/royalty deal with the state that will then allow the government to aid those in and around the area. According to the reports, the current 2% royalty payments would double to 4%, taxes would be paid after year three (instead of “when debt is paid” as currently stipulated, the financial equivalent of “how long is a piece of string”) and that $300,000 per annum is paid for environmental damages (past, present and future) along with a one-time $1m social fund payemnt for those living around the mine.

It should be stressed that these talks are both preliminary and non-binding. It should also be stressed that PTQ has an abysmal record in social and environmental issues and should not be trusted any further than its rotund CEO, Richard Fifer (a convicted drugs felon himself) can be thrown. I personally wouldn’t go near this stock with my money if it were the last choice left on the TSX, but there is clearly renewed interest in the stock as these two charts show. The longer timescale shows the decline and fall of PTQ....

.....while Thursday’s news was greeted with an upsurge in the price and traded volume.

From 22c to 27c in two days. Yep, that’s a move, with 811,000 share volume Friday, too.

Add this to reports that Inmet is beginning to move on studies for its ‘Panama Copper’ project (sold to Inmet by PTQ and situated close to the gold project) (4) and it begins to look like Panama’s new government is giving tacit approval to mining in the area (or at the very least giving the industry a green light to present its case).

PTQ’s balance sheets are still a total mess, with negative working capital and debt payments soon due that would sink the company if it doesn’t get new funds. However Fifer himself is stinking rich after selling the Petaquilla Copper project to Inmet and would be able to find enough cash to help himself and his company (and maybe other shareholders, though that is always less likely with this mob). Even with this positive news, PTQ is a high risk proposition. Those looking for “moral” trades should also avoid, in the opinion of this author at least. But there are big possible gains in the short-term in this stock thanks to last week’s news, that is something that should be recognized.