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10/23/10

Commenting on comments

Since re-opening free comments at IKN a few weeks ago the new regime has been working well enough (that new Google spam filter works most of the time) and so it will stay this way, though an extra trick I picked up from another blogger is also used these days. I was told how to put a moderation filter on posts over 2 days old to stop another layer of spam so that's now in operation and helps, too.

But let's make one thing clear. Freedom of speech is a good thing, however it is still limited to a certain extent round here. You're free to disagree with the messages on IKN, constructive criticisms are especially welcomed, other crits are not deleted and even the somewhat derogatory types are passed. However, if you think you have the right to come on here and publish outright lies and libellous messages about me or my friends (and always using that anonymous moniker, surprise surprise) you're out of your tiny, hateful minds. There are 43 squillion other places you can publish your bullshit but don't expect me to put up with it at this humble corner of cyberspace. Your right to free speech does not extend that far. Live with it.

Exposing the cockroaches that inhabit the world of junior mining and the liars that promote the scams will always create a pushback and make enemies because scumbags don't like a light shone on their dirty little practices. That's normal, so to round off I address the douchebags in question; feel free to continue to spread your lies in other places but as The Mex Files so rightly says, round here Le site, c'est moi.

Vote for Bina AGAIN

Please note that you can vote for Bina's blog, News of the Restless, once every 24 hours. So even though you've already voted (and thanks for that) you can go back and do it again now. Here are those instructions reprised:
1) Go straight to the voting page here
2) Check 'News of the Restless' (about 2/3rds the way down the list)
3) Hit 'Vote' button at the bottom.
4) Err, that's it.

Voting is not limited to Canada connections/Canadians, either. Then wait another 24 hours and cast another vote in a deserved direction. The polls close October 26th

A Saturday chart: The US Dollar 5 minute chart

Quite interesting, I thought. Thanks to 'MR' for the headsup.

Esp when the plunge coincided with the timing of G20 reports like this one from Bloomie:
The Group of 20 will today pledge to refrain from competitive devaluations and commit to market- determined exchange rates, a G-20 official said, citing a statement to be released after talks end in South Korea.
The International Monetary Fund will be tasked with producing a broader report on currency policies and studying economies with persistant trade imbalances, the official said.
I love that first line, which can be loosely translated as, "No, of course we're not going to descend into a deval war on our currencies....we're going to let the banks do it for us. Nothing to see here, move along now, nothing to see."

10/22/10

The Friday OT: The B-52s; Love Shack

It's been clinically proven that no matter how happy you are before listening to this track, once it's over you feel even happier.


Play loud and get your bop on. Love it.

The Don Coxe Friday 22nd October conference call

Access it right here.

Uranium versus the fantasy world of chartists and shillers

Your humble scribe notes that the chartists out there are having a poke at this corner of cyberspace this morning, mocking some sort of "derision" that was supposedly heaped upon their tushes back on July 20th when I dared to oppose their squiggly line reading with a few charts based on solid numbers and reasoning that concerned U supply and demand going forward.

So let's see how Uranium has done since that big shill moment back in July when the U pumpers were trying to get everybody into the metal and claiming it was about to go to da moon, Alice. Here's a table that shows the changes in gold, silver, copper and uranium in the period from that post to today.

Change in metals prices, July 20th to date (U$)

20th July Today % change
uranium 46.50 49.25 5.91%
gold 1183 1325 12.00%
copper 3.28 3.80 15.85%
silver 17.55 23.16 31.97%

Here's a chart that shows the percentage changes in the spot prices of the metals in question.

So forgive me, but I'm going to continue to ignore the U lah lah brigade and stick with the metals that the world really cares about. DYODD.

ECU Silver (ECU.to) reports 3q10 production

Interesting numbers out of ECU.to this morning, found on this NR. Gold shipments are up as expected thanks to the sale of the sulphide material and now account for the lion's share of revenues. Silver shipments were down. Here are a couple of charts.

This one shows the evolution of gold:

This one is the silver numbers

As for calculated revenues, here's what comes out.
By the way, the sharper eyes amongst you will have noticed that in the NR, ECU.to tries its usual BS tactics and quotes the latest spot prices for metals. When running our revenues calculations we've used the London PM Fix averages for the 3q10 period, which are $18.92/oz for silver and $1,227/oz for gold.

So with a calculated $8.7m in sales revenues for gold (Au the lion's share at $7.35m) and silver (we ignore the Zn and Pb credits every quarter to give us a straight line comparative) it may just be that ECU.to makes a profit this quarter, even after paying off the servicing on its heavy debt loads and the normal mining costs and G&A. We're kinda guesstimating $2m at the moment (and it's a guess, be clear), but the problem is that with 300m+ shares outstanding that would give us an EPS of 0.6c or so and a forward EPS of about 2.5c, hardly the earnings potential that will move a 70c stock. They've already diluted themselves out of real earnings growth and with a negative working cap of over $17m as at 2q10 earnings, there's a long way to go before these guys are clear of the snafu situation they dug themselves into.

It'll be interesting to see whether ECU.to rallies on this report. DYODD, as at the moment I'm neutral on  this utter dog of a silver stock, shamefully promoted by some real two-faced individuals, and will stay that way but have shorted the stock on a couple of occasions and wouldn't be afraid to do so again if it hits its 90c ceiling on wild-assed pumping. My best guess, however, it that ECU.to will not get anywhere near 90c and I'll just stay sitting on the sidelines. Laughing at them.

Think Zinc

Nice chart.


Who needs Dr. Copper anyhowz?

The Alan 'Twobreakfasts' García Halloween Facemask, a free IKN offer

Be the scariest spook on your street this year with your very own Alan García facemask, courtesy of IKN. Instructions are easy:

1) Click on the mask to make bigger.
2) Print off a copy.
3) Paste onto a piece of card, or even that Spiderman mask that you bought last year but didn't use because you finally realized it was lame before it was too late.
4) Wear, enjoy, get double rations of sweeties on the night.

Another free service, humbly offered to you by IKN.

Vote for Bina

Site friend Bina has just seen her most wonderful blog, News of the Restless, deservedly nominated for an award, the category being Canada's Best Feminist Blog. Bina's explains more here, but your humble scribe would greatly appreciate it if you did the following (which will take some five seconds out your day, no more):
1) Go straight to the voting page here
2) Check News of the Restless (about 2/3rds the way down the list)
3) Hit 'Vote' button at the bottom.
4) Err, that's it.

Voting is not limited to Canada connections/Canadians, either. You can only vote once a day, by the way. Thanks in advance for this.

Chart of the day is.....

....on the rise in Colombia oil production, taken from this Reuters report yesterday.


Here's the opening blurb of the Reuters piece:

BOGOTA, Oct 21 (Reuters) - Colombia's oil production rose
to its highest level in a decade in September with output of
798,000 barrels per day (bpd) up 17.4 percent from a year ago,
the National Hydrocarbons Agency said on Thursday.
Oil investment has boomed in Latin America's No. 4 oil
producer since a U.S.-backed security crackdown in 2002. The
Andean nation is trying to boost crude output to 1.5 million
bpd in the next few years.
Output from CONTINUES HERE

10/21/10

Tracy Weslosky, how does the truth suit you?

Last week, we documented the blatant censorship suffered by Mickey Fulp at the hands of Rare Metals Blog and, for our pains, were threatened with legal action by site owner Tracy 'Goldilocks' Weslosky (it's now nine days and counting with no sign of the blowhard wannabe bully making any move on her threats, by the way). The shenanigans was set off by an article written by Fulp, published on Rare Metals Blog and then taken down because it had the temerity to criticize some of the site sponsors that keep Goldilocks in spending cash.

So how are things panning out? Well, one of the companies that came in for Fulp's crits was Ucore Rare Metals (UCU.v) and thanks to IKN's saving of Fulp's note (you can see the whole thing here) we can read what he said about the company:

I visited Ucore Rare Metals’ (UCU.V) Bokan Mountain project in mid-August along with fellow Rare Metal blog editors Jack Lifton and Tracy Weslosky.
The Dotson Ridge deposit is small with low TREO (total rare earth oxide) grade but heavily skewed toward the HREOs (heavy rare earth oxides). The individual mineralized zones are very narrow (generally less than a mineable width of 1.5 meters) and are discontinuous along strike. The deposit will require selective mining and/or physical or mechanical separation of pay zones from wall rock using very high cost mining methods.
The company apparently is reluctant to commence the next logical step: Permitting, test mining, and bulk sampling during the 2011 field season. I must conclude the sole corporate exit strategy is to sell the project but have doubts that any larger player in the REE sector is seriously interested at this juncture. With current knowledge, the Bokan Mountain project is not viable. I agree with Jack that it will require private or government subsidies if a significant deposit can be delineated and if it is ever mined.
As of June 30, Ucore Rare Metals had 105.4 million shares outstanding, 134.0 million shares fully diluted, 24.5 million warrants at an average price of 26 cents, market cap of about $65 million, and $4.4 million in cash and securities. The company must go to the market for financing later this year or in early 2011. Ucore Rare Metals’ share structure is highly diluted given the stage of its flagship project and the potential for a significant increase in its share price is therefore limited.

And sure enough, when UCU.v released the results of its latest drilling campaign on Wednesday 20th (i.e. yesterday) they went a long way in justifying Fulp's analysis. The mineralized zones were indeed narrow and everything points to the accuracy of Fulp's call...including the share price action which is documented on this 10 day chart:

When the NR hit, so did very strong selling pressure due to the disappointing nature of the rock as reported by UCU.v....which matched Fulp's analysis to a tee, recall. It traded under 50c in the morning, rallied to close at 55 but then today we've seen more selling pressure and the stock closed at 51c, its lowest close since early September. 

Now it's also well worth noticing that on the 10 day chart above we also have the action for Tuesday October 12th. On that day UCU.v was trading at $0.64 and $0.65 all day. Or in other words, if Goldilocks cared more about the people who read her blog, more about truthseeking and much less about appeasing the corporate clients that pay her money, readers of Rare Metals Blog would have had a much better idea about the dangers involved with Ucore (UCU.v) and could have got out at the handy price of 65c. But no, she's far too interested in feathering her own nest for that and prefers to make bagholders out of her readers. UCU.v is now 21.5% down, looks set to go lower and with the pumped-out readers of her blog firmly on board. Meanwhile, the only problem Mickey Fulp brings to the table is that he's too damned honest to hang with the slimy side of the market.

Money talks and bullshit walks. Hey Goldilocks, guess which side of the equation you're sitting on tonight?



PS: To commenter 'thetick': Learned anything yet?

Radius Gold (RDU.v) thoughts

So let's start with a question for you chartists and TA buffs that refuse to be fooled by randomness. Here's the 12 month chart for Radius Gold (RDU.v) (RDUFF.ob). As you can see it ramped late August, spent September up at the 70c level (and even touched 80c for a moment) but in October it's faded back somewhat and right now stands at 56c.



Being nice and that, your humble scribe has included Bollybands, MACD and RSI (cos we normal people know how you TA guys lurve them there squiggles) and now here comes the question: 

At what price would you buy (or buy back) RDU.v?

Personally speaking I don't really know (and this is why I ask), but once everything were taken into consideration my answer would probably eschew the finer points of TA and be "Whenever the insiders start buying back". That's because not one but five insiders took advantage of that pop in RDU.v to sell their held stock in September at those elevated prices, all the sales coming after a long period of inactivity in their insider positions when not a single paper got sold. Here comes the details, with first up RDU's Exploration Adviser, David Cass:
Cass, David Maurice
2010-09-07 2010-09-08 Direct Ownership :  51 - Exercise of options -90,000  410,000   0.5200  
2010-09-07 2010-09-08 Direct Ownership :  51 - Exercise of options +90,000 0.5200  
2010-09-07 2010-09-08 Direct Ownership :  10 - Acquisition or disposition in the public market -50,000 0.7800
2010-09-07 2010-09-08 Direct Ownership :  10 - Acquisition or disposition in the public market -5,000 0.7900  
2010-09-07 2010-09-08 Direct Ownership :  10 - Acquisition or disposition in the public market -19,500 0.8000  
2010-09-07 2010-09-08 Direct Ownership :  10 - Acquisition or disposition in the public market -10,500 0.8100  
2010-09-07 2010-09-08 Direct Ownership :  10 - Acquisition or disposition in the public market -5,000 0.8200
2010-09-08 2010-09-09 Direct Ownership :  51 - Exercise of options -100,000 310,000   0.5200  
2010-09-08 2010-09-09 Direct Ownership :  51 - Exercise of options +100,000 0.5200  
2010-09-08 2010-09-09 Direct Ownership :  10 - Acquisition or disposition in the public market -30,000 0.7800  
2010-09-08 2010-09-09 Direct Ownership :  10 - Acquisition or disposition in the public market -15,000 0.7900  
2010-09-08 2010-09-09 Direct Ownership :  10 - Acquisition or disposition in the public market -45,000 0.8000
2010-09-08 2010-09-09 Direct Ownership :  10 - Acquisition or disposition in the public market -10,000 0.8100  
A lot of numbers and lines there, but put simply on September 7th and 8th David Cass exercised 190,000 options he had at a base price of 52c and immediately sold them into the market for prices between 78c and 82c. The total value of shares sold was $150,505, but to get the profit David Cass walked away with you have to subtract the 52c exercise price on those shares, which comes to $98,800. Therefore Cass's proceeds from the trades come to $51,705.
Bales, Kevin
2010-09-02 2010-09-10 Direct Ownership : 51 - Exercise of options -30,000 0.2600  
2010-09-02 2010-09-10 Direct Ownership : 10 - Acquisition or disposition in the public market -30,000 0.6300  
2010-09-28 2010-09-30 Direct Ownership : 51 - Exercise of options -20,000 0.2600
2010-09-28 2010-09-30 Direct Ownership : 10 - Acquisition or disposition in the public market -20,000 0.7300  
This time the quickmath shows that company CFO Kevin Bales exercised 50,000 of his 26c base price options on Sept 2nd and Sept 28th, selling both tranches on the same day. Selling value of $33,500 minus options base total of $13,000 gives us the final proceeds to Kevin Bales of $20,500
Cooke, Bradford
2010-09-20 2010-09-24 Direct Ownership :  10 - Acquisition or disposition in the public market -10,000 0.6900  
This one is straightforward, with no options exercising involved. Director Bradford Cooke sold 10,000 of his RDU.v shares on September 20th at 69c a pop, $6,900 cash in hand.
Osler, Tim R.
2010-09-21 2010-09-26 Direct Ownership :  10 - Acquisition or disposition in the public market -3,500 0.7000  
2010-09-21 2010-09-26 Direct Ownership :  10 - Acquisition or disposition in the public market -3,500 0.7000  
2010-09-21 2010-09-26 Direct Ownership :  10 - Acquisition or disposition in the public market -8,000 0.7000  
2010-09-22 2010-09-26 Direct Ownership :  10 - Acquisition or disposition in the public market -20,000 0.7000  
2010-09-22 2010-09-26 Direct Ownership :  10 - Acquisition or disposition in the public market -20,000 0.7000  
RDU's Corporate Secretary Tim Osler decided to sell a chunk of his shares in September, too. In his case, 55,000 shares and all at 70c went on September 21st nd 22nd. Proceeds from the sales, $38,500.
Rushton, Ralph
2010-09-03 2010-09-06 Direct Ownership :  10 - Acquisition or disposition in the public market -7,500 0.7000  
Our final September seller was VP Corp Development Ralph Rushton, who sold 7,500 wholly owned shares for 70c on September 3rd and bringing in proceeds of $5,250

So in total, Radius Gold insiders sold 312,500 shares of the company to the market in the month of September. The total value of the shares sold came to $234,655 and the (pre-tax) cash banked by the five directors aggregated to $122,855.
 x
To sum up, it's not the absolute amount of cash involved here, because in the great scheme of things less than a quarter of a million dollars' worth of insider sales is a drop in the veritable ocean when it comes to the cash moved around the markets in any single day. But there is clearly a good sense of timing shared by not one but five insiders here, something that catches your humble scribe's attention far more than any squiggly line on a chart will ever manage. So watch those insider filings on RDU.v in the future, people. Clues available for winning trades.

Finally, we'd like to applaud company head honcho Simon Ridgway for not selling a single share of RDU recently, despite having loaded up earlier in the year at 30c and 35c prices in the open market. A man with bigger fish to fry, perchance....

DYODD, dude.

Trading Post (all your base are belong to us edition)


Antares Minerals (ANM.v) up 0.8% at $6.70. Ok, a 30% chance of a counterbid. But that's as far as I go and I'd still be way happy to get it wrong. Not in any hurry here.

Iron Creek Capital (IRN.v) down 5.3% at $0.71 but still seemingly high. Seems to me that a no-brain arbitrage is for holders to sell at 71c then buy the same portion of the placement currently going on and get the shares back at 65c with a half warrant kicker at a loonie. But hey...WTFDIK anyway?

Ventana Gold (VEN.to) down 0.8% at $9.04. People who have trading smarts and are known to this humble scribe are buying at $9 and below, calling it an easy flip. I agree (but I topped up a little higher recently and pushed the pirce average to $7.92, so no more for the moment). Until November, patience.

Coro Mining (COP.to) UNCH at $0.58. Big date next week. 

ECU Silver (ECU.to) UNCH at $0.70 and still down on a year when any normal silver stock is flying. a stock for people who can't read balance sheets, eg anyone in GATA.

You can tell Setty is new to blogging.....

...because he naively believes that pro journalism is going to credit a blogger for hitting a scoop on LatAm business affairs. Forget it, dude. Even if you find the local equivalent of Watergate the shameless hacks in Mainstream Media would never sully themselves by admitting they got a market moving story from a blog. Believe me...been there, seen that, got the backfiles and timestamps.

Here's Setty this morning (excerpted, of course)

Nice to see Bloomberg & Reuters following me on the PDVSA arbitration story.
Now we’re all friends here (literally!) so I’m not going to get bitchy about this, but I need to note that when a small publication like this one scoops the big guys, it’s considered to be the polite, ethical thing to do to give a little link or mention. For future reference, the phrasing is something like “The change was first reported on the Web site Setty’s notebook.” But you already know that.

DYODD, dudettes and dudes. And read blogs to find out first.

Copper's chart

Weekly candles.

 Impressive...Perhaps even too impressive*

*I know y'all need to worry about something...just feeding the neuroses a little :-)

Cormark's good report on small cap mining exploration plays

Yesterday, Cormark Securities published its regular coverage report on small cap explorers and you, dear and kind IKN lector, can read it too. Here's the link, here's the opening blurb of this 60 page report that covers plenty names in the sector. Good source material available at a click to you.

"Our fourth edition of our Mining and Exploration Prospects report continues to present some of what we view are the more interesting emerging stories in the base and precious metals market today. As noted before, the list is by no means complete and we have restricted it to 30 names to be manageable. As such, there are many other high quality prospects out there."
So download yours today (but be patient as it's 6.9Mb). Here are the names of companies with write-ups in this edition. Plenty to choose from.

AQM Copper (AQM.v)
Cadan Resources (CXD.v)
Candente Copper (DNT.to)
Clifton Star Resources (CFO.v)
Coro Mining (COP.to)
Dalradian Resources (DNA.to)
Franconia Minerals (FRA.to)
East Asia Minerals (EAS.v)
INV Metals (INV.to)
PC Gold (PKL.to)
Nevada Copper (NCU.to)
Riverstone Resources (RVS.v)
NGEx Resources (NGQ.to)
Sandspring Resources (SSP.v)
Western Copper (WRN.to) 
Levon Resources (LVN.v)
Zincore Metals (ZNC.to)
Sabina Gold & Silver (SBB.to)
South American Silver (SAC.to)
US Gold (UXG) (UXG.to)
Ampella Mining (AMX.ax)
Auryx Gold (AYX.to)
Bellhaven Copper and Gold (BHV.v)
Magma Metals (MMW.to) (MMW.ax)
Belo Sun Mining (BSX.v)
Marathon PGM (MAR.to)

Chart of the day is.....

....the number of cellular lines in service in Peru, 2000 to 2010.

Still not at 100%+ market penetration, apparently. This explains the non-stop 24/7/365 advertising bombardment that drives sane people to WibblyWobblyLand. It also explains why the price war hasn't started and why Peru, along with Brazil, is the most profitable market for telephone operators in The Americas.

10/20/10

Trading Post (noxious gases edition)


Yesterday drops, today rebounds. Steady as she goes.

Fortuna Silver (FVI.to) up 4.0% at $3.35 and this stock is typical of many others' action today. FVI did come out with a positive-looking update NR on the San José mine development today. Run the numbers to see how undervalued this company is once San José starts churning out the metal.

Bellhaven (BHV.v) down 5.7% at $0.50 with some anonymous seller keen on taking any price this morning. BHV had an enormous run until maybe three weeks ago, since when we've seen some correction. Notably, cashed up now after closing a 60c financing on Monday so 50c kind of catches the eye. All on the drill results from here, however. 

U.S. Silver (USA.v) up 12.5% at $0.495. The quarterly production numbers out after the bell last Friday were a big miss, but USA.v is fighting back well enough. Nice volumes traded, too.

Antares Minerals (ANM.v) up 0.6% at $6.58. I don't care about the intraday stuff really, as ANM has made my week. Meanwhile, your humble scribe was asked via mail about the chances of a counterbid this morning. My personal opinion is 20% chance of one happening, so likely not but you never know and I'd be happy to be wrong on that call.

Dynasty (DMM.to) up 1.3% at $3.93 on low volumes. President Correa is in the area of DMM's Zaruma mine today, but the reason is not so very pleasant. There are two dead bodies and two disappeared miners to be searched for. In some ways it's fortunate that mining accidents are getting airtime, headlines and political attention these days, as it might stop some of them from happening in the future.

Peru has the best sports doping scandal ever


The above video (Spanish language) shows the report run on Peruvian TV yesterday about the best soccer doping scandal possible. During a break in a big match to decide which of the teams could go forward and get the chance to play for a spot in the country's first division (top national league) over the weekend, players and coaching staff of the home team 'Sport Ancash' shared squeeze bottles of drinks with their away rivals, 'Acosvinchos'. A little while later, not one but four players playing for Acosvinchos fainted and couldn't continue playing and eventually Sport Ancash went on to win the match 3-0.

Tests later performed on the liquids in the bottles given to the Acosvinchos players found that the drinks given to the opposition players by the Sport Ancash team contained the barbiturate Benzodiazepine. Here's an extract from this report that quotes one of the drugged players:

"From what I can remember, because I still have blanks in my memory about what happened, there was a moment when the goalkeeper in the rival team was being treated for an injury. At that point a person from the Sport Ancash training staff came on and, as is customary in any match, we shared their drinks", said player Andy Salinas.

"I asked to share a bit of their drink because I was thirsty and they offered me a squeeze bottle. The trainer had a six-pack and offered me one of them. The drink had a bitter, unnatural taste", added the player.

Salinas said that a little while after drinking the liquid he had difficulty seeing, he fainted and woke up in hospital. 

Another player, Luis Coello, said that after drinking the liquid offered he felt "heavy" and "tired".

Minera Andes 3q10 production

This morning Minera Andes (MAI.to) reported 3q10 production numbers for its 49% owned San José mine in Argentina. Read the thing on that link if you like, but here I'd just like to walk through one table to show a simple and fairly accurate way to make a revenues estimate for a precious metals producer, with Minera Andes as our guinea pig

1) note sales numbers for the quarter in gold, silver, whatever
2) go over and get London PM fix prices for your metals
3) work out the average PM fix price for that quarter
4) do the math (ounces X price)
5) once you have your number, compare it later to the revenue result reported by the company in question
6) if the estimate gets close to the reality over time, you can begin to rely on the calculation more closely

So in the case of Minera Andes (MAI.to) at San José, as this chart shows there's a pretty close correlation between our "calculated" method which you can do when the production/sales numbers come out and the reported revenues number that usually turns up 4 to 6 weeks later. 

As for the latest numbers from our specific case, the calculation to 3q10 this time around is $47.58m, which means MAI's 49% will be good for around $23.3m to the company. That's slightly down on 2q10, a quarter that eventually reported revenues of $49.4m (49% of which being $24.21m) a net profit from San José for MAI.to of $6.24m and a company net profit of $4.64m.

UPDATE: Anonymous (yawn) writes in the comments section:
Anonymous said...
The revenue maybe down but they built up inventory to realize higher prizes in the future/now 
Here are the charts. Maybe, but not a datapoint that will change things much. As you see, it's more run of sales rhythm more than a big inventory build-up that's in play. There is a common point though; look at several quarters' worth of information, not just one. The trend is your friend. You want charts? We got charts. DYODD.


Mexico's drug violence reaches the mining industry

Here's another excerpt from IKN76, out last weekend, that catches up on the latest developments in the Mexico drug violence as pertains to mining companies there. We first noted the rising political risk for miners operating in the North of Mexico in our September 5th edition and since then things seem to have got a little worse. This is one of the themes that we hope doesn't start developing into a major factor for investors going forward.

Mexico’s drug violence now affecting junior exploration mining companies
A very interesting report came out of Reuters last week (15) that we’re going to reproduce here in its entirety (and thanks to JS for the headsup). Your author has heard plenty of underground rumblings over the last year about this-or-that project that isn’t moving forward very quickly in the northern part of Mexico due to the threats of violence from drug gangs but this report, I believe, is the first time a mainstream news source has picked up on the story, got quotes from a mining executive whose company is exposed to the region (which probably was’t easy either) and shone a light on the potential problem.

 (Reuters) - Mining firms have shuttered a handful of exploration projects in remote areas of Mexico as the industry grapples with threats from drug cartels and rising security costs, Mexico's mining chamber said on Thursday.
Cartels are threatening mining operations not just in the violent corridor along the U.S.-Mexico border but in isolated, mountainous regions in other parts of Mexico, where traffickers grow marijuana and heroin poppies, the chamber said.
Executives belonging to Mexico's National Mining Chamber have reported cases of drug traffickers extorting, kidnapping, attacking and selling drugs to their workers.
Theft of precious metals is on the rise in Mexico, executives said. The government also said this week it caught one cartel member selling iron ore to firms exporting to China.
"We are living a very difficult situation," said Ramon Davila, the COO of Vancouver-based First Majestic Silver Corp.
"There are more and more specific cases of threats from organized crime trying to penetrate areas of mining exploration and operation," he said.
Miners have long seen Mexico, a major copper and silver producer, as a top destination for investment in Latin America. Spending on new projects is on the rise and the industry sees investment at over $13 billion from this year through 2012.
But as bloodshed mounts in Mexico's war on drugs, which has killed over 29,000 people since late 2006, there are some cases of small companies fleeing the country's most perilous areas.
Davila said he knew of at least two companies in Durango state that had shut down exploration projects due to fears of drug violence.
President Felipe Calderon has pledged to crack down on drug cartels and says spiraling violence is a sign the government is making progress as it captures capos and cartels splinter.
But some analysts warn drug violence could eventually undermine the economy as Mexico struggles out of a deep recession and courts international investors.
"Unfortunately, where we operate the response from authorities has not been as fast as we would have liked," Manuel Luevanos, the mining chamber president, said.
STOLEN GOLD, ORE
About two weeks ago, 150 gold and silver bars worth $3 million were stolen from a mining company in the central state of Zacatecas, said Luevanos, also an executive at top silver producer Fresnillo.
Canadian mining giant Goldcorp built a landing strip to fly gold out of its Los Filos mine as the country's highways become more fraught with banditry, said Salvador Garcia, the company's Vice President.
Garcia said security costs had risen 5-10 percent this year compared to last year.
Some traffickers have started their own side business in illegal mining, the attorney general's office said this week.
Steel giant ArcelorMittal recently lodged a complaint claiming iron was being sacked from its concessions in the western state of Michoacan, Jesus del Campo, an official at the economy ministry, told Reuters.
He said some foreign mining companies were encouraging illegal mining by paying cash for tonnes of iron ore, used to make steel in China, without asking for permits.
Mining executives said drug traffickers were encouraging drug use among some of their employees who make relatively high salaries in poor areas.
"A mining camp is an attractive market for drug dealers," Luevanos said. Companies have taken to giving workers drug tests and firing those who turn up positive.
Drug violence around mining facilities has caused concern for the industry. Fresnillo had a case of workers gunned down in front of their families at a mining camp where employees live, Luevanos said.
"This is not just worrying the management. It is sowing terror among (mining) families and many have fled," he said.

IKN back. This, I believe, is a story we’ll need to watch very closely going forward. The only company on our ‘Stocks to Follow’ list that would fit into the potential danger zone right now is (name removed from public blog) so our own exposure is low. Also, let’s be absolutely clear and say XXX.XX has not reported or mentioned any problems vis-á-vis the drug gangs. However, it’s definitely a factor that we need to consider as part of the political risk melting pot going forward, something we made a point of mentioning the last time we ran our regional political risk table in IKN70, September 5th. This is what we wrote on that occasion, by way of a reminder:

Mexico: We drop Mexico down to 31 this quarter, taking two points from the ‘political stability’ column due to the ever-worsening image problem Mexico has with its so-called “narco-war”, which is hardly a real war but more a three-cornered fight between narcogroup, narcogroup and police/army that’s spiralling a little too far out of control.

The problem is mainly one of national image right now compared to any direct threat to the mining industry, but that’s still something we need to take into account. Also, the risk is clear for any junior mining company operating in the North of the country and it wouldn’t take much more than an unfortunate incident between the narcos and a mining camp or exploration geologists to get really bad looking headlines in the mining trade papers.

Be clear that the vast majority of Mexico is unaffected by this current escalation of drugs related violence, with business continuing as usual. The problem for juniors is mainly one of negative image (the potential investor asks the company IR person, “You’re in Chihuahua/ Sonora/Coahuila/etc State? Oh, any cocaine problems around your way?”) but the risk of future direct problems has grown somewhat, it must be admitted.

Chart of the day is.....

....the gold/silver ratio, three years showing.

Was yesterday's uptick a one-off aberration on the non-stop silver highway to wealth and riches, or was it the start of something altogether nastier for the tinfoilhat silverbugs? You be the judge!

10/19/10

On rats and sinking ships (part two)

Rumours are that Bill Murphy of GATA, despite trying his hardest over the years to pump ECU Silver (ECU.to) to his flock (efforts that include another pump attack last week), is totally fed up with holding millions of shares of this dog and is ready to throw in the towel and sell. We find this perturbing and wonder whether the GATA chief is trying to pump up the stock to his flock at the moment for the sole intention of selling into an upmove before the end of 2010 comes around.

We at IKN know full well that we are not flavour of the month at GATA. However those with more friendly contact with Bill or even perhaps his pal Holt may be wise in writing and asking whether Murphy is looking to sell any of his multimillion share holding. After all, we're totally sure he wouldn't want to be labelled as a scumball delinquent frontrunner and would reply to people with the whole truth.

DYODD.

On rats and sinking ships (part one)

We note that Gary Artmont, this time last year President and CEO of Constitution Mining (CMIN.ob) who then resigned his head's post to shuffle back behind the real scamsters, has today resigned from the directorship altogether. We wonder what it could possibly mean?

FutureSpeak: Cut to October 25th 2010 for a conversation between two brokers

Broker 1: "Hey, remember this time last week when Timmy G said that he'd "work very hard to make sure that we preserve confidence in a strong dollar"?"

Broker 2: "Yeah, that was a good one. Mind you, even the gold market fell for it...for about half a day or so."

Broker 1: "Yup, I just loaded up. Seems like a no-brainer looking back now, doesn't it?"

Broker 2: "Dude it was a no-brainer then, too."

Argentina versus Peru

Conventional wisdom on Peru: New miracle economy.....stable.....top performing....great growth......new best friend......can't be bettered......expanding local market

Peru's benchmark IGBVL index is up 215% from the Financial Crisis lows.

Conventional wisdom on Argentina: Risky.....volatile.....default at any moment....don't wanna invest there....never make any money there....avoid the local market
Argentina's benchmark Merval index is up over 240% from the Financial Crisis lows.

Never forget that most advice you receive on LatAm finances is laden out by complete dumbasses.

Mo' M&A: Argonaut (AR.to) and Pediment (PEZ.to) to merge, Mexico gold gets the buyout buzz

There's been this rumour hanging round about M&A and Pediment (PEZ.to) for a while and today the thing came out of the closet. Argonaut (AR.to) was a company formed less than a year ago by smart miners to take over the El Castillo mine from the now defunct Castle Gold and run it right for the first time ever (as this chart shows).....

...... and is now showing its aggressive growth plans.

Here for good measure is the 1 year Pediment Gold (PEZ.to) chart.


Here's the NR linked and here are the two bits you'll need to know.

"TORONTO, ONTARIO--(Marketwire - Oct. 19, 2010) - Argonaut Gold Inc. and Pediment Gold Corp. are pleased to announce that they have entered into a binding agreement (the "Agreement") to complete a business combination (the "Transaction") to create a premier mid-tier gold producing company focused on the Americas.

"......all of the Pediment common shares (the "Pediment Common Shares") issued and outstanding immediately prior to consummation of the business combination shall become exchangeable into the common stock of Argonaut on the basis of 0.625 of a common share of Argonaut for each one (1) Pediment Common Share. Based on the closing price of Argonaut on the Toronto Stock Exchange ("TSX") on October 18, 2010, the exchange ratio implies an offer price of C$2.56 per Pediment common share and values Pediment's equity at approximately C$137.1 million on a fully diluted in-the-money basis."

DYODD, dude.

Riverside Resources (RRI.v): An interview with John-Mark Staude, pres/CEO of Riverside (from IKN76)

Here's an interview your humble scribe did last week with John-Mark Staude, Pres/CEO of junior exploration play Riverside Resources (RRI.v) and first published in IKN76 last weekend. So with no further ado.....



Riverside Resources (RRI.v): An interview with John-Mark Staude
Tracking down Riverside Resources’ (RRI.v) head man John-Mark Staude and keeping him in one place long enough to answer a few questions isn’t as easy as you’d imagine, but your author finally got his Q&A session with this workaholic and genuinely nice guy late last week. Here’s the result for your reading pleasure.


IKN: Riverside stock has been on quite a run recently, John-Mark. To what do you put this run down to? Is it the general market atmosphere for juniors or is there something more company-specific?

John-Mark Staude: We believe that Riverside has been and is still significantly undervalued in the marketplace because we have a portfolio of strong assets and the marketplace in the short term values single asset, "go for it all" drilling explorers.  We appreciate that approach but have been able to maintain a very tight share structure and converted our capital into ownership of precious metal assets.  As exploration is done by us and our partners on our Mexico properties including anticipated drill results from Libertad, recent high grade Ag results from Clemente and early this coming week new gold results from Chapalota projects we hope to continue to see strong gains in share price coincident with de-risking, adding value to our properties.

The general market atmosphere has been very good, with particularly realization that gold needs to rise relative to the US dollar.  Riverside has nearly 2 M Oz of gold in the ground at our 1,200,000 ounce gold resource that was drilled and estimated prior to the Toronto Stock Exchange’s rule 43-101 and is a non-43-101 inferred resource and secondly with the Capitan gold body where we have a volume of mineralized material that is still wide open and summarized in the filed 43-101 report.  Riverside has 24.5M shares issued and is trading around US$1.00 which makes for a ~$25,000,000 market capitalization.  Riverside has $3,000,000 in cash so the current Enterprise Value is $22,000,000.  With gold now over $1350 and other insitu values exceeding $30 / oz the fact that just Sugarloaf at just $18/oz explains the full market cap of Riverside.  Riverside has other open-pit style gold bodies and targets, drill results coming, exploration by partners, two strategic alliances that fund at least over $1,000,000 in exploration each year with no dilution to Riverside shares.

The two precious metals assets alone indicate in-situ value for Riverside at $20/oz of a market value of between ~$30-60M. This doesn’t even take into account the Company’s ten other value driving projects and initiatives.  So we believe the market rise is both the overall market and also realization of the ounces Riverside has but still we are far from valued compared to with our asset base.

Then the other 100% owned assets in Mexico plus the newly drilled gold body at Libertad and the high grade silver at Clemente combine to give Riverside an exceptional portfolio and at a relatively low market cap; thus we see good upside potential right now.

IKN: Your new big partner is Cliffs (CLF). Can you update us on how things are going in the JV?

JMS: The Strategic Exploration Alliance with Cliffs is going well with Riverside now having identified targeted properties and in the field following up on locations that Riverside has generated from our proprietary 44,000 mineral location integrated database.  The database provides a unique tool to rapidly launch this major generative program and now Riverside’s technical team is in the field, in fact I am conducting this interview right now from the Cliff’s field program as we are working as a team to highlight priority targets for the coming two month push.

IKN: Is there any news regarding Sugarloaf Peak coming up, or are the RRI efforts now largely aimed at your Mexican operations and assets?

JMS: Sugarloaf Peak is now on an joint venture asset capitalization track for Riverside where we have added value, shown already a double from the near surface now down to 200m open pit depth and with gold above $1300 this project looks increasing interesting. Riverside has focused this year on value, making a discovery and making some money along the way in Mexico.  By making money we have limited the need for large financings and our capital is best spent in Mexico on our high quality Tajitos open pit gold asset plus having discovered new high grade silver areas in Mexico. 

We expect to have news out from Sinaloa and Durango Mexico as projects have been advanced and now Riverside has at least 8 drill targets so we are in a very strong position for joint ventures and going forward ourselves.

IKN: So what, in your opinion, should be regarded as the company’s current flagship asset or project?

JMS: Our current flagship where we are spending our own money is the Tajitos gold project because it is in the exact right location among the large open pit gold systems of western Mexico and because we have high grades up to 1 ounce per ton and drill targets ready to go on the property. Riverside has successfully moved from drilling up a mineralized block at Capitan in Durango then a large gold inferred resource of Sugarloaf Peak in Arizona and now has worked up Tajitos. We realize that it takes a bit of thinking to appreciate having three large good gold assets and will be unlocking the value for shareholders over the coming 90 days with a significant push on deals and delineating the gold bodies.

IKN: You’re very much regarded as Mexico experts, John-Mark, but are there plans to expand into other LatAm countries? I ask this, because when we met for breakfast you just happened to be in Peru. Was that purely by chance or are there plans afoot?

JMS: Riverside looks for great opportunities and we are not bound by a country.  My being Peru was for a growth opportunity and we will continue to rapidly go after assets, deals, alliances with a primary focus toward Latin America. The Arizona asset was an example as it came across my desk and we immediately moved and acquired it. This one asset substantiates our company value and is not even our lead asset now that we have high grade open pit gold in Mexico.  As I have worked in over 20 countries and lived in different parts of Latin America we actively on the prowl. 

IKN: What’s the current cash position and approximate burn rate at RRI? Are you planning to spend more aggresively and accelerate programs thanks to the current bullishness in the metals markets?

JMS: Riverside is well-funded with a current cash position of approximately $3M in the treasury, and a historic burn rate of ~$1.5M per year. We are more aggressively working to get deals done, help others who have raised money to access our projects and make discoveries and drill up our projects. We brought in temporary business development people to specifically help increase the deal flow and we ourselves have already included in our annual budget drilling and could be more aggressive based on results. We are pleased with Clemente, Tajitos and now Chapalota. Yes, Riverside has a set of very good assets and we will deliver deals that expose our shareholders to at least 6 advancing projects in the coming 3 months. It is exciting for Riverside and we are in action to leverage off the bullishness in the metals markets.

IKN: Thanks again for your time, I know what a busy guy you are. Any last words for IKN readers?

JMS: Yes, a final plug for our Youtube videos. Riverside through our YouTubeVideos, www.youtube.com/user/RiversideResources and our website www.rivres.com aim to continually provide information that can help investors and people interested in the exploration business.  We hope readers will contact us via email info@rivres.com or call us 1-877-RIV RES1 (or 1 778 327 6671 x 333) to find out more. We truly aim to share ideas as we stand for “knowledge is golden” and are working to convert ideas into value for shareholders.

End

Chart of the day is....

...sugar, monthly candles.

Bad news for worldwide sales of Colgate.

Peru: The lies behind the miracle

As the old chestnut goes there are lies, damned lies and statistics. Never truer in the pretzelmath world of banana republic statistics offices that first ask what result the government wants and then supplies. This chart, taken from data supplied by top Peruvian economist Bruno Seminario of Lima's Pacific University (and also the guy in charge of leading Peru economics site "Actualidad Económia del Perú") shows how the current government of Alan García has spun lies into the growth "miracle" of Peru.


What we have here are two sets of monthly GDP calculations for the period 2009 to date. The blue line shows the GDP calculation published by the official stats office INEI for the period. However the red line shows what the GDP results would have been if the INEI hadn't changed the methodology of its calculations in 2006 when Twobreakfasts came to power.

It's one of the little snippets of data that gets lost amongst outside observers. In 2006 the INEI went under orders of Twobreakfasts and the head guy was changed to one of García's favourites. The INEI then set about using a new methodology that it didn't even admit to until repeatedly challenged on the strange results being offered up in 2009. Not only that, but the old method was a clearly published dataset and calculation that could be tracked accurately by third parties (hence Semanario can still apply the old method and get an correct reading). However the INEI has never published the "new improved" method or explained to anyone outside its building how they now calculate the GDP number that's fed to the world.

These days the "old method" would give a +7.9% GDP growth headline while the "new improved" offers 9.2%. A difference, but not as much as the papered over period of 2009 when the world and his wife could see Peru was going through the same recession as anywhere else but the INEI cooked the books to make it look much better than reality.

10/18/10

Tomorrow (Tuesday 19th October) in Ilo, Peru

From this newswire report

The Presidents of Bolivia of Bolivia and Peru will leave behind them years of political fights and "relaunch" the relationship between the two member states of the Andean Community when they meet on Tuesday in the Peruvian port of Ilo, according to the Bolivian head of State.

Evo Morales said on Monday in a press conference that his meeting with his Peruvian counterpart Alan García was made possible by the recent decision in Lima to send back two right wing ex-functionaries of Bolivia who had escaped to Peru in order to evade justice on charges of corruption.

It will be, "A Presidential encounter in the city of Ilo that has the objective to relaunch, impluse give new vigour, a renovation to bilateral relations with Peru", announced the indigenous governor. Continues here

All work and no play makes Jack a dull boy.....

.....which is why this humble corner of cyberspace will see no further posts until this evening. Please you too be having good day thank you very much.

Greystar (GSL.to) finally gets round to informing the market something that IKN Weekly readers have known for eight days

And so Greystar Resources (GSL.to) has finally got around to telling the world what IKN Weekly readers have known for eight full days. Compare the GSL.to news release this morning.....

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 18, 2010) - Greystar Resources Ltd. (the "Company") (TSX:GSL - News; AIM:GSL) announces that the Ministry of Environment, Housing and Territorial Development (Ministerio de Ambiente, Vivienda y Desarrollo Territorial MAVDT) has officially confirmed the date for the Public Hearing to consider the Company's Angostura Project Environmental Impact Study ("EIS"). The hearing will be held on November 21st, 2010 in California, Santander the town closest to the project site, at 9:00 am local time.
As part of the process established by the MAVDT, Greystar will conduct two prior informational hearings in the department of Santander. The first meeting will take place in California, Santander on November, 3rd, and the second one will be held in Vetas on November 4th, 2010.
Steve Kesler, President and CEO of Greystar Resources commented, "We are pleased that yada yada continues here

......to this section of IKN75, published on October 10th:

Greystar Resources’ (GSL.to) environmental hearing
Greystar Resources (GSL.to) is not a stock we follow or recommend here, but the company does have a key political date with Colombian authorities coming soon so today we take time to give a headsup on proceedings.
First the quick and dirty background. GSL went through a share price slump earlier this year when Colombia’s Environment Ministry requested a new environmental impact study (EIS) from the company (4). The reason for the request was that its ‘Angostura’ project in Colombia didn’t meet the requirements of the country’s newly modified mining code, with the specific problem being the planned open pit mine encroaching on the protected ‘Paramo’, a region of Colombia high above sea level that is apparently a biologically sensitive ecosystem. The share price then rebounded in style when the company announced on May 31st (5) it had successfully appealed the decision and the case would go to arbitration. The price chart seen here (right) speaks eloquently of the effect this process had on the share price at the time. We also see the lacklustre performance of the stock since then, perhaps due to this pending arbitration process

We are now less than a month from the start of that process. The first stage will be on November 3rd and 4th when informative sessions for the public are held on the case. Then on November 21st the formal audience takes place that will allow all those pro and contra the project to voice their opinions on the record. Once the formal audience is complete, the final decision as to whether Angostura is allowed to go ahead or is stopped is left to the Ministry of the Environment. As far as this author can tell (after checking the relevant papers and websites) there’s no set time limit for the Environment Minister’s decision and so it may come in days or months, we simply don’t know (but typical LatAm time schedules are suspected). In the case of a ruling against the project Greystar would likely have room to appeal to Colombia’s judiciary, but even a successful appeal would add mountains to the timeline in all likelihood.

Nice of the company to have finally bothered to tell the people that pay their salaries potentially market-moving and definitely key information that's been out there for over a week, innit? You can tell how much they care about their shareholders. DYODD, dude.

Chart of the day is.....

...copper, weekly candles.

Had to run with the copper chart today, what with the newsflow and all that. Subscribers to The IKN Weekly have three hundred and forty-seven reasons to be cheerful this morning, every one of those reasons being a percentage point. Congrats to Black, Heather and all the crew. Well deserved.

UPDATE: Make that three hundred and sixty reasons, with Top Pick ANM.v trading at $6.54 right now. We've been in it since $1.42. Just sayin'.

10/17/10

The IKN Weekly, out now


IKN76 has just been sent to subscribers. It has 31 pages and 14,774 words. Hopefully, one or two of them will make some sense. Enjoy your Sunday evening.

Sunday singalong

I've had this tune in my head all weekend. Now it's your turn.


Here are the lyrics. We heart Les VRP, best French band ever amen.


Nous avions rendez-vous a la piscine
Toi et moi, tous les deux
Sans mes copains, sans tes copines
Tous les deux en amoureux
        Ta soeur mongolienne
        Ta soeur schizophrène
        Ta soeur a tout gâché
        La raison m'a quitte
Sur le bord du petit bassin
Nerveux je craignais ton absence
J'aurais mis ma tête dans ton maillot de bain
Si j'avais su que tu trimbalais Clarence
        Ta soeur débile mentale
        Ta soeur hydrocéphale
        Ta soeur a tout gâché
         La raison m'a quitté
        Ta soeur mongolienne
        Ta soeur schizophrène
        Ta soeur a tout gâché
        J'ai failli me noyer