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11/20/10

Bjork, Magma Energy (MXY.to), Ross Beaty, defamation suits and I Am Spartacus

This is an interesting story, sent over by reader "M". Click here for the full story at The Reykjavik Grapevine, read an extract right below:

On November 9, Maclean’s Magazine posted an interview with Björk called, “In Conversation with Björk: Why the Icelandic singer wants a Canadian company booted from her country.” Shortly thereafter, the interview was retracted from Maclean’s website after Magma threatened the magazine with a defamation suit.

Among their defamation complaints is Björk’s statement: “Companies owned by Ross Beaty have a bad reputation for breaking serious humanitarian and union laws in South America—not giving farmers shares of profit they had promised and so on—but this is normal. This is the kind of beast you’re dealing with....”

Although Björk referred to Ross Beaty rather than Magma Energy, it was Magma Energy that threatened to sue Macleans if the article was not retracted. In fact, Björk was referring to Ross Beaty’s company, Pan American Silver, which is a mining company operating in South America.

On November 12, Macleans posted a correction, which reads as follows: “On the 9th of November Macleans published on its website an interview with Björk where she claims that Ross Beaty and Magma Energy Corp. have broken laws in South America. This is not correct and we apologize to Ross Beaty and his company.”

In conversation with the Grapevine, Björk said, “I don’t think Magma's qualms are about their reputation in humanitarian rights. That’s more likely a ruse.”

Björk thinks Ross Beaty is more likely concerned about her statements regarding geothermal energy not lasting for thousands of years. In the Macleans interview, Björk said: “…He has said that geothermal energy lasts for 1000 years. This is not true. It lasts about 50 years. Geothermal plants work similarly to mines, you drill and then there is only a limited amount down there. When magma’s current 65-year deal is over, the hole will be empty.”

She told us there are two things Ross Beaty seems to be trying to hide from investors, both current and potential. First, geothermal energy does not last forever. Second, Beaty does not have access to 400 MW of geothermal energy.

“On various widely watched business shows in Canada, he has been talking about having access to 400 MW of geothermal energy and that geothermal energy lasts forever and is entirely renewable,” Björk said. “That’s how he sells the idea to investors and it’s simply not true. If this information were to be featured prominently in Canada, his whole venture could fail.”

In the “corrected” version, which now appears on the Maclean’s website, all of the remarks Björk refers to are also missing.

After repeated attempts to contact Magma Energy and its investors regarding the facts in question over the past week, the Grapevine CONTINUES HERE



And thanks to the wonders of Google Cache, you too can read the original Macleans article right here...or right  here on IKN below (as Ross&Co is going to have to slap a suit on my tush too, it seems).

In conversation with Björk

Why the Icelandic singer wants a Canadian company booted from her country
In the summer and fall of 2009, barely a year after fraudulent investors bankrupted the country, Magma Energy Corp bought a 43 per cent share in Iceland’s third largest utility, HS Orka. Ross Beaty, the CEO of Magma—a Canadian company—said he wanted to invest in green energy for the benefit of the environment, his shareholders and Icelanders, and that he had no interest in a majority share of HS Orka. But Icelander’s weren’t happy; the public traditionally owns their natural resources, and the whole country is wary of foreign ownership, especially after the collapse of the economy.
Things have only gotten worse this year. Magma purchased additional stocks in May, bringing its control of HS Orka up to 98.53 per cent and sparking protests across the country. Thousands marched on the capital, and polls showed that 80 per cent of Icelander’s disapprove of the deal.
Icelandic musician Björk has become a spokesperson for the movement to cancel Magma’s contracts. She started a petition calling for a referendum on amending foreign ownership laws, and it bears the signatures of about 20,000 of her countrymen. She says that once that number reaches 30,000, or about 10 per cent of the population, the government will be forced to hold a referendum that could see Magma thrown out of the country.
She spoke to Maclean’s over the phone from Iceland.
Q: Why do you want to stop the Magma deal?
A: The case has been twisted a little bit—that we hate foreigners and we don’t want them here. That’s too black and white. This decision was made in a back room by two guys and the nation wasn’t even consulted.
If we decide, ‘let’s privatize,’ then we could do it properly and have really good legislation and make a really good deal. The bank crash has brought us to our knees and there are municipalities that are really broke so they’re selling. It would be better if we wait, once we’re in a better position to negotiate then maybe we can cut deals with foreigners that would be healthy.
Q: Is the problem with Magma specifically or foreign ownership generally?
A: Companies owned by Ross Beaty have a bad reputation for breaking serious humanitarian and union laws in South America—not giving farmers shares of profit they had promised and so on—but this is normal. This is the kind of beast you’re dealing with.
Icelanders have publicly owned their geothermal plants for a century now, why sell access to our energy sources for 65 years when this direction in business affairs has brought the nation to its knees? We should at least get a good deal—this one is appalling. 70 per cent of the price is paid with a seven-year bullet loan carrying an interest rate of 1.5 per cent. In other words the seller lent the buyer most of the money. The rest is financed with Icelandic currency bought at a serious discount on the offshore market.
Ross Beaty didn’t come to Iceland just out of kindness and consideration for us. He is a good businessman and he knew we were on the brink of bankruptcy. He knew he could get an unusually good deal for him, which is exceptionally bad for us. It is very hard for Icelanders to trust this man.
Q: Beaty says he regrets trying to engage you in the process. What happened?
A: Ross Beaty publicly offered me shares in the company. He invited me to his office where he said he could give me a good deal, which showed he totally misunderstood me. I don´t feel individuals should own this. It belongs to the nation.
When he bought the first section of HS Orka , which was a small share, he stated very publicly that he did not intend to own the majority in it. If the current sale goes through he will own more than 98 per cent. He has said that geothermal energy lasts for 1000 years. This is not true. It lasts about 50 years. Geothermal plants work similarly to mines, you drill and then there is only a limited amount down there. When magma’s current 65-year deal is over, the hole will be empty.
Q: You started a petition to force the government to have a referendum on privatizing natural resources.
A: We have collected 20,000 people, two thirds of what we need. When we have ten thousand more then the government has to have a national referendum.
Q: What is the general attitude in Iceland following the economic collapse?
A: A lot of people have lost their homes and their jobs. There’s a lot of anger. There were people standing outside parliament with pots and pans twenty-four-seven until the first government resigned. Now, after the backlash, we have a second government. They’ve been getting the same treatment. This used to be a peaceful place. We are in a situation we’ve never been in before.
Q: But you have dealt with colonization before.
A: We were a colony for 600 years, it took a lot of battles to secure our independence. Icelanders are strong and resilient. We will not give up.
Q: Won’t it be costly to buy these contracts back, especially when the Icelandic economy is doing so poorly?
A: It might be expensive, but to be honest, whatever it would cost us would be cheaper then the other option. We have a lot of other energy resources, and this isn’t that big a case, but this may only be the first privatization of many. The Chinese embassy just tripled in size and is looking into natural resources, especially fish. We could simply become a 21st century colony of international energy giants, Magma comes first, then the Chinese and so on.
Iceland has developed know-how and a graceful relationship between nature and technology for a century. We should be enjoying the harvest of these discoveries ourselves, not handing it over to an inexperienced Canadian mining company. Magma is right, green energy is the future, but we should enjoy the fruits of our own labour.
Q: What do you have to say to Canadians?
A: What kind of international energy direction are you going to have in the 21st century? How are you going to interact with other countries? In these times it is important to look at things long term. We have to unite technology and nature, get them to work together in an amicable way.
Q: Where did you get your concern for natural resources?
A: Our neighbors are not Canada or France or Brazil. Our neighbors are nature. Iceland is surrounded by mountains and ocean. Half of the food my family eats is from hunting. We’re an isolated island in the middle of the Atlantic, so we’re very aware of what we do to the island or to the ocean around us.
Q: You used to make a point of being apolitical. Why get so involved in all this?
A: It isn’t because I’m trying to convert people, the majority of people feel the same way; they just don’t have a spokesperson. If this goes through then we not only lose our banks and our homes, we loose our energy resources. They’re the only way that the next generation can get themselves out of this mess.
It’s a crossroads. It’s sort of terrible but it’s also kind of good because the bullshit is on the table. Everyone can see the corruption so it’s an opportunity to start a new society with new laws and new ethics. People are excited. That’s why people like myself are getting very heavily involved; they feel they can make a difference.

Bayfield (BYV.v) insider selling continues

Bayfield Ventures Corp. (BYV)

As of November 19th, 2010
Filing Date Transaction Date Insider Name Ownership Type Securities Nature of transaction # or value acquired or disposed of Unit Price
Nov 19/10 Nov 18/10 Pettit, Gaydon Direct Ownership Common Shares 10 - Disposition in the public market -30,000 $0.810
Nov 19/10 Nov 15/10 Pettit, Gaydon Direct Ownership Common Shares 10 - Disposition in the public market -28,301 $0.850

Mexican Owly comments on this development:

Jeremy Grantham on CNBC

This is a good interview.



Also available here 

UPDATE: WHOOPS, WRONG LINK! and I didn't even notice until reader 'Chomik' kindly mailed in. Ahem....errr...sorry. Here's the correct embed below, which is also found on this link 




Thanks Chomik

USGS report on rare earths (REE)

Read this USGS report.....

The Principal Rare Earth Elements Deposits of the U.S. - A Summary of Domestic Deposits and a Global Perspective 
The Principal Rare Earth Elements Deposits of the U.S. - A Summary of Domestic Deposits and a Global Perspective News release: "USGS: America Has Abundant Supply of Rare Earth Elements - America’s Rare Earth Elements Can Create U.S. Jobs, Expand Renewable Energy: "On the heels of a Wall Street Journal report outlining America’s dependence on China’s tightening rare earth element (REE) market, the USGS released a report revealing 13 million metric tons of REEs exist within known deposits in 14 U.S. states. While the largest deposits exist in California, Alaska and Wyoming, additional known REE deposits are found in Colorado, Florida, Georgia, Idaho, Illinois, Missouri, Nebraska, New Mexico, New York, North Carolina, and South Carolina."

....by clicking through to here. The link in the text next to the dot downloads the 5Mb PDF document.

11/19/10

Tu no puedes comprar Latinomérica (music bonus)

Calle 13's new album, 'Entren Los Que Quieran', is out next week and NPR has an EngLang write-up and previews all the songs in full today. Click here to link through.

I've had them all playing here today and loved what I've heard, but the one that stands out is 'Latinomérica'. Spanish speakers in the IKN audience take heed, this song is must-listen material

The Friday OT: George Thorogood and the Destroyers; Bad to The Bone

So the video is a bit Early-80s-MTV-Storytelling cheesey, so the riff is a direct ripoff of Mannish Boy, so I could have chosen "Who Do You Love" or "One Bourbon One Scotch One Beer" instead of his banner hit?


Who cares? This rocks, rocks and so very rocks.

The IKN Weekly: An apology

We would like to apologize to all subscribers of The IKN Weekly due to the poor performance of stock picks this week. At the time of writing, with a little over three hours left in the trading week, there is to our shame currently a stock on our 'Stocks to Follow' list that is in losing territory since last weekend.

The other 14 (we have a self-imposed maximum of 15 open positions at any one time) are all up on the week and all 15 are also in profit since first highlighted, but this should be considered a minor detail.  The next edition of the weekly, IKN81 out this Sunday, will try its best to improve on this sorry state of affairs.

Brazil: The biggest hint yet that Dilma will weaken the Real

The Brazilian Real has lost over 0.5% against the US dollar today, because of this, reported by Mercopress

Brazilian central bank chief steps down from president-elect Rousseff’s team

Brazilian central bank president Henrique Meirelles will not accept any invitation to remain as head of the bank unless president-elect Dilma Rousseff gives him full guarantees of “absolute autonomy” in running the institution. He also rejects the idea of holding on the job during the first quarter of 2011 until a definitive successor is named.

...................

Apparently Meirelles seems uncomfortable with these reports and much less having his name linked to a possible “tampon” action while a successor to his post is nominated. The central bank president said that working with President Lula da Silva he was “never exposed to any sort of pressure or influence”.
CONTINUES HERE

BIG copper: Codelco approves the Hales mine

News this morning is that Chiles' Codelco has finally (after delays that stretch back at least 5 years, cos the thing was supposed to have opened for business back in 2008) approved the U$2Bn or so needed to put the "Hales" copper mine project into production. Here's the official Codelco note on the announcement, here's a Chilean media report just out.

Hales is a big one, with oodles of copper grading an average of 1.18% and due to run an average annual copper output of 163,000mt for at least 13 years of mine life (and as you can guess, probably a lot more than that).

UPDATE: Setty's on the ball with the story, too 

UPDATE 2: I thought this was interesting. After posting here I thought I'd snuffle around and make sure my "should have opened 2008" memory was correct, so went to play on the Googletubes. This report  was found dated 2004 and confirmed that original 2008 date, but also had the capex slated for the project at U$900m. So, in 2004 the mine would have cost $900m to build. Six years later it's estimated at $2.1m to build. Food for thought, mineheads....

It must be some sort of Canadian practical joke

What do Gammon Gold (GRS) (GAM.to), Minefinders (MFN) (MFL.to) and Jaguar Mining (JAG) (JAG.to) have in common?
1) They're all junior gold producers
2) They all operate in the LatAm region
3) They all quote on the NYSE as well as in the Canadian market
4) They're all pisspoor producers, have never lived up to their own overhyped expectations and have left plenty of bagholders in their wake this year.

How the devil can a producing miner lose 10% this year the way Minefinders (MFN) has done is beyond me, what with the gold price up 20% in the same period and these miners supposedly giving leverage to the metal price. And MFN is the best (amazingly) of our three here, with Jaguar (JAG) and Gammon (GRS) losing more than 40% in 2010. Incompetence, thy names are clear.

The more I think about it, the more I come to the conclusion that this must be some sort of Canucky practical joke played on their southern neighbours. Kinda, "Hey, let's list this PoS down there as well....jeesh those guys will buy anything" theme. No wonder US investors can't handle gold juniors. After all, the limited amount of tickers available to them have been so overhyped they've probably been put off forever. DYODD.

Chart of the day is....

...car sales (as measured by change in registered ownership) 2006 to September 2010 by month, data from the Camara del Comercio Automotor Argentina (the official place to go for the numbers, basically).


Using this traditionally reliable benchmark for economic activity in Argentina there's little doubt that things are picking up nicely there. Just in time for the 2011 Presidentials, too....now ain't that a coincidence?

11/18/10

OT: Cheney and the seven ages of man

 photo from here
Writ large:

"The sixth age shifts
Into the lean and slipper'd pantaloon,
With spectacles on nose, and pouch on side,
His youthful hose well sav'd, a world too wide,
For his shrunk shank, and his big manly voice,
Turning again towards childish treble, pipes
And whistles in his sound."

This week's 100% freely free freebie

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China Mining's foreign labour relations: Coming soon to a South American country near you

It seems Chinese mining executives take a different attitude towards workforce protests than, say, Codelco or Southern Copper or ANY FREAKIN CIVILIZED HUMAN BEING in fact. I mean, why talk to the proles when you can shoot them? This story from The Times of Zambia today (for the record, approximate forex in the note is, K4,500,000 = U$9600 , K3,500,000 = U$7500, K2,000,000 = U$4300).

MANAGEMENT of Collum Coal Mine and all the 13 workers who were shot at have agreed that the two Chinese senior officers who fired at them should not be prosecuted.

And the mine management has agreed to compensate victims of the shooting between K20 and K45 million and has also increased the minimum basic monthly salary for its workers from the statutory required K286,000 to K450,000 following the Government’s directive to management to improve the working conditions at the mine.
According to the compensation agreement obtained by the Times of Zambia, management of Collum Coal Mine and the victims of the shooting had a meeting on November 10 which was also attended by the labour commissioner where the two parties settled the matter by agreeing compensation and that the two directors who opened fire should be exempted from prosecution.
“All the 13 injured agreed that Xiao Lishan and Wu Jinhua be exempt from prosecution.
“After verification, there are 13 people who were injured. Among these, one person was severely injured and he will be paid K45 million including five years school fees anywhere within Maamba area.
“Those who are partially injured are six and these will be given K35 million each while the other six who are not severely injured will be paid K20 million each. When Collum Coal mines industries Limited pays the compensation, the officers from Ministry of Labour and Social Security and relevant witnesses should be in attendance,” reads part of the agreement.
The move was part of the process aimed at improving the working conditions at the mine where 13 workers were recently injured when they were shot at during a protest to press management for improved conditions. CONTINUES HERE

How, therefore, do you get round the subtle problem of attempted murder charges in Banana Republics? Easy, just pay 'em all off and the charges get dropped. So on second thoughts China's mining companies look like they'll fit quite nicely into the LatAm way of thinking. DYODD, dude.

Screw the Ottotrans™, the Vennietrans™ is where it's at

Setty's got himself a brand new machine, the Vennietrans™. It's a marvel of interwebnetpipes science that translates the "nothing is ever wrong" world of Chilean biz reporting to the "nothing is ever right" world of Venezuelan biz reporting. Here's what happened when Setty ran this headline found in La Tercera....
"Chilean economy grows 7% in third quarter, biggest expansion in 6 years: According to data from the bank, internal demand keeps growing, but at a slower rate than in earlier quarters"
...through his magic machine:
"Chilean quarterly growth falls to 2% as internal demand falters: Fishing keeps falling as drought forces more spending on natural gas, water"

FM.to vs ANM.v: There's that arbitrage again

First Quantum (FM.to) holders, just sell your FM shares and buy Antares (ANM.v). Easiest 4% arb you'll ever make.

Or as a mailpal said very recently; "Efficient markets my ass".

UPDATE: Tell 'em Owly....

Fortuna (FVI.to): In the end it took three days

In IKN80 last Sunday we took time out to examine the net quarterly loss posted by Fortuna Silver (FVI.to) last week Friday, checking on the reasons and paying attention in particular to the hedging/derivatives loss posted and noting why that should be so. Here's how the note ended, final paragraph excerpted:
"....to answer one repeated comment in the mails received, for sure it’s not the kind of headline number that wins friends and influences people. Yes, it may cause some sort of selling pressure early next week from those people that prefer to react to headlines. If that happens (I’m not sure, stuck as I am with a headful of fundies, but people writing in seem to think it’s a strong possible) I’d just consider it a “buying opportunity”. So with permabull newsletter writer’s first cliché out the way, let’s move to another hackneyed phrase and say “keep your eyes on the prize”. FVI is, in the considered opinion of your author, still way undervalued on the near future of its San José project and that hasn’t changed a jot. Caylloma is performing well and is a cash cow. The books have hidden that somewhat this quarter, but don’t let accountancy fool you....."
And here's the five day chart:
Yep, you too could have picked up a whole bunch of FVI in the same way as IKN Weekly subbers did in the $3.60 range (I know cos they've told me). All you needed to do was to wait until those people who buy into the stock and have no idea about how the read a balance sheet got nervous, then pick up their shares....thanks, greenies!

DYODD, dude.

Peru: New 2011 poll numbers confirm Toledo's big upmove

 the rogue's gallery of top 4
 
Today's survey from decently reputed pollster CPI was at a national level too, not the Lima/Callao survey mentioned a couple of days ago. Data (and photo, in fact) from here:


Luis Castañeda leads but the gap is closing. Toledo is confirmed in second place and the loser is once again Keiko Fujimori (ThankDaLawd). It's a long way back to 4th place at the moment. 

People, there's still a long way to go in this campaign and anything might happen so we shouldn't read too much into things as they stand....perhaps around mid-February onwards is when poll readings can be taken as a decent reflection of what might happen come election day. But  today we can confirm that Toledo is now a serious candidate to get his old job back and by the looks of things, no single candidate will win 50%+1 vote in the first round so a 2nd round runoff between the top two is a virtual certainty...whoever they might turn out to be.

Start the day right

Your humble scribe was dancing to this around a breakfast table with a beautiful girl about 20 minutes ago, singing along to a blasting radio.


Say what you want about U2, but they will go down in music history for nailing the best morning song of all-time. I know your day will be full of beauty and just hope you get to see it.

Chart of the day is....

...spot zinc (ZN), 60 day chart

You thought silver got hammered? Felt bad about the copper droop? Looked sadly on the gold price? Well Zn had you beaten all ends up last week, dropping as it did 16.5% as low as $0.96/lb. This morning at $0.99 so showing signs of recovery, though.

The most interesting thing about last week's Zn slump, however, is that the Zn explorer that this author really likes going forward would be making plenty coin even at that slumped-out 96c price. Augurs well for the future of the investment there, methinks. DYODD and think zinc, dude.

11/17/10

Democracy in action, Argentina style

A cool video from Argentina's parliament this afternoon, when the president of Constitutional Affairs and Duhalde Peronist, Graciela Camaño, lands a most excellent right hook in the face of Kirchnerite deputy Carlos Kunkel. According to Camaño, she was fed up with Kunkel's non-stop insults and accusations about corruption regarding her and her husband. "I got tired (of him). I've had to put up with him all year", she said.


Enjoy.

Ventana Gold (VEN.to): What does the Can of Corn say?


The Can of Corn says: "TOO LOW, EIKE!"

Nicholas CampbellSoup has just raised his target from $14.75 to $15.50, saying that this bid needs to sweeten or face a counter. Read the Can of Corn PDF right here, hot off the presses.

(You got 11 minutes left in the trading day, dudettes and dudes: 3:49pm local time here.)

PS: By the way, this is part of a Flash update sent to subscribers less than 10 minutes after the opening bell this morning:
"...However, the advice is to hold your shares of VEN.to and do not sell them today, as the market seems to be pricing in a pot-sweetener right now and there's every chance that the final deal will go through at a higher price than today's offer. We'll keep a close eye on proceedings and if our "hold your shares" call changes you'll be notified immediately...."
 Just sayin'

Olivut Resources (OLV.v): Total Brass Neck News Release of the Week Award Winner


This NR just out from Olivut Resources (OLV.v):
"TORONTO, Nov. 17 /CNW/ - Olivut Resources Ltd. ("Olivut" or the "Company" - TSX-V:OLV) reports that there is no material information or change in operations to account for current stock market activity."
Oh how freakin' innocent we are! Oh we had absolutely no idea at all that the guy who owns 20% of our company was about to appear on the high-traffic investor radio show of King World News and promo our stock to the masses! It's totally unrelated and a sheer coincidence that the show's host owns 1% of the company too! And of course it's sheer coincidence that "Lucky" Pierre Lassonde has appeared four times on the King World News show in 2010, pumped OLV.v every single time and seen big upmoves in the share price and volume on every single occasion (as pointed out with this post and this chart this morning).

But those over at OLV just go for how "...there is no material information or change in operations to account for current stock market activity."

GET THE FUCK OUTTA HERE!

The Canadian capital markets deserve every inch of their disgusting, corrupt, scambag reputation.
ALBERTA SECURITIES COMMISSION, WHERE ARE YOU?

Colombia: Juanma's Venezuelan honeymoon

It gives me pleasure to say that, so far at least, my bad vibes about President Juan Manuel Santos before he took up the job have been totally misplaced. Take today's unmissable analysis from Hemispheric Brief as item one, the smartest EngLang piece on Colombia's political positioning I've seen for a long while.

Item two is Semana's report on Santos' first 100 days out last weekend, with poll numbers that show pure honeymoon loveydoviness. Santos gets a 73% approval rating from the people that really matter the most and those same people give him an 83% thumbs-up on the way he's handling relations with Venezuela.

Long may this continue.

Ventana Gold (VEN.to): Eike makes his move

MM, you owe me a beer my friend!


Here's the link, here's the story:


TORONTO, Nov. 17 /CNW/ - EBX today announced its intention to make an all-cash offer to acquire all of the issued and outstanding common shares of Ventana Gold Corp. ("Ventana") (TSX:VEN) that it does not own at a price of C$12.63 in cash per Ventana common share (the "Offer").
63X Master Fund, a company indirectly controlled by Eike F. Batista, beneficially owns approximately 20,806,000 common shares of Ventana (including common shares underlying outstanding special warrants owned by 63X Master Fund), representing approximately 20% of Ventana's outstanding common shares (on a fully diluted basis).
The Offer values the total equity of Ventana at approximately C$1.5 billion on a fully diluted basis.
The Offer represents an attractive premium of 26 per cent to the closing price of Ventana's common shares on the Toronto Stock Exchange ("TSX") on November 16, 2010. It is also a premium of 30 per cent to the volume weighted average trading price of Ventana's common shares on the TSX for the 30-day trading day period ended on the same date. The Offer will be fully funded and provides Ventana's shareholders with immediate liquidity and certainty of value regarding Ventana's growth potential in the face of volatile equity markets.
About the Offer
EBX plans to formally commence its Offer as soon as practicable. The Offer will be open for acceptance for not less than35 days from the date of its commencement.
The Offer will be subject to continues here

Two brokerage notes for y'all: CIBC on Fortuna (FVI.to), Desjardins on Copper

1) Want to know what CIBC thinks of Fortuna Silver (FVI.to) after this week's results and ConfCall? Click here for the note by Brian Quast but don't expect negativity. Apart from his modest price target (which looks likely for review soon), your author agrees with Quast's call here.

2) Desjardins has seen the copper bull very well this past year/18 months and isn't going to start rolling over yet, it seems. Here's how the latest note begins:
"Copper outlook—US$4/lb may be too conservative
"At the risk of sounding like a ‘broken record’, the outlook for the copper market remains extremely strong. We would suggest that the risk is that demand will outstrip supply by an even greater amount than we forecast, driving prices well above our forecast average price for 2011 of US$4/lb."
To read it all, download right here.

Chart of the day is....

...Olivut Resources (OLV.v) 12 month price chart.


For your information, a certain Pierre Lassonde is today's (Weds Nov 17th) guest on the King World News show, according to this schedule

Now, there are no guarantees on this and I don't know what he's going to mention, but wouldn't it be a surprise if 'Lucky Pierre' decided to mention how wonderful (his ahem big ahem shareholding ahem in) OLV.v is once again?  


thanks for the headsup, MP

11/16/10

1-0

Peru: ¡Viva Investment Grade! (part 56,183)

Want to know why Peru is so popular with the world right now? Look no further than two reports in 'La Republica' today, and all is clear.


That datapoint was widely announced all over the biznews wires yesterday and today, but this next one was weirdly missed by most. A longer translation needed:
 
The average monthly income for workers in the Lima & Metropolitan area was S/1.084 (U$388) in the months August to October 2010, a figure 2.3% lower than that registered in the same quarter of 2009, according to the National Institute of Statistics and Information (INEI).

According to the Permanent Employment Survey (EPE), income for men averages S/1256.40 (U$450), some 2.1% lower compared to the same quarter of last year. Also, womens' income came to S/864.50 (U$310) on average, lower by 1.5%. Tis figure represents 68.8% of average male income and shows a S/391.90 difference between the sexes.

Meanwhile, income grew on average by 4.1% for those between 14 and 24 years old, while the population aged 45 years or more saw an 8.4% drop in average income. Income also dropped in the population aged 25 to 44 by 0.6% year-over-year.

Finally, according to ranking by education in Lima&Metro, the the referred quarter average income rose by 8.1% for those employees with at least secondary education.

Peru: The capitalist wet dream where the rich get richer and the poor get KY Jelly.

You don't mind if I ask again, do you?

(From last Saturday morning)

ECU Silver (ECU.to): Has anyone else noticed something really strange about these results?

When your humble scribe saw ECU Silver (ECU.to) returning a loss in its 3q10 report yesterday it was a little strange because, after all, in this previous post that looked at the production numbers we'd ended up by anticipating a net profit for the quarter of $2m or so (guesstimated, of course). The culprit of the big difference between IKN's guess and the ECU report was quickly noted, however.

IKN had estimated sales revenues at $8.7m for gold and silver. We'd come to that number by simple multiplication of gold and silver sales as reported by ECU.to with the average spot prices for those metals in 3q10, according to the London Fixes. This is a method that usually works when anticipating sales revenues, but this time it came with a big big miss.

ECU silver (ECU.to) reported sales of $5.29m for the quarter.

That's a big difference and when seeing that low number it was "WTF?" time at IKN nerve centre, so this morning I found myself checking the ECU.to 3q10 MD&A to try and work out how this low figure came about. The answer seems to be in the sales of pyrite concentrate and what follows is based on guesstimates (because ECU.to disclosure is so pisspoor you need to assume here and there) but at least makes sense

First, this from the MDA

"During the quarter, the Company recorded sales of a portion of its gold pyrite material in process inventory. This resulted in a gain from the reversal of previous inventory cost write-offs in the amount of $1,049,111."

Now, according to ECU.to filings the total pyrite concentrate sales were 3999oz, and production of pyrite conc was 1740oz. This implies that ECU sold 2259 oz Au in the pyrite conc for $1.05m...less than $500 an ounce!

This also adds up in the estimates for all products. Check this simple table in which we make conservative estimates for the prices fetched for the other metals sales. We use doré gold U$1,150/oz, silver $18.50 (according to the London Fix, the quarter average was U$18.92) and then Zn and Pb at $1.00/lb. This leaves the gold-in-pyrite concentrate as the unknown variable (presented in blue)

product sales est prices revs
pyrite conc inventory 2259oz $465? $1,049,111
pyrite conc prod 1740oz $465? $809,100
dore Au 1989oz $1150 $2,287,350
Ag 72264oz $18.50 $1,336,884
Pb 141,215lb $1.00 $141,215
Zn 65,616lb $1.00 $65,616


total $5,689,276





recorded sales $5,293,139

For me, the $5.7m rough total is close enough to the $5.29m ECU reported as sales...what with TCRC etc etc. So under the rough guess table, the produced pyrite conc, if given the same average price of the inventory conc revenues (as implied by the MDA, but not explicit), also fits that estimate of $465/oz Au

Is ECU Silver (ECU.to) really selling its ounces of gold-in-pyrite at U$465/oz or thereabouts? I'm not sure but on reverse engineering on the numbers it seems at this point the only logical answer. I know IKN isn't the flavour of the Month over at ECU.to and I'm unlikely to be able to get an answer from management, but those of you long ECU.to would be wise to write, phone, tweet or whatever the top people there and get an answer on this, because this quarter's sales number was weird compared to the ounces sold numbers.

Yukon Nevada (YNG.to): If this was a strong quarter, I'd hate to see a bad one

Remember this little mining earnings rule of thumb from last week's post on GRS?


If you can't easily find the net earnings number in a mining company's quarterly earnings NR, you can  safely bet said quarter was a crockacrap. 

Well let's check out the NR just published by Yukon Nevada (YNG.to) that runs the screaming headline  

"YUKON-NEVADA GOLD CORP. SHOWS STRONG THIRD QUARTER RESULTS".

We open.....we look.....we check......plenty about ounces produced....talk about a "positive gross margin", whatever that may mean......bits about what they predict as a rosy future........but (yep you guessed it) precisely diddlysquat about the actual financial results, because for those you have to go to the regulatory filings where you suddenly discover that....
"The Company had a net loss of $17.9 million in the third quarter of 2010 compared to $11.8 million in the third quarter of 2009."
 Mon Dieu! Quel surprise! So let's leave it to Elmer Fudd this time:

(thanks olaf)

Silver, the US dollar and SezMeMan

You should visit the interwebs space run by Sez-Me-Man because the dude is smart as a whip when it comes to gold, precious metals, oil and the companies in those spheres. He's also more TA-oriented than around here with this chart swiped today from his site as proof:

(click to enlarge)

So, is silver doing the old DonCoxe triple waterfall here? Is the dollar about to roar back? YOU BE THE JUDGE but get smarter about the markets by making Sez a part of your interwebnetpipes life (or follow his  twitter account as he's pretty active there). Solid, straightshooting guy too.

Peru poll numbers

Pollster IMA has a survey out for the 2011 Peru Presidential election (that's only 145 days away now) and there are changes in the house. In the first reasonably reliable poll to have been released since ex-Pres Alejandro Toledo and APRA's dauphine Merceded Araoz officially threw their hats into the rings, here's the standing in the Lima/Callao conurbation (data here):


The big one is that Toledo has jumped hard, perhaps 7 or 8 points (depending on which previous poll you read) and lies in second place with 24.3%. Araoz has also moved up, from around 3% to today's 7%.

Leading is still ex-Mayor of Lima Luis Castañeda with 27.1% but the big losers here are Keiko Fujimori slipping down to third (in Lima/Callao too, where her biggest powerbase lies) and Ollanta Humala (though he can be expected to score much higher in nationwide surveys, as his power base is the South of Peru).

Meanwhile, Toledo wasn't backwards about coming forwards on this poll result, as seen over at his twitter account where he wrote, "With modestly and responsibility I inform you all that we have moved up into second place (24.3%) in Lima. We keep working....".

For the record, this humble corner of cyberspace has been tipping Toledo for the job for a long time now (this post goes back to June, there were others before that too) but not out of any great love for the guy, either. This scribe simply thinks he's the least worst of the bunch and would make a least worse President than the other people running.

Colombia's FDI: More hard rock mining than O&G....

....and that really surprised me. Take a look yourself at the numbers your humble scribe found while rottling around the Colombia Cenbank page late last night*.


In the last four recorded quarters Mining FDI comes to $2.799Bn, Petroleum FDI has totalled U$2.278Bn, and all other FDI lumped together (which according to the Colombia Central Bank list includes agriculture, fishing, manufacturing, electricity, gas, water, construction, commerce, restaurants, hotels, transport, warehousing, communications and finance....whew, pause for breath) totalled $1.164Bn.

Follow the money.

*yes, wife says i need a hobby, too. 

Chart of the day is....

...the gold/silver ratio.

11/15/10

Currency Wars? Oh no no no, figment of your imagination

This from Merconews today

Dilma prepared to apply drastic measures to contain Brazil’s currency surge

Brazilian president-elect Dilma Rousseff admitted her administration would take all the necessary measures possible to prevent the Brazilian Real from increasing its value vis-à-vis the US dollar, according to reports from the Sao Paulo press that interviewed the successor of President Lula da Silva in the recent G-20 summit in Korea. Continues here

Congratulations Colombia! Up two spots to number six in the world!

The World Terrorism Risk Index, that is.

With a deserved hat tip to Colombia Reports, your author is directed to world risk specialist Maplecroft and its updated World Terrorism Risk Index report, out today. Here's the graphic from the report (green good, red bad etc etc)...

...and here's the top ten.
1) Somalia
2) Pakistan
3) Iraq
4) Afghanistan
5) Palestine Occupied Territories
6) Colombia
7) Thailand
8) Philippines
9) Yemen
10) Russia
Yes indeedy, since its last review Maplecroft has upped Colombia from number 8 to number 6 in the  whole wide world for terrorism, calling the risk "extreme". And if you notice the top six, it's kind of a coincidence that they all have close military ties with The USA isn't it? Or perhaps it isn't....

yeah, we're still bullish round here

Here's how yesterday's IKN80 kicked off, a publication that makes no apology for its continued bullish stance. The way gold is acting this morning it seems the market agrees.

It didn’t take long for the bullish sentiment underlined in last week’s edition summed up by the phrase “Buy. Hold. Win.” to be tested, did it? Tuesday’s CME margin requirement news (1) stuck a pin in the frothiness of the silver bullion market, an event followed by “China Fears”, this time something to do with a rate hike to rein in inflation that will halt its growth or something like that. Ok, fair enough, so let’s see what was written in IKN79’s intro last week:

“What we need to look out for are not rough, stormy moments on the voyage but data that completely changes the tide and direction of the key macroeconomies, commodities and the markets. With QE2 now official and the US government committed to adding liquidity to spur activity, it will take TheReallyBigEvent to alter things for the time being.”

As far as your author is concerned, neither of the events that saw our stocks on rollercoaster rides count as changes in the tide. First the CME margin requirement change, which may have been designed to cause a shudder due to the timing (midday on a Tuesday and not post-bell), but is hardly something that’s out the blue, either. Margin prices tend to rise and fall with the prices of the contracts they cover and as such, raising the margin requirement 30% for the first time in 2010 on a contract for a metal that’s risen 56% since the first trading day of the year is quite understandable. Yes, it shook the hot money out of the trades. That’s what it was supposed to do, wasn’t it? Here’s how your author reacted to the news that evening (1):

“So when I saw the selloff this afternoon I tried my hardest to worry about it and failed, because once the ST flush has flushed through, the fundies are still intact and good miners are still hugely profitable. I'd go as far as to say that what we saw this PM was a healthy thing, because Ag really was getting a bit out of hand. DYODD.”

As for the ChinaFear, file it under “If I had a dollar for every time...”. This is a country that might want to look after its inflation but it’s also a country that is the source of nerves every time it moots doing something to cool down GDP (e.g. the periodic raising of bank minimum holding requirements which have never halted growth but always get the bears out their caves). It’s a country with a planned economy that sees government intervention on a regular scale, but it also has a plan for 8%, 10% GDP growth every single year that shows no sign of abating. I really don’t see how it will start losing its current 40% share of the world copper market because of policy tinkering.

Bull markets are never straight lines and the longer a streak continues (i.e. silver recently) the more abrupt the correction, but what happened last week hasn’t changed the macro environment and your author’s bullish stance remains intact. I like being bullish about the markets (far more so than predicting doom) but I’m also a natural-born contrarian, so on rare occasions I get to be both at the same time. What we saw last week was a simple rough moment, or in the words of Gary BiiWii this week in Notes From The Rabbit Hole (NFTRH) Issue 110,Precious Metals Bottom Line: What, you thought it was going to be easy?”

Peru import/export update

1) Peru's climbing exports have allowed it to import greater quantities wthout disrupting the balance of payments or putting pressure on its currency.

2) Mining exports have been the big driver of all exports.

3) Quantities mined of all the top metals have either been static or dropping, with very little evidence of more production added to its industry.

 (click to enlarge any chart)

In other words, Peru's expansion isn't some government-led miracle, it's a country that hasn't done a thing to expand its productive base and has ridden its luck on the world commodity price rise.

Bottom line: Peru is an economic luckhouse, not an economic miracle.

Chart of the day is....

..Peru's IGBVL 'general' index, five year timescale.

Remember that 14k to 16k dance this one was doing? Well, when it broke out it did it in style.

11/14/10

The IKN Weekly, out now

IKN80 has just been sent to subscribers. Everything you ever wanted to know about junior silver mining hedge book accountancy obligations but were too afraid to ask.

The IKN Weekly: Sure beats taking a sleeping pill!

In the spirit of healthy debate....

...your author would like to leave this response as his permanent reply to anyone who disgrees with any of the opinions (and there are many) found at this humble corner of cyberspace. Future critics will also be automatically referred to this page.


Let it not be said that IKN is closed off or lacks the spirit of truthseeking discourse. Thank you for your attention.

(h/t MR)

Understanding Argentina (Spanish language)

This is a little unfair to post on an English language blog about LatAm, it's also impossible to translate correctly (the words do translate, the meaning doesn't). But I cannot resist. Thank you JS.

I adore Argentina.