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4/16/11

An interesting Mexico

We like Mexico blog 'Aguachile' and we really like the post put up there yesterday that you too can check out vis this link. Aguachile points the way to a new report on just how profitable the North American Free Trade Agreement (NAFTA) has been.....for The USA. Here's an excerpt:

* "Mexican farmers on average lost more than $1 billion per year during the nine-year period of 1997–2005, with more than half the losses suffered by the country’s embattled corn farmers"
* "Without exception, the United States exported {agricultural] products at prices below what it cost to produce them, one of the definitions of dumping under World Trade Organization rules."
* "The losses from U.S. dumping surpass the total value of Mexico’s annual tomato exports to the United States, widely touted as Mexico’s biggest NAFTA success story in agriculture."

Go read more here.

Oh Goody! a new threat of legal action for IKN

Yesterday Friday, your humble scribe had an interesting mail exchange with Juan Ocampo, the guy from this blog post that is or was (i dunno which offhand) part of Canaccord and has been accused of defamation by John Icke of Cue Resources (CUE.v). Here follows the conversation and then afterwards we reprint the post in question underneath, just to make sure it's on hand and easily readable. First up though is the mail exchange and here it is, with the only redaction being the removal of the telephone number of Ocampo's lawyer:

From Juan Ocampo:

Dear Otto,

Could I please ask you to remove the following post.There is parts of it that are not true and a legal proceeding has begun regarding the dissemination of this stockwatch document. Feel free to contact my lawyer David Varty (604-XXX-XXXX) if you have any questions.


Regards,
Juan Ocampo

Reply by your author:
I think you mean "there are" parts of it.

So I'm assuming the plural. Would you mind telling me what parts are untrue? And why you think you can be the first ever person to edit my blog (and many have tried, believe me)?
o

Reply by Juan Ocampo:
I cannot get into details but I am asking you as a favor to please do so.  This lawsuit has nothing to do with Canaccord and as you already know it is not possible to short penny stocks for the average retail person. In the lawsuit states the message was written at 9PM who will be working at that time? Makes no sense to me.
 Reply by your author
If it's necessary to start legal action against me too, I suggest you get on and do it. Nobody has editorial control over my blog.
o

Reply by Juan Ocampo:
No need for that. I will contact google directly. Read:


Hate Speech: We want you to use Blogger to express your opinions, even very controversial ones. But, don't cross the line by publishing hate speech. By this, we mean content that promotes hate or violence towards groups based on race, ethnicity, religion, disability, gender, age, veteran status or sexual orientation/gender identity. For example, don't write a blog saying that members of Race X are criminals or advocating violence against followers of Religion Y.
Reply by your author:
Ok. Have fun. It's pretty clear that you haven't been down this road before. I have, and your pathetic empty threats have zero effect.

By the way, I'll be reprinting this conversation on the blog tomorrow.
o
 Reply by Juan Ocampo:
Do as you like.

And reprint we did. So just to remind y'all, here's the post that got Ocampo's knickers in a twist. Read on, kind lector:

 xxxxxxxxxxxxxxxxxxxxxxxxxxxx
John Icke of Cue Resources (CUE.v), Juan Ocampo of Canaccord and dumbasses of all shapes and flavours

It was surprising to note that while your author was out and about doing about'n'out type things, the world didn't stop and news from LatAm Junior Mining World continued (no respect these days...humph). Among the newsflow was this report from Mike Caswell at Stockwatch and here's how it starts:
John Icke, the chairman of Cue Resources Inc., has filed a defamation suit against a Canaccord Genuity Corp. employee over posts on the Stockhouse forums. Mr. Icke says that Juan Ocampo, who works as a stock market quotes administrator at Canaccord's downtown Vancouver office, was responsible for a message that accused him of extortion. Mr. Icke is seeking general damages for the post, which he claims was false and defamatory.
Mr. Icke filed a brief notice of civil claim against Mr. Ocampo on March 16, 2011, in the Supreme Court of British Columbia. According to the suit, Mr. Ocampo was responsible for an Aug. 27, 2010, post on Stockhouse written under the user name "scuba2223." It was titled "Paraguay going after John Icke." The body of it read: "Paraguayan Authorities are looking for John Icke regarding Cue Resources. The news said he is involved in stealing documents and extorsion [sic]!"
As Mr. Icke sees it, the post meant that law enforcement officials were looking for him in Paraguay, and the media had reported that he was involved in theft and extortion. The post damaged his reputation by "implying that he is involved in criminal wrong-doing and conduct unbecoming management of a public company, and [is] otherwise untrustworthy."
In addition to the defamation allegations, Mr. Icke claims that Mr. Ocampo was looking to profit from the message. "At or about the time he posted statements ... Mr. Ocampo traded in the stock of CUE, with the intent of profiting from a decrease in the price of the stock," the suit reads. Mr. Icke does not provide any further details. (Trading records show that Cue closed at six cents on the day of the post, slightly down from 6.5 cents the day before.) CONTINUES HERE

OK, so we can start pointing fingers at dumbasses and the first finger points to Juan Ocampo, who apparently has nothing better to do with his time than trawl the next to useless world of bullboards and post silly messages thereon. Second finger points to the Human Resources department at The Can of Corn who can't spot a waste of space when they see one and hire any old fool (mind you, we've noticed that previously so no surprise there).
But a third finger also points tentatively and nervously in the direction of John Icke  (after all, he might get busy with his legal beagles and slap a suit on IKN) and in a very quiet whisper of a voice nervously suggests he's guilty of FREAKIN DUMBASSERY AS WELL. Firstly, has this dude got nothing better to do than worry what they say about him on a freakin' bullboard? Y'know, like run a junior mining company and add shareholder value via exploration and suchlike?
Hmmmm...by the looks of things, he hasn't been too successful at that so far with or without bullboard critics of CUE's Paraguayan affairs. Then there's the practical side of it all, because if every company CEO or director took to heart every little thing written on bullboards about them and  filled up their time with legal actions to heal their wounded egos, I doubt a single drill rig would get to turn anywhere. So take a bit of friendly advice John; you now know who your slagger-offer is and he's obviously a jerk. You got your name, he's got his shame, Can of Corn has its egg on face. So just drop it, yeah? I mean, if you insist that Ocampo was trading round CUE.v in this period and trying to influence the share price.....
...you're just going to turn your mini-crusade into a laughing stock and your strategic judgement about what matters and what matters not is far more important to CUE.v than your personal bleeding heart. So don't graduate from potential dumbass to full-scale dumbass and pursue this any further dude, cos if you do you're slapping Permanent Avoid on any company you're ever involved in.

4/15/11

Quote of the day...

...goes to Juan Manuel Santos, the remarkably likeable President of Colombia.

"When I am an ex-President I will not annoy sitting Presidents."

THWAK, Álvaro. Link and video of the precious moment right here.

The Friday OT: Carlos Kleiber conducts Beethoven's 4th Symphony, 1st movement

For one reason or another I've listened to this track more than any other this week and it just  keeps on blowing my socks off. The audio-only version Chez Otto has been Herbert von Karajan's but this found on youtube today is just as magnificent by Carlos Kleiber, a conductor that really lived his music (as you'll see). Very acceptable sound quality, too.


Adore Beethoven.

The unbearable lightness of being a Great Panther Silver pumper (GPR.to) (GPL)

The amount of brainless writings in the stock market is always a source of amusement for your author and, as is the way of these things, some subjects will always attract more than their fair share of dumbasses that swallow company lines whole, vomit them back at their sheep and have no idea what hit them afterwards when the whole trade goes haywire on them. Take for example Great Panther Silver (GPR.to) (GPL), the sub-500tpd dog in Mexico that's currently riding its luck with the silver spot price. That it's run up a squillion percent or so isn't enough for its fans, because they're still predicting massive share price growth for the stock (note: anal ysts bang on tables only when they're fully bought in and desperate for the suckers to push their price up). However, the reasons they're now using are wearing thin. Take for example Christopher Barker at Motley Fool (emphasis on fool) who wrote this purple prose yesterday:

"But negative cash costs are certainly not required for a silver mining stock to yield phenomenal investment gains. A well-timed production growth spurt, combined with exciting potential for continued exploration success, is capable of propelling a silver stock with even greater force. In the case of my favorite silver miner -- Great Panther Silver (AMEX: GPL  ) -- issued guidance for 2011 production costs between $6.50 and $8 per ounce is not likely to interrupt a growth trajectory that has seen the shares quadruple in value over the past year. Moreover, with major producer Pan American Silver (Nasdaq: PAAS  ) forecasting 2011 cash costs between $7 and $7.50 per ounce, Great Panther's cost structure remains an impressive achievement given that its production scale is about 10% that of Pan American."

"So what's wrong with that, Otto?" I hear you ask. Well the problem is that Christopher Barker has absolutely no idea on what he's talking about when it comes to "cash costs" and is simply taking the bullshit GPR.to figures and stats to back up his case. The reality of GPR is that its costs of production (a MUCH better way of measuring efficiency than a non-GAAP metric such as cash cost that is prone to really nasty attacks of scammy company bullshittery) are way higher per ounce than PAAS, or serious mining companies or the kind of dumbass propaganda that GPR puts out to pull the wool over the eyes of the marketplace.

Some numbers.
In 4q10, GPR said that its "cash cost" was U$8.41 per ounce of silver sold. 

This means its "cash cost" total for the quarter added up to U$3.111m (and if you don't believe me, check the company filings on SEDAR, they're all there).

However, its "Cost of Sales" for the quarter was $6.36m!

Yes, you read that right. When GPR touts its "cash cost" figure, what it doesn't explain is that it only covers less than half of its real costs. And even then, GPR isn't telling the whole story as its filings for "costs of sales " don't include depreciation or amortization...which is like saying "Yeah well, we mined the silver out the rock and so the in-situ asset isn't there any more...but that's not going to change our asset position" It's asinine! It's bullshit! And people like Christopher Barker who hasn't got a single clue about balance sheet /P+L reading and simply prefers to blather out the company spin just perpetuates this stupidity.

Put simply: How on earth can 1) A company claim $3.111m in "cash costs" on $13.809m in gross revenues but then only deliver a $782,000 net profit on a quarter? Because that's exactly what GPR did in 4q10, its last reported quarter. Don't ask me that question, ask Christopher Barker of The Motley Dumbass and when he's failed to explain why, tell him to....


Comparing the GPR cash cost metric to the PAAS cash cost metric is stupidity squared, because one of them is a fair representation of what goes on in the mining world and the other one is just laughable. PAAS may have its faults, but it's not trying to bullshit the market via its quarterlies.

IGBVL

It's a little difficult to worry about the Northern markets when there's this yummy looking sandpit in which your author can go play today:


The Peru IGBVL index dumped seriously yesterday but then recovered and finished up on the day, from bottom to top a 6.8% turnaround....nothing shabby for an index. We've also had all the right soothing noises out of the Economy Ministry and a Central Bank that sold dollars for the first time in two years (U$91m), giving out a strong signal to the forex jocks that the Peruvian Nuevo Sol (PEN) wasn't going to go all Chilean Peso on us in the near future.

The rebound set up nicely for today, now just waiting nine minutes for the open. Have fun up your end of The Americas, dudes.

UPDATE: The IGBVL is 2.58% up in the first hour....a good start. Link here

UPDATE 2: Midday strikes and the IGBVL is up 4.7%. I hope you're having as much fun as we are down this way. Pip pip!



Chart of the day is....

...Dorato Resources (DRI.v), 12 month chart.


Because there's a silver lining to everything, even the recent Peru turmoil.

4/14/11

Greystar (GSL.to): well, it's not as dramatic as a big AGM showdown.....

...but it still gets the job done. Best line in the NR that follows (IKN highlights the funny bit):

"The board of Greystar would like to thank Mr. Kesler for his efforts as President and Chief Executive Officer in trying to advance the Angostura project."

And remember where you heard it first, dudette and dudes. Anyway, here we go with the "Kesler & Co Get Canned" news release.


April 14, 2011
Greystar Resources Announces Change of Officers and Directors
VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 14, 2011) - Greystar Resources Ltd. ("the Company") (TSX:GSL)(AIM:GSL) announces it has agreed with Amber Capital LP, a New York-based investment firm, which controls approximately 18% of the Company's outstanding shares, to change the members of its board of directors and the members of its executive management team. Other shareholders, holding approximately 20% of the Company's outstanding shares, have advised the Company that they support Amber Capital LP's position.

The Company has appointed Juan Esteban Orduz and Rafael Nieto Loaiza (biographies below) to the Company's board of directors. The Company also appointed Mr. Nieto Loaiza as President of the Company and David Rovig as interim Chief Executive Officer to succeed Steve Kesler in those roles.

It has also been agreed that at the Company's upcoming annual general meeting , the incumbent directors, other than Messrs. Nieto Loaiza and Orduz, will not stand for re-election and the Company will nominate as directors certain additional individuals proposed by Amber Capital LP. Further details on the annual general meeting will be announced to the market in due course.

"This is an important step for the Company. The Company will focus on reformulating the Angostura project in continued compliance with the laws of Colombia and in a manner that is environmentally sustainable and socially responsible to the people and the state of Santander, whose concerns we understand and will address. That is our number one priority," commented incoming President, Mr. Nieto Loaiza. "The path for Greystar is very clear. The Angostura project will succeed only if it truly benefits the people of Colombia - both the current and future generations - by offering them a better life while maintaining their land in a safe and sustainable manner," commented incoming board member, Mr. Orduz.

The board of Greystar would like to thank Mr. Kesler for his efforts as President and Chief Executive Officer in trying to advance the Angostura project.

Rafael Nieto Loaiza (age 44)

Mr. Nieto Loaiza is an attorney, and a specialist in Constitutional and International Law. He was the Vice Minister of Justice of Colombia. Mr. Nieto Loaiza is a partner of Nieto & Cia, a firm with more than 30 years of experience in legal assistance and business, and president of NSG, a consulting firm specializing in environment management and socio-political analysis. He is a Senior Director for McLarty Associates and acts as its representative in Colombia. Mr. Nieto Loaiza provides consultancy to governmental institutions and international cooperation agencies, such as the International Finance Corporation (IFC) and the World Bank, the Inter- American Development Bank (IDB) and the United Nations Development Program (UNDP). Mr. Nieto Loaiza has been an adviser of the Interior, Security and Defense Ministries of Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama, Paraguay and Uruguay. He has been a consultant for the Swedish Agency for International Development Cooperation (SIDA), the European Union Commission and the Inter-American Court of Human Rights. He was program coordinator for the Inter-American Institute of Human Rights, and the electoral observer of the Inter-American Center for Electoral Promotion and Assistance. Mr. Nieto Loaiza has been a consultant to several private and public institutions, including the National Constitutional Assembly of Colombia and the International Committee of the Red Cross (ICRC). He has been a university professor in Colombia and Costa Rica and a visiting lecturer in various countries in Europe and America. Mr. Nieto Loaiza is the author and editor of several books and articles on security, defense, armed conflicts and peace processes, human rights and international humanitarian law.

Juan Esteban Orduz (Age 45)

Juan Esteban Orduz has extensive experience with sustainable mining issues and corporate reorganizations since 1997, when he became Legal Vice-President of the Cemex Group in Colombia after its entrance into the Colombian market (Cementos Diamante S.A., Cementos Samper S.A., Central de Mezclas). Subsequently, during President Andres Pastrana's administration, Mr. Orduz was Minister Plenipotentiary - Deputy Chief of Mission of the Colombian Embassy in Washington D.C., where he was instrumental in the creation, financing and implementation of Plan Colombia, an ambitious cooperation program between Colombia and the United States providing millions of dollars in investment for many of the most relevant social programs in Colombia, as well as the fight against illegal drug cultivation. After being invited by Harvard University to be a fellow at its Weatherhead Center for International Affairs, Mr. Orduz took his current position as CEO of Colombian Coffee Federation, Inc. in New York. Mr. Orduz has been a strong and consistent advocate of community and social, economic and environmental sustainability issues. He has also served in several corporate boards or represented companies such as Cementos Diamante S.A. and Cementos Samper S.A., associations such as the National Coffee Association and the Coffee Quality Institute in the United States and charitable organizations, including as founder and chairman of the American Friends of Fundacion Cardio-Infantil, which benefits thousands of children with cardiovascular diseases in Colombia.

Additional information required to be disclosed under paragraph (g) of Schedule 2 to the AIM Rules will be disclosed in a further announcement shortly.

Peru Stock exchange down another 5.9% today

Here's the chart at yesterday's close....

...and since this morning's opening it's knocked another 1100 points off the total to stand at 17,521, 5.87% down in the first hour and a half. Follow all the fun and frolics at the Bolsa de Valores de Lima website, linked right here.

Gotta love market panics.

UPDATE: Looks like today is rebound day. A little while after posting the above, the Peru pension funds (known as 'AFPs' and the guys that really rule the financial roost there) came in as buyers and have swept up all the cheap shares going. The market is now 2.47% down and recovering fast. 

UPDATE 2: Buying all the time, now 2.17% down and Friday's on my mind already.

A Flash update...

...has just been sent to subscribers. The buying opportunities are coming thick and fast these days. Gotta grab 'em while they're out there.

South American Silver (SAC.to), Bolivia, IKN and owls

1) Bolivia and IKN (excerpt from yesterday morning's post):

"Fortunately, those people your author contacted today with exposure to Bolivia via junior mining companies (this humble scribe has none) seem to think that this won't affect them at all....because Evo said so. Meanwhile your author will feel much more comfortable today as soon as the monkey stuck in his butt has flown out of said part of anatomy."

2) South American Silver (SAC.to), the stock that "has worked out how to operate in Bolivia", according to its blind/deaf/dumb(ass) pumpers led up by the Scientologist Pied Piper himself, Michael Baybak:


3) An owl:


Moral of the story (oh, cos IKN got so much morals yaknowz): Don't listen to anyone talking about Bolivia that can't even find Bolivia on a map, let alone speak the local language. And while you're at it don't trust a company run by ex-Nadagold hypemerchants, either.

UPDATE: Your humble scribe receives correspondence that suggests people would take the IKN words of advice more readily to heart if they were phrased in a more diplomatic manner. So fuck you if you're losing cash today due to dumbassery. That work foryaz?

UPDATE 2: Double Owly!

Great Panther Silver (GPR.to) (GPL): I'm supposed to be impressed, right?

Today we had the 1q11 production numbers out of Great Panther Silver (GPR.to) (GPL) and if we add them to the numbers of previous quarters, the chart gets to look like this:


Over the last two years, production has moved up a bit...a little little bit... but hardly numbers that set the world on fire despite what this stocks ever-growing legion of pumpers (both paid for and otherwise) would have you believe. However, we got great news! Luckily things are about to change bigtime at GPR, according to the management at least. Here's the guidance for 2011 and 2012, as per the last MD&A:

2011 OUTLOOK
Great Panther’s three-year strategy to accelerate production to 3.8 million Ag eq oz by 2012 is now commencing its second year. New equipment has been delivered to the mines, new production areas are being added, plant performance continues to excel, plant capacity is being increased, resources have been increased and reserves defined, and exploration drill programs have made significant new discoveries of high grade mineralization.
The combined production target for 2011 has been set at 2.87 million Ag eq oz, consisting of 1.94 million oz silver, 11,200 oz gold, 1,170 tonnes lead and 1,430 tonnes zinc. Silver equivalents for 2011 have been established using prices of US$1,200/oz Au, US$20/oz Ag, US$0.90/lb Pb and Zn.

Good stuff eh? We're aiming for 1.94m oz Ag and 2.87m oz AgEq this year, which means the....errr....1q11 numbers of 411k oz Ag and 607k AgEq fall woefully short. But never mind because it's not as if GPR management has ever tried to bullshit the market about guidance in previous years, is it? This from the 2009 YE MD&A that set out guidance for 2010:
Great Panther has initiated its new strategy to accelerate production and increase resources at both Guanajuato and Topia. The new plan forecasts increases to 2.6 million Ag eq oz in 2010 and to 3.8 million Ag eq oz by 2012.

And in the end, GPR produced.....errr....2,255,803 oz Ag Eq in 2010...which only missed by 344,000 oz....hey, what's nearly a thousand ounces a day of underproduction between friends, anyhow?

And finally, I know nobody who pumps this way overpriced dog cares that much, but let's just point out one of the math trickeries GPR uses to set targets. This year, 2011, GPR aims for 2.87m oz AgEq and is using a gold/silver ratio (GSR) of 60:1 for its calculations. It doesn't care that the GSR is currently under 40:1. Why does this matter? It matters because for every 1000 of gold GPR produces, it's going to claim it's produced 60,000 oz of silver equivalent and will showboat the number accordingly every month. In reality, the number it should use is 40,000 oz (or even less). That kind of 'creative accountancy' really adds up over time, because as GPR is guiding to produce 11,200 oz gold in 2011, it's going to claim 672,000 oz AgEq for those gold ounces when in true money terms we're talking more like 448,000 oz. Do the math.

The market is currently telling us Great Panther Silver is worth North of half a billion dollars, according to its current market cap at least. Meanwhile, top executive insiders are selling out. I think the insiders are way smarter than the market and the ridiculous hype swirling round this overpriced, low tonnage, high cash cost dog, massive silver bull run or not. DYODD.

Chart of the day is....

....the U308 price chart, two year period.



According to UXC, the 'spot' price downed another 50c this week, currently standing at $58.50/lb. Please explain to science that math is important too.

4/13/11

The Peru political risk part of today's Flash update

At around 2pm EST today a Flash update went out to subscribers that named a Peru exposed stock as offering a good short-term trade possibility. Along with the stock-specific section and reasons for the call, we also checked out the latest in the fast breaking Presidential election climate in  Peru. Here's what was written on that subject:

Peru political risk
Meanwhile, in more general terms the main risk factor to a trade in [named stock] is considered here. Things are still very early stage in the type of post-election horse trading that goes on between surviving and losing parties/candidates. It's too soon to make many firm statements about the second round runoff except the following:

1) It's too close to call between Keiko Fujimori and Ollanta Humala at this stage.

2) Importantly, if Humala wants to win the election it's becoming very clear that he will have to move to the centre of the political spectrum (be that to a greater or lesser extent) in order to win enough support. So far in these early days there's also been a clear separation of issues by the Humala camp, with the Humala party making strong statements to the effect that the Peruvian economic model would not be touched or tampered with under a Humala presidency. Meanwhile, political issues that are fully or mainly separate from the economy have tended towards the same more radical, militant messages that found favour with over 30% of Peru's voting public last weekend. It really is too soon to say anything definite, but this is a positive signal for those of us that are concerned with Peru as an investment destination (nearly all of you) rather than as a place to live.

3) Humala has been making more noise these first few days and the Keiko Fujimori camp has been biding its time. This means that Humala is capturing more headlines right now but that won't continue. The Keiko camp is clearly biding its time (remember this is a near 8 week campaign before the runoff vote). The one-way news traffic from the Humala side of the argument that's been spooking the market recently is temporary in nature.

Overall, the political risk of this round two runoff and the eventual President it will give Peru is now way overstated and Peru exposed issues are due a rebound. Your author suggests [named stock] as a good way of playing the rebound when it comes because it will be able to supply its own batch of good news to the market soon as well. However, stocks such as Candente (DNT.to) Sulliden (SUE.to) and Rio Alto (RIO.v) have also been hit and offer decent alternatives.

Disclosure: I have a long position in Rio Alto Mining (RIO.v). No position in Candente Copper (DNT.to) or Sulliden (SUE.to)

Peter Kennedy of Stockhouse: Corrupt or just plain stupid?


Greystar Resources (GSL.to) has had a lot of ink spilled about its predicaments recently, what with the denial of permits for its Angostura project in Colombia and the share price movements that have accompanied it. But no note has been as daft as the one written on GSL.to by Peter Kennedy of Stockhouse and published on April 11th in its regular "Short Report" section.

Seriously, this guy is either on the payroll of large money or he's just downright stupid. In the note we get all sorts of stuff about how badly horrid GSL.to's situation is and we even get pearls thrown such as a comparison of GSL to Crystallex (KRY) (even though the two operate in separate countries it's apparently valid....like telling people to avoid Peru mining projects because they're next to Ecuador, I suppose) and how...shock and horror!...GSL hasn't made anything in revenues recently...just like the other 1500+ mining companies in Canada that are calleed "explorers" I'd guess.

But the thing that makes the piece highly dubious, nay suspicious, is what Peter Kennedy leaves out. What he fails to mention is 1) the selling is all done (I mean, doesn't it strike you as odd that this Stockhouse hatchet job only appears with the stock is $3 a share? Where were you when GSL was $5 and getting pumped by Canaccord late last year, Peter?) and the stock is going up because of 2) the massive recent insider buying by Amber Capital, now up to what must be nearly 20% of shares out by wholesale buying of large chunks of GSL. And as IKN pointed out in late March there's a very reliable rumour out there that come the GSL AGM in May, shareholders will rebel and throw the whole board of directors out of GSL, a rumour that's been backed up by some crystal clear market signals since then.

Why try and batter the price down when it obvious that a large insto wants in to all the stock it can get? Why write baloney now, Petey? Why are you suddenly interested in an in-play TSX mainlisted company when all you normally write about is OTC scamjobs? Cui bono? Put simply, this Kennedy character is either being deliberately ignorant about a key factor in the GSL trading mix, he's stupid about markets and how they work or he's written what he's written to scare a few shares out of naive hands and into those of the large instos looking to change the management team at GSL at the cheapest cost possible. Which alternative is the real one? You be the judge.

Bolivian holiday traditions

aaah, the good old days....

One thing we know about Evo Morales is that he sure likes May 1st to make Presidential decrees:
  • In 2006 he chose May 1st to nationalize the oil and gas industry in Bolivia
  • In 2008 he nationalized a telephone company then run by Euro Telecom Intenational
  • In 2010 he took over four electricity companies, including that of GDF Suez (which pissed off the French press for some time).

Though let's point out before going on that none of these were straight expropriations and Bolivia always reaches a negotiated agreement on the buy out price for the companies. So anyway, what's in store for May Day 2011? Well, let's check on what he said yesterday according to AP:
"AP: President Evo Morales announced the nationalization of some mines that previously belonged to the State. Without giving further details of the companies that may be affected, he said that he would emit an Executive Decree on May 1st "....to nationalize some mining companies that previously were of the State." while assuring that those mines that have always been in private hands would not be touched. "We are going to respect private property", he said."

Which mines come out of this reverse lottery in less than a month is still unknown, but all fingers are currently pointing to Pan American Silver's (PAA.to) (PAAS) San Vicente mine, Coeur D'Alene's (CDE) San Bartolomé mine and Glencore's Bolivian subsidiary company 'Sinchi Wayra' that runs five mines in the country including JVs or Mining Operations Contracts with Bolivia's Comibol State mining company at three of them.

Fortunately, those people your author contacted today with exposure to Bolivia via junior mining companies (this humble scribe has none) seem to think that this won't affect them at all....because Evo said so. Meanwhile your author will feel much more comfortable today as soon as the monkey stuck in his butt has flown out of said part of anatomy.

Chart of the day is....

...Uranium Participation Corp. (U.to), three month price chart (as a proxy to the metal):

4/12/11

IKN does the job of Bloomberg's John Quigley for him

"The Peruvian Nuevo Sol (PEN) crashed and was sent into the depth of Hades itself as it plummeted an amazing 0.3% to S/2.8115 on Tuesday as the realization that yet another South American state was about to fall into the baby-eating clutches of Hugo Chávez. A trader that did not want to be identified told Bloomberg that the rumors of Chávez sharing his baby meat meals with Peru Presidential run-off candidate Ollanta Humala were all true and that investors should be running for the hills immediately, making sure they take all their young children with them....just in case."

UPDATE: Paranoia and ooga booga scariness isn't confined to Bloomie. On this link Life In Peru's author Ward plays a joke on his facebook friends about Humala and, sure enough, they fall for it. And by the way, I agree with the points 1) and 2) he puts below it all (when being more serious).

Just to make sure you know what a Level 7 nuclear alert means

Take a good look at what's on offer at this page. I've never seen a set of photos like this before.

So much for the breakout in USA.v....

Here's what we wrote on Friday and here's how the chart's done since then:


Y'know, the best thing about realizing TA is just a whole book of bunk is that when it suits you can use it and when it doesn't you can laugh at it. Hey, I mean, you just have to sell sell SELL! USA.v, what with silver at a piffling U$40/oz. How on earth can they make any share price progress while producing 2.4m oz of silver at a $25/oz margin, eh?

El Salvador 1, Canada 0

The always great Tim's El Salvador Blog brings us news of an environmental prize won by one of its citizens for standing up to unwanted mining development. Here come a couple of excerpts, click through for lots more including an English language video that shows Francisco Pineda in action.

Francisco Pineda, a leader in the anti-mining movement in Cabañas, was named yesterday one of the 2011 recipients of the Goldman Environmental Prize. The Goldman Prize annually honors grassroots environmental heroes from six continents. The Prize "recognizes individuals for sustained and significant efforts to protect and enhance the natural environment, often at great personal risk." Each winner receives a cash award of $150,000

.....


Since 2004, Pineda's environmental organizing has included opposition to the gold mining planned by Pacific Rim. Pineda and his colleagues have been educating the people of Cabañas by going door-to-door and organizing community meetings. Since 2004, the movement has grown to include 26 communities and more than 450 members. Pineda helped establish the National Anti-Mining Board and with his coalition organized a series of local and national demonstrations to bring more attention to the issue.

Meanwhile, this section of the Goldman Prize citation gives you guys up there an idea of what happens down this way when Canadian mining companies don't get their own way and aren't allowed to trample over a supine local population:

"....supporters of the Cabañas mine suspected to have ties to Pacific Rim retaliated with threats and deadly attacks. In 2009, three of Pineda’s colleagues were assassinated. One close colleague was killed while under police protection. A month later, a group of assassins set out to kill another member of the environmental committee, but when they did not find him in his house they murdered his pregnant wife instead. Another anti-mining activist was kidnapped and his tortured body was found in a well. Today, Pineda lives with 24-hour police protection.  He has vowed to continue his struggle no matter the consequences."

Mining should be encouraged where people accept it. It doesn't have the God-given right to move in on any given region and if people don't want it then walk away, Canada. Don't murder them.

Chart of the day is....

...Military spending in South America, according to this new report out of SIPRI this week:

You'll note two figures for 2010; the first is in constant prices and exchange rates over the ten years and the second (the different colour) is in non-adjusted 2010 dollars. Also, note the following from another section of the report (IKN highlights the fun bits):

Americas

Estimated total military expenditure in the Americas in 2010 was $791 billion ($721 billion in North America, $6.5 billion in Central America and the Caribbean, and $63.3 billion in South America).

Spending increased by 3.0 per cent in real terms over 2009 (2.8 per cent in North America, 1.9 per cent in Central America and the Caribbean, and 5.8 per cent in South America), and by 76 per cent compared to 2000 (80 per cent in North America, 28 per cent in Central America and the Caribbean, and 42 per cent in South America)

In North America, the USA spent $698 billion (an increase of 2.8 per cent) and Canada $22.8 billion (an increase of 3.3 per cent).

Military spending increased significantly in 7 of the 10 South American countries for which data is available. The largest percentage increases were in Paraguay (16.4 per cent) and Peru (15.9 per cent).

The largest percentage decrease was again in Venezuela, where spending fell by 27 per cent. Bolivia and Uruguay were the other countries cutting spending.

4/11/11

Peruvian gold and mercury poisoning

An excellent article is yours to be read just by clicking this link and going over. Penned by Barbara Fraser, it's all about how high levels of mercury in the atmosphere in and around Peruvian gold shops selling wares from informal/illegal mining may be a very serious health hazard for the wider population. Here's how the note starts, make sure you click through for the rest and thanks due to the eversuperduper Jacqueline Fowks for the headsup. Great journalism.


Townspeople, gold shopkeepers highly exposed to mercury in Peru

Experts have long known Peru’s miners are exposed to extremely high levels of mercury. But now new research shows that the toxic threat has spread to towns in the Amazon and Andes Mountains where gold is sold. Inside Puerto Maldonado's gold shops, shopkeepers heat clumps of ore, releasing mercury vapors that waft into the shop, and then outside, into streets crowded with townspeople. Researchers detected mercury levels at a gold shop so extreme a monitor couldn’t measure them. Then, high in the Andes, they measured unsafe levels in the air outside the shops.

PUERTO MALDONADO, Peru -- On a busy, dusty street beside a huge open-air market, signs reading “oro” mark shops that trade in gold. The customers, mostly men in work clothes and rubber boots, have just arrived from the mining camps to sell their gold and wire money home.
Inside, shopkeepers heat the miners’ clumps of gold ore, releasing mercury vapors that waft into the shop, and then outside, into the streets crowded with townspeople.
Experts have long known Peru’s miners are exposed to extremely high levels of mercury. But now new research shows that the toxic threat has spread to towns in the Amazon and Andes Mountains where gold is sold.
In Puerto Maldonado, a jungle town in Madre de Dios, one of Latin America’s most productive gold mining areas, researcher Luis Fernández in 2009 detected mercury levels at a gold shop that were more than 20 times higher than an international worker safety standard. This February, his follow-up testing found mercury levels inside one shop that were so extreme his monitor couldn’t measure them.
Then, a week later, in a town high in the Andes, Fernández became truly alarmed when he measured mercury in the air outside the gold shops, and detected levels that exceeded the amounts considered safe.
“It seems clear that these workers are under extraordinary risk for acute mercury poisoning,” he said, adding that people outside the shops are highly exposed, too.
In the first study of its kind in Peru, Fernández and a team of researchers funded by the U.S. Environmental Protection Agency are measuring mercury pollution from gold shops in Puerto Maldonado, in the Amazonian lowlands, and La Rinconada, 15,000 feet above sea level in the Andes Mountains.
Their initial findings – coupled with new tests by Peru’s National Institute of Health that measured mercury in people’s urine – point to a public health risk in towns near informal mining camps, which have flourished with skyrocketing international gold prices.

CONTINUES HERE

UPDATE: IKN has the benefit of smart readers and one, who'll go by the name of 'Reader B' because he's not into fame and such, really knows his beans about all sorts of mining issues, including  mercury. Here's the mail he just sent in:



You know what is most upsetting to me about the mercury contamination from placer miners? It can be eliminated 98% by the use of a mercury retort, 500 year old technology. Any tinsmith/ mechanic/ plumber can make one for about $50, and it allows the miners to re-use the mercury again and again (so it would save them money) and save their health, the environment etc. See attached image, or Google your own.


Seriously, in 1556 Georgius Agricola wrote De Re Metallica, which instructs one in the art. One of the very earliest science text books.
I know a Yukon placer mining consultant who always takes one with him as a gift when he goes to visit placer mines in the third world. Biggest problem is the ultra-violence often found in illegal placer mining camps (see any episode of Deadwood). Often too scary to even approach these places.

Thanks a bunch, Twobreakfasts

Exhibit A: President Alan Twobreakfasts Garcia just a few minutes ago said:

"...[foreign investments in Peru] are the the sign of confidence in our country, a confidence that has not been bent by the electoral process."

Exhibit B: Fortuna Silver Mines (FVI.to) intraday chart:


The good news: Only another three months of this dumbass to go

What JPM thinks of Peru's election

Just in case you were wondering:

Official results will likely confirm that Ollanta Humala and Keiko Fujimori will go to the runoff on June 5.  As of 7:50am NYT, the official count of ONPE, Peru's election agency, had reached 71.3% of total votes and showed the following results: Humala 28.7%, Keiko 22.7% and PPK 21.7%. However, we expect that as the ONPE official results reach a higher percentage during the day, the figures will likely get closer to the "rapid counts" compiled by pollster Ipsos-Apoyo and Datum, and the Transparecia civil organization, which average: Humala 31.5%, Keiko 23.3% and PPK 18.8%. The rapid counts are based on representative samples of the actual voting station results that deliver a marging of error of just +/-1%. The results indicate that Humala and Keiko will compete in the runoff scheduled for June 5. These numbers also suggest that Humala obtained around 1%-point above the 30.6% he obtained in the first round election in2006, in which he came ahead of Alan Garcia and Lourdes Flores only to lose against Garcia by less than 5% in the runoff.
 
The confirmation of the Humala-Keiko second round basically validates our baseline scenario described in the note we published last Thursday, April 7, (see: “Peru: Risk-reward does not justify adding exposure yet” ). While Peruvian assets rebounded in the last two trading sessions of last week as private opinion polls suggested that it would be Keiko the one going to the runoff with Humala instead of PPK, which many market participants feared would have a much tougher time competing with Humala, we still see a very tight race for the runoff. Indeed , tonight several political analysts in Peru suggested that Humala will likely make a more aggressive move to the center during the second round campaign in order to attract the votes of PPK and Toledo. While this may seem implausible to many, it may not be so. If Humala agrees to appoint some conservative politicians or technocrats to his cabinet, it is conceivable that both of them make at least a tacit endorsement of Humala. In fact, in the speech in which he conceded defeat, Toledo said that his party will assess which of the two candidates in the runoff offer more promise to safeguard democracy, human rights and the promotion of "growth with a social face"--all of which suggest that Toledo does not rule out endorsing Humala (plus, remember that Toledo's political career took off in the late 1990s when he staged protests against Alberto Fujimori's dictatorial traits). Meanwhile, Humala said tonight that he will extend invitations to other political parties to support him in the runoff.
 
Peru: Official results point to Humala-Keiko runoff; tight second round race likely
 
Humala's Gana Peru party obtained the largest bloc in Congress. Based on the rapid count conducted by Ipsos Apoyo, the 130-member Congress (which in Peru only has a single chamber) would have the following composition: Gana Peru (Humala) 46 deputies, Fuerza 2011 (Keiko) 38, Peru Posible (Toledo) 21, Alianza por el Cambio (PPK) 12, Solidaridad Nacional (Castaneda) 9 and APRA 4. This means that if Humala's Gana Peru bloc manages to reach some political agreement with Toledo's Peru Posible, the two parties could have a simple majority of Congress with 67 deputies.
 
Although we believe that Keiko can defeat Humala in the runoff, we reckon that the final result remains a close call and still see  the balance of risks as not sufficiently compelling for Peruvian assets at this point. As we anticipated in our April 7 report, the uncertainty about the final outcome of the election was not reduced by the results of the first round. In fact, the runoff should be seen as an entirely different election in which party lines will likely be completely realigned. 

Julio C. Callegari (AC)
(55-11) 3048-XXXX
julio.c.callegari AT jpmorgan.com
Banco J.P. Morgan S.A.
  
Luis E Oganes
(1-212) 834-XXXX
luis.oganes AT jpmorgan.com
J.P. Morgan Securities LLC

Wild Thing

You make my heart sing

C'mon, join in the chorus dudes!

Election thoughts

It's all over bar the shouting now, and Keiko Fujimori will certainly join Ollanta Humala in the second round run-off in early June. A couple of thoughts

1) Right now the Peruvian Nuevo Sol is trading half a centimo stronger than Friday, at S/2.799 to the dollar. Early trading has the IGBVL index off by a point and a half, but there's not much in the way of  wholesale selling in large lumps in anything exposed to Peru (my best guess is small players with too many nerves are going to feel silly later this morning) so it's hardly the panic attack and descent directly to some kind of anti-capitalist oogabooga system that political commentators North and South have been worried about.

2) Quote of the day goes to a loser. In Alejandro Toledo's concession speech last night, he said the following:
"Peru has expressed its anger, explicit in the urns but deaf in its words, about a discontent in having economic growth without a distribution of its benefits. Ten years of growth, it hasn't reached the people and they have found a candidate that channels these protests......(t)his is democracy, the democracy for which I've fought hard."

That's right on the button. My first reaction on seeing Ollanta and Keiko through to the next round was "ugh", which was then followed by "double ugh", but this morning the words of Toledo have stuck with me more than my personal tastes and choices. Democracy is exactly this, it's taking decisions you disagree with and accepting them because the decision was made on a fair showing of hands. You might not like the decisions democracy throws at you sometimes, but you respect them. Any other reaction is at your own peril.
x
IKN congratulates Ollanta Humala and Keiko Fujimori on reaching the second round run-off in Peru.

UPDATE: Bloomberg tries its very very hardest to write something scary... and fails. It also fails with its line on the forex, because it's a blatant lie. The Sol traded at S/2.805 to the dollar Friday, and if resident Lima Bloomiefool John Quigley doesn't know that he should get out of his office more often and check out Peru on the street level.
The benchmark Lima General stock index fell 0.8 percent, exceeding a drop of 0.5 percent for the MSCI Emerging Markets Index. Peru’s dollar bonds due in 2025 dropped, sending yields up 3 basis points to 5.43 percent, according to data compiled by Bloomberg. The sol sank 0.1 percent to 2.8005 per dollar.

Really dudes, is that all you've got?

UPDATE 2: Aha! It looks like all they had was all it needed. The Lima Stock market now down nearly 3% on silly selling. Aaaah let 'em sell, they'll work it out eventually. 

Chart of the day is....

...crude oil dailies.

Oil's down to $111/bbl! 

Phew! 

That was close! 

For a moment there I thought we might have some inflation starting to move through the US Dollar.....

4/10/11

Peru Presidential Election: The 6pm "Rapid Count" result

This is NOT the official result, as those don't start dripping out of Peru's official ONPE body until 8pm and will take at least a couple of days to come through. What this chart shows is the results of the so-called "rapid count" survey done by polling company Ipsos/Apoyo that takes certain voting booths that have been shown to be bellweathers over the years and quickly counts up the scores in those. The "Rapid Count" vote has shown itself to be a fairly accurate gauge of the final results over the years (though with a couple of exceptions, must be said). Anyway, here's how the rapid count survey looks:


With over 3% of gap between herself and 3rd place PPK, it looks near certain that Keiko Fujimori will now be the opponent of Ollanta Humala in the second round vote set for June. And that's all she wrote.

The IKN Weekly, out now

IKN101 has just been sent to subscribers. Meanwhile we have an answer to a question first asked in 1969:

Q: "¿En qué momento se jodió el Perú, Zavalita?"

A: April 10th 2011.

Dorato Resources (DRI.v) sure suckered Eric Sprott

Did they get you, too?

So according to your humble scribe's rough scratchings, the 881,850 shares of Dorato Resources (DRI.v) that Eric Sprott's Asset Management company had tucked away at the beginning of 2011 were at that time worth $1.36m . Now they're worth $0.502m. Ouch.

It's a good job Eric spreads his holdings around, isn't it? Because owning up to a great fat loss in a scamjob like DRI in the midst of one of the biggest gold bull runs ever would sure be embarrassing otherwise, especially when insiders were busy selling their holdings at the very same time (and prices) that Eric thought such a bargain. Talk about snatching defeat from the jaws of victory, Ericdude, if I were you I'd have a word with the analyst that talked you into buying so much of DRI without having the first clue about the regional political risk that was being taken on board.