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Philip, you're breathtakingly good and I'm left in awe. A deserved win, sir.
The video which best sums up Peru's election campaign.
A short note from local Puno media "Los Andes", linked here and translated by your humble scribe:
The panorama in the city of Puno is devastating at this time. Empty streets, closed markets, public buildings destroyed, the population nervous after the social protest yesterday descended into violence.
Public telephones have also been attacked and windows of private buildings such as hotels and restaurants have been smashed.
The customs and immigration office (Aduanas) in the city of Puno is destroyed, with damage wherever you look. Cars destroyed, doors broken, furniture borken and littered about the floor and warehouses broken into all through last night.
Police presence yesterday in the customs and immigration office was practically zero. It's not known what will happen in the next few hours in the city while the population is still covered in uncertainty.
...gold these last five days, because without making screaming headlines it's done just fine and put in a good week.
In IKN106, May 15th, I wrote the following words. Sadly, I was right.
I’ve seen this movie before, ladies and gentlemen, it does not have a happy ending and no matter whether you approve or disapprove of the protesters, these people are quite willing to make this into a long-standing roadblock and aggravate authorities until troops are sent in and blood is shed
Update: Pleasant little evening bonfire...made from the furniture taken from the Puno tax office. H/T gabo_el
Sketchy reports of government workers being taken hostage, too. (Update on this...seemingly unfounded)
Now 7:30pm and reports of calm returning to the streets.
More pretty bonfires in the centre of Puno tonight
8:15pm Peru time (that's 9:15pm EST): Things are now worse, with reports that the local branch of the customs and immigration office (located just off the main square) is on fire, blazing away from many windows and on the way to near total destruction. Protesters have blocked the roads around the offices and won't let anyone through to put out the flames. Just down the road, reports are of looting in a electrical appliances store (white goods, etc)
We put up the GMP report as part of this post yesterday. Since then, the stock has done this:
UPDATE: I'm sorry, did I say $2.61....?
...the US Dollar:
1) Approach tinfoilhat goldbug knucklehead of choice.
2) Point out to him/her that recently, when the dollar went up so did gold.
3) Point out to him/her that today the flipside is also true, the dollar is dropping and so is gold.
4) Remind your preferred target about all those time s/he told you about the massive financial conspiracy and how rocketing gold in the face of a plummeting dollar would save us all from the death spiral and all that jazz.
5) Finally, ask said goldbug to explain the current situation. For extra bonus fun, ask your goldbug to explain without using the following words/phrases: "Illuminati", "Sinclair", "Weimar", "Rothschild" "Vampire Squid", "Fiat currency", "Ron Paul".
Rio Alto’s key asset is the La Arena gold/gold-copper project in northern Peru – it is located in a highly mineralized area which includes Barrick’s 1mm oz/yr Lagunas Norte mine - Rio purchased the property from IAMGold.
We believe that RIO, as a brand new producer, represents a de-risked development story trading at early development-stage multiples. In our view the company’s current market valuation is supported by the base case oxide dump leach project (which poured its first gold on May 6).
We see 3 principal sources of upside - the potential for significantly higher grades in the oxide deposit, development of the deeper copper-gold project and the significant exploration targets elsewhere on the La Arena.
La Arena – already producing with tonnes of porphyry potential
La Arena is located in northern Peru - infrastructure is outstanding and the mine lies immediately on a (mainly) paved road that links the mining town of Huamachuco. A major power line crosses the mine property within a few kilometers of the La Arena pit – there is sufficient capacity on this line with low (probably <$0.06/kwh) costs.
At the 24k tpd rate and at the average reserve grade of 0.44g/t, gold production is expected to average 100k oz/yr. Production guidance for calendar 2011 is for 75k oz. LOM production, based on current reserves, is projected at 640k oz.
Past work by Rio Alto suggests that grades obtained by diamond drilling may significantly understate actual in situ gold grade. During the early years of production at its nearby Lagunas Norte mine, Barrick indicated that actual mining grades were often significantly higher than reserve grade.
The porphyry copper-gold deposit provides, in our view, most of the value at La Arena. The company expects to complete a feasibility study by year-end 2012, and anticipates production beginning in 2015. The PFS study by Coffey Mining examined a 24k tpd project that is expected to cost approximately $300mm to build and would give annual production of 60m lb/yr copper and 31k oz/yr gold over 21 years mining a 180m tonne deposit with an extremely low 1.1:1 stripping ratio.
We reiterate that, in our opinion, the oxide project alone supports the current market cap of the company and that the real driver of the share price is in the copper-gold project. We also believe the election in Peru will end speculation on the potential impact of a socialist incumbent. We initiate coverage of Rio Alto with a BUY rating and a $C5.75 target price representing 75% of our NAV6% using GMP commodity prices.
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...the forex market for the Peruvian Nuevo Sol (PEN) versus the US Dollar (USD):
UPDATE: This just out of the Venezuelan Embassy in the USA
Venezuela Rejects U.S. Sanctions Against PDVSAPublished: 05/24/2011
The Government of the Bolivarian Republic of Venezuela has learned of the decision announced by the Department of State of the United States to impose sanctions against our oil national company, Petróleos de Venezuela (PDVSA), as part of a unilateral law targeting the Islamic Republic of Iran known as CISADA.The Bolivarian Government expresses its strongest rejection to this decision since it constitutes a hostile action on the fringes of international law that violates the principles of the Charter of the United Nations.The Bolivarian Republic of Venezuela and its revolution have a strong, independent and sovereign oil industry able to operate and permanently fulfill its commitments. Faced with this aggression, Venezuela further ratifies its oil independence and sovereignty.The Government of the Bolivarian Republic of Venezuela is undertaking a general assessment of the situation to determine how these sanctions affect the operational capacity of our oil industry and, therefore, the supply of 1.2 million barrels of oil per day to the U.S. Pending this assessment, the Bolivarian Republic of Venezuela reserves itself the most adequate answer to this imperialist aggression.The revolutionary Government calls on all the Venezuelan people, laborers and especially the oil workers, to stay alert and mobilized in defense of our PDVSA and the sacred sovereignty of the homeland.Caracas, May 24, 2011Ministry of People’s Power for Foreign Affairs
1) Bear Creek's CEO this morning:
You be the judge.
Subscribers: Expect an update mail on BCM this evening.
"...considering the smaller size of Santa Ana (see reserve/resource table here below) and offsetting that with its (theoretical at least) shorter timeline to production (Santa Ana is due commissioned in 2012 according the official company literature at least), your author currently weights around 25% to 30% of BCM.v valuation in this project. It is in trouble and the recent share price discount reflects that, but the feeling is that the market hasn’t fully grasped the depth of the trouble for BCM due to this protest that is not going to go away and is on course to halt development either indefinitely or definitively. So although the company has seen some discount, if your author’s read on this story is correct and Santa Ana becomes a no-go project there’s good reason to expect further selling in BCM and therefore a potential entry point of $6.50 on bad news is around the place where I’d consider a value entry position, this based on a rough 15% discount to current prices. This isn’t some hard-and-fast target price, but more like a marker that will do just fine for the time being."
And then this is an excerpt from IKN107, last Sunday May 22nd:
"...as mentioned last week, I have a scratched out $6.50 price point as a potential for entry based on the larger and politically much less risky Corani project (which is still in the region of Puno but in a much safer location). If it takes two weeks or six months to reach that $6.50 level, there’s no particular problem here as I’m not long and have no rush to take up a position either. It remains to be seen how the market reacts to today’s news that they will be holding on to a dead money situation through a volatile election and into the next six months at least, something that also definitively scuppers company plans for the previously projected start of mining in 2012 at Santa Ana.
Final point: Why this ongoing coverage about BCM.v? Because there’s a chance of getting in cheap on the world-class Corani project here, that’s all."
May 24, 2011
Turning more bullish as supply-shock concerns fade
Although near-term downside risk remains as markets adapt to a slower growth environment with supply-shock concerns fading, we now believe that the risk/reward once again favours being long commodities. Accordingly, we are shifting back to a near- to medium-term overweight recommendation, reiterating our long-term overweight and recommending fresh longs in oil, copper and zinc.
We remain structurally bullish commodities
Although we remain structurally bullish and have long argued the structural case for being long, timing does remain critical. This was evident in the recent market correction, which brought commodities down roughly 10% from their April highs. With prices now more inline with near-term fundamentals and price targets, we believe that the risk/reward once again favours being long commodities. Although the economy has likely shifted into a slower, but sustained, growth environment, we continue to expect that economic growth will likely be sufficient to tighten key supply constrained markets in 2H2011, leading to higher prices from current levels.
Raising oil price targets on persistent impacts from MENA events
We expect that the ongoing loss of Libyan crude oil production and disappointing Non-OPEC production will continue to tighten the oil market to critical levels in early 2012, with rising industry cost pressures likely to be felt this year. We are now embedding in our forecasts that Libyan production losses will lead to the effective exhaustion of OPEC spare capacity by early 2012. This raises our year-end Brent crude oil price forecast to $120/bbl from $105/bbl, our 12-month forecast to $130/bbl from $107/bbl and our end-2012 forecast to $140/bbl from $120/bbl.
Mid-cycle pause nearing a trough, creating upside to metal prices.
While a sharp decline in world economic growth remains a downside risk to commodity prices, we see the current slowdown in economic growth as part of a normal mid-cycle pause, partially driven by higher commodity prices, and therefore not a reason to expect commodity prices to decline substantially. Further, we believe that the recent evidence of economic weakness represents signs of a slowdown and not a downturn, which is reinforced by signs that Chinese metal demand has already returned with the SHFE-LME copper arb opening again, exchange inventories declining and the Shanghai copper forward curve moving into backwardation.
...copper, May 13th to date.
Sunday May 22nd 2011
R.S Nº 191-2011-DE- Authorizes the intervention of the armed forces to aid the Peru National Police Force in the district, province and department of Puno
...Colombia's International Currency Reserves, January 2000 to date:
Because we're back doing requests in this segment. There you go, 'BY', enjoy.
This is great because
1) It's short
2) It's two guys goofing off
3) You just can't script what happens
4) Nobody gets hurt in any meaningful way
5) It's plain funny.