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6/11/11

Weekend OT: IKN recommends "Onion-Like Headlines In Real Life"

Setty sent over the link, it's now on my RSS and we both strongly suggest that you do the same. The name of the Tumblr is "Onion-Like Headlines In Real Life" and it's guaranteed guffaws. My fave two so far are...

"Poll finds Americans angry about pretty much everything"

...and

"The Caperon, For When You Need An Apron But Also Might Need A Cape"


No jokey, they're real live headlines and you get the link to prove it and everything. Go see for yourself.

x

Madre de Dios Peru: An excellent report from AP

Go here and read the report filed by AP on Peru's Madre de Dios gold mining region (previously featured on many an occasion here at IKN). AP dude Frank Bajak has done a great job of work and there's so much to choose from in this report that it'd be unfiar to sample any of it here, so just click through and read the whole thing yourself.

Peru's dependence on big mining companies

The fact that over 60% of all Peru's exports are metals is well known, but something that underlies that is the dependence the country has on its biggest mining companies. This chart, drawn up from the latest export figures from Comex Peru and those of the Central Bank that take January to April 2011 as our timeframe, highlights this dependency.

In other words, the ten biggest mining companies in Peru account for more exports (and let's remember that the whole of the country's economic model still hinges on its exports) than everything nonmetallic exported by Peru. That's a long long list including the big sectors of fishery, agro, oil and gas (especially LNG these days) textiles, wood and paper, and a lot of other sectors as well.

And which are the top ten export companies in Peru today? Here they are and they're all metals mining companies to boot.
DYODD

6/10/11

The Friday OT: Youssou N'Dour & Neneh Cherry; Seven Seconds

Neneh Cherry....mmmmmmmmm....soooo fine.


 Did you know this song topped the charts in France for 16 weeks back in 1996? You couldn't move in the country for hearing the song at the time. It didn't hurt much though, because it was and is a great tune, the two voices seamless.

Investment advice from Pavlov's dog

The utter morons that get to spout off about the market never cease to amaze your humble scribe. Today we have this statement headlining Yahoo Finance:

"...it's the strength of the U.S. dollar causing selling in commodities and stocks."


Oh my, look at that strong dollar, Macke Dumbass Macke double dumbass with cream and extra fudge sauce:

It really takes a special kind of idiot to grab my attention in this cwazy wabbit market environment, but whoever the hell Jeff Macke is, he did it. So now Jeff...

Humala screws up with Chile

In his first public announcements on Chile since becoming President Elect of Peru, Ollanta Humala said to Chile's 'El Mercurio' newspaper yesterday that "We want to heal old wounds and have a relationship of equals with Chile."

Hah! Can you imagine that? The most stuck-up, arrogant race in Latin America actually thinking that they're not superior to Peruvians and treating them as their equals? Ollanta dude, get with the program, Chile is the country that has as its coat of arms "by reason or by force".

Oh goody

It looks like another day of watching the crap get kicked out of my long positions in junior mining companies. Oh what fun. Meanwhile, subscribers can look forward to (??) the previously threatened NOBS fundamentals report on Zincore (ZNC.to) this weekend, as what with it coming off from 90c to 28c in the space of just three months, stuck in a country that has gone directly to jail (do not pass Go do not collect any money at all unless you're short) and concentrated on a metal that nobody seems to care about, now might just be the time to take an initial position in the stock (as the re-wired financing announced this week does smack of value).

Still it's not all bad out there, as B2Gold (BTO.to) came in with a good quarter of results and made my $12m net earnings guesstimate look pretty neat too (they made $11.4m and I just got lucky, spose). But to give an idea of how tough this market is, BTO can't rally off this good qtr today, Cebollati drill results or not.

Sadly though, any more good news is confined to the Shadenfreud (or however you spell it) department and consists of pointing fingers and laughing at stocks that are tanking which should never have risen in the first place. Great Panther (GPR.to) an example, but there are lots more besides.

PS: Haywood opened coverage on FVI today with a $6 target....about time, dudes.

Disclosure: No position in ZNC.to...not yet, anyway. No position in GPR.to (and extremely unlikely ever to take one, as life's too short). Long BTO.to

UPDATE: I'm sorry, did I say that BTO couldn't catch a bid earlier....?

El Salvador's new world champion

Coffee lovers of the world unite and cheer for Alejandro Mendez of El Salvador, the new world champ barista. Tim's El Salvador Blog has all the details, starting like this:

The 2011 World Barrista Championships were held June 2-5 in Bogota, Colombia. The winner this year was Alejandro Mendez from El Salvador. With a polished presentation featuring coffees grown in El Salvador, he brewed and poured sophisticated coffee drinks for a panel of judges. CONTINUES HERE

Chart of the day is....

..corn weeklies, inspired by Yukon Cornelius's post yesterday.

My comment there: "Agro is a proxy for H2O. Moving agro products around the world = moving concentrated water around the world. That is all."

Think about it...it's fun to think.

6/9/11

Ex-Presidents, jails, total freakin' coincidences... and an owl

Part One, June 2nd 2011: Just days before the second round election run-off vote between Keiko Fujimori and Ollanta Humala, Keiko Fujimori said of jailed ex-President Alberto Fujimori during an interview with CNN en Español that she wouldn't pardon her father if elected President and that (and we quote the big money quote), "...happily, my father is in good health".

Part Two, June 5th 2011: Ollanta Humala won the closely fought election, polling 51.48% of valid votes to Keiko's 48.52%.

Part Three, June 6th 2011: The day after the vote, Ollanta's Vice-President elect, Omar Chehade, said that Alberto Fujimori would be transferred to a common cell (from his reportedly luxurious digs at Peru's Diroes establishment in Lima) once the Humala government was in power.

Part Four, June  9th 2011: Alberto Fujirmori is rushed to a local hospital's emergency ward by ambulance, is told he will have to stay there for the next three days, is diagnosed by doctors as "having lost a lot of weight" and doctors wish to put him under observation for the next three days to see if the weight loss is being caused by "a deeper illness".

Part Five, now to the near future: So having been in good health just one week ago, jailed ex-Pres Alberto F, who just lost his Get-Out-Of-Jail-Free card in the shape of his daughter's failure to make it to the big chair, is diagnosed with severe weight loss....and nobody noticed this ONE FREAKIN' WEEK AGO? Oh by the way, outgoing President Alan García has until July 28th to pardon Alberto on medical grounds if he sees fit. 

Cue Owly:

Once a Banana Republic, always a Banana Republic

The Carabaya Puno protests turn ugly

Please note that this protest, in the North of the Puno region, is not the same one that is currently in progress against the Santa Ana project of Bear Creek Mining and has blocked the border crossing at Desaguadero. This is in the northern part of the region and is all about opposing the Inambari hydroelectric power plant project and a generalized rejection of mining concessions in the area. Here's a direct translation of this report from Puno area news media, Los Andes:

Exclusive: Strikers in Carabaya cause damage in the mining Warehouses of Solex and Pacific Sur

The population of the province of Carabaya, currently protesting against the construction of the Inambari Hydroelectric project, this afternoon caused damage to several installations of two mining companies in the area.

Locals went to the location called Uchuy Macusani, where the warehouse of mining company Solex is located, and once there burnt the the receptacles used to process aluminium. They also burned wooden structures and hose pipes and all the rooms of the buildings suffered damage.

Damaged was also caused to the warehouses of mining company Pacific Sur in the zone called Patapampa, where rooms were also burned and destroyed. At the moment tonight the city is calm, however there is worry about what tomorrow may bring.

In which your humble scribe is interviewed by The Motley Fool about Peru political and investment risk

Tim Hanson, a good egg over at The Motley Fool, decided to interview your author regarding the Peru election result and what it means for the future of the economy and investments with Peru exposure.  On this link here you can find the result of the Q&A.

Peru copper production falls off a cliff in April 2011

The April 2011 production numbers for Peru metals are out today and the main driver of the economy, copper production, is not good at all. Here's the chart...

...and as you can see, production at 88,481 tonnes for April is the worst monthly performance since January 2008 (after which the Cerro Verde expansion kicked in). This on the back of a pathetic Feb 11, too.  The other main revenues earner, Gold, was crappy at 12.623m grams (405,884 oz), too. Here's that chart.


And moly was crap, and silver was crap, and zinc was crap. All figures here, including the über-woeful 47mt of tungsten out of MLG.to April...so much for those bullshitters and their new production upgrades. Another mediocre operation hiding behind high spot prices....just like the government of Peru, in fact. DYODD, dudettes and dudes.

Peru, Humala, Elections etc (from IKN109 last Sunday)

I've been asked in several mails this week for a longer comment on the Humala victory last Sunday, what it means to the market and Peru exposed stocks, etc etc and as I'm a bit too lazy to answer them with something new, what follows is the intro piece that appeared in The IKN Weekly issue 109 published last Sunday evening (very slightly redacted to remove a piece of unimportant personal information).

At that time Humala was clearly leading in the polls and a virtual certainty for the Presidency (which is now confirmed). Also, we were still waiting for Monday's open that saw the Lima exchange main index dive by 12.5% and we didn't know about Tuesday's and Wednesday's action that added back 7% and 3.5% respectively...so we got our call on this week in Peru about right (perhaps off by 24 hours). But there's lots more to chew over, so read at thine leisure, kind lector.


Peru is a buy, but not tomorrow morning (published Sunday June 5th, 2011)
This one gets put here instead of in the ‘Regional Politics section just to make sure it gets read. So let’s start with a nice clear statement about Peru exposed stocks: Tomorrow they sell off.

But with the short-term reactions out the way, Peru exposure is still a good option for mining exposure even with its now almost certain new President Ollanta Humala. Yes, there will be hand-wringing and wailing over this near certain Ollanta victory but once it becomes clear that the mining industry and its investment isn’t about to come grinding to a halt in Peru, the sector will adapt to the new rules, likely higher (though not prohibitive) State burdens and get on with the job of mining in Peru. What follows now discusses the Ollanta Humala side of things because he’s now the near-certain President elect and we’ll assume that from now on even though results are not official. If by some freak of stats Keiko is eventually called the winner we’ll cross that bridge another day.

Humala isn’t “anti-mining” per se. In fact he’s pro-mining, but he uses that “pro responsible mining” cliché that sends shivers down the spines of foreign investors and gets him comparisons with Rafael Correa along with the dog’s breakfast of a “nascent mining industry” in Ecuador that has so far done little else but antagonize locals and halt any sort of progress towards the large-scale mining operations he says he wants in Ecuador (sorry Rafa, evidence very thin). Ollanta Humala has said out loud that he’s in favour of mining, that the industry is extremely important to the country, that mining will continue to happen, that there aren’t going to be nationalizations in the industry, that private property is not under any sort of threat, all that backed up by the more general policy statement that he’s not going to change the rules to allow a second term of office as was the case in Correa’s Ecuador, Morales’ Bolivia, Chávez’s Venezuela and (interestingly and always left out by the fearmongerers) Uribe’s Colombia. He’s said, pledged, signed papers and put his hand on the bible to the effect that he’d do his five years and then leave. But back to the main issue that we cover, mining, and the main line of thought behind his proposed changes to the mining industry is that the mining companies pay more to the State as part of his ‘social inclusion’ policies and the monies raised going to State programs such as better schooling, pensions, healthcare etc. As for details, put simply his policies are to raise royalties from the current 1%-2%-3% rates to a 2%-4%-6% (a change that will probably happen). He has also spoken of raising corporate taxes on mining companies from the nationwide level of 30% to 40%, a rate exclusively for mining companies (this may be tricky to implement). Finally, he has often spoken of raising a windfall tax on mining companies to take advantage of exception profit levels, with a main eye firmly placed on the mega-mining operations such as Antamina, Cerro Verde, Yanacocha, Toquepala/Cuajone etc. As we’ve seen before in other debates on WFT, the theory sounds good to the outsider but putting these fiscal regimes into operation has been very difficult, so even if the spirit of the new Humala administration is willing it may take years rather than months even to get to the stage where WFT charges are levied.

The bottom line to this is that the royalty rates are likely to rise in Peru first, but you’ll also hear a lot from a Humala government about how Peru currently charges much less to its mining companies than peers in Chile or the USA (which is true) to offset the new round of taxes. The corporate tax changes may happen, perhaps as a negotiation trade-off against a windfall tax which your author believes will be tough for Humala to put in place, realpolitik-speaking.

However much Humala’s Peru claims the new taxes on miners there is a fair policy, businesses won’t like the idea much and there’s clearly going to be a rough period for Peru-based mining companies because he will run a government that raises more money from mining companies via higher royalty charges and/or taxes. This means that stock prices will be under pressure on today’s news, but you’ll also have to note that stocks downing in price will also be accompanied by fearmongering and will add in all the “them commies gonna eat your babies” type stuff. It’s important at these moments to separate the wheat from the chaff, because the chances are that Peru’s market and the miners therein will bounce back much faster than Northern commentators imagine...and that means opportunity for nimble traders. We’ll expand on that thought in a moment.

The other effect of a Humala government on Peru’s mining industry comes at the social interactive level and would be to give more power of decision to local communities on whether they want a mine built near to them...or not. This, for example, would mean the end for the Santa Ana project, the end of Dorato Resources (DRI.v) hopes of minebuilding in the Cenepa region of North Peru, the curtailing of activities in the jungle regions where anti-mining opposition is strong. But this would also mean that mining projects don’t cause the type of crisis flashpoints we’ve seen in recent weeks in the Puno region, so it’s worth noting both sides of the equation. The knock-on effect would mean that companies may not be so keen on committing to the less explored areas of Peru and NGOs might start making more of a nuisance of themselves as well, but resulting problems would be extremely unlikely in places like Rio Alto’s (RIO.v) La Arena mine, or Focus Ventures’ (FCV.v) exploration in Santa Rosa, or Fortuna’s (FVI.to) Caylloma, or Vena (VEM.to) at Azulcocha, or literally thousands of other examples, because mining is welcomed in the areas in which they operate. Or put another way, the mining exploration business in Peru is likely to continue just fine in the areas known for mining acceptance, but lessen in the farther flung spots that have attracted attention in recent years.

Expanding on that second point a little further, let’s re-emphasize something that’s been mentioned on these pages (and on the blog) more than several times. Peru has been, is and will be a miner-friendly country in general but the time is long past to heed ignorant commentaries about ALL the country being miner-friendly. Peru is miner-friendly in the areas that are traditional spots for mining. It’s not miner-friendly in the jungle areas (that make up over 50% of its country by area) because mining activity there is 1) new and 2) damaging to sensitive ecological areas, no matter what the mining companies say otherwise. It’s also important to understand Peru on a micro-regional scale, because a single village in the middle of a centuries-old miner-friendly spot can be dead set against mining for its own sweet reasons and be surrounded by others that are perfectly relaxed and happy to co-exist with the biggest type of world-class open pit operation.

So yes, we’ll be in for a rough few days now that Ollanta has seemingly gotten the nod in this election, but to use that horrid and hackneyed newsletter writer’s neverwrong bullshit, “Great buying opportunity!!!” (three exclamation marks used to emphasize irony). Also, I’d expect the Peru market, and therefore its exposed miners, to snap back more quickly than most foreign observers imagine, because the big controllers of the Peru stock market, the “AFP” pension funds, will be keen to protect their asset book and have already clearly raised cash in order to buy back into this market. This is because Ollanta Humala isn’t the radical raving Commie lefty boogieman he’s made out to be in the northern (and local right wing) press and there’s a mountain of evidence that points to his moderation of policies, particularly his move to the centre in the last few weeks. Yes, he’s left wing but no he’s not a radical lefty. No, he’s not Hugo Chávez so put that one behind you. I know that during the election he’s tried to attach himself to the image of Lula da Silva, so if he turns out like that President did Peru will be just fine. Personally, I see him more along the lines of a mining-friendly Mauricio Funes (El Salvador), but pigeonholing Humala is always going to be difficult.

Humala has moved to the centre to win this election and he has no choice now but to run a coalition government, else be slaughtered down the line. He doesn't have the natural charisma of Evo Morales (or Hugo Chávez or Rafael Correa) which will be a problem for him. He will adopt what are regarded by observers as left-wing policies wherever he gets the chance but the opposition is going to be fierce, worse than anything Evo or Hugo or Rafa suffers because the opposition forces in Peru are solid, organized and long-standing. He'll also piss people off when they realize they'll have to wait at least a couple of years for the Plan65 pension and his traditional radical supporters will either have to be reined in or seriously affect his credibility with the majority of mainstream Peruvian who have voted Humala on sufferance because they’re more opposed to a new Fujimori-led government (Peru has a memory for the bad things that went on, something that pleases your author on a non-business level). Finally, as a person I actually think he's quite a decent guy. Family man, more mature than 5 years ago, naturally intelligent, not a bullshitter in the normal politicians' way.

To wrap up, Peru mining stocks are still a buy, but they’re a buy later or a hold today if you’re already bought. A Humala win will make for a rough few days but it’s also totally buyable (and so would be Rio Alto at under $2 or Focus Ventures or Vena Resources at (or even under) 25c). The question is when the AFPs will step up to buy and my best guess is that they’ll wait two or three days before the bargain buys begin...but that’s just a guess. When it comes to mining Peru isn’t going the path of Ecuador, it isn’t going the path of Bolivia or Venezuela, either. Peru is Peru, a mining country and it will stay that way, period.

Post Script: For those of you versed in Spanish that care enough, find out a lot more about Ollanta Humala via the book he wrote in 2006, which goes into his past history until that point and explains his trajectory and his political stance. A free online copy of the most important sections of the book is available at link (1) in the appendix below. It’s actually a pretty interesting read, too.


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Mining PRs and the Ottotrans™, Part 41


Today we go with another one in our occasional series that uses the world famous and patented Ottotrans™ to take the gobbledegook English oft encountered in news releases out of junior mining company and turn it into something that reasonable people can grasp. Today's example comes from Zincore Metals Inc. (ZNC.to) and looks at the company NR was first seen after the bell last night.

This is what they wrote:

JUN 8, 2011 - 16:20 ET
VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 8, 2011) -
NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
Zincore Metals Inc. (TSX:ZNC)(BVLAC:ZNC) ("Zincore" or the "Company") reports that, due to adverse market conditions following the recent Presidential election in Peru, it is revising the terms of the brokered private placement of units originally announced on May 24, 2011. Under the revised terms, the Company will seek to raise gross proceeds of up to $6.4 million on a best efforts basis. Units will be priced at $0.28 per unit and will be comprised of one common share and one-half common share purchase warrant ("Warrants"). The Warrants will be non-transferable and each whole Warrant will entitle the holder to purchase one common share at a price of $0.40 for up to 36 months. Dundee Securities Ltd. is acting as the sole agent on this financing. 
Zincore CEO and President, Jorge Benavides, commented "The result of the recent Presidential election in Peru has created significant short term volatility in the market. For this reason, it has become necessary for us to amend the terms of our proposed financing. The fact that we are still raising these funds to carry out our programs in Peru is a testament to our belief that Peru will remain a good place to do business."
The net proceeds of the offering will be used to fund the development of Zincore's mineral properties in Peru and for general corporate purposes. 
The common shares issued with respect to this offering will be subject to a four month hold period in accordance with applicable Canadian securities laws.
The closing of this offering is expected to occur on or about June 15, 2011 and is subject to receipt of all necessary regulatory approvals including that of the Toronto Stock Exchange.
Any participation by insiders of the Company in the Offering, which participation will be subject to the approval of the independent directors of the Company, will be on the same terms as the arm's length investors and at or below their current pro-rata percentage ownership.
This press release is not an offer of securities for sale in the United States. The common shares being offered have not been and will not be registered under the United States Securities Act of 1933 and accordingly are not being offered for sale and may not be offered, sold or delivered, directly or indirectly within the United States, its possessions and other areas subject to its jurisdiction or to, or for the account or for the benefit of a U.S. person, except pursuant to an exemption from the registration requirements of that Act.


And this is what it means:
Zincore CEO and President, Jorge Benavides, commented "The result of the recent Presidential election in Peru has tanked our stock to kingdom come. For this reason, it has become necessary for us to cut the price of of our proposed financing otherwise nobody's gonna go near it, we'd be left with diddlysquat in the treasury and wouldn't be able to carry out our programs. The fact that we are still desperate to raise these funds to carry out our programs in Peru overrides the wishes of current shareholders so we've decided to dilute their asses even more than even they expected."

DYODD.

Chart of the day is....

..the straightforward 5 year price chart for copper.


Because I've been thinking about copper more than any other component of the metals universe this week. And as I have this 'ere blog and there's no need for me to suffer alone, here's another Cu chart today.

6/8/11

OT: Alice Pyne

Oh my stars.

You want perspective? Alice Pyne is perspective.

IKN Recommends: CWSX World Oil G&G

Oilmeister Alan von Altendorf is an old friend here at IKN and the good news is that this highly expert expert and main driving force behind CWSX LLC is now blogging on matters energy and hydrocarbons (and most recently great insights on Fukushima's underbelly). His blog can be found on this link, it's called CWSX World Oil G&G and you are now commanded by internetwebpipes LAW to go over, check it out and put it on your RSS or your bookmarks or whatever other way you use to get great info piped to you on a regular basis. To give an idea of the contents over there, here's the top page blurb:

News and analysis of oil & gas exploration, wildcats, megaprojects, frontier plays, deepwater discovery and completion technology, supermajors, independents, geology, geophysics, 3D seismic interpretation, and valuation of oil & gas reserves by CWSX LLC.

Rio Alto Mining (RIO.v): Two quick Qs and two quick As

Question 1: Who's buying Rio Alto Mining (RIO.v)?


Answer: Smart European instos are buying RIO.v.

Question 2: What's the difference between a Peru junior that's in a miner-friendly region and one that's in an anti-mining region?


Answer: About 12%

UPDATE: I'm sorry, did I say 12%....?

Bear Creek (BCM.v): The Santa Ana protest starts up again

As planned by the protesting locals around Bear Creek Mining's (BCM.v) Santa Ana project, the protest and roadblocks that were put on hold while the second round of the Presidential elections happened are now back in place as of eight hours ago. Also protests against mining projects in the Corani province, where BCM.v's big Corani project lies, are due to start today.

What? You thought this problem would go away now that Humala's been elected? Oh dear, who've you been talking to?

Update: Yes indeed the protest has re-started around the border between Bolivia and Peru (same place as before) and the road is blocked. Also the protest in the Northern part of Puno next to the Corani project has started as well, with the brand new Interoceanic Highway that connects Brazil with Peru blocked at the town of Macusani. Details here.

Chart of the day is....

...the gold/copper ratio, three year timespan:


Remarkably smooth running since late '08.

Ronaldo tonight

The greatest pure striker that I'm ever likely to see retired tonight. Spare two minutes of your time to understand what a number 9 is all about.


By the way, I was privileged to watch live the goal that starts at minute 0:41, and minute 0:47 is one of the all time great plays in soccer. I doff my cap, O Fenomeno.

6/7/11

Peru stock market up in early trading (UPDATED)

At 9am local time (10am EST) Peru's IGBVL index finds itself 1.87% up and rebounding a bit from the panic-induced drop of yesterday. Major moves include the big 11.1% bounce in Maple Energy (quite highly weighted in the overall index), Candente Copper (DNT.to up 6.47%), Panoro (PML.v up 15.4% but lightly weighted on the index) and the 3.77% move in Volcan (VOLCABC1), the heaviest weighed and most liquid stock on the market.

It's still early in the session however, and bigger money might change moods later. We shall see, but if you want to follow the BVL website is here, by the way.

UPDATE:  Now 40 minutes later (9:40am) and the rebound continues. The IGBVL index is now up 3.52%, with main component Volcan doing well at +7.55% and many of the tiny illiquid juniors springing double figure moves (ALT up 23%, DNT up 8.6%, PML up 15.4%, RCZ up 20%, VEM up 13%, ZNC up 10% etc).


UPDATE 2: IGBVL now up 5.33% and a decent slice of San Isidro's population must be feeling pretty stupid for selling Monday. Hah! That'll learn 'em.

Raymond James bullshits its clients re. Bear Creek Mining (BCM.v)

In its effusive pumphouse marketing note to clients on Bear Creek Mining (BCM.v) this morning, the crew at Raymond James decided that facts just don't matter. For example, its clients read this morning the following line about the protesters at Santa Ana:

"...they’re accusing BCM of looking to pollute Lake Titicaca, which is 50km away and uphill! Would need to invest millions in pumps to be able to do this"

Sorry guys, that's bullshit and you're either deliberately lying to your clients or you've been told bullshit by Bear Creek (BCM.v). The FACTS are that Santa Ana is 45km away from Lake Titicaca (a small point) and that Lake Titicaca sits at an elevation of 3812 metres above sea level, while the low point at Santa Ana is 4150masl (a big point that blows your sarcasm and exclamation marks out the water, dumbasses). The rest of the reasoning that tried to belittle the protests against Santa Ana was just as poor too.

Just another day of South American ignorance out of so-called professional brokerages in Canada, but don't worry guys, we're used to your stupidity by now. Anyway, here's a message for you from people who do actually check facts before opening mouths. Why don't you just do us all a favour one time and....

?

Chart of the day is....

...the Peru Stock Exchange IGBVL "General" index, 12 months to date updated from yesterday (as promised in yesterday's CotD)


The subtle difference is the 12.45% drop, the biggest in the IGBVL's history. It only traded for half an hour at the open and then for two hours from 11am, as well. The BVL's head honcho, Roberto Hoyle, was all over Peru TV news shows last night trying to explain why the directors of the bolsa decided to panic and spread the panic they did. For me it's either that they're total morons or that they actually wanted panic to happen, most likely both. Thew word Idiots is too kind for them.

But that was then and this is now and when this market is a buy is the question, not whether. It could be today, it could be next week, but right now my thumb-stuck-in-the-air-best-guess is tomorrow Wednesday 8th June, the same day the Aymara people go back to their protest and start blocking roads in Puno again. But whatever day it rebounds, it's gonna rebound, be clear about that. That chart above you is money waiting to be earned in long positions to come, it's up to you to decide whether you want a slice of the returns.

6/6/11

The next FinMin of Peru speaks

Word now is that Ismael Benavides was offered and declined the job of FinMin under Ollanta so all fingers now point to Kurt Burneo, the dude that dragged the Ollanta financial agenda towards centrepolitics during round 2. Here's Burneo in a youtube appearance today, explaining that the macro economic policy that will be implemented in Peru by the next administration is totally orthodox, things in the financial sphere will be as per and the social programs that Humala will implement will come under a totally balanced budget.


An interesting video for those that understand*.

*What, you don't dig Spanish? Sorry 'bout that, dude..

Eurasia on the Peru election result

Credit where it's due, Erasto Almeida of Eurasia stuck to his guns all the way through the second round of the Peru Presidential election, consistently called Ollanta Humala as the winner and got the result he predicted. Never mind the nitpicking, he deserves credit for a good call.

Now for his note sent out today about an hour and a half ago, which you can see below. Enjoy.


PERU: Risk of major policy shifts under Humala will be low at first, but could grow over time
6 June 2011 04:08 PM EDT

With nationalist candidate Ollanta Humala headed to become Peru's next president on 28 July, there is tremendous uncertainty amongst investors and businesses alike over what his agenda will be. Humala is likely to begin on a positive note. We expect him to signal continuity on fiscal and monetary policy and nominate reasonably well-respected economists to his economic team. Nevertheless, over time Humala will be challenged to manage the trade-offs between his goals of increasing spending and expanding the role of the state in the economy without threatening macroeconomic stability. As a result, we expect the direction of economic policy to deteriorate over the course of his mandate. The sector most immediately at risk is mining. Humala will seek to increase revenues substantially by increasing royalties and instituting a high windfall tax that will affect new and existing projects. Humala will probably try to negotiate changes with companies who have contracts guaranteed by Peru's constitution. The overall dynamics of how the increase is implemented will be a good litmus test of the overall direction of policy during his presidency.


In line with our expectations, official results and private estimates show nationalist-candidate Ollanta Humala appears to be headed to become Peru's next president (see Eurasia Group Note Peru: Humala is likely headed to a narrow victory 1 June 2011). The latest results from the National Office of Electoral processes (ONPE) show that with 94.3% of the vote counted Humala has 51.27% of the valid vote, while center-right candidate Keiko Fujimori has 48.7% of the vote. Quick counts (estimates based on a sample of voting stations), that in the past have proven to be fairly accurate, show Humala ahead with a comfortable margin. According to NGO Transparencia's latest quick count Humala defeated Fujimori 51.37% to 48.53%. A quick count by reputed polling agency Ipsos-Apoyo Humala had 51.4% and Fujimori 48.6%. While Fujimori has not yet conceded, the trends are unlikely to change. Moreover, the difference seems to have been wide enough to avoid any possible dispute or conflict over the results.

The main question now turns to what to expect from Humala after he takes office on 28 July. Our view remains that Humala will likely begin on a positive note, but that policy risks will likely materialize in the medium to long term (see Eurasia Group Outlook Peru: A low risk of radical change under Humala, but policy would likely take a negative turn for investors 5 May 2011). Humala has moderated his discourse throughout the campaign, and there are reasons to believe such a stance extends beyond a pure electoral strategy to help win the election. Humala and his advisors, for example, do seem to be earnestly concerned with containing the negative impact that his election could have on markets and they look to be placing a premium on maintaining economic stability in the short term. . We wouldn't be surprised if Humala announces part of his cabinet and economic team, including appointments to the central bank board of directors, relatively soon. Humala will likely nominate moderate individuals that would assuage market concerns. After the first round, many former President Alejandro Toledo economic advisors' joined the Humala campaign, so Humala has a pool of respected economists to choose from. The next administration will take office on 28 July, but Humala will probably announce appointments to key economic posts within a few weeks.

It's very hard to anticipate who Humala's next Minister of Finance will be, but Kurt Burneo probably has the highest chances of securing the post. He was one of Toledo's economic advisors, was an ex-Central Bank and Ministry of Finance official. He joined Humala's team in the second round, and the fact he has already been giving strong signals of policy continuity today could be seen as an indication of his growing standing vis-à-vis Humala. If he doesn't assume the Ministry of Finance, he could be a candidate to assume a position in the Central Bank (the government will appoint 3 directors plus the president within he first month of office).

The problem for Humala will be to strike a balance between his goals of increasing spending and expanding the role of the state in the economy without threatening macroeconomic stability or generating market uncertainty. Our view is that given the high demand for change among voters (this was a driver of Humala's victory) and Humala's desire to avoid seeing his approval ratings plummet, when faced with difficult trade-offs he would probably lean towards higher spending. It is unlikely that Humala would put broad stability at risk, but he will push the limits on fiscal and even monetary policy. As a result, the direction of economic policy could very well deteriorate over time.

Nevertheless, Peru's good overall macroeconomic fundamentals will give Humala some room to maneuver without significantly altering the policy framework. Moreover, and although we think this should not be overstated, Humala will face institutional constraints, including constitutional limits and a divided congress, that will limit how much he can do.

The sector that would be most immediately at risk would be mining. Humala wants to increase revenue to finance his policy agenda, and has clearly stated his intention of increasing revenue by 4% of GDP (Humala has stated a desire to raise revenue from 14% of GDP to 18%), and mining is the easiest source. As a result, he will most likely seek to increase revenues by increasing royalties and has mentioned his intention of instituting a high windfall tax. This will affect both new and existing projects. Humala will also seek to renegotiate current tax stabilization agreements to boost tax revenues (they represent around 25% of mining production). If he were to encounter difficulty doing this companies would probably face strong pressure to accept tighter terms, but risk of nationalization is low. In fact, how strongly Humala pressures companies and the overall dynamics of how the increase is implemented will be a good litmus test of the overall direction of policy during his presidency.
Erasto Almeida
Analyst, Latin America

Trading suspended in Lima stock market (UPDATED)

Due to the massive selling pressure at the bell this morning, trading in the BVL (Bolsa de Valores de Lima) Peru Stock exchange has been suspended for one hour. Here's the website link for the BVL, but don't be surprised if the page doesn't open, as they're swamped right now.

Basically, the idiots in the Lima middle class have decided to panic. Panic = opportunity. Don't buy yet, but keep Peru firmly on the radar because the chances of a big and buyable swoon are now getting higher.

Update: The Lima market is due to re-open at 10am local time (11am EST), which is about three minutes from now. Those trading stocks in Canada that have pair tickers in Lima should watch for the action in the more liquid junior mining stocks on the Lima exchange. These include Rio Alto Mining (RIO.v), Candente Copper (DNT.to) and Zincore (ZNC.to). Also of interest are Vena (VEM.to), Candente Gold (CDG.to) Rio Cristal (RCZ.v), Panoro (PML.v) and probably a few more I can't remember offhand right now.

Have fun and happy market watching!

UPDATE 2: We're just after 10am. The BVL bigwigs are obviously crapping their pants now and have suspended trading for another hour! If you ever wanted an example of "asking for trouble", look no further. Abject stupidity on display.

UPDATE 3: The BVL re-opened at 11am local time (12 midday EST) and....SPLAT! Now 10.6% down.Updating this update at 11:20 local time (12:20 EST), the IGBVL is now down 10.88%. Just so you know.

Scam runner Gordon Brent Pierce has got himself a website!

The man himself. Rip-off merchant Gordon Brent Pierce in the flesh

Oh joy! Go here to check out the website of Gordon Brent Pierce, who describes himself as a "no nonsense" business guy with a "hands-on" approach. Sadly, his concept on hands-on is much more about getting his hands on your money, because this scumbag liar is the same guy that's been banned by the Canadian authorities from the stock market, fined $2.9m by the US SEC for his pump and dump scam activities in US OTC stocks and now also has a $7m fine hanging out his tush, also from the SEC and also for pumping and dumping stocks.

Gordon Brent Pierce is a scumball of the worst type, a shark that preys on the innocent greenhorns of the market, rips them off and screws them into the ground, then leaves with their money in his pocket. He's still at his disgusting games too, as we recently witnessed with the shameless pumping and dumping of his vehicle Mercer Gold (MRGP.ob), a bullshit gold junior in Colombia he couldn't run himself due to his multitude of convictions, so he got it headed up by trainee scamster Rahim Jivraj, the whole thing that we at IKN exposed. To see Gordon brent Pierce promoting himself in this way is a joke, but it's probably due to the fact that he's had to put his house on the market recently in order to pay his fines, else face jailtime (at long last).

So do yourself a favour, go visit his website, take a few minutes, look at how he presents himself to the world and learn: This is the pattern of behaviour used by a criminal scumbag white-collar fraud merchant, so commit it to memory. It might save you some cash somewhere down the line. DYODD, dude.

UPDATE: A reader (whose personal details are reserved) send in a screenshot of a mail he sent over at Pierce's contact page on his website:


Goldman Sachs on the Peru election result

As well as calling "buy" on Freeport (FCX) this morning, the Vampire Squid decided to publish this on the Peru election result.

According to the official vote count, with 86.6% of total votes already in, Mr. Humala (Nationalist party) got 51.18% of the valid votes while Mrs. Fujimori (Fuerza 2011) got 48.17%. Mrs. Fujimori is likely to concede the election within the next few hours. Mr. Humala already gave a victory speech in the early morning hours in which he stroked a moderate tone. He said he would lead a government of national unity and that he would preserve the economic growth and the good policies of the current administration. Moreover he pledged to improve redistribution policies and comply with his campaign promises of increasing social spending.

In our view, the fact that Mr. Humala has won the elections with the support from moderate votes and moreover, that his political coalition does not have a majority in Congress, suggests that he would find it very difficult to impose a radical reform agenda early on during his tenure. Last night, his main economic advisors said that investors should have no doubts about the direction of macroeconomic policies in Peru, because Mr. Humala is committed to maintain the independence of the central bank and a disciplined fiscal policy.

In terms of things to look forward to over the next few days, Mr. Humala is likely to begin nominating cabinet members. In particular, he is expected to appoint the Prime Minister and the Minister of Finance. In our view, it is likely that Mr. Humala will appoint independents to these posts in order to reduce uncertainties.

Eduardo Cavallo

IKN back. For what it's worth, your author has heard from more than one source in the polite circles of Lima society that Ollanta Humala wants the current FinMin, Ismael Benavides, to keep the job and stay on as his Economy Meister. Others say that his finance boffin in the election campaign, Kurt Burneo, will get the job. I think he's set for the chair of the CenBank, personally. But WTFDIK? DYODD.

Chart of the day is....

...the Peru Stock Exchange IGBVL "General" index, 12 months to date:


On Friday it closed at 21,227.68 We'll see where it stands tomorrow morning, too. Place your bets, ladies and gentlemen...

The IKN Weekly, out now


IKN109 has just been sent out to subscribers. Just making sure you know.

6/5/11

Peru Presidential Election Results: Exit Polls make Ollanta Humala the winner

It's not yet official and we're best advised to wait until at least the more accurate but still unofficial "fast count" results due around 8pm Peru time (9pm est), but the 4pm close of votes has just gone and Peru is allowed to give fairly accurate exit polls to the world. Here they are:

Ipsos/Apoyo: Ollanta Humala 52.6%, Keiko Fujimori 47.4%
Datum: Ollanta Humala 52.7%, Keiko Fujimori 47.3%
CPI: Ollanta Humala 52.5%, Keiko Fujimori 47.5%

In other words, barring a statistical freak Ollanta Humala is the new President Elect of Peru and will take office on July 28th. We'll update this post at 9pm EST with the fast count results, which is probably the same moment that Keiko Fujimori concedes defeat. Pisco sours served, the end.

UPDATE: We hear the normally very accurate "rapid count" result is 52.2% Ollanta, 47.8% Keiko.As soon as that is officially confirmed by Peru's election agency I'll put a link up here. It's now time to get on with writing the Weekly section about what to expect tomorrow.

UPDATE 2: This is good from Reuters, a round-up of reactions from various market commentators. For the record, put me in the Benito Berber camp. Also for the record, Alberto Bernal of Bulltick has always been a zero on Peru and he shows it once again here.

Update 3: The rapid counts look like this:

Ipsos/Apoyo: Ollanta Humala 51.4%, Keiko Fujimori 48.6%

Datum: Ollanta Humala 51.0%, Keiko Fujimori 49.0%
CPI: Ollanta Humala 52.2%, Keiko Fujimori 47.8%

Finally, official vote watchdog "Transparencia": Ollanta Humala 51.3%, Keiko Fujimori 48.7%

These "fast count" results and NOT the official results, but have proven to be historically very accurate and close to the final election figures in Peru. So take this one to the bank: Ollanta Humala is the next President of Peru. That is all.

Update 4: A bit of jollity and a classic out of Peru Fail this evening, which I'll translate underneath. In the photo we see the map of Peru, with the red colour showing the departments won by Ollanta Humala and the orange departments won by Keiko Fujimori.


person 1: "Who did the little blue ones vote for?"
person 2: "It's called Lake Titicaca"

Message for subscribers

The question I've had for days is how I'd run the Weekly today in the light of the unfolding election in Peru. As it turns out, after considering options and now seeing the way the last couple of days of the campaign as well as the writing has unfolded this weekend I'm going to hold back on publication until this evening and incorporate at least the exit poll results into the script. As the result of the election is going to affect at least a few covered stocks one way or the other, on reflection adding in specifics for the sake of a couple of extra hours seems the right way to go about today.

So all that is a long-winded way of saying "expect The IKN Weekly in the evening hours EST, rather than the afternoon hours". TIA.

UPDATE: We've just heard from the necessary places that as well as the exit polling that will be available as soon as the voting closes at 4pm Peru time (5pm EST), the results of the so-called "fast count" should be available at 8pm Peru time (9pm EST). This "fast count" result is traditionally a very accurate forecaster for the official vote count that takes up to five days and typically gets within a 0.5% margin of error, so as its publication shouldn't be too deep into the evening that's the one we'll be waiting for today.

In the Argentine ski resort of Bariloche, that white stuff falling from the sky this winter isn't snow

It's ash from the erupting Puyehue volcano, 60 miles to the West in Chile. Here's a shot of the streets of Bariloche last night....

...and here's the satellite image.

..and here's more in English from Reuters. 

UPDATE: Excellent photoshow of Bariloche and surroundings at La Nacion today, right here. 

UPDATE 2: You want really really pretty photos of an erupting Volcano? Chile's La Tercera got really really pretty photos of an erupting volcano. h/t settydude