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11/5/11

¡Torito!

Just the four goals today for Cavenaghi. Here's number three:

IKN asks: What to do about Aaron Wise of Benzinga?

In this post I'm asking for your advice, but first you need to picture the scene so here goes.

I don't know whether it's a good or a bad thing, but it's true that your humble scribe gets a lot of mails along the lines of "Hi! Your blog is great! Would you like to write for us?" from those aggregation-type websites. I usually write a simple "no thank you" by way of reply, but as it happens in September I decided to see what one actually had to offer before refusing. So to get you up to speed here's what happened, word for word. The only things changed from the originals are the removal of the @ signs so that spambots don't pick up on the mail addresses and start sending tons of spam.

xxxxxxxxxxxxxxxxxxxxxx

On September 25th, one Aaron Wise from a company called Benzinga wrote this mail to me:
On Sun, Sep 25, 2011 at 4:42 PM, Aaron Wise wrote:
Your stuff is hilarious! I love it. You have such a unique, Mexican barrancas (am I guessing right?) style, I've never seen any writing like it. Pithy wit but fair and balanced, fun but well-educated... I enjoy your blogs quite a bit.

I am a manager at Benzinga.com and I've been following your blog for a few weeks now and wanted to reach out to see if you would be interested in a partnership. Any interest in becoming a columnist on our site? We have reach of 1-1.5M uniques per month, top-traffic article of 800,000 pageviews, primarily North American audience over 40yrs. old making $50k/year+, etc. Highly financially-focused audience about a wide variety of market topics.

Let me know. We also offer an affiliate program with a 35/65 split on pro.benzinga.com sales. Also other possibilities...



Aaron
So the same day I wrote back with this:
On Sun, Sep 25, 2011 at 6:31 PM, otto rock wrote:
O RLY?
To which Aaron replied (note that the reply came seven minutes later and that our two time clocks are one hour apart...timezones i guess):
On Sun, Sep 25, 2011 at 5:38 PM, Aaron Wise wrote:
lol, yep really
So this is the point where perhaps I should have written that "no thank you" mail, but instead and for once (not least because the guy actually seems to read IKN on occasion and isn't just blind fishing, added to the fact that he does seem to have a decent quantity of brain cells to rub together) I decided to find out more out of sheer cat-kill curiosity:
On Sun, Sep 25, 2011 at 6:55 PM, otto rock wrote:
Ok, so what's in it for me, Mr. Wise?

Money.

Nitty gritty.

gimme your best shot or get the "Thank you, but...." reply.

best, O

To which the Aaron dude replied thusly:
From: Aaron Wise
Date: Sun, Sep 25, 2011 at 6:10 PM
Subject: Re: IKN - Benzinga partnership
To: otto rock


I can offer you some hot info and warrants of POTG at $1 strike because it will return to glory like Elvis.


Um, (1) you could write for us on a traffic-based compensation system, like $10 per 1,000 hits. You would probably be most interested in that... we had a 850,000-hit piece last month... that'd have been nice for you.

If you're not interested in writing, (2) we can offer an affiliate partnership (you get 35% of $39-169 per month subscriptions to Benzinga Pro news, including unlimited residual commission). You could market via a banner or email. We provide customizable copy.

Otherwise, (3) we could offer you a set monthly contract for writing X # of words. This bores me most of the three options, but if you want, feel free to suggest a $.

-Aaron


And that's when I let it drop. I liked the reference to POTG.pk because it showed that he does actually read these humble pages but overall it was the standard stuff, a mix of how they'll make me famous, give me a relative pittance in return and make free money off my back so I just decided to ignore it. no reply, no nothing. I went back to my normal boring little neurotic weblife existence and thought no more of it all until October 14th, when suddenly this appeared in my mailbox:

On Fri, Oct 14, 2011 at 6:53 AM, Aaron Wise wrote:
Any updates from south of the border?
-Aaron
"OK", I thought, "I thought he'd given up, but at least tell him no thanks, it's the least he deserves". So I did:

On Fri, Oct 14, 2011 at 7:55 AM, otto rock wrote:
i have decided that i don't want to be famous or rich, therefore politely decline your kind offer.

To which he replied:

On Fri, Oct 14, 2011 at 12:10 PM, Aaron Wise wrote:
Hey no problem. Maybe in the future. Enjoy your weekend!

And that was that, right? Wrong. Yesterday I got this in the mailbox:

From: Aaron Wise
To: otto rock
Sent: Friday, 4 November 2011, 12:38
Subject: Re: IKN - Benzinga partnership


I think there is room for your stuff here still. Need I mention we have over three million hits per month? Could be quite interesting from an affiliate standpoint. Or...

Besides, we also want to provide more non-biased coverage and analysis of the small-cap sector as one of our differentiating characteristics as a news provider. You fit the mold in that regard.

Let me know what I can offer aside from riches and fame -

Aaron

Which brings me to my search for advice from you guys out there, the readers. What do I reply to this dude, ladies and gentlemen readership of IKN? On the one hand he can't take no for an answer and that's annoying. On the other hand he's only doing his job and at least he's personable and can write an engaging mail.

Like I say, I get maybe a dozen of these "come write for us!!!" offers a year and they're always roughly the same thing, too. The Benzinga model will vary from the Seeking Alpha model will vary from the Stocktwits model will vary from Wikinvest model will vary from the can't-remember-them-all model, but in the end the basic bottom line is that you're giving somebody else free and original content and they pay you peanuts for the privilege. If there's just one lesson I've learned in 3 1/2 years of this blogging malarkey it's that independence is a very valuable commodity in this game and I'm not going to give that up for ten times the amount these aggregation "make you famous" web(para)sites will ever offer.

So what to do about Aaron, folks? Mails with advice appreciated at the usual address and have a good weekend.

Alfonso Cano is dead

Good.

This El Pais biography out today is a good read and includes his background and how/why he became leader of the FARC-EP of Colombia. It also notes that this is the first time any FARC leader has been killed in combat.

Update: Half an hour after posting and two things to add here on further reflection:

1) The link is to El Pais, the Colombian newspaper. Not Spain's El Pais.

2) The reason behind the single comment word "good" above. It's the result of a) wanting to note here at IKN that a terrorist leader has been eliminated from the map of Colombia, because that's important news and a distinct positive for the country b) not wanting to paint him with too many words because he doesn't deserve my time and c) not wanting to speak much ill of the dead, as that does nothing much for anyone. So simply, the news is good.

11/4/11

The Friday OT: The Chemical Brothers; Midnight Madness

This is the third Chemical Brothers video featured as a Friday OT, with Hey Girl Hey Boy shown back on July 10th 2009 and then Star Guitar given its turn on January 14th 2011. So why do Chemical Brothers videos get featured with regularity round these parts? Simple:

1) Music rocks
2) Videos astound.

That's true for the above two linked and it's true for today's offering, Midnight Madness:


As for the track, it goes thru three rough phases, of 0:00 to 2:00, then 2:00 to 3:00 and then 3:00 to 4:00 (my fave is the last). When it comes to tracks with dance videos worth watching, there are three main categories. In ascending order, they are:
1) Good dance videos
2) Really impressive dance videos that make you go "Wow, that dude/tte sure can dance!"
3) The video for Midnight Madness by The Chemical Brothers.
Enjoy.

On the subject of Bolivia...

Yesterday we featured Bolivian President Evo Morales' approval ratings on these humble pages and noted the slump he's suffering at present, so I'd like to pick up and run with this a tad further because it's worth pointing out that the Evo woes are more about specific social issues (Tipnis first amongst them) and much less about the state of Bolivia's economy, which is doing just fine thank you very much.

Don't believe me? Well, no need to take my word for it, let's see what The IMF western hemisphere sub-director, Gilbert Terriel, had to say on the subject yesterday:
"In contrast to the rest of the LatAm and Caribbean, which is seeing a slowdown in economic growth from 5% to 4.5% and in the worst cases in the industrialized nations that only get to 3% growth, during this government Bolivia is keeping to a 5% growth rate with a slowdown in inflation to 6.9%."

Backing up those words at the same meeting and presser, Bolivia's Minister of Economy and Public Finances, Luis Arce, said:
"The international finance crisis won't affect our banking system or financial entities. We have a strong finance system. Inflation has stopped being a problem and is now dropping, despite those who try to exacerbate it through the media."

Then while laying out government forecasts for 5.5% GDP growth and 4.5% inflation in 2012, he added:
"All signs are that Bolivia's economy is going to behave well, with less inflation and stronger growth."

So now you know. Evo may be subject of gripes, but it ain't about the economy, stupid.

B-b-b-b-b-but they said it and it was printed too! They couldn't have been bullshitting me, surely?

Here's a YTD chart of Trevali Mining (TV.to):


Here's news from May 3rd 2011 and here's how it starts:

Lima, May. 03 (ANDINA). Canadian-based Trevali Mining Corporation said that mine commissioning and production at its Santander zinc-lead-silver mine located in Huaral, Lima, is anticipated to commence in late 2011 with full production to follow immediately thereafter.

"At Santander, in conjunction with our partner Glencore International A.G., mine commissioning and production is anticipated to commence at 2,000-tonne-per-day in late 2011", Trevali said in a statement. continues here

Here's an owl:

We also note that the Santander mine is now due to go online Q1 or Q2 of 2012, according to latest company literature. Anyone fancy taking a bet on this Cardero Group "fact"? And before you ask, yes this is the same mine that Bob Moriarty said would be online in 2008.

The other big question to answer is just how many rounds of financing is TV.to going to run before this mine goes FCF+. I'm guessing two, but three wouldn't surprise me, either. 

dyodd, dude

And a look at how precious metals have traded against the miners in the last five days shows...

...that the gold miners (GDX) have done the best, up 4% and that's a pretty decent showing all told. With it being earnings season for the major gold miners, it shows that the results have impressed the market on a global level. This is good.

Gold bullion ((GLD) proxy) and the junior miners (GDXJ) have a small win but nothing special, whilst silver bullion ((SLV) proxy) hasn't had a good week, despite the normal To Da Moon Alice rantings of its ridiculous permabull fanclub.

Chart of the day is...

...uranium 2 year price (spot and long term), Source: The Ux Consulting Company, LLC


Still not much movement on spot since the Fukushima snafu flushed through the market, but maybe a bottom being put in around here. However the downwards trend of the long-term contract pricing should be more of a worry for U longs.

11/3/11

Presidential (un)popularity: Evo Morales is giving Sebastian Piñera a run for his money

By now, most people with at least one eye on LatAm political affairs know that President Sebastian Piñera of Chile is the least popular president in the whole region, polling somewhere between 28% and 30% approval according to the survey you prefer. However President Evo Morales of Bolivia is now giving him a run for his money, as this chart of Evo's polling from September 2008 to October 2011 shows:


The newest number from the reputable Ipsos/Apoyo that does this poll every month, that of October 2011, came out yesterday and showed just 35% approval for the chunky sweatered one, with his disapproval rating moving up from 51% to 55% (the other 10% just said "meh", I suppose). According to those polled (around 1300 people monthly), the recent droop is mainly to to Evo's heavy-handed dealing with the indigenous Tipnis marchers (a subject we haven't covered here at IKN, but if you care enough here's a Google English language page with all you need) that included police bashing them over the head and then the eventual Evo capitulation on Oct 24th. What's most interesting about this is the way Evo, by turning against indigenous in the way his government did, got the thumbs down from his main El Alto powerbase with just 53% approval (it used to be a regular 85% or 90% there).

If Evo's learned his lesson, his numbers should creep back up in the months to come in the same way they did after his aborted attempt to raise fuel prices at the end of last year (the dip in popularity is clear there). But if he hasn't we may be in for a new era of "unpopular Evo". This will be interesting to watch as even though he has the job until 2015 and his opposition is fractured to smithereens at the moment, Bolivia can hardly be called the most stable of countries institutionally.

How Peru works

Today Peru's Minister of Energy and Mining, Carlos Herrera Descalzi, went to the meeting between the Yanacocha mine and local protesters who are against the development of Yanacocha's nearby "Minas Conga" project, which has been the scene of protests in the last few weeks. Minister Herrera talked about social inclusion and how the country's government supported mining but not at any cost, and how if Mina Conga didn't come up to standard and do the right thing by locals, by the main contentious issue of water supply and by the environment in general, the project wouldn't get the support of the government.


Welcome to the new Peru, just the same as the old Peru

I don't know why I bother sometimes

It's all rather depressing and it beats me why I pore over balance sheets, visit projects, grill management teams and read dozens of NRs every day when all I really need to do is ask three questions:
1) Does it trade on the US market?
2) Does it produce gold or silver?
3) Is it regularly pumped to fools who are separated from their cash time and time again*?

If the answer to those three is yes, then buy it. Forget about the crappy deposit, the constant managerial failures, the broken promises and the production shortfalls, just STFU and buy it.

dyodd

*retail: the crop that never fails

Metalheads, watch this video

Only around 500 of you clicked through to watch this video yesterday and that's not nearly enough of a percentage of IKN viewers. I know some of you come for the politics but I know most of you come for the mining blabber, and ALL of you people need to watch this. So watch it, because not only is it fun but it's also wise on information that one day might save you a whole packet of cash.


And for your information, Daniela Cambone is married.

What all that GDP growth has done to Peru

The annual UN Human Development Report was published yesterday and Peru, due to worsening comparative standards of health service and education, plus ongoing inequality and environmental damage (UN dixit, not me), has dropped 17 places since 2010 to stand at 80th place.

But don't worry, because a whole bunch of people living in central Lima can afford new Toyotas these days and as they're the people that actually write the news and comment on Twitter you won't have to put up with this type of stuff until this time next year for your next dose of reality about Peru. Style > substance every time.

Best in the region is Chile, up one spot to 44th. Argentina follows in 45th of the 185 world countries surveyed.

Mining PRs and the Ottotrans™, Part 48


Our occasional series of mine-babble translation and explanation picks up on the NR out of Argentex Mining (ATX.v) this morning:

This is what it said:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 3, 2011) - Argentex Mining Corporation ("Argentex" or the "Company") (TSX VENTURE:ATX)(OTCBB:AGXMF) is pleased to release additional drill results from its 2011 exploration program at the Pinguino project, located in Santa Cruz province, Argentina. In addition, Argentex desires to comment on the recent spike in the trading volume of its stock on both the OTC BB and the TSX Venture Exchange.
Market Comment
The Company knows of no reason for the recent spike in trading volume of its common shares. As a result of its August 19, 2011 financing, the company has in excess of $10 million in cash and short-term investments and is not aware of any unannounced information that may have caused this spike.
Corporate Update
Argentex continues to yada yada continues here

And this is what it means:
VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 3, 2011) - Argentex Mining Corporation ("Argentex" or the "Company") (TSX VENTURE:ATX)(OTCBB:AGXMF) is pleased to release additional drill results from its 2011 exploration program at the Pinguino project, located in Santa Cruz province, Argentina. In addition, Argentex desires to comment on the recent spike in the trading volume of its stock on both the OTC BB and the TSX Venture Exchange.

Market Comment
The Company has had the holy crap beaten out of its share price. We don't know why we've had the holy crap beaten of our price, but we can't possibly mention the badass price drop so we'll just talk all coy about volume instead.

Corporate Update
Argentex continues to yada yada continues here

Chart of the day is...

...gold, 90min candles, because it just did this:


dyodd

11/2/11

We finish IKN today...

...by showing you how the Swedish Chef makes donuts.


Bork

World of Stupid, AP Edition

This is the top story on Yahoo Finance right now:

As Expected, Fed Holds Off on Further Easing Amid Economic Woes- AP

Here's the chart of Fed Funds rates, 1955 to date:


Wow what a fucking relief that they're not easing that number any further, eh?

How Great Panther Silver (GPR.to) (GPL) pumps itself to the naive end of the junior market: A few facts

Fact 1) Great Panther Silver (GPR.to) (GPL) has a penchant for paying the scummy end of the pumphouse promo world to get its name in front of people with more sense than money..

Fact 2) These days, it has hired a firm called Torrey Hills Capital to do the dirty work.

Fact 3) This is the kind of thing people in US cities are now receiving, unsolicited, in their mailbox from Torrey Hills Capital (sidebar; people of Cincinnati, remember that there's no such thing as a free lunch)

From: "Mark A. Rauseo"
Date:
November 1, 2011 9:03:27 AM EDT
Subject:
Save the Date/GPL Cinn
I’d like to invite you to our inaugural due diligence roadshow luncheon in Cincinnati we are hosting for Great Panther Silver (NYSE-Amex: GPL), a mid-tier silver producer which reported 2010 production of 2.26 million silver equivalent ounces from its wholly owned mines in Mexico, Guanajuato and Topia, at a cash operating cost of $7.43 per ounce.  Erick Bertsch, the Company's VP of Corporate Development, will be presenting at a luncheon in Cincinnati on Friday, December 9, 2011 at Morton's The Steakhouse, a more formal invitation for which is attached herein.  Please let me know if you will be able to join us, I just need to know for headcount purposes.

By way of further introduction, below please find facts and highlights related to the Company.

ü  Aggressive Growth Strategy - In 2010, the Company completed the first year of an aggressive three-year growth initiative, targeting production of 3.8 million silver equivalent ounces in 2012.

ü  Strong Liquidity: The Company started trading on the NYSE-Amex under the ticker symbol "GPL" in February 2011, has average daily trading volume of approximately 2 million shares, and in June 2011 was added to the Van Eck Junior Gold Miners ETF, ticker GDXJ.

ü  Silver Resource: The Company is establishing and will maintain a compliant resource providing a minimum 10-year mine life, net of production, and seeks to open a third silver mine by 2013.

ü  Experienced Management: The management team is led by Bob Archer, a mining geologist with more than 30 years of experience, including with Great Panther, Newmont, Placer Dome and Noranda.

Previously, THC has not done such work in the Cincinnati area.  However, given the strengthening commodities bull market, particularly in Precious Metals, we are expanding our operations this year, targeting Cincinnati  due to its natural affinity for resource companies. 

If you or anyone else in your office are interested in attending, please RSVP via email or the phone numbers below.    Irrespective, I can put you on our email distribution list for future invitations if you so desire.
Thanks so much.
Mark

Mark A Rauseo
Torrey Hills Capital/BabyBulls.com
mr (at) sdthc.com
Fact 4) At the same time, arch-scumbag and two-faced frontrunning scamster Thom Calandra, a man already banned by the SEC for his unsavoury practices, has spent the last week pumping Great Panther Silver (GPR.to) (GPL) to his readership in these two posts linked here, this time going as far as trying to start lame takeover rumours about this dog of a stock.

Fact 5) Thom Calandra is a partner in Torrey Hills Capital. Sheer coincidence, of course.

Fact 6) Executive Chairman of Great Panther Silver, Kaare Foy, resorts to unsuccessful legal bullying tactics to try and keep facts from appearing about his company.

Fact 7) The most important of all. Here's how the GPR.to share price has been doing recently...sorely in need of a new pump campaign, no Kaare?

Moral of the story: Money talks, bullshit walks. People of Cincinnati, you have been duly warned.

Understanding Cristina Fernandez de Kirchner (plus special bonus: Understanding Argentina)

1) Last week saw the UNASUR heads of state meeting in Asunción, Paraguay. Cristina didn't attend and preferred to take time off in her home Santa Cruz region to commemorate the anniversary of her husband's passing (which was in fact after the meeting date, not on it).

2) This week sees the G 20 meeting in Cannes, France. Cristina came back to Buenos Aires from her break in Santa Cruz one day early to prepare for the trip. She should be landing in Cannes around now.

Special bonus: Argentina thinks this is normal.

the end

Two geologists walked into a bar...

With thanks due to reader RB for the headsup (and the title line idea), this is a must-watch video. Mickey Fulp and Brent Cook sit in a bar with Cambone of Kitco and talk about how to spot a scam in the junior mining sector. Educational and entertaining words from two of the best, most straight-shooting guys in the business.


Enjoy

Chart of the day is...

...the Argentine Peso (ARS) versus the US Dollar (USD) over the last two years:


If you look very very closely, you may be able to spot a trend.

11/1/11

"How do you spot a junior mining scam, Otto?"

I get that question a lot and the only real way of answering it is via examples. For instance, if you have a junior mining company with a chart that looks like this....

.....pumped by a bullshit merchant like this and prone to news releases like the one we had at 6pm this evening (and 2 hours after the bell is another clue)...
ROUYN-NORANDA, CANADA--(Marketwire - Nov. 1, 2011) - Explor Resources Inc.(TSX VENTURE:EXS)(PINK SHEETS:EXSFF)(FRANKFURT:E1H) announces that it has amended the price of 2,650,000 stock options that were granted to directors, officers and consultants of the Company on January 28, 2010 and of 500,000 stock options that were granted to a director on May 18, 2010, all at a price of $0.92. The price of these options has been reduced to $0.32 per share. (Continues here)

....then it's a safe bet that the people running the show aren't that interested in the financial wellbeing of their retail shareholders as much as they should be, in my opinion at least. Seriously folks, that NR tonight is just freakin' hilarious.

Memo to Wendell Z-Man Zerb and Nicholas CampbellSoup of the Can of Corn

Any financial report, paper or analysis that uses title line "Don't Cry For Me Argentina" = "Hackneyed tripe with zero insight guaranteed, so don't even bother opening it".

get a freakin' life, dudes.

IKN130 Regional Politics section

"Regional Politics" is one of the several regular sections that make up The IKN Weekly. As more than one reader of the Weekly took time out yesterday to write in and say "hey, good Regional Politics section this week" I thought I'd share it here (though a different respected reader took time to write and tell me why I was wrong about Argentina). The only changes are the deletion of specific stock names.

Regional politics

Mining & industrial plant leasers SKC on the state of the local industry
Here’s an example of the background stuff I tend to read here and there. This one is chosen because 1) it’s pretty typical of the general sentiment 2) it’s not directly mining but it makes clear that the mining industry in LatAm is a big growth driver and 3) the international growth aspect of the firm in question is interesting. SKC is a plant/machinery leasing company based in Chile, with a decent reputation and client base in the Central and South regions, but let’s not get too heavy on the preamble, here’s the report from Chile’s Diario Financiero (7) translated by your author and dated October 25th 

“There’s non-stop activity and we haven’t seen any let-up in investments”, says Alvaro Santa Cruz, CEO of Sigdo Koppers Comercial (SKC) regarding whether the international economic situation has affected companies with which he has a relationship, mainly in the mining and industrial sectors.

The executive says that, “Independent of the feelings of worry about what could happen in Europe and the rest of the world, we firmly believe that the mining sector will continue growing.”

So much so that he believes that in the next 12 months there will be an increase of between 10% and 12% in the volume of activity, this without adding new projects that may emerge. “Today the banks are a little more demanding (regarding credit facilities) but there is no credit crisis. There are still lines of credit available.”

Copiapó and Calama
The company is beefing up its presence in the North (of Chile) due to the growth in the mining sector. Santa Cruz commented that due to this SKC was opening a 4500 m2 branch in Copiapó that entailed an investment of $3.5m Also, next year they expect to begin the construction of a branch in Calama which will be an investment and surface area similar to that of Copiapó. The idea is that the mining sector will continue to increase its importance to the company.

International Development
The commercial subsidiary of the SK group is also raising its international profile. In Peru for example, as well as Lima, Arequipa and Chiclayo the company is going to open in Trujillo. “We’re going to open a couple of premises more focused on the mining sector”, he said. They are also growing in Brazil, having been in business in Curitiba for one year. In Brazil the company is mostly connected to the industrial sector. “We’re looking at Colombia. We’ve done some studies, but it’s a project that we’ll look at in 2012”, Santa Cruz added, saying that the mining sector in Colombia still had a lot of work to do to bring it up to speed.

Correa at Quimsacocha
Last Tuesday President Rafael Correa of Ecuador made a site visit to the IAMGold Quimsacocha project (8). The visit was political in nature of course, as he took time to point out to the media in tow that the project wouldn’t affect the nearby lakes and ensuing downstream water supply (the word ‘Quimsacocha” in Quechua means “two lakes”), that the rigged consultancy amongst locals that we reported on a couple of weeks ago was indeed rigged and “illegal” (rigged it certainly was, ‘illegal’ is debatable) that mining will be a big growth sector in Ecuador and all the other statements we’ve seen and heard before. The sanitized version of the visit is that above, but there were also incidents reported including the arrest of a 57 year old man who threw stones at the Presidential motorcade (apparently there was a rain of stones at one point, but only one capture), a strong police presence to keep protesters out of Correa’s face and a large crowd who booed and drowned out Correa as he tried to make a speech from the steps of the local municipal building.

In effect, the visit was a microcosm of the country’s attitude towards mining with the national government making the right kind of noises and the locals vehemently opposed to seeing a large mine set up in their vicinity. This split in opinion isn’t going away and won’t go away even if the now (in)famous negotiations on contracts with the big five mining projects (including Quimsacocha of course) are ever decided upon and get signed. The other negative that needs to be clearly underscored here is that Correa has been making the same mining-friendly noises for at least three years, but the progress made by his government on bringing large-scale formal mining to the country has been precisely and exactly zero.

The call on Ecuador remains AVOID, written in capitals bold-typed and underlined. If the country ever gets its act together then we can re-examine that call but even if the current negotiations with ther big mining companies reach a conclusion (so much for “signed in October”, no?) we’d still be a long way away from seeing a mining project get through the on-ground protests and oppositions it would be certain to attract and start producing metal (be it copper, gold or whatever).

A final point. After last week’s note which, like today, covered Ecuador in the ‘Regional Politics’ section and mentioned XXXXXX along the way I had two mails from subscribers wanting to know whether I was warming up again to the idea of buying XXXXX. The answer to those mails which gets repeated here is that no, I’m not considering XXXXX as a buy in the short-term or even medium-term. What we’d need from XXXXX to make it attractive is its own deal with the government on tax and royalty burdens, signed sealed and delivered, before it could seriously be considered a buying opportunity again. That kind of timesecale is likely counted in years, not days or weeks or even months. My thoughts regarding XXXXX last week didn’t make that time distinction and as such (and by the looks of the couple of mails received) may have caused confusion, so here today I want to shine the light clearly. I got out of XXXXX at a loss, it sunk much lower in the weeks after that sale and even though I note that the stock put in a bit of a low volume rebound last week I have no interest whatsoever in buying back. I made the mistake of hanging in too long on XXXXX and thinking Ecuador would be able to turn around its political risk profile in the time I held the stock, which was a failure in judgment but hardly likely to be the last one I ever make. However, in the words of Seneca the Younger, “Errare humanum est, perseverare autem diabolicum”.

Minas Conga, Peru
The gold mining project known as Minas Conga in Cajamarca, owned by the Yanacocha consortium (the operator NEM and partner BVN, with the IFC as minority holder), has been making headlines in the last couple of weeks due to a protest by locals against the project. The Congas project has been a contentious one for years (not just this year) but received its enviro permits late in 2010 and then got the formal green light from both boards of directors and the project is now supposed to be in construction (if it weren’t for the protests). Yanacocha SA (the main mine is close to Conga) wants to invest U$4.8Bn at Conga to bring the new deposit online by 2015 as the main Yanacocha pit is starting to deplete, while locals oppose the project because they say it will drain the local water supply to nothing and ruin the agricultural land around the region (9). In the last couple of weeks things have come to a head with road blocks and marches that were mostly pacific but a couple of violent flashpoints were reported as well.

So far so normal for Cajamarca. This region hosts some of the biggest gold mining operations in Peru (GFI Cerro Corona is another) but can also be a pretty fractioned and politically difficult region in which to operate. Political risk is a not a blanket “good” or “bad”, but varies from area to area, even village to village, depending on the attitude and culture of the local community groupings. In the case of Conga, those against the project have been organizing their protests for at least three years but now the Humala government with its Consulta Previa (pre-consulting) law is in power, the locals have found a legitimate platform and traction for their cause at the very same time as construction activity is beginning to ramp up at the site....hence the uptick in protests, the roadblocks, etc.

What happens from here is interesting from a test-case point of view, as (along with the Tacna protests against Southern Peru’s expansion plans and Anglo at Quellaveco mentioned a couple of weeks ago on these pages), it will be one of the first serious tests the government policy. That kicks off next week with a round-table meeting due to start between miners and locals (10) that the government (via the Mining Ministry) will sit in on, rather than lead. This return to negotiations between the two sides may well lead to an eventual government-led negotiation period, because both sides seem rather intransigent up to now (in typical fashion the mining company maintains it has complied to the letter of the law and in typical fashion the local communities are looking for a monetary compensation for the arrival of the mining company, said to be around the 200 million soles (U$74m) mark). Both sides accuse each other of the flipside of their demands, both claim blackmail and skulduggery, and from the outside looking in it seems the whole process is sorely in need of arbitration.

A personal call on this would be that in the best of cases, the government starts its formal arbitration process and after a few weeks Yanacocha concedes some ground and agrees on some level of financial compensation for the affected population, who then sign guarantees of support for the project and the whole thing goes ahead. That’s a best case of course and right now I’d give it a 50/50 chance of happening that smoothly. But Minas Conga is definitely a test case that a lot of major mining companies will be closely following, as it will give plenty of clues as to whether the new government policies will be effective. We’ll also be watching this space carefully in what’s left of 2011.

Argentina and repatriation
This one has made plenty of headlines and has been fodder for plenty of analysis notes, too (including of course the Flash update from last Wednesday afternoon which you can find in Appendix 1 underneath) so before noting a bit of fine-print, let’s cut to the chase with some what-you-need-to-know bullet points:

  • The new repatriation rule really is no biggie for mining companies (producer or explorer, large or small) in Argentina and does not stop any company from remitting profits back home

  • It’s not really about mining and much more about the crackdown in the exchange trade in dollars in Argentina. We note today the news reports (11) about how the market for dollars will be restricted by the Argentina tax office (AFIP) temporarily. No dollars from internet or phone banks none from cash machines and if you want dollars tomorrow and go to a bank teller window, you also have to justify your purchase and explain why you want dollars. It’s all about capital flight from Argentina and all about how the Central Bank (BCRA) has had to intervene by selling dollars to the market in order to prop up its currency.

  • It is ultimately an inflation fighting exercise by run by the Argentine government, as tighter controls on dollars = less capital flight = more power for the BCRA to intervene and prop up the currency = a stronger (or better put “less weak”) Peso = more buying power per banknote = prices don’t rise as quickly as they might. Whether or not this will work as a policy is beyond the scope of this publication about junior mining companies in LatAm, the fact is that they’re trying it.

  • Other regional countries apply the same rules as the new Argentina Executive Decree (a good example being Brazil, which imposes the same kind of small transaction tax on money movements as Argentina and is a near carbon copy of what companies will go through in Argentina in the future) with nary a word spoken against them.

  • This move may presage further tightening on transactions in foreign currency for companies (in our case the miners) because you can never say never, but anyone who shouts, states or even implies that those tightening measures are bound to happen doesn’t have the first clue on the subject.

  • Further restrictions on foreign currency transactions in Argentina are unlikely in the short to medium term, i.e. the attention span that the market is using and will continue to apply in the future.

  • This issue, badly understood by the prophet of doom English language media and analysis brigade, has thrown up a good buying opportunity in many Argentina exposed stocks, including of course our own covered stock XXXXXXXXXXXX, which has a great buy/add price on offer right now (I’ve personally taken advantage of that).

Now for a bit more and some background is needed here. Firstly, it’s interesting to note how the demonization of the Cristina government quickly moved from the original call from Northern press and its anal yst community of “Mining money can’t leave Argentina!! Sell!!”. When that was clearly pointed out as false, the anal yst talk went to “It’s the first move in a tightening that will lead to...” and you can add the rest yourself. The fact is that it might lead to a situation further down the line that puts more restrictions on the remittance of revenues (mining and other) out of Argentina, but for one thing that’s unlikely because even a heterodox economic model such as Argentina’s isn’t going to commit financial suicide and for another, even if the eventual policy hardens to such extremes it’s not going to happen for plenty time yet.

Second up: What we saw last week was a pretty classic example of how the Kirchnerites (or K people, or Frente Para la Victoria sub-section of the Peronist movement, or whatever else you’d like to call them) operate their political powers. The normal way the Kirchnerites (led by Cristina herself of course) move is to:

1)      Move by surprise and hit the market or opponents over the head with a large piece of 2x4 introducing a new rule or law or decree when nobody was expecting it.
2)      Wait for the critics and push back from their extreme and unannounced move.
3)      Negotiate to a more moderate position that leaves its opposition satisfied that it has gained some relief, while holding on to all the policies it wanted to install in the first place.

Last week and this week is part 1) and we’ll now go through the yelps and cries and accusations of how Argentina is a Chávez-modelled authoritarian police state while part 2) gets into gear. Give it a couple of weeks and part 3) of the K plan will come to the fore, things will settle down and it’ will be business as usual. And if you don’t believe me, don’t buy XXXXXX or any other Argentina exposed mining stock for that matter. I won’t hold it against you.

The fact remains that the new regulations as stand are of minor importance to the mining community in Argentina and that we’re not going to see remittance restrictions placed on revenues from mining companies operating in Argentina in the foreseeable future (by which I mean that even if restrictions are applied, it will be long, long after the time when the market has forgotten all about this issue-du-jour and has bought back all the stock it sold in its panic). Or in the simplest of terms, this is a buying opportunity. You don’t have to hold the stock you buy for years on end and you don’t have to like the CFK government’s policy or way of doing things. You don’t have to go and live in Argentina, either. You don’t even have to visit the place if you have a strong ideological complaint with the direction it (or any other LatAm country for that matter) goes about its business. You just need to know that this is a buying opportunity...for a bunch of juniors we follow...it’s business...it’s nothing personal. For further reading, this article (12) is recommended, written as it is by an Argentine mining journalist. He got it right the day after everyone in the English language was either still getting it wrong or just adapting their original, erroneous prophet-of-doom calls and making them even worse.

China looks at Chihuahua
Stories about how China is looking to the Latam region as a prime destination for its investment cash nowadays have a bear defecates in tree-covered location ring about them, but all the same it’s good to track down some micro-regional action have an idea about some specific places that may eventually attract Sino-dollars. For example Chihuahua in North Mexico, as this short report (13) makes clear:

Mexico City, Mexico, Oct 25 (UPI): Chinese business executives have announced their interest in investing in the Northern State of Chihuahua, bordering with The USA.

The Chinese met with the regions’ governor, César Duarte, to whom they stated their interest in bringing investment to this northern region of Mexico.

“For us it is of great importance to know of your interest in making investments in Chihuahua”, said Duarte.

He added that, “We are set on converting ourselves into a viable bridge for Asia products, specifically those of China, to The USA.”

The investors told the governor of their desire to put resources towards different types of projects that include the sectors of mining, rural development and water.


The 'Small Silvers' 2011 sweepstakes end October update

I remembered, so here's the updated list:


Still at the top is Endeavour Silver (EDR.to) with a near 60% gain so far this year. Second place has now been taken by Fortuna Silver (FVI.to), which doesn't surprise me one little bit. Completing the podium of honour is IMPACT Silver (IPT.v), which has put on a bit of a spurt in the last few days and nosed ahead of the chasing the pack.

Then come First Majestic (FR.to) and U.S. Silver (USA.v), both beating out the Silver ETF bullion tracker (SLV) which acts as our baseline. So we come to to dogs, with Great Panther Woof (GPR.to), MAG Woof (MAG.to), then big double woofs for Bear Creek (BCM.v) and Golden Minerals (AUMN)

Christmas is coming...

...and Gary Cope, President and CEO of Orko Silver (OK.v), knows how expensive the festive season can be so he's stocking up on goodies, just like last year.
  • In 2010, from November thru December 7th (when the selling stopped and the festive fun must have began Chez Cope) he sold 498,000 shares of his company, all at over $2 a pop and most as high as $2.76.

They tell me he makes eggnog with Hennessey XO....is that true?

And now, a special message for the Copper Bulls

Especially for reader JBL:


How's it feel to be bailed out by a Greek, JBL? :-)

Chart of the day is...

...the US dollar.


And thus the world reacts to possibly the single most stupid political gambit played in Europe this year (and my stars, there's competition for that prize). Barry Ritholtz nicely sums up the way I feel, with his post entitled "Are you out of your f*%ing mind!"

10/31/11

Ten square kilometres

After reading some news today I got to wondering on the best way of showing what 1000 hectares, or 10Km2, looks like. So after humming and hahing and trying different lines of thought, this one came up:


This is one of the famous photos of Hiroshima after The Bomb was dropped upon it in 1945 and as it happens, the estimated area of total devastation was calculated at around 10km2. Which also fits quite nicely with the news story I was talking about, as here it is (translated):


Alert in the Tambopata Nature Reserve: In one year more than 1000 hectares have been deforested by informal miners

This satellite image shows the advance of informal mining in the Tambopata Nature Reserve (Madre de Dios region) and its buffer zone. As can be seen, in just one year the miners' actions have gone from being a near invisible spot in the distance to a brown fingerprint of deforestation and depredation that has covered areas that were once primary forest.

According to the information gathered, between November 2010 and October 2011 the zone deforested by miners has grown from 100 to 1583 hectares. This image is also evidence that the zone affected by the miners' actions has reached the actual Tambopata Nature Reserve and not only to its buffer zone


The article continues here and there's a lot more information contained. It's worth noting however that this area featured in the report and satellite shots is just one of the dozens of zones being deforested by informal mining in the jungle regions of Peru, all in the search for gold and often bankrolled by the very same local politicians who should be guarding against this most digusting of mining activity.

¡Viva Investment Grade! ¡Viva, viva, viva!

The Deadliest Place in the World for a Journalist

This Real New Network report on Honduras is a real eye-opener



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Mining For A Heart Of Gold, annual bash is on Nov 3rd...BE THERE!


The annual premier night out for the Toronto mining community, Mining For A Heart Of Gold, is upon us again so click through from this post and read all about the event, happening on Thursday November 3rd.

Here's some of the blurb for this year's bash:

Every year Mining For A Heart of Gold invites Canada's most influential mining and junior resource stakeholders to play a leadership role in celebrating and supporting an outstanding charity. Some of the biggest names and companies in the mining and resource industry have helped Mining For a Heart of Gold raise more than $40,000.00 per event.
This year's gala event at the Strathcona Hotel in Toronto again celebrates the Jean Tweed Centre, a leading community-based substance abuse and problem gambling agency for women in Ontario. The evening kicks off at 4 p.m. and features critically-acclaimed bands such as Bill Cayley & the Countdowns as well as Canteen Knockout and Mine Pro Boogie. An after party which runs till "last call" will be held in the Strathcona Pub.
On the night of the event, Thursday, November 3rd, 2011, corporate and private donors receive high-profile recognition, media coverage and inclusion in all collateral materials. Donors also receive year-round brand promotion on the Mining For A Heart of Gold website.
The mining and resource industry has always had a heart of gold. On November 3rd, join us and hundreds of the Resource Industry's top stakeholders as we drill down and offer a hand up to the courageous, heart-of-gold women staying at the Jean Tweed Centre.

So now you've read that go over to the site, get your tickets and go along Thursday. Good times for good causes.

Chart of the day is...

...this little cracker comparing iron ore and gold from Boiler Room yesterday.


Go over and see what BR thinks about Fe as a short, too.

10/30/11

Anvil Mining (AVM.to) (AVM.ax): Hammer Time!

The thing I like most about Africa is that it makes LatAm look like political risk paradise. Here's tonight's NR from AVM.to with your author playing red pen on the fun bits.

Update on Discussions with DRC Stakeholders in connection with Takeover Bid for Anvil Mining Limited by Minmetals Resources Limited

TSX, ASX: AVM
Common shares outstanding 158 Million

All amounts are expressed in US dollars, unless otherwise stated.
PERTH, Australia, Oct. 30, 2011 /CNW Telbec/ - Anvil Mining Limited (TSX, ASX: AVM) ("Anvil" or the "Company") announced today that since the initial announcement of the takeover bid by Minmetals Resources Limited ("MMR") on September 29, 2011, Anvil and MMR have been consulting with various stakeholders in the Democratic Republic of Congo ("DRC"). During consultations with La Générale des Carrières et des Mines Sarl ("Gécamines"), Anvil was advised by Gécamines that "the completion of the acquisition of Anvil by MMR will result in a review of the financial terms of the lease agreement [for the Kinsevere Project], taking into account the current data on the tonnage of the Kinsevere deposit and the economic balance of the project for all parties and a review of the joint venture agreement in respect of the Mutoshi Project".
The Kinsevere Project is held as to 95% by a wholly-owned Congolese subsidiary of Anvil, which in turn holds a lease from Gécamines of the underlying mineral tenures.  The remaining 5% interest in the Kinsevere Project is held by a private Congolese company.  The Mutoshi Project is an exploration and mining joint venture between a wholly-owned Congolese subsidiary of Anvil (as to 70%) and Gécamines (as to 30%).
Anvil's position is that there is no legal requirement for Gécamines' approval in connection with the proposed change of control under any of its contractual documentation and that no legal right to renegotiate the contractual arrangements arises on the completion of the change of control, although there will be a requirement to give Gécamines a right of pre-emption in connection with the Mutoshi Project, which MMR and Anvil are fully aware of and intend to comply with. MMR and Anvil have previously agreed that Anvil's 70% interest in the Mutoshi Project has a value of US$52.5 million.
Gécamines made a public announcement in early October 2011 that it intends to audit compliance by all of its joint venture partners with their contractual commitments to Gécamines.  During the consultations with Gécamines it advised Anvil and MMR that it believes that the Anvil group is not in compliance with its obligations in respect of the Mutoshi Project for failing to deliver a "complementary feasibility study".  Gécamines has given the Anvil group 30 days to remedy this alleged failure. Anvil disagrees that it has failed to comply with this obligation, as the relevant documentation was delivered to Gécamines in August 2010. As contemplated by the joint venture documentation for the Mutoshi Project, Anvil is awaiting a response from Gécamines in connection with the feasibility study.
MMR and MMG Malachite Limited (the "Offeror"), a wholly owned indirect subsidiary of MMR, have advised Anvil that the Offeror will not complete the previously announced offer for all of the outstanding common shares of Anvil at a purchase price of C$8.00 per share in cash (the "Offer") unless the prior consent of Gécamines is obtained on terms satisfactory to MMR and the Offeror.
All of Anvil's mineral tenures were reviewed by Gécamines and the government of the DRC in connection with the review of mineral tenures conducted in the DRC in 2008.  In 2009, following completion of that review, Anvil and Gécamines agreed to amended contractual arrangements, including amendments to the royalties payable to Gécamines, and substantial additional payments were made to Gécamines by Anvil.
Anvil and its advisors will continue to discuss these matters with Gécamines and MMR.  However, in the absence of a solution which does not result in any material amendments to the contractual agreements with Gécamines, there is a risk that MMR and the Offeror may not complete the Offer.
Subject to the satisfaction of the terms and conditions thereof, the Offer is open for acceptance until 8:00 pm (Toronto time) on November 24, 2011, unless the Offer is extended or withdrawn.  The details of the Offer are contained in the take-over bid circular of the Offeror. The Offer and take-over bid circular and related documents and the directors' circular have been filed on SEDAR. Shareholders may obtain a copy of the take-over bid circular, letter of transmittal and notice of guaranteed delivery, and CDI acceptance form (for Australian shareholders) at the SEDAR web site under Anvil's profile at www.sedar.com and at the MMR web site at www.minmetalsresources.com.  Copies of the directors' circular may be obtained at the SEDAR web site under Anvil's profile at www.sedar.com and at Anvil's web site at www.anvilmining.com.
There can be no assurance that the conditions of the Offer will be satisfied, or that the transaction will be completed as proposed or at all. Anvil will issue further news releases in respect of the Offer as circumstances warrant.
Anvil Mining Limited is a copper producer whose shares are traded on the Toronto Stock Exchange (as Common Shares) and the Australian Securities Exchange (as CDIs) under the symbol AVM.

Re-post: B2Gold (BTO.to): My kind of gold mining company

Sunday evening: I want to make sure that those who receive the e-mail digest on Monday morning and read it at their desk get to see this post about BTO and what they're doing in Nica. So I'm re-posting it.

Disclosure: no position in BTO at present

xxxxxxxxxxxxxxxxxx

It's been raining hard in Nicaragua recently, with severe flooding that's affected hundreds of thousands of people. So when I read this note today, I remembered just why B2Gold (BTO.to) is the type of mining company I like to be involved with (as though not currently long the stock, I've been a happy shareholder on several occasions).

Executives of the Canadian mining company B2Gold handed over a donation of $750,000 in cash in answer to the call for aid made by President Daniel Ortega due to the emergency caused by the intense rains in the last few weeks.

Dale Craig, country manager of B2Gold Nicaragua, handed over the money to Guillermo González, Executive Secretary of the National System for the Prevention, Mitigation and Disaster Attention (Sinapred) and explained that this help is destined to alleviate the near-term needs of the affected population.

"We respond to this call with our best wishes that this donation can contribute to the government's efforts through Sinapred, to respond immediately and effectively to the population faced with the intense rainfalls that still persist in various zones in Nicaragua", said Craig.

B2Gold is a producing gold miner with its HQ in Vancouver. As well as the La Libertad mines located in the municipality of the same name in the department of Chontales and the El Limón mine in Malpaisillo, it has other exploration activities in other zones of Nicaragua as well as in Colombia, Costa Rica and Uruguay.


Check out the original note here, including nice photo of the cheque handover. And a big round of applause to BTO.to, doing the right thing.

The IKN Weekly, out now


IKN130 has just been sent to subscribers. Here's a quote from the text:

"Which reminds me, it never ceases to amaze your author that people actually pay for this weekly publication."

Just about sums things up I reckon.