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Which will be worth more at end 2015?

12/10/11

6.8MAG Earthquake in Guerrero State, Mexico

USGS page here

Now downgraded to 6.7MAG, 40 mile depth approx. Shouldn't be too bad, but if you were on top of it you'd have had a nervy moment back there for sure

Salomon Lerner's letter of resignation/carta de renuncia

Right here:


It says that things were wonderful...blah blah blah...thanks for the opportunity...blah blah blah...and so that you're not held back I present my irrevocable resignation...blah blah blah.

source: La Republica

also la republica feibu, here and here

Breaking: Salomon Lerner said to have resigned as Peru's Prime Minister (multiple updated)

According to Peru Vice-Veep of Congress Yehude Simon, Peru's Cabinet Chief Prime Minister and basically the second most powerful political figure after Ollanta Humala, Salomon Lerner, has resigned his post. Here's a tweet from Peru's decent newspaper La Republica on the breaking news.

If confirmed, this moves the political playing field in a big way in Peru.

Update: On Yehude Simon's twitter account, he's talking about his reliable source close to the event and how the move was "inevitable".

UPDATE 2: We hear in very provisional and underground info that "several other" ministers on the left leaning wing of the Humala government are also out in a purge that looks like taking the Humala government towards a harder line with protesters. If true we're likely to see much less dialogue from now on and more crackdowns.

UPDATE 3: We now hear a full re-shuffle of cabinet ministers will happen tomorrow with at least three ministers leaving and perhaps as many as five. Along with Lerner, the exit door is shown to Culture Minister Susana Baca, Agro Minister Miguel Caillaux and Women's Minister Aida Garci.

You hear it here first, people.

UPDATE 4: Lerner's resignation now confirmed via official government communique. At least we know why Ollanta Humala backed out of his trip to watch the Cristina show at the last minute on Thursday evening.

UPDATE 5: If this latest rumour is correct, we have a full scale crisis on our hands in Peru. We're hearing...unconfirmed (there are now a zillion rumours now flying, but this one is fairly well sourced) that the entire Humala cabinet of ministers has resigned along with Lerner.

UPDATE 6: Ok, update 5 is true but it's also normal protocol to see all ministers offer resignations when the cabinet chief resigns, so it's not so bad. What we now wait for is Humala's call or "should s/he stay or should s/he go?" on each minister. Latest whisper is that Mining and Energy Minister Carlos Herrera Descalzi won't be coming back, but we're now starting to get rumours upon rumours so it may be time to sit back and let official word come through on all changes. Not only that, but the Real Madrid/Barsa match starts at 4pm local time (80 minutes from now) so there are more important things going on, too :-)

UPDATE 7: Salomon Lerner's resignation letter here. Meanwhile there is some talk doing the rounds that Humala refused to accept his resignation and they're trying to reach some kind of agreement in which Lerner stays on. All rather strange stuff and hardly reflects well on Humala's leadership qualities if true. The guy wants to resign, well let him resign!


UPDATE 8: Ok, we now hear that Interior Minister Óscar Valdés Dancuart will be the next Cabinet Chief and PM and that Humala has indeed accepted Lerner's resignation. The swearing-in ceremony happens tomorrow. Meanwhile Real Madrid went one goal up about five minutes ago and Messi nearly equalized just a couple of minutes later, so El Clasico looks like a cracker.


UPDATE 9: Latest rumour is that all other cabinet ministers will keep their posts...for the time being at least. Only Lerner leaving. If true, good for Humala. However I'll stress here that there are still zillions of rumours flying about and some sources are better than others. This is one that needs to be confirmed in your author's humble opinion.


UPDATE 10: It's half-time at the Bernabeu and 1-1, so time to think about this resignation and  paragraph four of Lerner's bye bye letter is the key here (starts "En este marco..."). What it says between the lines is that Lerner's strategy of looking for dialogue and consensus between opposing factions hasn't worked and that if Humala wants to use other tactics, it's best for him to gracefully retire first. This is almost certainly referring to what Humala has decided to do about the Minas Conga protest in Cajamarca and speaking in general terms, I really really don't think thiS news is going to go down well with those intent on opposing the government on the mine plan...not in the confrontational way they've been doing so far, at least. One should not forget that Humala is an ex-army guy and that he had a reputation of being pretty ruthless during his time commanding battalions against Sendero insurgents in the 1990s. That's my take on things, anyway.


UPDATE 11: This is the last one for today, I have a Weekly to write for one thing. The Peru press is now taking the line of "ex-military man (Valdes) joins ex-military man (Humala) at the helm" and playing up the apparent loss of dialogue-style politicians in favour of more authoritarian figures. That may be the case, but then again it might be oversimplifying things because Lerner jumped suddenly (Lerner probably made his intentions clear to Humala Thurs PM Friday AM, who in turn made the snap decision not to attend Cristina's inauguration in Argentina) and was not pushed. However it is telling that the first major change in the executive cabinet is an apparent shift to the right and not the left (frankly I was expecting the FinMin to be the key change some time next year and his replacement a vital pivot point, but this one does the same job). The message is now pretty clear; Humala has turned his back on classic left wing populist policies and is coming from right-of-centre.


UPDATE 12: OK, one last one at 8:30pm EST.. Talk now is of a swearing-in ceremony tonight (update: now confirmed for 8pm Sunday evening) with Valdés getting his job and also a couple of ministerial changes. Environmental lawyer Manuel Pulgar-Vidalis to take the Environment Ministry job, with current Min Ricardo Giesecke out on his ear (he was a bit of a disaster in the job, has to be said). Also Valdés' move to Prime Minister means his job until today of Interior Ministry is given to a new face, Alberto Otarola we hear. There may be more changes at cabinet level, but they won't make it to this blog now that normal media channels are closely covering the whole shebang now. IKN signing out.



Cristina gets her job back

My fave bit of the inauguration ceremony wasn't when she got her daughter to put the Presidential sash on her, but a bit earlier when Cristina (dressed in black and invoking "him" for Nestor as she swore in) came into the room and was obliged by protocol to shake outgoing Veep Julio Cobos's (photo background) hand, which she did while looking the other way. Hope to get a photo of that later.

The whole re-inauguration show turned out to be condensed Argentina, the country psyche on display for the world. Flashy, melodramatic, high-handed, totally staged for TV and ultimately utterly unimportant. I loved it!

12/9/11

Fortuna Silver (FVI.to) (FSM): You've come a long way, baby

News out tonight linked here, nice bit pasted below


Standard & Poor's Announces Changes in the S&P/TSX Canadian Indices

TORONTO, Dec. 9, 2011 /CNW/ - Standard & Poor's Canadian Index Operations announces the following index changes as a result of the Quarterly S&P/TSX Composite Index Review.  These changes will be effective at the open on Monday, December 19, 2011:
S&P/TSX COMPOSITE INDEX
ADDITIONS
Issue Name Symbol  60/Completion  Live Composite GICS 
Sector Index
Algonquin Power & Utilities Corp.  AQN Completion Utilities
Fortuna Silver Mines Inc. FVI Completion Materials
Parkland Fuel Corporation PKI Completion  

DELETIONS
Issue Name Symbol  60/Completion  Live Composite GICS
Sector Index
Air Canada AC.B Completion Industrials
GMP Capital Inc. GMP Completion Financials
Ivanhoe Energy Inc.  IE Completion Energy
Yellow Media Inc. YLO Completion Consumer Discretionary 
Note: Provident Energy Ltd. (TSX:PVE) will be removed from the S&P/TSX Capped Energy Index following a GICS change of the company effective December 1, 2011.
Changes to the S&P/TSX Composite Index will also affect the S&P/TSX Capped Composite Index.  Stocks added to or removed from the S&P/TSX Composite Index will also be added to or removed from the appropriate Global Industry Classification Standard (GICS) sector index.

x

The Friday OT: Fatboy Slim; RockaFeller Skank

Awesome track.



Just freakin awesomeness, nothing else to add.

A Flash update...

..has just been sent to subscribers. Belt'n'braces post complete.

PS: Oops, just spotted a typo: 1$ = 25%

Those Doody picks

Although I haven't been told the specific names (my contact is a man of integrity), apparently I did mention all four of the companies that Doody has plumped for in his silver coverage out of the nine names in this post earlier in the week, though I hasten to add that (again apparently) they were definitely not picked in the right order.

Now let's watch Porter Scamsberry dump into the pump.

The Guatemala murder rate: Facts and no BS over at Mike's place

Mike at Central American Politics has a good, brief, insightful post up today about the real state of the murder rate in Guatemala. He pushes back against recent media hype and BS and provides solid data (with a chart and oooh you know how much your humble scribe loves a chart) that indicates things are dropping rapidly. In fact, if all goes to plan in December Guatemala's 2011 will be the lowest murder rate since 2005. This is good.

Mike is quick to point out that this dangerous country is still dangerous, but things are finally moving in the right direction. Go read his strong analysis right here.

Best column written about the UK veto today

Amongst much dross and overhype, Michael White of The Guardian gets it spot on correct.

Chart of the day is...

...the semi-regular one we run Fridays that compares gold bullion (GLD proxy), silver bullion (SLV proxy), the gold miners (GDX) and the mining juniors (GDXJ) over the last five days:

We got GLD down 2-n-bits %, SLV and GDX down 5% or so, GDXJ down over 7%...ugh to that one.

Apart from one small adjustment to the portfolio early week that subbers know about, I've been long and strong all through this week's mess (and that's not changing, by the way). So it's fair to say that this on has been a week to forget. 

so it goes.

12/8/11

Tony Hawkshaw (RIO.v) on BNN

Rio Alto's (RIO.v) CFO this morning did 10 minutes with Andrew Bell of BNN and did them very well. Watch it by clicking right here.

My thanks to several readers for the headsup.

The IKN Weekly, picking losing trades since 2009

It's true. Since the subscription service, The IKN Weekly, started in May 2009 we've consistently opted for investments, trades and picks that have turned out to be losers. In fact, as things stand today we've closed no fewer than 16 trades that have lost money.  But then again, we've had a few winners along the way too. Here's the breakdown of closed trades winners to losers for the last three years (and by the way, each trade is clearly available for scrutiny in every single edition of the Weekly):
2009: 9 winning trades, 1 break-even trade, 3 losing trades
2010: 16 winning trades, 7 losing trades
2011:  10 winning trades, 6 losing trades

As for the current batch of open trades, right now we have 14 open positions on the books and winners-to-losers is about half and half (or it was exactly 50% last weekend, yet to do the totting up for this week).

Whether good or bad, the world of junior mining investment is a volatile one and losing trades are part of the scenario (unless you choose to believe those who claim they never make a losing trade or follow people that love to recommend buys but hate to say when to sell, of course...that's your prerogative). Losers are part of the territory and you can be darned sure that I'll keep picking losers in the future. But it won't bother me as long as we can keep picking just a few more winners than losers every year.

Serafino Iacono's Gran Colombia Gold (GCM.to): Contrary to the vicious and unfounded rumours...

...being sent in from Colombia by mailers, we here at IKN would like to clearly state that it is NOT Serafino Iacono's fault that his junior mining company, Gran Colombia Gold (GCM.to), is at new 52 week and all-time lows this morning.


We do NOT agree with the scandalous things being said about Señor Iacono. In fact we applaud the fact that he's out there showing off his wealth and peer status at late night social gatherings...after all, what's the point in being rich if you can't enjoy it?

And while we're at it, it's best to point out that the awful performance of GCM.to stock isn't Frank Giustra's fault, either. Nor is it Gordon Keep's fault. Neither is it the SEC-banned paid pumper Thom Calandra's fault. Nor is it the people of the town of Frontino who are to blame. It's just plain unlucky, that's all. Markets are like that sometimes.

dyodd

News roundup ( we walk down the street without treading on cracks in the pavement)


This week's best food news: "Sao Paulo, Dec 6 (EFE).- The Consumer Defense Foundation in Sao Paulo fined fast-food giant McDonald's 3.19 million reais ($1.77 million) for including toys in children's meals. The organization considered that giving away toys with a "happy meal" creates eating habits harmful to youngsters' health, the official Agencia Brasil news service said." continues here

It's Inmaculada Concepción today, which is good news for those with Faith and those without...long weekend in LatAm.

IDL Reporteros has published an extensive two part interview with 'Artemio', leader of Peru's Sendero Luminoso. Dan Collyns of The Guardian was also on the trip to Artemio's stronghold, so expect an English language version soon via that paper.

You see the moves in gold this morning? Looks like some hot money got burned. This is good

In Argentina, everything's set for the re-inauguration of Cristina this Saturday. The most fun will be watching whether Veep Cobos takes CFK's oath, because he is outright hated by the Kirchner hardcore (and not much liked by CFK herself) and may be in for a rough time. Apart from that, it'll be partaaay time for the assembled mucketymucks.

Chart of the day is...

...this.


Information is in English and from here, which includes a report on dead reporters 17 and 18, just a couple of days ago.

12/7/11

Why love South America?

Well, there are a million reasons and counting but let's start with this, a photo taken on a bus in Lima Peru featuring instructions for the passengers. Translation on the right (accuracy and gist combo) by your author:


It was placed this afternoon on the most excellent Perufail blog, right here, so click thru for the original.

Van Eck now owns 10.02% of Minefinders (MFN) (MFL.to), but they're not all in the GDXJ

An interesting 13G filed by Minefinders (MFN) (MFL.to) a few minutes ago. Apparently those nice people over at ETF makers Van Eck now own 10.02% of the company, or precisely 8,159,029 shares. However, the ETF vehicle in which it places the MFN shares, the Market Vectors Junior Gold Miners ETF (GDXJ), holds just 4,564,762 of the shares according to the same 13G. Van Eck has cunning plans for the other 3.6m shares of MFN but wasn't worried about breaking through the 10% barrier and getting the total holding declared, it seems.

Looks kinda bullish for MFN to me....but hey, WTFDIK?

UPDATE: WTFDIK indeed, as reader 'BF' mails in and points to my obvious brainfart; the other 3.6m shares are held in GDX. The prosaic is the best explanation once again, but 10% is 10% after all. Anyway, thanks due to BF for the datapoint and for not calling me a dumbass outright, even though I deserved it.

Gossip on Jaguar Mining (JAG) (JAG.to) in Canada is....

...that Mr Titcomb "was encouraged to resign" after having "misled his board of directors".

Translation: Fired for lying.

Details on the misleaderation (dat a word?) are not yet available, but if and when we hear more, update(s) will be added. Please be having nice day.

Jaguar Mining (JAG) (JAG.to): In a bizarre turn of events....

...it seems the market has taken a dim view to the sudden, late night, after-hours departure of the company's CEO:



Hoodathunkit, eh?

And fwiw* we remind readers that your loving and caring IKN has been veeeery sceptical about this deal from day one. Evidence here, here and here (but the bit in the Weekly a couple of editions ago was better).

UPDATE: About 30  minutes after this post went up (still morning, though) and JAG is U$6.53 and still dropping. Oh dear, Mr. Wentworth

*not much

It's time for GUESS THE STANSBERRY/DOODY SILVER PUMP, a game all the family can play

So, it turns out that the bullshit frontrunning pumphouse Stansberry & Ass. is going to go for the silver sector at the end of this week, something that your humble scribe was blissfully unaware of until last night's mailbox was perused. Here below is the main body of said interesting mail received last night from "J". It also included a full disclosure on J's part as regards his financial positioning towards potentials here (which was straightshooting and shows he doesn't have ulterior motives, but as it's personal stuff it doesn't make the blog). The main body of the mail has also been redacted everso everso slightly to shield IDs, but the message hasn't changed a jot. Here's J and IKN returns after the break:

xxxxxxxxxxxxxxxxxx

Stansberry has been hawking John Doody's pending Silver Stock Analyst Report being released on 12/9 at 8am EST. here's the link to their "video" which you can avoid watching/listening to the whole thing by clicking Quit on that browser window and it will ask you if you really mean to Quit to which you should click Cancel, and you'll be able to READ the text of the "video" and skim over all of the marketing  BS.

The meat of this "video" is the following "teases" of the 4 Silver Stocks ("the universe of silver stocks ... there are only around 20 pure plays.") he's going to recommend:
Bottom line: I believe right now, as we experience another U.S. dollar crisis, silver could race up much higher than gold once again.
And to hedge myself against this possibility, I'm looking to buy FOUR (4) silver stocks, starting December 9th.
I applied almost the exact same metrics I use for gold stocks. And I came up with a short list of just four stocks that could take off as silver prices soar.
Each of these four stocks is #1 in one of the metrics I use: One is the #1 most profitable silver firm... One is #1 in digging out silver ounces... One is the fastest growing silver firm... And one is the best explorer.

Given that you have had many successful Silver plays in IKN Weekly, I'm wondering if you can peg Doody's four stocks and give your subscribers a heads-up before Thursday market close, ESPECIALLY if any of the four might be one's on your list of 15?
xxxxxxxxxxxxxxx

IKN back. So what we know from this is that Mr. Doody is pumping four silver stocks on Friday morning before the bell. As he does have decent traction in the market and a large following, added to the slicker-than-pigshit pumphouse that is Stansberry, it's safe to assume that four silver stocks on Friday are in for a good time. So, which ones?

The only things I can bring to the table on this are 1) that Doody concentrates on US listed stocks, so I'd expect the four he chooses will quote with US tickers and 2) a bit of educated guesswork on the sector. I have absolutely no idea which stocks are getting the Doody/Stansberry pump treatment Friday, but I'm going to hazard four guesses anyway. If you have any alternative suggestions, feel free to mail in, I'll add them to this post or run another post later in the week.

Anyway, here come my guesses on what I think Doody will go for here, tell me why I'm wrong
1) The most profitable silver firm: My best guess on the one Doody will plump for is Pan American Silver (PAAS) (PAA.to).


2) Number 1 in digging out silver ounces: My best guess is First Majestic (AG) (FR.to)


3) Fastest growing silver firm: My best guess is Silver Wheaton (SLW)


4) The best explorer: My best guess is MAG Silver (MVG) (MAG.to)

Now for sure there are plenty of alternative names you could throw in the mix, with Fortuna (FSM) (FVI.to), Endeavour (EDR.to) (EXK), Silver Standard (SSRI), Hecla (HL), Tahoe (THO.to) just five of many other candidates I could list. And I repeat, mine are just best guesses so if you have any better ones, fire away.

And dyodd dude, because when it comes to Porter Stansberry, we're talking about a guy who knows exactly what other words rhyme with pump and isn't afraid to use them.

UPDATE Friday 9th Dec: Apparently, all four of Doody's picks are mentioned in this post, but not necessarily in the four guesses.

Chart of the day is...

...the 12 month chart of Calais Resources (CAAUF.pk)....

...because it's worth getting in visual form what a Thom Calandra bullshit pump looks like. More on Calais Resources coming soon, watch this space.

UPDATE: The everwelcome quipster reader 'MP' mails in with, "Is it just a coincidence that your chart of the day kinda looks like the Vancouver skyline?"


made me laugh, anyway.

12/6/11

Jaguar Mining (JAG) (JAG.to): Curiouser and curiouser, said Alice

Because after all, it's a bit of a Wonderland over there at Jaguar (JAG) (JAG.to). Here's tonight's after dark NR:


CONCORD, New Hampshire, Dec. 6, 2011 /CNW/ - Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX: JAG.TO - News) (NYSE: JAG.TO - News) announced that Daniel Titcomb will be leaving his role as President and Chief Executive Officer of the Company effective today.
On an interim basis, the Chairman of the Board of Directors, Gary E. German, together with two other Jaguar directors, Gil Clausen and John Andrews, will form a newly-created Office of the Chairman to fulfil the duties of the Chief Executive Officer.  These directors also constitute a Special Committee of the Board charged with oversight of the Company's strategic process announced in November. (continues here)

So rather than continue with Lewis Carroll, let's go for something slightly more contemporary as our silly lead-out comment:

Trouble at mill.  
Oh no - what kind of trouble?  
One ont cross beams gone owt askew ont treadle.  
Pardon?
One ont cross beams gone owt askew ont treadle.  
I don't understand what you're saying.  
(In clear English accent) One of the cross beams has gone out askew on the treadle.  
Well what on earth does that mean?
(now annoyed) I don't know! Mr Wentworth just told me to come in here and say that there was trouble at the mill, that's all, I didn't expect a kind of Spanish Inquisition.

From this, of course:

Bazooka gold

Seems like the Financial Times is the world's tip sheet at the moment. Suspicious? Yup you bet.


Anyway, we hear that the EU haz buyed it one bazooka and ain't no fear to use it. Banksy's is better though.

Own gold, mojitos served, the end.

UPDATE: Effect required by ECB? Something like this:



:
c

Corrupt police in Peru? At the highest possible levels? Shome mishtake shurely ossifer!

The amounts of money involved aren't on the MF Global of Madoff level of course, nor is this a particularly uncommon occurrence in a country as riddled with corruption and petty thieving as Peru. But it does give you some idea of the mentality of corruption that runs through a third rate, tinpot, banana republic's public sector where everyone is looking to make their "second salary" (as it's known) with a sideline scam.

I mean, we're talking about the guys who ferry around and provide front line security for the President of the country and his family members. La Republica report here, translation of the first part of the report by your author below. 

Humala Security Chief Fired for Robbery of Auto Fuel

Officials in charge of the security of the President, his wife and children and his parents falsified service records to siphon off fuel from the Presidential vehicles and re-sell it. Those implicated include the administration office head Police Colonel  Belermino Vásquez Guevara, Police Commander Simión Pérez Mego and the head of security Police Commander Antonio Medrano Lau

Report by Doris Aguirre

Not even the Presidential Palace is clean.
The Minister of the Interior, Óscar Vadlés Dancuart, fired the head of Presidential security, Police Colonel Belermino Vásquez Guevara, due to his involvement in the systematic theft of fuel assigned to vehicles that protect President Ollanta Humala, his wife Nadine Heredia and the Presidential family.


Interior Minister Valdés took this drastic step least week based on a report presented by the head of the ministry's intelligence service (Digimin), Colonel Eduardo Arbulú Gonzales.


Agents under Gonzales discovered the officials of the presidential security brigade were adulterating mileometers, the devices that register the amount of kilometers travelled by a vehicle, in order to justify the fuel expenses in falsified services that never happened.  Records were invented not only for the Presidential couple but also for the children and parents of Humala. According to the Digimin report, others implicated include Police Commander Simión Pérez Mego and the head of security Police Commander Antonio Medrano Lau


Source at the National Police inspectorate say the Digimin reported filming the offices at the precise moment that modified the kilometer readings in the vehicles. Continues here

IKN back and it does show, at least, that the Humala crew is trying to clean up corruption a bit...but sheesh, if the people guarding the Prez are up to it, imagine how many other scams are happening up and down Peru right here right now. 

PBI on mining in Colombia

Peace Brigades International (PBI) is an organization that monitors human rights abuses in Colombia. In its November monthly report that you can read right here, it looks at the mining industry in the country.

Do not expect a pro-mining standpoint, but do expect to learn a whole lot about what mining is like in Colombia today and how it affects the lives of normal people in this extensive and detailed report that goes into several case studies. Anyone interested in the mining industry in Colombia and is fed up with reading the shiny, happy "nothing ever goes wrong here" bullshit pro-mining stance of the junior industry would to well to read this PBI report and get some balance. If you're going to go mining, do it right.

Quadra (QUX.to) gets a quick polish

Poor old Candente (DNT.to) ....always the bridesmaid, never the bride. Here's the NR, here's how it starts:

VANCOUVER, BRITISH COLUMBIA, Dec 06, 2011 (MARKETWIRE via COMTEX) -- Quadra FNX Mining Ltd. (the "Company" or "Quadra FNX") today announced that it has entered into a definitive agreement (the "Arrangement Agreement") with KGHM Polska Miedz S.A. ("KGHM") (warsaw:KGH) pursuant to which KGHM has agreed to acquire all of the issued and outstanding common shares of Quadra FNX and all of the outstanding Quadra FNX warrants (the "2007 Warrants" and the "2009 Warrants") by way of a Plan of Arrangement (the "Arrangement").
KGHM, which is listed on the Warsaw Stock Exchange with a market capitalization of approximately US$8 billion, is the world's 9th largest producer of copper and 3rd largest producer of silver.
Under the Arrangement, shareholders of Quadra FNX will receive C$15.00 in cash for each common share of Quadra FNX, representing a premium of approximately 41.3% to the 20 day volume weighted average price of Quadra FNX's common shares on the TSX as of December 5, 2011. In addition, holders of the 2007 Warrants will receive C$5.76 in cash for each 2007 Warrant held, and holders of the 2009 Warrants will receive C$1.68 in cash for each 2009 Warrant held. The total transaction value is approximately C$3.5 billion, inclusive of US$500 million of outstanding gross debt. KGHM has advised that it intends to finance the acquisition using existing cash on hand.
Quadra FNX's Board of Directors, after consultation with the Company's financial and legal advisors, and based on the recommendation of an independent committee of the Company's Board of Directors, has unanimously determined that the Arrangement is fair to Quadra FNX's shareholders and warrantholders and will recommend that Quadra FNX's shareholders and warrantholders together vote in favour of the Arrangement. All senior officers and directors of the Company intend to yada yada continues here



x

Chart of the day is...

..the five day price chart comparing the percentages gains of Coeur d'Alene (CDE) and Rye Patch Gold (RPM.v):

I hope you're following this one, it looks like a lot of fun in the offing...except if you're the poor bar steward at CDE who forgot to pay the annual. Anyway, it's straight to the shysters now, so expect handbags at dawn NRs for the next few weeks between these two. 

Is RPM a buy on this? I have no freakin' idea actually, so I play the "i don't care" card and will sit on the sidelines...laughing.

12/5/11

What Peruvians think of the first 100 days (or so) of the Humala government

The chart below is part of this presentation that survey house Ipsos/Apoyo gave to the annual bizbash in Peru, CADE 2011, last week. In fact to be exact it's page four of the 22 page gig and your humble scribe has translated the words into English (using the magic of the 21st century's computer applications, no less) but the numbers are as per. The survey was taken in November so it can be reasonably assumed as a scoreboard of the Humala govt's first 100 days:

And thus we learn that Peruvians like the way he's running the economy but also say Ollanta sucks at weeding out corruption in the country. Oh hey wow, that reminds me of this little line we use round here:

WELCOME TO THE NEW PERU! (just the same as the old Peru)™


x

Ecuador and Kinross (K.to) (KGC)

This hit four minutes ago. Here's the paste-out:


TORONTO, ONTARIO--(Marketwire -12/05/11)- Kinross Gold Corporation (TSX: K.TO - News)(NYSE: KGC - News) announced today it has reached a non-binding agreement in principle with the government of Ecuador regarding key fiscal and legal parameters for the exploitation of the Fruta del Norte (FDN) deposit in Ecuador's Zamora Chinchipe province.
A number of additional steps are required to conclude a final and binding agreement, including: the completion and approval of the project feasibility study by Kinross; a change in project status from economic evaluation to exploitation in accordance with Ecuadorian law; and, following the completion of negotiations, entering into definitive exploitation and investment protection agreements in a form satisfactory to the parties.
"This agreement represents an important milestone in the development of FDN," said Kinross President and CEO Tye Burt. "Key objectives are to develop the mineral resources at FDN in a socially responsible manner and to work closely with the government and local communities to establish FDN as a flagship mining project in Ecuador."
The key terms of the agreement in principle include the following:
 

--  An obligation to maintain the government's share of project economic
    benefits at a minimum of 52%. Project economic benefits are defined as
    the cumulative sum of the Government's share (comprised of the royalty,
    corporate income tax, the state portion of the profit sharing
    contribution, and windfall profit tax, as described below, plus a 12%
    value added tax applied to customary project expenditures) and Kinross'
    share (comprised of the after tax free cash flows of the project),
    calculated annually;

--  A sliding-scale net smelter return royalty linked to the realized gold
    price, with a royalty of 5% for gold sold at a price of $1,200 per ounce
    or less, 6% for gold sold above $1,200 up to $1,600 per ounce, 7% for
    gold sold above $1,600 up to $2,000 per ounce, and 8% for gold sold
    above $2,000 per ounce. The net smelter return royalty is calculated on
    the basis of revenues after the deduction of windfall profits tax
    payments (see below) and customary transportation and refining charges;

--  Advance royalties of $65 million credited against future royalty
    obligations and payable in two installments, subject to various project
    development conditions;

--  A corporate income tax rate of 22%, to be fixed under the proposed terms
    of the investment protection agreement;

--  A profit sharing contribution equal to 15% of earnings before tax, to be
    fixed under the proposed terms of the investment protection agreement.
    This 15% contribution includes two components, with 12% to be paid to
    the State and 3% to be paid to employees. Profit sharing contributions
    are deductible expenses for the purpose of calculating corporate income
    tax;

--  A windfall profits tax, whereby the government would receive 70% of the
    excess of the realized gold price above an agreed base gold price. The
    base gold price is defined as the greater of $1,650 per ounce and the
    spot gold price at the time of signing of the definitive exploitation
    agreement. The base price is indexed to the United States Consumer Price
    Index (CPI) on a monthly basis. The windfall profits tax would be
    deductible for the purpose of calculating royalties, profit sharing
    contributions and corporate income taxes;

--  An exemption from customs duties payable on capital goods to be
    purchased during construction, as approved by the Ecuadorian government;

--  Electrical power to be provided from the national grid at the industrial
    customer rate (currently 6.8 cents/KWH);

--  Disputes arising between the parties will generally be subject to
    customary dispute resolution mechanisms including binding arbitration in
    Chile under UNCITRAL Rules;

--  If new Ecuadorian laws are passed that adversely impact the fiscal and
    economic parameters of the exploitation agreement, the right of Kinross
    to seek amendments to the fiscal parameters of the exploitation
    agreement to preserve the original economic equilibrium and/or seek any
    remedies, pursuant to customary dispute resolution mechanisms;

--  Kinross undertaking various social infrastructure initiatives to benefit
    local communities, including the construction of a road and training
    center, airport improvements, and contributions to local social programs
    through domestic and international not-for-profit partners selected by
    Kinross.
Kinross is finalizing a project feasibility study, expected to be completed at year-end 2011. As previously disclosed, the Company is experiencing industry-wide escalation on FDN project costs, and both capital and operating costs for the project are expected to be approximately 25-30% higher than estimates included in the project pre-feasibility study. Kinross and the Ecuadorian government are currently completing negotiations and drafting of the definitive exploitation and investment protection agreements.

UPDATE: For whatever reason, I've been mailed a couple of times since this post went up and asked an opinion on the deal as stands. Well for one, it isn't a deal, not yet anyway, which is made crystal clear by the NR itself. It's a "non-binding agreement in principle"...and hey, only 18 months and umpteen delays and postponements to get that, too. Second, the terms may well be workable...just about...for a big project with loads of high grading gold such as at FDN, but it's a poor precedent to set for the exploration sector in general and will put off far more companies about the country than will attract. As for the details, the 52% overall burden (minimum) isn't a big surprise, but the 70% windfall tax is very user-unfriendly and we're supposing that gets put on top of the overall 52% minimum, of course.

The bottom line is that for juniors, this deal sucks. And it still isn't a done deal.

Morgan Stanley reads Argentina badly, as usual

Here's how today's Morgan Stanley regular "This Week In Latin America" pdf kicks off:

Argentina: The Return of Orthodoxy? by Daniel Volberg.
While most investors will be watching the European summit next weekend, we will be watching Argentina for the names of the new cabinet ministers for signs that the new administration may be about to take an orthodox turn. Indeed, we think the most likely outcome is tighter fiscal and monetary policy along with moves to limit wage increases—all designed to regain control over Argentina’s inflation problem

This is what Kirchner inner circle member Daniel Filmus said today:
No surprises. According to Senator Daniel Filmus, the new Cristina Kirchner ministerial cabinet will not have any great changes.


"The cabinet will be, in general terms, the same as that which since 2003 has brought the transformations to the country. There aren't any surprises (in store)."

MS is quite good on other LatAm countries (esp Brazil and Mex) but its coverage of Argentina is consistently dumbass. Personally I think it's the fact that Capitalist mainstream commentators just can't get their brains round the fact that a country doesn't have to do what it's told to by the North in order to grow and prosper. So Daniel Volberg, this one's for you:

Great post on the Minas Conga protest by Jacqueline Fowks

Right here, with plenty of background and behind scenes snippets from the protest and ensuing media coverage.

Chart of the day is...

...gold (proxy GLD) versus the S&P500 index, last five years.


Screw you mainstream. Still laughing at the gold longs?

12/4/11

Ollanta Humala declares 60 day state of emergency in Cajamarca

Tonight Ollanta Humala appeared on TV in his first official type live address to the nation type TV thing. After his Prime Minister Salomon Lerner and a few of the ministerial gang spent nine hours in meetings in Cajamarca (trying to reach some sort of negotiated agreement with the local anti-mining protesters who've been rocking the city of Cajamarca for the last 11 days against the development of Yanacocha's Minas Conga project) and getting precisely nowhere, Humala went on teevee to declare a 60 day state of emergency in the four affected provinces of the region (that include the city and the Conga site).

A State Of Emergency sounds dramatic. What it has in theory is power to suspend four constitutional rights, those of freedom of transit, meeting, personal liberty and right of protection in personal property, but in practice these things are rarely applied. Instead, Humala is using this strategy to re-open blocked roads (potentially using the military as well as police) and making sure that enough forces of order are on the streets to allow shops, schools etc to open. 

The most interesting thing was his appearance on TV to declare this, as he didn't mince his words and made it pretty clear that 1) he's pissed that the protesters didn't have the slightest intention of making any sort of conciliatory moves during the meetings with PM Lerner today and that 2) he's an ex-army guy and he's not going to back down and go wimp at this point. So chances are that we get a few heads banged together in and around Cajamarca even though I hope that violence is minimal (preferably zero). Even so, Humala hasn't been hesitant to play hardball tonight and a potential marker has been laid down for the rest of his presidency. Let's see what the next few days brings.

Finally, a message to subscribers: The thoughts as per IKN135 today on this subject are still totally valid.

UPDATE: Watch a recording of his brief address here. 

Socrates himself, particularly missed


A sports figure unlike any other passed on today. Socrates was famous worldwide for his role in the 1982 and 1986 world cups, but he was much more besides.
  • A chain smoking heavy beer drinker who didn't like turning up for training.
  • A qualified medical doctor.
  • An off-scale IQ.
  • A man who refused to go for the big bucks and play in Europe until Brazil's dictatorship was lifted and formed a political pressure group around him to help force democratic elections in his country.

And that's just for starters. He died today aged 57 and will be missed not only as a impossibly gifted ball player but as a role model for those who seek a life less ordinary. For quality reports on the man, your author recommends this link and this link for some insightful English language coverage. May he rest in peace.

UPDATE: Corinthians stadium today.

The IKN Weekly, out now

 135 es y siempre sería para vos, Tere

IKN135 has just been sent to subscribers and I actually think it came out quite well this week. But hey, WTFDIK anyway?