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12/16/11

The Friday OT: U2; Ultraviolet (light my way)

Because of the sumptuous key chord (wrote post too quickly) changes in this song which remind me of riding a motorbike fast down long straight roads...



...and the way U2 rocks a hall like no other band.

Random musings from a backwater

I spend many hours online every single working day (which is nearly all of them) and had to ask myself  "So wtf is Zynga?" this morning. Then I realized that I never use facebook....and that I live in a backwater....and that I'm a very lucky guy.

Christopher Hitchens on his experience of being waterboarded right here, as it's a far better tribute to the man to read his words, not mine. Rest In Peace, sir. 

According to the goldbug community, if CPI were up it would have shown inflation and gold would have zoomed, but if CPI were flat Bernanke would have more room for QE3 and gold would have zoomed. According to reality, when the CPI came out gold hardly budged...funny dat, innit?

Despite a slowing economy and corruption scandals, President Dilma Roussef nails a 72% approval rating at the end of her first year in office....that's strong and good for her.

The official papers needed to ask for a Presidential pardon for Alberto Fujimori (due to terminal illness, apparently) were filed last night. A key piece in the "welcome to the new peru (just the same as the old peru)" jigsaw puzzle about to be slotted into place.

Oh yeah, one more random thing on my mind this morning to mention. This 3 month chart comparing RIO.v to GLD. 


Real copper news

Much noise in the market, from the wailing of the hurt longs to the shrilling of the "buy more!" brigade. However, buried under all the inconsequential claptrap your author has managed to uncover some real, interesting and fundamentally significant news on copper metals and mining. It's from Reuters and the first part is pasted right here:

HAMBURG Dec 16 (Reuters) - Germany's Aurubis , Europe's biggest copper producer, has agreed long-term copper treatment and refining charges (TC/RCs) for 2012 of $63.50 a tonne and 6.35 cents a pound, up 12.4 percent on 2011 deals, sources close to the company said on Friday.
This means Aurubis has matched the higher TC/RCs for 2012 reached in early December by Freeport McMoRan Copper & Gold .
TC/RCs are paid by miners to smelters to refine concentrate into metal and are a key part of the global copper industry's income. Increases are being sought as smelters believe demand for metal and mining output will continue to rise in 2012.
There was still doubt in past days whether the Freeport level would be accepted as a benchmark for 2012.
Chinese copper smelters were still seeking to convince BHP Billiton , the majority owner of the world's biggest copper mine, to (continues here)
And if you don't think that's important, your humble scribe humbly suggests that you just continue reacting to the market instead of acting upon it...like you've always done.

Chart of the day is...

The gold/Silver ratio, three year timescale:

Zeroing in on the right-hand side of the squiggly line, it's interesting to note how the gold/silver rato has kept pretty steady these last couple of months, not moving out of the 50X to 55X band while gold has dropped hard (gold has seen London Fix  highs of $1795/oz and lows of  $1574/oz in November and December). Potential conclusions to draw from the steadiness of the ratio:
  • The influences have been strictly monetary, with the pure asset metal and the asset/industrial metal affected more or less equally.
  • It's been a waste of time following this ratio chart recently.

But hey, WTFDIK anyway?

12/15/11

Mining PRs and the Ottotrans™, Part 52

It's that series again, with the latest well-after-hours NR from Jaguar Mining (JAG) (JAG.to) the object of our affection.

This is what they said:

CONCORD, NH, Dec. 15, 2011 /CNW/ - Jaguar Mining Inc. ("Jaguar" or the "Company") (TSX: JAG) (NYSE: JAG) today provided an update on the strategic review process that it previously announced was initiated by its Board of Directors on November 16, 2011.
The Board has appointed a Special Committee comprised solely of independent directors to review and evaluate any proposals received as part of the strategic review process and to assess whether any such proposal may be more desirable than the continued operation of the Company on a stand-alone basis, and to make recommendations to the Board thereon.  The Special Committee is chaired by Gil Clausen and is comprised of Mr. Clausen, Gary German and John Andrews.
The Company has retained JP Morgan Securities LLC as its financial advisor and Davies Ward Phillips & Vineberg LLP as legal counsel to assist the Board and the Special Committee.
Over the past several weeks, through JP Morgan, the Company has solicited interest regarding a potential change of control or merger transaction with the Company.
Any proposal that may be received will be assessed relative to the inherent value of the Company's unique asset portfolio in order to determine the most effective means of delivering value to the shareholders of Jaguar. There is no assurance that this strategic review process will result in a change of control or merger transaction.
"For a number of months Jaguar's share price has been disconnected from the inherent value of the Company's unique asset portfolio," said Gary German, Chairman of the Board. "The Special Committee has been formed to explore alternatives.  Our Board will not support a transaction that does not deliver adequate value to our shareholders."
The Board intends to provide a further update to shareholders as circumstances warrant, likely in early 2012.

And this is what it means:

There's no offer.

Today posting at IKN will be light due to illness

I'm sick of watching the market. It happens sometimes.

Instead, your author will catch up with a bit of reading (The Seduction of Unreason, been meaning to re-read it for months, Ari) and cook some lentils for lunch. Served with white rice. Hasta mañana, damas y caballeros.

Scorpio Mining (SPM.to): One less to worry about

You are what you eat, they say.

Don't get me wrong about this, it isn't some sort of personal grudge and for all I know Mr Stonehouse may well be the nicest person around, always willing to help old ladies across the street, do fine things for charity and be the life and soul of any Christmas party. But when a VP Expl...
  • was at the centre of the clustafark called Ascendant Copper in Ecuador
  • and then at the centre of the clustafark called Mercer Gold in Colombia
  • and is then hired by a company that makes a point of NOT mentioning the names of companies in Mr Stonehouse's background in the NR, preferring to talk in general terms about his years of experience in The Americas and his fluent Spanish
...it makes his new employer, Scorpio Mining (SPM.to) a very easy avoid. And in the end this is good for your humble scribe, as the "one less to worry about" principle is a good one, cuts down on workload and frees up time for other things like eating food or playing chess. Anyway, here's the SPM.to NR from this morning:

TORONTO, Dec. 15, 2011 /CNW/ - Scorpio Mining Corporation (TSX: SPM) ("Scorpio" or the "Corporation") has appointed James M. Stonehouse as the Corporation's Vice President of Exploration, based in Mexico, effective January 3, 2012.
Mr. Stonehouse holds an M.A. in Geology from Dartmouth College, Hanover, New Hampshire. He is a professional and highly skilled geologist with over 30 years of experience in exploration, primarily focused in the Americas and on precious and base metal deposits. He is fluent in Spanish and has successfully led multiple teams through grass roots exploration to discovery stage, resource evaluation, feasibility study and development. His ability to recognize and re-evaluate geological settings and design successful exploration programs has resulted in significant discoveries that have increased resources and added satellite ore deposits to existing operations. Mr. Stonehouse is experienced in managing all aspects of exploration and resource development, including turnaround projects that brought sub-valued assets to economic status and production.
Mr. Stonehouse is a registered member of SME and a registered Geoscientist in the State of California, and is a Qualified Person as defined by National Instrument 43-101.
Parviz Farsangi, President and CEO of the Corporation, commented: "We are delighted to have James as part our dedicated team as Scorpio moves forward with its plans for growth. His extensive experience and expertise will be of great value to the Corporation as we continue to explore, develop and expand our portfolio of projects in the Cosalá and Parral Districts of Mexico.

The Toromocho copper mine project suffers an unexpected delay in construction

Moral of the story: Don't let a miner cook you lunch. From RPP news this morning (your author translates):

A total of 140 employees working for the mining services company JJC, contracted to the Chinalco mining company in the city of La Oroya, province of Yauli (Junín region), were poisoned after eating a communal lunch* accompanied by strawberry juice.

Due to stomach pains and vomiting, the employees were evacuated at first to the local health outpost in Morococha, but the severity of some cases caused their transfer to the hospital (45 people) and health centre (10 people) at La Oroya.

Pedro Rau Lavado, director of the Essalud Hospital, said that the condition of all patients was stable and the nauseas, colic and vomiting was caused by food poisoning.

"Many of them are on intravenous saline drip, but fortunately everything is now under control. The discharge of each patient depends on their individual evolution", he said.

*called "pachamanca" and consisting of meats cooked in an underground pit covered in earth, much the same style as a Hawaiian luau.

Chart of the day is...

...an update on our 2011 Small Silvers Sweepstakes with just two weeks to go:

click chart to enlarge

I've actually been asked for this halfway-thru-final-month update so it's not just me that's obsessed (sad though that may be). Anyway, EDR.to still leads, there are now just three issues in positive territory for the year, six stocks are doing worse than the metal itself and overall the sector still sucks. Official finish line result on Sunday Jan 1st 2012, the other side of Santa.

By the way, apparently some problems with Google Mail this morning, just so you know.

12/14/11

OT: New Banksy

I like. I share.


close-up:
from here (four more new ones on the link, too)

"Think of these things; whence you came, where you are going, and to whom you must account."

That was Benamin Franklin. This is the chart for Jaguar Mining (JAG.to) (JAG), November 1st to date.


Answer to part three of Frankin's thought is "shareholders" (especially the new ones that jumped on board at $8 and above) so it's about time JAG did just that, don't you think?

Dear chairman of JAG: Why did Titcomb resign? It's high time you addressed the ever-growing noise of rumours so step up and try, for once, to do things correctly by your shareholders.

Tahoe (THO.to): Question for Porter Stansberry

What rhymes with pump, Scamsberry?

dyodd, dude

Gold in Euros, 2011 year to date

Just thought I'd stick it here.

Looks healthier than the Dollar chart right now, n'est-ce pas?

Charts of the day are...


No better way of explaining the move in the markets after yesterday's Fed announcement, but as it's rather unfair to just copypaste them here without giving due credit to the author, the visuals aren't here and you have to click through. However, I sincerely hope you do click and go have a look, as Sumner's post at The Money Illusion is simply excellent (and brief).

12/13/11

Cajamarca Peru lifts its strike over Minas Conga

A developing story, but Gregorio 'Goyo' Santos, regional leader, has just said he'll move to lift the strike action in the region today. Negotiations with the national government and a lifting of the State of Emergency are likely immediate repercussions of this decision.

Good news, as a bit of common sense prevails in Cajamarca. Jaw jaw beats war war every time.

UPDATE 20 minutes later: Word starting to filter through on local media now.

Reuters: Humala alienates Peru's left, may lose sway in Congress

After that post below and just to prove that Reuters still does good work as a newswire, here's how the latest from that house on Peru starts. Click through for the rest.

(Reuters) - Peruvian leftists who supported President Ollanta Humala for years are leaving the government and may stop supporting him in Congress, saying his emerging authoritarian tone amounts to a further drift to the right.
At least two high-profile leftist aides who felt betrayed have quit their posts and more resignations are expected after Humala, a former military officer, shuffled his Cabinet over the weekend.


continues here

Shame on Reuters and Bloomberg for falling for the Jaguar Mining (JAG) (JAG.to) market rigging bullshit

With the hypothetic arbitrage now up to 50% on this non-existent, apparent, supposed, mooted, rumoured bullshit invisible deal (plus the minor event of loss of a CEO cos he told his board a bunch of porky pies) can we now put this whole bunch of stupidity to bed? There is no "deal with the Chinese", and just because a couple of hacks in the Asian offices of Reuters and Bloomberg got hoodwinked into helping a couple of unscrupulous scumbags make a whole heap of money by running the story under their newswire names, it doesn't make it any more real.

Money talks, bullshit walks. JAG at $9.30 takeover is bullshit, JAG at U$6.20 this morning is money, real money, talking. A 50% arb on a takeover deal? Gimme a break here...

UPDATE: To answer a couple of mailers, yes i have heard rumours of exactly why Titcomb was fir...SORRY!!...decided to resign but even though the source is pretty good, the reasons heard are unsubstantiated as yet and therefore (due to the sensitive nature of the issue and that JAG people are apparently miffed at IKN) we're not running them here. However, from what's going around on the junglydrum network, your humble scribe thinks that it's high time Jaguar Mining came clean and informed its shareholders exactly why Titcomb was resigned. And JAG is now threatening to go back to a 5-handle after trading over $8 on the BS buyout rumours last month. We'll leave it at that.

Dennis Gartman, dumbass on gold

Reader M writes in to state the freakin' obvious, but backs it up with a rather interesting chart:

"I wonder why people still listen to Dennis Gartman's calls on the price of gold. Here is a chart showing the Gartman Letter performance, the TSX, the S&P and GLD as a proxy for gold over the past year.

Cheers, M


The only thing I'd take issue with is that M forgets just how well a decent marketing and bullshit propaganda campaign works on the brains of gringo financial sheep. Apart from that minor quibble, agreed M. Nuff said.

Vampire Squid (GS) does zinc

Here's the intro of Goldman's note on zinc, published yesterday (thanks to reader and very nice man 'N' for the forward). 

Zinc looks ‘cheap’ from a supply-side perspective

We review the outlook for zinc mine supply between 2011 and 2015 and find that committed zinc mine supply is set to rise by only c.1% pa (predisruption), as Chinese mine supply growth slows and closures of depleted mines offset a large portion of the anticipated growth in supply ex-China. 

Assuming growth in global zinc demand of c.4% pa over the period, this lack of supply growth means prices will need to rise to incentivise high cost Chinese mine supply to produce (at least 10%, and as much as 30% of Chinese supply is under pressure at current zinc prices of $2,000/t). Prices also need to rise to incentivise some of the c.1.9mt of ‘probable’ zinc project capacity to come online between now and 2015, although some of this capacity is likely to be developed despite the zinc price trading below incentive prices of $2,200-$2,400/t (10% and 15% pre-tax IRR, respectively). For 2012, we nonetheless believe that zinc upside is capped by high refined inventory levels and concentrate stocks recently built at Chinese mines.

If anyone feels like reading the whole thing (14 page PDF, lots of numbers, lots of crunchy Chinese goodness) it's available for download right here. Please be having that day of niceness.

Chart of the day is...

...coffee, weeklies:

The difference between 2010 and 2011:
  • 2010, inflation was real, largely to the continued commodities rebound after the Lehman deflation event.
  • 2011, inflation is imaginary and exists only in the mind of financial quacks and idiots with Weimar fixations or think household-scale economics is a perfect miscrocosm of how macro-scale economics works. Two hundred years ago that might have been the case but this is the 21st century people and you're wrong.

However, said idiots still get space in the media to expound their stupidity and enough sheeplike followers to make it worth their while. 

12/12/11

Colombia's mining boom overshadowed by human rights violations: NGO

Colombia Reports with the note and waddya know, by some shocking surprise Serafino Iacono's Gran Colombia Gold (GCM.to) gets a front and centre mention. And hey wow, is that really GCM.to at yet another 52 week and all-time low today? Why yes it is!

Here's a snippet of the report, go click through for the rest.
According to PBI spokesperson Moira Birss, mining activities are frequently accompanied by a disregard of the constitutional rights of minorities and threats and attacks on leaders of these communities.

"Community leaders who oppose mining projects, or the organizations that accompany those leaders and communities, have at times been targeted with threats and even attacks in what would appear to be a result of their opposition, as was the case with the priest who was killed in Marmato," said Birss, referring to an area where mining company Gran Colombia Gold and the local community are at odds over who has the rights to mine for gold.

Your South American Head Of State Cancer Treatment Update Bulletin Latest News Thingy


According to Brazil's newspaper of record Folha SP today, Lula da Silva's cancer has 75%  disappeared after his three chemo sessions and that represents "an extraordinary reduction". This is good, but I can't help but think that the 25% left is far more important than the 75% gone. Anyway, get well soon Lula and red suits you, sir.

Eurasian on Peru's cabinet reshuffle

Out today.

PERU: Cabinet changes reinforce investor-friendly policy, but could increase protests
12 December 2011 02:25 PM EST

A recent cabinet reshuffle reflects President Ollanta Humala's desire to have a tighter grip on the government, but is unlikely to yield any substantial shift in policy. If anything, it confirms Humala's commitment to investor-friendly economic policies. The cabinet changes probably suggest that the government will take a harder line towards protests against mining projects. This means the government will seek to protect mining investments and will neither fuel nor politically use protests against the mining sector, as some feared. Still, taking a hard line could generate additional instability by further fueling protests. Humala could lose some political support from leftist groups, but this is unlikely to significantly affect his ability to govern.

President Ollanta Humala faced his first substantial political crisis with the unexpected resignation on 10 December of Prime Minister Salomon Lerner, one of his key advisors. Lerner's resignation led to a significant cabinet reshuffle (over half of the cabinet was replaced). While Lerner's departure seems to have been brewing for several weeks, the trigger appears to have been a disagreement over how to handle social protests, in particular his handling of the conflict over Newmont's $4.8 billion Conga gold and copper project (Humala reportedly favored a tougher approach). Growing protests led the company to suspend the project and the government to declare a state of emergency on 5 December. It also seems Humala became frustrated with his a somewhat conflicted cabinet, whose differing views on key issues (such as mining) were generating the impression that the government lacked control over the country's political situation. As such, Humala is probably seeking to gain more direct control of the government now that he has been in office for several months, and also have a more homogeneous cabinet with less dissenting views.

Lerner has been replaced by military-man Oscar Valdez Dancourt, who was interior minister. The cabinet reshuffle is unlikely to lead to a major shift in policy, and if anything will probably reinforce the current investor-friendly direction of economic policy. Economy Minister Luis Castilla will remain in his post, and Jorge Humberto Merino Tafur will be the new mining minister (he also comes from the industry). Other replacements include the ministries of agriculture, production, culture, environment, women issues, justice, interior, labor, and defense. These replacements leave the cabinet with a higher proportion of technocrats and a lower proportion of more leftist appointees (including Lerner, who was more of a leftist than many seem to remember), which if anything will reinforce the government's market-friendly orientation.

Perhaps the main signal emanating from this cabinet shift is that it suggests that Humala will deal with protests against mining and other natural resources forcefully, and will seek to protect mining projects and investments. It shows, first, that Humala will not side, fuel or politically use protests against mining projects, as some had feared, and is willing to clash with groups that could put mining investment at risk. Clearly the Humala administration understands the importance of mining investment in terms of economic stability and, more importantly, as a source of fiscal revenue needed to fulfill the government's ambitious social spending agenda, which will in turn determine his political success. As such, he is not willing to tolerate major risks to the investment pipeline.

The future of Newmont's Conga project however, remains uncertain. Valdez said the government would seek an international evaluation of the project in order to reduce tension with local communities. The conflict will not necessarily be resolved, but it seems the government will throw its weight behind such an important mining project, increasing the likelihood that it moves forward, despite local opposition.

If the government does indeed take a hard line attitude towards protestors, it would generate the risk that this actually aggravates social tensions and thus causes increased, or more intense, instability. Widespread protests against mining companies have been one of the main risks affecting the mining sector in Peru. To a great extent they are a function of a weak political system that does not provide institutional mechanisms for channeling popular demands or concerns. A more repressive stance will do little to ease those problems. On the contrary, it may reinforce the sense that the government is on the side of mining companies and thus strengthen anti-mining groups. As such, we do see some risk that the government strategy could backfire.

The cabinet reshuffle has been criticized by leftists groups that believe either this is a move towards the right or a "militarization" of the cabinet (neither of which is true, in our view). Former president Alejandro Toledo also said he would not support the government anymore (apparently Humala did not offer him any cabinet posts), which could diminish Humala's support in congress. Humala's Gana Peru bloc has 47 (out of 130) seats in congress, while Toledo's has 20. Still, none of this is likely to have a major impact on Humala's ability to govern. Majorities in congress can be built given Peru's weak party system, at least as long as the president remains popular and legislation is not particularly controversial. Thus, even though Humala could lose some support, we don't see this as a threat to his ability to govern effectively.

Daniel Kerner
Analyst, Latin America

Peru export slowdown?

Two months don't make a trend, but three might be a charm so watch out for the November number.


I mean, it isn't as if Peru is vulnerable to world commods prices by being dependent on just two freakin' products, copper and gold, for 45% of everything it exports, is it? Impossible to identify a systemic weakness there.

Copper: China keeps on buying the dips...

...despite all the threats of immediate world doom and all that jazz. So why shouldn't I?

Here's Desjardin's with the latest Chinese copper import data for November and here's the link to read the whole shebang, with pretty charts and everything.
On Saturday (December 10), preliminary Chinese trade data was released for the month of November. Unwrought copper imports reached 452,022 tonnes, up 17.9% from 383,507 tonnes in October and 28.6% from 351,597 tonnes in November 2010; this represents the highest level since March 2010. The import deficit implies net copper imports of 320,000 tonnes for November, up 25% from October’s level.
 
In addition, China’s production of copper semi-fabricated products (wire, plate, etc) reached an all-time high of 1.055m tonnes last month. All indications point to China continuing a growth trend in copper consumption.

dyodd, dude.

Is the rumour true about Casey's Louis 'Lobito' James and PC Gold (PKL.to)?

We hear unconfirmed reports that Louis Lobito James is so darned important these days that he got (now ex) CEO of PC Gold (PKL.to) fired by the company after throwing a fit of pique about the company's share price performance since reco'ing to his people mid-year....can this possibly be true? Can a humble rock kicker/stock picker like Lobito get a 25 year veteran of the junior world thrown out of the company just because he reco'd the stock to his subscribers on June 10th at 70c?


Here's how that June 10th piece by Lobito finished up, by the way:
"PC Gold seems to bottom in the 70-cent range, near where we are now. That and the pending drill results make this a good time to take a first tranche. Of course, Shopping Season is upon us, so you should not chase this stock, and should look for opportunities to take a second tranche below 65 cents, perhaps even at 60 cents or less, if given a chance to do so in the weeks ahead."

Well, the good news is that Casey Research Alert clients (paying what, $2k a year for the privilege?) got all the 60c they could have wanted, Lobito. Errr....the bad news is....

Chart of the day is...

...gold, last week or so, comex futs chart:

The bad news is that, yes indeed, we are all gonna die. The good news is that it was going to happen anyway so relax a bit, yeah?

Meanwhile, away from my guff'n'nonsense Rick Bookstaber has an interesting note about market volatility up at his blog (a far better place to visit than this corner of cyberspace, for sure). Go read it by clicking here.

12/11/11

The IKN Weekly, out now

IKN136 has just been sent to subscribers. One good'un, two bad'uns and more besides.

Peru's Cabinet Re-Shuffle

The following  according to Peru website La Mula (which is usually well sourced on political affairs) is the list of the new ministers that will be sworn in by President Humala at 8pm tonight (about 2 1/2 hours from now). First the new faces in the cabinet:
Justice: Juan Jiménez
Environment: Manuel Pulgar Vidal
Agriculture: Luis Ginocchio
Women and Social Development: Ana Jara
Interior: Daniel Lozada
Defense: Alberto Otárola
Culture: Luis Peirano
Work: José Villena
Production: José Urquizo
Energy and Mines: Jorge Humberto Merino
 Meanwhile, these are the ministers who will get to keep their jobs:
Economy: Luis Miguel Castilla
Development and Social Inclusion: Carolina Trivelli
Tourism and Foreign Commerce: José Silva
Health: Alberto Tejada
Education: Patricia Salas
Transport and Communications: Carlos Paredes
Housing: René Cornejo
Foreign Relations: Rafael Roncagliolo

Comment: This is a big reshuffle and particularly big for a government that's just four months old. Humala has got rid of some names he thought weren't performing well, but has also injected new blood that will likely support him if and when he takes a harder line against protesters, starting with those in Cajamarca against the Minas Conga project. Notable is that most of the "big ministry" posts such as Foreign, Economy, Health are left unchanged. It's still tough to know exactly how cards will fall, but the chances of violent episodes in that region are now much higher than they were a week ago, when the "dialogue first" message of ex-PM Salomon Lerner held sway.

We live in interesting times, unfortunately. By the way, be clear that this list is unconfirmed and if there are any differences when the real deal happens later, an update to this post will happen.

Total OT photo

Guess what this is:


It's a 1952 photo of nuclear bomb less than one millisecond into its explosion. Source and story here.

And yes I know it's absolutely nothing to do with LatAm or stocks or economics, it just got me thinking about the incredible force for both good and bad that is the human being. So I thought I'd stick it up here.

Report on La Rinconada in Peru

My thanks to reader LM for passing on this link. A report about a place that your humble scribe has also had the 'pleasure' of visiting, La Rinconada.