One for my Latino friends.
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- We got GLD, the gold bullion ETF.
- We got SLV, the silver bullion ETF
- We got GDX, the miner's ETF
- We got GDXJ, the junior's ETF.
- We got COPX, the copper ETF
PS: Also featuring Rafael Correa and Justin Bieber, of course.
It's fascinating stuff and once you're done with this part one, go see the 2nd and 3rd parts here.
Thanks for the headsup, M
...the Euro, dailies:
So watch it.
So what does Brian Quast of CIBC think of the Fortuna Silver (FVI.to) (FSM) 4q11 numbers and 2012 guidance?
Things Just Keep Getting Better
- Fortuna Silver announced production results for Q4/11 that were ahead of our expectations on all fronts. Production of 913k oz. silver, 3.5k oz. gold, 4.4MM lbs. lead and 5.7MM lbs. zinc was well ahead of our estimates of 794k oz. silver, 3.1k oz. gold, 4.4MM lbs. lead, and 5.7MM lbs. zinc.
- Cash costs were also well ahead of our estimates, coming in at $5.11/oz., against our estimate of $2.86/oz., mostly due to cost inflation at the Caylloma mine in Peru. We expect this to be a theme with Latin American silver producers that will play out throughout 2012.
- 2012 guidance was also very strong, and well above our expectations. Guidance of 3.7MM oz. silver, 17k oz. gold, 18MM lbs. lead and 21MM lbs. zinc exceeded our 2012 estimate of 3.4MM oz. silver, 14k oz. gold, 14MM lbs. lead and 23MM lbs. zinc.
- When we adjust our model for increased production and increased costs, our cash flow estimates move very little. Therefore, our price target of $9 and Sector Outperformer rating are maintained. Fortuna continues to operate well and should continue to be rewarded.
Anyway, it's high time you took advantage of Twitter too, if you're not there already, that is. And what better way than to follow the IKN stream, right? :-)
The ex-Minister of the Environment Antionio Brack Egg said this morning that the Conga mining project in Cajamarca is an issue that "has been politicized" too much when in fact it is a purely technical matter. "It's a purely technical issue that's been politicized. The people of Cajamarca prefer to keep quiet. There are only about 6,000 people at the (protest) marches", he said,
Brack also said that that will always be fundamentalist groups who will question everything, but the main worry to be addressed is, "Is there enough water, or not?".
"Mining only uses about 2% of the water (available in Cajamarca). If there are supply problems in Cajamarca it's because the population has grown and there are no reservoirs", he explained in an interview in the morning Tv program "Abre los Ojos".
2) In other non-sporting news, muchas gracias to reader J for writing in with this headsup:
Hi OttoSo Thurs. morning we have Brent Cook on BNN.
11:30 AM - Commodities with Andrew Bell
Finding undervalued mining projects: Brent Cook, Editor, Exploration Insights
UPDATE: Here's the link to go watch the 5 minutes BNN segment with Cook.
Yes, I’m optimistic about 2012 and I’m actively looking forward to the month of January and a rebound in the tax-loss battered IKN junior portfolio.
",,,[the] market out there is known for the way it can stay irrational longer than its participants can remain solvent, so for the moment I think this short-term rally is one to ride on, not to hide from. The beating taken by juniors, especially the smallfry juniors we tend to feature on these pages, was overly severe in the last six weeks of 2011 and there’s still plenty of room from them to make recoveries without any sort of technical analysis chatter about ceilings and tests to endure as yet. In the world of the brokerage a fund manager is almost contractually obliged to keep dancing until the music stops, else be accused of the one thing that can really put the dampener on their promising career; cowardice. The bottom line is ...... that week one of January is unlikely to be the last week of this relief rally, so there’s every reason to stay bought this market.
....the price of gold since 2003, because...
Ecuador: Groundhog DayLet’s keep this short, yes? This came out of Reuters (13) on Friday January 20th, late last week (author’s translation):
Quito (Reuters) – Ecuador expects to sign the definitive contracts for the mining of multimillion dollar gold and copper projects with the mining companies Ecuacorriente and Kinross during January and February, the Minister for Non-Renewable Natural Resources Wilson Pastor told Reuters on Friday.
The minister said that the Andean nation would receive investment of U$2.8Bn from these two projects and said that the country would sign the agreement with Ecuacorriente at the end of January and with Kinross in February.
Meanwhile we quote from IKN134, dated November 27th 2011:
Vice Minister of Mines Fernando Auquilla said that the contracts between The State and both Kinross (Fruta del Norte) and Ecuacorriente (Mirador) (translated by your author), “..are practically negotiated, we’re in the phase of construction of the definitive document”.
The same IKN134 quoted President Rafael Correa: “In the next few days they will be signed. We are negotiating these contracts very hard..we are also negotiating the forward payment of royalties and with those we will do a series of projects.”
And Federico Auquilla again: “The mining companies have accepted the conditions of the Ecuadorian State and we are completely satisfied.”
All that was followed in early December by Wilson Pastor saying that Kinross would officially sign by the end of that month. Oh well.
As for your author’s opinion on developments and the viability of Ecuador as an investment destination, those haven’t changed one single iota from the opinions expressed in IKN134 and a couple of times after that piece, too. Feel free to check back but they can be summed up with one word, AVOID. They also differ from a silly piece out of Canaccord last week that tried its very hardest to pump the country to its readership after being invited to look at the excellent rocks Salazar Resources (SRL.v) has to offer in the country (and they are excellent, just a pity they’re in Ecuador). People, the fact is that strong and viable projects are selling at considerable discounts in many places, in countries with good mining acceptance and traditions too (xxxxxxxxxxxxxxxxxxxxxxxx just one prime example that springs to mind) so there’s no reason at all to tack on extra risk by exposing yourself to Ecuador. Avoid, avoid and avoid once again, because that’s what all exploration companies that aren’t already up to their necks in Ecuador are going to do in the years ahead, signatures with Ecuacorriente and Kinross forthcoming or not. Even if these elusive deals are signed, the situation in Ecuador remains far worse than the brokerages pumping their stories to the ignorant would have you believe.
Argentina: Yamana (AUY) (YRI.to) at Esquel/Suyai, Osisko at FamantinaThe last couple of weeks have seen a ramping up of happy feely good news stories out of Argentina about the political risk environment for miners, with the news of the Rio Negro ban on mining (using cyanide, mercury etc) the central one on which much optimism has been hung. However, northern media channels have neglected (it must have simply slipped their minds, oops deary me) to mention anything about the worsening risk profile of the La Rioja province and the Famantina project of Osisko mining, a project slated for open pit mining currently being opposed by roadblocks and getting national headline attention...in Argentina at least. Your author hasn’t mentioned much of it so far, but it’s one to keep an eye upon because the protests seem to be spread a little to other areas and last week the big La Alumbrera mine got attention via selective roadblocks in the normally pro-mining province of Catamarca (14) that barred progress of supply trucks to the mine.
In other Argentina news, we go a little further into Chubut province and its issues. As mentioned last week much speculation is now turning towards this province and its mooted plans to allow mining operations by overturning existing laws. Your author remains sceptical about the “from 2q12” timeline promoted by Argentina’s mining minister Jorge Mayoral regarding Navidad, but at least in the case of the Pan American Silver (PAA.to) (PAAS) Navidad project in the centre of the province, there’s a fighting chance that eventually (best guess 2013) it’ll get the necessary green lights. However, we continue to scoff at the silliness that was and still is being promoted by interested third parties in Canada about Yanama Gold’s (AUY) (YRI.to) chances of a green light at Esquel/Suyai in the West of the province. To give a little background into how the company has been operating its community relations program there, here’s a story you’re unlikely to read about in the Globe & Mail or your morning brokerage update mailer. According to reports out of the small town of Esquel, last week a couple of thousand protesters gathered to reaffirm their opposition to the mining project in question. They also called out the town’s Yamana community rep in the following way (translated) (15):
“On the corner of Rivadavia and 25 de Mayo streets the locals declared Richard Bustos, community relations manager of Yamana Gold, a persona non grata in the town. A long text with extensive proofs was read out to the crowd about the role of Bustos who, as well as being employed by the mining company, is also a reporter with the local FM Del Lago radio station in the city, in clear incompatibility of the two roles. Bustos declared to the press that he had been working as community relations manager for Yamana for two years, a fact he had hidden from the community and from his audience of listeners until the (anti-mining) assembly had unmasked the facts.”
This cute way of going about community relations business looks, to your author at least, like a throwback to the sneaky, back-handed ways of doing things we saw perhaps 20 years ago from the industry. The very style of this creeping-in-the-background Yamana is doing (along with one of the major giveaways of problems in the mining industry, that of the project/company name change) should be enough of a clue here, so don’t get fooled into lumping all Chubut projects into one bag; Navidad might not be on the type of optimum timeline getting mention by bigwigs right now, but it does have a fair crack of eventual approval (I’m guessing 2013, but a later date than that wouldn’t surprise me either). However Esquel/Suyai is a no-way-José project and it matters not how much optimism is thrown its way by those with hidden agenda.
Mexico: A quick profile of PAN candidate Josefina Vázquez Mota as relates to miningLast week we ran a short piece of current frontrunner for the Mexico Presidential elections, Enrique Peña Nieto, and as we’d earlier run a note on perhaps his main rival AMLO in IKN139 (dated Jan 1st) we said that it was only fair to run a rapid-fire overview of the other current main candidate for the job, the PAN party’s Josefina Vázquez Mota. So here it is.
Vázquez Mota, (51 years old, born and raised in Mexico City, married, three children, career economist and party activist) is the likely candidate for the centre-right PAN party (Partido de Accion Nacional, for which I don’t think you need a translation), the political party that has supplied the country’s last two Presidents in Vicente Fox (until 2006) and the current Felipe Calderón (until now). Therefore it shouldn’t come as much surprise to find out that if elected, we’d fully expect the same type of pro-mining administration from Vásquez Mota as we’ve seen from the previous two PAN governments in the last 12 years. This is reinforced by the fact that Vázquez Mota has been an active servant of the last two administrations with periods as Education Minister and Social Development Minister, carrying out party policy handed down from the Presidents basically to the letter. She deserves her crack at the big job and would represent the continuation of the status quo in Mexico policy towards mining, but the general feeling is that after two terms the PAN party is feeling the fatigue of government, has lost general popularity with its citizenry (particularly on non-mining related issues such as the acceleration of the so-called “drug wars”) and is unlikely to get a third President from its ranks, for this time at least. Some current polls put her in a technical dead heat for second place along with AMLO, but that same street level general feeling is that Vázquez and PAN are lying third and behind the left wing candidate, with Peña Nieto out front at around 40% voter intention at this early stage.
UPDATE: Wowsers, this reversal is strong enough to put MFN green on the day. Huzzahs all round.
...the change in global steel production by region, 2009 thru 2011
"RAIN AND RIVERS"
The Saga of the Mist -
Trip from New York to San Francisco, 1949. N.Y across the tunnel to New Jersey - the "Jersey night" of Allen Ginsberg. We in the car jublilant, beating on the dashboard of the '49 Hudson coupe...headed West. And I haunted by something I have yet to remember. And a rainy, road-glistening, misty night again. Big white sign saying "West---> "South <--- our gleeful choices. Neal and I and Louanne talking of the value of life as we speed along, in such thoughts as "Whither goes thou America in thy shiny car at night?" and in the mere fact that we're together under such rainy circumstances talking heart to heart. Seldom had I been so glad of life. We stopped for gas at the very spot where Neal and I had stopped on th No Carolina trip 3 weeks before, near Otto's lunch diner.* Then we drove on playing bebop music on the radio. But what was I haunted by? It was sweet to sit near Louanne. In the backseat Al and Rhoda made love. And Neal drove with the music, huzzaing.We talked like this through Philadelphia and beyond. And occasionally some of us dozed. Neal got lost outside of Baltimore and wound up in
(*And remembered the funny strange events there.)
Enjoy, and thanks to reader 'MR' for the headsup.
...the Peru International Currency Reserve position, 2011 and 2012 to date:
Question: Who is this?
A couple of charts that show Peru Central Bank's efforts to stop its Nuevo Sol (PEN) from appreciating
And here's how the forex has looked in the last 12 months:
The BCRP last week came out with its projection for the currency in 2012 and called its exit at S/2.66 to the dollar, to which we say NoShitSherlock. In fact, we're probably looking at something under 2.60 by this time next year, with or without the Cenbank's strategy of letting things down gently.
Q: Definition of Las Malvinas?
We assume U$1 = CAD$1, the rest is all yours
|PAAS price||0.55X PPS||Cash||MFN Arb|
This week’s edition of The IKN Weekly is all about one trade and a near-term one at that, which is something that surprises your author as much as anyone else out there. The original plan in this week’s “Fundamental...” section was the NOBS report on XXXXXXX but as I’m still not totally at ease about the stock’s background (see above) it can wait until next week. What we do instead today is Minefinders (MFN) (MFL.to) and the following script is set out roughly as follows:
• We look at the MFN at Dolores 4q11 production numbers published last week.
• We consider the revenue breakdown into silver and gold sales and note changes in the revenues mix.
• We examine how revenues/revenues per share have come along and make forecasts for the next two quarters.
• We compare historic fundy revenues numbers against the current share price to see if there’s apparent value at the moment.
• We look at the MFN share price evolution compared to the metals and mining peers.
• We decide on a trading strategy.
And as we have no secrets round these parts and no wish to keep anyone in suspense, let’s clearly state that I see an excellent near-term opportunity for trading gains in MFN, I’m a buyer of the stock as early as tomorrow morning (Canada) or Tuesday (NYSE closed for MLK day tomorrow) and, as long as the gold and silver prices don’t drop from underneath us all, we expect a decent, short-term win between now and the end of February.
San José del Progreso, Oaxaca. In the southern Mexican state of Oaxaca one person was killed and another injured during a confrontation between mining opponents and police on January 18th. The middle aged farmer and a woman in her twenties, both indigenous Zapotecs, were among a group of villagers trying to block the path of an excavator working for the Canadian Mining Company Fortuna Silver. Bernardo Méndez and Abigail Vasquez were shot by local police and plainclothes gunmen working for the Vancouver-based mining company. San José del Progreso, located 50 km south of Oaxaca City, has been a flash point for violence since an alliance of local environmentalists and farmers occupied the gold and silver mine in early 2009.
Despite widespread resistance and an ongoing conflict that already claimed the lives of two people in summer 2010, Fortuna Silver began commercial operation of the mine last September. As the installations are located in an arid valley, smooth operation is heavily dependent on water access to process the ore. The contamination of the scarce resource is among the main concerns of the mining opponents, many of whom grow vegetables for a living and rely on clean water for irrigation. The inhabitants of Magdalena Ocotlán, a village adjacent to the mine that hosted a nationwide environmentalist convention in 2010, have so far successfully prevented the construction of a sewage duct leading to the ore-processing installations. Fortuna Silver has since tried to get water access at all cost, recently settling for a deal with San José’s pro-mining camp. The scheme allows the mine to tap into a newly built well on village lands to keep its operations going throughout the dry season. It was at the building-site of the new water duct that Bernardo Méndez was killed. He and his neighbors had gathered to stop the machine digging a trench because it had damaged their own fresh water access.
Mining operations in Oaxaca are backed both by the new governor Gabino Cué and the ousted Party of Institutionalized Revolution (PRI) which still enjoys widespread support in the countryside. Contrary to the precepts of international law, the indigenous population of the region was never consulted about the mining project. The recent violence has prompted various social organizations in Oaxaca, among them an influential teachers’ union, to demand the end of mining operations.
Disclosure: Long FVI.to (and that's not going to change on this news)
Minefinders (MFN) (MFL.to) and Pan American Silver (PAA.to) (PAAS): The problem with doing deals in late night Vancouver while drunk and loud is...
....that everyone gets to hear about them before you can get over the nasty hangover and announce the thing. Here's Brenda Bouw of the Globe & Mail with the apparent scoop:
Pan American Silver Corp. is poised to boost production in mineral-rich Mexico through the proposed acquisition of Minefinders Corp., a fellow Vancouver-based company with an aggressive growth strategy.
Sources say Pan American, the world’s second-largest primary silver miner, struck a deal late Sunday with Minefinders, owner of the Dolores silver and gold mine in northern Mexico and the nearby La Bolsa property set to begin production later this year. The deal is expected to be announced before markets open on Monday.
UPDATE: Apparently it's a $15.60 cash and shares deal, here's the NR. Subscribers, expect a Flash update with thoughts on how to play this deal soon.