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Which will be worth more at end 2015?

4/21/12

Five days of metals and miners: April 21st

The regular Saturday slot: The last five days' worth of action in the gold bullion ETF (GLD), the silver bullion ETF (SLV), the miner ETF (GDX), the junior miner ETF (GDXJ) and the copper ETF (COPX).

We have divergence. The copper guys had a reasonably decent week, the metals were flat or slightly down, but the precious metals miners of all sizes had yet another week to forget. Also, check how the PM miners tried and failed on most days to rally. Interesting.

4/20/12

Peru, VRAE, Humala

For your information, President Ollanta Humala is about to bomb the holy crap out of the VRAE coca growing region of Peru, controlled by the Sendero terrorist remnants.

The Friday OT: Kate Bush; Nocturn + Aerial

The last two tracks from her album 'Aerial' together on one spool will leave you speechless



Sixteen minutes of pure music magic. Dedicated to reader 'DW'.

Investing in LatAm natural resources: Black and white

In response to a mailed question today. You want it simple?


IKN can wildly oversimplify at the drop of a hat. Next question?

Spirit Air flies to Colombia


Full story here at Colombia Reports, we'll just quote the Colombian minister:

""It is a shameful publication and we demand that the airline withdraw it and publicly apologize to Cartagena and Colombia," said the Minister of Industrial Commerce and Tourism, Sergio Diaz Granados."

Chart of the day is...

...copper, this week:

dyodd, dudettes and dudes.

4/19/12

YPF: The joy of Rajoy

Argentina's newspaper of record, La Nacion, isn't anything close to being a mouthpiece of the Kirchner government and is usually either making snarky undercurrent comments against Prez CFK or outright opposing her. So to see the paper running this story today makes the subject matter all the more interesting. The report is all about Spanish Prime Minister Mariano Rajoy and his reaction to Argentina's nationalization of YPF, that plays against Spain's Repsol. This week he said:

"It's unjustifiable...it greatly affects the international reputation of Argentina."

But here's the fun bit. Back in 2008 when Repsol was in line to be bought by Russia's Lukoil, here's what Mariano Rajoy said then:
"Our petroleum, our gas and our energy cannot be put into the hands of a Russian company because it would convert us into a 5th division country."

So, how's this work again? Repsol's production in Argentina is Spain's oil and if those sneaky Russkies try to cut in on the deal it'd relegate Spain to the 5th division, but Argentina daring to claim that the oil produced in its country should be Argentine rather than Spanish is a totally unjustifiable stance and a bad bad thing. Ahhh, politics....

Mining PRs and the Ottotrans™, Part 56


Today our occasional series takes in the NR out of Extorre Gold (XG.to) (XG).

This is what they wrote:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 19, 2012) - Extorre Gold Mines Limited (TSX:XG.TO - News) (NYSE Amex:XG - News) (FRANKFURT:E1R.F - News) ("Extorre" or the "Company) wishes to provide its insight on the proposed acquisition by the Argentine Federal Government of 51% of the Argentine oil company, Yacimientos Petroliferos Fiscales (YPF), from Spanish Oil Company Repsol.
It is important to note that there are significant differences in regulations, tradition, public importance and internal use of products between the oil & gas sector and the mining industry in Argentina. Public policy in one sector is not connected with the other.
Furthermore, the Argentinean Government initiative currently under discussion before Congress has been enacted only in connection with YPF which has a long Argentinean history. Extorre notes that YPF was State owned from its inception in the early 1920's until the late 1990's, when it was privatized and a majority stake sold to Repsol. The current re-nationalization process of YPF has not been extended to other oil & gas companies operating in Argentina.
There is no reported agenda in the popular press or, to Extorre's knowledge, to extend the nationalization process to any other company in the oil and gas sector in Argentina or to any other sector of the economy. Additionally, recently, several mining Provinces have joined an alliance in support of mining with the acknowledgment of the Argentinean Government and none of the objectives of that alliance relate to any action or policy similar to the one taken in connection with YPF. The mining sector has also received explicit public support from the Provinces and the Federal Government.
Several other mining companies operating in Argentina have publicly commented on this situation in terms similar to Extorre's view.
Very recent discussions with potential financiers to provide capital for the potential development of Cerro Moro have indicated that the YPF action has not materially affected the finance ability of the project.
About Extorre


And this is what it means:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 19, 2012) - Extorre Gold Mines Limited (TSX:XG.TO - News) (NYSE Amex:XG - News) (FRANKFURT:E1R.F - News) ("Extorre" or the "Company) wishes to ask the investment community as to why it is afraid. Why are you afraid, nice investor person? Don't be afraid! The nasty lady isn't going to take our nice project, so you can buy our shares and you don't have to worry. About anything. Relax, put on some soothing music, stop worrying. And stop selling your fucking shares as well, willyaz? And please don't be afraid any more. There's nothing to worry about. Nothing at all. Look into my eyes.

dyodd

Lumina Copper (LCC.v) year to date chart

Just about the most interesting junior miner price chart out there today.

Disclosure: No position long or short in LCC.v. Yet.

First Majestic (FR.to) (AG) insiders keep on selling

What does it mean when a CFO owns zero shares of the company at which he works but when he exercises 25,000 of his $3.70 strike price options he immediately sells them into the market?

Polman, Raymond L.
Insider's Relationship to Issuer: 5 - Senior Officer of Issuer
Transaction
Date
Transaction Nature # or value acquired
or disposed of
Unit
Price
Account
Balance
Security Type: Common Shares (Direct Ownership)
Apr 17/12 10 - Disposition in the public market -500 $15.71 -25,000
Apr 17/12 10 - Disposition in the public market -2,000 $15.72 -24,500
Apr 17/12 10 - Disposition in the public market -5,000 $15.70 -22,500
Apr 17/12 10 - Disposition in the public market -2,500 $15.65 -17,500
Apr 17/12 10 - Disposition in the public market -2,400 $15.73 -15,000
Apr 17/12 10 - Disposition in the public market -100 $15.75 -12,600
Apr 17/12 10 - Disposition in the public market -1,100 $15.77 -12,500
Apr 17/12 10 - Disposition in the public market -100 $15.77 -11,400
Apr 17/12 10 - Disposition in the public market -1,300 $15.73 -11,300
Apr 17/12 10 - Disposition in the public market -3,700 $15.76 -10,000
Apr 17/12 10 - Disposition in the public market -700 $15.81 -6,300
Apr 17/12 10 - Disposition in the public market -600 $15.81 -5,600
Apr 17/12 10 - Disposition in the public market -100 $15.71 -5,000
Apr 17/12 10 - Disposition in the public market -4,400 $15.72 -4,900
Apr 17/12 10 - Disposition in the public market -500 $15.81 -500
Apr 18/12 51 - Exercise of options 25,000 $3.70 0

Ohhh, nothing, nothing at all! After all, what's the company CFO going to know that we don't, eh? Move along now....

By the way, approx $12 X 25,000 shares = $300,000.

Chart of the day is...

...gold, dailies.


Because remember folks! If the Spain bond auction goes well, it's negative for precious metals. But if it goes badly it's...errr....negative for precious metals

4/18/12

Today's market comment

Wanna know what you humble scribe thinks about his portfolio? Hey, why say it when you can sing it...


And yeah, before you start ragging I know Sting isn't cool or hip enough for you 21st century party people but at least in this track he gets backed up by some decent players, including the recently passed maestro Kenny Kirkland. And it's live.

Ever wondered why exploration stage mining companies much prefer the Canadian stock market for listing and tend to avoid the US stock market?


"In separate news, the Company confirmed today that the report of the Company's independent public accounting firm on its audited consolidated financial statements for the seven month period ended December 31, 2011 and for the year ended May 31, 2011, as filed with certain Canadian regulatory authorities and with the United States Securities and Exchange Commission in the Company's annual report on Form 40-F, on March 26, 2012, contained an "emphasis of matter" paragraph in relation to a going concern explanatory note. The note did not modify the report of the independent auditor, but instead draws attention to Note 1 of the Company's audited consolidated financial statements which describe certain material uncertainties related to the ability of the Company to continue as a going concern. Under rules of the NYSE Amex the inclusion of such a paragraph is required to be announced. As disclosed in Note 1 to the Company's audited consolidated financial statements, the Company's current working capital is considered sufficient to fund its operations and exploration program for the current fiscal year."

So the next time you hear the Canuck regulatory people patting themselves on the back and telling everyone all about their wonderful, transparent markets, treat yourself to a snort, a guffaw and a recall of this post. And hey wow, isn't is lucky that ITH had other news to announce today and that they could bury that on paragraph five of a five paragraph NR? dyodd.

The Kaption Kompetition Winner

A gallant runner-up was reader KS with "47 DOLLAHS!!! My secret service advance team said I'd get a discount if I dyed my hair gray" but as Highlander wisely said "there can be only one"* and the winner is this, from the world famous** RG of The Mex Files:


So winnah winnah and the 50 bucks should get a couple of chikkin dinnahs foryaz. Congrats


*sadly, he ruined it by smashing all the windows just after that
**in Mazatlán anyway

Chart of the day is...

...the gold/silver ratio (GSR), last three years:

Y'know, a lot of talk about the dumpy look of the junior world and how there's just been too much paper emitted and too many cruddy companies floated and not enough real live prospects and babies-with-bathwater. It's all of a meme right now and because this line of reasoning has become suddenly popular, you should at least treat it with the suspicion it deserves.

Here's an alternative thought: Looking at that chart above, it could just be that the precious metals world has become just plain straight boring recently and because of that, Mr and Mrs Newbigthing have turned their MTV attention spans over to some other zippy superduper sector of the market.

As David Bowie wisely remarked, "Fashion turn to the left fashion turn to the right". Sadly, he ruined it by saying "beep beep" at the end of the chorus.

4/17/12

Argentina political risk (from IKN153, dated April 8th)

All of a sudden my mailbox is getting "What's your thoughts on this Argentina thing?" type mails and as I'm feeling particularly torpid and soporific this fine morning, I'm going to answer said inquiries here and also by simply pasting out the note on Argentina political risk from The IKN Weekly issue 153, dated April 8th (two editions ago). It's been very slightly redacted and I've highlighted the "bottom line" bit because that's all you need to know (we also note that your author's "maybe/maybe not" thoughts on YPF have now been answered), but what you see is what subscribers saw 10 days ago.

 Here it is (and btw, kudos on a good call at the Canaccord Energy desk). I'm off to make myself another coffee.

Argentina political risk perception growing in the North
The important word in the title is “perception”, because whether or not it’s deserved the World’s Free Press™ seems to have decided to go on an anti-Argentina spree, with the two prongs of attack the business climate, test case being YPF, and political freedom climate, test case being The Falklands/Las Malvinas. In the last 72 hours your author has read English language analysis and opinion from Canaccord’s energy desk cutting who recommend cutting exposure to Argentina due to political risk (the PDF title line being “Oil and Gas, International -Downgrading Argentina outlook - Be afraid, be very afraid -- Target prices reduced”), some libertarian goldbug nutcase named Pater Tenebrarum (apparently he’s very widely read and I’m supposed to have heard of him before...sorry ‘bout that) who wrote a long, stupid, ignorant-gringo, highly cherry-picked article (14) that cobbles together the whole range of current affair issues to get to its point of accusing Cristina Fernandez de Kirchner of fascism, newswire stories bouncing between Bloomberg and Calgary (15) about imminent nationalizations, British banks being frozen out of Argentina if they support anything that goes on in The Falklands/Las Malvinas (16) and (of course, regular as clockwork) the warnings about how Argentina is on course for imminent economic collapse because of high interest rates and the way the country uses its Central Bank funds as a piggy bank and the weakening Peso all the other arguments the world has used against the country for roughly eight years...ever since Argentina had the temerity to throw out the IMF and its austerity plans, go it alone and do an excellent job of recovery from a financial meltdown largely caused by listening to overseas experts in the 1990s, in fact.

Because the issues lie well outside our fields covered by The IKN Weekly, we’re not going to get into the difficult and politically charged issues surrounding YPF right now (it might happen, might not), nor the pros and cons of the Falklands/Malvinas spat (you’ll note my neutrality by the way both names are given), nor whether Argentina really deserves a new round of criticisms or exposure downgrades from people who have absolutely no idea about the country (strange how countries like Argentina and Venezuela can stay constantly on the brink of collapse for a decade, while others like Iceland, Greece, Ireland get AAA ratings and warm plaudits). What we’re pointing to here is the perception, above all. It’s likely that this current Argentina-as-piñata fashion will continue (for as long as the country makes noises that threaten the back pockets of wealthy people up North, probably) and that perception is enough, most of the time at least, to get people running for cover and abandoning investment ideas that hinge on the country.

Our ‘Stocks to Follow’ list currently holds no exposure to Argentina, which is something that may change if we take the eventual plunge on [named removed] for its limited exposure to the country but apart from that there’s nothing in the active pipeline, if memory serves. This isn’t a coincidence as even in the best regions Argentina isn’t a plain sailing place in which to do mining business, while in the worst regions it’s simply impossible. Added to the bureaucratic levels that range between not easy to nightmare, inflation isn’t helping any company that earns in Dollars but pays for its mining in Pesos. The bottom line is that you tell me Argentina is a tough place to do business and I’ll agree, because it’s always been that way. You tell me that perception of Argentina in the eyes of the industrialized nations is degrading and I’d agree. Not only that, it’s probably an important development in our style-over-substance modern world. You tell me it’s some new Fascist State and I’ll laugh in your face and tell you to learn Spanish before trying to form an opinion about the place next time.

UPDATE: This morning Abel does a good job of gauging Argentine and international press and media reaction to the YPF news in this post right here.

Petromagdalena (PMD.v) 2011 results

Setty has put to together a most interesting post on Petromagdalena (PMD.v), the Colombia O&G junior that used to be called Alange Energy until the company totally crashed and burned due to rather dubious goings on and extreme over-exaggerations (honestly, that's being nice) from management about its reserves, production and all things related. 

Anyway, Setty does a great job of pointing you towards the continued oddness in the PMD.v filings, including this....
"....a $111 million annual net loss at a company with only $349 million in assets and $86 million in sales. Ouch. Where did the money go?"

...as part of the post intro. Go read it all, because we're sure that Serafino Iacono and his lawyers will be poring over every word, too. Link here

Chart of the day is...

...shareholder breakdown at Argentina's YPF oil & gas company, pre-nationalization and presumed post-nationalization (assuming CFK gets her way):

Source: Brazenly stolen from La Nacion and re-labelled in Engleeesh.

UPDATE: "El Jueves" is a comedy/satirical weekly magazine in Spain that's been going for literally decades and very much part of the fabric there. Today they're running this:
 

That's Head of State Rajoy with the gun, if you didn't recognize him. The caption says "Cristina Kirchner, we've got Messi"

4/16/12

Rio Alto Mining (RIO.to) 1q12 production

When did you know that Rio Alto Mining (RIO.to) was putting in a whup-butt 1q12 quarter of production? Is is just tonight, with the release of the 1q12 numbers that include...
  • Gold production of 55,973 oz gold
  • Mine site cash costs of $439/oz, total cash costs of $652/oz
  • Cash on hand at $70.8m

..amongst other strong returns? Or maybe you heard a whisper at PDAC in March? Well, readers of The IKN Weekly knew all about it back on February 26th. Here's an excerpt from IKN147, published on that day.

dyodd

The Kaption Kompetition is back!

This from lunch this weekend over at the Summit of the Americas, Cartagena Colombia.


Have at it, give it your best shot, show us what you're made of and all that malarkey. We'll give you 48 hours to come up with a caption of one, two or many people speaking...or hey, don't let my limitations bug you, have the water glasses chatting too if you like (put it in comments below or as many of you seem to prefer, mail to the usual address otto.rock1 AT gmail DOT com). 

And...roll on drums...The best one will win a prize! Yes, a real prize! IKN will stump up the merry sum of Fifty United States Dollars to you, lucky contender person you (as long as you're easily reached via PayPal) if you can scrape the win here.

Results Wednesday. Good luck, old bean/beanette.

Breaking: YPF nationalized in Argentina

President CFK just announced it, with a law being sent to Congress that will put 51% of the oil company into national State hands and 49% of it into the hands of the provinces. Link here

UPDATE: Oh interesting, the La Nacion article has now changed its information and says that Argentina will nationalize 51% of YPF, with that majority portion being split between State and provinces.

Growth! How Great Panther Silver (GPR.to) (GPL) bullshits the market

The pattern of sophistry over at Great Panther Silver (GPR.to) (GPL) has been clear for years. Well, clear for anyone that bothers to read their filings, at least. It's a kind of dainty dance that goes..
1) Promise great Growth! Make sure Growth! is mentioned all the time.
2) Make lame excuses when Growth! doesn't show up
3) But don't worry, just keep on promising that great Growth! Talk about Increases! too, because that's a nice positive word to mix in with Growth!
4) Return to point 2)

Want some examples? Yeah, let's do examples and there are literally dozens upon dozens to choose from, so we're going to feature just a short selection here so that you get the drift.

Here's a slice of the company's 2q10 MD&A
 

This is from the 4q10 MD&A


Now an example from the 1q11 MD&A

Now from the 2q11 MD&A

This last one (got the message yet?) is from the 3q11 MD&A

So we get promises of growth...and promises of growth....and more promises of growth. And hey, guess what people? The latest NR out of GPR today tells us that 2012 will be a year of....wait....you've guessed already haven't you?...GROWTH! So let's compare the perma-bullshit nonsense from the company's outlooks and forecasts above to how things have really done at GPR all this time:



Oh man, see that there GROWTH! NEGATIVE GROWTH! But finally let's not forget this little gem, either:


Yes indeed, Robert Archer dumped a whole bunch of his shares last year at prices 50%, 60%, 70% higher than the current levels and found himself sitting on a cool million by the time that selling was over. We're happy that at least some growth, that of his own back pocket, was achievable in this time.

So if you're sick and tired of the utter bullshit that emanates from junior mining companies, you will DYODD as well, dude. 

What goldbugs laugh about when nobody is looking is...

...The Screwtape Files. And this post linked right here is very good indeed, so go over and have a quick listen, chuckles guaranteed for anyone who's been following the sector a while.

Cheese Grommit. CHEEEESE.

Chart of the day is...

..gold, monthlies.

Are we good? Good.

4/15/12

Oh look, Endeavour Silver (EDR.to) (EXK) just spent a third of its market cap on a piece of shit asset and thinks the deal is non-dilutive

Here's the link to tonight's NR all about how Endeavour Silver (EDR.to) (EXK) has agreed to pay $250m to AuRico (AUQ) (ex-Gammon Gold (aka Scam'em Cold) for the El Cubo gold/silver mine, along with the Guadalupe and Calvo projects.

So let's just start by saying out loud and for the record once and for all Oh yes, Mr. Cooke, don't you just know that the El Cubo workforce, the same guys that went on strike for three quarters during 2010 and 2011 to maintain jobs and improve pay, are just going to LOVE your brand spanking ideas about costs savings and synergies. Betcha they're just DYING to queue for their redundancy cheques.

Anyway, that's off my chest and now here are a few charts that show you just how El Cubo's been doing these last couple of years under Rene Marion & Co (my stars, Xmas has come early Rene, no?)

Gold Production

Silver production
By the way, 1q12 productions are estimated from the AuEq number published by AUQ on April 11th. The total AuEq number was 8,351oz AuEq, down from 8,917oz AuEq for 4q11 and 10,008oz AuEq for 3q11. In other words 1q12 was another pisspoor quarter and our estimates aren't going to be far out.

Here's gold grades

 Here's silver grades

 Here's tonnage throughputs

 Here's cash costs.

Now I dunno 'bout you, but I tend to see a trend of things slipping downwards, from left to right, on most of those charts. OH! Except for the cash costs one at the end, which kinda does an upward slopey thingy, doesn't it!

And oh look, we're down to about $550 margin per OzEq. So let's call that $5m mine operating income for the last couple of quarters, before all that G&A jazz and boring stuff like taxes. And Mr Bradford Cooke of EDR.to has just paid how much? $250million? Holy maloney, even if EDR gets production up, costs down, gets those gold grades moving back up to where they were, keeps the miners happy and doubles MOI we're still looking at 25 quarters here. 

Oh, but they got those two projects in with the deal too. And it only has a ticket price of 1/3 the market cap of EDR, so there's no dilution, right? Oh well, that's all right then.

Jeez, these guys must be desperate to grow.

The IKN Weekly, out now


IKN154 is in the shops now. Full of the usual blather.

How short selling works

An excellent post by John Hempton of Bronte Capital, right here.

Message for new subscriber David O

David, I sent you two mails Tuesday 10th, one Thursday 12th and another batch of repeats, plus a reply to your mail, a few minutes ago. Please acknowledge receipt or if you still haven't received anything, please get in touch again. Also, please check your spam/trash box just in case.