Five days of metals and miners; December 22nd

Our regular Saturday slot of 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).

Splat. Hope there weren't too many of Eric Sprott's loyal silverbug flock on margin.

Copper Fox (CUU.v)

NR here. Sooo, waddya get for $3.25Bn in initial capex plus $1.24 in sustaining capex these days?

Oh, not so much.

UPDATE: I've been asked for clarification on what "oh, not so much" means. It means "short CUU.v if you can". It means "a market cap that's 80% of an pre-tax NPV in this market that uses $3.25/lb Cu as a base case, you gotta be joking". It means "Mr Echavarría is going to find out what reverting to the median really means." That clear enough for you? Sheesh...

The Friday OT: Robert Earl Keen; Merry Christmas from the family

Here we are again and as per annual tradition IKN offers up the world's best ever Christmas song.



Merry Christmas to you all.

Breaking: Antofagasta (ANTO.L) suspends development of its Antucoya project

Antofagasta (ANTO.L) has decided to suspend development of its 70% owned Antucoya project, according to reports out just minutes ago in Chile.

UPDATE: Here's a quote (translated) from company head cheese, Diego Hernandez:

"We continue to be worried about rising capital costs and operting costs in the industry. We believe that the  decision to temporarily suspend Antucoya and revise the project reflects the necessary and realistic focus to face this situation.

"Notwithstanding this decision, we remain committed to our strategy of organic growth  in our current operations and we continue our search to identify and invest in new opportunities, both in Chile and abroad."

PS: For those versed in the tongue of Cervantes, plenty of reports now showing up here 

Brazil adds to its gold reserves again

An interesting report over at Mining dot com today which you can read by clicking this link, but here's a chart derived from the report data.

In simple terms Brazil's gold reserves don't budge for years and now suddenly, in the space of the last three or four months, they double. Read more on that link above.

PS: One metric tonne has 32,150.75 troy ounces, so at today's more-or-less U$1,650/ozt for gold, one tonne is worth U$53.05m. Which means Brazil's total gold reserve is worth U$3.565Bn. Which means it's a touch under 5% 1% (ty for the correction anon commenter: Brazil total reserves stand at 378.55Bn) of total country reserves so minor stuff in absolute terms, but the trend is the interesting thing here. Trends are friends, y'see.

Pan American Silver (PAA.to) (PAAS) bails on the Navidad project, Chubut Argentina

This translated from this report, but there are other doing the rounds too:

Mining company Argenta, that is looking to operate the silver/lead deposit 'Navidad', will close its offices in Puerto Madryn and Trelew after the suspension of the law bill that would allow large-scale mining [in Chubut] sponsored by Governor Martín Buzzi, after facing overwhelming and massive rejection from residents in all parts of Chubut province.

....

A source close to the company said on Thursday stated unofficially that in the next few days Argenta, subsidiary of the multinational Pan American Silver, will close its administrative office in Puerto Madryn and in a few weeks do the same with its offices in the city of Trelew. Continues here

PAAS made it clear a couple of months ago that it was suspending activities, this will make the pull-out official. Watch for the announcement from the company soon enough. 

Another vote on Argentine mining, duly cast.

UPDATE: Yes indeed my mailing-in friends, the question is all about writedowns and impairments now, isn't it? As PAAS paid a Reuters reported $626m for Aquiline (oh well played mister henderson) back in 2009 and has a carrying value of $560m on the property according to its latest filing (3q12 financials) that's quite a fair chunk of the company's $3.4Bn in total assets, is it not?. Is this going to be a balance sheet special Christmas present for the YE numbers? Time will tell.

Meanwhile, rather than rely on sourced hearsay from Chubut and pathetic gossip-mongering blogs like this humble corner of cyberspace, somebody really ought to get in touch with the company and get some official comment on this. At least I think so.

Juniors that deliver

An interesting report from BMO today, which covers quite a few names in the junior PM producer space (ty reader L for the fwd). Instead of noting specific recos of the companies however, this simple table caught my eye.

Here's how author Brian Quast did the calculations:

And yeah, it may be rough but I think Quast is 1) spot on with his assessments and 2) right to start a type of league table of management credibility. Somebody has to make these jokers realize that they're accountable for the bullshit spin that's unceasingly foisted upon this end of the deal. Also, good to see that the benchmark is initial guidance for production, not the adjusted guidances that turn up in the 3q12 MD&A which then  allow the BSsers to say "oh look, we met guidance" at the end of 4q12, one of the most tiresome pieces of twofaced lying that we get to witness from the serial sophists. Good call, Quast.

Stillwater (SWC) and Lumina (LCC.v)

This is my favourite grumpy shareholder letter of the season so far (and there have been quite a few), sent by some dudes known as The Clinton Group (no relation to slick Willie, as far as I know) to Stillwater Mining (SWC), the company that ticked off the top of the copper market by buying Peregrine and its Altar property in Argentina, the point at which SWC caved and just kept on caving. The letter is long and deserves all your attention so go have a read, but here's just one extract:

"We are hard pressed to imagine that Stillwater shareholders were desirous of exposure to undeveloped Andean land, Argentinian monetary and natural resource policy or, for that matter, to copper prices. And, any such shareholder could have simply bought Peregrine stock in the public market, and done so for one-third the price that Stillwater paid. "

All those sellside anal ysts insisting that Taca Taca (LCC.v) will sell for upwards of half a billion dollars should read that more than once. And then go read the whole letter. That goes for McEwen Mining (MUX) at Los Azules too, though they just want to punt that out and get on with PM mining. 

Bolivia's cocaine

If you read just one report on Bolivia and cocaine, make it this one. Masses of data, careful analysis, consideration of what Bolivia is doing to combat illegal coca production, comparatives to what's happening in the other cocaine producing nations, more data, smart synthesis. Top top work from Kathryn Ledebur of the Andean Information Network and a must-read for anyone interested in the subject matter, as simple as that.

Gotta love Scotia

Here's how Scotia kicks off its piece about Rio Alto (RIO.to) in their Scotia Daily Mining Scoop morning mailer today:

"No farting around .. one of our favourite junior gold company's still remains Rio Alto"

A good sense of humour never fails to win hearts and minds, Scotia's rivals should think on that. Well played JA and all at The Scoop.

Mining PRs and the Ottotrans™, part 67

Life is beautiful, roses are red, violets are blue, our example is Prophecy Platinum (NKL.v), our NR dates from mere minutes ago.

This is what they wrote:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec. 20, 2012) - Prophecy Platinum Corp. (TSX VENTURE:NKL)(PNIKF) ("Prophecy" or the "Company") announces that it has received inquiries from the British Columbia Securities Commission (the"BCSC") with respect to the events leading up to the Company's news release of July 14, 2011 (the "News Release"), which disclosed the findings of an independent mineral resource estimate (the "Resource Estimate") for its Wellgreen PGM-Ni-Cu property in the Yukon Territory. Specifically, the BCSC has made inquiries relating to: (i) the chronology of events which preceded the News Release; (ii) the Company's insider trading policies and procedures in place during the relevant period; (iii) the individuals who had knowledge or awareness of the Resource Estimate prior to the issuance of the News Release; and (iv) communications relating to the Resource Estimate made or received by individuals who were directors, officers or employees of the Company between June 1, 2011 and July 15, 2011.In keeping with Canadian principles of good corporate governance, the Company's Board of Directors (the "Board") has formed a special committee of independent directors, comprised of Wesley Hall (as Chair) and Mike Sylvestre, to assess and make recommendations to the Board regarding the BCSC's inquiries. The Company is cooperating with the BCSC and a response has been provided to its specific requests for information. As of today's date, no further request for information has been received by the Company.The Company notes that its current management team, including its President and Chief Executive Officer, Greg Johnson, Chief Financial Officer, Jeffrey Mason, Senior Vice-President and Chief Operating Officer, John Sagman, Vice-President, Corporate Development, Robert Bruggeman and Corporate Secretary and Counsel, Samir Patel, were each appointed after August 2012, and, therefore, well after the relevant period for the purposes of the BCSC's inquiries. Similarly, five out of seven of the directors of the Company - namely, Harald Batista, Wesley Hall, Greg Johnson, Myron Manternach and Mike Sylvestre - were first appointed to the Board in 2012, and, therefore, well after the relevant period for the purposes of the BCSC's inquiries.Over the last few months, the Company has taken, and will continue to take, measures to reinforce its procedures and strengthen internal controls and processes in order to achieve its goal of implementing industry best practices for corporate governance. The Company does not expect that the BCSC's inquiries will interfere with its day-to-day exploration and development operations to advance its PGM-Ni-Cu properties in North America.Forward-Looking Statements: All statements in this news release, other than statements of historical fact, including, without limitation, statements relating to the Company's day-to-day exploration and development operations, are forward-looking statements that involve various risks and uncertainties. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements.

And this is what it means:

John Lee is a twat. The end.

Seriously. Trading in and out of your own freakin' stock when this kind of move is on is done by twats and twats alone. Company chairs that publically boast of their love for the game of blackjack is done by twats and twats alone. What about trading around your August 20th NR? Twat. And those with a memory will recall that the whole thing ended with a BCSC forced retraction of data on September 20th. Twat squared.

Sidebar: Why is Greg Johnson always involved with companies that are doing weird things? You'd think that....nah, fuggedit

Shock! Even-handed reporting of Venezuelan politics spotted at English language news service!

Jim Wyss of McClatchy/Miami Herald gets it, while few others do. Here's the note, here's an extract:

Two months after losing the presidency to Hugo Chávez, Venezuela’s newly united opposition was hoping that regional elections would prove that it could still put up a fight.
Instead, the red tide of Chavismo swept away all but three opposition governors Sunday and showed that it could pack a punch even when its ailing leader was not actively campaigning.

Read more here: http://blogs.mcclatchydc.com/southamerica/2012/12/venezuela-vote-shows-the-power-of-chavismo-without-chavez.html#storylink=cpy

continues here

To add my own dos centavitos, imho Sunday's election has significantly raised the chances of there being an announcement that Chávez is not in conditions to assume his re-election on January 10th, a snap Presidential election being called and a solid mandate offered to Nicolás Maduro.

So I'm looking at this table...

...published by Scotia today as part of its justification for a new reco and $9 price target on Primero Mining (P.to) (PPP) and thinking...

The pretty violet shading is Scotia's. The red bits are your humble scribe's

...that on these numbers, Scotia shouldn't be farting around with Primero and should be banging on the table with something really large and metallic that makes a lot of sound about Rio Alto (RIO.to). Not my numbers, their numbers. Just goes to show what brokerages will do when equity placement commissions are in the offing. And what they won't do when they aren't.

Ecuador Presidential Election voter intention update

Pollster 'Perfiles de Opinión' is out with its voter intention poll for the 2013 Presidential election in Ecuador this week (one of five officially sanctioned polling companies in Ecuador) and here's how things look according to that house, with the poll taken up to and including December 14th:

What part of "Rafa wins" do you not understand? Data from here

Charts of the day are...

...gold, dialies and monthlies.

Because lower lows aren't so good. Mind you...

c...if you look very very closely, you may be able to see a trend.

Gotta love TA, something for everyone. Why argue with an empirical science that is never wrong, eh?

Understanding Spain's job growth prospects

This was found on Twitter right here. Your author adds the translations and notes on the right, now it's all yours:

Shock horror development, sitting government found to be potentially lying to its citizens.

How the Earth Was Made, Americas Gold

Reader M alerted your humble scribe to the existence of this video yesterday morning, I got round to watching it last night and now it's here, fully recommended stuff.

A 44 minute documentary that's worth the time of anyone who's interested in knowing how economic metals deposits are formed, not just the ones from California and Nevada featured. 

Peru: A paper on Shougang Iron provides country FDI insight (from IKN189

This paper, featured in IKN189 yesterday in the way seen below, deserves more eyeballs so it's here's on the open blog today, too. My thanks to reader CS for the headsup and here's the link you need to get your copy of the paper (or alternatively, this link).

Peru: A paper on Shougang Iron provides country FDI insight

Your author offers this link (16) (or this one to reach abstract-plus-link page (17)) to a 27 page paper entitled “Chinese Investment in Peru: A Comparative Analysis” dated December 2012 and written by Amos Irwin and Kevin P. Gallagher and published by The Working Group on Development and Environment in the Americas (thanks to reader ‘CS’ for the forward).

The main part of the investigation centres on examining whether Shougang deserves its poor reputation with its workers, local community and general public opinion in Peru and the empiricals are tested by comparing Shougang to three other large mining concerns in the country, namely Antamina, Yanacocha and Doe Run. With the investigation work done conclusions are reached and then the argument is expanded to consider other aspects of the mining industry in Peru. Below is one segment that probably most directly relates to The IKN Weekly audience, but you are strongly recommended to download and read the whole paper if the subject of political risk, community or worker relations in Peru mining is of interest to you as it’s a very good and informative report. Here’s the chosen extract.

Shougang’s Lessons for Peruvian Mining FDI

There may not be any clear lessons from Shougang that apply only to Chinese companies, but there are certainly lessons that apply to Peru’s mining FDI in general. First, the improving regulatory framework has helped to keep companies honest. Kotschwar et al. conclude that the progress of the national regulatory framework has forced companies to improve their social and environmental impact. (Kotschwar, Moran et al. 2011) Many commented on the regulatory system’s positive impact on Shougang. An NGO leader maintained that today, “new legislation and better regulation have forced the company to make adjustments to survive.” (NGO Official 2011)

Second, while the Peruvian regulatory framework has improved greatly since the 1990s, two salient labor issues are subcontractors and government resolution of union negotiations. Since MINEM and MTPE have not agreed on the appropriate use of subcontractors, their conflict leaves unions, mining communities and NGOs outraged at the widespread outsourcing of what used to be decently-paid company jobs. Second, MTPE, which is supposed to be the ultimate mediator in union-company disputes, is not an effective mediator because locals see it as being in league with the companies. In Shougang’s case, the unions point out that regional office of MTPE ignores the union’s list of demands and simply forces the company to give a slightly higher raise and onetime bonus. (Shougang Union Delegation 2011)

Finally, the underlying problem facing all mining companies in Peru is the population’s lack of confidence in the government ministries that regulate these companies. Unlike workers, nearby communities often have no stake in the mining operations. When they feel that a company is damaging the environment, they attempt to shut down its operations. These communities do not trust the environmental impact evaluations, third party audits, or other inspections that private consulting firms prepare for MINEM. At the same time, local government and community officials have no means of challenging problematic mining operations. The government must give these communities a potent legal channel through which they can air their grievances. While community accountability will result in the end of some mining concessions, it is necessary to provide this avenue inside the system rather than forcing citizens to take matters into their  own hands

High Desert Gold (HDG.v) drills

Though unmentioned for a while, we still strongly recommend that metalheads make use of the Brent Cook/Corebox Drill Interval Calculator, as it's a useful tool to really get a handle on what your preferred mining company has drilled from its project. Let's take for example High Desert Gold (HDG.v) and its NR from this morning that is entitled "High Desert Gold Continues to Achieve Strong Drilling Results from the Gold Springs Project, Including 7.6 Metres @ 6.7 gpt Gold Equivalent Within 59.4 Metres @ 1.3 gpt Gold Eq".

Once you plug those headline numbers in (and btw, it's 1.29 g/t not 1.3) this is what you get from the handy dandy calc machine:

In other words, HDG.v has 7.6m of 6.7 g/t AuEq which is reasonably interesting, then around that rock it has 51.8m of 0.496 g/t AuEq which is...

Tell it like it is.

Chart of the day is...

...one that tracks the results of the Venezuela regional elections of yesterday:

Main opposition rallying point Henrique Capriles is catching plenty of media time as he managed to win the Miranda state election and is now governor. However, the fact remains that yesterday was a good day for Chávez and his PSUV party, as pro-Chávez players now control 20 of Venezuela's 23 regional governments, four more than this time last week. 

The IKN Weekly, out now

IKN189 has just been sent to subscribers, another steaming pile of fetid animal excrement worthy of nothing more than a firebomb stuffed firmly down its baggy jeans and set on a short fuse. Nice charts, though. Hope you enjoy it

Well blow me down, Orko Silver (OK.v) has found a buyer

Here's the NR that announces the friendly all-paper deal with First Majestic (FR.to) (AG), here's the first bit:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Dec 16, 2012) - First Majestic Silver Corp. ("First Majestic") (FR.TO)(AG)(FMV.F) and Orko Silver Corp. ("Orko") (TSX VENTURE:OK)(OKOFF)(OG3.F) are pleased to announce that the companies have entered into a definitive agreement (the "Arrangement Agreement") pursuant to which First Majestic has agreed to acquire all of the issued and outstanding common shares of Orko for consideration of 0.1202 of a common share of First Majestic (the "Exchange Ratio") plus $0.0001 in cash per Orko common share. The offer implies a value of C$2.72 per Orko share based on the closing prices of both First Majestic and Orko''s common shares on the Toronto Stock Exchange ("TSX") and TSX Venture Exchange, respectively, on December 14, 2012. The offer represents a premium of approximately 69% to Orko''s 30-day volume-weighted average price ("VWAP") for the period ending December 14, 2012. The transaction will be implemented by way of a plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia) continues here

OK.v is not one I've ever loved, which proves how wrong I often am. Though I can't blame First Majestic for wanting to exercise the strength of its paper right now

First Quantum (FM.to) moves for Inmet (IMN.to)

Did you see the PPS action in IMN.to on Friday? Yeah me too, so what shall we call this one, a "soft hostile bid"? Whatever the label, it's not one that's come out of the blue. Here's the link to the whole thing to peruse at thy leisure, here are the highlights (according to FM.to at least) and the CEO blahblah top paragraph:

Highlights

Financial

• Inmet Shareholders to receive consideration of C$72.00⁽¹⁾ per Inmet share, with the opportunity to elect First Quantum shares, cash, or a combination thereof, subject to an overall consideration mix of approximately 50% in First Quantum shares and 50% in cash; allowing the opportunity to realize immediate value and/or participate in substantial future growth of the combined company

• Offer values Inmet at approximately C$5.1 billion⁽¹⁾ and represents a premium of 65% to Inmet''s underlying net cash adjusted equity value⁽²⁾ as of 23 November 2012

Strategic

• Potential to create the world''s premier, widely-held base metals company, and one of the world''s five largest copper producers with a leading growth profile

• First Quantum''s demonstrated project execution, reflecting its in-house engineering, project management and construction expertise, gives it the confidence that it can bring significant benefits to Inmet''s major project, Cobre Panama, for the benefit of all shareholders in the enlarged group

Commenting on the Offer, Philip Pascall, CEO and Chairman of First Quantum, said:

"We believe strongly in the prospects of a combination for our two companies, which are uniquely complementary. The enlarged group will draw on the best physical and human resources of both First Quantum and Inmet, to create a premier, widely-held base metals company with leading growth in copper production and cash flow generation. We know that this vision is shared by key shareholders of Inmet.

We invite the Board and management of Inmet to work with us in developing our plans for the future and in assisting in an assessment of whether additional benefits can be identified to the advantage of all shareholders."

Peru Presidential Approval: Ollanta getting his mojo back

Peru's benchmark pollster Ipsos/Apoyo has its monthly approval rating snapshot out today and here's how things look:

Ollanta Humala is back up to 48% approval after dipping below 40 a few months ago (his wife Nadine scored 54% this time). The interesting bit is this:

Ollanta is seeing a return of approval from the Cs, Ds and Es.