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1/5/13

Argentina's tall ship "La Fragata Libertad"* is due back in-country on January 9th...

...fresh from all that Ghana vulture fund soap opera. And guess who's going to be there to welcome it?


Yup, you guessed right. Gotta love that artwork. From here.

*The Frigate 'Liberty'

Colombia's crude oil production, December 2012: They still can't break that magic million

Colombia's oilypeople, ANH, are out with the December 2012 figures for hydrocarbons production in the country and here's how the new stats change our now semi-regular charts:


Here's straight production and they can't get over the million barrels per day marker, the one President Juanma has been calling as about to happen for what? Ohhh, about a year and a half now. December came in at 944kbpd and these days the prognosticators are playing it safe and calling for that million barrel month by the end of this year.


As for growth rates, our second chart shows that they've been flatlining for a while now, gone are the days of pum!pum! rapid percentage growth month after month.

The Diplomats With Prostitutes scandal of the week award goes to...

...The Honduras embassy in Bogotá, Colombia. The story broke late Thursday in the Honduras Daily El Heraldo and told of a party night on December 20th at the embassy that ended badly because the Honduran diplos were stupid enough not to pay their guests for the services rendered (reminding you of the US Secret Service in Bogotá story yet? Yup, me too). The prostitutes took their revenge by stealing computers, phones and even defecating (I'll use the polite term today, just for a change) in the ambassador's office and on the desk of the military attaché. It now turns out that the girls had been invited to the embassy on at least three previous occasions

The cool bit is that one of the laptops stolen is understood to have oodles of State secret information stored in it. Hilarity ensues.

UPDATE: The Saturday lunch time unsurprise: Honduras has just fired its ambassador to Colombia, Carlos Humberto Rodríguez. Investigations have revealed that one Jorge Mendoza, a Honduras national and personal employee of Rodríguez, was a dude who organized the sex party that went wrong (and probably the other parties before it).


Market Narrative

Your humble scribe always enjoys Iwnattos's weekend commentary posts and this week's main offering, snappily entitled "5 newsbits for Saturday morning, with the mildly offensive commentary you've grown to tolerate" is right on form. If you want standard business thought and opinion don't read My Own Market Narrative. If you appreciate the world through the eyes of a critical and sharp free-thinker, then you should already be there. 

1/4/13

Anglo American loses $4.5 Billion (with a B) dollars via Amapa

News this morning is that Anglo American (AAL.L) (AAUKY) has sold its 70% share of the Amapa iron ore project to Brazil's Zamin Ferrous for "an undisclosed sum". 

This is the same 70% of Amapa that Anglo bought from Eike Batista for $5.5Bn back in 2008, so the rumoured-in-Brazil-today selling price of just over $1Bn would means that AAL.L managed to throw a cool $4.5Bn down the toilet in the space of four years. Well played, Cynthia.

Chart of the day is...

...inspired by a comment left by regular reader Tweetie, earlier in the week. We compare the silver bullion ETF (SLV) to Eric Sprott's physical silver fund (PSLV) over the last 12 months:


As Tweetie said, "Membership in the Eric Sprott fanclub has its price". Or as your humble scribe says, "Eric Sprott is richer than you. This is why."

1/3/13

Why miners should use gold as a functional currency

This links to a really great essay, call it a rant even, by Robert Cohen, VP and portfolio manager of Dynamic Funds (part of the Scotiabank group)and dated December 2012. Your humble scribe has asked for and been given permission to feature it here on the blog and hope you guys out there take advantage of the opportunity, too. Here's the executive summary of the note to give you an idea of what's going on:

  • The industry needs to recognize that it is in the business of mining a monetary asset. Selling gold for cash is exactly the opposite of what the companies should be doing for their own good whilst giving investors precisely what they seek exposure to. 
  • There are numerous benefits to using gold, wherever possible, as a financial asset: borrowing loans in gold to protect purchasing power of capital and saving gold production to continue to achieve purchasing power protection over the long-term. 
  • Expressing the health of the business in gold filters out the effects of the deterioration of the value of paper money. The gold industry would not only be healthier, but the reporting would be more sensible and exact. Investors will understand the idea of gold flow rather than cash flow and will think of the project payback period using ounces of gold rather than constantly deflating dollars. The industry will demonstrate itself as the premier safe-haven industry for investors. 
  • Gold companies will become quasi ETFs that not only accumulate gold, but produce gold at a fraction of the cost of prevailing market prices. Each company’s stash of gold can represent a future source of capital for new projects that not only pays back the original gold to the company’s coffers, but adds to it. 
  • Most importantly, gold companies can demonstrate that the preferred monetary asset is gold and not cash. Ultimately, investors would be attracted to gold equities even during times when the functionality of the broader stock market is compromised.


What you'll read isn't particularly "goldbuggy" but tackles, head-on and in a financially intelligent manner (i.e. not your average goldbug ranteration) the issues of gold, money and how gold mining companies are going about their financial business in a way that can be pitched a lot better, so says Cohen. Even if you decide to disagree with his argument (and fwiw IKN largely agrees with his thrust) this is still a must-read article. So download your copy now.

U.S. Silver & Gold (USA.to) update


Under New Management

No sign of Tahoe Resources (THO.to) (TAHO)'s exploitation permit today, either?

Oh dear.

In which case, I thought I'd start a little clock running. See above.

Cerro Casale Enviro permit approved

That's the news from Chile. Pity Barrick doesn't have the money or will to develop its marginal economics though, isn't it?

Dead Mexicans

Mexico's 'Milenio' tracks the numbers of people executed in narco-related crimes (NB: not overall country murder rates) and here's how 2012 stacks up against the previous five years according to that medium:


(lots more info besides in the Milenio note, including the graphic at the bottom of the report that needs no deep Spanish knowledge to understand)

The claims that things are abating in Mexico seem to be somewhat exaggerated, it seems. We've heard about the drop-off in deaths in Ciudad Juarez, but countrywide it's very much the same story as the last two years. and at average of 34 deaths per day (!). 

As for the future of this mess, let's see what new Prez EPN does about the clustafark he's inherited from the drug warrior Calderón, with my guess at the moment being EPN's PRI will come to some quiet and extremely off-record agreements with the narco groups that will see their activities drop in the year to come. Sweeping under the carpet, it's the PRIista way.

Copper Fox (CUU.v) insider selling

Gawd I'd loved to have been a fly on the wall when David decided to take Elmer's advice and buy back those15,000 shares on December 31st. Link here, info here:


But don't worry, CUU fan club, as Macdonald was probably selling "for tax purposes". Or summink. Right?

Galway Metals (GWM.v): A small headsup for subbers

Just wanted to make sure you guys are aware of this, fair dinkum and all that. FWIW your author's intentions remain the same as those spelled out in IKN190, dated December 13th.


TORONTOJan. 2, 2013 /CNW/ - Galway Metals Inc. (TSX-V:GWM) ("Galway Metals") is pleased to announce that effective January 4, 2013, Galway Metals' common shares will become listed and commence trading on the TSX Venture Exchange (the "TSX-V") under the symbol "GWM".
As previously disclosed on December 20, 2012, Galway Metals received conditional approval to list its common shares on the TSX-V in connection with a plan of arrangement (the "Arrangement") among formerly listed Galway Resources Ltd. ("Galway Resources"), AUX Acquisition 2 S.àr.l, AUX Canada Acquisition 2 Inc., Galway Metals and Galway Gold Inc. that closed on December 20, 2012. Galway Metals is well capitalized with US$12 million cash and holds a 100% interest in the Victorio tungsten-molybdenum project in New Mexico formerly held by Galway Resources.

Unemployment in Latin America

Jobs beancounters ILO/OIT are out with their 2013 report (full pdf here) that gives all the up-to-date stats on unemployment rates in Latin America and the Caribbean. Here's a chart with data from the main LatAm countries included (we exclude Caribbean countries, the smallest states and also any country that hasn't supplied OIT with data for all years, that last category therefore excludes countries such as Bolivia, El Salvador, Guatemala and Nicaragua)


Overall regional unemployment is pegged at 6.5% for 2012 (the thick black line) because it benefits from the two biggest markets, Brazil and Mexico, pulling the overall average down. Mexico has always had low-ish unemployment, but the big change has been Brazil, which has cut its headline unemployment rate by over half since 2002 (11.7% to 5.7%).

And I know that above chart is pretty busy, so here's the dataset for your further consideration



The regionwide 6.5% is a pretty decent number and OIT expects it to drop a notch or two in 2013, as well.


Chart of the day is...

...copper, hourlies:

That's a decent rally. I bet you can work out the reason for yourself.

1/2/13

Hugo Chávez "unresponsive, breathing via respirator"

That's what this link to a report from an unofficial source says, as well as saying that Chávez is heavily sedated and terminally ill. It goes on to say that his family do not want to turn off the respirator, although such a decision may cause unnecessary suffering in the next few days.

All this is unofficial of course. Sadly, Venezuela's government isn't helping the unofficial speculations and rumours by being tight-lipped about the status of its President. Also sadly, this fits in with how it looked on December 30th when the relapse news broke. As your humble scribe wrote at the time:
"Want it straight? Here it is: 3 relapses of a malignant tumour and quick deterioration post-op = Hugo Chávez is dying. The rest is noise."
Cancer is a bastard.

Shhhh! Be vewwy qwiet! Tahoe Resources (THO.to) (TAHO) ain't huntin' wabbits, it be huntin opawayshuns pewrmitz

It's awfully quiet over at Tahoe Resources (THO.to) (TAHO) today, isn't it Elmer? After all, wasn't that there operation permit for Escobal supposed to be issued by now? I mean, after the company told us on November 14th that...

....and then made sure we got the message by telling us on December 3rd that...


...you would have thought the company would have some news for us by now, what with it not being 4q12 any longer, wouldn't you? Or maybe it's just another junior that hopes you guys out there have more money than sense or memory. Or maybe they just forgot to pick up the papers from the Guatemala government offices yesterday and we'll get news tomorrow. Or the cat might have eaten the permit. Hell, I dunno...

Pan American Silver (PAA.to) (PAAS)


I've been running numbers on Pan American this week. Bottom line: I pass on paas.

Colombia Crest (CLB.v) spins us into the new year

We didn't have to wait long to get our first dose of nothing ever goes wrong in junior world, with the donation coming from Colombia Crest (CLB.v) and its announcement today that it was selling its San Simon property in Bolivia for $5m cash. Nothing immediately bad about  that of course, but you gotta love the happy smiles scribbled over the news:
"This agreement represents a major milestone for Colombia Crest as it monetizes the gold resource in Bolivia and lets us turn 100% of our attention to discovery of a gold resource in Colombia," comments Hans Rasmussen, President and CEO. "We advanced the San Simon project into an asset that we have now sold to a Bolivian company. Our business model consists of exploration and monetization of assets, so today we are thrilled to have reached this milestone."

But wait! What's this? Could it possibly be the same San Simon property that is given a carrying value of $12.365m on the latest CLB.v financial report? Why yes it is!

Only in the la-la-land we know as junior mining can a $7m+ loss be considered a major milestone that thrills its CEO.

Chart of the day is...

...the result of the "Small Silvers" 2012 sweepstakes:


Of our nine example silver companies that are stack up against silver bullion (using the SLV etc as proxy), just two managed to beat the metal. Winner in 2012 by quite some way was MAG Silver (MAG.to), with First Majestic in second place. Then comes SLV, the only other squiggly line to do better than breakeven as well. 2012 will be remembered as a rotten year for the sector.

12/31/12

Ten IKN random predictions for 2013

Following on from our scraped-a-win-but-not-great bunch of predictions for 2012, it's time to gaze into the crystal ball for 2013 and forecast ten occurances for the year to come in LatAm and/or mining related issues. By the way, we eschew the easy ones (e.g. Correa to win the Ecuador election) because we have to give ourselves at least a chance of getting them wrong. We also avoid any BS attempts to predict natural occurances (earthquakes etc) because that's just hocus-pocus. Here we go:

1) Michelle Bachelet to win the November 2013 Chile election (with run-off vote if necessary Dec'13). Right now we don't even know whether she's running and she'll be up against opposition both from in the Concertacion, from the semi-rebel centre and from the right, (eg let's start with Golborne, Ominami, Allamand, Velasco). But even at this early stage we're going for 'Chelle, one of the most successful and popular Presidents in Chile's history.

2) Nicolás Maduro to be President of Venezuela on December 31st 2013, and by the way, this post was drafted on Saturday morning (Dec 29th) before all the Chávez relapse stuff hit the wires last night. The most likely scenario is an election during 2013 and Maduro is given a mandate, but we'll see how it unfolds as there are a mountain of potential variables.

3) Gold will break U$1,800/oz which is the same as last year's call, so we'll add that gold will trade between U$1,600 and U$1,900 per ounce during the year and an average of U$1,730/oz for the year, just to add a bit of spice.

4) Junior mining companies will outperform silver bullion, as measured by the junior ETF ticker GDXJ versus the silver bullion ETF ticker SLV. That's a pretty specific and quantifiable forecast and as SLV has beaten out GDXJ by about 27% so far this year (with one trading day left to run) it's also one that bucks the trend set in the last 12 months.

5) Copper spot price to average U$3.50/lb, with the potential to spike over $4 and under $3 always there but overall, a flattish sort of 2013 and prices remaining calm.

6) The Colombian government's peace talks with the FARC will collapse, with the key event the FARC withdrawing its unilateral cease fire pledge and attacking the country infrastructure and military once again.

7) Mexico's new government will introduce a mining royalty, with a best guess of it being 3% to 5% levy on mine gate produce. I'd expect the royalty to be passed in Congress and on the books by December 31st 2013.

8) Local community opposition to mining projects in Latin America will increase and roll on from the upsurge seen in the last year or two. One country that will feel the anti-mining spotlight more than most is Guatemala. Admittedly it's difficult to quantify this prediction and it'll have to be more about general atmosphere towards mining companies and projects as 2013 runs forward than anything number based.

9) Gregorio Santos, regional governor of Cajamarca region Peru, will face arrest under corruption charges and with his removal, the Conga project will be seen as more likely to move forward (though official re-activation of the project won't happen until 2014).

10) Argentina, Ecuador, Colombia and Uruguay will qualify for the Brazil 2014 World Cup finals, with Chile getting through via the 5th place play-off.

So that's our ten for the laurels this year and as is our wont, expect a review of the calls very late December  2013 as we point a smelly finger and say har-de-har what a dumbass I was over them all.

12/30/12

The IKN Weekly, out now


IKN191 went out to subscribers a while ago. An abridged version this week, with just one main feature.


Hugo Chávez is unwell

Veep Maduro addressed Venezuela a few moments ago and told the country that Chávez is now in a "delicate" state and has suffered "new complications".

All you can eat on this story at this Google news link, which will get about three zillion new reports as the evening wears on to be sure.

UPDATE: Here's a youtube of VP Maduro's address to the nation:


So you know