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Which will be worth more at end 2015?

2/23/13

Murdered journalists

A black weekend for journalism in South America.

1) In Brazil yesterday, popular radio journalist on political matters and strong critic of local politicians, Mafaldo Bezerra Gois, was shot dead on his way from work in the town Ceará. He had recently received death threats and reported them to local police

2) In Peru this afternoon, photo journalist Luis Choy was shot dead outside his home. According to initial police reports, Choy got into his car, was approached by a lone man, he got out of his car and approached him, and was promptly shot in the head and chest by the person who then made off without stealing any of his belongings. Choy was pronounced DOA at hospital and leaves behind a 10 year old daughter, who he cared for as a single parent.


Photo quiztime (update with answer)

Name these two people. The answer will come as an update to this post tomorrow.


Those of you into Peru politics and mining will have an advantage.

UPDATE Sunday: A few of you got one or the other, two of you (commenter rawphile and mailer MM) got them both. And the answer is...

On the left is Victor Haya de la Torre, founder of the American Popular Revolutionary Alliance, nowadays better known as Peru's APRA party (Alan García et al). His many memorable moments include leading an insurgency against one of Peru's military dictatorships and being imprisoned for nearly a year, incommunicado, at Peru's most infamous prison. 

On the right, Roque Benavides, head honcho at Buenaventura (BVN) and leading light at Yanacocha SA (Conga etc). He has also been involved in social protests and uprisings recently.



2/22/13

The Friday OT: Prince; Pope

Friday OT is back:


Prince - Pope

Powered by mp3skull.com

I've had this song in my head all week (guess why), but it takes a listening to remember just how funky kick ass it really is, still fresh too. If the embed doesn't work, go here and hit the play button, easy.

Rob McEwen's prediction about U$50/oz silver has turned out to be 100% correct


As you can see just by visiting the McEwen Mining Store (aclaration: not The Onion). Yes indeed ladies and gentlemen, roll up roll up and you too can own a 1 oz McEwen Mining silver coin for the bargain sum of fifty US  Dollars. And while you're there, check out the by popular demand Robbie Mac products including those all-important MUX cuff links and six different designs of neckties.

Remind me again why Silver Wheaton (SLW) is a fanboy market darling stock?

It's not the price performance.



So, is it the 53c in dividend distribution over the course of that above chart? Or is it the commissions that the stock generates for brokerages? Or is it the growth plans for 2014 and 2015 (i.e. the same forwrd looking growth spiel we were getting in 2011)?

SLW, the new PAAS.

Mo' Primero (P.to) (PPP): Calling bullshit on Richard Gray of Cormark


After that CotD this morning, a kind reader who will remain nameless sent the update report on Primero  (P.to) (PPP) from Cormark's Richard Gray, dated Feb 22nd, which includes this as the thesis for remaining long with a $10 price target:

Balance Sheet Still Strong: Primero ended the year with $139 MM in cash, a modest increase from the $133 MM at the end of the previous quarter as cash flow from operating activities of $28.5 MM more than offset capital expenditures of $17.1 MM. The Company is well positioned to internally fund its growth that should see production more than double from 2012 to 2016.

Yeah well, cash position up $6m, ain't that great? FCF beat out Capex, whoopee. What Gray fails to mention to his flock is this:


Working capital dropped by $16.74m since that Cormark quoted previous quarter, mainly because current liabilities rose by nearly $20m. What was that about "offsetting" again, so-called professional anal yst? Hey y'know, any old company can take out a S/T loan and "improve its cash position", what really matters is subtracting current assets from current liabilities and people like Gray damned well know that. Merely quoting cash position increases as a reason to stay long this overhyped dog without bothering to mention a significant drop in working capital is the type of half-truthing bullshit that the market is sick and tired of reading from biased pumpers who are supposed to look after the welfare of clients, rather than regurgitate company spin . Do your job correctly Gray, else one of these days you'll find somebody else doing it.

Dead Peruvian miners update

An update on deaths in mines in Peru since the year 2000:


We're now at 158 weeks months* and 792 deaths, which is 5.01 dead miners per month on average. Smiley happy dataset here

*ty droog

Chart of the day is...

...one that compares the equity per share of Primero Mining Corp (P.to) (PPP) to its end quarter share price, plus a snapshot of now:


Back in October, when the world was screaming about this stock being the next big thing, I shorted Primero at $7.26. That was the right move, but I managed to snatch (near) defeat from the jaws of victory and cover the short postion at $6.73 in November. That was stupid and I'm kicking myself now for being a coward.

Ain't hindsight a wonderful thing?

2/21/13

Mailbag

Reader 'AK' writes in with (excerpted):
"I am very surprised you have not mentioned the total farce that is occuring at St. Elias Mines, from the "chair" ie the CEO! disalllowing all the proxy votes in the recent SGM, (held on December 27th!) to her now suing people that have already lost a substantial sum of money investing in her stock whilst she sold down all her 15c options at much higher prices!"
To which IKN Nerve Centre says:

1) We made mention of the St. Elias (SLI.v) story in November 2012. Back then the call of  'avoid like the plague' was made, loud and clear.
2) That's not enough for you? Then get your own freakin blog at write it up yourself. What do you think this is, Reuters?

First Majestic (FR.to) (AG): Neumeyer read the memo and walked

Since the op-ed below was published last Sunday in IKN198, First Majestic (FR.to) (AG) saw sense, listened to its shareholders and walked on the deal to buy Orko Silver (OK.v). The Good Lord only must know what Coeur (CDE) shareholders think of the people who are supposedly acting in their best interest.

By the way, the only thing that's changed in the piece below is that chart, as instead of a 5 day one that covers last week I've used a ten day that runs to today, to show how it's all panned out (hint: badly for Coeur).

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First Majestic, Coeur and the memo neither company has read

Will no one rid me of this turbulent priest?"
Henry II

Watching the action in First Majestic (FR.to) and Coeur (CDE) last week (neither of which I own, by way of full disclosure) I couldn’t help but wonder whether either of the management teams had got the message being sent loud and clear from the uppoer echelons of the precious metals mining world. It was also apparent that the respective boards of both companies have a different idea of what their fiduciary duty might be towards their shareholders than the shareholders themselves

Although not mentioned much by your author (barring one quick blog post at the time and a quick notice in IKN189) FR has had a all share friendly offer in for Orko Silver (OK.v) since mid-December  (1) that valued the transaction at a ticket price of $2.72 per share for OK.v. On the day before the deal proposal was announced FR.to was trading at $22.64. That day the stock dropped 10.4% and today FR finds itself at $17.36. Ahem.

With the backdrop in place, we cut to last Tuesday February 13th as Coeur (CDE) announced (2) a counter-offer for OK.v, a cash/share $2.70 bid (70c of that being the cash) that was accepted as a superior friendly bid by OK.v. The result on the two competing stocks can be seen in this five ten day chart:



Wednesday Feb 13th saw FR.to rally by as much as 5% at one point, while CDE lost nearly 10% on the day.

In other words, longs of FR.to were suddenly breathing a very large sigh of relief, while CDE shareholders were wondering just why its company’s management team had decided to outbid a friendly offer during an outright awful moment for silver stocks and tank its own share price. However, midday Wednesday saw First Majestic reversing its gains and the apparent reason for the change came Thursday when FR announced its reaction to the news (3). The NR was carefully worded, but gives the distinct impression that instead of thanking its lucky stars for an out on a deal that had been weighing heavily around the company’s neck for nearly two months and merely walking away from the deal (and collecting a very useful $11.6m break fee in the process), FR was seriously considering making a counter-offer to the CDE offer and competing for OK.v. As the action Thursday shows, CDE rallied and FR.to dropped further. Then came a very nasty Friday when all stocks got hit, no matter what they were doing or where they were going, so less can be read into that day’s action except that FR and CDE traded largely in line with one another.

The implication is clear: This weekend there must be a whole bunch of CDE longs praying that FR.to makes that counterbid, while there’s a whole bunch of FR.to longs praying that its management team walks away from the deal and leaves it in the hands of its competitor! And what that means is that both sets of management are not seeing the wood for the trees, have not taken on the clear lessons handed down from the Tier 1 mining companies in the last couple of weeks about reeling in expansion plans and not overpaying for expensive projects in a “grow at all costs” attitude. Coeur has always struck me as a company with management that lives in a different epoch (the 1950’s perhaps?) but it would be a real disappointment to see FR.to, a company that’s executed so well in the last three years, not see the wood for the trees and take the chance to escape, breathing a large sigh of relief. Walk away Neumeyer, just walk.


here's the working theory on the Fed

If i were Bernanke, nearing the end of tenure but a strong believer that the policies used in the last years have been correct, i'd been keen on protecting the policy thrust. So near the end i'd allow the Fed hawks to have a nice chunk of comment time in a set of Fed minutes to air their views, knowing full well that once the market read the new possible direction it would tank across the board on a one-day basis. So then when Obama gets round to interviewing for the next Fed chair it'd be, "Hey dude, you see how the market tanked on all that hawky talk stuff the other day? Tell me you're not going to do anything like that if you get the big chair position, yeah?" The rest you can work out for yourself. Smart guy, that Bernanke.

Chart of the day is...

...this from one week ago in this post:

Which i think is interesting, considering that gold hit that 1550 yesterday.

2/20/13

Fortunately...

...instead of looking at the markets today, your humble scribe was looking at this view.


Ignorance is bliss. Well, it was until I got online.

2/18/13

On the road


Your humble scribe is out and about for a few days, posting will be light until Friday or thereabouts. Meanwhile a bit of Shelley that's been bouncing round the brain for the last few days (and there's no reason why anyone should have to suffer alone):

I met a traveller from an antique land

Who said: "Two vast and trunkless legs of stone
Stand in the desert. Near them on the sand,
Half sunk, a shattered visage lies, whose frown
And wrinkled lip and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
`My name is Ozymandias, King of Kings:
Look on my works, ye mighty, and despair!'
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare,
The lone and level sands stretch far away". 



The flexibility and adaptability of the capitalist economic and financial system is its greatest strength

No economic system is better at quick changes, being flexible, finding the neatest solution to any given issue on the path of least resistance, than capitalism, cornerstone of our society. Take for example the way in which the oil industry will categorically deny that climate change exists in order to keep its clients from worrying about the environment and keep sales strong. However, as mining company Barrick (ABX) shows when faced with tricky questions in Chilean courtrooms about the disappearance of the glaciar close to its Pascua Lama project, high in the Andean mountains, the culprit isn't the company or anything it might be doing untowards up there. Yes you guessed it, it's climate change.

The IKN Weekly, out now


IKN198 has just been sent to subscribers. So now you know.

2/17/13

Trezeguet

Punteros!

"Eldorado Gold did not immediately respond to requests for comment or details about the raid"

Trouble at mill

UPDATE: Eldorado speaks* and says roughly what was expected.


*not "One on't cross beams gone owt askew on treadle."

A picture of a man voting

In Ecuador, minutes ago.


What, you want a prediction on the result? Are you serious?