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2/20/15

Copper Mountain (CUM.to) 4q14 results: CUM shot its load, financials say we're faced with cold sticky CUM

Copper Mountain (CUM.to) reported its Q4 and year end numbers. Here's a chart:


In 4q14 it was revenues of $53.914m, costs of $52.468m for a gross profit of $1.446m. That's a mighty thin margin to support CUM's welter burden of non-site costs and as a result you see that net loss of $16.245m

And be clear, that 4q14 loss was after selling its copper at an average of $3.00/lb. We're now down to $2.60/lb at market. Ewwwwww....sticky.

The Friday OT: Tchaikovsky: Swan Lake waltz, Moscow Philharmonic, Yuri Botnari

Tchaikovsky was insane. There are moments in his music when you hear the sound of true manic insanity and among those is the last two minutes of the Swan Lake waltz. But just as you can't get a good read on a mad person just by watching one of their manic episodes, you can't just skip to the end of this superlative performance of the piece. You need to listen to the beautiful but sane part and descend with Tchaikovsky, then you get a glimpse of his personal hell.




It's a piece of music labelled with pleasant things such as waltzes and swans, but it's also a scary white-knuckle experience that never fails to get my heart racing. It is, quite literally, frighteningly good.

Chart of the day is...

...the gold/basemetalbyproduct gold/silver ratio.



As noted during the prediction for 2015 that the GSR isn't going under 70X this year, silver isn't "the poor man's gold", it's "the choice that poor people make".

We should be talking about the chances this ratio has of hitting 100X.

UPDATE: Regular mailer and always quippy 'MP' chimes in with...

I like your quote of "the choice that poor people make" but can't help but to think that you really should have written "the poor choice that people make"...
Cheers.

2/19/15

Updating on the Newstrike (NES.v) Timmins (TMM.to) (TGD) deal



NES.v now unchanged since entering into its friendly deal "at a premium".

TMM.to now 15% down and sinking fast.


Me Told You So

No, seriously, me did tell you so on Tuesday when stating for the record "A very, very stupid group of mining people. If I were a holder this morning I'd be spitting mad, as it is I can relax and watch the fallout from the sidelines." As well as noting the meagre deal being offered on the NES.v side. It's one thing to argue the pros and cons of making share price upside the central focus of a mining company, it's quite another to treat shareholders and their concerns with absolute disdain. Bruce B falls most definitely into the second category. 

UPDATE post bell. I'm sorry, did i say NES.v was unchanged?


The search for blue tourmaline in Brazil (updated)

This video is fabbo, the story of the decades-long hunt for precious gems in Brazil told by the Tucson AZ geologist who's done it and wowsers, his love and passion for the subject is impressive.



It's geologically fascinating, the narration is engaging, the back-story is fun and then the end result is something very beautiful. You like cool exploring stories? Or you like geology? Very pretty shiny things? You only need one of those to qualify, I cannot recommend this video enough.

It's just one of four videos on the subject available here. The others are just as good but for some interwebs reason i can't put up all of them separately, so watch that one above and then click through.

And then, read more about GIA here.

UPDATE: It turns out that the husband and wife team* then take the stones they find and turn them into things like this:



That. Is. Pretty. Their website is here, go check it out.


*who I've never met, either real-life or virtually, so this isn't a sales pitch and i'm not on any sort of commish. This is just me going "wow people, check it out", nothing more nor less


A Flash update...

...has just been sent to subscribers, 9am local time Thursday morning and about 30 minutes before the opening bell. Some general comments on developments for four covered stocks, no change in any reco or call. Yet.

2/18/15

The pleasures of being a foreign mining company in Guerrero, Mexico

Did you think Torex (TXG.to) and its recent travails was an isolated case? Did you buy into that "it was a one-off, it was a single gang, we're on his trail now, there won't be any more trouble" thing?

Here's a translation of this report from Mexico's Reforma.

Mining Company Faces Blackmail in Guerrero 

Karina SuárezMexico City, 18 February 2015  
Since November 13th last year a syndicate of transport workers has been blockading the entrances to the Campo Morado mine in Guerrero, property of the Belgian mining  company Nyrstar.
The protesters are demanding the payment of a 15 million Peso (U$1.0m) debt which the company denies owing.
"We totally reject the additional payments demanded by the leaders of local unions, as we consider them illegitimate and are looking to destabilize the activities of Nyrstar by seriously affecting our reputation.
"Nystar has made clear its intention to pay transport companies directly, but we refuse to pay additional or unwarranted payments that do not reach the people who directly grant their services", the company said in a written answer [to Reforma].
The producer of zinc, copper and gold has operated in Guerrero since 2011, but also has projects in Peru, Honduras, Chile, Canada, The USA and Finland.
The company calculates that the protest have caused U$10m in losses and disrupted jobs for 2,500 families in the municipality of Arcelia.
Isidoro Ruiz Delgado, leader of the transport syndicates, explained that his union demanded a pay rise of between 20% and 25% for their workers due to rises in fuel costs and machinery parts.
According to him, the company has refused the renegotiate its agreement and has suspended all payments to transport workers since October, a decision which led to the blockade in the area that has been adhered to by transport workers, mine workers, machine drivers and municipal staff.
Nyrstar had promised to pay its debts accrued but has not done so, he said.

Barrick (ABX) 4q14 results

Put down that copy of War and Peace, set aside Infinite Jest for one evening, settle down in your fave easy chair and get ready for today's loooong read News Release. Right here.

And of course, eight bullet points to wade through before we get to the U$2.85Bn 4q14 loss, due to the flagged impairments at Lumwana and Cerro Casale. Knew they were coming, Thornton, fret ye not. But what follows that is more than interesting, it's ABX laying its cards on the table.

And this:

Wednesday music: Madness; Wings of a Dove

Ask Ms Yellen why this came to mind today.



Music starts at 1:10 and yeah, this is the one with the Ford Transit.

Sandstorm (SAND) (SSL.to) uses the subprime loan business model to GRO(W)

Hey, remember those heady days of 2005 to 2008? Lehman Brothers, NINJAs, boxing up crap and labelling it quality? Well, Nolan Watson doesn't. Here's the news release

Your need-to-know on the thing SAND has just bought, Gold Royalties Corp (GRO.v):

  • In February 2013 it was an 80c share price company
  • In February 2014 it was an 40c share price company
  • Yesterday it was a 10c company
  • Nolan's paying 20c a share, bless him.


And that's all you need to know, honestly. That's everything.

Yamana Gold (AUY) (YRI.to): Dripping wet

Here's the link to the NR from Yamana Gold (AUY) (YRI.to) this morning. Here's an extract, below the necessary commentary:
TORONTO, ONTARIO--(Marketwired - Feb 18, 2015) - YAMANA GOLD INC. (YRI.TO)(AUY) ("Yamana" or the "Company") today announced it has adopted a Dividend Reinvestment Plan ("DRIP") commencing with the previously announced first quarter 2015 dividend. The introduction of the DRIP responds to feedback from shareholders and provides further support to shareholders by offering an opportunity to increase investment in the Company without additional transaction costs by receiving dividend payments in the form of common shares of the Company.
Participation in the DRIP will be optional. Participants in the DRIP may obtain additional common shares of the Company by automatically reinvesting all or any portion of the cash dividends paid on common shares held by the DRIP participant without paying any brokerage commissions, administrative costs or other service charges.

They call it DRIP (we like cute acronyms) and then extol the advantages of getting your divis paid in shares, but do not be fooled by the narrative and do the math: SHARE-BASED DIVIDENDS ARE NOT DIVIDENDS, period. They're an automatic zero-sum game, they cost the company nothing and give shareholders nothing. In other words, another layer of corporate accounting BS.

UPDATE: Dear mailers, in order that I have no need to waste time on irrelevant words today, do the math first. Then if you still feel the need to write in, feel free. Though the likelihood is that if you've done the sums and still think there's a debate to be had, you did your math wrong.

UPDATE 2:


If you love a jolly parade...

...then hightail it down to Argentina today (Weds 18th), as later on they're planning on having a big one.



No music though, they say it's going to be in silence.

Nobody does election years like Argentina.

Yanis Varoufakis, the erratic Marxist

This opinion piece by Greece's new FinMin, out today, is essential reading. There's a whiff of a star being born here and though Piketty won't need to stand aside, he should shuffle a bit to make some room for Varoufakis. And right here...
After I returned to Greece in 2000, I threw my lot in with the future prime minister George Papandreou, hoping to help stem the return to power of a resurgent right wing that wanted to push Greece towards xenophobia both domestically and in its foreign policy. As the whole world now knows, Papandreou’s party not only failed to stem xenophobia but, in the end, presided over the most virulent neoliberal macroeconomic policies that spearheaded the eurozone’s so-called bailouts thus, unwittingly, causing the return of Nazis to the streets of Athens. Even though I resigned as Papandreou’s adviser early in 2006, and turned into his government’s staunchest critic during his mishandling of the post-2009 Greek implosion, my public interventions in the debate on Greece and Europe have carried no whiff of Marxism. 
Given all this, you may be puzzled to hear me call myself a Marxist. But, in truth, Karl Marx was responsible for framing my perspective of the world we live in, from my childhood to this day. This is not something that I often volunteer to talk about in “polite society” because the very mention of the M-word switches audiences off. But I never deny it either. After a few years of addressing audiences with whom I do not share an ideology, a need has crept up on me to talk about Marx’s imprint on my thinking. To explain why, while an unapologetic Marxist, I think it is important to resist him passionately in a variety of ways. To be, in other words, erratic in one’s Marxism.

...he gives voice to something you get to hear off-record from many financial academics. This is more than just a chess move in the current negotiations. Go read it all.

2/17/15

Capstone Mining (CS.to) 4q14 results

The title of Capstone Mining (CS.to) 4q14 earnings NR this evening is...


...in which we note those upbeat words. Highlight. Significant. Cash. Generation. Oooh, just bringing on that wet feeling in my underwear. But then comes the sub-header that reads...

"Operating cash flow before changes in working capital of $199.4 million"

...and you just know the narrative's in trouble already, even at this early stage of the News Release spindoctoring, because if the best they can manage is a made up line item it's not going well.

Let us be clear; "operating cash flow before changes in working capital" does not exist. To be utterly and absolutely crystalline in our clarity on this matter, "operating cash flow before changes in working capital" Does. Not. Fucking. Well. Exist. For the same reasons 'adjusted net income' doesn't exist or any of the other unicorn accountancy terms out there these days to mask over crappy financials, for that matter. Give us a break willyaz? 

However, things that do exist include gross profits (they come after COGS, royalties and deprec/deplet/amort get backed out), operating profits (post G&A, exploration, stock-based compensation, some impairments etc) and net profits (pay those pesky financial dues, pay those pesky tax bills, get to the bottom line). And here's how CS.to has done on those real metrics recently:


Even on the best looking of those three, gross profits, the number comes in at $104.74 for 2014. So tell me about the $199.4m number you stuck at the top of the NR guys again, it's so innarestin how them there numbers work.

But sadly for CS.to, for you and for I, running machines at a mine isn't everything you need to do to make a profit in mining and the bottom line sadness is that CS lost U$22.39m in 2014. And that shows over at the balance sheet too because...

...working cap's down by nearly $21m since 4q13. So CS.to loses just over $20m on the year and its working cap drops by just over $20m in a year. Funny how the real numbers come in similar to one another, innit guv? And all this while CS sold its copper at an average of over U$3/lb in 2014, so guess how well it's set to do now that copper's under U$2.60/lb? Yeah, that's my guess too. And the market's, by the looks of things.



So, now you know what CS.to's idea of a successful year looks like. End.

Peru re-shuffles its cabinet

For what seems like the 100th time, Peru's head of State (along with her husband, President Ollanta Humala) has today decided to re-shuffle the ministerial cabinet. We'll get the official who-wins-who-stays-who-loses this evening at the swearing in ceremony, but up to now we know that at least four mid-level importance ministerial posts are changing hands. If you care enough, here's a link to check on the names in the frames.

Banana splits served. The end.

UPDATE: Word now that Mayorga is out as Mining and Energy Minister, to be replaced by Rosa María Ortiz. That's one that we at IKN do care about....a little, anyway. Ortiz is a lawyer and expert in environmental issues.

Another thing about this Timmins (TGD) (TMM.to) Newstrike (NES.v) deal

Further to the post this morning, which concentrated on Timmins Gold's (TMM.to) (TGD) side of the deal with Newstrike (NES.v), another thing is to wonder just what the NES.v faithful must be thinking right now. I mean, even if we forget about the longer term NES.v chart and where it was a few years ago...


...and concentrate only on the 12 month price action...



...there's scant reward for loyalty. Here we are, the day they've been hoping for arrives, NES gets its yearned-for buyout deal and...up 2c to 98c (at time of post, midday-ish Tuesday). I'd be seriously pissed. 

On Greece

Cut through the crap by reading Yves Smith today. 

What drives the royalty streaming model

Several unconnected and independent mail exchanges, all with different thoughts and angles, sprang from the SSP/SLW post of yesterday and I'd like to thank those mailers who took the time to write in. After cogitating on the back'n'forth banter, here's a synthesis of several points in one shot.

Name: Nolan Watson.
Company: Sandstorm (SAND).
Current situation: Lipsticking pigs.
Main fear: People start looking closely at the companies where SAND holds its streams.
Ambition: To be Randy Smallwood.

Name: Randy Smallwood.
Company: Silver Wheaton (SLW).
Current situation: Pissed that Franco Nevada is now bigger than SLW.
Main fear: People play word games with his name.
Ambition: To be Pierre Lassonde.

Name: Pierre Lassonde.
Company: Franco Nevada (FNV).
Current situation: Being Pierre Lassonde.
Main fear: Tabarnak! Pierre Lassonde has no fear.
Ambition: To be Pierre Lassonde.

The Tahoe Resources (THO.to) (TAHO) earnings miss

4q14 and YE NR here.

The question: Why were 4q14 earnings soft at TAHO?
The answer:
  • When your main metal is silver
  • When you do 5.2m oz of the stuff
  • When you sell the stuff at substantially less the market average price for the period
  • And when your fail is the second time in a row


You miss earnings.

And no, Ferrari Kev, we don't care about your deferred sales because you'll sell those ounces eventually. We care about the crappy deals you've closed.

Kombat Copper and Aberdeen International

THE OLD MINING ADAGE: DO NOT DO BUSINESS IN "THE STANS": Afghanistan, Uzbekistan, Kazakhstan, Turkmenistan, Tajikstan, BhartiStan.

The joke's not an original one, but it's a good'un all the same. Anyway, today we hear that Aberdeen (AAB.to) took 10m of the recent 26m unit offering sold by Kombat Copper (KBT.v), which works out at 7% of shares out and 14% of F/D. The NR goes on and winds through this'n'that, but there's only one paragraph that really matters:
Kombat is part of the Forbes & Manhattan Group of Companies and pays Forbes & Manhattan Inc. ("Forbes") a monthly services fee relating to various administrative, financial and IT services provided by Forbes. The Company considered the monthly fee in its analysis of the merits of the investment.
And you thought incest was illegal, didn't you?



Timmins Gold (TGD) (TMM.to) to buy Newstrike Capital (NES.v)

The skinny: Instead of agreeing to be bought out at U$2 last year (it was on their table, it was knocked back), the entrenched management at Timmins Gold (TGD) (TMM.to) dilutes its already weak share price even further by purchasing another über-high political risk exploration stage project.

For the record last year I owned some TMM, basically for the high chance of the buyout. I rode it up, then rode it down, then sold at a small loss. My trade was dumb (you can tell because it was a loser) and smartest part of that process was the selling, but in the end I did get some value for my lost money because there are some things more important than mere monetary gain. In this case it was getting a course on how self-centred boards of directors in mining companies can be, how they often care zip zip nada about building share value, how their only concern is empire-building at all costs. In the case of TMM the costs are high indeed.

A very, very stupid group of mining people. If I were a holder this morning I'd be spitting mad, as it is I can relax and watch the fallout from the sidelines.

This morning's NR here, excerpt here:

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Feb 17, 2015) - Timmins Gold Corp. (TMM.TO)(NYSE MKT:TGD) ("Timmins Gold") andNewstrike Capital Inc. (TSX VENTURE:NES)("Newstrike") are pleased to announce that they have entered into a definitive arrangement agreement (the "Arrangement Agreement") pursuant to which Timmins Gold has agreed to acquire all of the issued and outstanding common shares of Newstrike by way of a court approved plan of arrangement (the "Arrangement"). continues here

PS: The corporate presentation on the merger is on this link. If it reminds you of the time Elgin bought out Gold-Ore Resources, I won't be at all surprised.


2/16/15

Peru vehicle sales highlight its economic inertia

Another stat out today in Peru was vehicle sales for January 2'15, measured by the Peru Automobile Association (Asociación Automotriz del Perú) by counting new registrations, the normal reliable method. The number was soft so I thought I'd take a look at the underlying stats. And after 15 minutes of datadump and play, here are the charts:



The above figures are for light vehicles, i.e. cars, vans, pick-ups, 4x4s etc. They don't include motorcycles etc at the smaller end, nor trucks/buses etc at the larger end.

Unsurprisingly, the drop in sales growth to flat and then negative coincides with the fall in GDP growth seen in Peru, starting in mid-2013 with little respite. Also unsurprising is how this coincides with the fall in the price of gold.

Peru 2014 GDP growth: 2.35%

And that's a long way down from the confident 5%+ predictions at the beginning of 2014. The dataset was completed this morning with the December 2014 month-on-month number, an anaemic 0.54%. Here's the chart:


This Thing Isn't Like That Thing, silver wheaton (SLW) and sandspring (SSP.v) edition

This thing is from Silver Wheaton (SLW) in November 2013:

VANCOUVER, Nov. 11, 2013 /CNW/ - Silver Wheaton Corp. ("Silver Wheaton" or the "Company") (TSX:SLW) (NYSE:SLW) is pleased to announce that it has entered into an Early Deposit Gold Stream Agreement (the "Early Deposit Agreement") with Sandspring Resources Ltd. ("Sandspring") for the Toroparu project located in the Republic of Guyana, South America.
"Silver Wheaton continues to push the streaming model forward," said Randy Smallwood, Silver Wheaton's President and Chief Executive Officer. "The Early Deposit Agreement model allows us to get our foot in the door on high-quality, earlier stage projects such as Toroparu for relatively little upfront capital. From Sandspring's perspective, these funds will allow them to complete the bankable feasibility study without subjecting their shareholders to excessive dilution that today's challenging equity markets would deliver. Yet again, Silver Wheaton has developed another innovative, win-win business model. In todays market environment we expect this model to be very attractive to junior exploration and development companies looking for funding."

That thing is from Sandspring (SSP.v) today:
The Company announces that it has completed all field and design engineering work required for the feasibility study for its Toroparu Gold Project located in the Upper Puruni River Region of western Guyana. However, the Company has elected to defer the additional expenditures required to complete the final stages of the Toroparu Gold Project feasibility study such as value engineering and optimization studies.

And then, insult to injury and all that, SSP goes on to explain how it's going to set up a small scale mining operation on the property in 50/50 partnership with a company set up by insiders who bought in for $500k, undoubtedly money that moved from SLW's treasury to SSP's and thence to director's pockets. 

"Pushing the model forward". Yeah I liked that one...pushing it until it drops over a cliff, more like. Randy Smallwood, Sandspring saw you coming a mile away. 

The IKN Weekly, out now



IKN301 has just been sent to subscribers and this from the days when phones were phones, none of that namby-pamby Apple Hi Phone or Sam sung the galaxy song. The Nokia 301 doubled up as a knuckle duster if necessary. Kids t'day, don't know thaborn.

2/15/15

Zlatan Ibrahimovic

I don't care what anyone says about Zlatan Ibrahimovic ever again. I don't even care about what I've said about him ever again, good or bad (it's been mostly good). It's all footnotes, because this is brilliant. 

Prepare to watch something special, hit play.



Zlatan, hero forever. Pity most of that ink is only temporary, though