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5/2/15

Guerrero Mexico: Apart from details such as bleedin' reality, it's a safe place to live and work

Here's what Bruce Bragagnolo, head honcho of Timmins Gold (TGD) and brand new owner of the Ana Paula property in Guerrero, thinks of the political and community risk situation in the State:
"The situation has had a lot of publicity recently but our essential view is that Guerrero is going to get better as more companies come to the area, and we can work with other companies and the government to make it safer for everybody"

The expression "cloud cuckoo land" comes to mind. Here's the reality of Guerrero Mexico, as of yesterday Friday:
Armed assailants shot and killed a mayoral candidate of the ruling Institutional Revolutionary Party, or PRI, in the southern Mexican state of Guerrero.
Ulises Fabian Quiroz, a candidate for mayor of the municipality of Chilapa de Alvarez - located 50 kilometers (31 miles) from the state capital of Chilpancingo - in Mexico's June 7 mid-term elections, was killed Friday afternoon while on the campaign trail.
The candidate was intercepted by gunmen in the town of Atzacoaloya, "forced out of his vehicle, beaten and then shot and killed," continues here

Frankly Bruce, I'm a bit worried about you. So take a tip, a sincere piece of advice that goes beyond your plug dumb stupid business decisions. When you go down to Guerrero to check out your property, don't hang around the town too long out of some false sense of bravado. And if you do decide that the place is getting safer just because a bunch of gringos with lots of money and no street sense have set up shop, don't start doing things like going to the same coffee house in the centre of town at the same time every day. There will be people on the ground there who'll be very keen on getting you up to speed with the reality, listen to them. 



The most visited IKN post this week is...

...this one, "Considered commentary on this evening's quarterly numbers from Detour, Yamana and Capstone".

This is one of the things that happens in the weird world of blogging, part of its mystery and (for me at least) fascination. I can write long essay-type posts, or a well-timed chart+comment that gets something right in the market that day, or I can publish something stupid that gets deserved ridicule. But then sometimes, a post that took about 20 seconds to put together and comprises a quick comment and a silly cartoon GIF gets more hits than anything else.

And so it goes.

5/1/15

Coastal Gold (COD.v) may be annexed from Bhartistan after all

As Friday evening NRs go, this is one of the more interesting ones in recent weeks:

PANAMA CITY, PANAMA--(Marketwired - May 1, 2015) - Taylor Housser and Glynn Fisher advise that on April 30, 2015, Satori Investments Ltd. ("Satori"), a private company wholly-owned by Mr. Fisher's spouse, but over which Mr. Fisher has full trading authority, acquired direct ownership of 2,000,000 common shares of Coastal Gold Group (TSXV: COD) (the "Coastal Shares") at a price of $0.03 per Coastal Share. After giving effect to the purchase of Coastal Shares on April 30, 2015, Satori owns, in the aggregate, 2,000,000 Coastal Shares, representing approximately 1.18% of the Coastal Shares outstanding. 
In addition, Verdmont Capital, S.A., a private company controlled by Messrs. Housser and Fisher (collectively, the "Joint Actors"), owns 12,411,000 Coastal Shares, Jacametra Inversiones, S.A., a private company owned by Mr. Housser, owns 2,381,000 Coastal Shares, and Mallinson Hill Limited, a private company owned by Mr. Houser owns 280,000 Costal Shares. The Joint Actors are acting jointly and in concert in respect of their investment in the Costal Shares, and therefore the Joint Actors beneficially own, directly or indirectly, or exercise control or direction over, an aggregate of 17,072,000 Coastal Shares, representing approximately 10.1% of the Costal Shares issued and outstanding as at the date of this News Release. continues here

This of course comes on the back of the news covered by IKN earlier this week. All that about how Coastal Gold (COD.v), run by Bharti cronies, thinks that a 5c/share deal from its overlord via his Sulliden vehicle (SMC.to) is better than the 8c/share offer from Keith Neumeyer's First Mining Finance (FF.v).

The EGM happens this Monday coming. Could be a lot of fun.

PS: Message for Ryan Morris of Meson Capital: This is how it's done, grasshopper. You have much to learn, grasshopper.

PPS: Just for the record, there is some dispute about how much SMC and how much FF is offering for COD.v, with 2 1/2c and 5c also doing the rounds. I'm okay about that, there are different ways of skinning this particular cat, the bottom line is that FF.v is almost certainly offering a substantially greater amount at the current slate of the three companies.

The Friday OT: Paco de Lucía: Almoraima

The full album, with playlist below:



As mentioned over the last couple of weeks, I've been on this Road-To-Damascus-like discovery jag on Paco de Lucía. Glad to say that the feedback from a few of you has been very positive (at least a couple of regulars enjoying this superlative stuff as much as I). With that in mind, this Youtube is the one I've gone back to the most in which we get 37 minutes of musical amazement that gets better every time you go back. The only one I've been skipping is 'Cobre' because I've noticed how my ambivalence towards Sevillanas has been confirmed over the fortnight. However, do have a shot at this, at least tracks one and two. And Plaza Alta (my mad stars, how could he possibly do that?), which is impossibly beautiful. The man was beyond genius with a guitar, those out there who are smarter about de Lucía than I have known this for decades, IKN plays catch-up with necessary humility.

1. Almoraima (Bulerías) - 00:00   2. Cueva del gato (Rondeña) - 5:33 3. Cobre (Sevillanas) - 11:17 4. A la Perla de Cádiz (Cantiñas) - 14:27 5. Ole (Jaleos) - 18:55 6. Plaza Alta (Soleá) - 23:15 7. Río Ancho (Rumba) - 29:25 8. Llanos del Real (Minera) - 33:54

Lake Shore Gold (LSG.to) (LSG) is trading like a champ this week

If this one isn't high up on the Goldcorp (GG) shopping list, then nothing is.



And when it comes to the charting, Gary T over at BiiWii has been following this one very closely for his subscribers and doing a top job of it, too. If you follow the markets and don't read Gary you're making a big mistake, best charter out there.

Biggest gold company market cap

I don't know whether you've noticed, I don't know whether you care, but for what it's worth Barrick (ABX) is getting very close to re-taking the mantle of world's number 1 gold mining company by market cap. It's a position it held for a long time, then Goldcorp (GG) took it off the Munk thing and has been top dog since. With the recent wholesale dumpage in GG, keep an eye on the closing numbers this Friday.

Northern Freegold (NFR.v) runs a classic Vancouver pump scam

You author receives this in his mailbox today from A. Reader:

This 6 cent company has a Market Cap of $1.8m. It has pissed away $46m on a dogshit anomaly in the Yukon that will never ever be a mine and now hire this group for $4,000 per month after raising $700k at 5.5c in February. Why would they do that?

NORTHERN FREEGOLD RETAINS RENMARK FINANCIAL COMMUNICATIONS INC.
Northern Freegold Resources Ltd. has retained the services of Renmark Financial Communications Inc. to handle its investor relations activities.
"We are pleased to announce that we have selected Renmark to reinforce Northern Freegold's profile in the financial community and enhance the visibility of our project portfolio. We chose Renmark because its standards and methodologies fit best with the message we wish to communicate to the investing public," noted John Anderson, chairman of Northern Freegold Resources.
In consideration of the services to be provided, the company has agreed to pay a monthly retainer of $4,000 starting May 1, 2015, to Renmark Financial Communications.

Indeed, here's the NR (let's link to the company page to make sure they know their scumball scam ways are being highlighted) and here's the link to the NR about the financing close, which is datestamped Feb 2nd. As that's 88 days in the past, it means there's a mere 32 days to go before the takers of that placement can stampede for the door and clip those (full) warrants to kingdom come.

Plenty of the placement went to Switzerland, by the way. Norway too. Bless em.

Announcing the new IKN investor relations service

Dear junior mining company CEO,

IKN today launches its Investor Relations outsourcing service. For the sum of CAD$4,000 per month this website will offer you an industry leading outreaching service that's so biased towards the absolute best-case spin in any given situation that it's laughably easy for anyone remotely connected to the realities of the industry to quick realize they're getting large quantities of smoke blown up their anal tracts. We promise to ignore any bad news your company is foreced to disclose, pay little heed to any financial weaknesses on show and smooth over poor quarterly production numbers. But as the target audience for any IR campaign these days is towards complete knownothings with enough lizard-brained greed to override any vestige of common sense they possess, none of the above is any sort of a problem to the more discerning and sophisticated junior mining company. We will guarantee to ram home every day how gold's about to fly any day soon and get the suckers into your stock rather than anyone else's, allowing you to raise in an equity placement, get your salary cheques paid for another year and dilute the merry hell out of the patsies we've just got on board.

Minimum contract period 12 months, with a three month opt-out. For further information, please contact the usual address. 

On Venezuela, on Pacific Rubiales or on Derwick, Setty beats Bloomberg every time

If you follow the moves of the extremely sketchy Derwick Ass.
If you care about what Pacific Rubiales (PRE.to) Kabuki Theater is up to right now
If you wonder just how corrupt Venezuela is anyway
If you like deep and quality investigation into the murky end of the business pool

Then check out the Derwick Ass / Pacific Rubiales (PRE.to) story over at Setty's place today. It's difficult to imagine two companies more deserving of each other. The links he offers are top hole stuff as well.

Chart of the day is...

...Newmont (NEM) versus Apple (AAPL), Feibu (FB), Vampire Squid (GS) and the S&P500 index:


Now I know I'm leaving myself open to the accusation of cherrypicking, that's not the point. The point is that I know which stocks get talked about a lot and I know which sector is derided by a moron end of the financial world as not even worth a look. And I know how freakin' stupid the average financial advisor is (they do too but they won't tell you, their biggest nightmare is being found out).

As a matter of fact, NEM shows that a well-run miner more than holds its own against a fashionable splashy well-run tech or two and a well run financial. Show this one to the jock financial advisor who steers you away from the mining sector "because of gold".

4/30/15

OT: How old

Here's a bit of fun. Microsoft has this brand new free & fun page called How Old, in which you stick a photo and the bot will then try to estimate your age from the evidence. For what it's worth, to try it out I just stuck a shot of yours truly plus a friend (who will remain nameless) into it. The result was the bot assuming I'm two years younger than my true age and my friend is estimated at six years older than his reality.

To be honest, both those results look spot on to me. Smart machine. Go try it

And let's see what Nyrstar thinks of the present situation in Guerrero State, Mexico

Belgium's Nyrstar owns the Campo Morado mine in Guerrero, which was put on care&maintenance late last year due to the troubles in the State. Here's the latest, from the company's Q1 conference call this week:

Guerrero has seen an upsurge in violence linked to drug cartels in recent months, including kidnappings of workers from Torex Gold's US$800mn Limon-Guajes gold project and Goldcorp's Los Filos mine. Three of four abducted Goldcorp workers were found dead.
"Continued security issues in the state of Guerrero prevent the resumption of operations at Campo Morado," Galassini told Nyrstar's Q1 earnings call.
"We're working with the government, the community and regulatory agencies to seek a resolution to the problems. Like many others we're finding this to be a very complex issue and that it's not likely to be resolved in the near term."
The mine will restart when site and community issues are resolved and when operations can be conducted in a secure environment, he added.

Kinda perhaps maybe you should be listening to the people who have tried hard to run mines in Guerrero and have given up, rather than those hopeful souls building mines and trying to pretend everything's fine there. 

The latest Torex (TXG.to) political risk news from Guerrero

What if I told you...


That a foreign national was murdered in Guerrero State this week, shot to death by a gang of assassins while visiting a car wash?

That he has been identified as a professional engineer and "an associate" of Torex Gold (TXG.to) at its Media Luna mine in Guerrero?

That the car wash in question is owned by one of the leaders of the same gang that was behind the recent kidnapping event at the Media Luna mine?

That Torex has already told the local media that the man in question "is not a worker or a contractor" at the mine.

The conspiracy theorist's guide to the gold price in 2015

There are basically three phases:



1) The most important, is that THEY want to keep the gold price in a narrow trading range. The $40/oz fluctuation in this bracket is only 3.33% of the median $1.2k, which makes gold rather boring and uninteresting to our casino world of thrusting players and jocks.

2) This is the moment THEY lost control for a couple of weeks, probably due to the nerves around the Swiss Franc's potential loss of reserve status and the collapse of the Euro that sent Old Continent squillionaires running for whatever cover they could find. However, after some intervention and collusion from the Chinese Powers That Be (who want to keep gold low so they can clean up), the price was dragged back to heel.

3) This was when El Salvador announced its  intention to sell its 5.4 tonnes of physical gold to the world, to which the PTB said "Sure! Sell us your gold!" and dropped the price to earn themselves that little bit extra. When Sanchez Ceren was done, the New Normal was re-established by THEM.

It's really quite simple. Zerohedge needs to up its game.

If you want to know who took up the First Majestic (AG) (FR.to) $30m bought deal...

...BMO took $11.4m of it and then John Thiessen's Vertex One took $15m of it. Then a couple of others picked up the remnant bits and pieces. Evidence here.

In the case of BMO, as they were the runners, this was a bought deal and the open market price has sunk under the $6.50, you kind of get the feeling they may be holding a bit of a bag here.

4/29/15

The Timmins (TMM.to) (TGD) Newstrike (NES.v) merger is approved

It's one of those late night NR days. Here's the linko:

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Apr 29, 2015) - Newstrike Capital Inc. (TSX VENTURE:NES) ("Newstrike" or the "Company") advises that the previously announced plan of arrangement (the "Arrangement") involving Newstrike and Timmins Gold Corp. ("Timmins") has been approved by the shareholders of Newstrike. 
Newstrike held a special meeting of shareholders (the "Newstrike Meeting") earlier today at which 98.81% of the shares represented at the Newstrike Meeting voted in favour of the Arrangement and 98.52% of the shares represented at the Newstrike Meeting excluding the shares held by the Newstrike Major Shareholders, as defined in the joint information circular of Newstrike and Timmins dated March 23, 2015, voted in favour of the Arrangement. Timmins held its annual and special meeting of shareholders earlier today at which Timmins' shareholders also voted in favour of the Arrangement. On closing of the Arrangement, all of the issued and outstanding common shares of Newstrike will be exchanged on the basis of 0.9 of a Timmins common share and C$0.0001 in cash per Newstrike common share and existing Timmins and Newstrike shareholders will own approximately 64% and 37% of the combined company, respectively. 
Newstrike expects to seek a final order approving the Arrangement from the Supreme Court of British Columbia on May 1, 2015.

Stupid, thy name is entrenched mining management.

Tonight's news from Canyon Copper (CNC.v), for those who thought the Vancouver scumbag junior management rip-off was dead

You have to search a bit to find tonight's NR from Canyon Copper (CNV.v), it's not even on the company website, but the news is here:
Vancouver, British Columbia--(Newsfile Corp. - April 29, 2015) - Canyon Copper Corp. ("Canyon") (TSXV: CNC) announces that it has entered into a loan agreement with Ainsworth Jenkins Holdings Inc., a company controlled by Benjamin Ainsworth, the President and CEO of Canyon, (the "Lender") whereby the Lender has agreed to loan Canyon CAD $250,000 (the "Loan") for a period of one year at an interest rate of 10% per annum. 
As additional consideration of the loan, Canyon has agreed to issue 500,000 common shares ("Bonus Shares") to the Lender. 
The loan agreement and the Bonus Shares are subject to the acceptance of the TSX Venture Exchange. 
The Loan will be used for working capital purposes.
On behalf of the Board of Directors, 

"Benjamin Ainsworth"
CANYON COPPER CORP.

So, the head honcho of the company lends $250k and gets 10% interest on the deal, pretty neat. He also gets 500k bonus shares for his pleasure. But you know what the coolest bit is? The company only has 13.9m shares outstanding! Yup, this joker has just awarded himself 3.6% of the shares out of his own company, free gratis and for nothing, as well as interest on the loan.

UPDATE: And as reader J pointed out in a mail during the wee small hours:
And of course, a goodly portion of Benjamin's loan will be used to pay his salary for another 6 months or so
Correct, sir.

The disintegration of the Colombia peace talks

In "How could any of this be the result of 33 months of talking peace?" Paula Delgado-King today does a good job in analyzing the slow collapse of the peace talks between the government of Colombia and the FARC terrorists. Here's how it starts:
To shouts of “liar” and “get out,” President Santos was loudly jeered and booed by dozens of spectators at a 10-kilometer run April 19 in Bogota to benefit soldiers wounded in combat. The frenzied scene repeated itself when he visited Medellin the next day. 
The outrage was sparked by the April 15 attack by the FARC’s Miller Perdomo Mobile Column in which the FARC brutally killed eleven soldiers and wounded a dozen others, who were part of a military patrol in the south-western province of Cauca. The FARC used grenades, explosives and firearms. FARC Commander alias Pastor Alape, a negotiator in Havana, said the army casualties occurred in a “defensive action.” Meanwhile, President Santos called the attack “deliberate” and ordered the armed forces to resume bombing FARC camps. 
So it is that the fabric of the peace talks in Havana is disintegrating, even more so as facts are made explicit.

A good, balanced piece which shows the predicament faced by Juanma and notes that he's painted himself in a corner. Whole thing here.

A Wednesday musical interlude: Mercedes Sosa; La Maza

When it comes to Latin America music, the voice of Mercedes Sosa is the crown jewel. Peerless, flawless, there is no other like it. It's reduced your humble scribe to a blubbering mess on more than a few occasions. 





In fact scrub that first line: When it comes to Latin America, the voice of Mercedes Sosa is the crown jewel. 

Detour Gold (DGC.to) gets a free pass because Canadians are terrified of its failure

When it comes to sellside brokerage commentary on quarterlies from mining companies

  • There's the trumpeting of good numbers from the rooftops (typical)
  • There's being honest about poor company performances (vanishingly rare)
  • There's lipsticking the pigs (often)
  • And then there's Detour Gold (DGC.to)

Whatever production number it does, however delayed the ramp-up, no matter how poorly the financial quarter comes in compared to estimates and expectations, DGC always but always gets a free pass from the brokerages who scramble to find the silver lining in any given quarterly and then stick it front and centre in their write-up. This time around it's "Yeah we know that A, B, C, D, E and F weren't great, but look at that wonderful March throughput everybody!" Fappity fap fap fap. 

And the only thing they'll ever say about the balance sheet is that "it's improving", which it might be on a drop-in-a-bucket level but it's the real story here, the elephant in the room: The whole of the Canadian mining sector is staring at that half billion 2017 convertible debt repayment and shitting itself. So their lapdog anal ysts stare quietly at the number in the comfort of their own cubicles but daren't ever mention it, even though the clock has started to tick more loudly. 



Coastal Gold's (COD.v) unbiased opinion

From today's NR:

In light of the Revised Sulliden Offer, the special committee (the "Special Committee") of the board of directors of the Corporation (the "Board") has reviewed the Revised Sulliden Offer and the unsolicited offer (the "FMF Offer") received from First Mining Finance Corp. ("FMF") on April 27, 2015 and, after consulting with its independent financial and legal advisors, has unanimously determined that they don't give a shit about their own shareholders and want to continue with the Forbes & Manhattan self-serving offer so they're just going to ignore the FMF offer la la la I can't hear you and is going to pretend that an 8c offer the FMF Offer is not a "Superior Proposal" to the 5c offer recently entered into between the Corporation and Sulliden.

Look, okay, admitted, that's not exactly what's written in the NR, bit of poetic licence and all that. But hey, close enough. We round off with the standard reminder of places where you shouldn't do business in mining: Afghanistan, Khazakhstan, Bhartistan.

Teranga (TGZ.to) (TGZ.ax) and Lake Shore (LSG.to) (LSG) earnings

Both very good.

TGZ here and the story is simple. 1) Better than expected earnings, mainly due to more gold sold than produced, plus $1217/oz avg received price for gold which was better than the industry average for the quarter and  helped. Then 2) , a very good costs number. North of $50m COGS wouldn't have surprised at all, in the end it came in at just over $48m. 

LSG here and this one was flagged up by the strong production numbers already known, but it's never a given to get a good top line to a good bottom line. LSG did that, the guidance for the rest of the year is solid and conservative, plus the optimism from the company about 144 is palpable.

If the gold price behaves today both these deserve to rally. However, recall that both USA GDP Q1 and then Ms. Yellen and her happy bunch of helpers are on deck today. 


4/28/15

Considered commentary on this evening's quarterly numbers from Detour, Yamana and Capstone

I think this covers it succinctly:



I mean, they make Barrick's look good. Seriously.

True Gold (TGM.v) 4q14 financials

In the 4q14 NR just out, True Gold (TGM.v) says it's going to be a bit late in getting its mine constructed and running, what with the locals being slightly miffed and breaking its stuff:
"At the time of the shutdown, Karma was ahead of schedule and under budget. Once activities resume at Karma, the Company expects it will be in a position to pour first gold within 10 months. Accordingly, the Company has amended its previous guidance, which forecast Karma to enter production before the end of 2015."
Then if we check the bullet points of the MD&A, TGM says everything's a go by 1q16.
"True Gold’s Board of Directors approved a construction decision with a target of commercial operations by Q1 2016."
Hmmmm...wonder why they're insisting on that timeline, what with things likely to be unstable until the new national elections in October?....hmmm...I dun..ah wait! What's this from note 14 of the Reg F about the repayment terms of the gold stream deal?
 "True Gold is obligated to deliver 100,000 ounces of gold over five years (the “Delivery Period”). During the Delivery Period, which starts on March 31, 2016, True Gold shall deliver to the Syndicate an aggregate of 20,000 ounces of gold each year."
Ah yeah, that'll be it.

Bottom line: IKN smells junior miner BS from several thousand kilometres distance and says there will be no commercial production at Karma in 2016. Any takers on that bet?

The death sentence...

...is the single most barbaric thing that human beings still do to one another. No matter what reason, country, race or religion. It shows us as the animals we are.


UPDATE: Congratulations, another eight dead human beings and of course, the finishing touch: "...after the executions, prayers were said for each person according to their respective religion." The continuing triumph of limbic over neocortex. We're so smart.

More Guatemala

A very interesting Spanish language video.



After spending the morning on this and other reading material re Guat, then considering the way in which the whole corruption scandal is being ignored (almost certainly willfully) by media both inside and outside the country, the one word that keeps floating back to my mind is "tinderbox". More about the video and Dionisio Gutiérrez here.

Consider this post due warning and don't say IKN didn't try to tell you later on. Oh, and enjoy the country's Presidential election year.

Mining code changes in Burkina Faso

Here's an interesting report on the subject. You get the strong sensation that mining companies aren't going to have it as easy now as in the previous corrupt regime.

More junior mining incest: Starcore (SAM.to) snuggles up Cortez (CUT.v)

These two companies have plenty of directors in common and the smaller one (CUT.v) is out of cash, so we are presented with another consolidation move this morning:
VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 28, 2015) - Starcore International Mines Ltd. ("Starcore" or the "Company") (SAM.TO) is pleased to announce the signing of a letter of intent with Cortez Gold Corp. ("Cortez") (TSX VENTURE:CUT) (the "LOI") that would see Starcore acquire all of the outstanding securities of CUT in an all-share transaction (the "Transaction") to be completed pursuant to a court approved Plan of Arrangement under the Business Corporations Act (British Columbia). Under the terms of the planned acquisition, each CUT shareholder would receive three Starcore common shares for every one CUT common share held. 
Cortez owns the Altiplano gold and silver processing plant in Matehuala, Mexico.

Whole thing here. This is the third (count 'em up) M&A move made by SAM.to recently. Beginning to see any trends appear, kind reader?

4/27/15

First Mining Finance (FF.v) makes a move

And it's on Coastal Gold (COD.v), owner of one of my favourite ticker symbols and a lump of Newfoundland with gold in it.

TORONTO, ONTARIO--(Marketwired - April 27, 2015) - COASTAL GOLD CORP. (TSX VENTURE:COD)(FRANKFURT:CY41) ("Coastal Gold" or the "Corporation") announces that it has received an unsolicited offer (the "FMF Offer") from First Mining Finance Corp. ("FMF") (TSX VENTURE:FF) to acquire all of the outstanding common shares of Coastal Gold (the "Coastal Gold Common Shares") for 0.122 common shares in the capital of FMF for each Coastal Gold Common Share by way of a plan of arrangement under the Business Corporations Act (Ontario) (the "ProposedTransaction").

Whole thing here

COD.v is has a deal in the pipeline with Sulliden Mining Capital (SMC.to) (don't do deals in Afghanistan, Kazakhstan or Bhartistan) that values it at a ticket price of $4.06m. If we take FF.v's 41c close tonight as the benchmark, this deal values COD.v at nearly 8.5m. That's a big jump.

PS: The interesting thing here is Bill Pearson of COD.v, one of Stan's cronies. Wonder how he's going to explain to the world that an offer double that of SMC's is not as good as Bharti's incestuous relations.

Barrick (ABX) reports its 1q15, IKN has its own angle

"In order to be successful, one must project 
an image of success at all times."
Buddy Kane, American Beauty, 1999


This evening Barrick (ABX) reported its 1q15 and the mining anal yst world is currently poring over all the numbers (fwiw ABX missed by a bit but it's merely a mediocre quarter, not outright bad this time). You're bound to get the results cut and sliced in a dozen different ways over the next 24 hours by every single house imaginable so rather than beat on the same boring cookie-cutter drum, this humble corner of cyberspace has decided to highlight something that was blaringly conspicuous by its absence this time around:



Seems like that nice Buddy Kane John Thornton doesn't like talking about the (white) elephant in the room any more, not like that Mister Jamie did.  Complete mystery as to why that might be.

Guatemala lives in interesting times

This report is a reasonable English language round-up of the weekend in Guatemala, as thousands of people demanded the resgination of the country's President and Veep. Those of you exposed to Guat pol risk should be on this issue.

Gold and the FOMC: start the dance

A very interesting start to the week. Dollar flat, oil flat and gold...


...doing this. Miners leading the metal, too. That's not supposed to happen before Janet & Co pronounce.

And now for your aural entertainment, IKN presents No Good (Start The Dance) by The Prodigy. 

Mining executive deaths in Mongolia (from IKN311)

Here's a short piece from yesterday's Weekly, IKN311

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Mining executive deaths in Mongolia
The news that Khan Resources Chair Jim Doak had died while on a business trip to Mongolia was another in the line of death news out of the Canada mining industry last week (22) but as A. Reader with a memory pointed out, it's not the first time a Canadian mining executive has met their fate while in that country. Mr. Doak was in Mongolia to demand from its government the payment due to Khan Resources  after it won international tribunal proceedings against the state. Here's how the Globe & Mail put it:

Khan had been engaged in a prolonged legal battle with the Mongolian government over a uranium project. Last month, an international arbitration panel ruled that the government should compensate the company for cancelling uranium licenses in 2009 and expropriating property where Khan had planned to develop a mine. The company said the compensation award, plus interest, totalled $103.8-million (U.S.) as of the end of March.
Company officials, including Mr. Doak, held talks this week with government representatives in Ulan Bator. During those talks, the company demanded full payment of the award and vowed to take enforcement action.

It's interesting (I think that's the word) to compare the untimely death of Mr. Doak to a case in 1999, when one Armand Beaudoin died of an apparent heart attack while in Ulan Bataar, Mongolia (23) (24) (25). The mining prospector, mover and shaker Beaudoin was in dispute with the government of Mongolia over a resource deal. According to an anecdotal (though wholly reliable) report supplied to your author last week, once dead of the heart attack Beaudoin's body was dragged out of his accommodation and into a open courtyard by police.

Any resemblance to the fate of Jim Doak, also in Mongolia at the time of his death after looking in good health on BNN TV just a couple of weeks before flying out there, also dead from a suspected heart attack in his hotel room and also while in dispute with the government of Mongolia over a resource deal...well, it's purely coincidental.

However fair is fair and there are differences as well. On checking up, Beaudoin was described to your author as "shady" by more than one person and was apparently mixed up in the Bre-X scandal in the 1990s before coming totally unstuck in Mongolia at the end of that decade. Meanwhile, the recently deceased Mr. Doak had a far better personal reputation in the industry but was also considered a fearless voice and unafraid to ruffle sector feathers. His naked body wasn't put on by public display last week, either. Small mercies.


The Oyu Tolgoi copper deposit, now on the way to being a fully fledged mine, shows the exceptional geological potential of Mongolia and there are many other examples, with gold, uranium and coal deposits being particularly attractive. Miners have been queuing up to do business here since the laws were changed to allow in FDI in 1997, but stop-start resource nationalism moves (sometimes very heavy handed (26)) and near-legendary levels of institutional corruption have remained in place, leaving Mongolia with a Wild West reputation to this day. Those companies betting their future on this country are in a higher risk bracket than most. 


Serious CUM talk

Copper Mountain (CUM.to) just gave us another set of sticky, messy numbers with a net loss so bad you feel like grabbing a tissue and wiping your hands clean after handling the financials.

But its problem isn't the nasty bottom line losses, the problem is its pathetic operating margins.




What CUM has is a crapload of financial debt that it took out with a bunch of Japanese banks and that happens to be in US Dollars. What with the Loonie going South bigtime against the Greenback recently, the amounts owed on that US Dollar debt suddenly balloons in Canadian Dollar terms and CUM.to (which for its own stupid reasons has decided to keep on reporting in Loonies) has to adjust that on the P+L. Hence it registers a small operating profit and a big net loss.

But the worry is that this perenially underperforming company isn't showing better operating margins. Costs keep eating into too much of that revenues number and we should be seeing better margins from a company that pays in Loonies but sells its wares in USD.

The debt on the CUM books is heavy, but most of it doesn't come due until the next decade and the next two years are very light in repayments. The company has financial time and isn't going to feel a cash crunch, but it's been a poor operator for way too long and its management team has to come under deserved scrutiny one of these days, you can't get a pass like this forever.

If I were Mitsu, I'd look for the moment to buy these jokers out and then put in a team that can actually run this company. One thing's for sure, if copper rebounds the Loonie will go with it and you'll suddenly see eyepopping net profits coming from this one. If they ever get those shitty costs under control, anyway.





4/26/15

The IKN Weekly, out now




IKN311 has just been sent to subscribers. 13,600 words on 28 pages. Grab that land.

A Sunday serenade: Paco de Lucia; Monasterio De Sal

My current office music jag is Paco de Lucía and this one...well, it's jaw-dropping musical instrument playing. Look around, there's nobody else on the stage. Nobody there playing the basslines, just him.



Amazing.

The 2015 Social Progress Index

The idea behind the Social Progress Index is that the traditional ways of measuring country progress, such as GDP, don't capture everything that a country might do (or not do) to improve the lives of its citizens (read more on that here). The 2015 version was published the month of April, you can find it on this link and here's a chart that shows how the LatAm/Carib countries on the 133 name roster have scored:



Uruguay and Chile regularly top these surveys when it comes to the LatAm region, so no surprises there. Costa Rica has that happy thing going on, Argentina scores higher than on straight GDP measurements (due to the amount of State coverage for its citizens, perhaps) and the LatAm average score is 67.64, so all countries from Mexico onwards fall below the line.