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8/29/15

Peru: The Juliaca airport heist

An impressive robbery last night in the city of Juliaca in Peru. A band of thieves entered the city's airport, set off a tear gas canister to waylay guards, then broke into an armoured car and in a matter of minutes made off with an estimated U$1m in USA cash, 9m Peruvian Nuevos Soles in cash (U$2.75m) and 120kg of gold worth around U$4.3m. 

The top three most visited IKN posts this week are...

...in reverse order:


Second Place: "Minera IRL (IRL.to) (MIRL.L) Redux (from IKN328)", which was the best thing on the again reduced-service blog this week.

First Place: "And i wudda gotten away with it too if it weren't for you pesky kids and that dawg". which beat out the second place post by a whisker and announced the departure of Mr. Hodges from Minera IRL after he received 91% of shareholder votes against him. It also got a lot of mails from Peruvian readers asking what the title line meant. Ahh that 70s pop culture, what would we do without it?


8/28/15

Minera IRL (MIRL.L) (IRL.to): Daryl Hodges goes the dirty tricks route

Here's an interesting development. Your humble scribe received a phone call this afternoon from Diego Benavides concerning the next move we can expect from the now ex-Exec Chair of Minera IRL (IRL.to) (MIRL.L), Daryl Hodges. 

Despite being voted down by shareholders to the tune of 91%+ on Thursday morning, this snake in the grass doesn't seem to have got the message yet and is still trying to get his grubby hands on the jewel that is Ollachea. To that end, as from next week (says Diego Benavides, who's a man that's definitely lost his slot on Hodges's Christmas card list) we can expect the Hodges crew to do a couple of things.

1) Jaime Pinto, Hodges' new lackey and front man on the board, will be nominated to run the company. For the record, Pinto flew to Toronto this Friday afternoon to meet with Hodges and his band of scum (maybe in The Pilot bar...hey you never know right?). In this way they plan to continue to control the company, but pretend it's being headed up by a Peruvian with everybody's best interests at heart (which is a joke, all they want to do is get all the baubles for themselves).

2) Hodges and his stooges have decided to go the dirty tricks route by coming out with a whole bunch of allegations against Diego Benavides, in order to besmirch his good name and try to turn public opinion (particularly that of the Ollachea community) against him. I asked Benavides for details of the allegations and although he told me he knows exactly what they're going to charge him with he wouldn't divulge the information. However, he did make it 100% clear that everything they're going to accuse him of is absolutely false. 

When the news hits next week, don't say you weren't warned.

It's important that copper moved up...

...because the gold/copper ratio was getting to such an extreme point that it would crimp the upside potential of gold when the rally begins.

And the gold rally is about to begin. So get positioned.

Chez IKN it's been a long week and business has kept me away from this humble corner of cyberspace. Normal service was due to return a couple of days ago, but with a little luck things will finally get back to normal next week. Whatever the devil 'normal' means.

8/27/15

A Flash update...

...has just been sent to subscribers. A quick comment on the IRL news, the main report and analysis will be in IKN329, out this weekend.

And i wudda gotten away with it too if it weren't for you pesky kids and that dawg

Daryl Hodges this morning failed to be ratified as a director of Minera IRL. Shareholders have voted him out by majority.


8/26/15

Minera IRL (IRL.to) (MIRL.L): The liar Daryl Hodges tries the Shiny Bead technique on the locals of Ollachea

What follows is the letter sent by Minera IRL executive chair Daryl Hodges to the president of the Ollachea community. In it we see how the two-faced liar Hodges has suddenly changed his tune, realizes just how his plan to screw everyone is falling apart and is now trying to butter up the community with such choice phrases as "I give my word". Bless his heart. This from the person who screwed Tyler Resources, screwed Jennings Capital, siphoned off undeserved bonus payments into his own back pocket and deliberately ignored the express wishes of the community in order to remove the only serious threat to his coup d'etat on the company. His word...incredible.

What the following letter amounts to is another attempt by a gringo to buy off what he thinks are ignorant locals with a few shiny beads. Big big big mistake you motherfu0ker, the people in Ollachea have more integrity in their little toenails than you and your band of thieves have combined. The people of Ollachea are already laughing out loud at your stupidity and by way of fair warning, I'd strongly, but strongly suggest that if they offer you a one-on-one meeting at the town itself, with none of your team allowed to accompany you, that you don't take them up on the offer.

Anyway, here's the letter he sent which arrived and was registered received tonight August 26th at 6:15 local time, just over two hours ago. By the way, the letter was delivered to Señor Valeriano by one of the company geologists, who also just happens to be the brother-in-law of IRL's VP Exploration. Y'know, what with the company's new high directive so keen about the potential for nepotism.

Oh yeah, final thing: That's the real e-mail address Hodges left at the bottom of his letter. Just in case anybody out there fancies sending him a mail and telling him what they think of his leadership qualities.




xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx




Lima August 25th 2015

Señor Juan Luis Valeriano Gutierrez,
President of the Rural Community of Ollachea, directors and population in general

It’s a  pleasure to contact you and all the population of Ollachea. This letter is intended to reiterate my desire and commitment to continue working with you and maintaining a good relationship between company and community, in which I make clear that the new directors (of Minera IRL will respect the social commitments that the company has with the community.

I have seen that since August 14th there has been totally erroneous information published in several publications that does not reflect reality or regarding the intentions we have as a company with the community of Ollachea. At the same time, many of the publications have stated that I lacked respect, which is not part of my character and something I would never do.

Any change can at times generate certain fears, but I give my word that it won’t be this way, this change will improve both the company and the community.

Myself as representative of the company have the greatest will to continue a harmonious Company/Community relationship, working closely with you in a direct way to assure that the both present and future commitments we assumed are complied with, which reflect in positive changes for the community.

I hope to co-ordinate  meeting with you at which we can converse openly in order to get to know you and listen in order to reach a joint agreement, to be able to talk calmly and in detail about all issues that are of interest to you, so that you can get to know me as a person and a professional, my ethics, my transparency and my great interest in beginning to work with you as the highest ranking executive representative of the Minera IRL company, where both community and company will win with the Ollachea project.

I look forward to your reply so that we may meet soon. Please communicate with me via the e-mail address below.

Sincerely

Daryl Hodges

dhodgesminera@gmail.com

PS: Here's the original, so that you bilinguals out there can decide whether my translation is fair (hint: it is):


Updating the gold/silver ratio

Your humble scribe has been a very busy boy today, but if only to mark the day here's the updated gold/silver ratio:


That's my idea of the biggest tell in the near-term market, right here. Now that the pressure of options expiry is out the way, let's see what happens tomorrow.

8/25/15

On the road


Your humble scribe is out and about until late Thursday, so posting may be light until then. I'll leave you with this. Because it's unspeakably beautiful.




Futures up

Looks like your humble scribe did buy on the right day yesterday after all. All purchases in the five stocks outlined in IKN 328 on Sunday, subbers.

Just lucky timing I guess.

PS: Oilpatch watcher Setty makes a point about the gold/oil ratio and what it might mean for the gold mining stocks in his latest post, here.

PPS: Regular mailer DW just wrote in to ask about this call in the "Ten IKN random predictions for 2015" dated December 29th 2014:
1) Gold to trend up gradually, with a rough U$1,400/oz target for some time at the end of the year. For sure with the normal wobbly stuff along the way and I wouldn't bat an eyelid to see it go under U$1,100/oz again at some point or other, but talk of its utter demise (South of 1k) strikes this author as plain silly talk from people who don't get the sector.
His main question (excerpted) was...

"...but do you honestly think gold still has a chance of reaching $1400..(?)"

...and as I'm fiddling around with PS's on this short post, let's do it here. (Humble scribe's note: Ladling on the congrats and doing the general ego-massage is a good way to get me to answer the thing that matters, DW isn't stupid and I'm pathetic like that).

Honestly DW, I'm happy about the rest of that forecast (yes, the "only spike under $1.1k" has worked out) but think that these days $1.4k is too far to reach and my forecast will fail. I think there is upside in gold, U$1,200/oz year-end is eminently gettable and if you want a real stretch, I'd give U$1,300/oz an outsider's chance. However (and there's always a mitigating factor) I still think the decent end of the producing gold miner sectors are good buys right now because revenues from sales are only half the story. Costs are the other and they're dropping for the operators. That means margins are beginning to grow again and the better quality stocks in the gold sector, the ones that have 1) strong/reasonable balance sheet positions and 2) have done the heavy lifting in the hard times so that now they're mean lean profitable machines, are cheap and ready for their upmoves.

So there you go.

According to my inbox, you want more opinion on Daryl Hodges of Minera IRL (MIRL.L( (IRL.to)...

...but seriously folks, if you haven't understood that my opinion is that he's a liar and a thief by reading articles such as this one and this one in the last couple weeks, what's the point here?

There will be more and there's a lot more to uncover about this most unsavoury of characters, but to give you just an idea, consider how he frames himself as the saviour of the freakin' world in the Mine Site article out yesterday (which is, by the way, sponsored and paid for by Minera IRL so if you think that's journalism take another toke of your doobie) and how we get the all-innocent "oh we don't know why the community is upset" stupidity from the lips of this abject liar, e.g "...all this seems to have rubbed the community up the wrong way. Precisely how still isn’t clear." Then compare it to the very clear and precise message given directly to Hodges by the community of Ollachea.

Playing dumb is part of the act chez Hodges. 

If you choose to believe that a company which worked for eight years to get community agreements and financing for its project (the latter over 18 months and unconnected to Hodges until the very end, when he strolled in signed the paper and picked up $100,000 cash bonus for doing basically nothing) and succeeded on all fronts under very difficult circumstances is the one that's badly organized, but the person who within six months has ruined everything is the one that's going to save IRL, I have a bridge to sell you. 

The day Hodges is thrown in jail for what he's done in Peru will be a fine day for the mining sector.

8/24/15

The Copper Mountain (CUM.to) Corporate Song & Video

This is not a joke. This is the real Copper Mountain Corporate Song (and Video), entitled "Anything Is Possible" that Copper Mountain (CUM.to) released onto an unsuspecting world on June 18th this year. Find it on the company website right here if you don't believe me.


Choice lyrics include:
"Anything is possible at the Copper Mountain Mine 
Where the impossible gets done every time" 

"Against all odds we make copper from ore 
While the ball mills roll our Japanese friends need more"
And my personal favourite:
"The wise investor knows when it's time to hold on"
Which compares to this chart, that runs from the date the song came out to tonight:


How much did they spend on this Grammy award winner?

IKN sends kind thanks to reader 'JS' for the headsup on this one.


The pressure's off gold producers

I was sticking in the data from the June production month numbers for mining in Peru (thanks to the MEM website...by the way Toromocho doing well) and updating charts, when the combo of these three below got me thinking about wider things. Not just Peru.

We see that since 2010, gold production in Peru has steadily dropped in the country:



But there was a big surge in revenues from the highs in gold prices, which reverted once the big drop happened in early 2013:


But this also shows how there was a big surge in Year-Over-Year revenues, then a corresponding drop, and now things have basically flattened out:


As as I stared at that last one, then considered that the costs inputs in US Dollar terms for gold miners have dropped significantly in the last year and a half (and very much so this year, oil and forex leading the charge), it began to dawn on me that the worst really is over for the producing gold miner sector of the industry. Unless you're talking about a stock saddled with heavy debt that sucks away all free cash flow from ops, the relative neutrality of revenues over (nearly) the last year suggests that if your gold miner hasn't gone to the wall already, it's not going to.

McEwen Mining (MUX) at the opening bell is the tell

I've just watched MUX open 15% down. Crazy. It's a gold producer. You seen gold today? In the last week? 

Today, ladies and gentlemen, is your long-awaited capitulation day, when the only people selling are 1) those forced to sell (margin-called, fund desks etc) and 2) idiots.

UPDATE: I grant Rick Rule plenty of kudos today. His timing may not be the best and he may have deployed cash too early, but I've watched carefully his strategic reading of the market and his thesis on a move to capitulation, in 2014 and 2015. What we've seen in August fits exactly into his playbook.

UPDATE 2 early afternoon: For a day in which, according to them there experts at least, I was supposed to be looking on at the death of western civilization and all equities amen, there's a fairly decent smattering of green on the screen now. And yeah, I did my pre-announced bits of buying earlier. Just sayin'.

UPDATE 3 at the close: Hah! Spoke too soon. I've never been good at micro-reading these volatile days.

Breaking: Anglo sells Mantoverde and Mantos Blancos to Audley for U$500m


It's just been confirmed that Anglo American has sold its two assets to Audley (who beat out Mick Davis's X2 for the deal). The deal is U$300m in cash up front, the other U$200m down the line when certain conditions are met.

Chart of the day is...

...five years of the Gold/Silver Ratio (GSR):



And that's where we are right now folks, 77.58X, with gold hanging tough and silver doing what normal commods do under these circumstances.

UPDATE at opening bell Monday: The GSR just went through 79X.


Minera IRL (IRL.to) (MIRL.L): Now here's an interesting news release

Out four minutes ago, link here:

LIMA, PERU--(Marketwired - Aug 24, 2015) - Minera IRL Limited ("Minera IRL" or the "Company") (IRL.TO)(MIRL.L)(MIRL.L) announces that the Board has unanimously voted to remove Diego Benavides from the position of Interim CEO of Minera IRL. 
The Company is also investigating allegations of impropriety received through its recently implemented and independently managed Whistleblower hotline. The investigation will be overseen by the Company's independent members of the board, Doug Jones and Robin Fryer. Additional detail will be provided as it becomes available. 
About Minera IRL Limited






Minera IRL (IRL.to) (MIRL.L) Redux (from IKN328)

This is part of IKN328, out this weekend. I mentioned in the Weekly that it would make the open blog and here it is.


Minera IRL (IRL.to) (MIRL.L) Redux

Between the acting of a dreadful thing
and the first motion, all the interim is
Like a phantasma, or a hideous dream.
The genius and the mortal instruments
Are then in council, and the state of a man,
Like to a little kingdom, suffers then
the nature of an insurrection.
Julius Caesar, Act 2, Sc1, LL65-71

I've had a whole stack of feedback, comments and reaction from the coverage of Minera IRL (MIRL.L) (IRL.to) in last week's edition of The IKN Weekly and on the open IKN blog. What this note today does is collate that feedback and pass on the important stuff. This isn't going to be the carefully constructed narrative like last week, more a coming together of notes. Some things are connected, others are outliers, but it's all about the situation at Minera IRL with an emphasis on the situation of its executive chair, Daryl Hodges.

I've now heard way more than enough evidence, anecdotal or otherwise, to underscore just how poisonous the presence of Daryl Hodges in any company is, let alone in IRL. It's not an understatement to say he's despised by those who have worked with him in other places and those with the misfortune of working with him now. The somehow insular nature of junior mining and its related capital markets means that in normal circumstances it's not easy for me to get people to blow the whistle on others working at any given company, with the typical scenario at IKN being someone, a single person or perhaps two, coming forward with information about one of mining's negative characters. Not so with Daryl Hodges, I've had a host of people coming to me with unsolicited mails and it's all of the same ilk. Many are simple "congrats/thanks on shining the light on him" and are greatly appreciated, several others have come forward with new information about Hodges and his modus operandi. All those sources are off-record for today's piece, but I will say that the information that's made it to these pages either comes from reliable places or it's come from people whose information has checked out.

I've chopped the notes into three rough categories for what follows, which are:

·     Hodges today at Minera IRL
·     Hodges previously at Jennings Capital
·     The upcoming AGM

Hodges today at Minera IRL: Here are a few pearls to give you an idea of what Hodges has been up to while running IRL.

Via the contract he drew up for himself when taking over as Exec Chair at IRL he claimed a $100,000 bonus for closing the COFIDE financing deal when in fact he had virtually nothing to do with the deal which was already in place before he took over. All the work had already been done by Courtney Chamberlain (QEPD) and Diego Benavides, but Hodges walked in on the last minute, signed the papers at the bottom and made off with $100,000 in cash of the money from COFIDE.

Internally, several IRL technical staff have raised serious doubts in the way the tender for the upcoming (now postponed) drilling program at Ollachea was conducted. Over the complaints of its technical team, Hodges selected a drill company that was offering far inferior service for a lot higher billing than others who applied for the contract.

He's recently spent U$33,000 of IRL money on a feature in a UK based business magazine, which turned out to be no more or less than a personal puff-piece. Thirty-three thousand (!!)…and here's me giving him space on IKN for free :-).

There was a fascinating little episode in the IRL offices a couple of weeks ago, one that demonstrates once again the total lack of understanding that Hodges has about working in a mining company in Peru. What happens is the Ministry of the Interior will come around to companies in Lima with foreign nationals working in them and "ask nicely" for a "small donation" to this-or-that charity, or perhaps a donation that helps fund their Christmas party, or perhaps they give the office a chance to purchase one of their newly printed 2016 calendars. Look people, life is like this in Peru, it's not bribery by any shape or measure but it is the type of "social lubricant" that makes things work smoothly and without frets. However, when one such moment came up the other day while Hodges was present, he refused to buy or donate and sent the Interior Ministry people on their way, claiming it wasn't ethical for the company to do such things. We can debate that point if you like, but the consequence of Hodges' decision is far more interesting. Just a couple of days later, the Lima head office got a visit from Interpol who asked to see the work visas of the foreign nationals at the company, people such as the new COO Eric Olson who was there that day. But of course, all the new foreigners there had got into the country on the free and easy 90 day vacationers stamp and not bothered to pay money and spend time doing their entry visas correctly. The result: the new COO and a couple of other individuals were obliged to leave the country that same day and can't get back into Peru. Or in other words, because of Hodges' utter tone-deafness on how to do business in Peru (not to mention that he speaks no Spanish at all), not only is the head of company not allowed to visit its flagship project but the company COO can't even get into the country now!

Unknown to the world and as yet undisclosed even to the other members of the board, Daryl Hodges has nominated a new director to the company. His name is Jaime Pinto, he's been chosen as he's an ally of Hodges (i.e. in cahoots), he won't have to go through the tedious affair of being ratified at the upcoming AGM (according to Hodges at least), he's coming from the Peru-based disaster stock Lupaka Gold, and his plan is that as soon as the AGM is done he'll be added as another lapdog member of the board in order to rubber-stamp any decision Hodges makes. We also note Hodges has already hired Carlos Yrigoyen, ex-Lupaka Gold, to be his country manager. Something else he has yet to disclose to stakeholders or the market.

The press release from the community of Ollachea that deemed Hodges "persona non grata" at the town and the project, the one that made official that the project was paralyzed by the community, was by any measure a new material event for the company. However, Hodges has not passed on the information to the market by way of a material change filing. On this subject, it's worth making 100% clear that the community of Ollachea is not against the Ollachea mining project. As made clear in its correspondence (21) the community is supportive of the mine. Its objection is to Daryl Hodges, no more nor less and once he's removed, things can get back to normal.

Hodges previously at Jennings Capital: On the blog last week (22) I ran some of the background of Hodges's time at Jennings Capital, when he was made CEO and proceeded to run the shop into the ground and get fired. Since that post I've received plenty more. As you'll see, it's very safe to say that Hodges' made himself a whole stack of enemies while there.

One source joined the company from another brokerage just after the time Hodges was made CEO and headed the Toronto shop. He joined as a high-ranking senior member of the new Jennings team and soon realized the new people coming in were of higher quality than those in Jennings at that time. The problem is that Hodges reacted badly to the new levels of quality, as he wanted people that weren't as smart as him, not better. He felt threatened by the new arrivals and quickly went about sabotaging their work. He fired an excellent (according to my source) new head of sales and when he fired the head of equities it resulted in a wrongful dismissal suit that, to the knowledge of my source, is still outstanding today (Mackie having taken over the defunct Jennings when it went under after Hodges's treatment of it).

The trickle of leavers from Jennings became a steady stream, as those with talent didn't want to work under Hodges. When employees who had also bought shares in the privately controlled Jennings left, Hodges bullied them into accepting less than face or market value for their shares, often using Jennings treasury to hire the lawyers at Fasken to help with the bullying bargain-down tactics. And again even today there is one ex-member of Jennings who was a shareholder and has held out for full payment of his shares, the case outstanding under new owners Mackie and dating from Hodges's time. To give an idea of how bad it was, one source flabbergasted me when he said that for a short period there were more shares of Jennings held by people outside the company than in it.

The final straw for my source came when Hodges, who watched all around as the Jennings team made money in the bull market days for the miners, decided to get his cut of their action by imposing a 5% management fee on any deal income into Jennings, all of which went to him. It was at that point the trickle of talent leaving became a river and my source was one of several to leave for better pastures.

In sum and according to a reliable source that's checked out well, Daryl Hodges decimated the Jennings Capital Toronto office, all the best talent left and anyone who opposed him or who was considered a threat to his position was fired. The end came when the Calgary office came in with the Jennings directors and fired him, but by then too much damage had been done to the integrity of the firm and a little while later, what was left was sold for residual value. My source ended his part of the exchange by issuing a warning; that if you are a Minera IRL shareholder and Hodges is left in power at the company, the only way the share price will go is down. In his parting words to me, "Watch out".

The upcoming AGM: Last week I wrote that even if Hodges survives the AGM vote, he'll eventually get shown the door anyway and I still think that's true. The problem is that after collecting an extra week's worth of information on the person it's more than a little worrying to consider what state he'd leave the company if he gets a pass vote at the AGM on Thursday and then has time to wreak the type of havoc he managed to do while at Jennings. So I again ask all shareholders of IRL to get their votes in and make sure they vote wisely on each item on the agenda, as the AGM vote is clearly more important to the well-being of this company than I'd supposed this time last weekend.


The bottom line: We should pay attention to what happens at the AGM this Thursday coming. It has the makings of a critical juncture in the history and future of Minera IRL.


8/23/15

The IKN Weekly, out now


Too many cars recently, but this one is obligatory as the only time I've ridden in a Ferrari 
was as a passenger in a 328 GTS. And yes, it was fun, thanks for asking.

IKN328 has just been sent to subscribers, Here's what's written on the cover letter.
Good Sunday evening, 
Please find attached IKN328. There's a lot in this week's edition, with some of the main content being:
  • I'm either buying or adding to five gold stocks
  • More on the situation at Minera IRL
  • An extended feature on Guatemala politics and political risk
Lots more too, 34 pages and 17,000 words. 
All feedback welcomed.
Best, O


Peru: What could possibly go wrong?

How banks are getting people hooked into unpayable debt in Peru:


My thanks to reader 'T' for sending in the photo.

Usain Bolt is my hero

The end.

Tim's El Salvador Blog on the uptick in violence in the country

Tim has forgotten more than the rest of us know about El Salvador and his considered and thoughtful post on the sudden uptick in violence and murders there (mostly gang warfare plus the police reaction to same) is necessary reading for anyone interested in the subject.