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5/21/16

"Thank you for winning the F.A. Cup for us, Mr van Gaal...

...you're now fired. José Mourinho's getting your job. Have a pleasant day."

The Angry Geologist does IMPACT Silver (IPT.v)

I fleetingly mentioned the eye-catching drill hits just yesterday, as luck would have it T.A.G. has also picked up on the assay numbers but in his case, has put together a superlative post that interprets what IPT.v seems to have found. Check it out, metalhead, right here.

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

...in reverse order:

Third Place: "Mining PRs and the Ottotrans™, Part 94", and one cheer for the good old Ottotrans making the frame. My stars, we're nearly at edition one hundred. I'll buy a cake when we make it, or something. Anyway, this edition was about Lydian (LYD.to) but it didn't stop the stock from putting on 15% from the moment of the NR to the Friday close. WTFDIK anyway?

Second Place: "Dynasty Metals & Mining (DMM.to) 1q16 financials (a.k.a anatomy of a gold mining trainwreck)", in which I did some work for a change and put some charts together to show where this company is headed (hint: Ch11). 

First Place: "CEO.ca and the 'protection racket' model of investor relations". By a nautical mile. And my mailbox strongly suggests there are a lot of people thinking the same things about Tommy Humphreys, the only difference is that IKN says them out loud. The truth may hurt, Tommy, but it's not libel. For further comment, we refer you to the reply given in the case of Arkell v. Pressdram.

Gold bullion holdings in the SPDR Gold Shares ETF (GLD)

Which is of course the biggest gold ETF in the world by quite some way and the industry demand benchmark (like it or not, hardcore bugs):

NB: Please note the cut-down Y-axis
  • It started 2016 at 642.37 metric tonnes.
  • This weekend it holds 869.26 metric tonnes.
  • That's a difference of 226.89 metric tonnes.
Or if you prefer, at this weekend's spot price there's an extra U$9.133Bn worth of gold in the GLD vaults. Not shabby.

5/20/16

The Friday OT: The Chemical Brothers (feat. Beck); Wide Open

It's a good track, one of those that benefits greatly from a good set of speakers. Beck does his job nicely too, but the reason it's the Friday OT this week isn't the music, it's the video (here):



Because it's wonderful, a combo of beauty and "how did they do that?"





Dear Tommy

Dear Tommy,

I've just seen the reply you wrote in your chatroom to the IKN post earlier this week (because somebody just sent me the link). A couple of points to make:

1) If it's libel, sue me. Wait, let me re-phrase that: If it's libel, sue me you fucker. It's really easy to squeal and squeak about "being libelled" before you bother to walk into a courtroom, the problem is that if you step up to the plate and do so you're going to lose because my post contains two things: 1) Facts about you and NXE 2) my opinion of your person. Neither of those are libel. Therefore I invite you to sue me after calling my blog "libellous" because if you do you'll lose (and you either know it or you're ignorant of what libel truly is) and if you don't you're just another blowhard. I'd bet large on the latter.

2) The problem with your list of excuses about NXE is that it doesn't explain why you decided to take a personal level potshot against the CEO of NexGen and his wife. As you have now admitted that you'd already fallen out with the NXE people, that shines a very clear light on you and the way you go about your business. Or were you just drunk when you wrote what you wrote, Tommy?

3) You made factually incorrect statements about me. You'll find out about that the day you sue me. That's what happens when you don't fact-check and just shoot your mouth off.

Yours, "Otto".

The cost of capital...

...is not the same for everyone. For example, if I were a shareholder of IMPACT Silver (IPT.v) this morning...



...I'd be feeling a little miffed about this:

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 20, 2016) - IMPACT Silver Corp. (TSX VENTURE:IPT) ("IMPACT" or the "Corporation") is pleased to announce a brokered private placement (the "Private Placement") of a minimum of $3,000,000 worth of units (each a "Unit"), at a price of $0.57 per Unit (a minimum of 5,263,158 units). Each Unit consists of one common share and one-half of one warrant. continues here

It's also interesting because the last drill hit that came from IPT was a very good one that caught the eye of at least one of my geol pals.

On risk management in metals and mining stocks

The other day in the update to this post I shared a short mail Q&A session with a reader and one of the subjects that came up was Gary Tanashian over that Notes From The Rabbit Hole (NRTRH) and his prowess in risk management of a market, in this case metals and miners.

Since then Gary's really stepped up to the plate by giving us two posts on the subject, the posts being...

These are highly readable and recommended way of spending a few minutes of your reading time this morning if you're serious about stock markets and are adult about the way to participate. For what it's worth, the second one is the better of the two in my opinion and here's an extract to whet your figurative lips:

"But this is not a casino and it is not a game.  These are the financial markets and if you do not have a consistent yet flexible approach, sooner or later you will get killed.  Yet, if you start trying to guess when you may be in the kill zone (i.e. planning to get out at just the right moment) you will either be left out in the cold or you will get sliced and diced by a whipsaw.
"But to survive and thrive over the long run you have got to have a plan, parameters to the plan and the ability to subordinate your ego.  You are not a genius.  Get over it.
"In this business people make up stories about their performance, they make up stories about their stock picking acumen and they make up stories about how they have a secret sauce (e.g. ‘my proprietary momentum indicator’ or ‘my super secret volume/buying pressure indicator’, etc.).
"You are the target.  Sometimes these geniuses will make you rich and sometimes they will make you poor.  It all depends on the environment within which they are plying their wares.  It is up to you dear individual investor trying to float your raft in shark infested waters, to take the ultimate responsibility."


5/19/16

Hudbay (HBM) (HBM.to) at Constancia: Yet another truck carrying concentrate crashes




HudBay (HBM) continues to be the single most irresponsible mining company in Peru

According to the report from Peru's OEFA environmental control bureau today, the truck was carrying 35 tonnes of concentrate, about half was spilled in the crash which directly affected a 250m2 area that includes a high country marshland (often the sources of rivers in the high Andes).

According to news reports on the incident, the Mayor of the local town of Espinar is pressing formal charges against HudBay because both he and his town are fed up with the repeated accidents of trucks crashing out of Constancia.

According to IKN this is the eighth crash of exactly this type since Constancia opened. That included the one in January that got the locals so pissed they blocked the roads in and out of the mine for 72 hours.

The funniest though was just last month, when after a crash on April 16th that was officially reported to OEFA, the HudBay CEO Alan Hair went on Canada's BNN biz TV show and denied that an accident had happened on April 29th, two weeks after the event. Will he dare show his face and lie to the cameras again? Time will tell.

In The IKN Weekly this weekend...

...there's going to be plenty happening. As well as following all the usual stories, I detail a new buy call on an exploration stage gold mining company. Also you'll get to hear the details behind the Regulus Resources (REG.v) news release from yesterday because...



...your author gets his information from the best sources.

Chart of the day is...

...copper, weeklies:



Continues to be far more important than gold because it's going under U$2/lb again and you'd better get used t the idea.

5/18/16

CEO.ca and the 'protection racket' model of investor relations

After this morning's quick post on CEO.ca and the recent "change in attitude" of Frank Giustra lackey Tommy Humphreys towards NexGen Energy (NXE.v), IKN has been contacted by sources close to the story with a most interesting back-story. But before we get to the exposé, please note that your author has no position or opinion about NXE.v or any other Athabasca stock for that matter. I couldn't be more neutral and what's more regulars round here know my negativity towards the whole uranium sector anyway, it's all for somebody else. 

We understand that Tommy Humphreys was a strong supporter and promoter of the NXE.v story on his CEO.ca promo pump hype site. Along with his chat room lackeys, it was one of the stocks he repeatedly put in front of the casual reader's eyes for many weeks and months. However, he didn't have any sort of investor relations or promotion and "sponsored coverage" agreement with the company. Unlike many of the other stocks that pumphouse puts in front of people's eyes that need to pay-to-play, NXE got a freebie, probably because Humphreys was long the stock on the open market and playing a straight pump.

He therefore decided to approach NXE.v and ask them to pay CEO.ca for coverage. For their own reasons NXE decided to decline the offer. And then, all of a sudden, Tommy Humphreys decided that he didn't like the company any longer and started finding excuses to bash the stock at any given opportunity on his website. He also stated that he'd sold some of his shares (which could be 99% of them of course). 

Got that so far:

1) Tommy likes NXE
2) Then Tommy asks NXE for money.
3) Then NXE doesn't give Tommy money.
4) Then suddenly, Tommy doesn't like NXE any more.

All facts but sadly that's only half the story as he's now started making very personal attacks on NXE's officers. This is what he said about NXE CEO Leigh Curyer at CEO.ca on May 14th 2016 (at 9:37pm) during last weekend's Metals Investment Forum:

And that's all he wrote, short'n'sweet no editing by IKN. The image of a Canadian junior CEO doing the "Tony Montana look" (aka Scarface) and surrounding himself with a bevy of women is all very cute, but in fact Leigh Curyer was with his wife, with NXE corp dev manager Travis McPherson, Travis's wife and two friends of one of the wives, because it happened to be her birthday. Understandably, when they found out the CEO was being compared to a cocaine baron and his wife some sort of hanger-on floozy the NXE officers were livid with Tommy Humphreys and according to sources close to the story, they have fallen out with the two-faced rat in no uncertain terms. That's not surprising, as they've finally worked out he's the type of Vancouver scum that will pump your company and then ask for money to keep doing so. 

Or else

It's the classic 'protection racket' business model and as he's already shown, he's not afraid of going way out of the business sphere and running smear campaigns on CEOs to the point where their spouses get hit by the collateral damage if he doesn't get his nasty little way and his grubby hands on your money. So, junior mining company boss, be aware of what you're up against when CEO.ca and Tommy Humphreys come knocking at your door offering "sponsored coverage".

Daniel Sturridge's goal

It's half-time in the Europa League final, it's Liverpool 1 Sevilla 0 and we don't know how the match will finish yet, but let us be crystalline in clarity: If Messi had scored this goal for Barcelona we'd be talking about it for years on end:



If you don't catch how good this is on the first showing, wait til the end of this Youtube and the second replay from behind the goal. World-class goal, period.

By the way , this happened while gold dropped on the "hawkish Fed" news. Just another buying opportunity.

UPDATE: And it took 25 minutes of the second half for Sevilla to score three and liquidate the match. Such is the way of Association Football but it's a great match for neutrals to watch and the Sturridge goal will forever be a peach.

Dynasty Metals & Mining (DMM.to) and high compliments: "I never much liked Otto ... but he has been right all along"

But before we get to the sweet talk, let's see how Dynasty Metals & Mining (DMM.to) has been getting on since the IKN post on Monday evening and your humble scribe's call to get out before it's too late on DMM:


Yup, that well. Another public service broadcast by IKN.

 And now back to the quote in the title, which was written by a poster on this board who is long DMM (thank you A. Reader for the heads-up) and goes on to say this in the next breath...
"I just think there is too much of an asset base in DMM that Rob Washer can work with to pull the company away from the brink of bankruptcy".
...just to prove how mind-numbingly stupid they are. It all gave me the big laughing merry happy ho-ho feeling on reading it this morning, thank you kindly A. Reader. It's the very essence of stupidity in fact, if we consider that in just a few scribbled words:

1) The authors shows that a like/dislike for the messenger is more important than the message. Ad hom rules.
2) They admit fault in their position and note the counterparty to their call "has been right all along" but immediately return to the "yeah but this time is different" land of hope and desires for the near term future. A phenomenon also known in the brokerage circles as "Retail, the crop that never fails".
3) They show zero understanding of balance sheets. It's not up to DMM to pull the company away, all it will take is one of the creditors to call in the monies owed and DMM goes CH11 on you. Immediately. No ifs no buts no "well let's just talk about this first eh...", assuming a serial bullshitter like Robert Washer is going to save you is the hallmark of somebody who should not be investing in mining companies of any sort, shape or form, let alone this walking disaster.

All that in just a line and a half, that's what I call triple-concentrated dumbassery. Still I do rescue the fact that being called unlikable by a complete dumbass is high praise. Ta muchly, Tad.

Mining PRs and the Ottotrans™, Part 94

 

Our occasional series is back, the one in which we take the gobbledygook written by mining companies in their news releases and put it into something we mortals can understand. This time the focus is on Lydian International (LYD.to) and its NR out just a few minutes ago on this pleasant Wednesday morning, but today we're running a variation of the normal series format because...

We only need to put the NR headline through Ottotrans™

...so here we go.

"Lydian Shareholders Overwhelmingly Approve $80 Million Private Placements"

And this is what it means:

"Lydian Shareholders Overwhelmingly Approve the financing deal that snatched away all the blue sky upside from shareholders at its Amulsar project just weeks before the gold miner market turned from bear to bull and handed hundreds of millions of dollars of money that should have gone to the company backers as reward for their patience and loyalty to a bunch of suits who got lucky with timing because the people running LYD are dumbasses and by the time the deal was done the original backers didn't stand a chance of making any meaningful protest because they'd been diluted out."



The only thing you need to know about the mining stocks bull market...

...is right here:



Seller's regret, time and again. 

To roll out for the first time (I think) the little ditty I've been using in The IKN Weekly for the past few weeks here on the blog, it's this easy:

Buy. Hold. Win.

Okay, not quite that easy because you don't want to fall into the grasp of one of the many scam stocks out there, but if you're not savvy about the ins and outs of the mining sector you can just buy the ETFs (GDX, GDXJ) and get that weakness reduced to a minimum. You may miss out on a super-mega-triple exploration company that goes through the roof if you do, but safety is its own reward and in the end, you're probably better off by not paying money to the self-styled experts, blowhards and double-agenda ridden snakes we know as newsletter writers. And yes, I include myself in that definition, beats me why people still pay me money to tell them things on a weekly basis, this market is that plug dumb easy.

So just buy, hold and win. And find something more interesting to do than watching squiggly lines move up and down all day. IKN lifestyle advice complete, have a pleasant Wednesday.

UPDATE: Reader T mails in with this (very slightly edited to brush up and a link added, but really as-is):

"I like the chart you just put up on IKN....nuff said! The hardcore technicians are still waiting for confirmation of the bull market in PM mining shares. I stopped reading Gary T(anashian of Notes From The Rabbit Hole) a few months back.  I know everyone's situation is different but is he still underinvested and waiting for a sizable correction after the run up from Dec/Jan? He did help me keep my port mostly intact during the bear, but aren't the technicians going to be left in the dust during the bull phase, in your humble opinion?"

For what it's worth, here's what I wrote back to reader T:
These are difficult questions (name redacted). I'll say here that I have the greatest respect for Gary Tanashian and his work, he's one of the best in the business. I'll also say that I run my own portfolio and I don't have a clue how under/over he is right now. You'd have to ask him, but I do know he's first and foremost a risk manager rather than a speculator. Risk management keeps you away from the worst of the losses but also, by the nature of the beast, means you don't get to grab the best of the gains...risk is risk, upside or downside. QED.

In short Gary T is "smart money", but one thing that invariably happens at turn points in a market is that the smart money becomes dumb money and vice versa, at least for a limited period in time at the most dynamic part of the market turn (what we've just been through). Dumb money by its own definition doesn't think much, has entrenched views, tends not to overanalyze or consider both sides to a story. When any market (not just gold/metals/miners) goes bull that's exactly what you need to make dem big bux, you need to be stupid and be one of those "Hey Ah Wuz Right! Look at me!" people who quickly forget their losses and never seem to learn from their mistakes (the ones that stop them from becoming true successes). It's unfair, even plain wrong, to criticize Gary for being prudent at this point, he's the type of person who helps makes you the big money in the long run. The stuff that counts.

Dan Steinhart has a message for you

The message is, "I am a prostitute and I work for Porter Stansberry". Here's the beginning of latest scam pump mail from Casey Research (out this morning and forwarded to your humble scribe by A. Kindreader:




It then goes on and on. He's calling it "America Ground Zero" this time and any similarity between the message of impending doom about to be delivered by Doug Casey  and the messages of impending doom he delivered in 2009, 2010, 2011, 2012, 2013, 2014 and 2015 is of course purely coincidental and has nothing to do with ripping off the naive and filling his own back pockets at their expense.





Chart of the day is...

...the gold/silver ratio...



...which still hasn't managed to beat its low score of October 2015. According to the headless chicken brigade it was guaranteed to blast down though 70X in this movement, but the recent stall and reversal doesn't quite fit into the narrative.

PS: Copper dumped to new lows this morning.

Not all CEO.ca readers are stupid

Some are observant and can see the underbelly of the scams, such as reader 'm' who informs IKN this morning...

Course of events as seen from a naive lurker over there

1)Tommy starts bashing NXE. 
2) Tommy declares he has trimmed his position quoting the stock plan amendment and a BMO analyst.
3)LIX options 50% of its property to a company run by FCU CEO Dev 

Hmmmmmm


Hmmm indeed, m. IKN also likes the way David Sidoo has got himself involved, the waiter turned failed oilman. North South...East West...geddit?

5/17/16

"Nothing about Venezuela, Otto?", is the cry...

...from readers of this humble corner of cyberspace. In fact we are following the rapidly deteriorating situation in South America's finest corner of FUBAR, but the comments are for IKN Weekly subscribers. Such as this, last weekend in IKN366 (slightly edited to keep the company name in question for the eyes of subbers only, respect the hand that feeds and all that):
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
Venezuela: A 60 day State of Emergency declared
One of my “Ten Random Predictions for 2016” back in December 2015 (17) was this:

6) Venezuela's government to implode. Maduro won't be President this time next year. It's likely to be very messy too. Venezuela has been the butt of annual "teetering on the brink" type of op-eds and articles every year for the last ten years with the right-wing press getting it wrong every time, but this time around things are obviously deteriorating and the opposition victory in the December elections just gone is a telling moment. Oil prices where they are could be straw that breaks this camel's back as China won't be so quick to bail them out this time. I don't know whether the PSUV party will fall from government, but the call is "govt implode" and "Maduro out", that's the thing.

The events in Venezuela this week suggest that I might be right. President Nicolas Maduro has declared a 60 day State of Emergency (18) shortages for basic consumer goods have increased, the well-documented queues to buy food etc are getting longer, crime is spiking with inflation (estimated at 700% per annum).

All very interesting I’m sure, but unless you have a political soapbox it’s not going to affect your life unless you (or loved ones) live there. The reason it’s mentioned today is for the classic “buy when blood on streets” principle, because if the Maduro left wing government falls and Venezuela goes through a period of bigtime political turmoil, we the mining investors may unfortunately have an opportunity to do just that. Most people know the names Gold Reserve and Crystallex when it comes to Venezuela exposure in mining projects, Rusoro might come to mind too. But one I have in mind is
(section edited out)
If Venezuela falls to pieces, it may be an alternative to (what I believe to be the untouchable and wholly crooked pairing of) Crystallex and Gold Reserve. It’s certainly cheap enough and could be snapped up by some smart junior looking for a quick way in to Venezuela mineral acres. Not one to buy today, just a ticker to stick in the back of the mind if/when Venezuela’s current government goes down the tubes.
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx


Meanwhile, Latin America Daily Briefing had an excellent overview of the downhill path of the country and the Maduro government in its post today. Just about all the need-to-know points in one shot, both sides of the argument covered. That's right here, well worth it.

Posting will be light today

For secret reasons.

Dynasty Metals & Mining (DMM.to) 1q16 financials (a.k.a anatomy of a gold mining trainwreck)

Dynasty Metals & Mining (DMM.to) reported its quarter this evening and oh what fun we'd had here at IKN, so here are some charts to help spread the glee and happiness. 

This one shows revenues, costs and gross profit. Bringing in $3.533m in 1q16 sales when it costs $5.972m to do that (including $4.854m in on-site mining and processing costs)....well, it isn't good business.


And when you subtract the other things you need to run a company, G&A and so forth, it gets worse:

We know that production was very low due to the workers going on strike. That's because DMM decided not to pay them (they owe over $1.7m in back pay to workers, and over $5m to their suppliers). The result was just 2,221 oz of gold production in the quarter but somehow DMM managed to sell 2,785 oz of gold, a full 564 oz more. As this chart shows they managed the same trick in 4q15 as well:
 

 Which is a cool trick, but we know how they did it...


 ...and they're unlikely to be able to repeat the trick in 2q16.

Over at the balance sheet, we can see just why DMM decided not to pay the people who work for the company or bring them supplies:


And if you think the lack of cash is bad, just wait til you see the working capital position:


This company owes $13m net/net in the next 12 months, with over half of that to the people who keep the company running. The people they haven't paid are still on strike, production is going to be even worse this quarter than the last one and there's no inventory left to prop up sales. And these jokers think they can being in contract workers to fill in for the strikers? 

Meanwhile, this stock bizarrely doubled recently when DMM announced they'd got a $0.5m loan from a company that was going to start digging up the mineral at a deposit they'd never developed before. Pray tell, how much damage does half a million dollars of cash do to a $15m current liabilities position? The only people who bought this stock are people who don't even know where to go to find the company financials, let alone open them, let alone understand what's written inside them.

This company is going bankrupt and no amount of pretend fixed asset value on the sheets can hide the cruel reality, get that into your head and if you own any of these shares, make like a shepherd* right now before your paper moves to its true intrinsic value of zero dollars and zero cents.

*get the flock out of here

5/16/16

Richmont's (RIC.to) (RIC) feeling defensive


IKN is amused at the news from Richmont Mines (RIC.to) (RIC) this afternoon about the C$27m bought deal that's basically a C$31m deal because the overallotment is probably fully taken already. So, just under 3m shares added to the pile, but the funny bit is the reason Monsieur Adams gives for the raise:
"The Corporation intends to use the net proceeds to aggressively expand the current exploration program as well as potential organic growth opportunities at the cornerstone Island Gold Mine."
To quote Blackadder:
Blackadder: You see, there was a tiny flaw in the plan. 
Baldrick: What was that, sir? 
Blackadder: It was bollocks.
As at March 31st 2016 RIC had C$61.192m in cash treasury and a working cap of C$54.306m. It's probably got even more than that now, what with being half way through Q2 and running a very profitable mine. But apparently 61 large just isn't enough to run an aggressive exploration program, it desperately needs another $31m or so in order to pay for drill rig teams without feeling strapped for cash.

Or more seriously, if you can't see a defensive move by a board trying to stave off buyout bids (from at least Tahoe Resources, maybe others) staring at you in the face, then there's not much hope for you as a mining investor. It'll be interesting to see how GMP spins this bot deal in its notes to clients mañana.
x

Readers of IKN are worried about gold today...

...according to my mailbox, at least.


The way it's suddenly "crashed" and "dumped". Manipulation by expert teams of financial crooks, or something. Okay, after all...



...the human brain it set up to find something to worry about. Have a pleasant day.




Focus Ventures (FCV.V) updated PFS

Out before the bell Monday, a very decent improvement in project economics including a 26.4% IRR and capital payback in less than four years.

5/15/16

The IKN Weekly, out now



IKN366 has just been sent to subscribers. Its main event is an update and a new price target on the Top Pick stock that saw its price target hit last week. Interesting situation. At least I think so. Well, after spending two days to write an article about a single mining stock, it has to be interesting else you just fall asleep putting the piece together.


Godwin's Law states that the UK will stay in the EU

The Brexit side of the argument have been looking increasingly desperate in the last couple of weeks but now we can confirm that The UK will not leave the European Union. 

Boris Johnson just lost the debate.