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10/1/16

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

...in reverse order:

Third Place: "Richmont Mines (RIC.to), Kirkland Lake (KLG.to), Renaud Adams, Louis CK and Native Americans". Yeah, this one came out quite nicely. And thanks for the mail, MG. 


Second Place: "The London Evening Standard, teaching the small brown people how to spell all proper like". Ah that Colombia/Columbia thing, when will you palefaces ever learn? I'm glad this one got popular, shows that it doesn't just annoy me.
 
First Place: "Auryn (AUG.v) and Baños del Indio". Potentially the reason why Alturas Minerals (ALT.v) dumped by 20% and back to 4c last week. What, didn't Miguel tell you he'd stripped the assets out of the public vehicle and into his own private one? Oops, it must have slipped his mind, that's all...

Frank Holmes Says

The Ryder Cup is bullish for gold. 


This is of course a developing story.

9/30/16

The HudBay (HBM) Augusta Resource insider trading scandal finally sees the light of day and SEC charges

After two long years, the US SEC has finally charged three Peruvian nationals for the insider trading that went on around the HudBay (HBM) buyout of Augusta Resource (owners of the Rosemont project at that time). Here's the story, reported very nicely indeed by Peru's Semana Economica, and here's how it starts:

The Securities and Exchange Commission (SEC), the market regulator in the USA, has filed a civil suit against three Peruvians for insider trading; buying shares of a company using confidential information with the objective of making money.

According to the SEC, the lawyers Nino Coppero del Valle and Antonio Castro Roca made illegal profits of more than U$112,000 via the purchase and subsequent sales of shares of Augusta Resource Corporation, a junior miner that traded on the New York Stock Exchange and was developing a mining project in Arizona. 

The SEC also accuses broker Ricardo Carrión, who made a purchase of the shares in the brokerage in which he works and who made a presumed U$73,000 profit. Continues here.

For the record, Nino Coppero's name made it to this humble corner of cyberspace at the time. Meanwhile, Antonio Castro Roca is a big swinging dick major-level Peru lawyer and this will cause both him and his firm acute embarrassment. Finally, Ricardo Carrión is one of the main players in Peru brokerage Kallpa SA, which has been making quite a name for itself recently via placements and deals with other Canadian junior mining companies. The optics are not good, that's putting it mildly.

Frank Holmes Says

Alicia Machado is bullish for gold. 


This is of course a developing story.

This is why I was so pissed about Lake Shore Gold selling out to Tahoe Resources in February*

Here's the TAHO share price chart compared to the Gold/Silver index (XAU), from the weekend of the all share deal to date:


Six months later, the truth is clear. I was a Lake Shore Gold long at the time because it was set to be bought out and because of its obvious price appreciation potential, but Makuch took any old freakin' crappy deal (plus his sale bonus, then decamped to Kirkland Lake) instead of finding a place that would add real value for LSG shareholders. Now look at the same comparative price chart of the mine TAHO tried very hard and failed to buy, Richmont (RIC.to):


Spot anything different? Yeah me too and LSG failed to get that kind of move this year because Makuch was more interested in getting his hands on his multi-million dollar change of control bonus. Tahoe's corporate is such a heap of mediocrity, even while sitting on some of the best silver veins in the world. Makes you wonder about reversions to the mean, Kev.

*Example, this post dated Feb 9th that contains "... TAHO is stealing LSG and Tony Makuch is doing his shareholders no favours by accepting this particular purse of silver (30 pieces)....", but most of the numbery work I did was for subscriber consumption in the IKN Weekly at the time, not on the open blog.

The Friday OT: Andrés Calamaro: Crímenes perfectos

Not the first time for this song as the Friday OT. I don't care.

The genius of Calamaro is in the lyrics, below.



Sentiste alguna vez lo que es tener el corazón roto
Sentiste a los asuntos pendientes volver hasta volverte muy loco
Si resulta que sí, si podrás entender lo que me pasa a mí esta noche
Ella no va a volver y la pena me empieza a crecer, adentro
La moneda cayó por el lado de la soledad y el dolor
Todo lo que termina, termina mal, poco a poco
Y si no termina se contamina más y eso se cubre de polvo
Me parece que soy de la quinta que vio el mundial 78, me tocó crecer viendo a mi alrededor paranoia y dolor
La moneda cayó por el lado de la soledad otra vez
No me lastimes con tus crímenes perfectos, mientras la gente indiferente se da cuenta
De vez en cuando, solamente sale afuera la pena real
Si resulta que sí, si podrás entender lo que me pasa a mí esta noche
Ella no va a volver y la pena me empieza a crecer, adentro
La moneda cayó por el lado de la soledad y el dolor
La moneda cayó por el lado de la soledad otra vez
La moneda cayó por el lado de la soledad.

Updating the Philippino* pair trade

Late Tuesday just before the close, this humble corner of cyberspace floated the idea of running a long BTO/short OGC pair trade, what with the bucket of cold water that had been dumped on their collective heads by the mining ministry in the Philippines. 

  • At the time of publication, BTO was trading at CAD$3.38. Here and now, 90 minutes after the open on Friday, it's now CAD$3.51. 3.8% up.
  • At the time of publication, OGC was trading at CAD$4.07. Here and now, 90 minutes after the open on Friday, it's now CAD$4.01. 1.5% down.

So a little over 5% up on that theoretical pair trade already. Hardly a cojones-busting king's ransom, but the right side of the trade already and I think there's more to come even if both companies receive the same final decision from the whackjobs now running the islands. And whackjob is not used lightly either, this new President is now comparing himself to Germany's leader in the 30's and 40's and wants to kill 3m or so of his fellow citizens.
Philippines President Rodrigo Duterte appeared to liken himself to Nazi leader Adolf Hitler on Friday and said he would "be happy" to exterminate three million drug users and peddlers in the country. continues here

Bless him. The fate of OGC and BTO operations is in the hands of a lunatic, basically. OGC's position looks shakier, but under normal circumstances I'd be supremely confident that BTO's issues would be resolved simply. But hey, I bet the trains start running on time.




*Sorry if the spelling annoys you, reader W and others.

Argentina: Well this surprised me

Earlier in the week IKN noted the pending judicial decision on lifting he suspension at Veladero, but assumed the judge would sign off on the papers and he mine could get back to work. Looks like ABX did too, but the reality turns out to be otherwise. Here's Reuters:
A judge in Argentina ruled on Friday to keep Barrick Gold Corp’s operations at Veladero mine suspended, saying repairs were not sufficient to reopen it after a leak of processing solution containing cyanide earlier this month.
State news agency Telam said the judge’s decision was based on a report from mining police in San Juan province that said the Toronto-based company had not installed security cameras and sensors as the local government had required. Continues here.


9/29/16

Richmont Mines (RIC.to), Kirkland Lake (KLG.to), Renaud Adams, Louis CK and Native Americans

As luck would have it, last night I just happened to re-watch "Louis CK Live at the Beacon Theater", arguably his best one hour stand-up special and on a par with the great Carlin. Here's a bit of the show (in the first minute of the youtube, NSFW but highly recommended and very funny), in which LCK talks about how the white settlers first arrived in North America and stuck the name "Indians" on the indigenous population.



...and here's the transcript of the centrepiece:
"We came here, they're like "hi",
And we're like, "Hi, you're Indians, right?"
They're like, "No."
"No, this is India, right?"
"Nah, it's not, it's totally another place."
"You're not Indians?"
"No"
"Ahhhh, you're Indians!" 

That segment came to mind just hours later, this morning when reading about Kirkland Lake's (KLG) friendly takeover of Newmarket (NMI) and the way in which Richmont Mines (RIC) sold off hard on the news today. Rumours about Kirkland Lake aggressively pursuing a merger deal have been constant and rife since Tony Makuch took over the helm a couple of months ago. Newmarket has come as a bit of a surprise to the market, because the two most talked about targets since Makuch became Eric Sprott's trigger guy have been Wesdome Gold (WDO) and Richmont (RIC). Once WDO was off the menu (the Tom Stanley rebuff and then Kiena taking the pressure away completely) talk about Richmont and KLG became so strong that we even had Renaud Adams popping up on Bloomberg TV a few days ago saying "We're not for sale". But even when he looked the market straight in the eye and told it how things really were, nobody believed him. Or to paraphrase Louis CK;

"We came here, Renaud's like "hi",
And we're like, "Hi, you're merging with Kirkland, right?"
He's like, "No."
"No, this is the company Makuch is buying, right?"
"Nah, it's not, it's totally another company."
"You're not getting bought?"
"No"
"Ahhhh, you're getting bought!"

And as the five day chart of RIC versus the gold/silver index (XAU) shows, it looks like they finally believed him today.



Moral of the story: They're rare but they exist, so when you come across an honest and sincere man of integrity in the mining world, a guy such as Renaud Adams, don't mistake him for one of the usual riff-raff that hold most of the executive seats in the sector.

Posting will be light today

For secret reasons.

9/28/16

OGC and BTO, analyst opinion wrap-up from a Bloomberg terminal piece

Thanks A Reader for punting this one on:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

(BFW) OCEANAGOLD/B2GOLD STREET WRAP: Philippines Suspension Unlikely

+------------------------------------------------------------------------------+

OCEANAGOLD/B2GOLD STREET WRAP: Philippines Suspension Unlikely 2016-09-28 13:22:29.743 GMT

By Aoyon Ashraf
    (Bloomberg) -- B2Gold fell ~12%, OceanaGold 14% in Canadian trading yday, after Philippines govt. noted that audit of roughly three quarters of mines in the country could see operations suspended; most analysts expect issue to be resolved, and mine suspension unlikely for both cos., although stocks likely to be volatile in S-T until issues are resolved.


CIBC (Jeff Killeen)
  * OGC CN, BTO CN have sufficient balance sheet strength be able to develop mines in Philippines (based on $1,300/oz gold price) uninterrupted
  * Says during previous site visits, it was observed, that operations at Didipio and Masbate mines seemed to be employing industry best practices; would be surprised if ops ultimately halted
  * Didipio represents ~37% of NAV for OGC CN; Masbate ~29% of BTO CN’s NAV


BMO (Brian Quast)
  * Masbate comprises 22% of BMO’s NAV, 28% of 2017 production ests.
  * Didipio represents 31% of asset-level NPV, 30% of 2017 gold eq. production for OGC CN
  * Expect weakness for OGC CN until further clarity is provided


RAYMOND JAMES (Chris Thompson)
  * OGC CN’s social license, strong environmental track record from operating in New Zealand and Philippines for several years underscore its commitment to safe and responsible mining
  * Also OGC CN has strong local support, which will help OGC CN in resolving this matter
  * Didipio is 30% of NAV for OGC CN; Masbate represents 28% of NAV for BTO CN


HAYWOOD (Geordie Mark)
  * OGC CN will be able to resolve issues raised in audit, even though DENT announcement presents negative headline risk, heightened investment risk for Philippines
    * Didipio accounts for roughly 23% of project NAV
  * BTO CN’s Masbate mine represents 20% of project NAV; notes that mine received ISO 14001 accredition earlier this yr, which confirms environmental mgmt system is up to ISO standard required by country’s law


CANACCORD (Reg Spencer)
  * Says unlikely that OGC CN can’t satisfactorily address listed social issues; notes that suspension is based on “soft” social issues rather than any specific environmental breaches
  * Didipio represents 30% of NAV ests; OGC CN ultimately will be able to resolve these issues, uncertainty will be elevated until situation is resolved


CORMARK (Richard Gray)
  * Ascribing low probability for suspension of BTO CN’s Masbate mine
  * BTO CN now trades at 0.97x NAV, 8.2x CF, which is “attractive value” for investors looking to build or add to position in high quality, growth co. in gold sector
  * Finds it “hard to believe that a well-run operation such as
    Didipio would actually be suspended;” also sees OGC CN trading on attractive valuations


NATIONAL BANK FINANCIALS (Raj Ray, Steve Parsons)

  * Doesn’t see any balance sheet risk for OGC CN, in case of potential suspension of Didipio (~22% of asset NPV)
  * Reiterating sector perform rating, PT of C$4.50 for BTO CN given potential for resolution of cited violations without production interruption or material impact to costs
    * Says Masbate represents 17% of mine/project NAV at C$0.54/shr


SCOTIABANK (Ovais Habib)
  * For OGC CN, under a worst-case outcome, oper. license at Didipio (39% of asset NAV ests.) would be suspended; although at this time its low-probability scenario
    * More likely that there will be requirement for more stringent operating conditions
  * For BTO CN remain optimistic that Masbate (23% of asset NAV) operating license can remain in good standing; final negotiations between co. and govt expected in coming weeks

Global Mining Observer brightens an otherwise quiet day...

...by quoting Ian Ball of Abitibi Royalties quoting Justin Bieber in this interview. It's actually a pretty good piece.

Chart of the day is...

...the gold/silver ratio:


I really don't know what to make of the current action in the GSR, aside from the fact that the immediate drop in the ratio to 55X that the silverbugs promised us was just another crock of delusional excrement from that bunch of permawrongs.

The Barrick (ABX) Veladero mine's suspension is likely to be lifted on Friday

That's what the Argentine judge in charge of the paperwork and the decision said today, after conducting a visual inspection of the mine yesterday. He said that the repairs and preventative work demanded by government and judiciary had been done by ABX and the only thing stopping the mine from going back into production was a Mining Police report on the quality of the work done, which is due in the next 48 hours.

So now you know.

Frank Holmes Says

Killer clowns are bullish for gold. 


This is of course a developing story.

9/27/16

A Philippino pair trade

An idea for instos and funds with easier access to the short side.

Considering...
1) the apparent difference in gravity between the company infractions (according to the Philippino govt anyway), as BTO's looks rather admin-related while OGC's looks potentially serious
2) the relative exposure of the two companies to the country in NAV terms (OGC has more percentage of its overall corporate neck on the line)
3) the roughly equal share price reaction so far today (I recently saw BTO down 12% and OGC down 13%)

...a decent pair trade looks like long BTO/short OGC from here.

I'm getting a lot of mails about B2Gold (BTG) (BTO.to) this morning...

...so to stem the tide, here's my position on the stock's issues at Masbate:

Pu simply I'm in "wait and see" mode. From what I've picked up, its problems at Masbate aren't as serious as other mines on the Philippino hit list. However, there whole loose cannon thing around this government makes things more difficult to read. There has been opposition to the Masbate mine on the island for many years, but that's mostly about accusations of land-grabbing. The mine is a big employer and job supplier (direct/indirect) to the local economy, it's not easy to cut that off...but it's not impossible either if you have a bigger political point to make.

Regarding valuation, Masbate is a large contributor to the BTO sales mix but it's not that much of the overall value. You're individual anal yst and brokerage house will argue the toss about the exact percentage, I have it at around 22% of NAV. As BTO is now 13% off in trading today, the market is signalling a binary up/down resolution in the near future and that's a reasonable stance.

I'm not a seller of BTO (as subbers know, I'm long and overweight the stock). I'm not a buyer/adder yet, either. I'll be very interested to get BTO's take on this, that's bound to come soon enough in an NR. In the NR I'll want as much information as possible, any nook and cranny, as what's left out of a NR such as the one coming from BTO matters as much as what's put in.

One final thing: My inner investor isn't really that worried or nervous about this, which surprises me a little. I'm taking that as a good sign, but it's a wholly personal thing.

UPDATE lunchtime: BTO announces this and the feeling above fits into the contents that 1) not as serious as other cases 2) the loose cannon effect still can't be ruled out. Bottom line is that before I was reasonably relaxed about holding through, now I'm even more relaxed, but I'm too whussy to add any more (plus I'm already overweight BTO, the eggs-in-one-basket rule says I shouldn't rush and and get more). Or as reader RL succinctly put it in the shortest mail I've received today, "Overblown...blow over".

The London Evening Standard, teaching the small brown people how to spell all proper like

It's 2016, fercryinoutloud.



Link here, but don't expect to learn anything from it.

The list of 20 Philippine mining firms in the firing line

Right here. And even though Masbate isn't one of them, B2 is off 9% at the bell. Go figure.
Update..oops, my mistake, the subsidiary Filminera is named. Makes more sense, I need to drink my coffee earlier in the day.

  • Libjo Mining Corporation
  • AAM-Phil Natural Resources Exploration and Development Corporation - Parcel 1 and Parcel 2B
  • Krominco Incorporated
  • Carrascal Nickel Corporation
  • Marcventures Mining ‬and Development Corporation‪
  • Filminera‬ Resources Corporation‪
  • Strongbuilt Mining Development Corporation
  • Sinosteel ‬Philippines HY Mining Corporation
  • Oriental Synergy Mining Corporation
  • Wellex ‬Mining Corporation
  • Century Peak ‬Corporation - Rapid City Nickel Project and Casiguran Nickel Project
  • Oriental Vision Mining Philippines Corporation
  • CTP Construction and Mining Corporation
  • Agata ‬Mining Ventures Incorporated
  • Hinatuan Mining‬ Corporation
  • Benguet Corporation
  • Lepanto ‬Consolidated Mining Company
  • OceanaGold ‬Phils, Incorporated
  • Adnama Mining Resources, Incorporated
  • SR ‬Metals, Incorporated

Mind you, the drop in OceanaGold (OGC.to) (OGC.ax) this morning does have more fundies to back it up.

9/26/16

Yamana (YRI.to) (AUY): Marrone, pwned

This is what it sounds like when the corporate profile of a $4Bn gold mining company has to play catch-up to a pissant blogger. 

On September 8th IKN revealed that Yamana Gold (AUY) (YRI.to) was facing the "never going to happen" card and a likely $1.1Bn write down on its Agua Rica project in Argentina.

On September 22nd IKN revealed that far from being a done deal, the lawsuit against the company filed by Ricardo Auriemma was looking bad for YRI and the company faced paying out up to $110m.

And tonight, September 26th, YRI published this news release to "clarify" on both the above matters, the verb used by YRI in its title line that's a very, but VERY debatable choice because Marrone's Minions have spun the two issues hard and laid on as much sophistry as they possibly could.

Regarding the Auriemma issue, AUY try to make it sound like the maximum on the table is $54m and the most likely result is nothing, or perhaps $5m. Total bullshit. Read the files and it's clear that they could be on the hook for as much as $110m and their hoped-for derisory penalty is very unlikely to occur. There are no lies in their text but it's spun like a Waltzer at a fairground.

Regarding the ban imposed on the Agua Rica project by the town of Andalgalá in Catamarca, they pooh-pooh the locals, say the laws are applied by the province and not the nearest town and make out they're running an efficient and winning community relations campaign. Sorry guys, I know I promised not to swear any longer on the blog but that's just fucking delusional. It's like saying that the law states the locals around Conga couldn't stop that project, or the locals around Suyai couldn't stop that project, or the locals around Tia Maria couldn't stop that project, or the local around Caballo Blanco could stop that project, or the locals around Cañariaco coul.... get the picture? But what YRI didn't address is the write down they should take in order to be straight and true with shareholders. Agua Rica may be ostensibly under provincial law but to use the local vernacular, deja de joder che! There is no way, none, zero zip zilch nada no chance that Agua Rica happens. Ever. So...writing down this quarter, Marrone?

But the big one for me is that I still can't get over how a company like YRI can get pushed around by a drunken zero-DD blogger such as your humble scribe. The humanity Peter! Oh the humanity!

Some Monday music

Alabama 3, 'Monday Don't Mean Anything To Me'



Keep your shades on when you clean your teeth.

Frank Holmes Says

Shopping mall mass shootings are bullish for gold. 


This is of course a developing story.

A signature in Colombia

The big show in LatAm today is in Cartagena Colombia, where President Juan Manuel Santos and FARC-EP leader Rodrigo Londoño will do the official signature thing and then shake hands on Colombian territory for the first time, all done in front of a wide array of local and foriegn dignitaries (plenty of South American presidents making the trip, along with Raul Castro of Cuba and John Kerry repping for the USA).

And the big big glittering show is all to make sure that the really big day, this Sunday October 2nd, goes off without a hitch and Colombia's population officially vote the peace deal into effect via the national referendum.

You don't need a link to any of this, your screens will be saturated by the story come the afternoon.

Auryn (AUG.v) and Baños del Indio

Here's how it works:

1) Baños Del Indio is explored in the 1990's, gets nowhere fast.
2) Miguel Cardozo incorporates the concession into his Alturas Minerals (ALT.v) vehicle in the mid 00s, fiddles around doing baseline stuff, tries to find a JV partner, fails.
3) ALT.v goes nowhere fast (for several reasons) and in the end Cardozo decides to quietly move assets out of the public company and into his private company, Exploandes (put together in 2013 for the specific purpose).
4) He gets wind that a cashed-up junior is on the lookout for land in Peru and flips them Baños Del Indio on its "concealed gold/silver high sulphidation replacement potential"(geological terminology known as 'Hail Mary' in Gridiron).
5) Auryn Resources (AUG.v) falls for it, Cardozo finally gets a payola from one of his pieces of llama pasture.

Another day in juniorlandia.

9/25/16

The IKN Weekly, out now


IKN385 has just been sent to subscribers, the usual serving of poorly written drivel and bad DD from a drunken waste of time who used to care but doesn't anymore. I wouldn't bother if I were you.

We continue to track Louis James' "Number one recommendation for this year"

On January 21st 2016, Louis Lobito Little Wolf James of Casey Research told his subscribers to "short the NYSE", called buy on the index shorting vehicle SDS and called the trade his "number one recommendation for this year".

And how's are we doing with eight months on the clock, Lobito?


Now 30% down, not to mention the opportunity cost of not being long the SP500, up 17% in the same period. But! Don't Worry! Anytime Now! Right Lobito? Right Duggie? Right Porter?

Frank Holmes Says

The Trump/Clinton debate is bullish for gold. 


This is of course a developing story.