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10/8/16

Boris Johnson reads the London Evening Standard

Words of whizz dumb from Boris Johnson, the British Foreign Secretary (fercryinoutloud!) and leader of the Brexit campaign:


The London Evening Standard must be his preferred briefing material for foreign affairs.

But there is a serious point here, it's not just snark; If you're an average woman or man on the street going about your daily life and likely smart about other fields, you're allowed to make mistakes on subjects which are in your peripherals.  You need to look up 'Ecuador' to make sure there's no Q there? Mauritania is on which continent again? Are you sure Argentina's finance minister's name is Prat-Gay, you're not having a joke with me now are you? But these people are not Josephine/Joe Ordinary, they position themselves as experts and pretend to be The UK's thought leaders and opinion-makers on the world. And can't even spell the names of countries correctly. 

And they told you Brexit is a good thing.

And you believed them.

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

...in reverse order:

Third Place: "Dynacor Gold (DNG.to) and its Veta Dorada problem". So far, most (not all) of you up there only have my word on this, from a post with no links or local reports to back it up. So when you phone DNG head office about its contents and get their sophistry reply, well obviously you don't act immediately. And that's fair enough, I wouldn't base an investment decision on a blog post either and I'd do a lot more DD before making a decision. But I do indeed suggest you do that DD. And fast. And you'll need to speak Spanish to do so.


Second Place: "Tinka Resources (TK.v): It takes a very decent NR...". Three facts: 1) In a week when mining stocks dropped by an average of over 12%, TK.v managed to put in a week-over-week gain of 15.8%. 2) I own some of these and have done for a while, with the position currently in the green. 3) I'm not selling into this new interest, no way José
 
First Place: "Amarillo Slim: "Look around the table. If you don't see a sucker, get up, because you're the sucker"". Not only the most popular single post of the week, but it also generated some very cool and interesting e-mail exchanges. Tony Makuch overrates his business acumen? Really? You shock me, folks...

A little weekend music

What made me think of this song? I have no idea.



Youtube here.

10/7/16

Hurricane news


Hurricane Matthew Kills Three In Florida USA






Oh yeah, over 800 in Haiti as well

The Friday OT: Alabama 3: Sad eyed lady of the low life

By Alabama 3, the Acid-Jazz-Country-Techo-Rock band with a sound all their own, best known for the theme tune to The Sopranos. Two riffs here:

1) The title is a riff on Bob Dylan's 'Sad-eyed lady of the lowlands'. The song below is better than Bob's.

2) This piano riff is addictive.



Build a fire light a match and watch the whole thing burn. Youtube here

Silverbug world domination plans have been put on hold

Funny how they suddenly go quiet, isn't it?


10/6/16

Next Tuesday is likely to be a good day...

...to buy stocks on the TSX (or TSXV), so in IKN387 on Sunday evening we have a new stock to recommend. I don't own yet and won't buy until we're on the other side of Canada Thanksgiving Day (remember folks, Canadian markets closed Monday), but buy I will.

And the biggest surprise? It's a silver company. Yup, even I can swallow that hard when the numbers are good.

HPQ Silicon (HPQ.to): Checking in on the Daryl Hodges Effect

He ruined the brokerage Jennings
He ruined the gold junior Minera IRL
And now, since joining HPQ Silicon...



...he's having exactly the same effect. The Toronto marijuana salesman Daryl Hodges, doing what he does best.

Dynacor Gold (DNG.to) and its Veta Dorada problem

Here's what's going down, according to IKN's on-the-spot sources. Back when they were putting their Veta Dorada project together, Dynacor Gold (DNG.to) managed to get the permits they needed with the regional government of Arequipa (known in Peru as GRA) in a rather dubious fast-track mode by cutting a lot of corners. This included managing to get their hands on the surface rights use permit in just four months instead of the five years it takes under normal circumstances, and that alone looks more than a little shady.

But the real problem they have now isn't just the dubious style of the permitting, it's the substance they hold because, since the Veta Dorada permits were awarded by the GRA there have been elections, new people have moved into running the GRA and the new guys have spotted serious irregularities. Here are the main two:

1) Its permit to operate was issued by the wrong people and using a regulation that had already been annulled and replaced by another. The surface use permit was granted by the GRA and it shouldn't have been. By the time Veta Dorada got that key permit it wasn't the GRA's job to grant it, it should have come from the relevant national authority (a body called "Superintendencia de Bienes Nacionales") which in effect makes the permit held by DNG.to null and void. It was also granted by the GRA to Veta Dorada (i.e. Dynacor) on land owned by The State (i.e. Peru) but The State hasn't received a penny for its land use, itself very strange.

2) The surface rights permit for the Veta Dorada plant allows DNG to explore or mine, but it doesn't allow it to build a processing plant. Unfortunately the latter is exactly what DNG did on the land even though the permit they got was specific, it simply didn't allow them to do that. They didn't care and the previous GRA administration seems to have turned a blind eye at the time. But the new guys haven't and therein lies the serious problem DNG faces today.

We hear that the new people in the GRA have now concluded their investigation into what went on during the permitting process in the previous GRA administration. What we expect to go down now is that very soon, perhaps as early as tomorrow Friday, the new Regional Government of Arequipa will revoke the authorization for the use of surface rights at the Veta Dorada plant. Once this happens, Peru's national-level Ministry of Energy and Mining will have no choice but to annul the plant's operating permit. And Veta Dorada closes for business. Don't say you weren't warned, folks.

Dynacor Gold (DNG.to) is in big permitting trouble

A really interesting story developing in this stock, pumped to the gills by the scamsters at Stansberry. More tomorrow, watch this space, but don't be surprised if DNG gets its operating licence revoked soon.

10/5/16

SIRIOS (SOI.v): Osti de tabarnak de calice! Is that all you got, Quebec?

This is the chart...


...of the company that's just won the Association de l'exploration minière du Québec (AEMQ) "Discovery Of The Year 2016" (not made official yet, but IKN has its sources).

Seriously, is that the best they can find, a bullshit pump job designed to part the naive from their cash? An "OOH LOOK VISIBLE GOLD" lah-lah romance that pays Allan Barry to dupe idiots at CEO.ca? A story that's already falling apart and bound from whence it came early year? Torrieu!

An important Wednesday message, coming to you from...

...Pooh Bear:



Light posting today as there are things to do in the real world.

Sometimes the light don't shine.



The slowdown in the mining sector rally in 3q16, in one chart

Part of Sunday's review of the sector in IKN386:


Frank Holmes Says

The lower gold price is bullish for gold. 


This is of course a developing story.

Chart of the day is...

...GLD inventories, Brexit to date:



The gold price may have dropped to the pre-brexit result level, but inventories on the big one haven't. That's 947.95 metric tonnes. Data here.

10/4/16

Tinka Resources (TK.v): It takes a very decent NR...

...to get a mining company to swim against the tide on a sector sell-off day like today. But that's what Tinka Resources (TK.v) served up today and there's some smart money buying the stock up 8.5% 11.4% 14.3% while all around wilt and faint.

You can have all the cool grades that you want but if you don't have amenable metallurgy to get the metal separated from the rock efficiently, it means squat. Also a measure of the seriousness of your exploration-stage junior is how much they care about met in early stages, all too easy for them to drill-baby-drill without doing the background work at the same time. TK is getting recognition today for good results, and for doing the right things the right way. Not all tinycap explorecos are the same.

Disclosure: Yup, I own some. Long-term perspective position, I don't flip things like this.

Message for Edie Hofmeister of Tahoe Resources (TAHO) (THO.to)

If you want my phone number, ask me for it. Don't try and get it via third-party sneaky backdoor methods. All you have to do is write me a mail, not difficult.

Goal of the year

Watch what Deyna Castellanos does to win the match for Venezuela (2-1 versus Cameroon in the U-17 Women's World Cup):



Amazing. Thanks to reader SB for the heads-up.



Sirios (SOI.v): And another Canadian pump and dump meets its inevitable end

  • From pennies to over a Loonie on "New Red Lake" rumours? Check
  • Dubious chart volume patterns? Check
  • Several "paid sponsorship" deals with newsletter writers? Check
  • Pumped by the criminals at CEO.ca? Check
  • Flashy mid-summer news release citing "visible gold"? Check
But then...
  • Everything go quiet? Check
  • Greenhorn bagholders left wondering what's going on? Check
  • Eventual initial drilling results (out just a few minutes ago) show nothing special, patchy results, little chance of continuity? Check

But don't worry about the back pockets of the people who reco'd this stock to you, greenhorn, they sold a loooooooong time ago. But don't fret, if you get in contact with them today they'll be very, but very sympathetic with you and tell you there's still plenty of hope and the exploration program has only just started so there's no reason (etc etc etc).

UPDATE: 20 minutes after the open:



Well, there's a shockah.

Chart of the day is...

...gold, under U$1,300/oz for the first time since Brexit:


 And while we're here, a quick reminder that you too can work for Bloomberg:


10/3/16

Regarding political risk for miners in Argentina (from IKN386)

At the end of every quarter, a regular feature in The IKN Weekly is the 'Regional Risk Review', where we go round the major and more interesting mining countries in LatAm and take a look at how things are progressing. We also score all countries on a six criteria basis to gauge their relative attractiveness for mining over time. We cover 20 countries, of which 12 are the main focus of attention (the others tend to be long-term unfriendly places to go mining).

By way of an example here's the piece on Argentina in IKN386, out yesterday evening.

Argentina: National Government Miner Friendly up 1 point, Community/Social Miner Friendly down 1 point.
At times this quarter it’s seemed like there is only one country with mining activity in South America, judging at least by the contents of my mail inbox. Everyone wants to know something or other about Argentina mining these days, it seems.

However the most pressing issue today is the state of the country’s macro economy because we’re now in a crucial period that will decide whether the reforms President Macri has pushed and is pushing through will be successful. In effect, what the Macri government is betting on is that the next couple of quarters are the period of max pain for the country economy. The fiscal and monetary reforms now in place are classic orthodox economic pills to swallow (and why the IMF is praising Argentina so effusively): Go through the sharp recession, restrict pay rises and then see inflation drop later, enjoy the benefits of a V shaped drop next year. As things stand today the country in in recession (best fit figure -5% GDP) and this is expected to continue to the end of the year, while inflation has shown signs of dropping in the latest sets of data but is still running at between 35% and 40% per annum. As wages are no longer keeping up with prices, the discontent at street level is rising fast and Macri’s approval ratings have dropped from 60% at the beginning of the year to between 35% and 45% today (depending on which pollster you prefer).

However 2017 does look brighter for the country and the situation was summed up neatly last week in by one of Argentina’s most famous economists (who seems to have been around forever, he was chief economic advisor in the Carlos Men_m years*), Miguel Kiguel in an economics conference. Here’s a quote (14) (translated):

“There’s not much doubt that next year Argentina will grow (i.e. year-over-year GDP expansion), even (Ex-Minister of the economy in the Cristina government Axel) Kicillof agrees. And there’s not much doubt that inflation will drop either. What we see this year in an inflation rate of 40% has a lot to do with the one-time readjustments (e.g. the very large utiliity bill increases, known as  “tarifazos”, as government subsidies were withdrawn). Later we’ll see whether the Central Bank has enough power to drop inflation to 17% in 2017 or maybe it will be a little higher, but nobody’s expecting an inflation rate in 2017 that starts with a 3, the most pessimistic are talking about 23% or 24%, the most optimistic around 17%.”

So there you have the scenario for the next year; pain today, GDP recovery at perhaps 5% next year, with an inflation rate that drops from its current 40% to something around 20% in 2017. The point here is that 2017 will be better, but will it be enough and for two reasons:

1)      Inflation at 20% is better, but it’s still going to hurt the back pockets of José Publico if their salary increases are restricted to below that level and add to the hurt they’re currently feeling. A year is a long time and the dissent is likely to get louder before it calms.
2)      A key point: In October 2017 Argentina has mid-term legislative elections in which 127 of the 257 lower house parliament seats (just under half) and 24 of the 72 upper house senate seats (one third) are up for grabs. This vote will be critically important, as not only might it change the balance of legislative power in Congress but it’s already being framed as the make-or-break moment for the Macri reform package.

Therefore, not only is there a reform period to get through without too much social protest, but there’s a time limit on progress too because if the recovery lags in the country and the rank and file are suffering too deeply come election day, Macri (and I keep reminding people that he only scraped in 52%/48% last year) is going to get a big thumbs down and then everything is up for grabs. And signs today are not good. Not only do we have his dropping approval ratings but as noted last week the largest and most powerful union in the country is now on the brink of calling a one day general strike to protest the measures in place. They want bigger wage increases etc etc, just the type of thing that would feed inflation (15) at the wrong time for the economic turnaround model Macri and his team are trying to implement. The strike still doesn’t have a fixed date and there are formal negotiations that are expected to go on for the next ten days, but a strike if it happens would be a clear negative and may set off further rounds of social protest.

Meanwhile in the mining scene, the government is still trying its hardest to push the Federal “all work together” model in the provinces and try to take executive decision power away from individual governors. That’s going to be a tough sell in places like Chubut and I’ve covered that example (particularly Navidad) closely, as it’s a good test case for the rest of the country. Then on top of all that, Barrick goes and adds insult to injury with another spillage incident at Veladero (see above), which wouldn’t have been any sort of problem if the company hadn’t been stupid enough to try and cover it all up.

Overall, Argentina gets one plus point for the macro and one negative point for the mining scene this quarter, but it’s still a story that’s being way overhyped in the North and the large-scale risks involved in jumping in too early are being ignored by most commentators (and the board of directors of Fortuna Silver).

*it’s bad luck to spell his name out completely



Amarillo Slim: "Look around the table. If you don't see a sucker, get up, because you're the sucker"

Give Makuch credit, he's consistent.

When he gets bought out he under-charges.

When he buys out he overpays:



Don't take up poker, Tony.



Sandstorm Gold (SAND) (SSL.to) 3q16 sales and revenues estimate

Take the preliminary 12,500 oz AuEq that SAND says they've sold in 3q16, add in an average price, assume the same type of split between gold sales and royalty revenues as in previous quarters, come up with a chart like this:


That's a guesstimate of U$16.625m for 3q16. A reasonable quarter. There's room for the stock price to go higher on that.

Chart of the day is...

...the average annual price of gold 2002 to 2016 (2016 to date):


When you smooth out the average prices for each year, you kind of wonder what all the fuss is about in 2016...

LADB does the Colombia vote result

Jordana Timerman does her usual excellent job of curating and comment on the region's biggest news story (by a nautical mile). Everything you need to know about the Colombia referendum vote and the fall-out to date, right here.

Frank Holmes Says

Kim Kardashian's security guards are bullish for gold. 


This is of course a developing story.

10/2/16

The IKN Weekly, out now


Oldskool video gaming, oh yeah

IKN386 has just been sent to subscribers. Script-rich this week, with 17,887 words on 32 pages. Today's main efforts are around reviewing how things have been recently but space for all that B2Gold thing too. And other stuff. There's always other stuff.

In sports news, today a team of white males beat another team of white males in front of a large crowd of white males.

Colombia votes NO to the peace agreement: President Juan Manuel Santos speaks

President Juan Manuel Santos has just addressed his nation on the shock "NO" result to the Colombia/FARC peace agreement. Among other things he said that as Head of State, he is the guarantor of the stability of the nation and this result will not affect the country. The cease fire agreement remains in effect and will remain in effect. Tomorrow he will invoke all political groups to listen to them and find a way forward and will re-open the dialogue with the FARC negotiators. He said he has a new opportunity to move forward and find points in common, but all must all work together in order to find a way forward. His final message was that he will not give in and will continue to work for the peace of the nation until the last day of his government.

Meanwhile, the head of the FARC spoke a few minutes before Santos addressed the nation and said that they were still committed to finding a peaceful solution and would "maintain words as their weapons". That's a reasonably good sign.

Finally, I just heard on Colombian radio that as soon as the tendency became clear and the momentum was with the NO side, the main player in the NO campaign, ex-president Álvaro Uribe, got in contact with all his allies in the NO campaign and told them all, "Do not celebrate this result" and told them all to pass the message down the political lines. That's also a reasonably positive reaction, one that will make negotiations easier in the next couple of days.


Colombia: A possible referendum shock in the cards: UPDATE--shock confirmed, "NO" has won

Today's referendum to ratify the peace agreement between government and FARC was expected to get the approval vote it needed. Instead it's currently looking mightily close and may even finish being rejected by the Colombian people. According to Colombia's highly reliable Caracol Radio, with 90.66% of votes tallied it's 49.9% Yes, 50.1% No.

Wowsers.

Counting is still going on, but the general air of confidence around the government of Juan Manuel Santos has disappeared. Will update later.

UPDATE: For a live Spanish language TV feed from Colombia, this link. The NO vote now has 50.2% of the vote and the shock result is looking more likely. Blame is being put on the very low turnout which wasn't helped by the very heavy rainfall in Colombia in the last 24 hours. It would seem that the hardcore NO voters had more will to get to the voting booths.

UPDATE 2: With 98.85% of votes counted, it's now NO 50.2% and YES 49.8%. This referendum is now a done deal and Colombia has rejected the agreement between the government and FARC as stands.

The head of the NO vote campaign has just spoken on national TV and said they also want peace and will be responsible, but the agreement needs to be adjusted and improved in aspects that were "badly negotiated". He also called for compensation for victims and justice to act against FARC members. He also strongly criticized the polling companies that were predicting a 55% to 60% victory for "YES" all week, saying that they had been biased and ignored the silent majority of Colombians that were not happy with the terms of the peace agreement as stands.

UPDATE 3: The final result is in, 100% of votes counted:

YES: 6,356,638 votes
NO: 6,417,1651 votes

The peace process agreement has been rejected by Colombia. Hilarity ensues.