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8/3/17

Asanko (AKG): The descent into bullshit lies

When a gold mining company starts by exaggerating its potential, then fudges its numbers to cover up shortfalls while praying at the altar of high gold prices to make everything awesome (and stop you from noticing the truth), the most likely outcome is that the lies are eventually found out and the truth rears its ugly head. And so it is with Asanko (AKG) and its 2q17 numbers. Two exhibits for your consideration:

1) July 19th 2017 was the day AKG announced its 2q17 production. At that time it told the world this, right at the top of the NR in bullet point number one: "...2017 production guidance of 230,000 - 240,000 ounces maintained". And just so you got it,  President and CEO Peter Breese looked at you in the eye and lied to you:
"...we expect the second half of the year to be stronger as we see the benefits of the plant operating at the annualized rate of 5Mtpa, the grade at Nkran improving, as we mine through the low grade zone, and the Akwasiso pit delivering planned grades and tonnages. We therefore maintain our 2017 production guidance."
And now, less than two weeks later, we get this:
"Subsequent to quarter end, recent information has prompted revision of 2017 annual guidance revised to 205,000 to 225,000 ounces at AISC of US$920 to US$960/oz..."

Subject to quarter end? Are you freaking serious? Are these people trying to tell us that they didn't know about a 15k oz projected shortfall on June 30th, or July 19th, but do now? Well yeah they are trying to tell us exactly that and if it were a company deserving of a little trust and respect it might go through, but for serial revisionists and BSsers it's not that easy. However, we don't have to suppose these people are abject liars any longer, we now know it 100% due to...

2)...the stockpile bullshit. Oh dear, they've finally shown their hand and demonstrated that they are liars and here's how it works. Today on the Conference Call, the President and CEO and blatant liar Peter Breesewas asked about the mysterious stockpile. If you recall, this was the data that they published happily, right up to the moment when they realized it was a tell on their false story. That's when they stopped publishing stockpile tonnages and grades but when asked by analyst "Chris" today to give an update, Breese said this:

"The stockpile right now Chris is around 2.4m tonnes at about 1.1g"

His words, not mine. So AKG claims to have 2.4mt on hand at 1.1 grams per tonnes gold, that's obviously false and here's why:
  • In its 2016 year end filings, on December 31st 2016 (the last reliable stockpile data) AKG told us it had 1,522,271 tonnes at 1.36 g/t Au (contained gold 66,669oz), plus a "marginal stockpile" (aka barely economic crap) 430,000 tonnes at 0.67 g/t Au.
  • In 1q17 they reported mined ore of 1.107m tonnes and processed ore of 0.908m tonnes.
  • In 2q17 they reported mined ore of 1.048m tonnes and processed ore of 0.887m tonnes.
  • Do the math and the stockpile should have increased by 0.27m tonnes during the first half of 2017. That's not my opinion, the mathematics demands. 
  • Therefore, the stockpile should be 1.792m tonnes. Or if you include the "marginal stockpile", it's 2.22m.
So where, pray tell, has an extra 180,000 tonnes of stockpile appeared from Mister Breese? And again, in other circumstances and with other companies you might be inclined to give a benefit of the doubt, with this obvious cover-up it matters, because it's a clear case of provable false numbers from the company head's own mouth. Class action lawyers, take note.