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4/29/17

OT: Carlos Kaiser, football's greatest conman

This is great. I read it in the week and saved it for a short weekend here, footy and that. The story of Carlos Kaiser has to be read to be believed and according to the report, it's the subject of an upcoming documentary too.  Here's part of the intro, you'll enjoy the whole thing by clicking that link above.
Renato Gaúcho, one of the finest Brazilian players of his generation, calls Kaiser “the greatest footballer never to have played football”. He had a career spanning more than two decades, during which he was associated with Rio’s four biggest clubs – Flamengo, Fluminense, Botafogo and Vasco da Gama – as well as Bangu, América and a number of overseas teams. Yet throughout his career he went out of his way not to play football. “I wanted to be among the other players,” Kaiser says. “I just didn’t want to play. It’s everybody else’s problem if they want me to be a footballer. Not even Jesus pleased everybody. Why would I?”

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

...in reverse order:

Third Place: "By mouthbreather demand: IKN writes nice things about a junior mining stock". You wouldn't believe the stupidity contained by some of the hatemail I get. Then again, maybe you would. Atico popped on publication by over 22% too, which just adds another layer of stupid to the whole exercise. Seriously, I wonder about the level of dumbassery out there sometimes. An idiot pissant blogger writes a diatribe of snark and as a result, over $10m gets added to the market cap of a smallcap producer. Madness layered upon madness.


Second Place: "Why is it that nearly all mining stocks are going down...", a post which continues with "...except the two I want to buy/add?" as the whole message. There's nothing else, which begs another question; Why is it that the silly little two line throwaway posts are often some of the most popular? Happens a lot, I've never really understood it.
 
First Place: "This Angry Geologist piece on Barkerville Gold (BGM.to)..." and deservedly so, too. I just get to reflect in his glory from time to time, for my money TAG has become the single most influential mining blog in the business.

4/28/17

The Friday OT: Claude Debussy, Claire de Lune

Thomas Labé plays one of the world's most recognized piano pieces.



To drift quietly into the weekend, smile on face. Youtube here.

Just so we're clear about Rye Patch Gold (RPM.v)

It definitely has run out of cash and it definitely will finance again very soon. So stop mailing me with your stupid guesses about royalty payments being enough, dumbasses. You don't know what the fark you're talking about and if this is the way you go about your mining investment, you'd be much better off sticking your whole wedge in a time deposit and dedicating your time to learning something more productive to your life, such as macrame or competitive trainspotting or coupon swap evenings. Freakin' twats. End of rant.

Barkerville. Eric. Sean.

Enough readers have mailed in already to correct me, and quite right too, so a quick post here. Yesterday in this post I incorrectly implied that Barkerville Gold (BGM.v) was a Sprottstock. Yes it was for a while, but I'd forgotten that Osisko/Roosen had bought the Sprott position out and is now the head cheese there.

The funny thing is, that second paragraph works just as well if you extract the name "Eric Sprott" and replace with "Sean Roosen". Lackeys is as lackeys does.

Regarding mining stocks and humility

A major aspect of following, investing, speculating and analyzing in the mining sector and its companies, particularly the junior explorers and producers, is that every now and again you go through a week in which seven bells are kicked out of your portfolio. It could be for one specific reason that hits across the board or is could be for disparate factors, but sure as eggs are eggs it's an experience you'll go through. It's been my "pleasure" this week so, in The IKN Weekly edition 415 on Sunday, there's bound to be reflection on that. 

Sorry ladies and gentlemen, this sector isn't all about "winning", "killing it", "crushing it", 100% guaranteed success, it's about staring reality in the face and, if you're up to the task, learning from the experience. Or as Hugh MacDiarmid wrote in "On A Raised Beach":

We must be humble. We are so easily baffled by appearances
And do not realise that these stones are one with the stars.
It makes no difference to them whether they are high or low,
Mountain peak or ocean floor, palace, or pigsty.
There are plenty of ruined buildings in the world but no ruined stones.

What happens to us
Is irrelevant to the world’s geology
But what happens to the world’s geology
Is not irrelevant to us.
We must reconcile ourselves to the stones,
Not the stones to us.

4/27/17

Sandstorm Gold (SAND) (SSL.to) in the next edition of The IKN Weekly

In The IKN Weekly this weekend, your humble scribe will explain why John Doody is a freaking idiot.

By mouthbreather demand: IKN writes nice things about a junior mining stock

I'm getting another round of dumbasses asking me why I'm so negative on the mining industry, why I always post nasty things about juniors, why don't I have a life and seem to be such a bitter twisted piece of crud and, just to prove they don't have the first freaking clue about the word, asking me why I'm such a troll.

Yes indeed, another day in mailbag paradise, wading through mouthbreather mails and their painful grammar.

But hey, I'm supposed to be a capitalist and want growth and recognition and the customer is always right and all that shit, so today I've decided that it's time to kow-tow to the market braindead and give them a reco for a stock that's truly worth their time owning. By way of disclosure, yes indeed I own shares in the company I'm about to mention and it's also covered in The IKN Weekly, so I'd assume a portion of IKN Weekly subbers also own some. I bought at lower prices and have a target that's substantially higher than today's market price, so I'm not trying to rip you off like Marin Katusa does and sell into any new buying, I'm a strong holder until my target is hit. This stock is going to have an excellent financial 2017 and the next quarter in particular is set to be a blow-out, which will make all the sell-side anal ysts who doubt its balance sheet STFU once and for all. So buy yourself some Atico Mining (ATY.v) mouthbreathers, anything under 70c is a drop-dead knockdown bargain, even paying 80c is dirt cheap and a no-brainer. Which is perfect for people like you.

Have a nice day. Love and kisses, Otto.


Mailbag. Detour. Goldcorp.

Main man mailer 'H' today asks:

If Detour drops by a third, I have to think it would get GG's attention and warrant a bid.  Thoughts?


The IKN reply: If Garofalo is crazy enough to buy Caspiche and half of Cerro Casale, he's crazy enough to buy anything. In fact, if I were CEO of ITH, GOLD.v, CKG, NG, NAK, VGZ or any other of these low grade wastes of time that only a geologist could love, I'd be mailing him every other day.

Barkerville Gold (BGM.v): Ah wuz shocked...

...to learn that on the back of its grade-smear bullshit NR, it now wants you to exchange over thirty million of your dollars for its newly printed paper. That this utter joke has a market cap of over $300m is off-scale crazy. That it gets a bought deal at these levels is an indication of the way in which the brokerage houses are in cahoots with these liars and thieves.

Why is it that these days, in 2017, you'll hear howls of derision when recidivist a scam junior explorer tries to scam the idiot mouthbreather end of the market, but not a peep when it's an Eric Sprott company?

UPDATE: And ah wuz shocked when they upsided the bot deal. Shocked.

4/26/17

New Gold (NGD): And for the first quarter in living memory...

...New Gold (NGD) has managed to file its quarterly financials, its MD&A and the accompanying news release without adding to the capex or further delaying the construction timeline of Rainy River.

The IKN theory on the new US government's tax reform plans*

They've decided to make the proposal so fucking stupid that it doesn't have a chance in hell of passing. End of theory.

*You see how I managed to avoid the T word in the title?

The Paul van Eeden "Better Sleep Principle" and Rye Patch Gold (RPM.v) (from IKN412)

A little background is needed.

1) The IKN Weekly has a "15 stocks maximum" holding policy. There are several reasons for this, but the main thrust is to promote portfolio discipline and keep things real.
2) In IKN 412 dated April 9th I had 15 open positions and decided I wanted to buy a new one. Therefore, one of the open stocks had to go.
3) Even though I'd just run the numbers on Rye Patch Gold (RPM.v) in IKN411 in light of its news of the receipt of its long-delayed cyanide usage and decided to hold through, it was RPM.v that got the chop.
4) Since that date, RPM.v has dropped 22.4%. I got out with a small profit, which after commish wasn't much more than breakeven. In other words my trade was a real world failure, but it would have been worse if I hadn't paid heed to Paul van Eeden's "Better Sleep Principle". 

Read on (name of new purchase edited):

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Rye Patch Gold (RPM.v): SELLING: The short story; to make way for the new position in (EDIT) and to maintain the integrity of the “15 positions maximum” philosophy* here at The IKN Weekly (though I have bent the rules a couple of times over the eight years) something has to give. That’s RPM.v and so I’m going to sell this position in the next five days and close the position.

The slightly longer story; Even after running the numbers last week and summing up by writing a conclusion along the lines of...

  • Good news about the permit arrival
  • I’m holding on the numbers and its potential
  • But financials and cash position now look tight
  • And if they decide to run a placement it will be a bridge too far and I’m out

...as the week wore on that uncomfortable feeling about the corporate balance sheet came back again. I want to believe in this story because, if it goes to plan, RPM has a great looking operation at Florida Canyon that’s currently heavily discounted. The problem is, my wanting to believe ended in me deciding to ignore the risk that RPM dilutes my shares in a final, top-up placement which would deliver my profits to somebody else. And on re-consideration it’s more like a probability than a possibility, plus rumours about things not going as well as we on the outside would like at Florida Canyon have not gone away and keep coming around. If things had run more smoothly on the permitting track it would be much easier for me to brush off the chatter-talk and have more confidence in RPM, but where we are today and how we’ve got here means that I don’t. It’s at the stage where I’m worrying about this trade and it floats back into my brain at nighttime...not a good sign at all. I’m a long-term fan of Paul van Eeden’s “Better Sleep Principle” and here’s an excerpt from one of the times he’s written about the concept (8):

“This is where the Better Sleep Principle comes to play. I had not really thought about it but I have for many years now subconsciously followed the Better Sleep Principle in my own investing. It works like this:
If I start worrying about something when I go to bed at night I fix it the next morning. For example, if I own too much of a stock and am concerned about what would happen if the price falls, I sell some. If I don’t own a particular stock and I lie in bed worrying that the price would go up before I get a chance to buy it, I buy some. I do whatever it takes to make me sleep better at night.
Here’s why you should follow your own instincts to make sure you sleep well at night: it doesn’t help if you follow someone else’s advice and they sleep well while you lie awake. Investing is a very personal endeavor; only you know what you need to do.”

Result: When I made the decision to buy some (EDIT) last week it was easy to choose which company to drop from the ‘Stocks to Follow’. It means it’s likely to be a booked as a small profit of little consequence, but even if the price dives next week and it is closed at a minor loss it’s still nothing much more than a failed breakeven trade, 10% either side is not why I buy junior mining stocks. So, rack it up as another IKN Weekly failure, not the first and won’t be the last.

*Perhaps a bit too grand, it’s an idea.



The other thing about this Sandstorm (SAND) deal is the newco market cap

When SAND is joined by MARL, we're going to be close to the U$1Bn market cap threshold, something that Nolan Watson has been keen to promote as a target due to the way it will open up the door to a new tranche of insto cash.

Sandstorm buys Mariana (UPDATED)

Woah! Here's the chewy bit:


Under the terms of the Combination, Mariana shareholders will receive 28.75 pence in cash and 0.2573 of a Sandstorm share for each one Mariana share held. The Combination values Mariana at approximately 110 pence per Mariana share based on the closing price of US$4.04 per Sandstorm Share on the NYSE MKT and a currency exchange rate of £0.7788 per USD, on April 25, 2017.
The terms of the Combination represent a premium of approximately 84% to the closing price of 59.50 pence per Mariana share on April 25, 2017 and a premium of approximately 88% to the 20-day VWAP per Mariana share.
If successful, the Combination will result in Mariana shareholders, together, owning approximately 19.0% of the ordinary share capital of the Combined Group.
Sandstorm holds 8,980,243 Mariana shares, representing approximately 7.0% of the issued ordinary share capital of Mariana, and Mariana warrants over a further 4,490,122 Mariana shares.

UPDATE: MARL has opened at 87p in London on 3m shares traded. That's only just above its recent January highs and plenty below the nominal 110p offer price, probably due to UK capital gains tax laws. The lack of percentage lock-up is the main barrier to deal success here, so SAND may look like it's pitching high, what it's really doing is telling UK instos that this is a tax-efficient way of buying their shares. You can think what you like about the Hot Maden asset (for what it's worth, I like it and like it even more after the Yes vote in the recent referendum), but it's clear that Nolan has done his homework on the deal structure and thought it through well. After all, they'll still be 81% of the newco...that doesn't leave room for a massive price dumpage for SAND today.

4/25/17

Crapstone Mining (CS.to) 1q17 financials and that "costless" collar

Dear reader, cast your mind back to November 9th, the day Crapstone Mining (CS.to) announced it had hedged a large chunk of its production for the next year and a bit:
VANCOUVER, Nov. 9, 2016 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (CS.TO) today announced that it has entered into zero-cost collars for 43,000 tonnes of copper with settlements between January and December 2017 at a minimum of US$5,025 and a maximum of US$5,585 per tonne of copper. There was no cost to Capstone to put this protection in place.
Oh how we laughed when Darren 'drop the' Pylot told us there was no cost, it was protection, it was zero cost. In IKN's words that day...
"...those of you wondering why all the gross profits have suddenly disappeared from the CS.to 1q17 and 2q17 results will receive a sharp lesson in just how "zero cost" this all is."
...and on fact we didn't even have to wait until the 2017 numbers showed up, the effect was felt in the 4q16 numbers. So with the 1q17 financials posted tonight and two quarters booked since this executive decision was enacted, we can check on just how much the device is hurting the company. We do that via checking on the "gain/loss on derivatives" line item in the P+L and here's a chart on that:

 Before Darren Pylot put his "costless" collar hedge on copper production in place, CS.to reaped a small dividend on other minor instruments. But with the hedge in place, as soon as the price of copper busted out of the upper end of the range (around U$2.54/lb) it caused and is still causing Crapstone significant financial losses, a total booked of $43.742m in just two quarters. And be clear, these are not fictitious, accountancy, non-cash losses. These are real cash losses and they literally involve writing cheques to the counterparty, cash that would otherwise have made it to the company treasury.

In short, the reason CS.to has files a 1q17 operating profit of $16.759m but a net loss of $7.395m and the reason its cash treasury position dropped by nearly $19m in this first quarter is due to the blithering idiots pretending to be intelligent executives making dumbass decisions as they fail to run this joke of a copper producer. The end.




The GMO piece on diamonds, De Beers and Stephen Lussier is a bona fide tour de force

In the post earlier today we featured two of the pieces in the latest edition of Global Mining Observer, but didn't point you to the major event, the interview on the evolution of the diamond market with Stephen Lussier of De Beers. I kind of left it to last to read because the diamond sector has never really been my thing, but it turns out to be the best single article that's ever come out of GMO. I've now read the whole thing twice and I'll go back to it a again later, too.

Insightful, intelligent and top class prose to boot, Alex W has out-done himself. You have to read this so do so by clicking this link.

Continental Gold (CNL.to) gives us an update

This morning Continental Gold (CNL.to) gave us one of those "hello we're here stop selling our shares please" NRs that didn't work, the stock is down another 6% as your humble scribe writes these words. Add that to the performance so far this year and...

...there's no doubt about it, you just gotta laugh about the way Louis Lobito Little Wolf James of Scamsberry / Casey Research told you to buy it on January 18th this year (after telling you to sell it in January 2016 when it was a $1.40 stock...bless him).

But leaving monkeys with dartboards aside, what is it with CNL recently, why has it been going down like a porn star at a stag night? Well for me the answer is to look at today's NR with the eyes of a newbie to the story, albeit a newbie who knows their way around the financial world. Such a person would see this in the top paragraph...
"With the senior secured debt facility in place, the Company remains funded for its 2017 planned activities with approximately $100 million in available cash and liquidity and remains on track for first gold pour in early 2020."
...and surely think:

1) Took $100m in debt 
2) Good for 2017
3) No production until 2020
4) So how are they going to fund 2018 and 2019???

And there's the rub. Why own this company now while it's owned by the banks? Why not wait until the end of the construction process when we'll know more about whether this mine will work? 

Still, never mind, CNL are conducting a site tour this week, Sprott, and Oppenheimer and a bunch of others in attendance with Ari and Don Gray leading the tour. We should get another round of pumpy pumpy from the sell side whores soon enough.

Why is it that nearly all mining stocks are going down...

...except the two I want to buy/add?

“The Clintons are family friends, I just want to leave it at that.”

Robert Giustra is featured in the latest edition of the best publication in all of the mining forever, Global Mining Observer. Read about Giustra's connected world of Russian oligarchs, France's hot favourite for President Macron, and the Clintons. Of course, the Clintons. That's linked here.

Also don't miss GMO's review of the book on the gold industry written by one Pierre Lassonde, way back in 1994. That's here.

The Copper Mountain (CMMC.to) financial disaster zone

The company formerly known as CUM (tcfka-CUM), Copper Mountain (CMMC.to), reported its 1q17 financials last night and in the NR this morning, was quick to trumpet its sales of $74.1m and net earnings of $7.1m (4c/share). Sound like strong financials, no? Stock will rally, no?

Nope, sorry, it's complete bullshit because there's no way O'Rourke and his collective band of mediocrity are going to point you to the reality of tcfka-CUM's financial disaster area. To do that you need to care enough to download its Reg F and when you do, even if you ignore the house of pain that is the Statement of Cash Flows there's no way you can ignore the dog's dinner balance sheet



They made a net profit of over $7m, but cash dropped and working cap went deeply into negative territory and the reason is down there at the bottom. Yes indeed madame and sire, tcfka-CUM has real and nasty cash debt to pay back at the rate of around $13m a quarter (which happens to be around $13.7m/qtr for the next three quarters of 2017), so how making less than $8m/qtr in operating profit (at U$2.65/lb copper, you're not going to see that average in Q2) is going to help the cause is beyond my ken.

It also beats me why this utter dog remains popular with the Canadian retail community, the only reason I can think of is that it's propped up by rah-rah boys and bought by people who wouldn't even know how to access SEDAR, let alone read and understand a company's financials. This company has 133.1m shares out and at its current share price, a market cap of $126.4m. Its true equity value is zero, unless of course copper prices come to the rescue. If they do tcfka-CUM goes up (but then again so do a whole lot of copper miner shares). If they don't, this company is destined to implode. Math says so.

This Angry Geologist piece on Barkerville Gold (BGM.to)...

...isn't just good geology and mathematics, it's damned funny too. Read it here.

Pirsig

I first read Zen and the Art of Motorcycle Maintenance 26 years ago and though I'm not sure it changed my life, it certainly woke me up at the right time. 


Hold quality undefined.




Robert M. Pirsig, Sep 6 1928 - April 24 2017. RIP.

UPDATE Tuesday: The Graun has published a decent obituary of the man, here.

4/24/17

Dalradian (DNA.to). Galantas (GAL.v). Northern Ireland Police. Explosives. Mailbag.

Your humble scribe receives mail this morning from reader 'GA', a nice lady who has agreed to let me reproduce this part on the blog:
"...do you think the GAL news affects Dalradian?  They use explosives don't they?  Do Northern Ireland not like Canadian miners and are stopping them with this?"
For the record GA is currently a holder of DNA.to stock and I'm not. Answer: To begin, DNA uses explosive to a certain extent in its current exploration phase, but they'll really need explosives a lot if/when the mine goes into production. As for the question my best guess, after reading the last couple of NRs from GAL.v carefully, is that there's more than meets the eye about the Police Service of Northern Ireland (PSNI) decision not to play ball with GAL.v and its Omagh mine. There are two things that stick out:

1) There may be specific problems between the mining company and the police (or locals) and this is a way they've found of putting the kibosh on the project. If so, DNA isn't likely to suffer in the same way.

2) There's a payment issue which seems to revolve around the failure to close on the "cost-recovery agreement" (i.e the police want the mine to pay for their time). The way GAL.v frame it, stating that other mines don't have to pay so why should they, suggests this may be a new policy at the PSNI. If so then yes, this could well become an issue further down the line for DNA.

Either way, it certainly doesn't help the political risk perception of working in Northern Ireland. All that and Brexit, too.

Galantas Gold (GAL.v): Chalk up another success for "The IKN First Law of Mining News Releases"

Remember this post back on April 13th, less than two weeks ago? In it we noted that Galantas Gold (GAL.v) says its tunnel development was "temporarily on hold" while they work out a deal with the Northern Irish police on explosives handling, but the problem "is not expect to exceed one month". This set off the red flags at this humble corner of cyberspace because around here, we have the tried and tested First Law of Mining NRs which goes like this:
"The IKN First Law of Mining News Releases: Considering that anything contained in a mining news release is presented in the best possible way for the company in question, any piece of information contained in a NR that comes across in any way negative means the real news and/or events behind it must be very, very bad indeed."

Cut to the wee small hours of this morning and the latest NR out of GAL.v. Read it here and there's plenty in it, but the pay dirt is this:
Galantas Gold Corporation ("Galantas" or the "Company") (TSX VENTURE:GAL)(AIM:GAL) has received notification that the Police Service of Northern Ireland ("PSNI") will not provide its required anti-terrorism cover in regard to blasting operations required for mine development at the Omagh Gold Mine.

The First Law of Mining NRs told you to stay away. This morning GAL.v is already 16% down and we'd wager there's a lot lower to go.

4/23/17

The IKN Weekly, out now



IKN414 has just been sent to subscribers. As for the Cessna 414, I'll let my pal and mega-pilot "W" explain all:
Everybody loved it because it was roomy and comfortable and, for the time, had good cruise performance.  However the airplane was really quite underpowered and in today's world not many pilots are still comfortable flying them.  If you lose an engine right after takeoff you can only manage about 300ft/minute climb rate on the remaining engine, which is not a lot when you consider minimum safe speed is about 120kts.  And then only if you were careful about weight and balance, if not get ready to meet your maker.

He has IKN421 reserved, too. What a total propellerhead nerd.

Messi and The Matrix

Here's an excerpt from this piece entitled "What if we’re living in a computer simulation?" that I found myself reading yesterday:

The simulation hypothesis has entered the culture as an explanatory meme. Writing in the New Yorker earlier this year, the critic Adam Gopnik suggested that the Oscar confusion, in which La La Land was wrongly given the best film award meant for Moonlight, the election of Donald Trump, and the improbable late comeback by the New England Patriots in the Super Bowl showed “that we are living in the matrix, and something has gone wrong with the controllers”.

Anyone who watched Leo Messi score in the 92nd and last minute of the Real Madrid/Barcelona game today to win the game for Barsa 3-2 will know the feeling.

Macro(n)-economics



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

...in reverse order:

Third Place: "How to add breadth to the GDXJ: A proposal". I got some really interesting feedback from this post.


Second Place: "A rarity: A geopolitical event that may affect the price of gold for longer than a day", a post very early in the week carrying a France voter intention poll that showed how close it was between the top four candidates. Now somewhat out of date, as these words are written we're just hours from the results of the round one vote.
 
First Place: "If you knew what I knew about Red Eagle Mining (R.to)...", because the peanut gallery loves posts like this. I really shouldn't get tempted into writing them. The third placed post is what IKN should do more often, not this clickbait crap.