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7/29/17

BREAKING: Six Continental Gold (CNL.to) security personnel dead in Buriticá gold mine incident, Colombia

Reports are still early on this incident, but according to initial reports six seven security guards working for Continental Gold (CNL.to) were doing their rounds in and around their area of vigilance when they entered one of the nearby artisanal mine workings and found illegal miners working there. In the confrontation that followed,the illegals set off explosions and then burned car tyres underground, the resulting smoke asphyxiated the security guards. Of the seven guards, six died at the scene while one managed to escape and is now in hospital (and is bound to give more details once interviewed).

UPDATE: Here's what the secretary of the government of Antioquia told reporters a few minutes ago:

 "The security personnel of Continental Gold were doing their rounds and found that Cafeto Gold had got into their tunnel and were extracting gold, that's where the confrontation occurred. There were some explosions and a landslide. It seems, according to the security guard that survived, they set fire to care tyres that suffocated them and stopped them from getting out (of the tunnel)."

UPDATE 2:  CNL has given us a news release, read it here

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

...in reverse order:

Third Place: "The performance of major gold mining companies, February 29th 2016 to date", in which IKN kicks Goldcorp (GG) while it's down. Great mailbag feedback from this one too, thank you people.
Second Place: "Cordoba Minerals (CDB.v) hole ACD-063". Laugh or cry? You decide!
 
First Place: "The demolition of the Argentine Peso continues". I'm constantly amazed about which posts get popular and which don't. This one for example, not mining scandal or numbercrunching but a fairly straight comment on a macro financial matter. It seems more people are paying attention to Argentina and seeing through the neoliberal positive spin these days. By the way, since this post on Tuesday the deterioration of the Peso picked up speed and despite the Central Bank dumping U$305m on the local market Friday, the Peso closed at 18.01 to the dollar official and 18.43 on the street.

Dunkirk (no spoilers)

A great movie. But find out for yourself because if you start reading lengthy critiques, even ones that promise "no spoilers", it will detract from the pleasure of discovery of this film's layers. All I know is that this morning on waking up, one of the first thoughts of the day was "I want to watch that movie again" and it's been a long time since that has happened.

7/28/17

The Friday OT: Soda Stereo; En el Séptimo Día

Such a tight band. From the 2008 tour, they were great in the studio, miles better in gig.




No descansaré. Youtube here.

Updating Tahoe Resources (TAHO) (THO.to) shareholder value decimation

In the post "Tahoe Resources (TAHO) (THO.to): The decimation of shareholder value caused by Kevin McArthur's empire building designs" dated March 23rd this year, we considered just how bad the deals to buy Rio Alto and Lake Shore had been for the people who held those shares and believed in the tosh and nonsense vomited by Ferrari Kev to the market. But since then it's only got worse:
In February 2015 when Tahoe Resources (TAHO) (THO.to) bought Rio Alto Mining, it was an all-paper deal framed at a ticket price of U$1.09Bn. TAHO issued 75.991m shares to close the deal. Those shares are now worth U$425.5m.

Then in February 2016 when Tahoe Resources (TAHO) (THO.to) bought Lakeshore Gold, it was another an all-paper deal framed at a ticket price of U$569m. TAHO issued 69.239m shares to close the deal. Those shares are now worth U$387m.

Kevi MacArthur has taken U$1.66Bn worth of shares and made them into U$812m worth of shares. but hey....the dividend! Right guys???

Chart of the day is...

...the US Dollar, monthly:



No prediction, just observation.

Yamana Gold (AUY) (YRI.to) 2q17 financials

NR here, IKN comments in one simple and easily understandable image:


I loved the way Marrone's band of funsters told us this about the key issue, the balance sheet:
Balance sheet as at June 30, 2017, includes cash and cash equivalents of $132.3 million, representing an increase of $26.4 million from March 31, 2017, and available credit of $823.6 million for total liquidity of approximately $955.9 million. Net debt(1) decreased by $22 million ($2 million consolidated with Brio Gold) from March 31, 2017.

Oooh look, cash is up!! Net debt down!! No matter that the truth about its liquidity position, working capital, shows the financial reality that AUY is slipping into serious trouble:


Cash up $26.4m? Nobody cares, because working cap is down $17m and the main reason is its loan book, big fat nasty financial debt now coming into current liabilities, AUY has to find U$110m by this time next year or face the doo-doo. 

This is why Marrone has been so desperate to monetize the junk that is Brio Gold (BRIO.v). But when you're facing U$110m in hard cash debt repayments in 2018 and another U$223m in 2019, you need to return profits and this is a company that ran to a 2q16 loss of U$36.8m. Math don't lie, people lie.

7/27/17

The Alset (ION.v) Scam: Eleven weeks and no news on the assays...

...that should have taken three weeks maximum to publish, and all the CEO of this scam, Allan Barry, can do is flap his lips on CEO.ca. Interestingly he'll talk all day and every day about anything except the crazy delay of the ION.v assays and my stars, he gets thin-skinned and delicate if you prod him on it too much the sweet snowflake. Good job he doesn't add to this standing joke by being drunk and abusive online in the evenings though; that would be a shame.

The performance of major gold mining companies, February 29th 2016 to date

  • Barrick (ABX) up 20%
  • Agnico Eagle (AEM) up 36%
  • Newmont (NEM) up 42%
  • Kinross (KGC) up 42%
  • Franco Nevada (FNV) up 21%
  • Royal Gold (RGLD) up 84%
We can even add these:
  • Gold and Silver Index (XAU) up 34%
  • Precious Metals ETF (GDX) up 18%
  • Gold bullion ETF (GLD) up 1%
And then, this:
  • Goldcorp (GG) down 10%
Fact: David Garofalo became CEO of Goldcorp on February 29th, 2016.

UPDATE: Reader 'DR' has a thought:

"...You highlighted Goldcorp's 10% drop on the blog today. You may be interested to see a summary of how their Yukon mine development project is progressing..."

UPDATE 2: David Garofalo on BNN today. Watch it here, but in three words it's "Everything Is Awesome". Utter bollocks. In the Q&A the BNN guys mention the call on the stock made this morning by Peter Ward of Renaissance Macro Research. Your humble scribe strongly agrees with Ward's call and FYI, here below is the front page of his note to clients out pre-open. Since this was published GG is down 7.1%, so work it out for yourself.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Goldcorp
Reiterate Underweight Rating – Cut Target to $12

We have been and remain negative on Goldcorp shares. The company reported a decent quarter that we suspect may have included some non-recurring gains such as a large tax benefit. Management will host a call later today to clarify.
As we have discussed, the company has committed to make a major investment in Cerro Casale – a low grade and very remote copper/gold project in Chile. In our opinion, the inclusion of Cerro Casale in “Proven & Probable” reserves reflects a shocking lack of conservatism. Yes, we realize Barrick and Kinross did so for many years. But, we expected better from Goldcorp given management’s acknowledgment that the project still needs years of study. The project has already been studied for over twenty years. We visited the property in 1996. The project was not advanced by previous owners during the last decade when gold prices exceeded $1700 per ounce and copper exceeded $4.00 per pound. Current prices are much lower. Therefore, it’s hard for us to discern what makes the project more attractive now. The challenges of a lack of infrastructure and shortage of water in the Atacama desert have not improved to our knowledge.
Our thesis is intact. We believe Goldcorp is depleting its high quality and low risk reserves. Therefore, GG’s earnings multiple should continue to contract. YTD, gold is up 9% and GG shares are down 7%. As we have said before, it is far too simplistic to view gold equities as merely levered plays on the commodity price. We continue to find attraction in a pair trade that is long gold and short shares of Goldcorp.

More TMAC news

It turns out that TMAC Resources (TMR.to) didn't just waste its money on one Python plant. They bought two. No news on whether they bothered to install the second once they realized the first one doesn't work.

7/26/17

TMAC Resources (TMR.to): The IKN First Law of Mining News Releases strikes again

On July 14th, we wondered out loud in this post just why TMAC Resources (TMR.to) had dropped just a modest 6% or so on the back of obviously bad news from its operation (aka Monty Python's Flying Metallurgy) and invoked the First Law of Mining NRs as evidence:
 "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."

And since then?

 
And GDX is up 5% since July 14th, too.

Moral: Don't mess with the fundamental laws of nature.

Mailbag on FOMC

Reader 'CM' sums up the FOMC in twelve words and one photo:



The last six Fed meetings in one picture
Different shape, same content.




Nicely done, CM.

Three juniors moving up, one midcap moving down

Novo (NVO) is going wappy:



Trilogy (TMQ) is trading like that road is already built:

Constantine (CEM) has broken out:

But Asanko (AKG) is hitting new lows, even lower than the bottom of the Muddy Waters day:


Copper pushes higher

Copper contracts were trading at over U$2.90/lb earlier today.



That's the highest price since early 2015.

7/25/17

Cordoba Minerals (CDB.v) hole ACD-063

Here's the NR and here's the funny jokey bit about hole ACD-063

"0.5 metres @ 5.97 g/t gold, 0.24% copper (from 67.2 metres)
 with visible gold in the preserved half-core."



Well, you know what they say...



Sigh.

Copper breaks out. Probably.

Chart of the day is copper, of course. Here's the weekly version, your author adds the thin red line.


It's broken out from the U$6,000 metric tonnes (U$2.72 and bits) level but we still haven't got a definitive new high on our hands. The big question is whether this approx 10c move sticks, not whether it goes any higher. Glad I wrote this on Sunday in IKN427, too:

Over at the copper pit things were buoyant and gave solid fundy reasons for the stocks’ rally. This daily chart shows that we’re back at the top of the recent trading range, so it’s natural that thoughts would turn to whether a breakout is in the cards. Personally I think there’s a reasonable chance of that, what with the world finally cottoning on to the fact that the whole Trump economic policy is about weakening the dollar in order to promote growth (and close that trade deficit he’s so obsessed about). This is, by the way, the main reason we’re seeing record after record hit on the US broad markets…cheaper future dollars mean higher equity prices in dollar terms.

However, other copper anal ysts aren’t quite as bullish as your author, according to a report (decent stuff for a mainstream medium) from Chile’s La Tercera this weekend (11), which did the rounds of houses to get the collected thoughts of copper market analysts on where the metal is going next. No need to delve into the Spanish language report, your author does the legwork and reduces it to the need-to-know bullet points:

  • Caroline Bain of Capital Economics: Copper to end 2017 at U$2.36/lb
  • Francisca Pérez of BCI Estudios: Copper to fluctuate between U$2.40/lb and U$2.70/lb to December, then U$2.80/lb in 2018
  • Goldman Sachs: Copper to reach U$2.812/lb “in near term”.
  • Andrew Cole of Metals Bulletin Research: Copper comfortably above U$2.72 in 2018
  • Bloomberg average of anal yst forecasts: U$2.60/lb in 2017, U$2.62 for 2018, U$2.76 in 2019, U$3.00 in 2020.


Experts, eh...

Educating Peru

It's Independence week in Peru, what with the country celebrating its Independence Day on July 28th as it has done for close on 200 years (then the winter break vacation kicks in), so Peru's Ministry of Education...repeat, MINISTRY OF EDUCATION...decided to do something patriotic on its website and put this up yesterday: 


That translates roughly as, "From this moment Peru is free and independent, by the general will of its peoples and for the justice of its cause that God defends. Long live the Fatherland, long live freedom, long live independence!". Those were the words spoken the day Peru became independent and every schoolkid in the land knows them by heart, your actual "We The People..." thing (or perhaps "of/by/for the people" Gettysburg is a closer fit). 

Therefore, Peru was shocked by its Ministry of Education and today, in its place this appeared...


...which is basically a long-winded and humble apology. That's because Simon Bolivar didn't speak those words above, nor did he declare Peru's independence, it was José de San Martín. For context, this leaves Dan Quayle's potatoe in the dust, you need to imagine the reaction if Donald Trump announced that George Washington was assassinated while watching a play in a theatre. Read Peru's daily paper "La Republica" on the scandal and fallout right here (Twitter having  field day in Lima, of course).

Anyway, happy Birthday for Friday, Peru. Enjoy your President's speech and the nice parade.

7/24/17

The demolition of the Argentine Peso continues

Longer-term watchers of Latin America know what this means:


The Argentine Peso came under heavy selling pressure today, it touched 17.66 until just before the end of the day when the government, via the Buenos Aires Province bank, intervened and dumped dollars onto the market to stop the rot. It closed 17.43 after the late flurry, but there's a real finger-in-the-dyke feel about this, the government is getting desperate to cover over the systemic weaknesses that the market knows all about.

The ironic thing about Argentina in the last ten years; When Cristina is President, the rest of the world begs for the country to implode. It doesn't. Now with Macri President, the rest of the world is wishing it the best of fortune. And it goes down the tubes.

Imperial Metals (III.to) refinancing news

Word reaches IKN Nerve Centre today that a bunch of South Korean and Chinese miners and financiers have had a pleasant weekend at Imperial Metals (III.to) Red Chris mine. Lots to see and lots to talk about.

Votorantim going public (from IKN427)

A snippet from yesterday's edition of The IKN Weekly, IKN427:



Votorantim moves to IPO
Coming soon, a big LatAm based mining IPO. Reports first appeared in April (25) about Brazil’s privately controlled (by the Ermirio de Moraes family) Votorantim Metais (26) plans to float and become a public company, now news from local press (27) last week stated with more confidence that, the country’s big base metals/iron ore producer that also owns the majority stake in Peru’s Milpo, is in advanced discussions for an international IPO with target listings in the NYSE and the Toronto TSX. The New York listing procedure is being led by JP Morgan, Morgan Stanley and Credit Suisse, with the Toronto IPO end being covered by BMO. Though details are still sketchy as they tend to be before the prospectus gets published, the reports talk of the company looking to get market by the end of this year and to raise around U$750m in the share allocation. This would move up its market cap to around U$4Bn and make a new major miner available to Northern investment cash. Those kind of ratio figures clearly show that the Ermirio de Moraes family intend to keep tight executive control of the company after the IPO is done.

7/23/17

The IKN Weekly, out now



Look I'm not the biggest car fan in the world by any means, while you go gaga for a Ferrari or Maserati I'm happier taking a taxi to visit an art gallery. But there are exceptions to my four wheel indifference and there was no way this post could go by without a photo of the Shelby Cobra 427 on it, the sexiest car ever built. Right colour and the white hood stripe too. I mean, just look at that beast.

Anyway, IKN427 has just been sent to subscribers and as for the main featured stocks this week...


...I just know that something good is going to happen.