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9/2/17

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

...in reverse order:


Third Place: "Silver Bear (SBR.to) mailbag". This one, plus the "death spiral" update the next day, is an example of why I like writing on this weird platform even after all these years. There's a new crop of neophytes coming into the sector right now and posts like this one can help the smarter ones learn how to avoid the sharks (and thank you once again reader 'W' for the nudge). As for the less sharp in the new pack, well it's like newborn turtles flapping across the sands towards the sea for the first time...they'll find friends waiting for them at CEO.ca...

Second Place: "Excellon Resources (EXN.to): IKN spies report to IKN Nerve Centre that...". This may have been a minor reason for the move in EXN last week. The major reason was, of course, the Eric Sprott pumperooney
 
First Place: "Tahoe Resources (TAHO) (THO.to) in IKN432". Real content tend to be more popular  than the wafer-thin ranty crap that makes up 90% of this blog. It's the way things should be.

9/1/17

Martin Scorsese on Jerry Lewis

A great thing to read, right here.

Antioquia Gold (AGD.v) rights offering

Antioquia Gold (AGD.v) filed to run a rights offering yesterday. Its shares price is C$0.10, there's around 300m shares out, around 70% of those are held by one entity (Infinita Prosperidad), it wants to raise a maximum of C$62.5m, Infinita says it will participate fully. This means:

AGD is moving to raise the money it needs t build its small gold mine.
It's looking for around 70% of that total, i.e. $44m
The terms of the rights offering are not known yet, but you can be sure that anyone holding this is about to be diluted to kingdom come unless they play along and invest more in the story.

Silver Bear (SBR.to): What death spiral selling looks like

Yesterday we brought you the news, today the visual:



THERE OUGHT TO BE A LAW! And in fact this time there isn't one, just a bunch of unscrupulous shitbags taking the money and running, aided by idiot management who opened the door wide to the wolves. But no worries, Inflection Mgmt Corp only have another 415m shares or so left to dump*.


*Yes, that was ironic, this is going much lower.

Wall St continues to ignore gold

On the date of the US Election, November 8th 2016, gold (London PM fix) was U$1,282/oz. Today it's U$1,324oz, some 3.3% higher but...



...in the same time period, GLD gold inventories have dropped by 133.26 metric tonnes.

Wall St. boys too busy making coin on Google and Amazon and Pets Dot Com.

The Friday OT: George Gershwin; Rhapsody in Blue

One of the most famous melodies of all time, but not so many people have heard the whole piece.




And they should do, it's a work of art written in 1924 by a genius, the original jazz/classical crossover that brought needed legitimacy to the new style. Youtube here.

8/31/17

Chuck Higgins has left the building

Good news for the Canadian legal profession! Charles "Chuck" Higgins, the man who singlehandedly brought Fasken into disrepute through his dirty, self-serving, two-faced dealings while partner at the firm "has been retired" and left the company today. Now kicked out of Fasken and with nothing better to do, he's started his own two-bit firm which, hilariously, is called "Pilot Law LLP" after the bar he part owns with his partner in crime Daryl "Sell You A Doobie" Hodges, the failed broker who ruined Jennings and then moved on to by a failed CEO, kicked out by Minera IRL for trying to asset strip the company.

The abjectly stupid Higgins has even used the same pilot logo as the bar for his new firm.


As from Monday you'll find him sitting at the corner table, laptop and smartphone.


Silver Bear (SBR.to) mailbag

FWIW I did register this NR when it came through last night, but it had slipped my mind until reader 'W' nudged me in a mail just now. Total agreement with W, here's what he said:

Hi Otto,

I am not sure if you saw this NR last night, but there is a lesson here for your readers. If you ever see big debt like this convertible at a fraction of the market price, run!!

A NR: (and I'm pasting the whole thing, you need to read it all, but a couple of key phrases are in bold type to help guide the eye)

TORONTO, ONTARIO--(Marketwired - Aug. 30, 2017) - Inflection Management Corporation Limited ("Inflection") announces that it has delivered to Silver Bear Resources Plc ("Silver Bear") a notice of conversion under its 15% convertible promissory notes due December 31, 2017 (the "Convertible Notes") issued by Silver Bear.
In its notice of conversion, Inflection exercised the right to convert its entire C$13,515,432.53 principal amount and all of the C$3,524,116.54 accrued and unpaid interest thereon into ordinary shares of Silver Bear ("Ordinary Shares") at a conversion price equal to C$0.045 per Ordinary Share (the "Conversion"). As a result of the Conversion, Inflection will cease to hold any Convertible Notes and will acquire 378,656,649 Ordinary Shares from treasury.
The Convertible Notes, of which an aggregate principal amount of C$18,020,576.71 is outstanding on identical terms, are held by Inflection and another holder. Based on there being 163,248,351 issued and outstanding Ordinary Shares as of August 18, 2017, Inflection previously held 41,176,471 Ordinary Shares representing approximately 25.2% of such issued and outstanding Ordinary Shares, and its Convertible Notes represented 75.0% of the principal amount of the outstanding Convertible Notes.
On the basis that the other holder of Convertible Notes has announced that it will also convert all of the outstanding principal amount of its notes and the accrued and unpaid interest thereon, but assuming no other new issuances of Ordinary Shares prior to the completion of the conversions by both Inflection and such other holder, it is anticipated that Silver Bear will have an aggregate of 668,047,513 Ordinary Shares outstanding immediately thereafter. Of these, Inflection will hold 419,833,120 Ordinary Shares, representing approximately 62.8% of the then issued and outstanding Ordinary Shares. The Ordinary Shares acquired by Inflection upon the Conversion will represent approximately 56.7% of such total issued and outstanding Ordinary Shares.
The purpose of the Conversion by Inflection was to adjust its holdings of debt and shares of Silver Bear. Inflection will continue to monitor the business, prospects, financial condition and potential capital requirements of Silver Bear. Depending on its evaluation of these and other factors, Inflection may from time to time in the future increase or decrease its ownership, control or direction over the Ordinary Shares or other securities of Silver Bear through market transactions, private agreements, subscriptions from treasury or otherwise.

A price chart:


Soooooo, even after today's 15% dump on this news, a group of hard-nosed capitalists have just bought over half the shares of a 20c stock for 4.5c apiece. Guess what happens next? (hint: picture an arrow pointing downwards).

A gold price chart

This is looking good. Trading more strongly than I expected.




x

Recent coverage of Excellon Resources (EXN.to) in The IKN Weekly

This from IKN431, dated August 20th 2017:

“…EXN remains this publication’s number one near-term conviction trade at today’s price deck (bold-typed for a good reason), expect it at $2.50 before the end of 2017.”


This from IKN432, dated August 27th 2017:


IKN432: “…assuming silver bullion plays ball Excellon (EXN.to) is still my most compelling near-term idea.”


Here's a price chart:



Any questions?

Chart of the day is...

...copper dailies...


...because of this written on December 27th 2016, one of the "Ten Random Predictions for 2017":

2) Copper to break through U$3.10/lb this year. This is also a weak dollar play in part, but it's more about China and the way its economy will pick up as 2017 goes on. I've gone for U$3.10/lb (spot price) to make it just a little more interesting than the more obvious $3.00 line.


That's a win. All we need now is gold to make it to U$1,400/oz, then...errr...Delpo to win the US Open and...errr...Barcelona to do the double...hmmm...

Well, they are random.

8/30/17

They say imitation is the sincerest form of flattery

Over at Sinking Alpha, Itinerant does Tahoe Resources (TAHO), right here. Nothing you haven't read before on IKN but at least he re-writes the original source DD in his own words. By the way, Teutonic mini-me, it's "can't help but", not "can't help and".



UPDATE: After a meeting this morning between local at the La Arena locality and management, a full scale strike has been avoided by Tahoe Resources. They did so by giving locals a whole boatload of concessions and saying sorry a lot.

Excellon Resources (EXN.to): IKN spies report to IKN Nerve Centre that...

...a party of three Canadian sell side analysts and one fund manager have been on a site visit to the Platosa mine this week. The anal ysts in questions arrived skeptical about the company's claim that they've successfully de-watered the mine, they're not skeptical any longer. The party, along with EXN bigwigs, were also spotted at a local steak and wine eatery in Torreon last night.

Expect a ramping up of coverage, people.

Regarding Goldmoney (XAU.to)

In IKN430 dated August 13th your humble scribe did an unusual thing and commented on a non-mining stock, Goldmoney (XAU.to). Here's that full piece:

Goldmoney (XAU.to): An impressive 1q18
I was impressed with Goldmoney’s (XAU.to) quarter as published on Friday (13) August 11th, which happens to be its 1q18 period due to its financial year ending March 31st. Revenues up YoY, a net profit of $2m (or adjusted $3.3m which is the one CEO Sebag underscored as more important) and definite signals of momentum increasing in its activities. The stock rallied on the news but is still under $3, which looks like a bargain for those with patience. For what it’s worth, Sebag and I have had intermittent contact over several years (started way back before Goldmoney or its previous name Bitgold even existed) and I’ve always been impressed with his sharp mind. I’ve been a doubter on this company for a long time, the concept of using gold as a backing for electronic transactions seemed like a redundancy to me. I may have to change my mind. Due to the move into mining company analysis it’s been a long time since I’ve looked closely at a financial services/quasi banking company seriously. I may have to change that too, its books are solid and if the idea reaches some sort of critical mass, this could be the start of something big. Even if it isn’t, there’s no chance of the current corporate structure collapsing, too much in the way of tangible assets on board.

Since then:




Just sayin'.

Gary T parses Mohamed El-Erian on gold

What is it about normally insightful and erudite market voices that makes them spout dumbassery when it comes to gold? Over at NFTRH, main man Gary Tanashian takes the op-ed written by Mohamed El-Erian on gold and parses it beautifully. Here's how it kicks off:

"...Mohamed El-Erian has always seemed like a textured, critical thinker. Now it appears he knows exactly how to write the perfect mainstream media article talking about gold… it doesn’t matter if you’re bullish or bearish, just paint-by-numbers so the lowest common denominator will nod his head and want more scoops from a given outlet."

A case study of the metal and the debate around it, today's recommended read. So click here and read it, far better for you brain than this blog.

Gold price action: pretty impressive so far

With the emphasis on so far.

Gold's doing well to stay handily above the U$1,300/oz line, doing so in the face of a mini-rebound in the US Dollar (thanks to the GDP number). The way gold trades in the very-near-term is sentiment based, in other moments that reversal in the dollar would have sent gold tumbling but not this time. The metal is showing backbone, and two tonnes added to GLD inventories yesterday.

A Friday close above 1.3k will suit me just fine.

8/29/17

Minera IRL (MIRL.cse) news

This is the link to the report on IRL in Peru's newspaper of record, El Comercio, yesterday afternoon. This is the translation:

Minera IRL Reduces the Cost of Ollachea
 
Minera IRL sees light at the end of the tunnel for Ollachea. The gold producer expects to put its mine project into production before 2020, despite the financial difficulties derived from the decision of Cofide to cease its financing of the development.

Gerardo Pérez, chairman of the board of directors of Minera IRL, explains the reasons for this as the arbitration process (between IRL and Cofide) begins at the Lima Chamber of Commerce (CCL)

Arbitration at CCL
"We consider this tribunal as the right location, not only because we can get a resolution from the arbitration committee but also because it will open dialogue with Cofide", said Pérez.

In 2015, the mining company was granted a U$70m bridge loan from Goldman Sachs, with an expiry date in June 2017, structured and financed by by the State entity Cofide, in which Cofide also committed to structure a full financing for U$240m.

Cofide has made it clear, however, that it will not continue in this service and demands repayment of its U$70m in order to comply with its social mandate. The State financing entity considers that the financing of Minera IRL is outside of what should be its policy line and has even said that there is the potential of corruption in its original granting.

Under this scenario, the gold mining company has been left without the capital to finance the U$165m that the Ollachea project needs. However, it has taken measures to revert the situation.

Re-design the project
The most important advance has been the re-designing of the project to a smaller scale, in order to reduce capital costs and increase its attractiveness to investors. "The optimization (process) is almost complete and will allow us to reduce capex by 50%, from U$165m to around U$80m", said Pérez.

The new optimized feasibility study recommends the construction of a smaller mine, of 1,500 tonnes per day, which is scalable to 3,000 tonnes per day (as per the original design) in the fourth year of operations. This will allow construction in just seven months, instead of the 18 months estimated previously. "Another big advantage of Ollachea is that it has its EIA approved and all its permits in order to start operations", Pérez added.

The gold mining company has also been in contact with investors interested in financing the project and is currently in negotiations with two investment funds.

At some point in the next two weeks...

...this blog will go through 20m pageviews.

I was at a bit of a loose end today, fiddling around in the blog back office (which is where that screenshot comes from) when I noticed the number in the red ring. So as I'll probably miss the precise moment, let's preempt it with a screenshot and a thank you to all readers. Now for the next twenty million...

What these two GLD inventory charts are saying is...





...there is a LOT of room to run here if the Wall St. jocks decide to fall in love with gold again.

Thinking about Houston

I'm a lucky guy, others are having a much worse day.



Hang in there, Houston. Sending best wishes.

My question about this move in silver

Is it real?



I'm not against the idea, just unconvinced at this point. Show me SLV at 18 and that may change. Maybe even seventeen and a half.

Eric Sprott pumps Excellon

On King World News yesterday, right here. The result?



These pumps may be in-your-face, but they work.

8/28/17

We're all geniuses again

This move was so strong even Goldcorp went up today. Mind you that one's still negative 2017 year to date.


So yeah, gold goes up and we're all geniuses. Unless of course you're a dumbass Garofalo fanboy or stupid enough to buy into Allan Barry's Alset. If you are, consider it a learning curve; You get to be a genius next time.

Tahoe Resources (TAHO) (THO.to) in IKN432

This is yesterday's edition of the weekly:



Tahoe Resources (TAHO) (THO.to) and its community problems in two countries
It doesn’t really matter which Tahoe Resources (TAHO) (THO.to) price chart you dial up, they’re all a bit of a disaster so this standard 12 month variety will do nicely. It shows the legs down in July and most recently last week, when the company announced (19) that it had heard the Constitutional Court (CC) in Guatemala had provisionally ruled against rescinding the suspension on its operating license, though the formal hearing doesn’t happen until next week (tomorrow Monday, to be exact). To the problem in Guatemala we can add the problems TAHO has at its La Arena mine in La Libertad region, Peru, as reported on the blog (20) last week. There we noted that the mine was under blockade by locals who are unhappy that the local community liaison officer had been dismissed by the company. In today’s note we examine both aspects of TAHO’s current CSR snafu, including the latest information.

Guatemala
At first I found it strange that TAHO had unilaterally announced that a provisional ruling had gone against the company and in all likelihood, when the CC sits this week the company won’t get its operating license out of suspension and said as much on the blog (21), but it soon became apparent that all Guatemala news agencies were running the same story and TAHO was simply getting in front of news that it would have to address anyway. The stock dropped nastily on the news (down nearly 19% on the day and with heavy volume), so that also rules out any sort of double game being played by the company; unless something surprising happens tomorrow, it’s not getting the suspension lifted while the longer court process goes on.

I find this surprising. In the note “Tahoe Resources (TAHO) (THO.to): A buying opportunity?” in IKN425 dated July 9th, just after the original suspension and lodging of the appeal with the CC by TAHO, I made mention of the CC action and the precedent it could follow in the ruling it made earlier in the year when on May 26th it lifted the operating permit suspension on the Oxec I and Oxec II hydroelectric operation and allowed it to continue while its case proceeded. I thought that precedent would see TAHO get back to work and assuming last week’s news is upheld officially in the days to come, I was wrong on that call.

This leaves TAHO in a sticky situation and the NR last week from the company made no bones about it. It also mentioned that the blockade of the mine at the town of Casillas continues and it went as far as to mention “the D Word”, default on the terms of its financial debt, because even though it has around U$190m in cash at bank it’s going to be tough for the company to maintain the terms of covenant on its debt because they demand a minimum EBIT level from operations. Assuming the unofficial ratification of the suspension becomes official next week, the company is looking at a shuttered mine for the 12 to 18 months that the larger Supreme Court legal action will take to resolve. And on that, there was further bad news for the company last week when the courts decided that it wasn’t just the single locality of the town where TAHO operates its Escobal mine, San Rafael Las Flores, which needs to be heard during the trial. According to this decision (22), the localities of Jalapa and Santa Rosa have the right to be heard as they are also directly affect by the mine’s operations. That’s bad for TAHO because in San Rafael Las Flores the town is reportedly split roughly 50/50 pro/contra the mine (it provides a lot of employment and salaries, as well as royalty payments) but in the outlying areas the public opinion is heavily against the mine.

Peru
Adding to the community relations woes at TAHO (of their own doing I hasten to add, don’t expect any sympathy from me) is the developing situation at TAHO’s La Arena mine in Peru. We noted on Wednesday that the mine was blockaded by locals and gave the reasons why via this translation of a local news report:

Since yesterday, residents in the La Arena area have closed down operations at the mining company in the vicinity due to their opposition to the firing of the mine manager, the engineer Mariano Yupanqui Rada.

The protesters are located at the gates of the La Arena mine with banners, in order that management reverse the decision to make the aforementioned manager redundant. They stated that they were happy with the work of Yupanqui because he had always complied with the agreements made between the company and the community, as well as gaining the respect and affection of locals due to the caring way in which he went about his work, no matter how rich or poor the people concerned.

The president of the local community 'Ronda' group, Eleuterio Baltazar Rodriguez, said that it was unfair because thanks to the work of Señor Yupanqui the mining company had avoided conflicts with the local community. "He is a person who knows how to connect with the people, we are not going to allow him to leave the company because he's a professional from this region and we don't want people from other places to come in and do his job".
Also, the president of the La Arena Urban Expansion Association and also the general secretary of the union of workers at the mine, Ernesto García Armas, voiced his opposition to the decision taken unilaterally by upper management at Tahoe Peru. He said that since Rio Alto was sold to Tahoe Peru they had seen many labour abuses and unjust redundancies.

He said, "If the company ignores us, we will continue with this blockade and then as from August 31st the union workers at the mine will go on indefinite strike in order to defend our rights".

We can now update on the situation there, via the latest reports this weekend (23) that show the relationship between locals and company have deteriorated further. There’s a longer video on that link which is worth watching (if you are equipped with Spanish language and care enough) but the short report that goes with the visual captures the essence and here it is translated:

La Arena Community continue in struggle against mining company
The president of the local ‘Ronda’ community association in the La Arena area, Eleuterio Baltazar, spoke clearly when indicating that all the community were defiant (against the La Arena mine) because it was trying to ignore the agreements made by the mining company when it was controlled by Rio Alto, but unfortunately since the mine was taken over by Tahoe Peru the problems began.

He said that there were specific points that the transnational company must adhere to and they would fight until they reached their objectives because the community would not allow itself to be negatively affected.

He added that the protest was pacific in nature and lamented the fact that the company had brought in personnel from the DINOES police force as if they common criminals.

That last paragraph is significant for several reasons, because it’s no small thing to see the word DINOES there. That’s the elite police force put together in order to fight (as in really fight, war and guns and death) against the cocaine growers, narcotraffickers and far left Sendero remnant operations in the VRAE region of central Peru. Seeing DINOES personnel at a mine gate blockade is a massive case of overkill and implies the following:

  • The mine gates are no longer under blockade. Locals would be stupid to confront DINOES agents, these are the ones who shoot first, ask questions later and get a free pass on questionable methods by the national government. This is probably why TAHO hasn’t made any sort of official announcement about the blockade in the media (it thinks its problems are over; nope sorry, they’ve only just begun).

  • TAHO has no intention in engaging with locals and prefer the stick-no-carrot method of community relations. Bringing in DINOES like this without any attempt to converse and reach agreement is arrogance of the highest order and you can guarantee that local blood is now boiling around the La Arena zone. Yes, this company really is this stupid.

  • The bad blood that’s developed between locals and company since TAHO took over will only increase and that’s evident when you watch the video on that link. Locals are now threatening to make good on the strike action as from September 1st (next week) and are also bringing the unhappy locals around the nearby Shahuindo mine (also TAHO) into the protest. Those locals have been unhappy for many months and have staged their own protests and temporary blockades, so it won’t take much to get them involved.

When DINOES leaves (and they will, they only stay for a limited time) TAHO will find it has created a rod for its own back. The level of their tone-deafness in interacting with locals is astounding and if recent history has taught anything about mining in Peru, it’s that you cannot disrespect local communities and get away with it, particularly organized local defence groups like the Rondas, the same people who have stopped projects like Conga.

Bottom line: Back in IKN425 I suggested that TAHO could be a near-term trade on the rebound that would entail from it getting its Escobal operating licence out of suspension. That now looks like a very risky trade and not a decent opportunity, unless of course the CC surprises us next week and changes its unofficial ruling of last week. Added to the problem is now Peru, TAHO is screwing itself there as well with its painfully poor CSR operations. This company thinks it’s still the 1970’s, it’s not. They’re in a lot of trouble and cheap though it may be, the stock has to be called for what it is; a clear avoid.

8/27/17

The IKN Weekly, out now


Learn more about 432Hz here


IKN432 has just been sent to subscribers. Numbers and things, usual stuff.

Silver or Vanilla?

My thanks to reader CM for the heads up.

Hey Neumeyer! Hey Silverbugz! You're in the wrong commodity! According to latest reports (here and here) the price of vanilla has shot up to U$600/kg. That's around U$50/kg higher than silver bullion.



Though it does remind me a lot of Eddie Izzard's 'Cake or Death', there's really only one video to go with this note.


Harvey, Texas

Help me out here, ladies and gentlemen:
  • Climate change models predict higher sea temperatures.
  • Higher sea temperatures make for more powerful and greater water-bearing hurricanes and tropical storms.
  • But what just happened on coastal Texas is a one-off, unprecedented, nobody could have predicted it and anyone trying to connect this with climate change is just being a left wing commie bedwetting liberal with a dogmatic agenda.
Is that right?

UPDATE: Mail in and learn me things, but read this first.

Sport

Not sport.