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5/21/19

Abitibi Royalties Corp 1q19 financials: All Razzle, No Dazzle

Abitibi Royalties (RZZ.v, a.k.a Razzle) reported its 1q19 financials this evening and...well, I just don't get why this company is so expensive. Its share count is tight for sure, with just 12.47m shares out. The balance sheet is tidy enough, as even though it runs a working cap deficit that's because it writes calls on its stock holdings and its $1.32m in cash is enough to do its thing. But the current share price, C$12.72, gives it a market cap of C$158.6m and that is really up there. For one thing, it implies a 4.7X book (and how many mining companies can command that these days, even royalty companies). For another, you start looking at its P+L and it's hardly a dazzle, this Razzle):


Operating profit is tiny, but the way it gets to a 21c/share net profit is via the change in value of its share investments and those are basically its holdings in Yamana (AUY) (YRI.to) and Agnico (AEM). Over the course of 1q19 those stocks went up and made Razzle look good, the company able to pimp its net earnings by $2.96m (but doing nothing for free cash flow, which was negative by just under half a million, despite the company in its recent NR blowing its horn about making a million in cash flow). But relying on the movements of stock prices to justify one's own is a double-edged sword because since 1q19 closed, AEM has dropped around $2.50 to date. That meas a million or so loss for Razzle coming up in 2q19 (if things stay that way). Even worse at AUY, down around 65c since then and that's a cool $2.3m lost to date. So, those investments that propped up the meagre cash royalty revenues to the tune of $2.9m in 1q19 have already lost more than that in 2q19. 

Razzle is a nice little biz model yeah, but hell's teeth it ain't worth C$159m.


5/20/19

Newcrest talks to BHP

Newcrest: "Hi, how you doing?"
BHP: "Hey fine! How are you, I was just about to call you."
Newcrest: "Really, what about?"
BHP: "Was thinking of offering you the chance to buy another 11% of SolGold. Interested?"
Newcrest: "Hah! Funny you mention that, that's why I called. Was thinking about offering you the opportunity of owning another 15.23% of SolGold."
BHP: "Let's do lunch this week."
Newcrest: "Yeah, good idea. I'll get back to you this afternoon with a day."
BHP: "Okay, look forward to it."

I'm sorry! Did you just say "ten point five billion dollars"?

Seriously? In that country? To be exact, let's quote the CEO:

"The study team has been careful to separately identify start-up capital costs ($2.4Bn – $2.8Bn) and ongoing sustaining capital costs ($7.5Bn – $7.8Bn over the life of mine) and has differentiated this from operating costs."

I darned well bet you guys have, Nick. For further information, please consider the IKN post "The Real Meaning of P.E.A." from June last year.

The IKN Weekly, out now


IKN521 has just been sent to subscribers. Many photographs of a place called Copper Gold.

5/17/19

Henk van Alphen, loan shark

This out of Cardero Resource (CDU.to) this Friday evening:

Vancouver, British Columbia - Cardero Resource Corp. (“Cardero” or the “Company”) (TSX: CDU, Frankfurt: CR5), reports that, subject to TSX Venture Exchange (“TSXV”) acceptance, the Company has secured loans in the aggregate amount of $150,000 (the “Loans”) with certain Directors of the Company (the “Lenders”).
The Loans have a two year term and bear interest at a rate of 12% per annum compounded annually, payable on the maturity date. The Company has agreed to issue in aggregate 3,000,000 non transferable bonus common share purchase warrants (each, a “Bonus Warrant”) to the Lenders. Each Bonus Warrant will entitle the holder to purchase one common share in the capital of the Company at an exercise price of $0.05 per share for a period of two years. All securities issued pursuant to the Loans will be subject to a hold period of four months and one day in Canada from the date of issuance. The funds available from the Loans will be used for general working capital.


What part of "we do not care about anyone except ourselves" do you not understand?

5/15/19

Barrick (GOLD) At the BAML conference in Barcelona

May 14th to 16th. The man himself presented to a sum total of 15 delegates



Shouldn't shoot elephants.

5/14/19

This blog will be quiet for the next three days

For secret reasons.

5/13/19

Mike McPhie obtains absolution

He can now rip off a new set of retail shareholders with a clean conscience. From here.


From the same people who brought you "Caedite eos. Novit enim Dominus qui sunt eius"

5/12/19

The IKN Weekly, out now



For more information, click here. I learned this today, too.

IKN 520 has just been sent to subscribers. Lots of results.

5/10/19

Byron King, fired by Agora Financial

Confirmed word reaches this desk that Byron King has had his "contract discontinued" as mining analyst for Agora Financial. And let's face it, you have to be pretty awful to get fired by that crowd of shysters.

So it seems Porter Scamsberry is hiring, should I send over my CV?

The Friday OT: Deadmau5; Strobe

Deadmau5 is an artist I have deliberately avoided over the years due to something akin to fear. Well, not really fear, more the addictive strain in my music tastes and the deep dark space in my brain that knew if I started listening to him, I would get so obsessed that wouldn't put anything else through the speakers for weeks. And damn I was right, on my fifth day now, had Fn Pig on repeat play for a couple of hours a while back, Channel 42, Ghosts N Stuff, whole albums, live recordings, you name it and I'm still just scratching the surface. 

So anyway, here's Strobe, which is an utterly incredible piece of music.



Hope you enjoy it as much as I have the 35 times this week. Youtube here.

Mo' Hecla (HL)

From yesterday's post:

"...once more people get a feel for how bad this company's financial situation is, it'll drop more."

A five day price chart:


On an up day for precious metals, too. Further questions?