start here

start here

The Daily IKN email digest, get all daily posts sent to you next day (& no ads)


Alex Dalmady wins "blog post headline of the day"....

....with "*Sigh* No Forest". It's a good post too and here's how it starts, click through and read the rest, wontcha now?
"In a move that should surprise no one, Canadian/Chinese forestry company Sino-Forest filed for bankruptcy in Canada yesterday. The timing of the filing shouldn't be a surprise either, since the company was due to deliver its 2011 audited financial statements and also unsurprisingly couldn't find an auditing firm willing to sign off on them."
continues here

Five days of metals and miners: March 31st

The regular Saturday slot: The last five days' worth of action in the gold bullion ETF (GLD), the silver bullion ETF (SLV), the miner ETF (GDX), the junior miner ETF (GDXJ) and the copper ETF (COPX).

All lower again this week (what is it about Thursdays anyway?) but I still say we saw the bottom on March 22nd and there's nothing up there, apart from the distressed selling in the juniors, to evidence otherwise. Meanwhile, as an extra special bonus here's the first three months of the same set of squiggly lines, what with it being end of quarter yesterday, too.

Gold miners down, juniors just beat even, coppers and gold did ok, silver did best. Nuff said.



Fortuna Silver (FSM) has insider buyers now. This from INK Research:

INK Research

Fortuna Silver Mines Inc. (FVI) has the following new filing(s) recently:
SEDI Insider Relationship:
     4 - Director of Issuer
Acquired 33,000 Common Shares (Direct Ownership) between the prices of $4.330 and $4.420 through the public market on March 29th, 2012 (Holdings Change* of 91.7%)
SEDI Insider Relationship:
     5 - Senior Officer of Issuer
Acquired 22,500 Common Shares (Direct Ownership) between the prices of $4.330 and $4.410 through the public market on March 29th, 2012 (Holdings Change* of >= 100%)

The Friday OT: Earl Scruggs; Foggy Mountain Breakdown

Earl Scruggs does Letterman, with a band of musicos that features banjo-pickin' Steve Martin running on his other talent and other top players too. But it's Scruggs they've come to hear, the main man, the top dog.

A seriously kickin' tune that's all lined up ready for you, just hit play and enjoy. Mr. Scruggs, we salute your memory and bow deeply.

Earl Eugene Scruggs; January 6th 1924 - March 28th 2012. R.I.P.

Venezuela election opinion poll from Datanalisis: Chávez 45%, Capriles 31%

A significance of this poll is that Chávez has stretched his lead since the last Datanalisis survey. Another is that the owner of Datanalisis, Luis Vicente León, is a rampant anti-Chavista. However it's worth noting the polling dates on this one, from earlier in the month. Since then Hugo has seen more rumours about his health come up and more chemo in Cuba. Here's the chart:

LV Leon says that the ballgame is all about convincing the undecideds from now until October 7th, the now confirmed polling day. Sounds about right. Data from here.

Any news on Batero Gold (BAT.v) at The Dollar Vigilante?

Just wondering if Ed Bugos is going to go "extra special triple-down children's university fees buy even more" on Batero Gold (BAT.v), now that the "buy even more at $1.20" stock has dropped another 33% and is at new 52 week lows today? Any news from the guys recently on this? Inquiring minds....(etc).

The silver lining to market blowhards is that they always remind me to watch this. Then I have a good chortle. And my life is improved as a result. Thanks Jeff*!

Specifically, it's the bit around "pointed stick" that jumps to mind (fresh fruit not good enough for you, loganberries, etc)

*or should I say Mr Apricot? Or Harrison?

Chart of the day is..., hourlies:

And so gold is shaping up to close the week unchanged. Plus, the top-to-bottom price movements we've seen this week amount to a fluctuation of just 3%. Plus, it looks like we're going to end the quarter with a per-ounce price around $90 higher than the end of the last quarter. But that's just not good enough for you all, is it? You want $300/oz upmoves every day and if not, gold's back to being the barbarous relic or summink like dat. 


Canaccord's Chutzpah

Chutzpah (n): "...gall, brazen nerve, effrontery, incredible 'guts,' presumption plus arrogance such 
as no other word and no other language can do justice to.../...that quality enshrined in a 
man who, having killed his mother and father, throws himself on the 
mercy of the court because he is an orphan."

The Joys of Yiddish, Leo Rosten, 1968

Your author wet himself laughing at this week's edition of Canaccord's "Metaland" weekly report on the state of the junior market. Not because of the usual blather and sophistry included from the hand of Wendall Z-Man Zerb and Nicholas CampbellSoup, but because of the jawdropping brass neck on display.

The main essay's subject was on why gold mining equities were currently so hated by the investment community and the jolly fellows at the Can of Corn offered up their reasons as to why that might be so. Here are two of the main bullet pointed thoughts that The Z-Man & Soupy Show put forward, (you can download the whole thing here if your stomach is strong enough, that is):
"Too many low-grade deposits: High gold prices have allowed companies to significantly reduce cut-off grades applied to new deposits and resource estimates. It is no longer unique to have a one million ounce gold project. As grades have dropped, the focus shifted to scaling up projects to benefit from economies of scale, which have resulted in substantially higher capex requirements. The net result is operations that have high capex (which is tough to finance as a junior) and relatively high costs (which is less attractive for larger cap producers)."

"Over-promote/under-deliver: Unfortunately, some of the more promising, much hyped new discoveries that have been announced over the past few years have not lived up to the heightened expectations of investors."

IKN back. What brass neck! The guffaws were loud and hard at IKN Nerve Centre™ because it's Canaccord that's been running these bullshit pumps! For years! Who pumped the low grade, über-high capex, under-delivering Exeter Resources ( (XRA) to the mouthbreathing end of shareholder community for years? WHY IT WAS WENDELL ZERB OF CANACCORD! Excerpt from here (a time when was a $5 and $6 stock):

Wendell Zerb, Canaccord Genuity (1/18/12) "Exeter Resource Corp. has released the prefeasibility study for its 100%-owned Caspiche Au-Cu-Ag project, with results as expected. We maintain our Speculative Buy rating and 12-month CA$9.35 target price. . .Exeter's Caspiche deposit remains one of the most significant new Au-Cu-Ag discoveries in the last decade; located in the Maricunga belt in Chile and adjacent to Barrick's Cerro Casale and Kinross' Maricunga (Refugio) deposits, Caspiche is well located as this prolific district expands. . .we continue to value Exeter on metrics related to it ultimately being acquired."

And who pumped Batero Gold (BAT.v) like there was no tomorrow for the whole of 2011, that total trainwreck disaster of a low grade, ultra low cut off BS pump for years and was calling this a $10 target as late as January 2012 that dropped 2/3rds of its share price to the current 0.80s levels once the truth became apparent? WHY IT WAS NICHOLAS CAMPBELL SOUP OF CANACCORD! 
16/1/2012 Analyst Nicholas Campbell of Canaccord Genuity is maintaining his rating on shares of Batero Gold Corp. (BAT.V) as the company released promising drilling results from its Colombian Batero-Quinchia mine, The Globe and Mail reported.
The Globe said he is expecting an initial resource of at least 7 million ounces of gold, with longer-term potential for the project to develop into a 10 million ounce gold resource.
Canaccord Genuity maintained its "speculative buy" rating and 12-month target price of $10 on the stock.

And believe it people, there are many, many more bullshit pumps from that den of iniquity which match the profile. Andina (ADM.v) was a Can of Corn pump vehicle. Its relationship with NadaGold (NG) goes back over a full decade. Northern Dynasty at Pebble got the P&D from Canaccord on its unpermittable Pebble thing up North. And on and on and on we could go. But now, after manifold examples of pumping and over-promoting low grade high capex gold things over the years, these utterly shameless individuals want to make themselves out to be industry vigilantes, policing and cleaning up the streets of shame so that we lesser mortals can walk down them with no fear.

Leo Rosten step aside, sir. There's a new definitive definition of "chutzpah" in town. Origins: Canada.


This is how exactly your humble scribe is feeling this morning:

At 11

And we certainly hope you are having a pleasant day

A Flash update...

...went out to subscribers just before the bell today.

Chart of the day is...

...zinc LME inventories, 5 year:

To go with this from Reuters :

LME zinc stocks hit highest since May 1995 SINGAPORE, March 28 (Reuters) - 

Zinc stocks in warehouses monitored by the London Metal Exchange (LME) jumped to the highest in nearly 17 years on Wednesday, climbing steadily after years of market surpluses.
LME stocks of zinc , a metal used to galvanise steel, jumped by 9,850 tonnes to 898,675 tonnes, latest LME data showed, which was the highest since May 1995, metals strategists at Bank of America-Merrill Lynch and BNP Paribas said. "The zinc market has been in a very large surplus for several years now, and is looking at another surplus this year. Stocks are generally continuing to build up from already massive levels," metals strategist Stephen Briggs of BNP Paribas said. "There's likely to be a slowdown in steel demand growth this year, and for the last few months, for most base metals, demand has been quite weak. Zinc is in worse shape than some because producers have been more than matching demand," he added.
The global zinc market was in surplus by 22,400 tonnes in January, having recorded a 351,000 tonne surplus in 2011, according to Lisbon-based International Lead and Zinc Study Group (ILZSG). 29

Mo' Fortuna Silver ( (FSM): Andrew Kaip of BMO upgrades tonight to a buy rating

All good clean fun in the Canadian brokerages. Not. 

Anyway, here's the link to the full BMO report that went out to their list at 10:30pm tonight and here's the cover letter that came with it.

Fortuna Silver Mines


Stock Rating:
Industry Rating:

March 28, 2012
Research Comment
Toronto, Ontario

Andrew Kaip, P.Geo.
BMO Nesbitt Burns Inc.
(416) 359-7224
Assoc: Alexandra Syrnyk, CFA /
Scott Gryba, P.Eng., P.Geo.

Upgrading to Outperform; Market Pull-Back Overdone

FVI’s share price has dropped 22% after the company reported a Q4/11 EPS miss late last week. The share price decline appears to be a reaction to increasing costs, permitting concerns at the Callyoma mine, recent community violence around the San Jose mine, as well as concerns that optimization and expansion programs to reduce costs at both operations will be delayed.

Potentially Positive. While cost escalation is a reality in the sector, BMO Research sees the Q4/11 EPS miss as an isolated event. FVI has established a solid operator reputation underscored by the successful commissioning of the San Jose mine in Q3/11. The risk to implementing optimization programs appears to be overdone with FVI in a good position to increase production rates at both Callyoma and San Jose in 2013.

BMO Research forecasts 2012 production of 3.6Moz silver, 17.0koz gold at revised co-product cash costs of US$14.14/oz silver (up 27% from BMO Research’s previous estimate of US$11.33/oz).

Factoring in higher costs and the recent share price decline, FVI is trading at 1.1x its 10% nominal NPV at spot metal prices, a 15% discount to intermediate and junior peers at 1.3x providing an attractive entry point for investors.

BMO Research is upgrading FVI to Outperform, but lowering its target price to $6.75 to reflect recent guidance on operating cost escalation.


Fortuna ( (FSM) downgraded by CIBC World Markets' Brian Quast

Your humble scribe reads with interest the analysis of Fortuna Silver ( (FSM) published March 28th by Brian Quast of CIBC World Markets. Here's the front page of the PDF:

Fortuna Silver Mines Inc.
Losing A Bit Of Its Luster
FVI surprised to the downside with Q4/11 earnings. Adjusted EPS were $0.00 compared to us and consensus at $0.08. The miss was particularly shocking given production and cash costs were pre-released. As of 3/28, we reduce FVI's rating from SO to SP as our PT goes from C$9 to C$6.50.
Over the past three years, operating costs per tonne have almost doubled. During the conference call, management guided to cost inflation of 20% in 2012. We have raised our long-term operating costs across the board for Fortuna, with a somewhat disastrous effect on our NAV.
Smelter agreements, particularly for "pure" precious metals concentrates have become progressively more onerous recently. San Jose produces this type of concentrate, and given the difficulties that we have observed, we have materially boosted our smelter costs at this operation for 2012.
The new mining taxes in Peru are based on operating profit, not on revenue, and they are assessed on a sliding scale. The rates slide from 3% for mines with no operating profit to 20% for operating profit above 85%. These are now incorporated in our Caylloma model.

The full report goes into the details of the costs hike, the revenues drop and the way in which received price for silver has gone significantly below the average price per quarter. In fact the conclusions drawn by Quast all round are similar to those of IKN151 last Sunday, when your humble scribe called sell on the stock. The reduced CIBC target price for FVI is within 11c of our own, too.

Oh, there is one significant difference though; The IKN report was dated March 25th and gave the chance to get out at over $6 on Monday morning. Just sayin'.

The funniest thing of the lot is that I've heard from subscribers that FVI's IR department has been blaming this humble corner of cyberspace for its share price action this week. I wonder if they're going to blame Quast too now that he's come to the same conclusions? The "blame" for the poor results doesn't rest with anyone outside the company and the only thing I'm guity of is seeing the deterioration first. There are no sacred cows, this is capital markets not a kiddies funfair ride.

PS you can download your copy of the CIBC report by clicking here 

UPDATE: I've been asked to share the March 25th IKN151 analysis on here on the blog. I'm not so sure about the whole thing (it's 9 pages long for one thing, hardly blogpost stuff) but to give the general idea, here's how the conclusion section of the report started. 

Before any further thoughts, after last week’s diatribe I again want to stress my full personal satisfaction with the way FVI has disclosed and approached the news dissemination of the recent accidental death of a worker at Caylloma. The company had already said it would be raised at the ConfCall and in the MD&A, but it was above and beyond its call to have featured the circumstances in its NR so prominently (and given it a large space at the top of the MD&A too, instead of tucking it somewhere further down where many eyes don’t travel) as well as making sincere pledges to help those directly affected by the accident when it most likely has little legal obligation to do so (if we read between the lines about the causes of the accident). My decision to sell FVI is not in any way related to this now closed issue.
I’m selling FVI because the way in which 2012 is shaping up doesn’t seem to give the company much more share price growth to the upside, it’s that simple. The combination of reduced revenues and creeping costs, particularly those at Caylloma, mean that cash flow that affects the price the market is willing to pay for a piece of this company is being squeezed on either side. Added to the straight math-crunching, the $57m budgeted for cap-ex at Caylloma and San José combined suggest that FVI will be a better and more profitable company once those improvements are done, but 2012 is shaping up to be a transition year for the company, at least in respect to its results (and yes, bottom line results because they do count round here).


On the road

Posting will be light for a couple of daze, so just for a change let's enlighten you with words at IKN that are actually worth reading. Tis the man Jack, for your enjoyment:

At Sonora I again helped myself to free bread and cheese while the proprietor chatted with a big rancher on the other side of the store. Dean huzzahed when he heard it; he was hungry. We couldn’t spend a cent on food. «Yass, yass,» said Dean, watching the ranchers loping up and down Sonora main street, «every one of them is a bloody millionaire, thousand head of cattle, workhands, buildings, money in the bank. If I lived around here I’d go be an idjit in the sagebrush, I’d be jackrabbit, I’d lick up the branches, I’d look for pretty cowgirls - hee-hee-hee-hee! Damn! Bam!» He socked himself. «Yes! Right! Oh me!» We didn’t know what he was talking about any more. He took the wheel and flew the rest of the way across the state of Texas, about five hundred miles, clear to El Paso, arriving at dusk and not stopping except once when he took all his clothes off, near Ozona, and ran yipping and leaping naked in the sage. Cars zoomed by and didn’t see him. He scurried back to the car and drove on. «Now Sal, now Marylou, I want both of you to do as I’m doing, disemburden yourselves of all that clothes - now what’s the sense of clothes? now that’s what I’m sayin - and sun your pretty bellies with me. Come on!» We were driving west into the sun; it fell in through the windshield. «Open your belly as we drive into it.» Marylou complied; unfuddyduddied, so did I. We sat in the front seat, all three. Marylou took out cold cream and applied it to us for kicks. Every now and then a big truck zoomed by; the driver in high cab caught a glimpse of a golden beauty sitting naked with two naked men: you could see them swerve a moment as they vanished in our rear-view window. Great sage plains, snowless now, rolled on. Soon we were in the orange-rocked Pecos Canyon country. Blue distances opened up in the sky. We got out of the car to examine an old Indian ruin. Dean did so stark naked. Marylou and I put on our overcoats. We wandered among the old stones, hooting and howling. Certain tourists caught sight of Dean naked in the plain but they could not believe their eyes and wobbled on.

The IKN Weekly, out now


IKN151 has just been sent to subscribers. The usual collection of vapid meanderings trying to pretend at some sort of expertise in order to hoodwink a bunch of suckers with more money than sense*. We certainly hope you'll enjoy it, but doubt you will because it's truly a load of crap and a waste of time reading it.

*our ongoing campaign to try and get a few people to unsubscribe gathers speed