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A photo from your humble scribe's gentle trek in the great outdoors

Name that peak*:

It was a pleasant day. More Sunday, subbers.

*clue: many mountaineers will recognize it, as it's one of the world's toughest climbs


Dale Campeon!

PS: No more posts until Sunday, this very happy River fan is on the road.

It's time Gold Resource Corp (GORO) told us where the missing gold is

In the third quarter of 2014, Gold Resource Corp announced significantly lower sales of its gold than production. To be exact, it produced 6.523 ounces of gold and sold just 2,932 ounces. At that time, company President and CEO Jason Reid explained the shortfall as follows in the 3q14 results NR:
We stockpiled much of our high-grade gold and silver concentrates produced during the quarter in preparation for pouring Doré bars in our new Doré facility, which we began commissioning at the end of the quarter and which increased our unsold inventories. We recorded a $(0.03) per share loss which was contributed by unsold concentrate inventory as a result of stockpiling the high-grade concentrates for the Doré facility process. These inventoried ounces are planned to be processed and sold during the fourth quarter as Doré bars. 
Okay, fair enough and what's more you can see how the extra amount of precious metal was booked to GORO's sheets by looking at the inventory figures:

However, when 4q14 came around there was no catch-up of gold sales, in fact for a second quarter running gold sales were substantially less that the reported production. Precisely, GORO produced 8,865 oz gold and sold 6,026 oz gold. And I thought that was rather strange. However, I thought the extra retained gold may wash out through the next couple of quarters, so I waited through the 1q15 numbers and to tonight, when GORO announced its 2q15 financial results.

  • There's still no sign of the missing gold.
  • It's not in the inventories any longer.
  • GORO hasn't made a single mention of the shortfall in 2015
  • And that's not just a shortfall from 3q14, there's one in 4q14 as well.
  • When you add up those numbers, GORO has produced 30,524oz gold in the last four quarters.
  • But in the same four quarters GORO has only sold 24,732 oz gold.

That's a difference of 5,792 ounces, which if you price at an average U$1,200/oz is U$6.95m worth of metal that's apparently disappeared into thin air. Call it seven million dollars between friends.

Tomorrow Thursday August 6th GORO has its conference call scheduled for 11am Eastern Time. Maybe somebody would like to ask him about this shortfall, because in my opinion it's a little difficult for a mining company to mislay something like five thousand ounces of pure gold.

Hudbay (HBM) ( suffers its fourth truck accident this year at Constancia in Peru

Word picked up by this humble corner of cyberpace this morning is that there has been a yet another trucking accident at the HudBay (HBM) ( Constancia mine in South Peru. This is the fourth time (seriously) a truck has overturned laden with concentrate since operations began at the mine earlier this year.

The latest accident occurred on Saturday August 1st on the road between Chillotroya and Espinar. The local environmental authorities were called to the scene, because the overturned truck spilled a large quantity of copper concentrate onto the pasture lands of local farmers.

Today Wednesday, a emergency meeting of community member has been called by the closest town, Coporaque, due to the frequency of these accidents out of Constancia.

HBM doesn't have the cash to fix the road? What's certain is that according to the company's 2q15 financial report they have a big backlog of concentrate waiting to be shipped out, so there's more than a hint of the company pushing the infrastructure to outside good safety levels.

PS: IKN reported on one of the accidents earlier this year, the time in May when the truck overturned and the concentrate from Constancia fell into a local stream. HBM didn't tell anyone about that accident, either.


IKN has just learned that Steve Letwin is still CEO of IAMGOLD (IAG) (

It's amazing.

Primero Mining (PPP) ( G&A: gold fittings in the staff washrooms

Primero (PPP) ( reported this morning and all you need to know about its crappy quarter is that you can't find the real net earnings number anywhere in the spindoctor NR (they lost $6.744m, for the record).

However, IKN zeroes in on a subset of figures at P, its G&A numbers:

When it dipped to under U$100/oz AuEq in 4q14 I thought the company might have been serious about cutting costs instead of just paying lip service, but the last two quarters have thrown that naive thought out the window:

These are unjustifiably big numbers for any mining company in 2015, let alone one that's making a loss.

And NR of the day comes from Tahoe Resources (TAHO) (

VANCOUVER, British Columbia, Aug. 5, 2015 /PRNewswire/ -- Tahoe Resources Inc. (THO) TAHO (bvl:THO) today announced that Kevin McArthur, Tahoe's Executive Chair, has assumed the Chief Executive Officer duties of the company following the resignation of Alex Black as Tahoe's CEO and Director.

Mr. Black, who assumed the CEO role following the acquisition of Rio Alto Mining Limited in February, is resigning for personal reasons.

Mr. McArthur said, "I wish to thank Alex not only for his vision at Rio Alto, but also for his leadership in helping to put our companies together. He can look back on his accomplishments with great pride, and the entire Board of Directors wishes him the best."

"Tahoe Resources has a strong balance sheet and excellent assets that were strengthened and diversified through the acquisition of Rio Alto," said Mr. Black. "I am leaving with the mines and projects operating in great shape, and I look forward to Tahoe realizing the full potential of the combined companies."

About Tahoe Resources Inc.

Chart of the day is...

...this plate ripped from the May 2015 presentation of Midway Gold (MDW), the company that failed miserably to ramp-up its gold mine:

There are lessons for us all in that. Thanks to reader R for the headsup (would never have looked otherwise).


Lundin Gold ( preparing to raise via equity financing

Most probably a bought deal.

That's what this evening's SEDAR filing is all about:

Barrick (ABX) reports its 2q15 after the close Wednesday August 5th

You've gotta ask yourself one question: "Do I feel lucky?" Well, do ya, punk?

They forgot to wish him well in the future.

Normally it's "The company would like to thank (name of person) for his/her service and wish him/her well in the future". But today AndeanGold (AAU.v) seems to have forgotten the future wellwishing bit:

AndeanGold Announces Resignation of Executive Officer and Default Status 
Vancouver, British Columbia--(Newsfile Corp. - August 4, 2015) - AndeanGold Ltd. (TSXV: AAU) (BVL: AAU) ("the Company" or "AndeanGold") wishes to announce that Mr. David Cross, CGA, has resigned as Chief Financial Officer of the Company effective as of July 27, 2015. AndeanGold would like to thank Mr. Cross for his service to the Company over the past several years. 
Further to this matter, the Company also announces that it is now in default of complying with the continuous disclosure filing requirements with respect to its Financial Statements (Part 4 of National Instrument 51-102: Continuous Disclosure Obligations) and its Management Discussion and Analysis (Part 5 of NI 51-102) for the year ended March 31, 2015. The filing of those statements is now expected to take place before September 29, 2015. In the interim, as requested by the Board of Directors of the Company, the British Columbia Securities Commission ("BCSC") has issued a Management Cease-Trade Order ("CTO") dated July 30, 2015. The Company has already commenced the process of identifying and appointing an interim Chief Financial Officer to oversee and complete the final steps in its on-going audit procedure. 
About AndeanGold Ltd:

Hey, y'think that's anything to do with the fact that the person who's just left is the CFO, he left just three days before the filing deadline and now the company can't report its quarterlies which means it's now on a Cease Trade? Or maybe it's just a coincidence. Full NR here.

Richard Fifer of Petaquilla: Beware of strangers holding envelopes

Today's IKN mailbag includes this:

Atna Resources ( A rant

On July 15th Atna Resources ( came out with a big rah-rah NR on the "75% improvement" at its woeful moneypit which goes by the name of Pinson. If you check out the NR you get to see the wonderful thrusting upwardness of it all, with the arrow that goes swooOP!...

...and oh how we love them. It even got a few suckers to buy the darned thing:

Today we got their quarterly numbers and things aren't quite as swoopily wonderful. To start with that chart above that shows the Pinson mine at over 5,000 oz of recovered ounces? Only 3,604 ounces were payable. But if you start searching round the MD&A things get even funnier, there are some absolute pearls to be found. Such as this:
Our operating strategy is to fund ongoing and long-term development with operating cash flows. With limited development spending planned in 2015, the Company expects to use operating cash flows to pay-down a debt obligation coming due on January 31, 2016 and to refinance the balance of the obligation.
Here's an idea of the cash they're generating. Forget cockamamey "operating cash flows" and look at the real numbers that are accounting standards, such as operating earnings...

...or even gross profits:

Can somebody please tell me how you're supposed to pay down a $22m facility from Waterton (of all freekin' people!) due in January 2016 when your operations make negative gross profit?

There are other beauties in the MD&A too such as this one:
After incorporating first half production results, the Company has revised its targeted 2015 production to 40,000 to 50,000 payable ounces of gold, from both Briggs and Pinson Underground. The consolidated average cash cost of gold is expected to be between $850 and $950 per ounce sold, and the consolidated average all-in sustaining cost (AISC) is expected to be between $950 and $1,050 per ounce sold in 2015.
In fact, in the first half of 2015 the average cash cost has been $1,075.50/oz and the AISC has been $1,282/oz. That means to even get down to the top end of the ATN guidance range, they'll have to produce gold at a cash cost of $823.50/oz for the second half of 2015, or the AISC will need to be $813/oz. Why don't you just stencil "Shareholders Are Dumbasses" on my forehead and be done, guys?

But it's when you get to the balance sheet that the reality of Atna Resources ( moves from ugly to something far more nefarious. Remember that $22m they need to pay back in less than six months' time? Here's the cash treasury position:

And here's working cap:

Those two representative of many other charts I could bore you with today. With all of them, the song remains the same.

Amazingly, there are still idiots who in 2015 have been recommending this company's shares to people, saying that it's cheap and stuff. With that in mind I'm going to put the next bit in bold type, just to make sure it catches your eye at the late stage of a long-ish post:

You may think 7.5c, or even ATN's recent 10c or 11c level, is a cheap price for a share price of a producing and operating gold mining company. Believe me, it's about to get a lot, lot cheaper because once Waterton's done with ATN this equity is going to be smashed into tiny little pieces.

Do yourself a favour, ladies and gentlemen of the retail investment community, make note of the names of the people who've been pumping this utter junk at you and remember never to listen to anything they have to say about investment ever again. "Stop The Stupid" applies to your own trades, it also means that these blithering idiots need to be weeded out of the mine chattering class as soon as humanly possible.

Chart of the day is...

...12 months of the gold/silver ratio:

And this, one of the "Ten random predictions for 2015" published on December 29th 2014, is why it's today's chart:
2) The gold/silver ratio to stay high, by which we mean 1/70 or above. It can spike down briefly under that along the way, but I don't expect it to trend down meaningfully. When they call silver "the poor man's gold", the real message is "the choice that poor people make". Semi-on-topic, I'd definitely hold gold miner stocks over silver miner stocks this year.
Any further questions?


Toromocho expansion delayed indefinitely

Chinalco's Toromocho copper mine in central Peru has news. I think I'll do it the easy way and directly translate this brief report:

Expansion of Toromocho Postponed
3 August 2015 
The metallurgical problems that Chinalco faces at Toromocho are coming to an end. The Chinese mining company announced a few days ago that it had reached full production capacity, but the delay of almost 20 months in getting there (the mine was inaugurated in December 2013) has forced it to suspend indefinitely its operation growth project, in which it was going to invest U$1.32Bn.  
"The company is losing money. Because of that, it hasn't given us a date for the expansion project", said the Vice Minister of Mines, Guillermo Shinno. The Toromocho expansion project was due to begin its construction in January 2016, according to the chronogram of the Ministry of Energy and Mines (Minem).  
The high concentrations of arsenic in the deposit (a penalty mineral for copper refineries) has been the main obstacle for the Chinese mining company. "Chinalco made a bad plan. Its engineers thought that coper mineral with lower levels of arsenic wasn't far from the surface, but in fact it was much lower down", explained the Vice Minister.

IKN back and if you believe all that, you'll believe anything.

Balance sheets

The rich rule over the poor, and the borrower is slave to the lender.
Proverbs 22:7 (New Intl Version)

Do not be one who shakes hands in pledge or puts up security for debts;
if you lack the means to pay, your very bed will be snatched from under you
Proverbs 22: 26/27 (New Intl Version)

I nearly had a rant in the Weekly yesterday about balance sheets, but in the end decided against it because I've already bored that smaller audience to death on the subject after several similar pieces so they deserve a break. But it's still bugging me today Monday, so a couple of words to get it off my chest here instead. It's been eating at me ever since that Bank Island Gold (BOZ.v) thing last week, with the post I threw together once I'd seen how horrid the thing was underneath the blahblah and Lobito pump nonsense. That post on this link and by way of reminder here's the latest balance sheet as seen there. 

I didn't scribble much on it, but could have done and maybe that's why the subject still sticks in the craw today. 

Here's the thing----> In the end screw Louis James, he doesn't matter and I don't care what thinks says or does, what matters here is that retail share investing people who are still putting (or at least thinking about putting) their hard-earned cash into juniors stop blindly betting on stories and start looking at a company's financial position. Here and now today, with money tight and junior shares cheap because the companies have gone into lock-down mode, there are potential deep bargains to pick up but do yourselves a collective favour and don't fall for a company with weak debt positions. 

Or bluntly, LOOK AT THE FREAKIN' BALANCE SHEET, PEOPLE! That's all I really want to say, because if you don't and you decide to buy into one of these tale-to-tell stocks like Banks Island Gold (BOZ.v), it's the type of basic error that could wipe out all your cash. Look, if you want to risk some shekels on a longshot that's fine, but please pick one that's not in imminent danger of collapsing in on itself financially. Look at the balance sheet and before you start caring, check its liabilities. If there's true financial debt staring back at you (like that one above) and little in the way of current assets to offset the burden, consider it a big fat red flag.

There are a lot of cheap juniors out there. So if you're going to play them don't just choose the ones with the massive potential upside, get smart and choose the ones with the massive upside and the likelihood that they'll still be alive and kicking in a year's or two years' time if the anticipated rebound doesn't come in your preferred timescale.

PS: Match the post with music, they said. So I did:

Well that didn't take long

EDIT Monday afternoon: Oh bless my soul, look what Gary T's found:

From Mining Weekly: 
SocGen says miners’ output costs have dropped more than expected 
Miners’ output costs have dropped more than industry consensus due to lower energy prices and weak emerging market currencies, a report by Societe Generale showed, suggesting metals prices have further to fall before miners are forced out of business.
I laughed. Whole thing here.

This morning comes this piece in Peru's biz daily Gestión that interviews The Mining Expert (in this case José Miguel Morales, ex-prez of Peru's chamber of mining, the SNMPE) who says that gold miners in Peru are in good shape to confront $1,000/oz gold if necessary because (he says) energy costs are low and the strong dollar also helps costs. It also quotes Fitch Ratings as saying that the PM mining sector is prepared to support gold prices under $1k/oz.

Eight days ago, as part of the intro to IKN324 dated July 26th, your humble scribe wrote the following which explained how the mining sector was about to claim that they'd be just fine at $1,000/oz gold and the silly anal yst people were making too much fuss about nothing.
How mining companies will react to the new new normal  
I've been sent three "stress testing the gold miners" fundamentals analyses published by brokerages this week (the best was from RBC and for what it's worth, Tahoe Resources and Semafo came out best) and I've read at least a dozen "gold miners in trouble at $1,100/oz gold" articles that sometimes take a look, other times are akin to the guy with the "End Of The World" sandwich board on the city street corner. And when those anal ysts have a theme, they're sure to thrash it to death. It's called justifying paychecks. However, one thing I can guarantee in the face of this very important and wholly objective scientific numbercrunching is the reaction from the miners. We're about to hear from a whole bunch of mining executives working at the larger and the medium-scale producers who are going to tell us that in fact things have changed and they're perfectly profitable at U$1,100/oz gold these days, plus how they're "stress tested" down to a thousand and all those suits in cubicles are being overly pessimistic.  
What then happens, given a level gold playing field, is that the lapdogs anal ysts writing their pseudocritiques fall into line and start saying nice things about the miners (recall they care more about the people running these mining companies than their brokerage clients), shares recover at least some of the recent losses as bargain hunters move in to snap up the value. That re-rate remains in place right up until they discover that the mining bosses were talking about operating costs and not total costs, or total costs and not all-in sustaining costs, or All-In costs and not all-in sustaining costs. Whichever way it is, the new buyers discover one or two quarters down the line that the money made at the mine is having great difficulty in reaching the bottom line of the P+L. All very strange and perplexing, I'm sure. Unless of course gold recovers in the meantime and then we're all saved. Cynical opening riff complete, I'll now turn the irony spigot towards other targets.

Today's Gestión piece will be the first of many. Anal ysts will guarantee that.


The IKN Weekly, out now

IKN325 has just been sent to subscribers. This is the link and this be the verse:

In Phædrus’ “Church of Reason” Lecture In Zen and the Art of Motorcycle Maintenance, Robert Pirsig relates a lecture delivered by his alter-ego, Phædrus. At the time the lecture was written, Phædrus was struggling with a problem he had with his students’ perception of university. The University was at that time in danger of losing its accreditation and students seemed concerned that if it did, the university would cease to exist. The “Church of Reason” lecture was delivered by Phædrus to explain to them the true nature of university. One student remarked that the State Police would move onto campus to prevent the University from losing its accreditation. This made it clear to Phædrus that there was a fundamental misunderstanding of what comprises a University and the lecture was an attempt to explain the proper meaning of ‘University.’ The following is an excerpt from chapter 13 of the book.  
The real University, he said, has no specific location. It owns no property, pays no salaries and receives no material dues. The real University is a state of mind. It is that great heritage of rational thought that has been brought down to us through the centuries and which does not exist at any specific location. It’s a state of mind which is regenerated throughout the centuries by a body of people who traditionally carry the title of professor, but even that title is not part of the real University. The real University is nothing less than the continuing body of reason itself.In addition to this state of mind, “reason,” there’s a legal entity which is unfortunately called by the same name but which is quite another thing. This is a nonprofit corporation, a branch of the state with a specific address. It owns property, is capable of paying salaries, of receiving money and of responding to legislative pressures in the process.But this second university, the legal corporation, cannot teach, does not generate new knowledge or evaluate ideas. It is not the real University at all. It is just a church building, the setting, the location at which conditions have been made favorable for the real church to exist.Confusion continually occurs in people who fail to see this difference, he said, and think that control of the church buildings implies control of the church. They see professors as employees of the second university who should abandon reason when told to and take orders with no backtalk, the same way employees do in other corporations.They see the second university, but fail to see the first. (Pirsig, 1999, p. 150). 
Phædrus goes on to describe the role of the professor within the University through an analogy of a minister within a church. 
After these explanations he returned to the analogy of the religious church. The citizens who build such a church and pay for it probably have in mind that they’re doing this for the community. A good sermon can put the parishioners in a right frame of mind for the coming week. Sunday school will help the children grow up right. The minister who delivers the sermon and directs the Sunday school understands these goals and normally goes along with them, but he also knows that his primary goals are not to serve the community. His primary goal is always to serve God. Normally there’s no conflict but occasionally one creeps in when trustees oppose the minister’s sermons and threaten reduction of funds. That happens.A true minister, in such situations, must act as though he’d never heard the threats. His primary goal isn’t to serve the members of the community, but always god.The primary goal of the Church of Reason, Phaedrus said, is always Socrates’ old goal of truth, in its ever-changing forms, as it’s revealed by the process of rationality. Everything else is subordinate to that. Normally this goal is in no conflict with the location goal of improving citizenry, but on occasion some conflict arises, as in the case of Socrates himself. It arises when trustees and legislators who’ve contributed large amounts of time and money to the location take points of view in opposition to the professors’ lectures of public statements. They can then lean on the administration by threatening to cut off funds if the professors don’t say what they want to hear. That happens too.True churchmen in such situations must act as though they had never heard these threats. Their primary goal never is to serve the community ahead of everything else. Their primary goal is to serve, through reason, the goal of truth. (Pirsig, 1999, p. 151). 

The Seven Ages of Mine (with apologies to William Shakespeare)

All the world's a mine,

And all the men and women merely miners;
They have their tailings and their discoveries,
And one man in his time buys many stocks,
His losses being seven ages. At first the third-party contract worker,
Mewling and puking in the pit boss's arms.
Then, the whining investor with his portfolio
And naive trusting face, creeping like snail
Unwillingly to losses. And then the speculator,
Sighing like smelter, with a woeful  ballad
Made to his bullboard's earhole. Then, a trader,
Full of strange oaths, and bearded like a hipster,
Jealous in dishonour, sudden, and quick in quarrel,
Seeking the winning fliptrade
Even in the bear market's mouth. And then, the justice,
In fair round wallet, with inside intel lined,
With eyes severe, and hotel minibar half-cut,
Full of wise tips, and modern rip-offs,,
And so he plays his part. The sixth age shifts
Into the round and pyjama'd newsletter writer,
With spectacles on nose and paunch on front,
His youthful hose, well saved, a world too small
For his expanded shank, and his big manly trades,
Turning again toward childish hedges, shorts
And caveats in his sound. Last scene of all,
That ends this strange eventful history,
Is second bankruptcy and mere oblivion,
Sans teeth, sans eyes, sans money, sans everything.

Morgan Freeman does his own version here

Sunday music worthy of the grand listening achievement while simultaneously typing at the computational device's keyboard

This is the son of the famous father and probably due to that doesn't get anywhere near as much airtime.

Which is unfair, it's beautiful music no matter what branch of the family penned it. We bring to you Johann Christian Bach's Symphonies Concertantes C33a, C32 and C42, it's been office background today and thanks to the blerg I get to share.