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I say things on Twitter

3/31/18

Catching up with Lucara Diamond Corp (LUC.to)

Remember that "Disrupt Diamonds" deal from Lucara (LUC.to) a month ago? The game-changer pumped by Marin Katusa to his flock of sheep back in February under the breathless headline "Total Disruption: This is THE Most Important Alert I Have Ever Sent"? The one this humble corner of cyberspace did the Cassandra act about at the time?


As always with a Katusa pumpjob, ask yourself who is selling while his mouthbreathers' list is buying.

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

...in reverse order:

Third Place: "Torex Gold (TXG) drops". I wonder what goes through the brains of CEOs who try the type of BS that Stanford has been trying to lay on the market in 2018. "Hey, let's just confidently predict the best outcome and then pray it turns out that way?"

Second Place: "PentaNova (PNO.v)". Short and sweet, made a couple of you laugh (I have the mails).
 
First Place: "Impressively, Tom Gallo of Canaccord manages to analyse Dalradian Resources (DNA.to) and blow his boss at the same time". About the only time I made an effort on the blog this week, mind has been on other things frankly. Oh, there was the post on Asanko, that had a bit of thought applied to it as well. Anyway, I'm sure Mr. Gallo will be pleased to note that his report managed to move the price of DNA shares from C$1.05 to.....errr...96c.

3/30/18

The Friday OT: JS Bach; The aria "Erbarme dich, mein Gott" from The Passion of Saint Matthew (BWV 244)

Whatever faith you may profess, if at all, let's agree on two things:
  • Around 2,000 years ago a man went around saying it was better to love than hate, said it a lot and said it out loud. He was killed for doing so. There is of course a lot more to the story but if only for that, it's right to remember him.
  • This aria ("Have mercy, my God") is just a short segment from one of Bach's greatest works and you don't need to be a Christian to be moved by its beauty. For what it's worth. I was once at in a cathedral in South America and heard Bach being recited on a Good Friday (though not this particular piece). It was, in the root meaning of the word, truly a religious experience.





Youtube here. Please enjoy your Easter weekend.

3/29/18

PentaNova (PNO.v)

Most mining magnates have expensive hobbies. Fast cars, choice properties, rare collectables etc. Frank Giustra's expensive hobby is Serafino Iacono.

I have a question about Red Eagle Mining (R.to) (updated)

They've mentioned it in Colombia in a Spanish language communiqué, so why has Red Eagle Mining (R.to) decided to sue the government of Colombia to the tune of CAD$40m but not told the English language market about it? No news release and nothing in the annual filings out earlier this week, not even in the Legal Proceedings or Subsequent Events sections

Isn't a gig worth 40% of market cap a material event?

UPDATE: Thank you reader 'B', this helps explain. It begins this way:
"Red Eagle Exploration Ltd. has filed an application for arbitration under the Canada-Colombia free trade agreement to preserve its rights under the FTA, allowing the current discussions between the government and Red Eagle to continue." etc

As R.to and XR.v announced their plans to merge (like divorced couples who get back together again) and the deal isn't going through until April 5th (then all the paperwork), it makes sense.

IKN would like to apologize to Pierre Vaillancourt and Douglas Ibbitson of Haywood

Follow the bouncing ball, ladies and gentlemen:

1) On Monday March 26th, as published in the local press, some beak in Dom Rep slaps a suspension order of GoldQuest (GQC.v). Exhibit A, with link to original here:





2) On Tuesday March 27th, GoldQuest (GQC.v) trades as per normal, light volume and no real price change.

3) On Wednesday March 28th somebody somewhere gets wind of the crap going down and dumps their position. GQC drops by plenty, your humble scribe looks at his screen and goes "Oh look at that, wonder if there's any news..." and goes off to play on the Google machine. Four minutes later, this post appears on the blog (and here's the screenshot) which includes the link to that above news story:

4) On Thursday March 29th (i.e. today) this note is published by Haywood:



Uh-ohhhhh, it's a Downgrade To Hold (aka make like a shepherd*). It's also fun to note that Haywood's analysts made a special effort to avoid stating when that ruling was handed down. Hmmm....wonder why. Let's re-cap all that:


Anyway, what we can safely deduce from this episode is that analysts at Haywood are obviously relying heavily on this humble corner of cyberspace (published for free and run by somebody who doesn't cover GQC and holds no shares in the thing) for their LatAm/Carib mining news which they subsequently charge their clients to read. Therefore I'd like to apologize directly to Pierre Vaillancourt and Douglas Ibbitson, two people generating at least part of their monthly salary from covering GoldQuest closely, for the poor service on this story. Sorry about getting to the story late for you guys, I hope it doesn't ruin your week.



*Get the flock outta here

Asanko (AKG)

It's important* to understand what just happened in this NR today that announced Gold Fields are buying 50% of Asanko Gold's (AKG) stuff in Africa, (we quote, "...the Asanko Gold Mine (the “AGM”) and all associated properties in Ghana."). And because your humble scribe is an inveterate nerd and numberfreak, we'll do it this way:


Back when AKG was a U$4 stock, even when it was a U$3.50 stock at the start of 2017, the company was running a price/book of over 1X which, speaking roughly, meant that the market believed it would create wealth from its overall business. That bit works like this:

  • You decide to do capitalism
  • You invest one hundred dollars and buy stuff (your assets). Let's say you buy a thousand pencils.
  • You then work hard and turn that one hundred dollars of assets into two hundred dollars of cash. Let's say you sell each pencil for 20c.

Now that doesn't mean you get a price/book ratio of 2X, but when you start the business with a thousand pencils and a business plan, somebody else will recognize that you're onto a winner and mark you up at over 1X (depends on how long you need to sell the pencils....let's spitball 1.5X). That's what the P/Bv ratio does and it's why it matters when you're checking a companies fundies.

Therefore, in simple but very accurate terms, what the management at AKG has done to today is say to the world "We are shit at capitalism. We bought something for $299m and sold it for $165m and now we want you to congratulate us for the deal with Gold Fields." Of course, they use different words to present the same concept, their choice being this:
“This transaction presents a unique opportunity for Asanko to de-risk its future production targets whilst at the same time eliminating corporate debt. With a healthy balance sheet and robust operational cash flows, together with a strong technical endorsement, our Life of Mine plan is assured,” said Asanko President and CEO, Peter Breese.

And that, ladies and gentlemen, covers a lot of the things that are so wrong with the mining business today and it's why the real world of money avoids these clownshow stocks like the plague. Asanko is run by complete idiots.

*Well, not quite as important as world peace, looking after your health, etc. But you know what I mean.

3/28/18

Licking the rock

This one will keep all you geols tuning in happy, the story of a geology professor in Vienna who is heading up the city's old building maintenance and upkeep program and tests the state and quality of the stones by....yup you got it....LICK. THE. ROCK. Here's a translated chunk of the text (and as my German is basically non-existent, this time it's a Google Translate job)
"Professor Rohatsch has tasted it all as a seasoned geologist with a refined sense of taste. "There were hundreds of buildings and objects in which I could gain experience. And of course every rock is sampled with the tongue, "says Rohatsch. But sometimes it also scares him, for example when rock is heavily polluted and unhealthy. "There are many heavy metals in there, soot, dust particles, rubber output ... I'll say it clearly in the Viennese way: I do not lick up any filth."

Here's the whole translated piece and it's worth going over, if only to see the photos. But before you do close your eyes and imagine the typical, stereotype Austrian professor, you won't be disappointed. My thanks to reader CM.


PS: For more on the subject, this:
You might be wondering why you’re being offered advice on how to lick a rock. Who licks rocks? you might find yourself asking. Well, there’s a little known species called the geologist and they are experts at said task. Some people may have heard of a geologist but most will never have seen one as they still spend much of their time in the wild. Excess facial hair, large collections of walking boots and the ability to pronounce “molybdenite” correctly are all indicators that somebody may actually be a geologist.

Gilberto Zapata Castañeda is one interesting dude

This November 2012 report from Mexico's 'Diario NTR' newspaper has a fascinating article featuring the mining businessman Gilberto Zapata Castañeda. Allow me to translate the first few paragraphs:

Martín Bernardo Sutti Courtade is Stripped of his Mining Companies

As he usually did on a weekday, Martín Bernardo Sutti Courtade, geologist and mining businessman, took his granddaughter to school after making her breakfast.

He returned to his house briefly and then went to his office, located at Paseo de Bernárdez 59 in the exclusive residential zone in Guadalupe.

It was March 27th 2012. Around 11:30am Gilberto Zapata Castañeda arrived, who he had known for around ten years as he had mentored him and employed him as manager of several of his companies.

He had built Zapata new offices and also covered his university fees for a Master's degree in the university of Texas, however he claims that the USA company Sterling Manning paid but even so Martín Sutti was that company's Mexican representative. He also paid for his internship trips to China and Japan.

Zapata told him there were two people in the underground car park of the building where the 2009 Jeep Grand Cherokee owned by Sutti was parked. Sutti was thinking of selling the vehicle and Zapata asked him to go down with him and show the Jeep to the potential buyers.

Suddenly, one of the two men jumped on him, covered his mouth and put wadding with ether into his nostrils. They blindfolded and handcuffed Sutti then threw him against the vehicle."


The report then goes on to explain how when Sutti came round he was in the process of being interned in a clinic against his will. Then while he was out of circulation, board meetings were called that accused Sutti of being an alcoholic and stripped him of his companies (to the benefit of Zapata and his own associates), how Sutti brought criminal charges against Zapata and others, but then how a little while later Sutti died in that same clinic bed. And wouldn't you know, these days Gilberto Zapata Castañeda is a close associate of Allan Barry Laboucan in his Mexico scams.

But I'm sure there's a perfectly reasonable and logical explanation for that.

Wondering why GoldQuest (GQC.v) is doing a swandive...

...this week? Well have a read of this.

You're welcome.

3/27/18

Torex Gold (TXG) drops

The pigeons come home to lay with the fox in the henhouse and sleep with the fishes. Torex Gold (TXG) is down heavily today as the tape catches up to the unalloyed BS previously purveyed by Stanford and Co, all that guff and nonsense about the strike being over and things getting back to normal is finally recognized for what it is; corporate lies out the mouth of a liar.

With the Mex Elex now looming large and increasing calls from politicos (both Guerrero and national level) to allow more than the milquetoast union installed into the mine, it's either back down or suffer longer for TXG. Freakin idiots.


3/26/18

Impressively, Tom Gallo of Canaccord manages to analyse Dalradian Resources (DNA.to) and blow his boss at the same time

Figuratively speaking, of course.

Post-close today, the venerable Can Of Corn decided to transfer coverage of Dalradian Resources (DNA.to) from Eric "ZeeMan" Zaunscherb to its new boy analyst, Tom Gallo. The resulting note is one of the most embarrassing and pathetic that this humble corner of cyberspace has had the misfortune of witnessing for several moons.

Which means Gallo is going to fit right in at the house, of course.

Want to see what it looks like when a numbers wonk masturbates in public? Read on kind visitor, here's a chunk of the Gallo script from the DNA note, specifically the valuation paragraph:

Valuation

Our forward-curve-derived long-term gold price of US$1,499 generates an after-tax project NAV (6.5%) of C$900M (previously $799M). We have raised our discount rate to 6.5% (from 6%) to reflect apparent market hesitation and increased permitting delay risk. We derive a corporate NAV of $1.09B (previously $1.12B) with net debt and other corporate adjustments. With 455M shares outstanding (previously 463M) our corporate NAVPS of C$2.39 (previously $2.42) supports our rounded C$2.50 target price, which is unchanged
We note the following:
  • U$1499/oz??? WTF?? Why? When? How? Why not pick $1,300/oz gold, or $1,700, or Fly-To-The-Moon-Per Ounce?
  • Next, not only does an adjustment to a 6.5% discount rate from 6% reflect precisely bugger all, but it bears no relation to the true political, community and permitting risk of the location. 
  • Regarding that risk, Gallo has obviously fallen for the old "Oh they have white skin and speak English so no worries", trap. Plain fact is that pol risk around Curraghinalt is way higher than those smelly hot places with no aircon and small brown people, Tom. Sorry to let you down so early.
  • NAV, as always, is simply an exercise in MSU (make shit up).
  • And the final insult, a "rounded target" price. Why? When? How (etc)

What you see above is a classic example of the most cynical trick in the sell side's book, the reverse engineering of a price target. This humble corner of cyberspace can guarantee, God's witness and souls of family members*, that the numbers presented by Mister Gallo (Spanish for rooster, cockerel or just plain cock) derive from the target he was told to publish by the jerkoff in the corner office on his floor. His only leeway is that of an ultra marathon fell-runner, allowed to choose his route but the finish line is mandatory. Utter utter utter wank, Tom. Welcome to Canaccord.


*some restrictions apply

IKN is now on Twitter

As from Saturday, your humble scribe has decided to crawl out from under his rock and become slightly more sociable. The link to the Twitter page is here so feel free to click through and follow, I'll make an effort to write real words and thoughts on the thing too, not just endless re-tweets and auto-forwards from the blog (though that will happen, too).

The Kinross/SEC corruption settlement

Here's the link and this bit stands out because...

"...Kinross Gold is found to have awarded a lucrative logistics contract to a company preferred by Mauritanian government officials, despite concerns that the company was a high-cost provider with poor technical capabilities, in contravention of Kinross Gold’s bidding and tendering procedures.  Kinross Gold also contracted with a politically-connected consultant to facilitate contacts with high-level Mauritanian government officials without conducting required, heightened due diligence.  In addition, the company paid vendors and consultants without ensuring the payments were consistent with policies prohibiting improper payments."

...it's what Canadian domiciled precious metals mining companies do every single freakin' day in South America.
  • Contracts awarded to government connected companies? Check
  • Tendering processes ignored and contracts awarded to whoever at whatever cost? Check
  • The use of "facilitators"? Check
  • Slush fund payments to third parties? Check

Kinross's only real mistake was to list in the USA.

The IKN Weekly, out now


lego! fark yeah!

IKN462has just been sent to subscribers. The main event this week is a report on the site visit your humble scribe made to the Chakana Copper (PERU.v) 'Soledad' project in the Ancash region of Peru last week. Guaranteed to break the ice at parties.

3/25/18

José Abreu

Down of a system.