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4/14/18

Angry Geologist does Pretium (PVG)

And does it well. Right here.

4/13/18

The Friday OT: The Undertones; Teenage kicks

John Peel's favourite song, as played at his funeral:



Youtube here. Right through the night. All right.

AngloGold (AU) $AU selling projects in Colombia

We learn that RBC has been commissioned by AngloGold Ashanti (AU) to sell a lot of their land holdings in Colombia. They don't want to sell their three main projects but a lot of whatever else they have is now up for grabs, around 3,500km2 of concessions with a host of early stage targets. AU was of course the first mover on Colombia back in the Uribe government time but with the failure of La Colosa (their own doing through awful CSR practices, we hasten to add) they seem to be getting fed up with the country. So, time to bug out and let a few juniors in on the land, it seems.

Zinc One (Z.v) $Z.v: Elefterios Aligizakis the main taker of the upcoming placement

Pretty impressively, IKN learns that even before the Zinc One (Z.v) placement is announced a lot of the book has already filled. Keith Neumeyer is in there of course, as is Daniel 'Davidoff Cigar' Ameduri and his soon-to-close company Future Money Trends.

However, the biggest bankroll behind this financing is Elefterios Aligizakis, normally known around Vancouver as "Larry The Greek". Elefterios Aligizakis / Larry The Greek is one of Neumeyer's closest pals and that's unsurprising, as Neumeyer owes nearly all his success (or what passes for success) to his multi-vowelled friend. And as we also know Elefterios Aligizakis is already seriously underwater on Zinc One and desperate to make at least some money on the deal, you can now guarantee a full-court pump on the stock once this band of scumballs get their cheapo paper.

PS: Just out of interest, spellchecker tries to change "Elefterios" to "Deleterious". Apt.

Yes, of course The USA cares about South America

It's the Summit Of The Americas in Lima Peru today and tomorrow with all Presidents making the trip. All except The Donald, who has sent Mike Pence in his place. Interestingly, here is part of the White House press release on VP Pence's agenda this weekend:



PPK resigned three weeks ago.

We now know why the Auryn Resources (AUG.v) drill results were so delayed

They're dogshyte.

Cardozo saw them coming, all right.


Zinc One (Z.v) will run a placement at 25c

With a half warrant attached. So now you know. Announcement imminent.

PS: One wonders whether Z.v will announce this before the bell today, or whether they're planning to bury it in a Friday evening special. Time will tell.

4/12/18

Shocking that Tinka Resources (TK.v) is up today

Not.

GLD: The inventory levels and the inventory/price ratio have a tale to tell

If you go over to the dedicated site of the SPDR Gold shares ETF, better known to the world as GLD, there's plenty of information to cut and slice. Here are two charts derived from just a couple of the datasets available.

This shows bullion holdings in metric tonnes since Jan 1st 2016. It takes in the pre-Trump world, the system shock of the US election, and all moments since then. Notice how, with some normal fluctuations, bullion held at GLD has been pretty stable recently.

However, if you divide bullion by gold price there's a distinct decandence (taking into account the cut down Y-axes of course):


Chew those over and come to a conclusion or two. That there's a lack of interest in owning gold among the Wall St jocks at the moment. And that there's plenty of room for gold to run hard when that sentiment changes.


Argonaut Gold (AR.to) meets The IKN First Law of Mining News Releases

Not for the first time, here's the law:
 "The IKN First Law of Mining News Releases: Considering that anything contained in a mining news release is presented in the best possible way for the company in question, any piece of information contained in a NR that comes across in any way negative means the real news and/or events behind it must be very, very bad indeed."
And here's AR.to this morning:

TORONTO, April 12, 2018 /CNW/ - Argonaut Gold Inc. (TSX: AR) (the "Company", "Argonaut Gold" or "Argonaut") reports that its wholly-owned subsidiary that owns the La Colorada mine has had its permit for the use of explosives at the site temporarily suspended as a result of a pending legal action brought by four individuals against the Secretary of National Defense ("SEDENA") and the Municipality of La Colorada.  Activities at site continue unaffected due to the availability of blasted and stockpiled material adequate to allow for operations to continue normally. Stockpiles are sufficient that operations will continue normally through at least April 16, 2018, at which time there is a hearing scheduled where Argonaut hopes to resolve the issue. Continues here

We can only guess on the underlying reasons for the permit suspension. But the law covers the essential.

Chart of the day is...

....zinc, last 24 hours:




A big open interest short move on Zn this morning pushed the metal to it's current U$1.41/lb spot. For what it's worth, Zn hasn't been under U$1.40/lb since July 2017.

4/11/18

Seven dead, up to 40 injured in Bolivia mine accident

It's not easy to find English language news on this (yet) and as it's an important and tragic accident, it gets blog space. At around 4am this morning, an explosion at the Huanuni tin mine in Bolivia killed seven people and injured at least 15 (some local reports have the seriously injured list as high as 40). According to early reports, a truck that was carrying personnel down the main underground mine tunnel exploded, the explosion greatly amplified because it was also carrying dynamite (or similar, we're still collecting data) on board.

Carrying people and explosive on the same vehicle is of course totally prohibited and as Huanuni is a State-owned and run mine, this tragedy is already turning into a national level scandal. Bolivia's mine workers have called an immediate strike in protest and solidarity with the dead and injured and President Evo Morales has called for an immediate investigation.

Rio2 Ltd (RIO.v)

Expect improved volume.

Asanko Gold (AKG): What subscribers read on the company ten days ago

The last time Asanko Gold (AKG) was mentioned on these pages was in this post dated March 29th, just after the announcement that Gold Fields (GFI) was buying into the Asanko Gold Mine complex and we pointed out the large slice of humble pie that AKG management were having to eat over their company, its projects and the financial snafu they'd got themselves into (hubris and ignorance is a powerful combo). But what didn't appear on this humble corner of cyberspace was the following note dated April 1st (no joke) that appeared in IKN463 for subscribers only. It explained why AKG was now a buy with a decent near-term upside. FWIW I bought a few the day after this note went out at U$0.93.

People sometimes ask me about the difference between the blog and the Weekly. Therefore Exhibit A:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx



What wasn’t mentioned in the Asanko (AKG) post Thursday: It looks like a buy
Before this starts, I want to make it 100% clear that I stand by every word written in this post on the blog Thursday (12) regarding the deal between Asanko Gold (AKG) and Gold Fields (GFI) as announced that day (13). What it does is point out something I (and many others, it started with K2 Assoc and then famed short sellers Muddy Waters got in on the act, it even got to the point where all Canadian sellside coverage either discontinued or went bearish on the stock) have stated about AKG in numerous posts over the years; that it’s a failed company, with poor execution and a debt burden that was killing the stock.

A few numbers, with money things in US Dollars unless stated:

  • As at December 2017 (with Share price close of Wednesday, pre-announcement)
  • Total Assets $708.8m
  • Total Liabilities $278.8m
  • Book value: $430m
  • Shares out: 225.8m shares out
  • Book value per share: $2.11
  • Share price: $0.73
  • Price/Book ratio (P/Bv): 0.35X
  • Working capital: $9.51m

The above, in slightly more formal terms, is what I was alluding to on Thursday. Anyone can see this is a dysfunctional company just by checking that P/Bv, after that the details of the dysfunction (e.g. financial debt $158m as at Dec 31st which is now $164m, or the lack of operational profits at its mine in 2017, impending liquidity crunch, missed guidance, changes in mine plan, etc) can be searched and taken into account.

However, when we run the pro-forma numbers on “New Asanko” and assume the deal with GFI goes through as planned (we also need to assume asset valuations don’t change until then and operational results are a net neutral) the structure of AKG changes. Here are the IKN-estimated new numbers for AKG:

  • Pro-forma deal (with share price close of this weekend)
  • Shares out: 225.8m shares out
  • Total Assets $428.5m
  • Total Liabilities $120.5m
  • Book value: $308m
  • Book value per share: $1.36
  • Share price: $1.00
  • Price/Book ratio (P/Bv): 0.74X
  • Working capital: $64.6m

The P/Bv has doubled, something is afoot. It’s still under 1X so can be classed as a dysfunctional company, but that’s a big leap in just one day. We consider the total liabilities are now without formal financial debt (there are always a few minor items scratching around on accounts payables in any company) and importantly, there’s no liquidity crunch now as working cap has bounced via a 1) $17.6m cash injection as GFI buys 9.9% of the company in new shares 2) over $36m is lifted from current liabilities when the Red Kite loan is paid off.

But most of all, AKG is now under adult supervision. It’s one thing to take out a loan and go into operation, quite another to screw it all up as one does not necessarily lead to another (yup, even in mining and despite all the recent evidence). We can send out the jury for a while on the precise start and causes of the AKG SNAFU, but we can surely narrow it down to a mine plan that did not match the reality of the assets and a management team that first devised, the executed, then refused to come clean that the plan wasn’t working and a different approach was needed.

Enter GFI. Of course you can point at errors that company might have made too, but there’s no denying they have a deep knowledge pool and not only that, are specialists on the African continent. The appearance of GFI on the scene affords Asanko and its assets money, real time to re-work its mine plan and get it right (maybe start with a serious  and necessary pit wall cutback plan to expand the pit meaningfully, instead of trying to piecemeal essential capex works while limping on with decadent production), plus the type of mining brains who’ll get it right from the start and won’t try to BS the market before, during or afterwards. It also begs the question as to how long GFI will support the continued presence of current AKG CEO Peter Breese (ultimately responsible for this mess) and whether or not he “may choose retirement after many years of effort and a long…etc”, but that’s another issue for the medium-term, perhaps. In short the combo of money, time and brains that has just been injected into this story by GFI will bring confidence back to the market about the project. And that means a higher share price.

When AKG opened Friday at 85c or so, up 16% and 17%, I was surprised and started planning this note for today’s edition to call buy on the stock. Then it broke 90c, then to 95c and a final surge on late-day volume saw the stock get to U$1.00. This was disappointing because it’s taken the edge off the potential gains in AKG this weekend, but it’s also understandable (and the way in which the trading closed strongly suggests short covering going on…Muddy Waters worked it out too, perhaps?).

Here’s a clear statement for you, from somebody who’s been hating on this stock for quarters on end: The news last week of GFI moving on AKG is strongly positive for the AKG stock price:

  • It brings in the money it needs to extinguish the welter burden of debt.
  • It allows the company real time to re-work its plans.
  • It brings in serious, respected brains that will provide the confidence lost by this team on this project to date.

I don’t know what will happen once the Nkran pit is re-worked and then when the Esaase pit comes online in 2019 (they’ve always looked rather marginal to me), but in the near-term* AKG now looks like a lay-up to regain that 1X P/Bv mark. That would indicate a target of U$1.36 and thanks to the neat and clean close of U$1.00 on Friday, it’s not tough to work out the potential percentage gain on such a trade (hint: 36). Do with this what you will. As for me, when it was under 90c the opportunity of biting at a potential 50% near-term gain was strong, but the thinner margin due to that close has taken a bit of the shine off. Depending on how it opens next week I may play a small side-bet trade, i.e. one of those I occasionally call here in the ‘Market Watching’ section that don’t make the formal ‘Stocks to Follow’ list in subsequent lists.


*For those new round here, my idea of “near-term” is normally three months, a financial quarter.



Rye Patch Gold (RPM.v) 1q18 production

NR here. The plan: around 18,000 oz gold per quarter. The reality:


You know those annoying people who sneer at you and say "toldyaso" in a whiny voice? Well, toldyaso. Stick a fork in this one. Step right up Alio, next in line at the Florida Canyon tombola. Roll up! Roll up!

Pretium (PVG) 1q18 production

Here's a NR. Here's a chart:



The 9.1 g/t average grade was crappy again. As for the overall production number,back in previous MD&As PVG had this written:
On December 15, 2016, we announced an updated Mineral Reserve estimate for Brucejack’s Valley of the Kings deposit, with Proven and Probable Mineral Reserves in the Valley of the Kings increased to 8.1 million ounces gold (15.6 million tonnes grading 16.1 grams per tonne). The Proven Mineral Reserves in the Valley of the Kings increased to 1.6 million ounces gold (3.3 million tonnes grading 14.5 grams per tonne gold) which is sufficient for the first three years of mine life.

The way things are going, that 1.6m oz gold will be enough for 5.2 years of production, not 3. Assuming the banks don't pull the plug on the debt before then, of course.

B2Gold (BTO.to) (BTG) 1q18 production

Here's the NR, here are two charts. First gold production and sales:



Second, revenues per quarter:


Expect a lot more on these numbers in IKN465 this weekend, subbers.

4/10/18

Tinka Resources (TK.v) hosts a site visit

Coming up this Thursday, after trying and failing to get Canada's sell side anal ysts on site for years, and after closing a magically discounted bought deal placement, the guys at Tinka Resources (TK.v) find they are suddenly and coincidentally attractive enough to get a whole bunch of visitors from Canada's finest.

Hey, I wonder if we're about to get a sudden and coincidental raft of new coverage notes and buy calls on the stock? That would be a shocker.

4/9/18

This blog will be quiet today

For secret reasons.

4/8/18

The IKN Weekly, out now



Call now! Satisfaction guaranteed or your money back!


IKN464 has just been sent to subscribers. Words and numbers, mainly.

Mailbag: Glencore and Novo Resources (two unconnected stories, I hasten to add)

Mail of the week comes from reader and real mining person MG, who reacts this way to the reports this week on how Glencore (GLEN.L) uses violence against old ladies in Cusco in order to grab their land:
Thanks for showing those photos - the locals, the cops and the Cat gear.
I cannot believe that even a D-grade manager of any mining company would allow that to happen.
These A-holes continue to make life more difficult for the rest of us every day.
More jail time is needed for such shitty management.
Best regards,

IKN Nerve Centre has received several mails and messages of the same ilk, but MG's was the most on-point and concise. 100% agreed.

In other news, this morning I was again asked for an opinion about Novo Resources (NVO.v) and as I don't cover it, am strictly neutral on it and have felt no need to add to the incessant noise about the stock, I only got to read its latest NR out on March 20th today. And y'know, after reading it yeah I am going to say something.

FIVE TONNE BULK SAMPLES??? WTF???

Seriously, what's the point? At the very best NVO is innocently wasting its time. I mean, even if you get 50 g/t from the samples you're not going to prove a thing about its mine-worthiness or otherwise, which is also true if they come back 0 g/t. The main problem is that I sincerely hope that this complete waste of corporate time and money has been done for naive but innocent reasons, because the only other alternative is to consider that NVO put together a bulk sample program in order to spin out time deliberately. And that would not be good at all.

One final thing: I've stayed out of this and still have no dog in the race, but every time I've met a mining sector person (lunch, site visit, office visit etc) they've asked for my thoughts on "hot story NVO" along with giving me their own unsolicited opinions. Those opinions have been a rough pro/contra split but what I can tell you is that every single geologist, engineer or mining market professional I know, have met or have come across from either Australia or New Zealand gives the project and the company a firm thumbs-down.