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Glass half...

Thank you, reader "R":


A reminder to subscribers of The IKN Weekly

Due to travel commitments, this weekend's edition will be published on Monday evening, instead of the usual Sunday evening.

The Friday OT: Ólafur Arnalds and Nils Frahm; Trance Frendz

Want to listen to something beautiful? Want to watch something beautiful? Well of course you do, kind reader.

Thank me later. Youtube here.


The LIVE pump and the liar Ameduri

The proven liar Daniel Ameduri is ground centre of the LIVE pump. And here's the paydirt:

Ameduri is getting U$800,000, 800,000 options and 1.9m RSUs.


This blog will be fairly quiet for the next few days

For secret reasons.

Tahoe Resources (TAHO) ( Clayton "is resigned"

Let's face it, Ferrari Kev was never going to take the blame for the value destruction wrought on TAHO or the almighty mess he created, was he?

Clayton is replaced by Voorhees, the epitome of the two-dimensional company suit and another of Ferrari Kev's lapdogs.

So it goes.


Argentina's Peso, inflation, growth and the people who now own the country. Again.

And Macri is STILL the saviour and future of this country. Anyone who believes this shtick is either unversed in the language of Cervantes or utterly out of their minds.

The only way this ends ---> Badly for Argentines. Their owners, on the other hand, are making out like bandits. The perma-FUBAR country strikes again and it's like watching Groundhog Day, except that the star doesn't get to learn any deep wisdom or fall in love with Andie McDowell.

Tinka Resources (TK.v) mailbag

Several interesting feedback mails from readers this morning on the Tinka Resources (TK.v) note out yesterday in IKN472. Good stuff and thanks to all that took the time, and one of them in particular got me asking permission of the author to put up here on the humble corner of cyberspace. Fortunately reader 'MP' agreed, so here we go:

Thanks for the thorough review of TK. I have been scratching my head on that one ever since the financing closed and it took another leg down. As a point of interest, I've watched broker 11 (Macquarie Capital) sell boatloads of stock steadily over the last 2 months. It seemed a odd broker to have an order of that size especially considering they weren't involved in the recent financing. Who knows the reason they got the order but as of today the have sold exactly 2.75 mill shs since April 18th via the various Cdn exchanges. Sometimes those nice clean share numbers indicate the order is filled. Maybe I'm watching the tape too closely but thought it was interesting. 

Yup MP you're right, that is interesting. Nice catch sir, thanks.

When Sibanye (SBGL) bought Stillwater

Just wondering how that decision to buy Stillwater for $18/share back in December 2016 and to move into PGMs is working out for you, Sibanye Gold diehards...

Really? That well?

This is the thing about balance sheets and why I whack on about them so much. You can ignore them and their effects for a while, you can bluster and bluff the market about cash flow projections and what-have-you and it'll work for a time, as well. But sooner or later your balance sheet catches up with you. SBGL knows, AKG knows, NGD knows. Who's next? PVG?

Novo Resources (NVO.v): A conversation (from IKN472)

A minor part of the Weekly IKN473, out last night.

We join this conversation half way through:

A: So do you agree that it’s going to be very difficult to reach a 43-101 or JORC compliant resource number for NVO?
B: Yes, we agree on that. But that doesn’t make the company worthless! They clearly have a lot of gold!
A: And I agree with you on that. But what I’m interested in is monetizing it, making the company profitable.
B: Me too.
A: Good! We’re on the same page. But what really matters is being able to justify the current market cap, because if you include those very-in-the-money warrants (and you have to, really) NVO is now revolving around a $1Bn market cap. That’s expensive.
B: Okaaaay…if you say so. I think NVO is cheap!
A: Fine. So in that case, I’m not even going to ask you to justify a future where NVO is double or triple today, all we are going for is to justify $1Bn.
B: They have a lot of gold!
A: And a lot of market cap valuation, too. Let’s justify its market price with that gold, yes?
B: Well, you do what Bob Moriarty says! You mine it!
A: I agree 100%. Now, how do you mine it?
B: Placer-style of course! Dig it up, process it, produce gold!
A: Okay, how much gold?
B: What do you mean?
A: How much gold will you be able to produce from any given part of the NVO tenements in, let’s say, one year.
B: Why one year?
A: Okay, ten years! Whatever time period you prefer, I simply suggest one year at this point because it’s a standard period used in the industry.
B: Well, let’s say a year then. And they mine the rock at a 10g/t average and 90% recovery.
A: To be honest, I think the nature of this deposit means you get higher recoveries than that. I’d prefer you used 95%.
B: Okay, so one tonne of rock produces 0.305 oz of gold.
A: Agreed.
B: And 2,000 tonnes per day is 611 oz gold.
A: Agreed.
B: That’s 55,000 per quarter! That’s a lot of gold!
A: Not bad, is it? 220,000 oz gold per year.
B: Lots of mines at that production rate are worth $1Bn!
A: Well that might be pushing the envelope a little, but I’ll concede the point.
B: Good!
A: But for how may years will it produce?
B: Sorry?
A: 220,000 ounces in a year, yes. For how many years?
B: Lots of years!
A: How many?
B: We don’t know yet.
A: Why not?
B: We haven’t finished exploring yet.
A: And when NVO does, will it have a resource?
B: No, probably not.
A: And what about that average grade? How do you know it will all be around 10g/t like the recent bulk samples?
B: We don’t know yet.
A: Why not?
B: We haven’t finished exploring yet.
A: And when NVO does, will it have an official average grade to tell us? One that it can safely use in economic modelling?
B: No, probably not.
A: And what about the capex to build the mine? How much will it need?
B: We don’t know yet.
A: Why not?
B: We haven’t finished exploring yet.
A: So what you are saying is that NVO has a lot of gold and should mine it. And under reasonable circumstances (e.g. 10g grade, 2,000 tonnes per day, 95% recovery) it can produce 220,000 oz per year. But we don’t know if that grade will hold up across the whole of the resource and we don’t know what size production facility it will need. Or how and when the mill is built, because we don’t have a resource we don’t know how many mineralized tonnes there are and the operator will be hoping for the whole life of mine that they find enough for the next year.
B: Well…maybe. But they can mine more! And produce more! What about a 4,000 tonne per day operation?
A: Okay that’s fine. So apart from the risk that it depletes twice as fast and runs out, are you also telling me that we don’t know what size mine it will need and therefore the capex cost is unknown?
B: Hmmm, probably not.
A: And that’s because we don’t know the grade or the tonnage, right?
B: Right.
A: And though certain people can make a reasonable guess on both, we won’t have any guarantees because the third-party peer review system in the world of mining, namely 43-101 or JORC, won’t be able to give us one. So when the company goes to the financiers to ask for money to build the mine, what will they be able to use to guarantee the bankers’ investment?
B: They have a lot of gold!
A: How much gold?
B: We don’t know yet. But Quinton says there’s a lot!
A: So a bunch of hard-nosed bankers who always want a guaranteed path to return of principle loan will simply believe the founder, president, driving force and promoter of the company? Who is also the chairman by the way and that avenue of unusual corporate oversight can be explored another day, but for the moment let’s give that a pass. Who is the same person who burned through a bunch of OPM at Evolving Gold by looking for a massive gold deposit that started well with excellent early discovery stages but eventually petered out and failed when the deposit couldn’t grow?
B: Are you suggesting Quinton is a crook?
A: No not at all, far from it. He’s as straight as an arrow and his integrity is not in doubt. All I am saying is that it might not be easy to raise the type of capex NVO will need to build a mine.
B: They can sell shares! Kirkland Lake will buy shares!
A: Okay, shall we assume 300m shares out then, rather than 220m?
B: Okay, for ballpark purposes.
A: And you think that company, with that mine, is worth around $1Bn today and once the placement is done $1.5Bn at its current share price? The same ballpark valuation as MAG Silver, Fortuna Silver, SSRI Mining, Pretium Resources, First Majestic etc etc.
B: Yes, because they have a lot of gold!
A: How much gold?
B: We don’t know yet! But if it can produce over 200k oz of gold a year for a few years, it’s bound to make money!
A: Oh I agree on that, don’t think for a minute that I don’t agree. But will it be able to command the type of price/earnings ratio that a mine with a compliant resource or reserve will be able to get? One that knows it has gold to mine and produce in 10 or 15 years?
B: Kirkland Lake can buy them out!
A: And KL takes on the type of unknown resource risk you’re implying? No reserve asset value? The potential the crater the whole company if the resource surprises the bulls by being smaller than once imagined? We know Eric Sprott likes taking risks, but that’s a whole different league of exposure.
B: But these ounces are going to be very profitable.
A: I agree. For what it’s worth, my ciggypack calculations say they could produce at an AISC of U$700/oz and that’s U$600/oz profit per ounce. Pay taxes and everything, I see U$80m per year net/net and that’s not to be sniffed at.
B: Good!
A: That’s enough to justify a $1Bn market cap…if you could give it the normal type of PE multiple. And if it were in production. And if it had raise the capex cash. But right now…?
B: Dude, you don’t get it! They have a lot of gold!
A: How much gold?



The IKN Weekly, out now

IKN473 has just been sent to subscribers. All aboard!