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9/1/18

Tahoe Resources $TAHO THO.to, cyanide spills and 35,000 dead trout (UPDATED)

UPDATE: This news story below is apparently only the tip of the iceberg. Since publishing this post, your author has heard from reliable local sources that locals now have no drinking water available and no water for their livestock. People dozens of kilometres downstream from the Tahoe Resources La Arena mine are frightened of even going close to the water courses near their homes. To be honest, I can't blame them.


This news story today, translation below and photo from the report. If preferred, another report on the same story here.


Published September 1st, 2018

35,000 Trout Die After Cyanide Solution Spill

Residents of the Carracmaca community, in the district of Sanagorán (La Libertad region, Peru) have reported the death of 35,000 trout, due to the leakage of 600,000 litres of cyanide solution from the La Arena SA mining company, property of Tahoe Peru.

According to the locals, the fish were ready to go to market, however after the spill of the toxis substance the large majority of them died.

Apparently, the company said it would pay damages for the loss, however the inhabitants of the community in Sánchez Carrión fear that the pollution of the water has affected many different communities, from Carracmaca and down the Condebamba Valley.

Local media report that those with losses have tried to file charges for contamination, but have been denied the opportunity by local authorities


(Some of) Eric Sprott's Greatest Misses


Unlike those who think that he's some sort of infallible machine who never gets them wrong, I understand how Eric Sprott approaches the exploreco market. He knows he's going to bet on losers along the way and has done so on umpteen occasions, he also knows that it only takes one massive winner among a bunch of positions to justify the strategy and come out on top.

This is something that the newbies in hot stocks fail to capture, so by way of an example they might want to mull over the RegFs  filed by Mr. Sprott last night on SEDAR in which he announced the lapsing of warrant positions in four of his holdings. For those just joining us, this means...
  • He bought into a placement that included warrants in the deal
  • No matter what the shares have done, the warrants on the day of expiry weren't at the base price required
  • He has let them expire worthless, waving goodbye to them forever. 

There were four of his positions filed last night, in Latin American Minerals (LAT.v), Excellon Resources (EXN.to), Golden Predator (GPY.v) and Ascot Resources (AOT.v). For what it's worth, considering the entry price of the units in each placement, though still losers he's only going to be down a bit in EXN and AOT, no big number in percentage terms. However in LAT and GPY, he swung and missed.
  • The LAT warrants were priced at $0.15. Today it's a $0.025 stock
  • The EXN warrants were priced at $1.75. Today it's a $1.13c stock
  • The GPY warrants were priced at $1.00. Today's it's a $0.355 stock
  • The AOT warrants were priced at $1.50. Today's it's a $0.87 stock

FOR IMMEDIATE RELEASE
TORONTO, August 31, 2018 - Eric Sprott announces the following common share purchase warrant (“Warrant”) expirations that resulted in a partially diluted beneficial ownership change of greater than 2% and the filing of early warning reports.  

Latin American Minerals Inc. (“LAT”)
On July 7, 2018 and July 18, 2018, a total of 25,000,000 Warrants expired unexercised representing approximately 10.2% of the outstanding common shares on a partially diluted basis. Prior to the expiry of these Warrants, Mr. Sprott beneficially owned and controlled 35,333,334 common shares and 33,333,334 Warrants representing approximately 27.2% of the outstanding common shares on a non-diluted basis and approximately 42.8% on a partially diluted basis assuming the exercise of all Warrants. As a result of the Warrant expiry, Mr. Sprott now beneficially owns and controls 35,333,334 common shares and 10,333,334 Warrants representing approximately 27.2% of the outstanding common shares on a non-diluted basis and approximately 32.6% on a partially diluted basis assuming the exercise of all Warrants. LAT is located at 502-211 Yonge Street, Toronto, ON M5B 1M4. A copy of the early warning report with respect to the foregoing will appear on LAT’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and may also be obtained by calling Mr. Sprott at (416) 362-7172.
 
Excellon Resources Inc. (“EXN”)
On July 26, 2018, 2,913,413 Warrants expired unexercised representing approximately 2.3% of the outstanding common shares on a partially diluted basis. Prior to the expiry of these Warrants, Mr. Sprott beneficially owned and controlled 20,520,715 common shares and 3,538,413 Warrants, representing approximately 20.8% of the outstanding common shares on a non-diluted basis and approximately 23.6% on a partially diluted basis assuming the exercise of all Warrants. As a result of the Warrant expiry, Mr. Sprott now beneficially owns and controls 20,520,715 common shares and 625,000 Warrants, representing approximately 20.8% of the outstanding common shares on a non-diluted basis and approximately 21.3% on a partially diluted basis assuming the exercise of all Warrants. EXN is located at 900-20 Victoria Street, Toronto, ON M5C 2N8. A copy of the early warning report with respect to the foregoing will appear on EXN’s profile on SEDAR at www.sedar.com and may also be obtained by calling Mr. Sprott at (416) 362-7172.
 
Golden Predator Mining (“GPY”)
On July 26, 2018, 5,000,000 Warrants expired unexercised representing approximately 3.5% of the outstanding common shares on a partially diluted basis. Prior to the expiry of these Warrants, Mr. Sprott beneficially owned and controlled 8,000,000 common shares and 5,000,000 Warrants, representing approximately 6.1% of the outstanding common shares on a non-diluted basis and approximately 9.6% on a partially diluted basis assuming the exercise of all Warrants.

 As a result of the Warrant expiry, Mr. Sprott now beneficially owns and controls 8,000,000 common shares, representing approximately 6.1% of the outstanding common shares. This is Mr. Sprott’s first transaction in GPY since he last reported as a 10% or more beneficial owner. GPY is located at 510-580 Hornby Street, Vancouver, B.C. V6C 3B6. A copy of the early warning report with respect to the foregoing will appear on GPY’s profile on SEDAR at www.sedar.com and may also be obtained by calling Mr. Sprott at (416) 362-7172.
 
Ascot Resources Ltd. (“AOT”)
On August 5, 2018, 8,695,653 Warrants expired unexercised representing approximately 4.7% of the outstanding common shares on a partially diluted basis. Prior to the expiry of these Warrants, Mr. Sprott beneficially owned and controlled 18,628,006 common shares and 8,695,653 Warrants, representing approximately 12.2% of the outstanding common shares on a non-diluted basis and approximately 16.9% on a partially diluted basis assuming the exercise of all Warrants. As a result of the Warrant expiry, Mr. Sprott now beneficially owns and controls 18,628,006 common shares, representing approximately 12.2% of the outstanding common shares.
AOT is located at 1550-505 Burrard Street, Vancouver, B.C. V7X 1E5. A copy of the early warning report with respect to the foregoing will appear on AOT’s profile on SEDAR at www.sedar.com and may also be obtained by calling Mr. Sprott at (416) 362-7172.
 
Purpose
The securities noted above are held for investment purposes. Mr. Sprott has a long-term view of the investment and may acquire additional securities either on the open market or through private acquisitions or sell the securities either on the open market or through private dispositions in the future depending on market conditions, reformulation of plans and/or other relevant factors.
 
Eric Sprott
200 Bay Street, Suite 2600
Royal Bank Plaza, South Tower
Toronto, Ontario M5J 2J1


These are just a handful from last night, a list that makes for an easy example post in the blog on a Saturday morning. Those of you under the impression that following Eric S into a trade is some sort of mystic formula for guaranteed gains ought to check further, do more DD, see for yourself. He backs failures A LOT of the time (seriously, go look), the difference is that when he nails a winner he makes an equal capslock A LOT of money (e.g. at least $300m in Kirkland Lake). However, anyone that gives you the "Eric is long so this is a winner" spiel does not know what they're talking about.

8/31/18

It's a Friday post close NR, Desert Lion (DLI.v) edition

Beats me why Desert Lion Energy (DLI.v) waited until after the close on Friday to announce this:


TORONTO, Aug. 31, 2018 /CNW/ - Namibian lithium developer and emerging lithium concentrate producer Desert Lion Energy Inc. (TSXV: DLI) (OTCQB: DSLEF) ("Desert Lion" or the "Company") today announced that it has ceased all operations in Namibia in light of the continued decline in lithium carbonate pricing. The Board is currently re-assessing the previously announced 3-stage execution plan and is evaluating all available options to find a sustainable path to the continued development of its Namibian Lithium Project.
The Company has also commenced negotiations with its offtake partner, Jiangxi Jinhui Lithium Co. Limited, to amend the pricing metrics under its offtake agreement in light of the current lithium carbonate pricing environment.
As previously disclosed, the Company intends to announce its Maiden Resource Estimate and Preliminary Economic Assessment prior to the end of Q3 2018.
About Desert Lion Energy

Anyone? A clue? Emerging or submerging?

The Friday OT: Ólafur Arnalds, re:member

New album just out on Spotify, new ear-worm for me, this is the first track. This dude and Nils Frahm are 80% of the things I'm listening to at the moment (and they work together, too). Addicted.



Hunt down the whole album as pearls abound in it, but this track is a fair place to start. Youtube here.

How Palisade Global works, Giga Metals (GIGA.v) edition

Please note that the people behind Palisade Global (registered in The Bahamas with most of its dirty work done out of Panama) are not the people behind Palisade Capital (registered in New Jersey, founded in 1965, re-incorporated in 1995 and as far as I know, a fine upstanding insto catering to HNW individuals). Two different companies and in fact, the way in which Palisade named itself five years ago is probably an attempt to get reflected glory from the large and successful insto.

Anyway, here's an example of the way in which Palisade Global, headed up by one Sean Zubick (from next to a hotel pool in Panama if his LinkedIn photo is anything to go by), goes about its business of pumping worthless stocks on retail sheep using its designed-for-pump media channels. The script that follows is from A. Reader (who wishes to remain anonymous and their wish is my command) and not the words of your humble scribe, but it wouldn't be published on this blog if the information hadn't checked out and were solid. I've scrubbed very lightly at the text and provided the hyperlinks, but apart from that it's all the work of A. Reader. Take it away:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Thought you might be interested in Palisade's involvement in a particular junior. The company is Giga Metals, formerly Hard Creek Nickel, and here’s the sequence of events:

August 2017
Hard Creek is down to virtually nil in cash and has a market cap of approx. C$1.5 million. The company announces a share consolidation and financing via issuance of $0.06 units comprising shares and 3-year warrants with a strike price of $0.08/share. The company changes its name from Hard Creek to GIGA and announces a focus on battery metals.

The financing is taken down by a small group including Palisade & Pala Investments (and/or certain of its principals). The investor domiciles (Bermuda/Belize) in the exempt distribution summary tell the tale.

August/September 2017
Palisade begins pumping the stock to its close associates.

September/October 2017
The first public pump of Giga is done via the Palisade Radio program featuring Pala’sAnthony Milewski mentioning Giga as a preferred junior nickel play.

The early stages of the Palisade pump runs the share price up, allowing the completion an October financing at $0.35/unit for proceeds of $2.36 million.

December 2017/January 2018
Giga announces that is has retained Palisade for IR and strategic advisory services at a monthly retainer of $15K for 3 years ($360K) payable in advance.

Giga closes another financing for $2.4 million comprising of units priced at $0.60/unit.

1-year Share Price Performance – Round Trip, Anyone?
Giga reached 90 cents in November, at which point the investors in the August PP at $0.06/unit were sitting on a 15-bagger from the shares alone (i.e. not to mention the warrants). Then as the 4-month hold came off that PP, look out below. More recent attempts to pump the stock (Seeking Alpha coverage, etc.) have not worked out so well.



GrowMax (GRO.v), Fertimar, dissenting shareholders and a nice photo of a ship

This humble corner of cyberspace notes with amusement that concerned shareholders have launched a proxy slate against the current management at GrowMax (GRO.v), the bit that fell off Americas Petrogas that owns its near-worthless* phosphates property in Bayovar, Peru. Basically, the dissenting shareholders are not happy about the deal GRO management has put together to buy Fertimar, a private Brazilian concern, as announced in its NR of three days ago.

Unsurprising, considering that the Fertimar company's main asset and the reason they've talked up the benefits of the deal is this ship, the "Litho One":


Here's how GrowMax talks up Fertimar and Litho One in its NR spiel:
The company owns and operates a suction dredge vessel called “Litho One” with a current capacity of approximately 500 tonnes per voyage to recover the material from its licensed tenements. Dredged material is off-loaded at one of three local ports in the Salvador area of Brazil and trucked to a processing plant at the municipality of Candeias, located approximately 40 km north of Salvador. The plant location is adjacent to major fertilizer bulk storage and shipping facilities operated by international fertilizer companies.
Lick of paint when you've bought it, guys? By the way, GrowMax would be a better name for one of those products they sell on porn sites.


*Not due to the mineral content, but the exact location. That specific property has a fatal flaw that they never tell you about.

Garibaldi Resources (GGI.v) has managed to...

...go all of June, all of July and now all of August without a single substantive piece of news about it ongoing drill program. This after peppering the market with NRs while its 2017 program was in progress.

Good news travels fast, bad news slowly.

8/30/18

Classic moments in fundamental analysis on mining stocks, Fiore Gold (F.v) pump whore edition

The guy under the handle of "Critical Investor", who is paid $20,000 per company by Frank Giustra to write up his companies in a glowing light and has been pumping Fiore Gold (F.v) all the way down its 2018 (and continues to do so), has just revealed the secret of his success. On the Fiore Gold board at CEOca, in response to somebody who put up the link to my post yesterday "The cruel reality of Fiore Gold", he wrote the following (screenshot):


Let's ignore the fact he fails to address the key weakness at F.v noted in my post of yesterday (the future and the strip rate) and concentrate on the phrase of utter dumbassery he just let slip from his brain. Yes indeed, ladies and gentlemen, according to his paid pumper and Frank Giustra whore who will say or do anything to keep his benefactor's cheque book open, "free cash flow is meaningless in mining."

I rest my case, m'lud.

Argentina's Peso is collapsing

When President Mauricio Macri went national yesterday morning with his proclamation that he'd asked for advances of cash from the IMF in order to cover everything and that the problems faced by Argentina had been generated by political chatter, not economic fact (seriously, he said that, what a freakin idiot), the Argentine Peso (ARS) stood at 32 to the US Dollar. Last night it closed at 34, this morning it's just rocketed to 40. In response, the Argy Central Bank has raised its baseline interest rate on the Peso from 45% to 60%. Yup, it's collapsing. Again.

For more, maybe another look at the article published by your humble scribe entitled "Argentina and the calm after (and before) the storm", that first appeared on August 5th. At that time the Peso was 28 to the Dollar. I've also been boring subscribers of The IKN weekly stiff every weekend with updates on the decadence in the country's financials, so not everyone should be surprised about what's going down today. Or in order words...

Toldyaso.

HIVE Blockchain Technologies (HIVE.v) financials

HIVE Blockchain Technologies (HIVE.v) posted its 1q19 financials last night and the stock is down this morning. One of the reasons may be that its CEO Harry Pokrandt is retiring (and can therefore sell his large slug of shares without anybody noticing), but that's probably not the real reason for weakness today. That'd be the state of the financials and what lies ahead for HIVE. Charts please!

This shows the full extent of how much it costs to run HIVE...


...and you need to understand what's going on in this chart. First up, the main red block is what HIVE would like you to believe as their only cost of doing business, the "operating and maintenance costs". Yes it's one of the two biggies, but it's hardly the whole banana. Importantly, the calc includes the depreciation of its computing equipment that was substantially greater this quarter, but is still woefully underestimating the true DDA involved with these machines that go out of hashing fashion very quickly. There's a long-winded way of explaining why depreciation (a balance sheet item) needs to be included in any true calculation of the true cost (a P+L matter) of running this company, but the essence is simple; Anyone ignoring the replacement price of the HIVE equipment when making their case for (or against) the company doesn't have a freakin' clue. Period.

There are other minor costs too, including a charge of $255,000 for travel expenses, another crazy amount for a company this size (Frank Giustra hiring out his private jet?) and means that in just nine months, these guys have spent $872,000 on travel (over $3,200 a day). This line item needs poitning out, it gives you a window on the corporate attitude.

So, add 'em up and then stick the costs next to the total income at HIVE. That's made up of two things, the revenue in the quarter plus the "coin revaluation". That one will be important in the quarters to come as well, it's the way to keep a handle on the true state of liquidity if they have indeed decided to sell all inventory.


Ladies and gentlemen, HIVE costs more to run than the revenue it generates. Sounds sustainable, yeah? And indeed, HIVE reported a net loss of $2.7m on the quarter but for me, the more important measure of liquidity, working capital, and its $7.5m drop to $30.1m is more indicative of the situation.

And finally, if you do a bit of math on the number of ETH coins sold during the quarter (17,555), take away a small amount for the minor Ethereum Classic sales and then run that through the revenues number, you work out that HIVE.v sold its ETH at an average of U$570 during the quarter. Which compares to these numbers:
  • Average price of ETH in current quarter (July 1 to Sep 30) to date: U$380
  • Current price for ETH: U$284
Which does not make for good optics in the current quarter in progress. When HIVE reports its Q2, unless ETH rallies hard and/or it sells all its ETH inventory they're not going to pull in more than $6.5m and that won't even cover the true depreciation of this shell game company.

Congratulations to Tahoe Resources (TAHO) (THO.to) on another record

Yes indeed, it's yet another 52 week and all-time low.



8/29/18

The Tahoe Resources (TAHO) (THO.to) cyanide spill

The news this afternoon from Tahoe Resources (TAHO) (THO.to) regarding its La Arena gold mine in the La Libertad region of Peru requires some clarification, it seems:

1) It's obviously an attempt at gold theft, which begs the question about site security. They've been there three years, for crying out loud! Don't they have a single clue about running a gold mine?

2) You'll note that in no place does the word "cyanide" appear in the NR. That's obviously a deliberate decision by the company, but it's what this is all about. They do of course use the term "pregnant solution" and that is correct, but the important thing is to understand what that is. The "pregnant solution" from a heap or dump leach is the liquid that's collected from the pads which has captured the gold. You sprinkle dilute sodium cyanide onto the pad, it picks up the gold, the then pregnant solution runs into collecting ponds and is treated to get the gold out. Bottom line---> This is a cyanide spillage and the cyanide "may have" made its way into the local water supply. Which means it did.

3) And what about the size of the spill? The company says it's "600 cubic metres" and if you put it that way, it sounds modest. In fact that is 600,000 litres. Of highly toxic liquid. In the river. Via the company's very own storm management system. Yummy. For context, the cyanide solution spill at the Barrick Veladero mine that caused the closing of the facility, a near $10m fine and prosecutions of ABX management was 1.1m litres, a little under double the size. This is no small event, ladies and gentlemen.


The cruel reality of Fiore Gold (F.v)

On the back of the company's 3q18 financials out last night, your humble scribe decided to take a peek at the state of Fiore Gold (F.v) to see whether it justified its recent ski-slope sell-off. Numbers got plugged in, charts came out the other side and here below are a few of those. What follows will not be explained to you by the CEO.ca writers who are on "sponsored coverage" deals with F.v (i.e. they get paid $20k by Frank Giustra to write nice things), but it does explain just why the stock price has gone South while those whores with laptops swore blind it was cheap, all the way down.

Before you start scratching the surface (which is exactly what the pumpers don't want you to do), F.v and its Pan mine seems to be returning good numbers. Revenues up, free cash flow positive etc. But then you see how the costs have risen too, and how income from mining operations has remained basically unchanged:


To be precise, operating income per share remained static compared to Q2 (the only quarter with which it's fair to compare F.v, last year it was still ramping back up), at 1.9c. Now that might not sound too bad, a straight line fwd operating earnings of 7.6c on a 40c stock (not bottom line EPS, but still less than 6X which isn't bad), but there are other things below the backward-looking results to consider.


For one thing, Q3 was pimped by selling more gold than it produced. Now that's fair enough, there has been a slight lag on sales all the way back since F.v re-started Pan but this quarter that's all been used up. By selling 620oz extra in Q3, Fiore got an extra $750k into the company and no problems, but it's a one-time benefit.


Those extra sales are a minor point, but before we get to the major issue let's note in passing that this is the company which BSses the world with the Fake News All In Sustaining Capital (AISC) number. In its 3q18 literature it claimed AISC of U$971/oz, but  as noted previously, even though the AISC rules are not law there is a generally accepted way of presenting the number...which F.v ignores. That can be neatly and accurately translated as "Hah! Sucker!", so if we de-construct F.v bullshittery and present its AISC in the way 99% of gold mining companies do (i.e. including the G&A), its AISC for 3q18 comes to U$1,114/oz. And twenty-two cents.


Those are the kind of things you see that unfurl the yellow flags on a company, but for the red flag let's move to the MD&A and this section of script:
Looking ahead to the fourth quarter of 2018, the Pan Mine is entering a planned period of higher stripping that will extend through the bulk of fiscal year 2019. While the life of mine strip ratio is not expected to change from the 1.3:1.0 number reported in the 2017 Feasibility Study, the strip ratio is expected to be in the range of 2.2:1.0 for the next three to four quarters. While partially offset by higher grades in the fiscal year 2019 mine plan, the increased stripping is expected to result in higher mining costs which will in turn affect operating cash flow. We are currently projecting a return to significantly lower strip ratios in fiscal year 2020.

To begin, let us note that "fiscal year 2020" will begin on October 1st 2019, that means there is at least a year of this higher strip ratio to go. If we then note the company is now guiding to the low end of its 35,000 to 40,000 ounce production range for calendar year 2018, then work out how much ore it needs to place to get to that number, then have a best guess on the total amount of dirt they mine, then factor in the new strip rate average (which is bound to have a couple of quarters of higher ratio as well), here's a best guess on what that looks like compared to previous quarters:


I've stuck in two quarters' worth of guesstimates there, but it's worth recalling that F.v will run at that strip average for at least five quarters. Its production will be lower, strip higher, AISC higher and as its real AISC is already over $1.100/oz, there's precious little meat left on that financial bone.

The bottom line is that F.v is running to stand still. Its balance sheet position isn't bad (no debt to speak of) but with $7m and bits left in the treasury and a producing asset that is about to go through five quarters of breakeven at best (unless gold puts in a big pop), anything it wants to do at its exploration assets will require a new source of funding. That's probably why they pared off the Chilean asset this quarter, too. It's not a case of whether F.v runs a dilutive round of financing, it's a case of when and all the people who bought into the CEO.ca paid pumper enthusiasm at the beginning of the year (when it was a $1+ stock and trading over a million shares a day, begad!) will get another lesson in how they are being ripped off by the whores at the periphery of Giustra's empire. But don't worry about Frank, he sold enough stock to you in January to guarantee his own winning trade on this one.

Updating on Paul McRae of Lundin Mining (LUN.to), the illegal insider trader

So far at least...
  • No word from the other companies at which Paul McRae is a director, namely Lundin Gold (LUG.to), Filo Mining (FIL.v) and Bluestone Resources (BSR.v), on whether they are investigating the case.
  • Nothing as yet from the market authorities in Canada on whether they are investigating the case. Also, no word from Sweden whether their market authorities are looking into the case.
IKN will of course keep you informed on developments.

Some are born BSsers, some achieve BS, and some have BS thrust upon 'em.

With apologies to William Shakespeare, it would seem to this humble corner of cyberspace that Tim Frounde, CEO of Sokoman (SIC.v) falls into the latter category of the three and is not at all cut out to run a TSXV pumpjob company. After all, if you're a guy who just hit an excellent gold assay hole, reported it, got the promo community slavering over the hit, got his company cashed up as the Eric Sprott headless chicken investment strategy kicked in... that guy does NOT follow up with NR number two if he's a real live TSXV BSser by writing things like:
"Like many structurally controlled gold deposits, this will entail a lot of drilling - likely, closely spaced."
That's way too honest. Tim, you're ruining the pumpjob. The Vancouver louts in Panama won't be happy.  NR here.

8/28/18

Friday may have been the day (but don’t count on it), from IKN483

Here's the intro to last Sunday's edition of The IKN Weekly, IKN483:


Friday may have been the day (but don’t count on it)
If there one thing you can count upon in the wild and whacky world of gold stocks and all who sail with her, it’s that sentiment among its investors and speculators will turn on a sixpence. By way of example, we’ve just come out of an eight week period when gold was repeatedly hammered by the strong dollar, by Trade Wars!, by disdain for the whole precious metals complex and talk of dying demand. Most recently, gold spent two weeks under the U$1,200/oz line and spiked as low as $1,152/oz at one point and the whole process has been boring, painful or just plain horrible in turns.

And then, suddenly, Friday wakes up and gold pops over U$20/oz, going back above the U$1,200/oz and bringing a welcome relief rally to the sector. That’s why I decided to run this small poll on Twitter that day and here are the results of the 169 people who took a click of their time to answer: 


I find that most impressive (and with 169 replies, the margin of error is reasonable). Eight weeks of gloom, two weeks of sub-$1,200/oz prices, just hours after gold rebounds (and it never got beyond U$1,210/oz either) and only 18% of respondents thought we’d go back down again. As for the other choices, they were kind of evenly spread but the object of the exercise was not that, it was to gauge the market mood and sure enough, hope once again sprung eternal in the precious metals sector.

Now for sure I’d like it to be true as well, because one thing is to play the “call the bottom” game, another is to put your money where your mouth is and that’s exactly where I am today, betting on a better September than August (and beyond, of course). However we shouldn’t take this as a given, especially not on just one day of trading in this most volatile of sectors that sits under a nervous and volatile broad market. You don’t have to look far to find data that points gold back down, either:



While all was merry and bright in the gold market Friday, GLD inventories actually sold off further and ended the week at 764.58 metric tonnes gold. That’s 2.7mt down on the day, nearly eight tonnes on the week and the lowest inventory position since the 26th of February 2016. I want to believe and the forecast is a public one too, as per Thursday evening (1) and the “put up or shut up” post. But I’m not above being wrong, not counting any sort of chickens yet and I’m aware that what the dollar does is vastly more important than any set of results in my chosen portfolio companies right now. This time next week I may be writing with more confidence about a nascent bull run in our sector of focus, we’ll see on that.

8/27/18

Miranda Gold (MAD.v): And a mad time was had by all...directors



Here's one that made me giggle, sent by a friend who was sent it by A Concerned Citizen. Back in late January, Miranda Gold (MAD.v) ran a $1.5m placement in order to raise funds for paying management to do nothing business and exploration and stuff. All normal so far, but then on February 1st they announced this:

Feb 01, 2018
Miranda Modifies Terms Of Recently Announced Private Placement

Vancouver, BC, Canada -- February 1, 2018 -- Miranda Gold Corp. ("Miranda") (TSX-V: MAD) announces that it has modified the terms of the private placement announced on January 8, 2018. Miranda now proposes to raise up to $1,720,125 by way of a non-brokered private placement through the issuance of up to 31,275,000 units at a price of $0.055 per unit (a "Unit"). Each Unit will consist of one common share and one non-transferable common share purchase warrant (a "Warrant"). Each Warrant will entitle the holder thereof to purchase one additional common share of Miranda at a price of $0.12, until expiry four (4) years from the date of closing the private placement. The Company increased the total amount to be raised in this placement by $220,000 to accommodate increased participation by the Board of Directors and management.

Now you'd think that a good thing, right? Four officers of the company had decided to chip in with their own money on the placement to the tune of $220k. That's a positive thing normally, yeah? Skin in the game, money where mouth is, belief in the company and its projects etc etc etc. 

Yup, all good normal and fine, right up to the moment the quarterly financials came out:



Three directors and one officer (the CFO) had been given one time, unscheduled and out-the-blue bonuses of $55,000 cash each. In other words, they'd been given the money by the company in order to buy the shares in the placement. It was the first time MAD.v had awarded bonuses to management too, this isn't a regular occurrence and just happened to coincide with the raising.

Or in short, they'd awarded themselves 1m shares and 1m warrants for free. And sure enough, when the escrow came off those shares...


...the stock got blown to pieces by a whole bunch of people looking to cash in quickly. 

These are the people you're dealing with in explorecos, directors and managers who will screw their own company over and leave their shareholders holding large bags of paper, all for $25,000 cash in the hand. Lovely people.

Notice to subscribers of The IKN Weekly

Hi people,

Last night and for some unknown reason, the Weekly didn't reach a portion of subscribers in a specific geographic area (and I have the mails to prove it). Some sort of glitch in the matrix it seems, as apart from that zone it went out no problems. If you haven't received yours yet, please drop me a line.

8/26/18

The IKN Weekly, out now




IKN483 has just been sent to subscribers. Words, charts, numbers and coloured bricks. Little Rocket Man.

Paul McRae of Lundin Mining (LUN.to), illegal insider trader


Paul McRae

The core of following was sent to me by A. Reader, who prefers to remain anonymous. However, I have checked out their contents and 100% agree with both the veracity of the evidence and the undeniable conclusion it brings, that Paul McRae, Senior Vice President Projects of Lundin Mining (LUN.to), a director of the company and resident of Portugal, used material non-public information in order to place a trade on the stock market and benefit economically as a result. In short, he's an illegal insider trader.

The interesting thing is that LUN.to itself has been forced to admit this, in writing, in a published document, because it may have put their deal with Nevsun (NSU) (NSU.to) in jeopardy if they had not and the fact were discovered later. However, we do not know whether Mr. McRae has been reprimanded in any way, shape or form by the company for this obvious breach of its code of conduct, so maybe LUN would like to clarify on that.

I'll now hand you over to A. Reader and the mail they sent over, late last night (very slight editing done to protect the innocent).

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The following three short paragraphs are copied verbatim from page 38 of Lundin Mining’s Circular dated 26 July 2018 and designed to convince Nevsun shareholders to tender to their C$4.75/share cash offer. The text is a portion of the ‘Background to the Offer’ section, whereby Lundin Mining outline their timeline of the events leading up to the hostile bid. I added the bold type and underlining for emphasis, as the timeline is the smoking gun:
On February 7, 2018, Lundin Mining submitted a proposal to Nevsun pursuant to which Lundin Mining proposed to acquire Nevsun at a price of C$3.75 per Nevsun Share, consisting of C$3.43 in cash and the balance of the consideration in common shares of a new company to be spun out of Nevsun (the “First Proposal”). The C$3.75 per share value represented a 44% premium to Nevsun’s closing price on February 6, 2018 on the TSX and a 34% premium to Nevsun's 20-day volume weighted average price on the TSX for the period ended February 6, 2018.
On February 14, 2018, Nevsun rejected the First Proposal and advised Lundin Mining as to its concerns with the proposal, including the potential value of the common shares of the new company proposed to be spun- out to Shareholders.
On February 25, 2018, Mr. Lukas Lundin, Chairman of Lundin Mining, and Mr. Kukielski met to further discuss a potential business combination involving Nevsun and Nevsun’s concerns with the First Proposal. Subsequently, Lundin Mining submitted a revised proposal to acquire Nevsun at a price of C$3.60 per Nevsun Share in cash to address Nevsun’s concerns with the structure of the transaction and to provide certainty on the value of the consideration (the “Second Proposal”). The C$3.60 per share value of the total consideration represented an approximately 30% premium to Nevsun’s closing price on February 23, 2018 on the TSX and to Nevsun's 20-day volume weighted average price on the TSX for the period ended February 23, 2018. 
On page 43 of the same document, I saw the following text.
During the six-month period preceding the date of the Offer, no Nevsun Shares have been traded by the Offeror or any of its directors and officers, other than as follows: Mr. McRae, Senior Vice President, Projects of Lundin Mining, purchased 17,000 Nevsun Shares on the facilities of the TSX on February 23, 2018, at a price of C$2.82 per Nevsun Share, for a total purchase price of C$47,940. 
So Mr Paul McRae, after the first non-public bid was rejected, but days before a second bid was tabled (as he knew that his employer Lundin Mining was not going to walk), decided to buy shares in the target company knowing full well that the cash component of the Lundin’s offer was going to be materially higher than his purchase price. 
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Thank you, A. Reader. My mailer also went on to say that it doesn't matter whether he stood to make a hundred dollars or a million, this is insider trading, period. In fact A. Reader signed off on the op-ed part of his mail with "How much more blatant does it need to be?" and this humble corner of cyberspace fully agrees with that statement. What I find interesting is that, due to the need to be fully compliant during M&A periods such as this, when the other brass found out about McRae's illegal trading they felt compelled to publish it in order to avoid legal problems later. In other words, we finally get to see one of these scumbags do their scumbaggery. As for the fruits of his trade, as a matter of fact NSU is at C$4.83 today and means (assuming he's held through) Mr Mcrae has made a little over $34,000 gross on that trade. Nice work if you can get it (anyone want a free SUV?) and by the way, I sure hope for his sake that he held onto the shares.

We should also point out that Paul McRae is not just a director of Lundin Mining, he is also on the boards of Lundin Gold (LUG.to), Filo Mining (FIL.v) and Bluestone Resources (BSR.v). Therefore, not just one but four companies need to ask serious questions of this man, as having an illegal insider trader on your board is no small matter. As for experience, McRae has been in the industry for over 40 years so it's going to be very difficult to come at us with the "Oh gee shucks, I didn't know you could do that" spiel. This man knows the rules, knew what he was doing was illegal and still did it.

Which now leaves us with the last piece of this puzzle; Dear Canadian market regulators, IIROC, TSX, BCSC, OSC, ASC, now that you've been presented with a lock-tight example of blatant illegal insider trading in securities of a company in your jurisdiction, what are you people going to do about it? It would surely be nice to see you do something for a change, instead of letting this pervasive corruption continue to prosper and slowly kill Canada's capital markets.