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The scene at this week's American Exploration & Mining Association convention in Spokane

IKN Nerve Centre receives this photo of the scene at this year's American Exploration & Mining Association convention, Spokane WA (Weds thru Fri):

According to the source, there were 1,200 people registered for the gig, of whom 1,100 were automatic booth registrations. Therefore real attendees were around 100 or so, or in the words of IKN's source, "It was crickets". And golf too it seems, the guy getting some putting practice in had few concerns about delegates in his sight lines.

Eric Coffin, your petticoat is showing

Mirth and merriment on show over at CEOca at the moment, where on the Prize Mining (PRZ) board you have such leading lights as Eric Coffin and Tommy Humphreys back-pedalling hard in order to try and distance themselves from the unfolding scandals. Got to adore Lord Haw-Haw and his "oh it was just one erroneous phone call" excuse to explain why he bought into the Kootenay Zinc ZNK.cse P+D, but even better is watching Eric Coffin squirm and carefully choose his own anti-strawman subjects before answering them himself. Yup, he's careful to broach only the issues he can deny easily.

So why not tell them about your cozy relationship with Scott Gibson and Gibson Capital, Eric? Or why you always seem to get interviewed by Gwen Preston on the Gibson-owned media channels? Or how certain companies always seem to get mentioned during those pally pal Q&As. C'mon Eric, stop being so coy, give your flock full transparency about your backroom double dealing for the first time in your life, not just the clean corners of your biz.

PS: And by the way, Coffin really likes to make out he's an expert judge of my character and will state with certainty this-or-that thing about my viewpoints, life choices, opinion of other human beings etc etc. So when he starts on the ad-hom attacks again, just remember one fact; he's never met me. Not once. Never even spoken on the phone with me, in fact. His expertise as character judge is just another layer of fakery based on his own error-strewn imaginations and third-hand snippets.

The top three most visited IKN posts this week are... reverse order:
Third Place: "Aphria Inc (APHA): I sincerely hope clients of Scotiabank sue their brokerage". We're all the potstocks all the time this week, the most viewed posts all connected with the short report whacking of Aphria (APHA). This one was my rant.

Second Place: "The Aphria $APHA Scotia post this morning results in an interesting conversation...". And this one was the conversation that arose due to that rant, but went off at quite a different angle.
First Place: "Classic moments in sell side due diligence, Scotiabank edition". And this is the post that started it all. Scotia, thy name is ouch.


The HIVE Blockchain Technologies (HIVE.v) five day price chart

Ethereum closed the week at $93. There is no zero missing.

The Friday OT: Bow Wow Wow; C30 C60 C90 Go

A blast from the past:

Seminal punk track. Youtube here. For best results, play it really loud thru a mediocre sound system.

A gold chart

The next three or four trading days will be important for gold.


More excellent mailbag on the perils of passive ETFs

Here's something received at IKN Nerve Centre midday today, which continues the subject brought up yesterday by VEP. This time, Another Reader has more light to shed. The entrance and exit blurbs are removed, what's left is what matters and darn, I'm lucky to have smart readers. Read on...

As a mining banker I observe, on a daily basis, the corner of the market where these effects are most acute. Mining has absolutely no cyclical capital coming into it at the moment to paper over the cracks, so I’m left staring at the bare wreckage created by an absence of capital that is primarily due to the structural inefficiencies in the markets. And make no mistake about it, these structural inefficiencies are being caused by passive funds and ETF’s.

The succinct explanation as to why we should all be concerned, mining investment bankers or not, is as follows; If the dominance of passive funds and ETFs is followed to its logical conclusion, there is no need for a stock market.

Why? Because the biggest impact that ETFs and passive funds are having, invisible to most market observers (and especially those who don’t care about mining), is that the primary market for mining companies has been obliterated. While the secondary market seems superficially healthy, the new issue market is dead. A company with a good project, sensible capital structure and a a competent management team used to walk up and down Bay St before collecting a modest capital infusion for a drill program of merit, but there is now barely anyone left to write a cheque for them. And that is only partially due to the decline in the number of people willing to invest in mining, but everything to do with the fact that when ETFs take your capital, they don’t invest it in the primary market. If all of the capital willing to invest in mining is domiciled in ETFs, not a dime of new issue paper would ever get issued again.

“So what?”, I hear you say. Well, there are two reasons we should all care about this. Firstly, put yourself in the shoes of a mining junior. If you know you can’t raise capital on the public markets, why list? Sure, there’s a point being a public company if you’re big enough to get into an ETF or a passive fund, but the primary reason that juniors list is to raise capital. Which is a good thing because people like me and you get to participate in the upside of some great projects. But if you want all of the junior mining projects to be controlled by private capital, feel free to cheer on the rise of the ETFs.

Secondly, in my humble opinion, ETFs are indeed starting to look scarily like the sub-prime market before the collapse. In short, the liquidity of many ETF instruments is probably not matched by the liquidity of the underlying stocks, so in the event of a mass liquidation of ETF positions not all of your capital is coming back to you. I suspect that a significant market correction could create a scenario where ETFs have the potential to implode in a liquidity crisis reminiscent of that which eventually blighted the mortgage backed securities market. If you own ETF’s and there is a mass stampede for the exits, do you think that your only risk is the price of the underlying securities? The reality is that ETFs and passive funds are mispricing the risk that the holders bear. What every ETF holder is unlikely to be accounting for is the counterparty risk with the ETF provider who will need to liquidate ETF positions much faster than they can sell the underlying instruments in the event of a mass liquidation event.

On top of all this, don't even get me started on tracking error. I'd make a heavy bet that if you could ever precisely replicate the contents of an ETF over any given period in a portfolio of stocks you bought and sold yourself, that your performance would be significantly superior to that of the ETF itself. Call it a hunch, based on how much money the ETF providers are making.

Mailbag on Kootenay Zinc (ZNK.cse)

Here's an interesting mail, received from A. Reader yesterday. It's about one of the companies caught up in the BridgeMark scam and, lo and behold!, it was pumped by Gwen Resource Maven Preston to her subscribers at the time the P+D was in full swing. My, what a coincidence! It was also pumped by the so-called "Equity Guru" Chris Parry, who also makes full use of the Vancouver scamster central website to push his nefarious agenda. Yep, that is indeed the Tommy Humphreys site and....oh wow! Tommy was in on the Kootenay placement as well! My, another sheer coincidence.

People, the M.O. of the Vancouver newsletter scam cabal is on full show, right here. And if you think this is some sort of isolated incident, I pity your poor hide.


I applaud your efforts in shedding light on the junior mining newsletter writer (NLW) business, really more a promotional business than anything approaching an analytical one, with rare exception (you, Kaiser, Exploration Insights, that's nearly it). 

As you rightly point out the Resource Maven is a particularly sneaky scamster, and the recent BCSC "Bridgemark" kerfuffle has swept her into the mix, albeit tangentially, regarding one of her picks, Kootenay Zinc (ZNK) (no company website, always a good sign).

One of the beauties of the CSE is its "open kimono" Form 9 distribution report which specifically names all PP subscribers (unlike the TSX equivalent, in which subscribers' name are kept confidential). See here for the Jan 2017 Kootenay Zinc Form 9, which lists Gwen Preston (plus Tommy Humphries, Chris Parry, among many other characters) as subscribers to a $0.20/unit PP (shares plus half-warrant @ $0.30/share strike price). Interesting to note that by the time the PP closed the shares were trading at about $0.55/share, so the placees seem to have gotten one hell of a deal. What a shrewd and lucky lot!

Henceforth did the pump well and truly begin, including this podcast appearance by the Maven within mere days of the PP closing. The placement holders didn't even have to wait the normal four months either, as ZNK changed the tersm to allow them to liquidate 25% of their holdings at the end of February, while it was still a forty cent stock. Thay got another 25% out in May, but by that time the collapse was in full gear. The stock has since done a 10:1 rollback and now trades for $0.06/share (or $0.006/share on a pre-rollback basis, i.e. less than a penny). If you'd bought shares at $0.50 (pre-rollback basis), you would have made a whopping return of negative 98.8%. What fun for Maven subscribers!

The simple fact is that 90% or more of junior mining NLWs are pumpers looking to dump their cheap shares on their flock, the latter of whom actually pay for that masochistic privilege! NLWs, by and large, are promoters full stop. Far from adding luster to a story, their involvement in a stock should be viewed by anyone outside that company's inner circle as a kiss of death.

My coffee mug explains capital markets action for the rest of 2018

Bought from Ebitbrah:

Get yours in for Christmas, before stocks run out. Link here.

A nice explainer on The BridgeMark Group scam

Right here. An extract:

As an example of what occurred, BCSC outlined how four of the 11 issuing companies (Green 2 Blue Energy Corp., Cryptobloc Technologies Corp., BLOK Technologies Inc. and New Point Exploration Corp.) raised nearly $18 million by privately placing (selling) shares directly to the various BridgeMark members.
The companies then returned $15.3 million to the BridgeMark members in so-called consulting fees, leaving them with $2.7 million. The members, now down $2.7 million, then sold their shares (which were originally issued on a free-trading basis) for $8.8 million, thus raising about $6.2 million in allegedly illicit profit.
“In addition to being quite bold, it’s quite clever. You get the money and back it goes. It’s simple enough, not overly complicated; but I guess that’s the charm,” said Woods of the allegations.

Full story here and notice a little further down the report the reference to Kootenay Zinc (ZNK.cse), as IKN will have a post on that stock coming out later today.


McEwen Mining (MUX): Puppet Show and Spinal Tap

"If I told them once I've told them a hundred times, to put Spinal Tap first and puppet show last,"
  Jeanine Pettibone, This Is Spinal Tap

Today brings another example of a junior trying to bury the real news below the flying sequins, McEwen Mining (MUX) telling us all about its fabulous plans for the proven money pit it bought from Primero. Here's the title:


Get those last two words? And here was me, thinking that the idea of buying Black Fox was to...

1) Make a profit on your operation
2) Re-invest that money into projects
3) Grow organically and accrete shareholder value

...but no, actually making money by producing gold and silver....that's so oldskool. So instead of making $15m, the guy with the teeth who promised you he'd look after you retail guys is going to take that upside away from you all.

The Aphria $APHA Scotia post this morning results in an interesting conversation...

...via DM with a person who will remain nameless, but it's fair to say that this person is not my peer when it comes to Canadian capital markets; This person is waaaay ahead of me and has forgotten more than I know about the subject (yes, I know I'm lucky to get to have conversations with these people, no need to point it out). I'm going to call my friend "VEP" (very experienced person).

Anyway, it turned into an interesting exchange and as I've been given permission to share right here, that's what you get. It was a DM conversation so I've brushed up the grammar and tightened the words very slightly, but changes are few and there's no meaningful difference to conversation we had (apart from at the very end where I have left off the bye-bye bits). I'll indent my bits and put them in italics, to keep your eyes on the important person's words in the exchange (hint: not mine). Read on:


Very Experienced Person
Saw your note tearing the Scotia guys a new one. To be fair, the problem is systemic and relates as much to the buy side as to the sell side analysts. The fundamental problem is that sell side firms no longer get paid to do research.  It wasn't always the case. In the days of fixed commissions there was money enough for guys to do the work, kick the tires, do site visits and sincerely appreciate opinions as to their "top pick". Then fixed commissions went the way of the dodo and there was less money.  Then tech came along and lowered transactions costs. Then discount brokers came along and broadened access. Then DMA came along and cut out brokers altogether. Then ETFs and algos came along and made stock picking irrelevant altogether.

At each turn money for research went down a notch and at each turn, research looked to banking to make up the difference. Nowadays, banking funds research. This is technically illegal but utterly ubiquitous. Those guys picked Aphria because that's where they thought they'd get the most banking fees. Everyone knows this, yet no one talks about it.
I'm not sure what the solution is, but sunlight, as they say, is the best disinfectant. Research should be labelled advertising, because that's what it is. Don't bury it in the disclaimers in fine print, put it right up front in 48pt font. Anyway, that's my two cents.
Thanks. Much to agree with there. I see this shit going on all the time, but I think the point here is that this one is an egregious example. You pull your own research note after just 6 weeks? And key word there is "example"; An example has to be set, so this blatant nasty is a good place to start. To be honest, I think the whole brokerage system is going the way of the dodo, but that's a larger story.

Another thing; nobody talks about it in public, you say? Well why not start! I'd love this DM conversation to be out there and in the public realm, just your screed above would make for a great post on the blog. I could do it with your name, or go anonymous route. Waddya say?
Feel free to pull the pin on the exchange but please keep my name out, thanks.
Okey dokey.
One more thing: Regarding the dodo, I think we are all worse off with the current state of affairs. Superior investment returns come with the efficient allocation of capital, yet the efficient allocation of capital is predicated, or at least strengthened, by a free and honest exchange of ideas. Now that equity research is largely banking-driven, investment decisions are made on the basis of a conversation that resembles a collection of used car salesmen pounding hoods and wearing funny hats. Who wins? Certainly not the investor, yet these inferior returns are masked insofar as the impact is market-wide, a market that is largely gone passive anyway.
The root of the evil is brokerages skipping over their fiduciary duty to clients and cozying up to the sources of 8% placement commissions.
I don't disagree. But these clients are getting exactly what they pay for, namely, not that much.
There is that. Brokerages are businesses and will follow the money.
Which is only to say that there is much blame to go around. It is everyone's fault and no one's fault, all at the same time.
We're back to your 48pt banner comment.
Actually, the root of all evil here is Bogle (IKN note: This refers to Jack Bogle, founder of Vanguard and normally understood to be the father of the passive investment model). It was his great insight to say, "Why try to pick an active manager when you can buy all of them and not pay for any of them!" Hence the start of passive investing, freeloading at its finest.
And here we are in 2018, it's turtles all the way down these days.
It worked well when passive was a small component (even if immoral), but now that just about everything is passive (or passive-esque, as index hugging is); the whole thing is on autopilot. No one is driving the bus and no one even knows the difference. We are all frogs boiled slowly.
It's sub-primey.
Can't stop dancing while the music plays on, eh?
You see other sectors, I just look at miners. And I look at GDX(J) for examples, propped up by holding 10%+ in All-Them-Miners.
Yes indeed (and then the conversation ends).

Aphria Inc (APHA): I sincerely hope clients of Scotiabank sue their brokerage

Before getting to the point of this post, I want to make it clear that this is not about the merits or otherwise of Aphria Inc. (APHA), the recently high-flying but now troubled pot stock. It's not even about the short report published by Hindenburg Research and Quintessential Capital Management, which has grabbed many headlines and made the stock do this:

My point is about Scotiabank and its analysts on the marijuana sector, namely Oliver Rowe and Ben Isaacson. As we know from yesterday, Rowe and Isaacson in October 2018 told the world that the pot sector "is real and here to stay", which is fair enough as an opinion. The went on to state this, "When selecting stocks in this sector, investors will need to assess the quality of management, funding and strategic relationships they have in place", which is also a reasonable statement, I suppose.

And then they selected Aphria Inc. (APHA) as the best way to play the sector, their number one equity idea, their Top Pick. However, what we now know thanks to the Hindenburg short report is, no matter what happens in the future to APHA, there are serious doubts to the quality of the management. The strategic relationships have gaping holes in them, at least in the LatAm arm (the part about Argentina was too amazingly funny for words) and as for the funding, the evidence as seen so far from Hindenburg/Quintessential shows plenty of reason for doubts. It is now patently clear that Rowe and Isaacson decided to make APHA their Top Pick without doing the necessary DD. Maybe they just took the word of the company as gospel, or didn't ask the right questions, or didn't do the legwork. But you can bet several thousand dollars against one freshly baked doughnut that they did NOT visit the company's assets before deciding not only to recommend this stock, but to make it their number one Top Pick of them all.

That is lazy. It's negligent. It's a godawful attitude toward your profession. And I'd vouch that their pathetically poor Due Diligence on APHA has opened Scotiabank up to lawsuits from people, clients of Scotia, who took their sell side analysis at face value and bought on this advice, back in mid-October when it was a $14 and $16 stock. A multi-billion dollar growth sector, a $2.6Bn market cap company, a team of two, a Top Pick....and you can't dedicate a few days to checking out the fixed assets in Jamaica, Colombia and Argentina? My stars, I hope Scotia gets its cojones clavados on this, it would be a step forward in clearing up the deservedly pathetic reputation of the Canadian sell side brokerage industry.


Classic moments in sell side due diligence, Scotiabank edition

In just six weeks, from this:

The pot industry “is real, it is here to stay and we believe there is money to be made,” Scotiabank analysts Oliver Rowe and Ben Isaacson write in a note.
Investors in marijuana should shift their focus from grams of weed sold as a product to cannabis sold as an ingredient, according to the analysts. They compare the sector to the chocolate industry, where investors are more focused on sales, margins and market share of top companies, rather than producers in a specific country or region. When selecting stocks in this sector, investors will need to assess the quality of management, funding and strategic relationships they have in place, they say.

Aphria Inc. is the best way to play the sector, according to the analysts, who initiated coverage of the stock with a sector outperform rating. Their 12-month price target of $25 implies 34 per cent upside to the last close.

To this:

Feeling stupid yet, guys? Mind you, it won't feel half as bad as being unemployed.

Let us talk arsenic pollution and Tahoe Resources (TAHO) (

Here's a table from this guideline document showing the permitted maximum levels of arsenic in soils in various places around the world.

Japan looks pretty lax on this, but that 150mg per kilo level is under exceptional circumstances and normally, as the notes suggest, maximums before clean-ups have to happen are much lower. Perhaps a standard reading would be that of The Netherlands, which says that 76mg/kg is a severe  contamination condition. Meanwhile and not mentioned here, depending on where you are and what the ground is used for in the USA the permitted level max can be anything from 0.39mg/kg to 40mg/kg, but that's the absolute upper levels,

So, let's see what the Peru environmental authorities got from the sediments just outside of the Tahoe Resources (TAHO) ( Shahuindo mine in Cajamarca, Peru this year, from a document that fell into the lap of your humble scribe just last night (full PDF available on request):

Hmmm....531mg/kg. And by the way, the Cadmium levels on show there are off-scale dangerous and even worse. And what about this table, showing soil sample results from the mine?

Big numbers are not always good, ladies and gentlemen. So how's the clean-up going, guys? That award-winning community team make sure it's all spick and span for the new owners? Gotta wonder if this is why Ferrari Kev was so keen to do a cut price deal with Ross Beaty? Maybe Pan American (PAAS) isn't buying assets after all, maybe they've just paid goo money for a liability.

Dear Ari (updated)

Any particular reason why, four days after he was supposed to have resigned, Mateo Restrepo is still listed as President of Continental Gold ( on your website (screenshot below from 5 minutes ago)? Mere corporate laziness and inefficiency, or is there something else behind this?

UPDATE post-closing bell: Aaaaaaand it's gone:


Tahoe Resources (TAHO) ( The arrogance and conceit runs deep

How pleasing it was to hear that the Tahoe Resources (TAHO) ( Shahuindo mine in Cajamarca this weekend won an award for its community relations program. Also very puzzling too, because Shahuindo has been the scene of endless protests against the company by locals for the couple of years, the people around the zone fed up with TAHO's two-faced attitude and promising things that never come to pass. We've seen roadblocks and ministerial committees arrive to try and sort out the bad blood, but then suddenly this...?

Yes indeed, as part of the "4th National Convention on Community Relations" organized and sponsored by "Grupo Hierro Comunicaciones", Shahuindo got this award (and allow me to translate the blurb on the gong, "...for its actions of sustainable social management, that benefit the communities where the company has its operations."

Very nice.

So who is "Grupo Hierro Comunicaciones", you ask? A fine question indeed, because when you check them out you see that Grupo Hierro is a investor relations/social relations/communications company in Peru with clients such as...

Oh wow! Tahoe Resources! What a surprise! And not only that,but their main one featured top-left of the list, even in front of Barrick. 

Probably just a coincidence.


The IKN Weekly, out now

Keep Beetling On

IKN497 has just been sent to subscribers. Lovingly created from the finest pixels, what it lacks in intelligence it makes up for in wild and unfounded libel.

So how are those Peru mine development projects getting on, Otto?

Oh, just about as you'd expect.

While searching for something completely different earlier today, I came across this slide from this presentation made by Peru's main Geological Mining and Metallurgical Institute, INGEMMET, back in 2014. For what it's worth, these are the people the government of Peru rely upon to give accurate forecasts of future developments and production timelines for mining projects in the country and the source for those puff pieces you'll come across when Peru does its presentations at PDAC and suchlike. Anyway, this one has a nice handy map of the country upon which are the names of a whole bunch of projects's the interesting bit...the year that INGEMMET said the project would go into production:

Therefore we now know that:

Chucapaca (BVN, now called San Gabriel), Accha (Zincore) La Granja (Rio Tinto) and San Luis (SSRM I think, but it's been some time) and Los Chancas (can't remember) went into production last year, 2017. Los Calatos (ewww, ex-Metminco) went into production this year and Magistral (Nexa/Milpo) has been operating for the last two years.

Next year 2019 a whole bunch of projects have their first year of production, including Quellaveco, Tia Maria, Zafranal, Shouxin, Mina Justa, Pukaqaqa, Michiquillay, Conga, Cañariaco, Santa Ana, Quechua, Corani, Crespo, Haquira, Anubia, Ariana, Quicay II, Hilarión, Cotabambas, Ollachea, Galeno and Rio Blanco.

Fascinating, yeah? Because the funny thing is that none of them are in production yet. Pukaqaqa is close, Mina justa and Quellaveco have started construction, Michiquillay is going to get its first full year of development before any firm construction decision gets made, San Gabriel can't seem to make up its mind andif memory serves, Crespo isn't far off happening. As for the others, don't pick a year, pick a decade.