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2/9/19

An excellent analysis of the Vale (VALE) Brumadinho tailings dam collapse

Tom Szabo has awoken his infrequent blog to write highly recommended piece on the events surrounding the Brumadinho tailings dam collapse. Part armchair sleuthing, part careful analysis of available videos, part expert eye and chain of logic, the piece is several grades higher than anything I've read on the disaster. It also goes a long way to backing up a couple of my initial gut reactions, those of "they didn't stand a chance" and "Vale executives should be jailed for this".

2/8/19

Good news for mining from Ecuador (from IKN506)

This news is now ten days old (or so) and was reported to subscribers of The IKN Weekly last Sunday in IKN506. As it still hasn't got the amount of recognition it deserves (outside of the pop in LUG.to at the time), here's the note as published:

Ecuador: Significant changes to the mining tax regime
A big positive out of Ecuador last week was the news (15) that the mooted changes in State burdens on mining are now official. The main changes are:

  • The elimination of the Windfall Tax (WFT), which was always a line item that caused more heat than light but was a detrimental element to the marketing and image of Ecuador mining abroad.
  • Investment dollars are now tax deductible on remittance profits. That’s to say, if you are Lundin Gold (LUG.to) and you invest U$800m in FDI at FDN (so to speak), that’s now a tax credit on profits.
  • State royalties that were previously on a sliding scale of between 5% and 8% (depending on metal type, mine size, gross metal values etc) are now calculated on a sliding scale of between 3% and 8%, providing some relief if profit margins get thinner than expected.

All these things are positives for the mining industry in Ecuador and that’s me, the notably leery one on the country and its potential for mining investment, telling you that. It’s no surprise that just about the safest way of playing the formal Ecuador mining industry, Lundin Gold (LUG.to), took a big hike last week on the news, with the main 1.4m share trades going through on the day of the tax overhaul announcement.

The $5.54 close on Friday is the best price for LUG.to since May 2017. Because LUG.to has done an excellent job in community relations and has built out FDN (so far) without much fuss of disruption, as well as paying its “advanced royalties” dues to the local and national governments, it’s about the only project I’d feel comfortable about owning in the country. However, the newly relaxed State burden regime (particularly the tax credit for investment now clear and without question) is a significant and positive step forward for Ecuador.

The Friday OT: Olafur Arnalds; Ekki Hugsa

From his latest album Re:member (that's at the top of my most-listened Spotify list at the moment) with this official video released just yesterday. I'm up with the times for a change.




Youtube here, on which they must have spent at least $100. "Ekki Hughsa" means "don't think" and in the words of Arnalds, "The video is about letting go and succumbing to the moment, realising that the moments of highest creativity tend to come when I finally manage to turn off the broken radio that is my head." So now you know.

Victory Metals (VMX.v): The bullshit pump begins

Not only is it being run by the mega-pump artists Palisade, but Victory Metals (VMX.v) will hold no qualms about handing over lumps of cash and/or favours to every single pay-to-play newsletter BSser and promotion medium with any sort of audience.

Whether or not the project works is going to be another story for another day. And you never know, it might, but before that's known they're going to have to do a whole bunch of serious metallurgical testing on the deposit. That's not even scheduled to happen until next year, so it's a easy bet to say VMX will care more about shifting paper to saps (i.e. you) than actually being a serious junior mining company in 2019. NR here.

GLD loses tonnage

After the decent rally, a drop. After peaking at 823.87 metric tonnes at the end of January, the last few days have seen tonnage leave the GLD inventory count.



We're down to 803.29mt, some 20.58 mt less. That difference is about $850m worth of metal, which isn't dog meat in my book. Data from here.

A strike at the Gold Fields (GFI) Cerro Corona mine

According to this report, as from yesterday locals are either on strike or have blockaded the Cerro Corona mine in Cajamarca, owned by Gold Fields (GFI), in protest against the recent pollution spill.

2/6/19

The definition of material information, INV Metals (INV.to) edition

Let's see what The TSX says about material information and when it's necessary for a company to inform shareholders of any public company on news or events pertaining to its operations:
“...any information relating to the business and affairs of an Issuer that results in or would reasonably be expected to result in a significant change in the market price or value of any of the Issuer’s Listed Shares, and includes Material Facts and Material Changes”

Therefore, if I may be so bold as to suggest the following. If a group of local residents around a mining project...
  • Oppose its development for nearly two decades.
  • Campaign firmly within the law for its prohibition.
  • Call for a officially recognized referendum, with the vote sanctioned by all national electoral authorities, since 2015.
  • Comply with all the requisites demanded of it to hold the referendum.
  • Suffer seemingly interminable delays to the sanctioning of the referendum due to the national and municipal government's fear that the vote will go against their preferred pro-mining stance in overwhelming fashion.
  • Never give up hope and continue to press for their constitutional right to a binding and official referendum.
  • And finally, after years of campaigning, are awarded their democratic right to vote on whether or not the community will allow mining of the type proposed by said mining project to go ahead. 
...do you think it might be classed as material information that the company should be right and moral transmit to its shareholders before the vote takes place, while also explaining the risks its project would face if the vote goes against them?

On March 24th 2019, the 15,363 registered votes of the Girón canton in the Azuay region of South Ecuador will vote in yes/no fashion on the question:

"¿Está usted de acuerdo que se realicen actividades mineras en los páramos y fuentes de agua del sistema hidrológico Quimsacocha?"

As for a translation to that, there's always room for different takes but I translate it this way, as the tone and neutrality of the statement is the most important:

"Do you agree that mining activities take place in the páramos and the sources of water of the Quimsacocha hydrological system?"

This is directly related to the presence of the INV Metals (INV.to) Loma Larga (previously known as Quimsacocha) gold mine project in its locality. The referendum has been sanctioned by the Ecuador courts and approved by the Ecuador Election Authority (CNE), who will run and supervise the vote as well as announce the official result. The referendum result will be legally binding and recognized by the State. The people around the Loma Larga project have fought for years for their right to vote and have overcome block after legal block to get where they are today. 

Perhaps you think INV Metals (INV.to) owes an explanation to its shareholders of this obviously material risk to its project. This humble corner of cyberspace certainly does. We await INV.to's NR because up to now and strangely, the company hasn't bothered to tell its shareholders about the impending risk of this referendum vote.

The IKN experience of the Dunning-Kruger chart

This came to mind as I sat in front of the screen this morning and, once again, realized I had nothing to say about the state of junior mining, senior mining, metals or the market in general.


The basic shape of the chart is the one most of you have seen before, but there are two additions (and be clear these are personal ones, my sample size is one and it's me). Firstly, the timescale goes on because I'm getting slower in adding any significant new layer of knowledge. Second, when the curve normally move up in a straight line to the right mine wobbles up and down (and in reality does multiple wobbles, I've just sketched in a couple) because even during the knowledge accumulation phase there are times when I'm more willing to blather on than others.

The reason the blog has been quiet recently is that I'm going through one of those wobbles somewhere on the right and am keenly aware I know nothing about mining. I'm quite sure that once my willingness to opine once again supersedes my knowledge of the topic (as it is bound to do at some point), posting frequency will pick up again.

Ignorance is bliss. Embrace the stupid.


PS: The classic Dunning-Kruger chart will also have the "plateau of sustainability"  over on the right-hand side. I have no idea at all what that is.

2/5/19

No posts today

For secret reasons.

2/4/19

Watching copper tonight

More interesting than the late night cable movie choices.


A couple of mining quotes: Barrick's Thornton and B2Gold's The Clive

Today Mining Journal goes with this, from B2Gold's (BTO.to) (BTG) The Clive:

"B2Gold not buying or being bought, CEO says"

Which is a strong and strident title line, for sure. The sub-header goes, "It is a truth universally acknowledged that a gold company in possession of good assets in February 2019, must be in want of a buyer." And because Mining Journal is behind a stupidly expensive paywall and only has one in a hundred articles worth reading these days, you don't get the link (seriously guys, those "sponsored coverage" pieces of BS doomed to fail junior tinycaps are becoming cringeworthy). But they do go with "(Probably) not for sale: Clive Johnson said the small or no-premium M&A environment meant his company would not be bought out" in the photo sub-header, which qualifies that headline somewhat.

Now for Barrick's (ABX.to) (GOLD) John Thornton, back in August 2018:

The company remains focused on growth by finding new deposits rather than acquisitions, he said.
“It’s a lot cheaper generally than buying an asset,” he said.

In September 2018 ABX bought out Randgold. Just saying.

2/3/19

The IKN Weekly, out now




IKN506 has just been sent to subscribers. The second division of the 506th parachute division, aka Easy Company, often known now as the Band of Brothers. The word "hero" is used too loosely in our age, it should be reserved for the truly heroic.