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5/10/19

Byron King, fired by Agora Financial

Confirmed word reaches this desk that Byron King has had his "contract discontinued" as mining analyst for Agora Financial. And let's face it, you have to be pretty awful to get fired by that crowd of shysters.

So it seems Porter Scamsberry is hiring, should I send over my CV?

The Friday OT: Deadmau5; Strobe

Deadmau5 is an artist I have deliberately avoided over the years due to something akin to fear. Well, not really fear, more the addictive strain in my music tastes and the deep dark space in my brain that knew if I started listening to him, I would get so obsessed that wouldn't put anything else through the speakers for weeks. And damn I was right, on my fifth day now, had Fn Pig on repeat play for a couple of hours a while back, Channel 42, Ghosts N Stuff, whole albums, live recordings, you name it and I'm still just scratching the surface. 

So anyway, here's Strobe, which is an utterly incredible piece of music.



Hope you enjoy it as much as I have the 35 times this week. Youtube here.

Mo' Hecla (HL)

From yesterday's post:

"...once more people get a feel for how bad this company's financial situation is, it'll drop more."

A five day price chart:


On an up day for precious metals, too. Further questions?

Copper

The President of the United States of America helping China keep its input costs under control. Oh the irony.





Don't worry, it won't last. Above U$3 soon, so load up on your preferred CU stocks today. This year's best metals trade is staring at you in the face, up to you to ignore it.

5/9/19

Catching up with Hecla (HL)

Back on March 19th 2018 (a year and a bit ago), Hecla Mining (HL) announced it would, "...acquire all the outstanding shares of Klondex, a high-grade Nevada underground gold producer with its Fire Creek, Midas and Hollister mines." The deal was ticketed at U$462m and a cash/shares gig, with HL prez/CEO Phillips S. Baker, Jr. saying the following; “We structured the deal to use our excess cash balance so our shareholders can benefit from the approximately 162,000 gold equivalent ounces a year of production while minimizing dilution.” Which was, of course, absolute bollocks. This humble corner of cyberspace pointed this out that very same day in this post, entitled "In order to understand just how bad Hecla Mining (HL) financials are, the necessary blog post on IKN", which took a look at the HL financials and made special mention of its U$502m financial debt, as well as the way it was shockingly bad at turning a profit at its operations. Putting those together, all that talk of "excess cash" at HL was an exercise in chutzpah and stupidity (which is par for the course at Hecla, potentially the single most financially illiterate mining company in the world).

And so we cut to today and HL's announcement of its 1q19 financials. Here's the link, here's the quote on how its Nevada Operations (i.e. the stuff they bought from Klondex) are going.
Nevada Operations - Nevada
For the Nevada operations, 10,364 ounces of gold and 67,438 ounces of silver were produced. Advance rate increased 27% from the fourth quarter of 2018 but milled tons declined 30%. Capital investment increased from the fourth quarter by $4 million to $21.8 million. Of that amount, $15.8 million was for development at Fire Creek and Hollister, including $4.2 million for the Hatter Graben decline.
The Company is demobilizing the mining contractor, mining some previously-developed remnant stopes at Midas and considering other alternatives to reduce the cash spend and improve the cash flow at the Nevada operations. Some of the possible alternatives include third party processing, reducing development, and changing grade control procedures. Pending the outcome of the review, the annual production and cost estimates for Nevada are being suspended.

In short, an utter disaster. What's more, HL's cash is down to under $12m, its working cap to negative $2m (from +$108m at the time of the Klondex acquisition) and its financial debt has ballooned another $30m to $533m. And here's the share price action in HL, March 19th 2018 to date:


From U$3.56 to U$1.78, a drop of exactly 50% and once more people get a feel for how bad this company's financial situation is,  it'll drop more. They shoot horses for less. We understand that dumbass stupidity is not a crime, but it should at least be an impediment to being named and retained as CEO of a mining company. Phillips S. Baker, Jr., you are that utter dumbass, do the mining world a favour and resign.

Gold > Palladium

Palladium just dropped off another cliff, now U$1,263/oz and counting. Gold at U$1,280/oz is back at the top of the pile (if you don't stare too hard at Rhodium and a couple of other weird things out there).


Kai Hoffmann of Oreninc does BNN

As I write these words, it's Wednesday 6am PST. At 8:30am 08:10am i.e. in two and a half hours' time, the hirsute but sexy Kai Hoffmann is doing a slot on the Andrew Bell (dulcet tones) BNN show and the subject is one close to our hearts, the "State of Junior Mining Finance" (following on from Hoffmann's excellent recent presentation on the gig at Mines & Money NYC, see here). 

Well worth tuning in for the slot, I'll stick the link to the recording up here later.

UPDATE: Here you go and Hoffmann's gig starts at the 25:10 minute mark. 

First Majestic (FR.to) (AR) 1q19 financials

On the one hand, you have a U$1.15Bn market cap company that can only put together U$10m in operating profits. It's not exactly the margin of the century or the first place you'll think of for ROI, but the FR.to 1q19 is a modest improvement on 2018 quarters and the balance sheet looks a little healthier (but watch that sustaining capex in future quarters).

However, when you start looking you realize just why they bought San Dimas. Because without it, they would be royally farked.
 

Not an owner, not a buyer and definitely not a fan of the mediocrity running this company but they've delivered a decent enough set of numbers and will be able to tell people how they are such a great leverage to silver price upside (ugh).

5/8/19

Pan American Silver (PAAS) plays 'pimp my balance sheet'

Pan American (PAAS) filed its 1q19 financials tonight. Here's the balance sheet:


What with...
the purchase of TAHO
the well telegraphed word that they would dispose the Lake Shore end of TAHO (after all, the corporate title isn't Pan American Gold)
the distinct lack of news on a buyer for the LSG stuff
...I'd been wondering how they would do this. The answer is that they've assumed the sale and here's what it says in the notes about that line item:
Concurrent with the Acquisition, the Company formally initiated an active program to locate a buyer of Lake Shore Gold Inc. ("Lake Shore"), a subsidiary acquired by the Company as part of the Acquisition. Lake Shore's principal assets are the Bell Creek and Timmins mines (or "Timmins"). Based on management's assessment of the Company's sales process it was determined that Lake Shore meets the criteria, under IFRS 5 - Non-current assets held for sale and discontinued operations, to be a discontinued operation to be classified as held for sale upon acquisition. As such, upon the Acquisition and as at March 31, 2019, the assets and liabilities of Lake Shore were classified as assets and liabilities held for sale and are presented separately under current assets and current liabilities, respectively, and the post-tax profit or loss from the Lake Shore operations have been presented as a single and separate item on the Company's consolidated income statement.

So at first glance the balance sheet looks fine, especially as they took out a $400m revolver to pay off MacArthur's serial fark-ups and moved all that to a 2023 maturity. But there's a certain lack of liquidity about that sheet and putting those for sale items on the currents makes the policy both official and to close this year. As for the price and speaking of the worst mining CEO in the business, let us also recall that Ferrari Kev and TAHO paid C$945m for those LSG assets, now about to leave PAAS for around C$500m. That guys knows how to make small fortunes for people. By starting with their large fortunes and...

“This quarter has seen a great start for our first year as the 'new and improved' Barrick"

So says the man who shoots endangered species for fun. Whereas the market says that...



...no, it hasn't.

Unless you compare Barrick to Newmont's chart, of course.

Steve Letwin is still President and CEO of IAMGOLD (IMG.to) (IAG)

Entrenched mediocrity. Somebody tell that Paulson pressure group.



Radius Gold (RDU.v) and the hallmarks of a serious company

One director buys just days before a significant drill result shoots the stock higher. Another dumps their position into the pop. The stock then sells off heavily on no news, just after the NR and the director sales...or perhaps that should be "on no news for most of us".




When the shares are used as Bagatelle by its own directors, it is not a serious company. Avoid the Ridgway twats.

5/7/19

Sandstorm Gold (SAND) (SSL.to) 1q19 financials

Sandstorm (SAND) (SSL.to) filed its 1q19 this evening.






Another rock solid quarter

So I asked George Salamis of Integra (ITR.v) about the company NR today....

...on drilling results and progress at its DeLamar project after digesting the information and data contained right here. The trick with these high-flying, arrogant, self-important president and CEO type people* is to keep your message short and on-point, so once I'd added the numbers to the XLS, made a stab at interpreting the drill map and had a very decent cup of coffee, here's what I wrote:
"My major takeaway is that you guys have a shitload of drilling to do. Those discrete areas of high grade aren't easy to spot otherwise and you run the risk of leaving grade average low."

And here's what Salamis replied (permission to re-print verbatim has been granted):
"We do! Too many targets to test is a Hollywood problem, I guess. We are trying to strike a balance between those who say ‘Drill, baby, drill. Don’t waste time/money with economic studies, just make the resource bigger” and others who proclaim “we wont invest until we see metallurgy done and some sort of economic study tabled”. We are trying to please both (for now). So far so good, the drill bit keeps working for us. As for the discrete zones of high grade, I guess we should have clarified why we are looking at these. We think they are feeder structures that may have been the main pathways and conduits to the main plumbing that formed the deposit in the first place. Following these laterally or downwards sometimes leads to great things in these epithermals.
The drilling is adding value. The metallurgy is looking really good. The resource estimate will likely convert a lot of ounces and add more.The PEA will look really good."

So there you go. He also confirmed that the PEA is targeted for the start of September rather than the end, which is a good thing for post-Labor Day marketing reasons.

*Luckily, Salamis is not one of them.

The operations update from Superior Gold (SGI.v) this morning...

..., as written by its new COO in the second half of the NR, reminded me of that old adage about gold mining;
When gold prices are bad, it's best to high-grade your deposit. But when gold prices are good, it's best to high-grade your deposit.

NR here. TBH not a bad NR overall, it was about time they actually started informing their shareholders.

5/6/19

The IKN Weekly, out now




IKN519 has just been sent to subscribers. An obvious near-term trade set-up is the main event of the edition, money to be made.

5/5/19

Kai Hoffmann of Oreninc on the state of the junior mining market

This Kai Hoffmann guy is becoming a bit of a name, doing keynote slots and Mines & Money, getting interviewed by La Cambone on Kitco, etc. And this takes you to his latest gig, the blurb goes as follows:
At Mines & Money in New York, held May 1st and 2nd 2019, we presented an update on the current "State of Junior Mining Finance". Please click on the image below to open the presentation.

He also says that 2013 and 2015 were bull markets compared to the dross that is 2019 so far. Some sharp insights to the financial side of the junior scene here on this link.