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I say things on Twitter

11/16/19

The top three most visited IKN posts this week are...

....in reverse order:

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Third Place: "Maybe Zara Boldt should have kept her mouth shut". Because it's not just CEOs who deserve the attention of this humble corner of cyberspace, CFOs enjoy the exposure, too.

Second Place: "Here's the thing about Quinton Hennigh". Only went out yesterday afternoon, too.
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First Place: "The Art of Promoting Mining Projects". Thank you reader O, your happiness has been spread even more widely.

We now know why Chakana Copper's (PERU.v) annuals were delayed...

...and the stock on management CTO for a couple of months. They late-filed the 2019 annuals (and the latest quarter) on SEDAR last night and...

Subsequent to May 31, 2019, Management discovered that an employee had misused $569,698 of Corporation’s funds for personal benefit. The employee directed unauthorized cash payments to be made, which were supported by falsified supporting documentation. Management has reviewed the payments and determined that $120,169 of these transactions relates to the nine months ended May 31, 2018 and $368,886 relates to the year ended May 31, 2019. Subsequent to the year ended May 31, 2019, Management has determined $80,643 of the misuse loss relates to the period from June 1, 2019 to September 18, 2019, the termination date of the employee.

Management has determined that the effect of the misuse of funds during the nine months ended May 31, 2018 is material to the consolidated statement of loss and comprehensive loss for that period and to the consolidated statement of financial position as at May 31, 2018. The effect of restating the financial position and financial performance for the period ended May 31, 2018 is described in Note 2.

On October 4, 2019, the Corporation signed a settlement agreement pursuant to which 4,000,000 of the common shares of the Corporation, owned by a former employee of the Corporation, were relinquished as compensation for misuse of funds by the former employee. These 4,000,000 shares were cancelled on November 14, 2019. Additionally, as a result of the former employee’s termination for cause, 1,000,000 share purchase options, issued September 17, 2017, have been cancelled.

...it looks like a modest case of embezzlement. And as those tend to create an accounting spaghetti that needs to be un-knotted forensically, the delay is understandable. The silver lining is that they caught the bad actor and that the damage isn't heavy on a corporate level, Chakana will not be killed by this unfortunate event.

PS: It wasn't difficult to work out the ID of the bad actor.

11/15/19

The Friday OT: Claude Debussy; Nocturnes

This week I got on a plane in a bad mood and got off it in a good mood, partly because the nice gent in the uniform served me three rums over ice but mostly because this is downloaded on my Spotify. Nuages relaxes, Fetes gets that pent up energy out your system, Sirenes rocks you to sleep (and when you have the thing on repeat, you're still listening to it when you wake up).




Debussy improved my week, now it's your turn. Youtube here where the publisher has left a nice note:
According to Debussy's introductory note to the Nocturnes: "The title "Nocturnes" is to be interpreted here in a general and, more particularly, in a decorative sense. Therefore, it is not meant to designate the usual form of the Nocturne, but rather all the various impressions and the special effects of light that the word suggests. 'Nuages' renders the immutable aspect of the sky and the slow, solemn motion of the clouds, fading away in grey tones lightly tinged with white. 'Fêtes' gives us the vibrating, dancing rhythm of the atmosphere with sudden flashes of light. There is also the episode of the procession (a dazzling fantastic vision), which passes through the festive scene and becomes merged in it. But the background remains resistantly the same: the festival with its blending of music and luminous dust participating in the cosmic rhythm. 'Sirènes' depicts the sea and its countless rhythms and presently, amongst the waves silvered by the moonlight, is heard the mysterious song of the Sirens as they laugh and pass on."

Here's the thing about Quinton Hennigh

To get to the point, we are going to take as read that he is a world-class and peer-approved geologist, okay? I know that, you know that, good. My issue is that Quinton Hennigh the geologist has somehow managed to morph his stellar academic reputation into one that covers the world of business and finances as well, so it's equally valid to judge him on what he has done to create hard coin wealth. That was the underlying point made as per the tweet this morning which turned into a fair debate with Brent Cook (who is both a friend of QH and a true objective professional admirer of his work, we have no problems there).


Companies create wealth away from capital markets and not in them, that is a basic truth. If your company, via innovation or discovery or whatever, brings new sources of wealth to the capital market arena it will create wealth for itself and those around us. And if it doesn't it won't, so the fact that Quinton Hennigh has not made a single economic discovery while in the junior arena means his companies have not created wealth. We also know the markets are a zero sum game and also that Quinton Hennigh has done very well for Quinton Hennigh. 

So if you really want to hero-worship a economic geologist, look somewhere else. For example David Lowell, a man who not only co-authored a highly significant geology paper (which is also without a shadow of a doubt the single most significant economic geology paper ever), but then went down the coast of South America, said "I think it would be a good idea to stick a big long drill hole in right here" and nowadays more copper comes out of the hole he made than the whole of North America. There's a man who not only made himself justly rich and famous for his geological knowledge, but also created untold amounts of wealth for the planet, from shareholders of BHP to Chinese families with interior plumbing for the first time in their lives.

11/14/19

Alio Gold (ALO.to) and the lender of last resort

This is a classic Rick Rule deal: With very little risk to his company (because he's already worked out how long Alio Gold (ALO.to) can remain in production before the financials ruin it completely) he turns $15m into $20m in three years. It's great business, I mean how many mining equity investments have given you a +10% column in your port for three years running? Meanwhile ALO.to just told the world how bad its financial situation is, even with U$1,500/oz gold. Highly doubt Rule has assumed he'll get 80c for his 1.22m ALO.to shares in 121 days' time. 

Key Terms of the Facility are:
  • Principal Amount of $15 million;
  • Maturity date of October 31, 2022;
  • Interest rate of 8% plus the greater of LIBOR and 2%;
  • Amortization of the Facility in eight equal quarterly payments commencing January 31, 2021;
In conjunction with closing of the Loan Facility, Alio Gold has issued 1,286,228 shares to Sprott.

Alexco Resource Corp (AXU) 3q19 financials and another delay to the water permit

This is your carefully curated news release excerpt:
The Company is in the final steps of renewing the Water Use Licence ("WUL") with a Technical Pre-Hearing Conference scheduled for early December 2019. Following this process step, the final issuance of the WUL renewal will be subject to consideration by the Yukon Water Board and will likely extend into Q1 2020.

Whole thing here.

(Disclosure: long term long here, too. As per today's close, small profit on trade. Not selling anytime yet, either)

Integra Resources (ITR.v) and a Coeur placement and a bought deal

This is an excellent deal for Integra Resources (ITR.v) and raises my fawning fanboy bromance admiration for George Salamis, ITR's dashingly handsome CEO, one notch higher. It's like being a competent club player and watching a chess grandmaster, after a while you get a feel for how many moves ahead of you he thinks.

VANCOUVER, British Columbia, Nov. 14, 2019 (GLOBE NEWSWIRE) -- Integra Resources Corp. (“Integra” or the “Company”) (TSX-V:ITR; OTCQX:IRRZF) is pleased to announce that it intends to raise C$21.6 million via a C$6.6 million non-brokered placement of common shares (the “Strategic Placement”) with Coeur Mining, Inc. (“Coeur”) (NYSE:CDE) at a price of C$1.15 per Strategic Placement Common Share, and a concurrent C$15.0 million bought deal public offering (the “Public Offering”) of common shares (the “Public Offering Common Shares”) of the Company at a price of C$1.15 per Public Offering Common Share (the “Issue Price”).
C$6.6 Million Strategic Placement with Coeur
The Strategic Placement with Coeur will consist of the issuance of C$6.6 million in common shares at a price of C$1.15 per share on a private placement basis. The common shares issued in the Strategic Placement will be subject to a four month hold period from the date of issue. In connection with the investment, Coeur and Integra will enter into an Investor Rights Agreement which will grant to Coeur the following:
  • Participation rights to maintain pro rata share ownership interest for a two-year period;
  • The right to appoint two members to a newly created five person Technical Committee, which will be established to review ongoing exploration and pre-development activities on the DeLamar Project and other mineral properties that may be acquired in the future, so long as Coeur continues to hold at least 3% of Integra’s share capital.
C$15.0 Million Bought Deal Public Offering
Raymond James Ltd. is acting as lead underwriter and sole bookrunner under the Public Offering on behalf of continues here


Disclosure: I am long ITR, nicely in the green on the trade so far (thanks for asking), not selling anytime soon no matter what happens in 2019.

The Art of Promoting Mining Projects

Do you remember the days of Internet 1.0 when we used to send "electronic mails" (sometimes known as "e-mails") to each other? And how we'd stuff inboxes full of funny photos, jokes and silly things via mail groups? 

In order to bring some cheer to your author's day, a friend sent over the piece seen below that he's had stored on his hard drive for about a decade. I'm sure plenty of you have seen it before, but as it's new to me and made me laugh it's going up here. If anyone has a link to an original source I'll be happy to add it, not claiming this as original at all. Rule 20 is spot on, by the way.



THE ART OF PROMOTING MINING PROJECTS
The art of promoting mining projects has a long and undistinguished history. It started with Jason and the argonauts (the fleece was placed in a sluice to trap small particles of gold in streams) carried on by Cecil Rhodes and probably reached its peak with Bre–X in Indonesia.
It can of course be quickly converted to promoting technology or biotech shares by deleting all geological references and replacing them with various technical words from the electronics or genomics industries.
Rule Number 1
Make frequent press releases. The stock will move on what is called “news flow”. Any time someone flies out to the exploration area, or peers down a microscope, tell the world. This is because every shareholder knows in their bones that they shouldn't really be holding this stock. However, constant reassurances by a portly Chairman are known to deter investors from selling.
Rule Number 2
When presenting on TV or to a massed group always take a large piece of rock or drill core and wave it around imperiously. Tell the audience that it is a very rare piece of vermiculated pyroxene gabbro. Don't let anyone touch it and never explain where it came from. Let them make the assumption that as you are holding the rock and you are talking about the company that the two are connected. The fact that it came from your garden is not relevant here.
Rule No 3:
Announce loudly that you are exploring/drilling/flying over immediately adjacent to a property where a large and more famous company is working. The geology may be totally different but few mug punters know the difference between geology and geography and this technique can work surprisingly well in giving your property an undeserved aura of credibility.
Rule No 4.
Make grand claims about how much gold, platinum, copper etc was produced in historical times by the Romans, Greeks, Egyptians, Incas, Chinese and so on. Make it clear that those bozos could never have got it all out and there is still plenty left for everyone.
Rule No 5
Always include lots of pretty coloured geological maps in the annual report and presentations. For maximum effect draw lots of big bold lines and circles on them and call them trends. This impresses the hell out of people. Big maps in TV studios, or on small tables, are particularly effective as it implies the project is so large that it can't fit on a small map. Hopefully, no one will ask why you didn't bring a 1:500,000 scale map and not a 1:5,000 scale.
Rule No 6
Photographs in the annual report of gold antiquities from the local museum add a totally spurious, but very persuasive layer of intellectual credibility to the project.
Rule No 7
Always show photographs of planes and helicopters in the annual report. I don't know why, but everyone does.
Rule No 8
Never show a photograph of a donkey in the annual report. This has associations with crooks form the American Wild West which is far too close to the truth.
Rule No 9
Always show photographs of happy smiling natives. This gives the project a patina of benevolent third world development even if it is only the local mayor who will get rich.
Rule No 10
Make all press releases highly technical with lots of long words and talk of drill hole numbers, intersections, grades and rock types. Do not include anything useful that could be used by anyone to make a proper analysis of the data.
Rule No 11
Keep press releases firmly dedicated to technical issues. Never talk about detailed finances.
Rule No 12
When talking about financial projections always talk about the project as a whole. Don't remind investors that their company only owns 15% of it.
Rule No 13
Financial projections are based on the most optimistic metal prices you can find. But always label them “conservative”
Rule No 14
All projections should be based on 100% extraction of the ore, and no losses of metal in the mill, smelter, refinery or your trouser pocket.
Rule No 15
Remind investors that you are using the latest computer technology. They will assume that everyone else is using slide rules and haven't discovered PC based 3D modelling yet.
Rule No 16
A good trick is to suggest that you have some technology up your sleeve that no one else has. The most plausible ones promise better recoveries or the ability to find metal that no one else can. The name of the technology should include some or all of these words: pyro, hydro, metallic, orthogonal, bio, techno, leach, molecular, sulphidic, oxide and bacterial. The word order is not important.
Rule No 17
The board should include a couple of university lecturers or, even better, a Professor. They will be delighted to fly business class and have people listen to them while they talk about archean orogenies. The presence of academics is proven to increase the fund raising power of these companies by several times. Because academic pay is so low the non-exec compensation can be kept at a modest level.
Rule No 18
On no account actually find anything or even worse, go into production. That removes all the upside potential of the company at a stroke.
Rule No 19
Never forget that of the object of the company is to raise money for the benefit of the directors. It is not the aim of the company to find anything. That makes life far too complicated and the management might have to manage something.
Rule No 20
Always find some newspaper pundit or internet tipster to back your cause to the hilt. This can be done by flying them out business class to the drill site, putting them up in a five star hotel, showing them a few rocks, and giving them a few free shares.



11/13/19

This blog will be quiet for a couple of days...

...for secret reasons.

Well in fact the blog has been quiet for the last couple of months, on and off. That's been a deliberate thing, long-story-short it's me wondering just how much of IKN can be shifted to Twitter and doing an experiment or two. That's now over and you can now expect a return to a more regular posting rhythm this humble corner of cyberspace, as soon as this secret reasons quiet thing is over. Which is in fact a trip to Mako Mining (MKO.v) in Nicaragua and the report on the gig will be out on Sunday in IKN 547. There we go, not so secret any longer.

11/12/19

Maybe Zara Boldt should have kept her mouth shut

Zara Boldt, CFO of Lucara Diamond Corp, in the NR of November 4th 2019:

"Lucara is weathering the current downturn in the diamond market better than most of our peers."


A ten day comparative price chart for LUC.to, using the SPX as guide:

And in the next post, your author will have a good rant while explaining why LUC has fallen off yet another cliff. A drop it fully deserves, by the way.

11/11/19

Interesting that Lundin Gold (LUG.to) is selling off again...

...in the very week that it gets the official inauguration from the government of Ecuador, all pomp and ceremony ribbon cutting, to be sure.


we will remember

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

11/10/19

The IKN Weekly, out now

FACT!

IKN546 has just been sent to subscribers. Just thought I'd let you know.

Bolivia and the OAS report UPDATED

Bolivia is a fun place this weekend for sure, but the reason why Evo Morales has capitulated and agreed to new Presidential elections in Bolivia isn't directly due to the street scenes of yesterday and more about the preliminary findings of Organization of American States (OAS) report on the election that was published early this morning. Here's the moneyline (translated):
“Taking into account the statistical projections, it is possible that the candidate Morales has finished in first place and the candidate Mesa in second. However, it is statistically improbable that Morales has obtained the 10% difference in order to avoid a second round.”

In other words, Evo cheated and has been caught as close to red-handed as our complex electronic world lets us get.

UPDATE Sunday afternoon: Evo Morales has just announced that he will resign as President.