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10/11/14

New York Times: "End the U.S. Embargo on Cuba"

Not only is it the NYT editorial board top feature in its Sunday edition, but the editorial is published in both English (link here) and Spanish (here). The piece is required reading for anyone interested in Latin American affairs and is a careful, point-by-point reading of the current situation as regards the two countries as well as The Americas as a wider region, but perhaps the key point comes at the end:
In April, Western Hemisphere heads of state will meet in Panama City for the seventh Summit of the Americas. Latin American governments insisted that Cuba, the Caribbean’s most populous island and one of the most educated societies in the hemisphere, be invited, breaking with its traditional exclusion at the insistence of Washington. 
Given the many crises around the world, the White House may want to avoid a major shift in Cuba policy. Yet engaging with Cuba and starting to unlock the potential of its citizens could end up being among the administration’s most consequential foreign-policy legacies. 
Normalizing relations with Havana would improve Washington’s relationships with governments in Latin America, and resolve an irritant that has stymied initiatives in the hemisphere. The Obama administration is leery of Cuba’s presence at the meeting and Mr. Obama has not committed to attending. He must — and he should see it as an opportunity to make history.
This humble corner of cyberspace fully supports the NYT Op-Ed position.

Rafael Correa's necklace

Another weekend, another Saturday TV/Radio show for President Rafael Correa of Ecuador as with his usual meeting-place forum and political discussion. But this weekend Correa decided to wear a necklace created by a local artist and...well...somebody should have pointed something out to him:


That's a photo of somebody's TV set, a little while ago. The result is widespread mirth in Ecuador and even a dedicated hashtag on Twitter #elcollardelmashi (translation: "The Necklace of Mashi", with Mashi being his nickname and also "friend" in the local lingo). Priapic post of the day complete. Enjoy weekend.

10/10/14

How Nolan Watson spends your money, Sandstorm $SAND shareholder


  • Net profit at SAND in first six months of 2014: $9.9m
  • SAND's loss on August 2014 equity purchase of Luna Gold (LGC.to) to date: $12.1m
What's the point in investing in the long-term benefits of the streaming model when the person running your company thinks he's in a casino?


The Friday OT: Chemical Brothers; Star Guitar

If just one person discovers this piece of visual work from today's choice of OT, the day will be considered a resounding success by your humble scribe.



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"Uribe’s approval ratings implode; Is Colombia’s ex-president’s Teflon coming off?"

That's the title of this, a most interesting report from Colombia Reports.

It's about time, but as CR notes at the end of the piece...

"In spite of his impressive drop in popularity, the former president is still more popular than Juan Manuel Santos."
...because context is always required. Read it all here.

Platinum

Nearly there. Won't be long now.

The best mails are always the same mails

Dear Otto,

Normally I like your blog but yesterday you said something nasty about Liberals. And I'm a Liberal and I don't think it was very fair.

Dear Otto, 
Normally I like your blog but yesterday you said something nasty about Republicans. And I'm a Republican and I don't think it was very fair.

Dear Otto,

Normally I like your blog but yesterday you said something nasty about investor relations officers. And I'm a VP investor relations and I don't think it was very fair.

Dear Otto, 
Normally I like your blog but yesterday you said something nasty about geologists. And I'm a geologist and I don't think it was very fair.

Dear Otto,

Normally I like your blog but yesterday you said something nasty about Goldbugs. And I'm a Goldbug and I don't think it was very fair.

Dear Otto, 
Normally I like your blog but yesterday you said something nasty about junior mining investors. And I'm a junior mining investor and I don't think it was very fair.

Dear Otto,

Normally I like your blog but yesterday you said something nasty about Obama. And I'm an Obama suppporter and I don't think it was very fair.

Dear Otto, 
Normally I like your blog but yesterday you said something nasty about mining executives. And I'm a mining executive and I don't think it was very fair.

Therefore, IKN would like to make its position crystal clear: Fuck you all.

UPDATE: Reader MP writes in:
Dear Otto, 
Normally, I really hate your blog and couldn't be bothered to read it because it's a total waste of of time but yesterday you said something nasty about Doug Casey. I really hate Doug Casey too, and think your comment was spot on. So I think I'll start visiting regularly again. 
Regards.
M
F'kin' spot on, Bevan. 



Doug Casey has your handy Libertarian investment tip of the day

Your humble scribe reads the following headline on Kitco this fine, bright and warm springtime morning:
Move Away From The Dollar, Mining Stocks May See ‘Super Bubble’ – Doug Casey - Kitco News, Oct 9 2014 1:45PM
(and no, not linking to it, go find it yourself if you care enough).

Or in other words, you are being encouraged to take advice on the Fed's influence on the markets from somebody who's been 100% wrong about the influence of the Fed on the market for at least six years*. Doug Casey is so intellectually blunt that he doesn't even get what "don't fight the Fed" means, can't remember how effective the phrase is, prefers to fight the Fed when making trade calls. Thing is, he may be dumb as a stump when it comes to basic understanding of the markets but he's a marketing whizz and has known for a few decades that there's a whole audience of pig ignorant fucktards with spare cash just waiting for somebody to tell them what they want to hear, no matter if it concurs with reality or not. You know them as Libertarians and Casey's been fleecing them non-stop and getting very rich as a result for said decades.

That Einstein quote about madness, doing the same thing over and over but expecting a different result, springs to mind.


*probably much longer than that, but Lehman marks an obvious watershed and we only need to consider the period since the big collapse these days

10/9/14

Luna Gold (LGC.to): Sandstorm $SAND won't buy it, because...

...if it does it won't get the 62.5k oz gold penalty payout when LGC fails to deliver the promised production upgrade next year. Also, because Nolan's already wasted far too much money on Brazil already. So who wants a badly run, overhyped, unprofitable gold mine in a place that rains too much? Anyone? Any offers? Pierre?
VANCOUVER, BC--(Marketwired - October 09, 2014) - Luna Gold Corp. (LGC.TO)(LGC.TO)(LGCUF) ("Luna" or the "Corporation") today announced that it has established a Special Committee comprised of independent members of the Luna Board of Directors with a mandate to explore all strategic alternatives, including the terms thereof, available to the Corporation to offer greater value to the Corporation's shareholders. The Special Committee will evaluate proposals and other alternatives and will provide advice and make recommendations to the Corporation's Board of Directors regarding any such potential transactions. 

Robex (RBX.v): It's the ebola what did it guv, honest


Remember this from IKN on September 30th?
And Robex (RBX.v) provides the NR of the day
First the background, provided by this quote from the NR dated September 10th (less than three weeks, my how time flies in the wonderful world of capitalism):
The Company's management confirms that the problems relating to the proper functioning of the elution system have been resolved and that the last elution proved positively conclusive.
Hey wow, not just "conclusive" folks, but "positively conclusive".
Now for the moneyshot from today's award-winning NR:
Robex's management wishes to inform the market that the research of solution with the current elution problems did not give the expected results. Continuing with these current installations will strongly affect the profitability of the Nampala site.
And oh look! RBX.v share price just happened to drop 19% on heavy volume yesterday. Sheer coincidence, of course.
Well now we have this:
QUEBEC CITY, QUEBEC--(Marketwired - Oct 9, 2014) - Robex Ressources Inc. ("Robex" or the "Company") (TSX VENTURE:RBX)(RB4.F) is suspending their operations at the Nampala mine for an undetermined amount of time. 
Considering i) that new capital investments are necessary to make changes to the Nampala mill; ii) the time for fabrication, delivery and installation of necessary equipment for a profitable operations of the Nampala mine iii) the decrease in the price of gold; and iv) the risks and costs of surcharges related to geopolitical and health risks including the proximity of Ebola outbreaks, Robex's Board of Directors decided, during a special meeting of the Board of Directors, held on October 7, 2014, to suspend ore extracting activities in the Nampala pit. Robex will thus reduce the local and expatriates workforce to a minimum at the Nampala mine.
continues here

Ebola was the straw that broke the camel's back though, it wasn't the company's fault. Honest.

Artisanal gold mining on the Loess Plateau, China

This is a good post from World Complex, with plenty of first-hand witness photos.

Endeavour Silver $EXK (EDR.to) 3q14 production

Here's the NR, here are the charts:

This is silver:


This is gold:

And this is a crappy quarter from EDR. Go on, remind me again how much Brad Cooke and EDR paid for El Cubo? And what about that cool plan they had to re-work the asset and make it fabbo and productive and things? Seems so long ago, because since then it's been excuses and "any time now" BS that's failed to translate into anything of worth. Production is now dropping sharply at all three mines and EDR looks set to dump even further.

Bottom line: FVI whupped their ass today.

Fortuna Silver $FSM (FVI.to) 3q14 production

NR just out here, charts here:

This is silver:


This is gold:

And this is a very good quarter's worth of production from FVI, no matter which angle you look. Top job.

Chart of the day is...

...the US Dollar Index, hourlies:


A most impressive chart.

10/8/14

Exploreco market prediction

After the Janet relief rally of this afternoon, we'll see the phrase "best efforts non-brokered private placement" turn up in approximately one dozen different exploration stage junior mining company news releases during the next seven trading days.

Cynique, moi?

The broad market sell-off and Cam Hui

Frankly, the broad market action isn't something I watch very carefully. However, plenty of readers do and I also read smart people who care more about the moves in the S&P, Dow, Naz, etc. One person who's been calling the sell-off action very accurately in the last couple of weeks is Cam Hui, over at his blog Humble Student of the Markets and via his Twitter account, on which he's been more active recently (a good thing). His last few posts are recommended reading and I expect his calls in the days to come will be worthy material, too. 

Yet another "Get Smart By Reading Smart People" post complete. Make use.

Just by changing one little thing...

Southcom Chief Urges Campaign Plan for Central America 
By Jim Garamone
DoD News, Defense Media Activity 
WASHINGTON, Oct. 8, 2014 – Central America needs a campaign plan to combat the power of transnational criminal syndicates, reinstitute the rule of law, and regain sovereignty over their own territories, the commander of U.S. Southern Command said here yesterday.

...and it struck this humble mind that just by changing one leetle leetle thing...
Southcom Chief Urges Campaign Plan for Central America 
By Jim Garamone
DoD News, Defense Media Activity 
WASHINGTON, Oct. 8, 2014 – Central America needs a campaign plan to combat the power of transnational corporations, reinstitute the rule of law, and regain sovereignty over their own territories, the commander of U.S. Southern Command said here yesterday.
...the perspective is interesting. As my English Lit exams used to say, 'discuss'.

Goldcorp $GG New Gold $NGD and the El Morro judgment in Chile

Just about everyone in the mining space would have heard by now the Chile Supreme Court judgement that has stopped the El Morro mine (70% GG, 30% NGD) from being developed, but not so many will bother to read just why the call went against the people developing the $3.9Bn project and for the people living around the location. So here's the indigenous peoples' lawyer to explain a little more with three excerpts from the linked report, right here for your eyes:
The lawyer said that the judgement did nothing else but re-establish rights, in particular that held by indigenous people to be consulted on projects of this scope, thereby annulling the environmental and community impact studies previously submitted. 
"The courts of justice are protecting the right of indigenous peoples to be consulted", he said. 
The lawyer went on to say that that Goldcorp is a company that has absolute disrespect for indigenous rights. "This transnational company doesn't do the same in its country of origin (Canada), but here it assumes the right to violate indigenous rights in Chile and that is not acceptable." 

Or to pot it into one paragraph for your consideration, GG and NGD tried to push throughits project without doing things the right way, because it knew that if it did all the correct consulting of indigenous they'd push back and demand conditions that would be more expensive. So they ingored all that and decided to cut corners, at which point the locals fought back and now, the whole things has blown up in the face of the comapny, bigtime. So you can now expect the company to deny any fault and blame those pecky locals again, because that exactly what complete assholes do.

10/7/14

Gold and The Matrix

What if I told you...


...that the gold price has been stable over the last 15 months?


All you need to do is take an average reading for each month and ignore the daily meanderings and noise.

Luna Gold (LGC.to) 3q14 production

Its numbers are out tonight and its 20,188oz of production means Luna Gold (LGC.to) needs to produce 21k and bits in order to scrape into its new downwardly revised guidance for 2014 (75k to 85k). I'll laugh hard if they make it by a hair's breadth then have the audacity in January '15 to crow about hitting guidance, because they started the year by promising they'd produce at least 85k. Anyway, that's another thing for another day, this time rather than wheel out the prod number chart again here's the sales breakdown:


For what it's worth, according to the calc that will put LGC 3q14 revenue at very close to $20m, gross profit at around $3.5m and assuming LGC doesn't book another large forex gain to pad its figures out like it did last quarter, G&A will take most of that gross profit away and leave very little indeed on the bottom line. Again. Crappy company.

Anyone want to take the under or over on house predictions? Nolan Watson praps?

Journalism's attitude to blogs

Good enough to read
Good enough to rip off
No need to give attribution
Because ewwww, blergs.

Today's example: Setty on October 6th re. ALFA and Pacific Rubiales and then Bloomberg on October 7th on, yup you guessed it, ALFA and PREC. Same story, same narrative, not an ounce of decency from the so-called professionals at Bloomie. So fuck you, hacks.

UPDATE: Yes, seriously, fuck you hacks.

UPDATE 2: However, it must be said that Iwnattos understands the blogger's psyche:
"...we're paranoid and we like stalking people and you generally would never want to meet any of us in person even if you could be assured it was those 5 minutes of the day when we are unfortunately not drunk."
Seconded

Ritholtz versus Iwnattos on gold


Ritholtz has been giving it to the goldbug community for a couple of days (spite? fun? pity?) and it's an easy enough target. So Iwnattos takes it upon himself to defend the rabid goldbug true believers (spite? fun? pity?) in a reply and to be fair it's a pretty good critique that makes its points, right here.

Chile: More evidence of dropping costs in mining

After reading this report today on the latest numbers from Chile's INE (three months to September) regarding the number of people employed in the mining industry, your humble scribe hightailed it to the INE website, pulled down the comparative numbers from previous years to 2010, made this chart:

NB: Cut down Y-axis that's used to show differences, not to try and trick you

Costs are dropping in Chilean mining? You bet. LatAm too? Don't even think twice. As that linked report stated at the end (translated), "...today there are a lot more applicants for a lot fewer jobs which means that salaries aren't just staying the same, they've begun to drop for new contract and the salary levels have been adjusted as today [companies] compete less and less for an employee."

So now you know.

Chart of the day is...

...the gold/copper ratio:


If you check the equivalent silver/copper chart (i just did) it's now at its lowest ratio for the last three years. But gold and copper seem to be getting on better as friends. Best guess: demand for both is better than suspected.

Ah hey, why not? Here's that slightly off-beat silver/copper chart too. 


By-products of things people find useful have a tougher time altering supply. So, change the price.

10/6/14

Lundin (LUN.to) finally closes its Candelaria deal

The one IKN told you about on July 14th took until the first week of October to close (Freeport extricating itself from a tax burden was the main knot to untie), but close it did. Not only that, but we now know why Franco Nevada wanted to raise that $500m.

An IKN primer: How to report South America GDP data

You too can be a business newswire reporter, kind reader:


Moral: Brazil's better as a second posting, go to one of the easy ones first.


Chart of the day is...

...the dollar (USD), hourlies:

Or is that too cynical as well?

Today's Yamana Gold $AUY (YRI.to) news release: The good and the bad

  • The good: It's a MOU with the regional government of Catamarca, they'll work together, create jobs, develop as partners, other fine things.
  • The bad: Last time I looked, Catamarca was still in Argentina.


That cynical enough for you?

Rio Alto $RIOM (RIO.to) 3q14 production

It's 56,368 oz for 3q14, which stacks up to other quarters like this:


Here's the IKN house estimates on costs:


(note COGS per ounce is slightly different to op.cash costs, but a straight line is a straight line).

The IKN Weekly, out now



IKN282 has been sent to subscribers. Adding to one position, not doing much apart from that. Sometimes nothing is the best something. 




Minimalist.

10/5/14

Peru politics

The following from IKN280, dated September 21st 2014. The context: According to exit polls this evening, Luque has beaten Aduviri into second place and may even have enough votes to win in a single round, without the need for a run-off.

Or in other words: IKN 1, JP Morgan 0

Read on, kind visitor to IKN...

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IKN280, September 21st 2014

Bear Creek (BCM.v): The game changes
I’ve been looking more carefully at the situation in Puno’s political scene as a result of the selling last week (even before that late Friday dump, the $2.20 or abouts prices were enough to getrme interested again) as well as casting around my contacts in the zone for opinions and thoughts on how they see the election unfolding.

The upshot: I think there’s now a potential long trade here. So help me, higher powers.

First a little memory nudge via this chart (not shown here on blog), which shows how BCM has given us a very volatile ride in 2014, even by the standards of this whacked out market. The lows were under $1.50 in April and May, but come July and August the stock traded at and over $3.50. During that time we managed to snag a reasonable little 25% win on a small, near-term trade (marked on the chart) but failed miserably to capitalize on the big move by selling out too early. The final scene is this month of September, which has seen BCM drop very hard and thanks to the outright panic selling of late Friday closed at $1.88.

[Sidebar: BCM wasn’t the only silver stock to suffer late Friday, for example Fortuna Silver (FVI.to) was dumped late down to CAD$4.44. This is part of my uncertainty that’s voiced further down in this note as I really don’t know how these stocks, including BCM, will open and trade on Monday and the days to come]

So that’s the potted history, now for the reasons why there may be a trade here and that starts with the state of play in voter intention polls for the Puno regional elections. This has been the object of a couple of recent notes in The IKN Weekly (see IKN278 and IKN279 last week) because we’ve tracked the rise in the polls of Walter Aduviri, the man behind the Santa Ana protests of three years ago that royally screwed that BCM owned project.

We left things last week in IKN279 with me half-kicking myself that JP Morgan had picked up on the scent of the rise of Aduviri too. Here’s a section from last week by way of reminder:
To my dismay and personal regret, I read on Monday (21) that JP Morgan had published a client alert on the Peru regional elections and had pinpointed Walter Aduviri’s rise as one of the main problem points of the country. To quote the report (translated),

“The frontrunner candidate for the regional presidency of Puno is Walter Aduviri, ex-member of the Gregorio Santos team in Cajamarca, which implies an even more difficult scenario for mining projects in the [Puno] region”.
I strongly suspect that the JP Morgan call of “Aduviri Favourite” on Monday is the reason behind the share price action in Bear Creek Mining (BCM.v) last week.
IKN280 back and what we saw I the price collapse of BCM in the days since those words confirms to me that the Aduviri situation is the reason for the sudden weakness. For sure exacerbated by the heavy plunge in silver, but people are running away from BCM bigtime and the price has been cut in half in the two weeks since JPM warned its lists. But I think JPM is calling this one badly and Aduviri is by no means favourite for the the vote come October 5th. Here’s why:

First we consider the latest opinion polls out of local Puno survey companies. There are two, (22) both taken during the first week in September, with the De Fondo survey company (23) putting Juan Luque Mamani of the reasonably moderate PICO (stands for Integration and Cooperation Project for the Development of Puno) party on 19.0%, with Walter Aduviri on 17.0%. Then in third place Lucio Rojas on 10.7% and fourth Alberto Quintanilla on 6.1%, then come the also-rans. De Fondo interviewed 1,200 people and call their margin of error at 3.5%. The second survey company is CIMEC Kipu, who put Juan Luque Mamani on 16.5% and Walter Aduviri on 14.3% with another chunky gap to 3rd and beyond. In other words, the front two are clearly ahead of the field, but neither looks likely to break through the 30% barrier needed for a first round win and that means we’re odds on to get a second round run off between Luque and Aduviri in November (there’s no fixed date for any run-off yet, aside from the month).

So Aduviri isn’t leading the field in Puno. Not only that, but this radical and outspoken figure is in second place to a relatively moderate candidate in Juan Luque Mamani, ex-rector of a local university (the UANCV, where as it happens one of my sisters in law works as a languages professor). Luque has been a lower figure in Puno politics previously and is allied with an ex-mayor of the city, so he has the profile and likely the consolidation power to be able to beat off Aduviri in an eventual round two run-off. The other aspect to consider is tribal (for want of a better word) as Aduviri is an Aymara and is heavily identified with the Aymara people to the South of Puno, rather than the predominately Quechua descended people in the Northern part of the region. Although there’s very little if any animosity between Quechua and Aymara these days, there still exists an undercurrent of wariness and from what I have picked up, the Quechua regions (which comprise perhaps half of the total population) think an eventual regional president Aduviri would favour development and growth for the Aymara South over Quechua North Puno. The more moderate Luque would suit them better.

Therefore the most likely scenario today is the following:

Luque and Aduviri win through to a second round run-off, with neither candidate reaching 30% of the total vote
Luque wins in the second round.
Bear Creek Mining (BCM.v) rallies on the news.

That’s the easy bit, the difficult bit is deciding when BCM might rally and just as importantly, from what level. First the entry price questions and after the heavy drop of Friday afternoon literally anything could happen when the markets open tomorrow Monday. BCM might go down further, it might snap back to the $2.20 level, it may stay under $2. I honestly don’t have a clue. As for when we might get a rebound on a relief of political concerns, that’s another one to guess about and as shown a couple of weeks ago (with mea culpa last week) I’m not so good at timing these things.

All the above means that I think there may be a trade, if silver holds up and if BCM gives a decent entry window, but it’s going to be a tough one to call and I don’t know whether there definitely is a trade. But there is a trade here somewhere, because the selling now looks overcooked. If I had to guess (and I suppose I do), the scene is likely to stay volatile until October 6th minimum and as anything could happen between now and then I’m pretty sure to stay out on the sidelines, watching. However come October 6th and the election results, if my likely scenario becomes fact and it’s Luque vs Aduviri in the November run-off, I may take a long position in BCM in the expectation that Luque moves ahead and becomes clear favourite quickly. All this of course is also highly dependent on the price of silver and any new trade exposed to the metal has a lot of caveat to think over. But given a fair wind on the metals price, a return the $2.50 and above on a Luque win and Aduviri loss would be an easy target to make. That’s nearly 33% higher than Friday’s close and that’s not a bad short-term target win.

I’m going to watch BCM next week. My forecasts on its price moves due to political newsflow have been bad recently, which I might just be identifying the reason why we’re now seeing the very bottom and it rebounds sharply without me on board as from tomorrow. But it’s way too volatile for my blood and I’d prefer to see 1) a more settled price (higher or lower) plus 2) reduced volume and 3) a date much closer to the October 5th election (preferably just after it with results in hand) before making a move.


Great Panther Silver $GPL (GPR.to) accused of polluting local water supply by member of congress

Marco Antonio Miranda Mazcorro, member of congress for the PAN party, says that GPR has been knowingly polluting the water supply of the town of Guanajuato with magnesium, iron, selenium and arsenic for many years. Story right hereAnd as we at IKN Nerve Centre™ know that GPR head honcho Robert Archer has this humble corner of cyberspace on his RSS and loves reading about himself via self-Google, we therefore aim to please our esteemed audience.