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12/12/15

Thing of beauty

Leo Messi's free kick goal today, in slo-mo from the stands:




Ahhhh.

New Fascism

This piece on the rise of New Fascism is a decent enough read, though much like IKN it's a bit too mouthy for it's own good. But read it I did and I'm glad I did so because about half way down there's this, which really resonated:

"A generation of leftists decided instead that the true opposition wasn’t a right-wing economics locally — but a global politics they called “neoliberalism”. But much of neoliberalism, in stark opposition to trickle-down economics did in fact lift millions across the globe out of poverty, misery, and despair. Why? Because liberalism, however you choose to define it, is not trickle-down economics: it is precisely the opposite — investing in institutions, people, and societies, so that gluts do not pile up at the top.

"Yet, the left began targeting and protesting the very institutions that were defending the globe from trickle-down economics — the World Bank, the IMF, the UN. Of course, I’m sure that those of you who are leftists will quibble with me vehemently here, and call me a Terrible Person. But the simple fact is that the IMF and World Bank were created by Keynes precisely to prevent wealth piling up at the top — and that is precisely what they did."

That's sharp insight. Go read it all

A Minera IRL Ltd (Team Hodges) Saturday news release

We'll explain what this means in The IKN Weekly issue 344 tomorrow, subbers. In fact it's really quite simple.

December 12, 2015

Minera IRL Board Concludes Investigation in Anticipation of EGM Resumption

LIMA, PERU--(Marketwired - Dec. 12, 2015) - Minera IRL Limited ("Minera IRL" or the "Company") (AIM:MIRL)(BVLAC:MIRL) announces that it has been advised that the Company's registrar has received a proxy revocation in respect of the votes whose validity came into question at the Company's Extraordinary General Meeting of shareholders (the "EGM") on November 26, 2015, resulting in the adjournment of the EGM and the commencement by the board of directors of Minera (the "Board") of an investigation into the validity of such votes. In light of such proxy revocation, the Board has determined that any potential issue with such votes has been resolved to its satisfaction and therefore the investigation has terminated. In his capacity as Chair of the EGM, Mr. Jaime Pinto confirms that, following such proxy revocation, he presently knows of no reason that any proxies submitted for the EGM cannot be validated.
The adjourned EGM will be re-convened on the 24th Floor at 333 Bay Street, Toronto, Ontario M5H 2T6, on December 16, 2015 at 10:00 a.m. EST (3:00 p.m. GMT).


James Hansen on Paris COP 21: Some quotes

Some of the better chunks of this interview with James Hansen, these days being framed as the father of climate change awareness. My how we human beings like our nametags. Anyway, it's good stuff.

“It’s a fraud really, a fake,” he says, rubbing his head. “It’s just bullshit for them to say: ‘We’ll have a 2C warming target and then try to do a little better every five years.’ It’s just worthless words. There is no action, just promises. As long as fossil fuels appear to be the cheapest fuels out there, they will be continued to be burned.”

...

Hansen, 74, has just returned from Paris where he again called for a price to be placed on each tonne of carbon from major emitters (he’s suggested a “fee” – because “taxes scare people off” – of $15 a tonne that would rise $10 a year and bring in $600bn in the US alone). There aren’t many takers, even among “big green” as Hansen labels environment groups.

...

“We all foolishly had such high hopes for Obama, to articulate things, to be like Roosevelt and have fireside chats to explain to the public why we need to have a rising fee on carbon in order to move to clean energy,” he says. “But he’s not particularly good at that. He didn’t make it a priority and now it’s too late for him.”

Hansen is just as scathing of leading Republicans who have embraced climate science denialism to the chagrin of some party elders. 

...

“Many of the conservatives know climate change is not a hoax. But those running for president are hamstrung by the fact they think they can’t get the nomination if they say this is an issue. They wouldn’t get money from the fossil fuel industry.”

For what it's worth, I fully agree with Hansen's capitalist-based solution. Full thing here.

PS: I don't care what you think about this subject so don't bother writing in with carefully chosen links that feed your own prejudices, I won't reply. Please recall at all times that this blog is not a paragon of democracy; it's a dictatorship, it's run by a dictator (me), my opinion is always absolutely correct.

12/11/15

The Friday OT: Holst, planet suite: Jupiter, bringer of jollity

Instantly recognizable 20th century classic classical. If you have one of those friends in your group who "doesn't like all that classical music stuff", play them this seven and a half minutes of greatness. If they haven't grudgingly admitted some change to their absolute position by the end of it, unfriend them and find better people to spend your time with.



This Chicago Symphony version really bangs it out too, killer stuff.



Callidus Capital and the Yellowknife government get ripped off in a diamonds scam

A wonderful tale of scammery over at The Muck Pile today, as Muckpile Mike regales us with his usual wit and eloquence. Go see.

Confirmed: Photographic proof that "The Pilot" bar in Toronto is rat infested


Samarco: Brazil's environmental bureau speaks

Yesterday Marilene Ramos, president of the Brazilian Institute of the Environment and Renewable Natural Resources (Ibama) held a press conference which included:

The River Doce will take ten years to recover from the Samarco tailings dams failures. Impressive for a spill that Vale and BHP assured was non-toxic when it occurred.

The November 5th disaster is one of five tailings dam failures in the Minas Gerais region over the last ten years. There is obviously an engineering problem in the area and with so many other tailings facilities there, "it's feasible" that more failures will happen.

Ibama, which has already imposed several fines on Samarco, says it will add substantially more fines to its list next week. This is aside from the U$5.24Bn lawsuit now underway against the company.

Ibama underscored the position of Vale, which says it is not responsible for the failure. Yes of course, Vale. Of course.

So tell me, IKN reader who also reads the general mining press, did you hear about this press conference held by Brazil's most important environmental control body? Nah, didn't think so, BHP and Vale has the English language media in lockdown.

Chart of the day is...

...copper, dailies:


Now be clear, I'm a bear on copper and I think its fundies suck, now and for 2016. In the case of precious metal exposures I've suffered in 2015 but in the case of industrial metals, headed up by copper, I did okay and managed to step out of the way of the speeding express train of financial death. 

And I'm still a bear, but on looking at what might be building in the metal's price chart there's a look of a potential break-out and some relief for the sector. Perhaps. Not calling it, just admitting my bearish position may take a knock in the next couple of weeks. As in maybe. We'll see. Vamos a ver...

Has pretend World Class miner Tahoe Resources (TAHO) (THO.to) told us about the death yet?

Two plain facts:

1) When there's a death at one of its operations, any world class mining company has the common decency to tell the market.

2) Late November this year, one of the workers at Tahoe's Escobal mine in Guatemala died in a work-related accident while on duty. Tahoe prefers to hide this from the market.

Hey Kevin, the guy who died wouldn't have dark-coloured skin now, would he?

12/10/15

Almaden Minerals (AMM.to) (AAU)

The market shrugged its shoulders today, but I thought the news out of Almaden (AMM.to) (AAU) yesterday about its new downsized PEA plan was pretty interesting. So this weekend in The IKN Weekly issue 344 we're going to pretend that the world cares about exploreco projects and do an old-style look at the thing. Just so you know, subbers. 

Full disclosure: No position in AMM. Yet.

Global Mining Observer interviews Sean Roosen

Another decent industry scoop* from Alex W over at GMO, this Q&A with Sean Roosen of Osisko in which he claims he's drinking from a fire hydrant. No hubris there, eh Sean?

Well worth your time, mining sector people.

*beats me why these people never want to talk to IKN...

Dear Chuck

Thanks for coming over and checking the blog so regularly Chuck, it's kind of you (your hits show up on the back office stats here, don't try and pretend otherwise Chuck).



And I know you're feeling nervous about next week because you and your pals still think you have a chance of pulling it off. Well, enjoy the meeting next week Chuck, sit back, relax and let it all flow over you, but I guarantee that you're getting no extra snippets of fun or insight from this humble corner of cyberspace between now and then. Go scurry off and find a better place to feed your neuroses, Chuck.

And talking of scurry, here's a song especially for you. And we can extend the dedication to anyone who eats at The Pilot in Toronto this weekend. Sing along, Chuck. Lah lah lah, Chuck.

Love and kisses, Otto.


A death at Tahoe Resources (TAHO) (THO.to) Escobal mine

According to Radio Bemba Guatemala*, a full two weeks ago an employee of Tahoe Resources (TAHO) (THO.to) was killed while at on duty and at work at the company's Escobal mine. Which begs the question...

WHY HASN'T TAHOE RESOURCES TOLD 
ANYONE ABOUT THIS WORK-RELATED DEATH?

...because hell's bells this is 2015 and do they seriously expect to keep things such as deaths at their mines quiet? That aside, we're in a world in which world-class mining companies operate in an open and transparent manner, so this incident points to one thing only, that TAHO is not run in a world-class way.

And now, a mighty U$2Bn market cap mining company has to play catch-up on its internal affairs to a pissant blogger. Nice going, MacArthur. Lookin' good, Ira.




*if you have to ask...

Happy Hanukkah

Reader B kindly sends in the link to this video with heartfelt wishes for Hanukkah and tips on how to celebrate the season. Highly wonderful and worthy of sharing here on IKN.



Oh yeah, this: ----> The sentiment is good and pure, but the language is NSFW (and that's a severe understatement).

Today's South America show is...

...Mauricio Macri in Argentina as he swears in and becomes the country's next Prez. Ceremony at Congress (without CFK, who threw a hissyfit) and then speechifying (to a half empty hall because CFK's party has also thrown a hissyfit). All good clean fun and as I write these words, Macri's in his motorcade on the way to the gig.

Chart of the day is...

...two years of Jemi Fibre (JFI.v):



There's one thing that all Bobby Genovese companies have in common: Sooner or later, the shape of their price chart (plus the periods of heavy traded volume) are exactly the same. The M.O. is simplicity itself too, anyone who can read a balance sheet can see how the share price was destined for Crush City.

Until the OSC/BCSC closes down thieves like Bobby G, nobody will ever take the Canadian markets seriously again. This is 2015, information flows like water and the segment of the investment community that isn't taken in by scam merchants can see that the structure they're offered by the regulatory authorities begets this financial violation, time after time.

PS: And yes, IKN has run many posts on JFI since this pump and dump began, starting on August 9th 2014 with this and covering many aspects, including the obvious deterioration of its financials this year (e.g. this post). Many more besides.

12/9/15

Atico Mining (ATY.v) news

That was then (October 2013):

Mr. Nelson makes several allegations in his claim, including: alleging a key role in recognizing the mineral potential of the El Roble project and acting as a founder of Atico; alleging the existence of a partnership or joint venture; and alleging oppressive and unfair treatment related to the issuance of shares, benefits and his exclusion from the management of Atico. Mr. Nelson seeks various relief, including: claiming payment of a finder's fee of approximately $436,000 in connection with the El Roble project; seeking the right to purchase 2,500,000 additional shares of Atico at a pre-IPO subscription price from Atico, or alternatively, the individual defendants; seeking appointment to the board of directors of Atico or accorded such other meaningful and ongoing role in the affairs of Atico; and claiming other damages and costs in addition to the amounts already paid to him for his geological consulting services.

The allegations of Mr. Nelson have not been proven. The Company disputes Mr. Nelson's claims and will defend itself in this matter.


This is now (December 2015):
"Mr. Nelson, the Company and three of its Directors reached a solution satisfactory to all parties whereby Mr. Nelson will receive a cash payment of CAD$550,000, of which CAD$200,000 will be paid by the Company, and the balance by insurance."

If you consider what's happened to the PPS in the last two years (makes the pre-IPO share price unattractive) that cash payment, plus the long-ish explanation in tonight's NR all about how Carl Nelson was a key part of the ATY decision to move on El Roble, all sounds like a win for the geol in this one.

Zinc: It must be December

As traditional in Canada as fat men in red coats yelling Ho Ho Ho is the Christmas zinc pump, with "zinc supply squeeze next year...promise" always centre stage.

"On a macro-scale, zinc continues to display the strongest short-term fundamentals of all the base metals (perhaps with the exception of lead, of which we also produce significant quantities). Global zinc mine closures have been accelerating however the full impact of well documented concentrate supply constraints has yet to be felt. LME zinc warehouse drawdown rates have recently increased to almost double its normal pace while spot treatment charges have been dropping in conjunction with announced smelter closures globally, suggestive of a tightening zinc concentrate market. Given Trevali's strong zinc exposure and leverage, the Company is well positioned to crystallize value from strengthening in zinc (and lead) prices going forward."

Scotia today (from the house 'Scoop' morning mailer):
- Zn Revisit: Zinc TCs trending lower on tighter supply (lowest since September 2014):  Zinc TCs, the discounts on refined prices miners grant to smelters to cover the cost of turning concentrate into metal, slipped to $170-180 per tonne from $175-185 at the end of November on a cost, insurance and freight (CIF) basis for delivery to Chinese ports - the lowest since September 2014 and down from $185-195 in October.  Market participants are saying that some Chinese smelters are buying at TCs of $165 to $175/t for standard grade material.  Many didn’t expect TCs to drop this quickly, thinking that the production cuts we have been reading about take hold next year but TCs now are reflecting tighter supply already.  Recall that Nyrstar will put its Middle Tennessee Mines (MTN) in the US on care and maintenance due to depressed metal prices, which will translate into 50,000 tonnes per year of zinc-in-concentrate being taken out of the market.  This follows the planned suspension of 400,000 tonnes of zinc concentrate in addition to the 100,000 tonnes removed by the Myra Falls and Campo Morado suspensions.  As well, Glencore has slashed annual zinc production by 500,000 tonnes, cutting around 100,000 tonnes of contained zinc metal in the fourth quarter alone.  Chinese domestic supply has also tightened as some medium-sized miners have closed due to low prices.  Some market participants are saying that Chinese smelters are operating at around 80 percent of capacity in November. 
 
Oh you funny guys, you so funny. You be make us the laughing.




The 'Regional Politics' section of The IKN Weekly issue 343 (out last Sunday evening)

This mixed bag of reports is typical of what The IKN Weekly does while covering the political scene in LatAm. It's mostly mining-related and we try our best to cover events in as many countries as possible, but sometimes it's pure political on a macro level (eg the Peru presidential candidates section last weekend).

The only thing that's missing is the Peru Sol forex chart.

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Regional politics

Argentina Santa Cruz: The “mining tax” is voted down
Back in 2013, the province of Santa Cruz caused a ruckus in its mining sector by creating the “Impuesto Minero”, or “mining tax, based on charging companies for 1% of the value of their in-situ mineral reserves per year. Companies such as Goldcorp (Cerro Negro) and Pan American (Triton) in the region railed against the idea, said it was unconstitutional or impossible to calculate or just plain and simply unfair. The province meanwhile, under Governor and erstwhile CFK supporter Daniel Peralta (who has since fallen out with the Kirchnerists) insisted on its plan, needing the cash to shore up its empty regional coffers. Since that time legal challenges to the law have blocked any real payments and the mining company lawyers along the way won several victories, not least when Pan American managed to get a court to agree that it didn’t have to pay (under the terms of that time) in July 2015.

We therefore cut to last week and what now looks like the final chapter in this surcharge tax story. During in its last session before dissolving the current provincial administration (the new one starts on December 10th same as at the national level), the parliament overwhelmingly voted to annul the ‘mining tax’ (8) and it is now a thing of the past. Good news for mining companies in Santa Cruz.

Argentina: The Macri mining team
With the inauguration of the new President Macri on December 10th just days away, we now have the names of the people who will run mining in Argentina. Top job of Minister of Energy and Mines goes to Juan José Aranguren, an ex-executive of Shell in Argentina who will surely have more to do with the country’s hydrocarbon policy (Vaca Muerta etc) than hard rock mining, as Argentina has always been a bigger player in oil anyway.

Meanwhile the job of Secretary of Mining (i.e. Veep Mining and reporting to Araguren) has been given to Daniel Meilán, a career mining guy and public servant who for a while was sub-secretary of mining in the 1990’s in the Carlos Menem administration. For a glimpse of the way Meilán sees mining in Argentina today, this link (9) is to an interview he gave a few months ago to a Cordoba provincial newspaper and an interesting look at the way he sees the sector, this of course long before he was picked (to many people’s surprise) as the new main mining man. It includes quotes such as this on the mining sector under the CFK government and Jorge Mayoral, the outgoing mining vice-minister:

“We (as a nation) have done so many things badly that to become credible again we need to demonstrate (credibility). This is the job, first to demonstrate all this and then go out looking for foreign investors, but with a package of things already done.”

Then this on the anti-mining attitude of some Argentine provinces:

“The issue of being for or against mining is an issue of lack of dialogue. Without dialogue between parties, the extremist view are favoured. What we need to do is go back and to national/provincial dialogue. If there are provinces that don’t want mining, then accept it, but define territories and zones where mining will be prohibited. We need to get it down an writing (make official) once and for all, we need to go back to making agreements between the Federal government and the provinces, because the last ones were many years ago and we need to revalidate them, to redefine the rules.

“What we need to do is to get agreement with the grassroots concerns before we start calling for investment. The work to do is inside the system.”

All that sounds reasonable enough to me. We wish Meilán good luck (he’ll need it).

Peru: Five candidates do CADE
As noted in last week’s edition, the top five candidates for the 2016 Presidential election ( in no particular order Alejandro Toledo of the ‘Perú Posible’ party, Alan García of ‘Partido Aprista’, César Acuña of ‘Alianza para el Progreso’, Pedro Pablo Kuczynski of ‘Peruanos por el Kambio’, and current poll leader Keiko Fujimori of ‘Fuerza Popular’, normally known as “Fujimorista Party”) had speaking spots at the Peru Chamber of Commerce (CADE) annual conference in Paracas last week. All of them spoke on Friday so I dedicated part of my day on the speechifying. I wish I hadn’t bothered.

Most of the time all they talked about was themselves and how they were cut out to be the next President, rather than talk policies or manifestos. A long way second came real policy notes, which I found surprising to an audience of Peru’s rich and successful business community and the people you need to have on your side at this early stage. A potted summary:

Alejandro Toledo: The deterioration of Toledo is marked, which could be due to his long-documented drink problem (I get to write these things, other places worried about lawsuits will only whisper or suggest). He’s turned into a joke, a cardboard cut-out politician who is an embarrassment to his country. He had his moment in the early 2000s, that time has gone and so has any credibility he might have had.

César Acuña: Boorish, pompous and a terrible public speaker. Unpresentable in polite society, he may be a successful businessman, politico and rector of the university he founded (that’s made him very rich) but he has the charisma of a wet lettuce and is so full of himself he’s almost as painful to witness as Toledo. Mind you, none of those character weaknesses ever stopped people from becoming high level politicos in any country. Even though he’s polling fairly well at the moment I cannot see Acuña mounting a real challenge, plus there are some dark corners of his personal life that won’t sit well with the public (e.g. history of family violence and an ex-wife who isn’t afraid of telling the world about it).

Alan García: As usual, world class oratory and a control of an audience that the others who shared the podium on Friday can only dream about. García is Peru’s only serious politician and a master of his (dark) art. However, García also managed to use his time to say virtually nothing of substance in his eloquent manner (another of his strong points). Of the five he came off best, because only he’s by far the best speaker of them all. Content was light, he’ll be relying on the APRA party machine to get him up in the polls in 2016.

Pedro Pablo Kuczynski: He went over a few of the manifesto points that have already been announced, such as his plan to reduce sales tax (IVA) to 15% from the current 18% (a liquidity thing, which will help money velocity), while offering pre-boxed platitudes such as his thoughts on mining (translated), “Mining is 50% of Peru’s exports. We must support mining, (but) no in an irresponsible way. Mining has to be environmentally responsible”, which revealed nothing new to anybody present or listening in, perfect politikese. The rest of his time was spent playing up his business background and qualifications. The worse thing was his persistent cough, which was distracting all through his speech but also returns focus to his health and whether a man in his mid-80s is in conditions to be President. It’s one of the main points against PPK among rank and file Peruvians, so any signs of health weakness will be jumped upon by his detractors. He did himself no favours on the health score last Friday though on the other hand he got the highest approval rating from those present, a solid 84% thumbs-up for his speech by the CADE business crowd. That’s to be expected, after all.

Keiko Fujimori: Alberto’s daughter of course, and as such I personally think she’d be negative for the country and set Peru back in terms of judicial reform and the fight against corruption, but that’s based more on internal social matters than economy thoughts and I will give her the credit for being the only one who unveiled real policies and some of her election platform on Friday instead of going the “Aren’t I wonderful?” onanist route of the other male strutting candidates. My chief Keiko takeaway was that her economic policies would be hands-on, with a Finance Ministry that would be proactive to promote growth (i.e. neo-Keynesian style government intervention in macro matters) rather than the current (in her words) auto-pilot Economy Ministry.

Summing up the five, the good news is that when it comes to Foreign Policy, Foreign investment and economic growth, none of the five are far from each other and they can all be classed as “business friendly” and miner friendly”, they’re all pretty neoliberal with some small degrees of difference. There’s nothing in these five for those on the outside looking at Peru as an FDI destination should fear. The bad news is that they’re all mediocre.

Moises Naim does CADE
Head of the influential magazine Foreign Policy, the right-wing Venezuelan national Moises Naim was invited (paid) to address the Peru CADA conference and his main message is captured by this short  report in El Comercio (10) which I’ll translate in full.

During his presentation at CADE, Naim said that micro-regional powers can block national interests, such as what has happened with the Conga project in Cajamarca, which generates poverty.

The expert recommended not to use hardline strategies nor have a predilection to violently repress protests against (mining) projects.

“It’s a false temptation to go in heavy handed (ottonote: In Spanish “mano dura”, which means “hard hand” and explains the situation when e.g. police move in with firearms and batons to break up protests). Projects would have national appeal. In which universities, media, the church and others are involved. These issues won’t be solved by pressure but by democracy”, he said.

In Peru mining represents 14% of GDP and more than 60% of total exports. In copper, it’s the world’s third largest producer.

This is one of those situations where Peruvians may finally react and the subject gain traction because instead of being told the obvious by the usual suspect greenies and lefty hand-wringers, somebody “famous in business” tells them instead. Naim is right, he’s not making any startling new discovery here, but its the type of discourse that could positively affect the upcoming election run.

More Peru: Peru’s forex versus the dollar
Here below is a ten year chart of the Peru Sol (PEN) versus the US Dollar (USD) and it’s a good visual on how the currency pair has rushed back up to the highs last seen in 2006, when Toledo was President and gold traded around U$600/oz (seems a long time ago). Peru’s Sol is a decent proxy for the state of other LatAm countries’ currencies against the dollar, as its strength has been commodity-based, it’s a free floating currency and has a Central Bank that normally uses orthodox policies to keep the transitions smooth (i.e. intervention is on a short-term level to stop big moves). The interesting bit is the last few weeks in the pair, because the move up to this weekend’s 3.36 versus the US Dollar has been a spike, but we now have most national commentators saying that it’s no flash in the pan and the Sol is likely to keep moving up, to 3.50 or 3.60, because the Central Bank doesn’t have much in the way of ammo left to defend it.

If you check the official figures, the Peru Central Bank (BCRP) currently counts on U$62Bn in international currency reserves but that figure is padded out by the number of dollars held in bank accounts by citizens and companies, which comes to around U$36Bn. In fact the BCRP itself has around U$25Bn in liquid reserves and because it’s been selling dollars in 2015 to keep the Sol from any sharp deval event, that’s down from just over U$35Bn at the end of 2014. Put in simple terms, the BCRP is running out of ammunition. The market is now keenly aware of this (of course) and the Central Bank isn’t likely to drain its dollar holding down to zero, the result being the acceleration of the deval.

This is good news for mining costs in Peru in dollar terms, of course. Not so great for its citizenry, who are about to go through a burst of inflation due to the import costs of goods.

Chile: More on the country’s rise in mining unemployment
Following on from last week’s report in IKN342 that 167 of Chile’s 1,100 small copper mining concerns have closed in 2015, this week the country’s official stats office, INE, reported (11) that total employment in mining in 2015 has dropped by 19,000, or 7.9%, compared to the same period of 2014. At present some 222,770 people are directly employed by mining, compared to 241,770 this time last year. All sector commentators expect the layoffs to continue and say that there isn’t a company out there that hasn’t seen significant layoffs. Even the State controlled Codelco has rid itself of 4,292 employees.

For a little more context, Chile’s government normally uses a 2.5X factoring for direct to indirect jobs in mining, i.e. the number of auxiliary jobs that depend on the wealth created by the mining industry. If we use that thumb-rule number and put the two groups together, we can estimate that 66,500 jobs have been lost in Chile due to the slowdown in mining. In a country with a labor force of 7.6m, that works out at 0.9% added to the unemployment stats just this year by mining layoffs. That’s significant and even more so when you consider that mining jobs in Chile are traditionally some of the highest paid jobs in the country, especially when compared on a like-for-like basis to similar level employment opportunities in other sectors.

Ecuador: Cordova does Mines & Money
It was interesting to read that Javier Cordova, Mining Minister for Ecuador, was doing the rounds at London’s Mines & Money conference last week and talking to the press about the State burden deal his country expects to close with Lundin Gold (LUG.to) soon (according to Global Mining Observer (12). The deal is 22% corporate tax plus a 5% royalty), or that according to this Bloomie report (13) Rio Tinto “is considering investment in Ecuador” on one or more of the copper project areas coming up for grabs as from January 2016 when the government tenders new concession areas to the world.

I voiced my...errr...opinion of Señor Cordova on the blog on Thursday (14) when hearing these multiple messages start coming through, but I’ll expand on that here by saying that Cordova is a classic “jam tomorrow” artist who has been promising the world for the Ecuador mining sector ever since Correa came to power, but so far has delivered very little.

Also, the LUG situation is already flagged as the company has stated its timeline includes a finalized deal with the government at end 2015 or early 2016 (by law each mining company in Ecuador negotiates its own State burden deal). The figures cited by Cordova sound reasonable too, but we must remember that they’re only part of the whole package and according to the nation’s constitution, the State must take at least 51% of total gross proceeds.

As for Rio Tinto, it may be true and it may be false, but as it comes at a time when Rio Tinto is pulling out of copper projects such as La Granja in Cajamarca Peru, the thought of it moving to pick up space in the sketchy Ecuador jurisdiction doesn’t sit right. Especially from a man with Cordova’s track record while pressing flesh at a trade bash. Avoid Ecuador.

Political risk increases for Tahoe Resources (TAHO) (THO.to)
Last week we noted the potential for increased political risk for Tahoe Resources at Escobal in Guatemala and part of the translated report was about Alberto Rotondo, the Peruvian ex-army man who was contracted by TAHO to run its security campaign and as a result of the violence as arrested by the government. Here’s an excerpt:

The ex-army officer is currently in prison waiting to stand trial for acts of violence against community members (in San Rafael Las Flores). Also, according to the CALAS lawyer, “Since 2012 the company has faced a legal action for environmental damage caused since the time of its construction and the legal case is about to come before a judge.”

As luck (?) would have it, it turns out that Señor Rotondo absconded from his house arrest in Guatemala, an event reported by Mining Watch on December 1st (15). Rotondo made his escape on November 28th because he didn’t want to face his trial that was due to start in January. He is now in Peru according to his own defence attorney (16), but here’s how Mining Watch told it earlier in the week:

Guatemala City/Ottawa/Tatamagouche) On Monday, plaintiffs in the criminal case against Tahoe Resources’ former security manager, Alberto Rotondo, were informed that he had escaped police custody. Rotondo is accused of having ordered private security guards to attack peaceful protestors outside the Escobal mine in southeastern Guatemala on April 27, 2013, wounding seven men.  

“This demonstrates that the Guatemalan justice system, especially the National Civil Police, still suffers from high levels of corruption and influence peddling. The police failed to implement the judge’s order to ensure constant police supervision of Rotondo, now turned fugitive,” remarked Rafael Maldonado, Director of the Centre for Environmental, Social and Legal Action (CALAS).

This could cause a major headache for TAHO, as even though they’re bound to swear blind it has nothing to do with them the optics are very poor and come at a time when the incoming President Jimmy Morales may look for his example for a crusade against corruption and sketchy goings on in the Otto Pérez Molina administration period. Meanwhile, the political risk mounting in Guatemala for TAHO is being completely ignored by the market and TAHO continues to trade in the front rank of precious metals plays (and more like an outperforming goldie, rather than a stock largely dependent on silver for its well-being). IKN reiterates its “avoid” call on this stock, risk does not justify the potential reward and there are far safer ways of playing the PM space.

Colombia awards an environmental permit to an open-pit project
This went largely undetected by the English language trade press but I think it’s important. Last week the Gramalote project (51% AngloGold Ashanti, 49% B2Gold) was awarded its environmental permit to continue work, a permit that will allow Gramalote to move forward with work on its pre-feasibility study eventually to feasibility stage that AngloGold Ashanti (project operator) estimates for 2018.

Notably B2 didn’t make a squeak about this event (it doesn’t seem to care much about Gramalote any more) but it caught my eye because as this local report (17) points out, even though it’s only a permit to continue exploration work rather than a full EIA for a mine operation to come it’s the first time that any environmental impact permit has been awarded to any open-pit gold mining project in Colombia in decades (and yes, that statement includes La Colosa). When it comes to the bureaucratic swamp that is the government of Colombia, anything positive that that happens to promote the mining industry needs to have as much light as possible shone on it because if so, they may feel willing to do it all again. Or as Ken Kluksdahl, Senior VP Projects for AngloGold Ashanti in Colombia, put it (translated), “This is an important step for the future, which shows us that the Colombian authorities back large and modern mining projects that comply with the highest social and environmental standards. It shows the opening of the country to business and that our future in Colombia is advancing, as we work towards concluding our current pre-feasibility study”. A more obvious hint towards La Colosa’s future is difficult to imagine.

Samarco: IKN shows you what the mining industry media refuse to show

This is the town of Bento Rodrigues, before and after the November tailings dam failures at the Samarco mine (50% owned BHP, 50% owned Vale):




Keep ignoring it, you sold out shits. Keep ignoring it.

The financial joke that is Uranium Energy Corp (UEC) (a.k.a "What Casey Research can do for your portfolio" part 429)

My isn't it strange how Casey Research pumps so many things run by Amir Adnani, it's surely just pure coincidence how they buy into his stocks and then promote them to the world and then suddenly go quiet about them? Just coincidence. Anyway, you remember the Casey Research pump on Uranium Energy Corp (UEC) earlier in the year? How Marin Katusa pumped it to death via his Energy Report thing before jumping ship, then how Louis Lobito Little Wolf James picked it up and called it (and I quote), "UEC is without question my favorite pick in the uranium space"?

Yeah well UEC published its quarter last night and reported yet another loss, which isn't a surprise because it didn't sell anything. But some of the numbers that came along with the quarter make for interesting reading:
  • In one quarter, cash dropped from U$10m to U$5.35m
  • Workings capital is now negative U$2.3m
  • As from July next year, it has to pay back $1.667m per month until its U$20m financial debt is fully paid.
  • And unlike the unsubstantiated and wholly anecdotal claims made by Casey Research early this year, there's no stockpiling of product going on. All you need to do is check the inventories line item (unchanged at U$252k) to know that. 
  • Bottom line: These people aren't doing anything, but they're happy enough to get through $2.5m a quarter in G&A 

So how does UEC plan to fill in the obvious gap in its finances. Well as UEC says itself, they're not about to go profitable anytime soon so they plan to sell paper. Here's a quote from the 10-Q:
"As the Company does not expect to achieve and maintain profitability in the near term, the continuation of the Company as a going concern is dependent upon its ability to obtain adequate additional financing which the Company has successfully secured since its inception, including those from asset divestitures. However, there is no assurance that the Company will be successful in securing any form of additional financing in the future when required and on terms favorable to the Company, therefore substantial doubt exist as to whether the Company’s cash resources and working capital will be sufficient to enable the Company to continue as a going concern for the next twelve months. The continued operations of the Company, including the recoverability of the carrying values of its assets, are dependent ultimately on the Company’s ability to achieve and maintain profitability and positive cash flow from its operations."

At its current share price of U$1.03, UEC has a market cap of U$101.86m. Its book value is $27.5m (give or take the change) which means this company is running a price/book of 3.7X.
  • Price Book at three point seven times.
  • In this market for miners.
  • For a company with dwindling cash.
  • No production.
  • Every intention to dilute the share count and finance.
  • And $20m of real financial debt on board.

This is the type of bovine excrement that Casey Research recommends to people. A more obvious short in the mining space is difficult to envisage.

12/8/15

Four charts

HudBay (HBM): Come back David, all is forgiven (aka the Alan Haircut).



Goldcorp (GG): Come back Chuck, all is forgiven.



Continental (CNL.to): That old saw about the soufflé not rising twice comes to mind.

NGEx Resources (NGQ.to): What part of "Don't buy news in this market" did you not understand?

Now that IKN has both Bob Sangha and Sandeep Singh of Maxit Capital...

...as signed-up readers of the daily e-mail digest, IKN Nerve Centre would like to inform these gentlemen that they are prime examples of everything that is wrong about the Canadian capital markets world. A special place in hell awaits them after the way their treated their fellow human beings during this current incarnation.

UPDATE: We have mail feedback. For the record, he may have visited since 2010 (that I don't know) but he only joined the mailing list a month ago.

I have been forwarded your note today.
 
I’ve been on your distribution list and/or visited your website since at least 2010 when (name supplied) pointed it out to me when we worked together at Dundee.  I don’t recall meeting you but clear that you would prefer if I was not on your email distribution list so please feel free to drop me.
 
Enjoy the holidays.
 
Regards,
Bob Sangha
 

News round-up

We haven't done one of these for a while, so...

First the non-news, as the mining world's lapdog press corps continue to give zero coverage to the Samarco disaster and how its industry has managed to ruin a whole Amazon basin river. Contemptible media coverage, vomitworthy. Shame on you all.

Movin' on, Goldcorp's "Conflict free" policy causes conflict, death, violence, extortion and other such lovelinesses in Guerrero Mexico? Hoodathunkit! Here's Reuters with the story.

Galt's Gulch Chile is the Libertarian scam that just keeps on giving. This new (looking) website is the foot-stomp "it's not fair!" approach from the scammed suckers who were stupid enough to trust someone who has Ayn Rand (me first....that a clue guys?) as the central pillar of their life philosophy. Here's a chunkette:
As of November 2015, the investors do not have title to the residential lots, orchards or shares of Agricola GGC (the farm operating company) for which they paid and that Johnson agreed to deliver. Loan payments to GGC investors have not been paid. In addition, titles to two GGC companies and the two parcels that were to become Galt’s Gulch Chile are clouded. The project is insolvent.
Unintentionally hilarious.

Here's Shore Capital this morning on Minera IRL. Yes true, what are those irregularities?


PS: The news that the location of the San José galleon, reputedly carrying around a billion dollars' or seventeen billion dollars or choose-you-own-report billion dollars' worth of gold and jewels when it sunk off the coast of Cartagena, has been located and its booty assigned to the country has caused a massive uptick in stories that spell Colombia with a "U". Dumbass gringo hacks never die, they just hibernate a while.

12/7/15

Jaime Pinto and Elliot Associates: The full case file in English

Apparently, Jaime NOT HODGES! Pinto, non-executive chairman of Minera IRL (IRL.to) MIRL.L) with a dark and murky past, has been telling people he knows nothing about his links with the corruption case involving the State of Peru and Elliot Associates (Paul Singer et al) which, according to the government of Peru, ripped off the country to the tune of U$50m.

Therefore and to help Jaime Pinto catch up on what the rest of us already know, here's the official Peruvian Congress case file translated into English. This should embed here if I've done it right but if not you can get your own copy of the downloadable PDF at this link.



Or paste this into the right place:

https://drive.google.com/file/d/0B2SQWc0IFnrKcFNONHl4SUpLYWc/view?usp=sharing

And here are a few screen captures of the file, including the front page...


...the contents page...



...and this jolly little segment from the conclusion section (and there's lots more where that came from).


Enjoy reading about yourself "for the first time", Jaime. It's little wonder the investigation into these allegations of corruption have been reactivated recently, what with Keiko riding high in the polls. Because yes, no matter what Jaime NOT HODGES! Pinto might tell you or want to make you believe, this case has now been re-opened by the Peruvian public prosecutor and is being actively investigated by the State authorities.


Strong traded volume in Lake Shore Gold (LSG.to)

Lake Shore (LSG.to) (LSG) has done approx 4X average daily volume on its main Canadian ticker this morning and in the process has held onto its price gains of Friday while all around it wilt.


There are two theories doing the rounds, this desk one of many place to have heard the same:

1) That GG is interested in buying out LSG has been an open secret for many months (and hey, full disclosure, it's one of the basic reasons I'm long LSG).

2) Chuck leaving and Garofalo entering means that Chuck will want to seal his deal before exit.

3) Chuck leaving and Garofalo entering means the other possible deal, that of the much larger Detour acquisition, is now off the table because the new boy won't want to bite at that big a cherry early in his tenure.

And that's about the size of it, thus LSG gets a new influx of buyers today.




x

How to become CEO of Goldcorp (GG)

1) Join a mining company.
2) Stay for five years. Do things.
3) Turn the company from a U$2.038Bn market capper with a share price of U$11.89 into a U$1.08Bn market capper with a share price of U$4.58.
4) Become CEO of Goldcorp

Easy.

Math is fun

Peter Lynch gives advice to investors:

“If you can’t understand the balance sheet, you probably shouldn’t own it.” 

Exactly. Thank you reader PMK for the heads up. Full WSJ piece here.

Minera IRL (IRL.to) (MIRL.L): The EGM continues on December 16th

Here's the NR, here's the pay dirt:

December 7, 2015

Minera IRL Limited Announces Adjourned EGM Will be Re-convened on the 24th Floor at 333 Bay Street, Toronto,
Ontario M5H 2T6, Canada on December 16, 2015 at 10:00 a.m. EST (3:00 p.m. GMT)

LIMA, PERU--(Marketwired - Dec. 7, 2015) - Minera IRL Limited ("Minera IRL" or the "Company")
(AIM:MIRL)(BVLAC:MIRL) today announces that the adjourned Extraordinary General Meeting of shareholders ("EGM")
will be re-convened on the 24th Floor at 333 Bay Street, Toronto, Ontario M5H 2T6, on December 16, 2015 at
10:00 a.m. EST (3:00 p.m. GMT).

12/6/15

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

...in reverse order:

Third Place: "Basic Life Mistakes #43: Taking career advice from academia" . Good to see the sarcastic ones still get love.

Second Place: "Minera IRL (IRL.to) (MIRL.L): An interesting post...". My stars I'll be glad when this saga's all over with.

First Place: "A news release from Minera IRL SA", the one on Wednesday that announced the subsidiary board meeting wouldn't go ahead until the main IRL EGM was completed. To stop Hodges from running with his sneaky plan, the one that he daren't tell Jones about.

The IKN Weekly, out now



 Bandeja paisa

IKN 343 has just been sent to subscribers. A mixed plate.