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3/18/16

Jon Hopkins: Immunity (asleep versions)

Another slice of breath-taking music from Hopkins. Play this when you want to chill out after getting too worked up after listening to chill-out music.




You answered my prayer for a worthless diamond
In our carbon lives
You said it'd always be fine
And you said you'd never stop
Coming round in the dead of the night
You said forever was unkind

Apparently, the Chile government has just told Kinross (K.to) (KGC) to shut off its water wells at Maricunga

Because they've dried out the surrounding area.

Could ruin K's weekend.

Chart of the day is...

...gold, dailies:


One thing about the goldbug community is its propensity to go direct from boom to gloom, there's not much space devoted to the large range of sentiments between the extremes in which they spend most of their time. Take for example today, the gold cheerers are all depressed and down because their metal failed to break U$1,270 and is now, oh horror of horrors, sixteen dollars cheaper!

That chart looks healthy enough to me but hey, WTFDIK?

3/17/16

Somewhere in Cartagena...

...this image from last night, as the next chapter of the LIX.v pump is finalized:



They've all gone to the Dark Side, I'm afraid.

UPDATE: To be exact, "somewhere in Cartagena" is here:



Nice place you got there, guys. My thanks to Keith for the information.

The IKN Mailbag Index(TM) is now signalling a near-term retraction in gold and precious metals stocks...

...due to the sudden rise in quantity of "Ha ha you said bad things about Stock XYZ and now it's up by loads and you suck ha ha ha" mails. Sadly, only the quantity has changed, quality remains at its usual levels. The smug ones from people who think they "know the market" are the funniest (you can tell which ones they are, because they'll slip "I know the markets and..." in there somewhere). And yes, they are that self-absorbed, thanks for asking.

For the record I'm expecting far fewer mails next week, as the mouthbreather end of the casino will be too busy on their bullboards blaming the Bildebergs or Goldman or PTB or "them" for gold's sudden reversal.

Retail, the crop that never fails.

Do not feed the animals.

Regarding the recent rally in B2Gold (BTO.to) (BTG)

It's been the Top Pick at The IKN Weekly for what seems like a couple of lifetimes, as subbers well know there was a wobbly two or three months back at the turn of the year when I was getting a bit cheesed off with the losses, wasn't interested in adding and was seriously considering downgrading the stock, but now gold's in fashion and we're all freakin' geniuses again and all of a sudden people want to know about Clive "I'm a F__king CEO" Johnson and his thrusting enterprise. Which he built. And isn't pwned by Fidelity at all. Oh no.

To the point: I've received a flurry of mails* asking what would be a good entry point for B2Gold. 

The answer is "February". 

More precisely, the weekend of February 14th 2016 when in IKN353 we ran the numbers once again on BTO but this time saw bigtime light at the end of its long tunnel. So we changed the near-term call back to buy (nay strong buy) and upped targets. That weekend BTG was U$1.04 and BTO.to was C$1.42, so call them 50% up from there.

Or the next weekend when I underscored that call in IKN354 dated Feb 21st with things like...
"...this is the same point I made last week, that BTO is still undervalued! And even after beating out the sector averages neatly last week, it’s still undervalued! People, this is the sound of me banging on the table about BTO, here you have a stock that doesn’t need a single dollar added to the price of gold in order to see its share price improve..."

...when BTG was still waiting for lift-off at U$1.11. We've enjoyed gold's 4.7% pop since then which helped our charge along, but the 47.7% gain in less than a month on a very outsized position cash-wise knocks that into the proverbial cocked hat.

Anyway and to paraphrase Jack K, whither goest thou B2Gold in your shiny car at night? All the 20/20 hindsight in the world won't answer what the stock could do next, so that's this weekend in IKN359, we're doing BTO as the main event this weekend. Be there or be square.

*to be precise, five

Chart of the day is...

...the main gold bullion ETF (GLD), ten days:



Yes, we liked yesterday's big swoosh up but let us be clear; gold isn't even at weekly highs yet. All we've seen, so far at least, is the dip of the previous two and a half filled.

Then again, bullion touching $1,270 overnight puts us halfway there ( livin' on a prayer).

3/16/16

B2Gold (BTG) (BTO.to) files its 2015 year-end financials

On SEDAR now, as of about 20 minutes ago (filed at 18:31 Toronto time). First pass bits and pieces:

BTO took a $108m impairment, basically adjusting down its assets as they've gone for e U$1,250/oz gold price assumption (was U$,1300/oz last year). An impairment was expected, around $100m is an easy swallow, though other companies have adjusted to U$1,200/oz for this year, BTO is kinda dragging its heels on this and that number would have been heavier if they'd followed suit. $32m of the write down was on Gramalote...long overdue.

From that, the 4q15 net loss was U$115.1m. But back out the one-time stuff and the adjusted net profit for 4q15 was $1.64m. Basically break-even and an okay result without being wowsers

AISC was U$807/oz. Reasonable. Inside that, Otjikoto AISC was a kick-ass $509/oz for 4q15, that's a sparkling result.

Working cap $104.7m. Right on the button with my estimate (I'm happy about that).

Fekola confirmed fully funded (by the deal announced early this week).

Janet backs away

The jawbone begins, here's the bit that says "errr...yeah...we were thinking of doing that, but we're kinda thinking of doing this instead...so...(etc)"

"The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run"

Nuff said. Gary's got the full FOMC statement here. On the news, gold popped U$14/oz and that's a decent chunkette, but I'd warn all you jocks and players that what Janet says at 2:30 (22 minutes from time of writing this) will be just as important, and may change the game too.

UPDATE: Janet hath spoken and gold's now popping, 2.2% up at U$1,260/oz.  Which is getting close to a...errr...weekly high. Hell, I'll take it, BTO's zooming after all. And now that the trivial matters of this Wednesday are out the way it's time for the serious stuff, as Barcelona vs Arsenal kicks off in 37 minutes' time, Champion's League 2nd leg and The Messi Show beckons. Catch you all later.

UPDATE half time: they're the best team I've ever seen.

Continental Gold (CNL.to): History doesn't repeat, but it does rhyme

When on Monday morning Continental Gold (CNL.to) announced that Ari Sussman was stepping down as company president and giving the role to Exec Veep Meteo Restrepo, there was something about the NR which rang a bell but I couldn't for the life of me think what it was. It bugged me all day, then yesterday Tuesday I forgot about it, but then suddenly this morning on waking up it came to me.

Check out this Colossus NR dated October 2011 that announced Ari Sussman was stepped down from his President and CEO role and giving the job to the company CFO, Claudio Mancuso. In it, here's the piece when Sussman extols the virtues of Mr. Mancuso:
"Since joining Colossus, Claudio has demonstrated outstanding judgment and the leadership skills required to manage Colossus through construction and into production. Colossus will no doubt continue to benefit as Claudio draws upon his experience from being involved in the construction and operation of six gold mines located in three different countries."
Now that's one helluva drumroll isn't it? And especially when you consider that Mancuso was a well-known cokehead with a drug habit that compared reasonably to Keith Richards' leisuretime activities. And also when you consider this drug addict ran CSI into the ground withing two years and lost its backers hundreds of millions of dollars in the process.

But back to today. This time Ari Sussman is only stepping down from his role as President, he's staying as CEO (for the time being at least). But here's what he has to say about the person taking over his role as prez of Continental Gold in this week's NR:

“Since joining the Company in August 2015, Mateo’s energy, strong leadership skills and key relationships have made a positive impact on the Company,” commented Ari Sussman. “Based out of our Medellín office, Mateo will work in direct partnership with Donald Gray, Chief Operating Officer. I am confident that their complementary, yet distinct skill sets will result in a seamless transition for the Company as we move into project financing and construction once permitting is completed. Lastly, I would like to thank Leon Teicher, Executive Chairman of the Board, for his effort in helping to prepare Mateo for his new role.”

Since joining the company....leadership...into construction...it's deja vu all over again. Now for sure I'm not saying that Señor Restrepo is a cocaine addict the same way that Mancuso was (is?). For all I know Señor Restrepo is a fine upstanding member of the community, has never ingested anything stronger than Earl Grey tea in his life and spends all his spare time helping old ladies across the road. What this is about is that slimeball Sussman and his M.O. of pulling the wool over the eyes of the mining world while filling his pockets with your money.

The reason why the Vancouver newsletter tipsheet pumphouse community is pushing West Red Lake Gold Mines (RLG.v) at you this week

Because they think you're fucking stupid. They're right about some of you, too.

Do not feed the animals. That includes the paid-off parasites who try to get you into these purveyors of moose pasture.

North Korea feedback

Your humble scribe has received quite a bit of feedback from the post on that impressive North Korea photo-reportage yesterday, including this one from reader RB:

Otto, I'm sure this dude could take thousands of poverty photos in the US and for sure he could take thousands of photos of desitute poverty in many Capitalist countries on this planet. 
 One thing I know about North Korea is that it is the most heavily embargoed country in the world and is and has been constantly threatened with destruction for the last 50 or 60 years by the biggest bully, the US.
 As far as I can tell , it's only crime is to not cave in to US control.

To which I replied:
"The system of democracy has many faults but you can't fault it on one score: You get to believe anything you want and get the right to tell other people about it, too. Thanks so much for your considered opinion and keep enjoying the use of e-mail (which is more than 99.99% of N. Koreans ever get to do) But not with me any longer, life's too short. Goodbye forever."

My long-standing and carefully tended halo of pinko-ness is slipping, no? And you'll also note that I didn't even use a swear word at the brainless fucktard either. There, that's that improved already.

Have a pleasant day, esteemed readership of IKN.

Argonaut Gold (AR.to): If your only chance to hype your financial results...

...is to use a non-existent financial parameter IN YOUR FREAKING NR HEADLINE then you know the company publishing has just put in one helluva shitty quarter. Argonaut Gold starts its silliness this morning with...

"Argonaut Gold Announces Revenue of $158.6M and $42.7M in Cash Flow from Operations Before Changes in Non-Cash Operating Working Capital for the Full Year 2015"

...and that's something that even Bart Simpson has clear these days.


I mean blimey O'Reilly and bless you on St Pat's Day it's bad enough that this stupidity is quietly pervading financial results, quite another to blast it as your freakin' headline!

A little further down comes some of the reality (a massive loss), but even then we're not told what they've written down in the NR. For that we're obliged to check out the filings and you'd have thought the big hit would have been taken by that arch-dog waste of money Magino thing they bought for oodles and is uneconomic at under U$1,5007oz gold...BUT NO!. Here's the list...


...and Magino is either minor or nothing, that means there's still a whole bunch of impairing left to do at this joke mining company.


3/15/16

Abitibi Royalites (RZZ.v): Glenn Mullan loses his cash cow...or not

Back in June 2015 IKN did its part in shining the light on yet another smallprint scam in the Canadian capital markets with this post on Abitibi Royalties (RZZ.v) (which by the way Mister Ball, has had a whole bucketload of hits in the months since then) that pointed to the "Management Success Fee" clause held over the company by Glenn J. Mullan which was a total rip-off scam (quel surprise).


VAL-D'OR, QUÉBEC--(Marketwired - March 15, 2016) - Abitibi Royalties Inc. (TSX VENTURE:RZZ) "Abitibi Royalties" or the "Company") announces that the Board of Directors, after continued consultations with various stakeholder groups, has terminated the Management Success Fee Agreement as described in the Company's Management Information Circular dated May 15, 2015, prepared in connection with the Company's annual general and special meeting of shareholders held on June 25, 2015. Approximately $132,000 had been paid under the Management Success Fee Agreement, with no further amounts payable.

The Company, through its Board of Directors on recommendations from the Compensation and Corporate Governance Committee, intends to compensate its officers, directors, employees and consultants through conventional means including salaries or management or consulting services fees, bonuses, as well as awards under the Company's Restricted Share Unit Plan as previously approved by shareholders and the TSX-Venture Exchange. The Company has 824,269 Restricted Share Units available for issuance.

So that first paragraph sounds pretty shareholder friendly, the Mullan cash cow goes away, right? But then the second paragraph comes along and the fudge begins. You'll note that the bold and direct statements of para 1 are eschewed, in their place hints and suggestions and potentials that allude to something else.

In other words, betcha Mullan has still got a sweet deal. And Ian Ball just wants this whole thing to go away. And it won't.

The Warren Irwin hagiography continues

IKN notes that Warren Irwin of Rosseau made it to the pages of The Gold Report this morning. Which is nice for the peanut gallery in Canada, he's the demigod of the month and you ought to watch them fawn over his every word over at CEO.ca, highly amusing viewing. Me personally, I prefer to remember when Irwin got conned by Ari Sussman. A salutary reminder that your demigods of finance aren't immune to losing very very large amounts of money through stupidity and naivete. That trade also made the pages of The Gold Report but somehow and for some reason it doesn't get talked about much any longer. Wonder why?

TGR: What about Colossus?
WI: Colossus Minerals is one of my favorites for a number of reasons. Again, the jurisdiction is one I like—it's in Brazil, a mining-friendly country. But what's interesting about Colossus is its very, very rich property. The grades are unlike anything I've seen in my career. And because of the tremendous grades, in terms of gold and some of the other precious metals—platinum and palladium—they're able to achieve a substantial amount of ounces of precious metals in a very small plot of land.
In my opinion, Colossus will get to 3 million ounces of gold and with byproduct credits, such as platinum and palladium, that gold can be mined at a negative cost and over a short period of time. That's extraordinarily lucrative and attractive for a major mining company to step in and mine this ore.
Right now, the company is extremely cheap and definitely on the majors' radar screens. The risk I see going forward is Colossus' ability to handle its relationship with partners. Its partner is a company called COOMIGASP (Cooperativa de Mineração dos Garimpeiros de Serra Pelada), an organization of the Garimpeiros who once mined the deposit in a large open pit. They're teamed up with Colossus to work on mining the underground portion of this deposit. It's frankly an extremely exciting deposit, probably richer than anything else I've ever seen. It has a negative cost of production and could be mined very quickly. It's like having almost $3 billion worth of metal just sitting there ready for you to take it out. I think it's extremely cheap and I imagine a number of majors see the same benefit, too.
TGR: It's a large lake, right?
WI: That's right; the old open pit has filled in with water. What Colossus has is the down-dip extension of that high-grade material found in the pit.
TGR: What would it take for Colossus to go into production?
WI: It would not be very difficult. It's very shallow and, again, very concentrated. All these millions of ounces are in a very small area. It would require some underground expertise, which the local COOMIGASP does not have, which is why they brought in Colossus. But at the end of the day, I don't really believe it will get to that stage because the majors see the same things I see in this deposit. I don't see Colossus making it through to actually getting it into production.

I also wonder why Irwin isn't long Continental Gold (CNL.to). Any thoughts on why that might be, IKN readers?

OT: Michał Huniewicz takes photos of North Korea

On this link and this link are the photos that Polish travel blogger and photographer Michał Huniewicz took on his February 2016 visit to North Korea. Many of the photos were classed as "illegal" and normally would have been erased by authorities on leaving the country, but Huniewicz knew enough tricks about digital cameras to fool them. 

This isn't normal IKN fare but you're getting the links anyway, because it's the single most impressive set of photos I've seen in a long time. Take ten minutes out of your day, go visit...

...then...

...and once you have, thank your lucky stars that George Orwell's fictional vision has only become reality in a few dark corners of the planet. And not yours.

Analysis of the B2Gold (BTG) (BTO.to) Fekola financing plan in two words

Good deals.

3/14/16

Fortuna Silver (FSM) (FVI.to) reports its 4q15

On SEDAR tonight, you'll get the NR tomorrow morning for sure. Here's a numbery bit:

For the fourth quarter ended December 31, 2015 (“Q4 2015”), net loss amounted to $17.3 million (Q4 2014: income of $0.1 million), resulting in basic loss per share of $0.13 (Q4 2014: $nil). Loss before income tax for Q4 2015 was $21.2 million, compared with income of $3.4 million in Q4 2014.
 
The Company’s Q4 2015 adjusted net loss was $0.1 million (Q4 2014: income of $0.2 million), after adjusting for the non-cash impairment of Caylloma Mine, net of tax, of $17.0 million ($25.0 million before tax) and other minor items.

Or more simply: A miss.

Plus on the 4q15 numbers and the 2016 forecasts, its Caylloma mine is looking seriously tired.

First Majestic Silver (FR.to) (AG): Style > Substance




Here's today's NR from First Majestic (FR.to) (AG):

First Majestic Silver Corp. (“First Majestic” or the “Company”) announced today that its board of directors has approved the extension of its share repurchase program (the “Share Repurchase”) pursuant to a normal course issuer bid in the open market through the facilities of the Toronto Stock Exchange (“TSX”) or alternative Canadian market places over the next 12 months. Pursuant to the Share Repurchase, the Company proposes to repurchase up to 7,783,799 common shares of the Company which represents 5% of the 155,675,982 issued and outstanding shares of the Company as of March 10, 2016. continues here


And here's how they've taken advantage of that very same share repurchase program in the last two years, according to the 2015 YE MD&A published just days ago:

The Company has an ongoing share repurchase program to repurchase up to 5,879,732 of its common shares, which represents approximately 5% of the Company’s issued and outstanding shares. The normal course issuer bids will be carried through the facilities of the Toronto Stock Exchange and alternative Canadian marketplaces. 

No shares were repurchased during the year ended December 31, 2015. During the year ended December 31, 2014, the Company repurchased and cancelled 140,000 shares for a total consideration of $1.0 million.

Got that? With the stated intention of buying up 5.88m of its own shares, FR.to bought 140k in 2014 and zero zip nada in 2015. But hey, let's make it sound like we're a bargain share price again eh Keith?

BUT WAIT! THERE'S MORE! When this "share repurchase program" began back in 1q14, FR.to had 117.6m shares outstanding. Today it has 155.7m shares outstanding, so instead of making the float smaller, this paragon of transparency and shareholder love has in fact ADDED 38.1m shares net to the total and diluted the merry bejeez out of the people it thinks it's going to impress by emitting balderdash and nonsense NRs like the one today. 

Did you get that, my wonderful parrot? Instead of lowering the number of shares out by 5% during this share repurchase program period, FR.to has raised it by 32.4%!


Run along now Keith, IKN's done with you for the day.

Argentina: Barrick fined for the Veladero cyanide spill (from IKN357)

Just  small snippet from the Weekly out yesterday. Because context is important, not just money.
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Argentina: Barrick fined for the Veladero cyanide spill
Back in September when a pipe rupture at Barrick’s (ABX) Veladero mine caused 1.15m litres of cyanide solution and a series of negligent work practices (including leaving a water diversion gate open instead of leaving it closed, which would have diverting the accidental flow to the mine’s tailings facility) to pollute four different local rivers, Miguel Martín, head of communications at Barrick Argentina stated the following (12):

"They're saying that the local water supply is contaminated but that is completely false. We don't have any contaminated water anywhere".

Last week when accepting to pay a ArgP$145.7m fine (U$9.3m at current rates) and hours after nine of its employees were formally charged by the Argentine courts, Barrick Argentina stated the following (translated) (13):

We deeply regret this incident and hope, from this point forward, to reconstruct a pathway of trust with the community, the province of San Juan and Argentina.”

And people outside of LatAm, while chowing down on the free buffets offered up by country chambers of mining at suit-filled get-togethers, wonder why these mining companies have such a bad reputation with local communities.

Chart of the day is...

...the gold/platinum ratio, four years:



I dialed up this chart after reading this reasonably interesting Pimco piece on gold last night (they think gold's mildly expensive right now and mentioned Pt as a potential alternative at the end of the note). The first question is the difficult one (for me the answer to the second is "probably yes") and as I stared at it the reason became apparent: I know nothing about platinum. 

Well that's not strictly true, I know it's white and shiny and people with more money than sense buy jewelry made out of it and then give you the "Ohhh no! It's not silvahhh, Oh ha haaaa, you can't see what it is? Oh dear...", and then you put it up your car's exhaust pipe somewhere for better living (which isn't working if you check out the latest world temperature data) and it mainly comes from South Africa and that amazing Norilsk mine up in Northeast Russia. No, I mean I don't really know its pricing mechanisms, where and how its price discovery works. 

A case of "To The Internetz Young Man!" and I snooped around for a while at the World Platinum Investment Council and Johnson Matthey websites. Turns out that roughly 2/3rds of Pt demand is autocatalyst and industrial, and roughly a third is for jewelry/bullion investment. In other words, demand is largely driven by utility rather than shiny, which makes it more like silver than gold.

So maybe the dumbass silverbugs should change their theme tune to "Silver's the poor man's platinum". Meanwhile, I'll stick to investing in the real asset class metal, if only to comply with the principle of not complicating one's life too much. End of silly Monday morning musing.

3/13/16

The IKN Weekly, out now




IKN357 has just been sent to subscribers. We check out an interesting gold project, we talk a lot about copper, we do quite a bit on the region's political scene as it affects mining this week, too. That and the usual guff and nonsense.

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

...in reverse order:

Third Place: "Capstone Mining (CS.to) hedges". The obvious commentary on the news that's made this stock a fallow field for 2016. Its problems, namely its debt and the way the failure CEO is still in charge, haven't gone away however. Just booted forward.

Second Place: "Joe Mazumdar and his willing assistant Brent Cook do BNN's Market Call". Because everybody loves Joe.

First Place: "The Vampire Squid doubles down on its bearish commodities call". Because everybody loves the squid.