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8/6/16

The Angry Geologist does Cascabel

TAG has a look at the rocks and so forth at the Cascabel project in Ecuador, 85% owned by the Australian company Solgold (SOLG.L) and 15% by Canada's Cornerstone Capital (CGT.v)

Venezuela signs a deal with Gold Reserve (GRZ.v) and Energold (EGD.v)

The main deal is with Gold Reserve (GRZ.v) and though details are currently sketchy, it seems to be

1) A Joint Venture deal between State and company on the Las Brisas project.
2) Venezuela builds the mine and GRZ gets a free ride.
3) Then Venezuela owns 55% of the company and GRZ owns 45%
4) Once the mine gets going GRZ pays tax, royalties etc on its 45%.
5) The deal is for 27 years.

It was all done at a big flashy signing ceremony with President Maduro and all the nine yeards. We now know why GRZ has been under a trade halt for so long. Energold have, we assumed, managed to land a drilling contract with the State, though this report from the Pro-Maduro media service Telesur talks about Energol (without a D) getting a LOI to mine niobium and tantalum.

8/5/16

The Friday OT: Björk; All is full of love

Björk is right, the rest of us are wrong.



The official IKN price recommendation on producing gold mining stocks, in three easy to understand statements

1) If the price of gold goes down, the price of producing gold mining stocks will go down.
2) If the price of gold goes up, the price of producing gold mining stocks will go up.
3) Point number two does not apply to Primero Mining Corp (PPP) (P.to).

Any questions?

Excellent news for copper bulls

Goldman Sachs is bearish on copper:

A storm’s about to hit the global copper market, according to Goldman Sachs Group Inc., which forecasts that the price may slump to $4,000 a metric ton over 12 months as mine supply picks up, producers enjoy lower costs and demand growth softens.
“Company guidance and our estimates suggest that copper is entering the eye of the supply storm,” analysts including Max Layton and Yubin Fu wrote in an e-mailed report received on Friday. A drop to $4,000 would be a 17 percent slump from Thursday’s close on the London Metal Exchange.

Continues here. World's number one fade is bearish? Be bullish.

US Jerbs: The need-to-know for mining stocks

+255k

Gold down U$14

Silver under twenty.

Chances of "buy the dip" not working are one in ten.

Yes, that does mean you're holding positions open over the weekend this time, get used to the idea.

8/4/16

Sociopath, proven liar and poor-quality footwear expert, Daryl Hodges becomes director of HPQ Silicon (HPQ.v)

Here's the NR, here's the text:

HPQ Silicon Appoints Industry Veteran Daryl Hodges To Board Of Directors

August 4, 2016 / TheNewswire / Montreal, Quebec, Canada - HPQ Silicon Resources Inc (“HPQ Silicon”) (TSX Venture: HPQ) (formerly Uragold) is pleased to announce the appointment of Mr. Daryl Hodges to the Board of Directors.
Mr. Hodges brings over 35 years of extensive capital markets experience and success on a global scale in the mining industry. He was a founding partner of Jennings Capital Inc. in 1999 and was integral in its growth to the 7th largest independent investment dealer in Canada. From 2003 – 2010, he was the Senior Managing Director and Head of Investment Banking.  From 2010 – 2013, he served as Chief Executive Officer, President and Chairman of Jennings Capital, as well as Director of Jennings Capital (U.S.A.) Inc. Mr. Hodges is a geologist and currently serves as President of mining finance advisory firm, Ladykirk Capital Advisors.
About HPQ Silicon

Strange how they forgot to mention his time at Minera IRL, how he decimated that company through sheer greed, tried to strip all the assets out of the company then slapped a multitude of expensive lawsuits on the company when his bullying didn't work, of course via his partner in crime Chuck Higgins of Fasken. I wonder why?

It does mention his time at Jennings, it doesn't mention how he literally ruined Jennings Capital, causing their bankruptcy by his woeful management of the company and again, once it went wrong, he and Higgins wrapped the company up in lawsuits for years on end. Funny that, innit?

Then again, if a company like HPQ Silicon, formerly known as Uragold, then before that Uranium Bay Resources (gotta love those serial name-changers) really is desperate enough to put this excuse of a human being onto its board it tells you everything you need to know about them and their business opportunity.

Primero (P.to) (PPP)

Versus the gold and silver index (XAU):


And I thought Goldcorp was bad...


Mo Sandstorm

It's trading like a buyout target.

Probably due to the fact that its lack of debt has made it into a buyout target.

Great Panther Silver (GPR.to) (GPL): A penny begins to drop

Sometimes it takes a bath of cold, hard reality in the form of quarterly results to strip away the myopic optimism of silverbugs. Sorry people, all silver mining companies are not the same and some are complete shit, Great Panther is a prime example and you don't even have to know about numbers to come to that conclusion. Just realize that this is the same company under criminal investigation by Mexican national authorities for the death of a child worker at its mill.

Oh, Robert Archer didn't tell you the death of that worker in July was that of an under-aged and illegally employed boy? Well now, that's a surprise.

UPDATE: No, I'm not joking. Yes, I am serious. Yes, you should be mailing GPR IR department about this and not IKN. Yes, I'd be ashamed to be a shareholder of this company, too. No, I don't know whether this death is connected with the death of the mine manager announced yesterday.

Chart of the day is...

...the gold/copper ratio, 12 months.



Can it go higher? Yup, sure can, the spikey-droppy thing say there's another 5% in play. And how's that there Hopey Changey thing workin' out for ya?

8/3/16

IAMGOLD (IAG) (IMG.to): Steve Letwin is expertly trolled by his own IR department

They actually got him to say this, right at the top of the 2q16 earnings release NR:

 "The second quarter thrust us back into an earnings position..."

I couldn't stop laughing. And Steve, it's not just me, we're all laughing at you. For the rest of us, you know things are ominous when the headline of a mining NR is about "net operating cash flow". Yup you got it, IMG reported a net loss.

Sandstorm 2q16 financials

It's what happened after the close of 2q16 that's the most interesting. This bullet point from the NR:
Subsequent to quarter end, Sandstorm completed an equity financing for aggregate gross proceeds of $57.5 million. Upon closing of the financing, the majority of the net proceeds were used to reduce the balance of the Company's revolving credit facility. As a result, the Company currently has no bank debt and the entire $110 million revolving credit facility remains available for acquisition purposes.

As at 4q15, long-term bank debt stood at U$83.5m. Now it's all gone. I'm impressed.

Wesdome (WDO.to)

A line from the analysis of Wesdome in IKN371, dated June 19th:
"...the wannabe buyers starting to manipulate the WDO stock down in order to pressurize a board with whom no love has been lost recently. "
A price chart of the last two months of WDO:



If that's not walking down a price on low volume, I'd like to see a better example for the textbook I'm putting together. Welcome to your new job, Mr. Middlemiss.

OT: Artificial Intelligence 101

I've read "AI Revolution 101" twice today already, a very impressive, thought-provoking longread article for a near-knownothing such as I on the whole subject of Artificial Intelligence (AI). Highly recommended reading.

The bit that's missing from the end of this quote

Premier Gold (PG.to) has just explained how it's covering the purchase price of the Mercedes mine from Marrone's crew. Here's the quote from the PG CFO, you job to decide how it should have finished:
"With positive cash flow expected during the second half of this year we expect Premier's financial position will continue to strengthen as we progress toward 2017."
1) Because it couldn't be much weaker right now.
2) If not who cares? It's not as if I own many shares.
3) Relax dude, gold's going up anyway.

Endeavour Silver (EDR.to) (EXK) 2q16, for balance sheet wonks only

This morning Endeavour Silver (EDR.to) (EXK) reminded us once again of the woeful level of business acumen running silver mining companies, via its 2q16 results. A penny a share net profit at these silver prices? Laughably poor numbers and to add insult to injury, note the way they decided to award themselves pay rises.

But the pay rise thing isn't the detail that springs out of the numbers when you start sifting them, it's this:



Seriously, guys..


Pray tell, would this have any connection to the new EDR decision not to mothball El Cubo, announced this morning? Bit of a hole in your balance sheet there? Problems with suppliers, Mister Crooke?

The Aurubis Copper Mail, August 2016

One of the better sources for copper macro out there (and free, too), the Aurubis Copper Mail's August edition has just hit the streets. Get your copy of the PDF here.

UPDATE: A. Reader makes a good point. What you really need to do is sign up to the Aurubis letter and get it delivered straight to your inbox every month (it's what I did). Do that by clicking right here.

Chart of the day is...

...crude oil, weeklies:


Under U$40/bbl again, well riddle me ree. It's not just fuel and air tickets, those useful plastic things you like to buy in large retail outlets will get cheaper, too.

8/2/16

Goldcorp (GG) versus its peers

Last ten days:



My stars. Gold bullion puts on U$50/oz, the XAU is up 8%, Goldcorp (GG) is down 2%. How in God's green pastures can any goldie be down these last two weeks? It's getting to the point where I'm checking back on its fundies and going "Hmmm....book value U$12.861m....market cap just two billion higher...hmmmm...not much financial debt here...wonder what Barrick could bid...wonder if Newmont would counter...Zijin up for this perhaps...hmmmm..."

Venezuela's recall referendum (i.e. Maduro's job) got one step closer today

Jordana Timerman at the evergood LADB has the news for you, right here. The opening lines of the full coverage service are these:

Venezuela's National Electoral Council (CNE) approved the first of two petitions needed to carry out a recall referendum against President Nicolás Maduro.

The much postponed decision was far from certain, and represents (continues here)

Lunchtime





In other news, even though this humble corner of cyberspace is largely uninterested in which of the candidates is chosen as the lesser of two evils in The United States of America, a word is needed on Trump's "I've always wanted to get a Purple Heart" comment this morning as it means quite specifically that...

1) He wanted to be a member of the military.
2) He wanted to be wounded during active service.

His ignorance knows no bounds, though that's no disqualification for the job of President (plenty of historical evidence available). However IKN does salute the genuine nature of support Trump got from the veteran who gifted him a copy of his Purple Heart.

PS: A word of advice to potential mailers: Putting "Dear shit for brains" as your title line guarantees that your mail will be deleted without opening and all those fancy words you used in the body of your missive will remain unread forever. 



Question for anyone piling into their new favourite Colombia mining play this morning

Have you thought about the fall-out the Colombia mining sector is going to face when the town of Ibagué votes to ban all large-scale mining from its region, including of course the AngloGold Ashanti (AU) La Colosa mine?

By the way, this won't be one of those unofficial, cooked-up votes that people wearing suits can ignore either. This one is an officially sanctioned, court-approved, legally recognized and fully binding regional referendum. It happens next month. Have fun.

Gold to rise in August (from IKN377)

Here's the gold comment intro from IKN377, out last Sunday July 31st. The short version: It took less than 48 hours for the prediction to become reality.

Hot summer or August Doldrums?

Down dropt the breeze, the sails dropt down,

'Twas sad as sad could be;

And we did speak only to break

The silence of the sea!



All in a hot and copper sky,

The bloody Sun, at noon,

Right up above the mast did stand,

No bigger than the Moon.



Day after day, day after day,

We stuck, nor breath nor motion;

As idle as a painted ship

Upon a painted ocean.



Water, water, every where,

And all the boards did shrink;

Water, water, every where,

Nor any drop to drink.



The Rime of the Ancient Mariner

Samuel Taylor Coleridge



It’s sometimes called The Doldrums, after the region of equatorial Atlantic Ocean in which ships would becalm for long periods in the times when sails were the main power source and you didn’t even need to shoot an albatross to get caught up in one. That was in ye olden days, here in the 21st century we have the thrusting business world and the relatively short period of August, when markets calm and in our specific focus sector, the world of mining, will wait until US Labor Day before coming out with any new news.



Is that our fate next month? So far at least (and forgiving a dollar or two on Friday) gold has kept inside the IKN predicted Northern summer range of U$1,300 to U$1,350 per troy ounce, but for one thing we haven’t got close to the bottom of the range (U$1,315/oz was the worst if memory serves) and for another, the way last week panned out there’s every reason to cast doubt on that arm-wave call. And for yet another thing there’s the above chart of GLD and XAU that shows how the market reacted once the FOMC announcement was out and it’s difficult to call that anything else but bullish. You can take all the geopolitical events and wrap them up in a tight ball but they don’t come close to the real catalysts for gold price movements, such as a couple of carefully worded lines in a Fed release. Money talks, bullshit walks and money spoke loudly as from last Wednesday lunchtime.





Another reason to cast doubt on the Doldrums scenario is my interpretation (rose-tinted specs or otherwise) in what’s happening in to GLD physical inventories today (regular chart above). In last week’s intro piece “The metal is leading the miners”, part of the theory proposed for expecting the miners to catch up again (which happened right in cue I might add...toot-toot) was GLD inventories were showing that the most speculative money from the desk jocks had been largely blown off, leaving gold in safer and smarter hands again. That process continued last week with another nine metric tonnes sold until Friday came along and four tonnes added, the first real add in a couple of weeks.



That’s indicative of a new appetite for gold from the speculative end, the type of money that pushes gold higher on momentum. From Brexit to peak spec, we saw 66.82 metric tonnes (mt) added to GLD. That retraced to last week’s low by 28.21mt. If that hot money is about to slosh back in and momentum runs again, this move would see GLD holdings challenge that big round number of 1,000mt. And talking of momo, it’s not my idea of entertainment and never watch it personally but trusted friends who do note that the talking heads on CNBC started giving bullish predictions on gold again. Here’s (1) an example and here’s a typical paragraph on offer:



"Until and unless central banks begin to tighten policy, gold continues to be an unabashedly strong buy," said Schlossberg on Thursday on CNBC's "Trading Nation." "That's been the theme we've seen building up all through this year, and yesterday was simply a confirmation of that."



Whoever Boris Schlossberg might be (but great last name, “mountain castle” or “mountain palace”). We need of course to be clear that when CNBC latches onto a bullish idea it’s already mature, but these people are and are watched by the momo crew par excellence.



Summing up the gold chat intro, the metal did indeed lead the miners, the miners did a good job of catching up but there’s evidence and enough momentum talk post FOMC to say that gold is going to blow away my early July prediction of a slow summer. So to answer my own question in the title, put me down for a hot summer and let’s see gold break away from U$1,350/oz next week. Reasons to be cheerful.

The main problem with this miners' market

It's too easy. The smartest mining brain in the world works at the same level as a monkey with a dartboard. There's no challenge.

8/1/16

Thoughts on Goldcorp (GG) (from IKN377)

One of the minor pieces in IKN377 out last night was this, a musing on a couple of aspects of Goldcorp (GG) after its rotten Q2 results last week.

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Goldcorp (GG): If you care about the large cap miners you’ll already know that the negative vibes for GG we mentioned a couple of weeks ago in IKN375 turned into nasty reality on Wednesday. The company reported a stinker of a quarter so I won’t do the big details here, save to say that on a pure production basis the main hits came from production problems at Peñasquito and Cerro Negro.

One-time hits? Well yes they happen and aren’t good, but they happen to them all over time and that’s no reason to judge the new CEO negatively on that alone. GG is “under new management” and you could cut David Garofalo slack if you consider that he inherited a company badly in need of restructuring. Take for example the implicit message of “we were high grading the crap out of Peñasquito last year and it’s going to take until 2019 to repair the damage” in the NR. But there are other things that make me wonder whether this new direction for GG is going to turn out like Spinal Tap’s new direction of free-form jazz. Example one, Garofalo said (13) during the prepared notes at the Conference Call:

"While lower production was expected in the second quarter, the decision to accelerate a significant organizational restructuring had a short-term, negative impact on gold production.”

And though blandly put, that’s one helluva thing to say. It’s one thing to swallow the cash hit from a much-vaunted re-organization and in this case, CEO Garofalo’s new broom has cost U$39m in restructuring charges to date. It’s quite another to see production hit by the changes, the actual amount of gold and other things affected by the upset of staff redundancies and so forth. The whole point of corporate restructuring is to make a company more efficient, not less efficient! I honestly thought that here in the 21st century we’d moved on from the ‘beatings will continue until morale improves’ method of corporate captaincy.

The second thing that concerns me, the analyst on the outside looking in, is the decision to sell Los Filos, as well as Marlin and Alumbrera. Here’s how Garofalo put it:

"Los Filos, Marlin and Alumbrera are smaller scale mines. They don't have the economies of scale that our existing five camps offer us" or that a newly acquired gold project, Coffee, "potentially offers us once it's built out".

And here’s what it says in the quarterlies (with CODM = Garofalo):

Effective January 1, 2016, the Company's CODM reviewed the results of its mines and associate that have short mine lives and are headed for closure together as one operating segment. Accordingly, the Company has grouped Los Filos and Marlin into one operating segment, Other mines, and presented its 37.5% interest in Alumbrera as the Other associate operating segment.

So I understand the decision behind Marlin, there may be something for a smaller mining company to explore and re-define there but for the GG size of company it’s now depleted (not to mention the crappy political risk of operating in Guatemala). I also understand the Alumbrera decision, it’s also near closure and a minority stake.

But Los Filos? Really? This is a 250,000oz to 300,000oz gold per annum mine that’s very profitable (in 2q16 op. Cash cost U$704/oz, AISC U$822/oz). Those cash costs are slightly above the GG average, but both production and costs ae a darned sight better than Eleonore. It can hardly be called depleted either, with the potential to go underground on the Bermejal Deep deposit with 1.3m oz M+I plus 1.1m oz inferred (and open along strike and at depth). However, Garofalo has decided it’s up for sale and if it goes, it’s another 10% sliced off an already sharply depleted corporate production rate. Can somebody please tell this man we’re in a bull market?

7/31/16

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

...in reverse order (and a quiet week of blogging):

Third Place: "Capstone Mining (CS.to) and a cash costs explainer". That's good, it was my fave post of the week.

Second Place: "A download link for the Clinton Cash video (and an alternate Youtube, too)". Because we all love Frank Giustra.

First Place: "Daniel Ameduri's paychecks". From the look of back office, there are a lot of people in Germany that got a lesson in how the world works from this post. About time too, greenhorns.

The IKN Weekly, out now





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