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8/24/16

Wesdome (WDO.to) and gold porn

I think we can safely say "good hole". From here.




One year ago today...

...on August 24th 2015 the Board of Directors of Minera IRL, led by its then Executive Chairman Daryl Hodges, decided to fire Diego Benavides from the company. 

Today, one year on from that event, Diego Benavides is still the President of Minera IRL SA. The board of directors has been completely replaced. And Daryl Hodges is a marijuana salesman in Toronto. 


More on the SRK Toronto office

Following on from the IKN post yesterday. IKN claims no credit for the following, it's information from mail sent out by Clarus Securities this morning August 24th (this desk merely gets wind of such things from nebulous corners of the universe). Clarus did the legwork and deserve the kudos, but what they found is more than enough to share to a wider audience and will certainly be of interest to anyone with a position in Dalradian Resources (DNA.to). In the words of Clarus...


Resource estimate for DNA, RMX and ORE done by SRK consulting Toronto.
Oy Leuangthong did the geostatistics for both DNA and ORE  
Glen Cole did resource geology for RMX and ORE

And here's a screenshot of the main body of the mail:




Probably just coincidence, innit guv.

Checking in on the K2 Associates Asanko Gold (AKG) short

What with the sudden weak market for precious metals names this week, the random and often disjointed thoughts of your humble scribe turned to the well-publicized short position in Asanko Gold (AKG) (AKG.to) taken out by the jolly chaps at K2 Associates and revealed to the market in late June. Let's see how that's been getting on since then by comparing the AKG squiggly line to that of the Gold & Silver Index (XAU):



Answer: Moot. Nothing to report. No biggie. Undecided. Though we should note that K2 certainly built at least part and perhaps all its short position before the June 28th date when it published its hitpiece report, so they'd probably be able to claim a small win on the trade to date. 

IKN was, is and will remain neutral on this whole affair. But it's a fun one, so an eye will be kept on proceedings.

Producer mining stocks are at buyable prices...

...for the first time in a while.

By which this humble corner of cyberspace refers to the mining sector, rather than any single company. It's becoming easier to buy the sector, or buy the usual suspect stocks, or buy the ETFs and that's a good thing, life becomes easier and there's more time for the important things in life such as ice-cream or books or quality music or stamp collecting or bricklaying because there's no need to spend hours poring over dozens of operating miner stocks trying to find the undervalued one, the name the hot money missed as it melted into the sector and took valuations from reasonable, straight through overbought and directly to the "Are they serious?" sillynumbers that assumed gold would be at U$1,500/oz by Thursday tea-time and that Keith Neumeyer's theory on the Gold/Silver Ratio holds more water than Anne Elk's on the Brontosaurus (clears throat).

I'm sure the newswires will hang the correction on Jackson and his hole. The real blame is with dumbasses believing the breathless marketing hype and paying too much money for things. The capital market is now handing over the usual timely lesson.

PS: Of course it goes without saying that none of the above applies to the stocks I currently own, which to a name are still wildly undervalued and today being unjustly dumped by crazy idiots without an ounce of market nous or common sense. Thank you for your attention, please return to your August.

8/23/16

IMPACT Silver (IPT.v) is drilling again! Hoorah!

The IMPACT Silver (IPT.v) 2q16 results NR was published just a few minutes ago and aside from the expected mediocrity of its financials (another net loss and NO! YOU! CANNOT! IGNORE! DD&A!) the beady and sneaky little eyes of IKN were drawn to this line further down the page:
"With the proceeds from the Q2 2016 financing, the Company will begin surface and underground drilling programs in the fourth quarter."
Well that IS good news for the company, is it not? After all that time not drilling IPT is going to drill again and of course the tendering process for the drilling is going to be absolutely open and transparent with all drilling companies operating Mexico welcome to bid and the most competitive offer chosen from the stack. Why anyone should think that Energold (EGD.v) is going to get another automatic uncontested juicy contract from IPT is beyond my ken. Right, Mr. Frederick W. Davidson President & CEO of IPT.v?

Or if you like here's how we put it in IKN377, dated July 31st 2016:


Between 2011 and 2016, IPT returned a mine operating profit of $14.687m. But then $9.023m of that has gone to EGD, the major cause behind the mine operating profit turning into an overall operating loss over the period (not to mention the net loss). Put another way, in the two “good years” of 2011 and 2012, IPT returned Mine Operating Profits of nearly $17m ($12.9m in 2011, just over $4m in 2012). It was after the big positive results in 2011 that the big money was spent by IPT with Energold, those $8.3m in drilling bills. It’s fair to say that EGD has benefitted far more from operations at IPT’s mines than its shareholders. But that may just be a coincidence, of course.

PS: Frederick W. Davidson is also President & CEO of EGD.v
PPS: IPT.v rents office space from EGD.v

Today's post-close commentary on today's stock market action is brought to you by...

...The Kinks:



It's August.

Orezone (ORE.v) more zone

It's getting to the point where these things become so freakin' obvious and the bullshit so blatant that the elephants in the room go un-noted even by this humble corner of cyberspace, I'm skipping over outlandish consequences of the pisspoor quality of work done in the mining sector and taking them as read when they really should at least be documented somewhere. So after a few mails yesterday and today, plus the realization that few places other than IKN are crass and basic enough to do the job, here's a short follow-up post on the Orezone (ORE.v) resource revision yesterday that makes the two points that need to be made, concisely and clearly.

1) HEY, ANOTHER SRK TORONTO MESS! We out here are losing count of the number of poor resources signed off by this office. The potential for a company-killing malpractice suit is now looming large.

2) HEY, NICELY TIMED FINANCING! Hey, have lead brokers RayJames and NatBank come out with the same type of damning report we saw from BMO (dropped to 75c tgt, dropped to mkt perform)? No? Whyever not?


And that's enough.

Warren Dick: "Can the gold industry avoid the sins of the past?"

This piece by Mineweb editor Warren Dick is absolutely spot-on correct, as is the main player in the report, Nick Holland of Gold Fields (GFI). Here's an excerpt:

“How is it possible that companies can drop their stay-in-business capital so much when their operating costs have stayed reasonably constant?” asks Holland. “I believe that they have merely deferred capital that is going to come back, because if you want to sustain the business into the future, you need to spend that money. That for me is a little bit of a concern.”

We’re still early in the precious metals cycle

This from the intro to IKN380, out last Sunday evening.


We’re early in the cycle

If you haven’t seen the 29 minute round table discussion video (1) I stuck on the blog last week featuring Brent Cook and Joe Mazumdar of Exploration Insights, John-Mark Staude of Riverside Resources (RRI.v)  (a company I currently own) and Morgan Poliquin of Almaden (AMM.to) and Almadex then do so, it’s one of the better ones I’ve seen recently and there’s plenty of intelligent insight from all four participants to get your mining brain working.



But of all the comments made perhaps the best for me came from Joe Mazumdar who pointed out that, so far at least, mergers and acquisitions in the mining space in 2016 have been 1) friendly and 2) nearly all pure-paper deals, with either very little of no cash component at all.  That’s a great point, one of those market generalities that’s easy to spot and shows that we’re still early on in this current cycle. Along with Morgan Poliquin confirming the IKN view that there really has been sea-change in the mining sector and this current rally isn’t about relief in a bear, it truly is a change of trend, Mazumdar’s observation tells us something simple; that mining companies haven’t started to fight between each other for the next round of assets and once they do, the friendly all-share type of M&A that goes through without fuss or mess will become the exception rather than the rule. To the fore will come paper+cash deals, all-cash deals, hostile bids out of the blue, third party interlopers, target companies finding White Knights (to save their own boardroom hides) and all other stripes of mergers and buyouts.



We’re now two months on from Brexit and gold has just been through another soft and quiet week, with more selling of bullion from GLD to add to the wall of worry (955.9mt as at this weekend) and the edge taken off silver’s run as it drifts back up to 70X. We’ve even had a few of the braver anti-goldbug commentators piping up and telling us that gold’s a waste of time. Again. Pay no heed, nothing goes up in a straight line, August has gone quiet and what’s more, it’s done so at the top of the current gold range rather than at the bottom. Most of the time the advantage in capital markets is skewed enormously in favour of the larger player but there are some times and circumstances in which being small and nimble offers an edge, as noted below I’ve been taking the opportunity to top up on positions thanks to the opportunities offer by smaller weaker hands and impetuous traders. I suggest you do the same, because when gold breaks U$1,400/oz you’ll have to pay more. Make no mistake, Joe Mazumdar is right about where we are in the current mining cycle and anyone bailing now on quality names with longer-term futures is making a big mistake. This has only just begun.



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8/22/16

"Hiroshima" By John Hersey

This morning I was reminded about arguably the greatest single piece of journalism in modern history, 'Hiroshima' by John Hersey, in part because we're just ten days away from the 70th anniversary of its publication. So being a member of This Modern World and with an 80 minute plane ride to do, I loaded it into Pocket and for the first time in too many years read it again today.

It hasn't lost an ounce of its impact. If you've read it before you'll know it's worth revisiting. If you haven't read it before it cannot be recommended too highly, the report that literally changed the world.

Peru: The new government lays out its plans for mining (from IKN380)

A small sample from yesterday's 28 page edition of The IKN Weekly, IKN380, where the real work gets done round here.



Peru: The new government lays out its plans for mining

On Thursday the new Cabinet Chief, Fernando Zavala, went to Peru’s new Congress in a key moment for the new government. According to the law he needs to get approval for all Ministerial positions from the Congress by vote and to do that, must go and explain what they plan to do. As Peru’s Congress is under an absolute majority of the opposition Fujimorista (FP) party (Keiko lost to PPK in the run off by a whisker) that’s not necessarily a given vote.



I won’t go into every aspect and issue covered, we’re here for mining so that’s the subject to cover today and as Zavala laid out the government’s plans for the sector (14). I took away three things. A soundbite or two for mining friendly headlines, the extended quote that lays out the PPK vision for mining and the new measure this government plans to bring in to help move projects forward (all eyes on Tia Maria, a test-case if ever there were one). All translated from the Spanish by these hands.



The soundbites:

“A modern Peru needs sustainable mining”.

“Mining investment is welcome”.

We like those.



The extended quote: “We will generate the conditions which allow our rich natural resources to be converted into products of higher value, not only via foundries and smelters but also through mining clusters that invest in the care of the mining environment, investigation, innovation and automization of the sector.”



The new measure: There are other reforms in the pipeline which are aimed at the small private miner/mining company, such as the phasing out of the use of mercury in gold extraction. But when it comes to our focus the big reform will be the “Adelanto Social”, best translated as the “Social Advance Payment” which reminds me of the way Ecuador requires mining companies to invest and give money to local communities for civil projects before the mine gets going. In Peru, exploration stage companies will also be required to lay down cash for new local works, though presumably the scale will be small (and let’s face it, most decent junior explorecos in Peru already have these types of plans, certainly the ones I invest in).