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12/28/15

On the road


Q: Whither goest thou Otto in your shiny aeroplane at night? 

A: Your humble scribe is taking a few days off and travelling to places where work does not happen. The blog will resume in 2016, not before. Until then, IKN features some better words than its author has ever written or will write.

And Death Shall Have No Dominion
  Dylan Thomas, 1933

And death shall have no dominion.
Dead man naked they shall be one
With the man in the wind and the west moon;
When their bones are picked clean and the clean bones gone,
They shall have stars at elbow and foot;
Though they go mad they shall be sane,
Though they sink through the sea they shall rise again;
Though lovers be lost love shall not;
And death shall have no dominion.

And death shall have no dominion.
Under the windings of the sea
They lying long shall not die windily;
Twisting on racks when sinews give way,
Strapped to a wheel, yet they shall not break;
Faith in their hands shall snap in two,
And the unicorn evils run them through;
Split all ends up they shan't crack;
And death shall have no dominion.

And death shall have no dominion.
No more may gulls cry at their ears
Or waves break loud on the seashores;
Where blew a flower may a flower no more
Lift its head to the blows of the rain;
Though they be mad and dead as nails,
Heads of the characters hammer through daisies;
Break in the sun till the sun breaks down,
And death shall have no dominion.

Gold Resource Corp (GORO): If today's news...

...came as a surprise, you haven't been paying attention. They cut the divi to a sixth of a penny a month, which is tantamount to zero but hey...face-saving right? Hey you who bought 12,000 shares at U$10 apiece, you enjoy that Jackson when it plops into your account won't you? But my fave bit is when the serial sophists at GORO tell us that the cut is due to...
"Multiple factors contributed to the decision to reduce the dividend including declining revenues and the reallocation of capital focusing not only on our Arista mine, but also on the recently optioned Gold Mesa property in Nevada."

...which is wonderful. Oh, but of course it's nothing at all to do with this:



Just coincidence, probably.




12/27/15

The IKN Weekly, out now



IKN 346 has just been sent to subscribers, a slightly shorter Christmas period edition (18 pages, 9,200 words) which is mainly about the 15 copper companies we'll be following in The Copper Basket in 2016 but also has a few extra bits and pieces about the region's politics and a company comment or three.


Ten random predictions for 2016

Here we go with the IKN Never-Fail Forecasts* for the year to come. And as in 2014 and 2015 we're sticking to the same general format with a mix of financial, politics and sport. After scoring 5.5/10 in 2013, 6/10 in 2014 and 5.5/10 in 2015 (sport good, financials ok, politics miss) there's a trend to protect and I'll need to break the 50/50 barrier again, but as always part of the deal is to go for a real left-field call or two and try hard to fail in at least a couple of them. Because light-heart.

*some restrictions apply

So to business:
1) Gold to break through U$1,250/oz in the course of 2016. I'll also call it as potentially breaking under U$1k/oz at some point early year, but that's more tentative and I won't care much either because it'll only be a spike if it does and the noise from the wailing world will be far greater than its real effect. No, the call for gold this year is positive, for gradual improvement and a second half of 2016 that's better than the first. So get positioned and then sit back and enjoy (oh isn't this easy? What could possibly go wrong?).
2) Silver to rally against gold and the gold/silver ratio will finally break under 70/1. It's been that high since October 2014 but I think it could be better for the poor relation metal in the year ahead. However and the same as last year, I still much prefer gold mining stocks to silver mining stocks as the goldies have much more chance of making real profits.
3) Uranium to go nowhere yet again. I get to score points every year by stating the obvious; Uranium is the buggy-whip metal, if you discount the pretty colours it makes if you mix it with molten glass it only has two uses and one of those is very nasty indeed, there's a lot of it out there and pinning the hopes of a commodity on a power generation industry that has worked out these power plants cost a lot of money to close down and that governments now make you take those costs into consideration doesn't make any sense when other sources of power are cheaper, easier and more flexible. 
4) Goldcorp (GG) to buy Lake Shore Gold (LSG). Because Chuck.
5) Copper to go under $2/lb early year and to rally to $2.50/lb by the end of the year. Because China. Junior copper companies are still to be avoided though, a bit like iron ore this metal is now strictly and big-player game.
6) Venezuela's government to implode. Maduro won't be President this time next year. It's likely to be very messy too. Venezuela has been the butt of annual "teetering on the brink" type of op-eds and articles every year for the last ten years with the right-wing press getting it wrong every time, but this time around things are obviously deteriorating and the opposition victory in the December elections just gone is a telling moment. Oil prices where they are could be straw that breaks this camel's back as China won't be so quick to bail them out this time. I don't know whether the PSUV party will fall from government, but the call is "govt implode" and "Maduro out", that's the thing.
7) Keiko Fujimori to become the next President of Peru. The campaign proper won't until February, it's very tough to call in December and for the record I personally am anti-Keiko (I think a Fuji in power in Peru could set the country back years). All the same I'm calling her as the next Prez. Keiko leads the polls today but she won't make it a round one win and will likely face off with Alan Garcia in the run-off (or maybe PPK, but I doubt Cesar Acuña or Alejandro Toledo will get close). From there in round two it's anyone's game but I'm going to stick my neck out and call Keiko, she seems to be doing enough to separate herself from the negative aspects of her father's legacy. Her headwinds include the country's blatantly sexist society and doubts it will ever vote for a woman leader. Time to join the 21st century, Peru.
8) Usain Bolt to break the world record for the men's 200 metres in the final at the Rio 2016 Olympics. Because hero (and I'll be taking half points for a gold without a record that day).
9) England to win the Euro 16 European Football Championships. Because 1) it's about time they won something 2) their team is finally improving and a new batch of young and near-world class players are showing through 3) the other serious Euro countries only care about the World Cup. Still, this is bound to be a controversial prediction and I know when I'm calling an outsider.
10) Christopher Froome to win the Tour de France and retain his crown. Just to annoy the French. And the Spanish. And the Colombians. But mainly to annoy the French. Sport has its uses.

There you go, our Ten For The Prize in 2016, expect the usual post-mortem post just before next Christmas comes.

12/26/15

The five most popular Friday OT posts of 2015

And we make it to the end of another year. Other places do look-back reviews of their fave or most popular posts in the year, but as IKN is ashamed of what it publishes* we instead review the music and videos, specifically the Friday OT segment to see which slots of tunes were the most popular, in direct hit terms.

And here are the top five, all of which can be accessed by clicking on the names:








That Jimmy Page semi-interview-semi song was a fave with many of you, not least reader and friend AB who waxed lyrical in a mail way back in January when it came out. Then "Messi is a dog", Spanish with English subtitles, is the only non-music video to make the top five list. It's also wonderful and just the thing for any non-football fan who wonders what all the fuss is about.

Third place comes Paco de Lucia playing a buleria from heaven, the chemistry between him and the cajón player is a marvel, too. Then the runner up is Miss Philippi....ah no, the runner up is the OT from just a couple of weeks ago, Tom Waits hitting your festive chords.

And the winner, the most popular Friday OT of the year, is richly deserved. My own personal musical discovery of the year (but only because I'm slow, he's been around for at least 15 years), I've never heard anything quite like the amazing and deeply beautiful music of Jon Hopkins.


*nah, not really


12/24/15

A Christmas miracle

Christmas is that special time of year when miracles can really happen, the mean-spirited become generous, good will comes to those of true faith and legends abound of animals, such as reindeer and dogs, that can suddenly fly and soar without any apparent means of support.

Completely unconnected to all that, here's the ten day chart of McEwen Mining (MUX):


Ho Ho Ho.


Own Nevsun (NSU.to)? Read this

It's what you're helping to support. Merry Christmas.

"The prosaic truth is that this is just another of the nasty regimes that persist in parts of the world. Eritrea is a one-party state with no elections, has had no functioning civil society since 2001 and, with at least 16 journalists currently behind bars, is ranked bottom of 180 countries assessed in Reporters Without Borders’ press freedom index. The regime sows paranoia and uncertainty, leading to divergent views over how far the limits of free speech can be tested.
"A recent UN inquiry on human rights described extrajudicial killings, torture, arbitrary detentions, enforced disappearances, indefinite military conscription and forced labour. Its report found “a pervasive control system used in absolute arbitrariness to keep the population in a state of permanent anxiety”."

Full report here.

The Beatles are on Spotify

As of today, Christmas Eve 2015. And I reckon that's the best intel you'll get from this blog this week.

Merry Christmas.

12/23/15

News from Banks Island Gold (BOZ.v), Louis James's "biggest personal position"

In three snack-sized parts.

1) Here's what Louis Lobito Little Wolf James, fake geologist and chief rock kicker at Casey Research, said about Banks Island Gold (BOZ.v) in 2014 when he pumped the merry bejeez out of it and got people in at 50c (and here's an extract line or two):
"I want to remind readers that both Doug Casey and I own shares in Banks. Personally, it remains my largest position."

"...I'm reiterating my renewed Buy recommendation. Whatever happens in the near term, these shares are a great buy, whether for a first tranche or a second. I intend to buy more myself—after giving you a chance to do so first."

2) Here's what IKN said about Banks Island Gold (BOZ.v) when your humble scribe eventually took a look at the thing (and here's an extract line):
"Seriously. I mean, seriously, how can anyone in their right mind like a company with a balance sheet like this? Let alone somebody as dangerous to other people as Lobito who recommends it to other people. Especially when those people are a bunch of naive sheeplike followers who require a little expertise in the sector, not tripledumb investment advice?"

"I knew Louis James was stupid about geology. I didn't realize how stupid he was about financials. The above is just plain embarrassing, it's amateur hour level."

3) And here's what BOZ.v said today:

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec 23, 2015) - Banks Island Gold Ltd. (TSX VENTURE:BOZ) (the "Company") announces that the Company has canceled the equity financing announced by news release on December 1, 2015. The Company did not receive sufficient interest to be able to close the $3M minimum financing required to support its operations over the coming months.
As a result, the Company has insufficient funds to maintain operations and has received notice of claims from three significant trade creditors for payment of outstanding debt. The mining reclamation bond posted by the Company with the Ministry of Energy and Mines has been confiscated by the Ministry. The Company has provided notice of termination to all of its remaining employees effective December 31, 2015. The Board of the company is currently comprised of Ben Mossman, Jason Nickel, John Anderson and Frederick Sveinson.
The Company is consulting with its legal advisors, and will provide a further update on the Company's status in the coming weeks.

How's that trade doin', Lobito?

Rio Tinto stays on at La Granja

Contrary to rumours that did the rounds in Lima a few weeks ago, yesterday Rio Tinto (RTZ) announced today Gestión revealed that RTZ was renewing its concession for the big La Granja copper project in Cajamarca Peru for another eight years and plans to re-boot its exploration and development of the project in 2016. Here's a photo of the dead wood version of Peru's biz paper Gestión with the news:



And that's very interesting.

Reality bites: Results of the IKN "Ten random predictions for 2015"

On December 29th 2014 we ran our annual "Ten random predictions" post for the year ahead. As we're now all done bar the shouting, it's time to check out how we got on in this edition. Here below come the original calls, the result and the usual polemic slant on scoring for the year (1, 0.5 or zip nada zero per item), And by way of reminder...
  • In 2013 we scored 5.5/10
  • In 2014 we scored 6/10
...so let's see if the improvement continues. First (in small script) you get the prediction as it appeared on December 29th 2014. Then you get the result and a line or three of views'n'news, so starting at the beginning with forecast number one...

1) Gold to trend up gradually, with a rough U$1,400/oz target for some time at the end of the year. For sure with the normal wobbly stuff along the way and I wouldn't bat an eyelid to see it go under U$1,100/oz again at some point or other, but talk of its utter demise (South of 1k) strikes this author as plain silly talk from people who don't get the sector.
Score: 0.5. For sure the $1,400/oz bit was out, but the low end prediction was pretty darned accurate, as we saw the $1.1k breached and $1k hasn't been threatened. So I'll rescue half points on this one.


2) The gold/silver ratio to stay high, by which we mean 1/70 or above. It can spike down briefly under that along the way, but I don't expect it to trend down meaningfully. When they call silver "the poor man's gold", the real message is "the choice that poor people make". Semi-on-topic, I'd definitely hold gold miner stocks over silver miner stocks this year.
Score: 1 point. This one couldn't have been closer to the mark, as a) the GSR stayed high all year and only once spiked under 70X and then only for one day.


3) Uranium will go nowhere again. We're in the high $30s today, it could fluctuate up into a 4-handle, down through to the 2s, but the prediction is to watch it flatline in general terms. Uranium's going the way of the buggy whip, the world has moved on from the fallacy of "near limitless/near free energy" and knows how expensive these things are to decom, the type of cost that's built into projections by serious countries (China an obvious exception to that category). 
Score: 1 point. It didn't see a 2-handle, it saw a 4-handle very briefly, but for the vast majority of the year it simply languished in the mid-$30s per pound, not going anywhere and getting no love.

4) Barrick (ABX) will merge with Newmont (NEM). It's long past fusion date for these two. The sooner the outsized self-important egos on both boards start caring less about themselves and more about their shareholders, the better. 
Score: Zero points. This was my left-field biz call and it would have been an eye-opener if it had happened, but the turgid state of the mining sector put paid to the idea quickly and nobody's even breathed about the idea for at least six months. Nada here, move on.


5) Copper to maintain around U$3/lb average for 2014. This is perhaps the toughest and most important commod market to call in the year ahead. Also (and to push my luck on the prediction) it wouldn't surprise me in the least to see Cu weak in the first part of the year, trending higher in the second part. If it exits between $3.10/lb and $3.20/lb I'd be a happy long.
Score: Zero points. On this one I'm happy to say I saw the reality early and stepped away from major copper stock exposure, but back in December 2014 I was way too optimistic about the world and frankly, 12 months on, the call looks plain silly. And that's not a bad thing, keeps the ego in check.


6) Venezuela's government to be bailed out by China. It's no secret that Venezuela's finances are under severe pressure due to the drop in oil prices, but it's not going to lead to a fall in the government in 2015 (sorry haters, it's the way it is). China wants crude oil and has dollars, Venezuela wants dollars and has crude oil, the two countries get along just fine, the synergies are obvious. The question is how much Venezuela will have to cede for the bailout.
Score: 0.5 points. Indeed Venezuela was tipped for economic death this time last year by the chatter-o-sphere and indeed one of the things it did was get a big bung from China (rumoured to be around U$7Bn) in March which helped them pay the bills. But I'm only going to award myself half marks on this one because even I agree that the political situation in Venezuela is now looking unstable and the Maduro government is under real pressure from all sides.  How 2016 will go for the country is anyone's guess, but there comes a time when the right wing boys who cry wolf are going to be right. It could be next year.


7) It's a difficult call this early in the process, but I'm contractually obliged to make a call on the Argentina presidential election so the forecast is for Daniel Scioli to be the next President of Argentina. Main opponent is Massa, in with a squeak is Macri, outsider Randazzo, the rest are just noise. But it's still a very fluid situation so this one is only tentative. For the record, the Argentina vote slated for October is the biggest single political event in LatAm this year and arguably the most important one in terms of regional repercussion potential for the last five or even ten. It's going to be big, noisy and full of FpV/CFK-hate in your English language press (who'll be rooting for Massa and/or Macri).
Score: Zero points. The shock political result of the year, Mauricio Macri came from a losing position in August, ran a strong campaign (while Scioli's was weak and lacked total support from the hardline Kirchnerists) and came from behind to win in the second round run-off. It's also one I got wrong more than once, because my confidence that Scioli would win it grew as the year went on and I started calling him the very likely winner from August onward. Shows what I know.


8) Argentina to win the Copa America 2015, the equivalent of the European Championships for the continent, held in Chile in June/July this year. If that doesn't turn out right, hosts Chile must be in with a strong chance and I'd place them as clear second faves today. FWIW it's easy to bet against a Brazil that will need a couple of years to re-build after its World Cup disaster (no other word for it). 
Score: 0.5 points. Yeah I know Chile won it, but as they beat Argentina in the final and I picked those two as the candidates, albeit in reverse order, (and I nailed the Brazil call) I'm going to award myself half a point. Because it's my blog, bite me.


9) River Plate to win the Copa Libertadores (for those of you who don't know, that's the LatAm equivalent of the Champion's League trophy). This is the easiest forecast of the year. Vamo lo millo.
Score: 1 point. The most wonderful sporting moment of the year, as simple as that.

10) Argentina to beat Ireland in the Quarter Finals stage of the 2015 Rugby World Cup, held in the UK in October. How about that for a specific forecast? (Also, the All Blacks for the cup).
Score: 1 point. I still can't believe I called this exact result correctly ten months before it happened (and reader NA can't believe it either). What you see above is exactly what went down in the Rugby World Cup and to get that result it wasn't just a case of picking the winner in the game, but being able to predict where each team finished in the group stage so they'd meet in the quarter-final. I rule.


GRAND TOTAL: FIVE AND A HALF OUT OF TEN. That's half a point lower than last year, the same as 2013. So call me consistent and on due consideration I may turn IKN into a sportsbook prediction service blog in 2016, as my sporting forecasts are way better than my stockpicks.

At some point next week I'll post the Ten Random Predictions For 2016, so until then I'll leave you to laugh at the thought of ABX and NEM merging.

The Automatic Earth

On reading the title of this note in Mining dot com, "Study shows 96% of some mining jobs can be automated", reader R writes a mere five words to your humble scribe:

Steve Letwin came to mind.

And makes my day. Thank you, R.


The fun never stops at Minera IRL (IRL.to) (MIRL.L)

Today's NR:

LIMA, PERU--(Marketwired - Dec. 23, 2015) - Minera IRL Limited ("Minera IRL" or the "Company") (AIM:MIRL) (BVLAC:MIRL) Further to the announcement made by the Company on December 16, 2015 regarding the results of the   Company's Extraordinary General Meeting, the Company has been informed that Mr Jorge Luis Ramos Felicies has   resigned as a director of the Company with immediate effect.   The Company will be considering alternative appointments to the Board in due course.

Or as reader JH put it in a mail this morning, "So a freshly elected director resigns, leaving two of the previous directors, both with 60% of the recent vote against them as a majority in the present board."

Let's hope they can accord a suitable replacement soon, eh guys?

PS: Honestly, we all have better things to think about this week than this chunk of news so relax and let the IRL circus flow. Team Hodges thinks it's gained something with this turn of events, IKN's advice is to let those people think exactly what they want to think. In the upside-down world of IRL, good is bad and bad is good. Truth will out in the end, people.

12/22/15

Meat and Dan

In response to yesterday's wonderful SNBC 'toon featured in this post, reader 'Dan' took the time and effort to send this along.

Hi Otto, in response to your SMBC quantum mechanics post, i thought you'd enjoy this. 

I came across it at least 20 years ago and have remember it fondly ever since.   

cheers, Dan

Thanks Dan, wonderful. Now spreading the word further.

Ricardo Martinelli: Lock him up

First Otto Pérez Molina of Guatemala and now Ricardo Martinelli of Panama, throwing ex-Presidents of Central American countries into jail for abuses during their office is getting to become a habit this year. A very good habit.

The plenum of the Supreme Court Monday ordered the provisional detention of former President Ricardo Martinelli in connection with the investigation into illegal surveillance allegedly carried out during his administration (2009-2014). continues here

Starcore (SAM.to): Weird

Weird and slightly disconcerting, as I own a few shares of SAM.to. This from the NR of three minutes ago

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec 22, 2015) - Starcore International Mines Ltd. (SAM.TO) (the "Company" or "Starcore") confirms that it is not aware of any reason as to why trading in its common shares has been halted by the Securities & Exchange Commission. The Company is not a reporting issuer in the United States and is up-to-date on all its regulatory filings in Canada. Having issued this clarification, the Company expects trading to resume on the Toronto Stock Exchange.

Does the US SEC make dumbo mistakes and hit wrong buttons? Time will tell.

UPDATE: Yup, looks like an SEC brainfart. SAM.to now trading normally again.

A Tuesday tune: Four Tet; Love Cry

Setting you up for Christmas and getting you in the chill zone, this is simply amazing:



IKN strongly recommends that you get your hands on a high quality version of this track and then stick it through a high quality speaker. And set the speaker on loud.

Gary Biiwii is bullish on precious metals in 2016

And that's not a permabull's call either, Gary Tanashian of Biiwii and NFTRH has been calling bear for quite a while but he's suddenly getting hot and sticky about the sector prospects for the year ahead. Here's his note today and here's a chunk to give you interested enough to go over and read it all:

"...in the summer of 2011, it was obvious that the gold sector was not only due for, but in need of a cleaning. Well folks, that is the good news! We gold bugs have been deep cleaned, buffed, waxed and are just about ready for prime time, hopefully much wiser and more humble than before. The bear market has been a good thing. Period.
 
I could unleash a chart fest showing gold’s long-term support and downside risk, individual gold stocks that are already in bull markets and myriad other things, but I want to keep this article compact and on message. That message is that a huge proportion of the risk (vs. reward) in gold is now in the rear view mirror with four solid years of bear market activity. So we will show some strategic monthly charts instead.

The Twelve Days of Almaden (AMM.to) (AAU)

On December 10th we wrote these words about Almaden Minerals just hours after it had published news of its new PEA for the Ixtaca project:

"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..." (continues)

It traded and closed at 70c that day (the T for Thursday in this chart below). Here we are 12 days later and...


...which is a very decent little 25.7% pre-commish rally, even though the volumes haven't been much to go by.

Argentina: The challenges for the Ministry of Energy and Mining

Here's a two minute Spanish language video from La Nación today entitled, "The Challenges for the Ministry of Energy and Mining" (well, in fact it's called "Los desafíos para el ministro de Energía y minería" because it's in Spanish, but you get the point).



It's a pretty reasonable overview and to help with your Spanish, the whole script is subtitled. Those of you into the sectors and versed in the tongue of Cervantes should take the opportunity.

Yamana (AUY) (YRI.to) and Brio-X Gold: Scotia got it

Here's the call section of what Tanya Jakusconek wrote last night on the huevo-en-cara news from YRI last night. She's right, of course:

Recommendation
Management had strongly telegraphed that it believed it could complete a monetization of Brio Gold in a timely manner in order to reduce its debt levels. Without the successful sale, we expect debt levels to remain high relative to the group (2016E net debt/EBITDA is 2.5x vs group avg ~1.6x at $1,100/oz gold price). We expect the shares to be weak tomorrow on the news of the suspension.

I like the understatement in that last sentence. It's a bit like "We expect the next Pope to be a Catholic".

UPDATE: Beggaring belief, YRI actually opened higher on this news! That's either reefer madness or it's a sad indictment of all mining management teams; the market is so used to mediocrity from people running these companies that when one of them (this time our pal Peter) makes a strategically dumb move, it just shrugs its shoulders, mutters "normal" under its breath and carries on regardless.

12/21/15

God, why did you make quantum mechanics so weird?

A wonderful SMBC, right here. Add a chuckle to your Christmas week by clicking that link.

Catching up with Yamana (YRI.to) (AUY) and Brio Gold (aka Brio-X Gold)

Here's what IKN wrote about Yamana Gold (AUY) (YRI.to) on November 23rd, the day it announced the Brio Gold spin-off:


Seriously! I'm not joking, it says so right here:

YAMANA GOLD INC. (YRI.TO)(AUY) ("Yamana" or the "Company") hereby announces that its wholly-owned subsidiary Brio Gold Inc. ("Brio Gold") has commenced a private placement of Brio Gold common shares, consisting of a primary offering by Brio Gold and a secondary offering by Yamana. The implied initial post-money valuation of Brio Gold based on the private placement is approximately $369.3 million.
The primary offering as currently planned will fully fund the near-term business plan for Brio Gold with the majority of proceeds expected to (continues here)

And with a secondary, too...

Yes it's true, you gringos really will buy anything, won't you?
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And here's what YRI just came out with today, December 21:

YAMANA GOLD INC. (YRI.TO)(AUY) ("Yamana" or the "Company") herein announces that in the context of current market conditions and in consideration of recent positive operational developments at its wholly-owned subsidiary Brio Gold Inc. ("Brio Gold"), it has decided to suspend efforts relating to the monetization of Brio Gold. Yamana will continue to hold the Brio Gold assets within the Yamana portfolio of assets and continues here

We eat turkey for Christmas, Marrone eats crow. Though it must be admitted that this humble corner of cyberspace underestimated its audience, as it turns out you gringos won't buy just anything after all. And I can't remember which of my readers mailed in with the name, but they called it "Brio-X" at the time and we like that.

Any further questions?

McEwen Mining (MUX): Hey Otto! Whatever makes you think...

...that Rob McEwen would like to see his company's share price close 2015 at over U$1.00?



Oooh, just a hunch yaknowz...

How to predict the gold price, Doug Casey edition

Follow the bouncing ball, people:

  • December 2012 gold $1,700/oz: "There's never been a better time to buy and own gold."
  • December 2013 gold at $1,220/oz: "Gold's just about at the bottom, so buy now and you'll be okay."
  • December 2014 gold at $1,180/oz: "Gold's just about at the bottom, so buy now and you'll be okay."
  • December 2015 gold at $1,080/oz: "Gold's just about at the bottom, so buy now and you'll be okay."
  • December 2016: "With gold now trading at $1,200/oz my brilliant and perceptive prediction this time last year has made Casey Research subscribers many millions of dollars profit".

Or as PT Barnum put it, "Every crowd has a silver lining".

Chart of the day is...

...gold, dailies:



That is all.

Mailbag on Barrick (ABX)

This is the way I like my reader feedback: Short, sweet and saying nice things:

"...want to wish you yours (sic) all the best in the holidays and tell you just the short piece on ABX in the weekly yesterday justifies my annual sub. Great intel!!!"

Thank you reader TY, appreciated. Auto-toot-toot finished, on with the show.

News from Ollachea

At its always-important end-year meeting yesterday, attended by most of the population of Ollachea and all its main figures and conducted as always in an open and democratic manner (everyone with a view can speak their mind) the President of the Rural Community, Juan Luis Valeriano was ratified in his post for the next calendar year of 2016. 

Don't expect Team Hodges to pass on this news to you.

Minera IRL and power of attorney (from IKN345)

I've been asked to put this small section of yesterday's weekly on the blog. So here it is.

The new board shows its reluctance to change matters
We could go round the houses on this, but to cut to the chase Power of Attorney (POA) was awarded to Jaime Pinto and (IRL Ltd controller) Carlos Yrigoyen by the old board of directors so that Pinto (in particular) could act on behalf of the board.

Sidebar: Power of Attorney (3): A written document in which one person (the principal) appoints another person to act as an agent on his or her behalf, thus conferring authority on the agent to perform certain acts or functions on behalf of the principal.

It gives him the power to do what he wants, when he wants, with the IRL assets. The idea behind the POA was related to the gaining of control of the subsidiary, Minera IRL SA, because the IRL Ltd (Team Hodges) people want to transfer all assets out of the subsidiary and into the mother ship company and from there, they can do what they want with them.

Now that’s fair enough you might say and if you believe the Team Hodges people they were only going to do that to clean up the structure and take the assets away from an overly powerful and quasi-independent subsidiary that was up to no good. However, that argument suddenly unravels when you realize that the new board of directors has not revoked the POA to Jaime Pinto. It also gets a different light when you consider the way Pinto really operates (see below for more on that).

Yes folks, that’s right: Under any normal change of board, the first thing that would happen is that powerful legal devices such as POA would be taken away from an outgoing board member immediately. But in the crazy world of IRL and because of the obstinacy of the two Team Hodges people left on the board of directors, Jones and Fryer, the person that you voted out by a tally of 92% to 8%, Jaime Pinto, still has full control over the assets of Minera IRL Ltd.


12/20/15

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

...in reverse order:


Second Place: "Having a difficult day, Jaime?". Don't bother clicking through on this one, a sum total of seven words and nothing there, but it tickled the funnybone of a few of you.

First Place: "Minera IRL (IRL.to) (MIRL.l): The latest round of Jaime Pinto BS" and even though it's all IRL (again), I did like the way the "eat a live dog in public" explanation came out because it gives a decent perspective on the dirty tricks being used by Team Hodges.

The IKN Weekly, out now



IKN345 has just been sent to subscribers. A buzz-saw attack edition.

12/18/15

The Friday OT: Tom Waits; Christmas Card from a Hooker in Minneapolis

With thanks for the suggestion from readers R and B (not R&B):




A jolly Christmas tune, sure to raise your spirits.

PS: If you'd like to check out the wonderful lyrics to this one, they're here.

The Minister of Energy and Mining versus Jaime Pinto

Here's a photo of today's edition of El Comercio, Peru's newspaper of record:



And yes, that's Peru's Minister of Energy and Mining Rosa María Ortiz, the country's top dog in the sector, giving her views on the supposed corruption of MEM officials that Jaime Pinto denounced earlier this week. Here are a few choice phrases from Señora Ortiz:
"We have investigated the criminal charge and no element of proof (or evidence) has been presented to the court that allows us to say there has been an act of corruption by functionaries in our sector (ministry). The name or names of the people who have allegedly been bribed aren't even mentioned."
"Anyone can bring a criminal charge, but for the sake of seriousness evidence should be presented and names of the functionaries being accused. Here we begin from the principle of presumption of innocence of all our functionaries, here there is no favouritism. But now that the investigation has been opened we will offer all the help necessary to the investigation that will be conducted by the public prosecution investigators. If they determine there has been a criminal or administrative event, we will proceed using the full force of the law, as is due."

Oh Jaime...look what you've done, Jaime...

And to think that Doug Jones and Robin Fryer thought that butter couldn't melt in Jaime's mouth. Helluva way to find out your people judgment is this poor, hey guys?

UPDATE: The El Comercio report is now on its website, link right here.

Chart of the day is...

...the Gold/Oil ratio over the last five years:



Spiky.

Standard Trolling (TON.v)

As subscribers know, I was interested in this one for a while this year. The business plan sounded great on paper and I met up with the team (who passed muster, particularly the Peruvian/Bolivian executives who were steeped in experience in this type of operation) but one of the pre-conditions for purchase of this stock was always a site visit to their toll mill facility in Huamachucho to see the thing for myself, to check out the community risk atmosphere. There was a visit slated too, but for reasons I never really understood the company never made that final call to fix a date for the visit.

I now realize why. Here's last night's NR from Standard Trolling (TON.v). Oh my stars. One bullet duly missed. Example from script:

Len Clough has resigned as Chairman, President, CEO and Director.  The Company’s Board of Directors is currently in discussions with a potential candidate to fill the resulting vacancy on the Board and to serve as the Company’s new President and CEO.

Next Steps

Standard Tolling is insolvent.

The Board of Directors of Standard Tolling is working to devise a solution to the Company’s financial difficulties, including ongoing discussions with Inca One respecting a potential asset purchase and debt assumption agreement.  Among other things, any such agreement will require the acceptance and agreement of all of the Ore Note holders.  There is no assurance that any agreement will be entered into with Inca One or any other person which will address Standard Tolling’s financial difficulties.

As the Company has only two directors with the resignation of Len Clough, it does not meet continued listing requirements of the TSX Venture Exchange and the Company understands that the trading halt on the shares of Standard Tolling will continue.

12/17/15

The Minera IRL voting results

As posted on SEDAR a few minutes ago (get your own PDF version over there).

I've scribbled a few notes in red at the side of each resolution, but remember the basic rule that as all resolutions were deemed "special" at this EGM, they all needed 66.67% to carry (at next year's EGM it'll just be 50% +1 vote).

 
 




The Friday OT on a Thursday: Four Tet; Angel Echoes

A beautiful track with a message worth remembering.



Four Tet is from the only branch of music that's bothering to innovate and reach for art these days.

Canaccord dumps on its copper coverage

Here's how their price targets have changed, from the front page of their "We Now Hate Copper" research report date December 17th. Well in fact the report's entitled "Survival of the fittest" but anyone with half a brain knows the real score.



Capstone at 30c and downgraded to hold, that one sticks in my eye (that and "sell Teck" of course). And for those of you who want to know what "downgrade to hold" means in the sellside world's code, a quick reminder from this post:

For those of you who need a translation, "cut to hold" in the world of sell side anal ysis means "MAKE LIKE A SHEPHERD"*

We good? My thanks to reader B for the forward.

*Get the flock outta here

Trident Gold (TTG.v) bites the bullet

Back in 2013, Trident Gold (TTG.v) bought the Marquesa Gold project in Colombia (close to Gramalote) from Colombia's Bullet Group (Grupo Bullet), for half a million in cash and 40% of its shares. At the same time TTG raised $4m or so from unsuspecting retail suckers savvy mining speculators to go exploring, because the deal involved them spending at least $1.5m on a drill program and things or that ilk.

This morning TTG sold the property back to Grupo Bullet for the approx $450,000 in debt it has outstanding (mostly to Grupo Bullet, surprise surprise).

Lather. Rinse. Repeat. See you in Colombia in 2019, Canuckies. Come on down, the water's lovely and the fruity rum punches are just so delish.

Candente Copper (DNT.to): Freeze Frame

Back on February 3rd 2011 Reuters ran this headline about Candente Copper (DNT.to), which was trading at the time at CAD$2.13:



And with DNT.to today at 2.5c, we now know the result of CEO Joey Freeze's prediction. Congrats Joey, one of your calls was right! Winning! Happy!


The Jaime Pinto IRL bribery accusation reaches Peru's main newspaper, El Comercio

This is how the El Comercio report, published just a few minutes ago, starts (translated):

"One day before being removed from the role of non-executive chairman of Minera IRL Ltd, Jaime Pinto dropped a bomb that puts under suspicion the system under which mining companies receive their environmental permits  .

"Pinto made public an expanded criminal charge that was present to the 4th Lima Super-Provincial Court Specialized in Organized Crime, according to which employees of Minera IRL S.A. (Peruvian subsidiary of Minera IRL Ltd) paid around U$11.5m in bribes to functionaries of the Ministry of Energy and Mining, between 2013 and 2014" Continues here

Be clear: A report in Peru's most prestigious newspaper claiming that government officials received U$11.5m in bribes is NOT a small story.

For more on this, including the full English translation of the press release that Pinto sent out at the time and the way in which scumbags like Pinto use the oddball criminal charge system for their dirty tricks campaign, check out this post from Monday

Now for a question: As the criminal charge was made under the name of the previous board of directors of Minera IRL Ltd, i.e. three people named Jaime Pinto, Doug Jones and Robin Fryer, will Jones and Fryer allow this criminal charge process to continue or will they withdraw themselves and the company from the process?

Hey, I wonder why Sean Roosen has been talking up Falco Resources (FPC.v) recently?

For example just days ago, ending this Q&A with...

But where, amongst Osisko's sister companies, will the next mine emerge? “Obviously it's hard to say which child you love the most,” Roosen says, “but Falco in Quebec. People don't understand the property, so there's quite a bit of value there.”

Hey, dythink it might maybe just perhaps have something to do with this news today?


You think? Maybe?

Exeter Resources (XRC.to) (XRA) doesn't cut all the costs it could

This morning Exeter Resources (XRC.to) (XRA) gave us one of those "we're cutting costs" NRs that explains about the lay-offs and salary reductions its decided to run on order to slow the burn on the cash it has left (now U$23m, was U$81m as at end 2010, so basically they've spent U$10m a year on......what?). It then goes on and on about the Caspiche project and the apparent benefits which we've heard about for the last five years and we still don't care (seriously, the story hasn't changed a jot).

But right at the end we're told...
 If you have any questions regarding Exeter, or would like a complete presentation forwarded to you, please contact Mr. Rob Grey, VP Corporate Communications at Toll-free: 1.888.688.9592 or by email at rgrey@exeterresource.com.
 ...so it's clear there's plenty of fat left to cut at XRC if they want. I mean, who needs a VP Corp Dev/Comms? Jobs for the boys par excellence.


Google Doodle mistake

I wake to find that the Google Doodle of today, December 17th 2015, is about Lugwig van Beethoven's birthday being today. And that's a mistake, Google People. 

It's almost certainly December 16th. Though there's no official record of his birth date, he was baptized on the 17th and the tradition in that part of the world in that period was that you got baptized the day after birth. Just thought I'd tell you. Have a pleasant day.

UPDATE: To give Google Doodle some credit, on the dedicated page it says, "It’s unclear when Beethoven was actually born, but December 17th marks the 245th anniversary of his baptism". 

12/16/15

FOMC in charts

Gold cared a little bit, but when it tried to care more nobody cared.



Copper didn't care at all.


The US Dollar pretended to care, but in the end couldn't decide.


Oil cared a bit, then again it has bigger things to worry about.




A well flagged decision. Janet done good. Care Bear.

What Minera IRL forgot to mention in its EGM news release of a few minutes ago

Here's the link to the official IRL NR, which doesn't have the percentages of the votes. That's probably because company chair and Team Hodges lackey numero uno Jaime Pinto was voted out with 92% of the votes going against him. Roughly 131 million to 9 million.

Bye bye Jaime.

It also forgot to mention that Doug Jones and Robin Fryer were elected via a minority vote, that's to say there were more votes against them than there were for them. The reason they survived is that the agenda items were deemed "special" and needed 66.67% of votes in order to pass. Come the AGM next year, those two charming and engaging gentlemen won't have that type of protection. Worth thinking about.

Bavin got 92% of votes in favour. Ramos around 86%.

As for Diego Benavides withdrawing his nomination, I strongly suggest you read the minutes of the EGM when they become available. They will explain things very well, you'll have no need for biased commentary from either side afterwards.

The IKN Weekly on Sunday will have a lot of details and thoughts about the result of the vote. It will also have a special section devoted to Jaime Pinto. And my stars Jaime, I've been waiting to publish on you vaya hijo de recontra mil putas que sos.


Timecheck: It's 1pm in New York

One hour to...


Having a difficult day, Jaime?

Oh dear!

Argentina to announce end of currency control this afternoon


They expect the Argentine Peso to trade at around 15 to the dollar once the news settles in, which is a serious devaluation. Good news for miners working in the country though, such as Rob McEwen, which is probably why MUX touched U$1 this morning.

Capex in mining, 2012 to 2015

Here's a chart I stuck together from data in the Ernst & Young PDF report I read this morning entitled "Opportunities to enhance capital productivity (Mining and metals megaprojects)" (ty reader R for the forward):


For the record, the sources for these data are 1) Ernst & Young analysis, 2) the Engineering and Mining Journal’s annual survey of mining investment, 3) the Deutsche Bank report “Riding the rising tide of global growth” of  February 2014.

And here are two other datapoints, as quoted from the report:
  • 69% of surveyed projects were facing cost overruns with an average cost overrun of 62% above initial estimate (where cost data was available).
  • 50% of projects were reporting schedule delays even after remedial acceleration initiatives had been applied.

Want more evidence that mining company management executives are among the most overrated in the world? Grist for your mill.

12/15/15

Salman Partners

Word is that Salman Partners is no more, victim of the commodities downturn. Today they closed shop, apparently.

There will be more.

UPDATE post close: Yup.

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 15, 2015) - It is with regret that Salman Partners Inc. announces that it intends to voluntarily resign from its membership with Investment Industry Regulatory Organization Of Canada (IIROC). Accordingly, we will cease carrying on operations as a registered investment dealer on February 15, 2016.
Industry conditions have made it extremely difficult for independent dealers to remain profitable. In this environment, Salman Partners has made the decision to voluntarily resign from IIROC. Arrangements have been made to ensure an orderly transition of all client accounts to alternative registered dealers and clients will be receiving information on those transfers shortly.
Salman Partners has been in business for 22 years and during that period, we were members of syndicates that raised over $20 billion dollars for over 400 issuers. As a research driven firm, Salman Partners trained over 50 analysts, many of whom are currently employed as analysts, fund manager or corporate executives globally.

Link here

Mailbag: Seriously, where do I start with this?

I got this yesterday from reader "Charlie":


You seem very upfront when I read your blog. I appreciate that. I do not know much about you or your work but somehow came across your blog a year or so ago.

I started following people like Casey Research, Sprott, Jeff Berwick etc those like minded people. Philosophically speaking I think they have sound ideas. I think Doug is extremely intelligent as well as Rick Rule. I know you rip Louis James, and recently Jeff's Galt Gulch.

I agree I lost a ton of money on Rubicon because of Louis calling a double if you buy by a certain date. I am furious over it. Also, people who invested in Galts Gulch clearly got hammered.

I guess my question is as people do you think Doug, Rick, Eric, Jeff, Daniel, Louis are good? And you do you consider their mining recommendations to be solid?

Charlie, do you really care what I think? I don't even understand the reason why you sent me this because the mere fact you use the word 'philosophically' in a paragraph that mentions Jeff Berwick is more than enough to mark our cards. But I will separate Rick Rule from the others, because he's not a snake oil salesmen. When you sit on the buyside like Rule does your motives and priorities are different and even though I'm not an adherent of his so-called anarcho-capitalism and I wouldn't trust him in a deal until he's signed at the bottom of a piece of paper, he's the only one of them who has a clear and respectable position: He just wants to make a profit. With him it's nothing personal, it's just capitalism. 

The other people you mentioned are different, they're just bullshit merchants. Some more successful than others and in the example of Doug Casey, his wealth stems from the insight of working out a couple of decades ago than there are a whole bunch of naive and financially inept people in the Libertarian (for want of another pigeonhole) movement that will give him money if he offers them the right message (gold/guns/freedom/Rand/etc). I'll give him credit for nailing a way to become rich but that's the limit of his intelligence, though. It's also a method that involves zero wealth creation, he hasn't added a thing to society, all he does is transfer wealth from one pocket (yours) to another (his). Ayn Rand would laugh at him in his face. He's also studied his PT Barnum because he knows the results of his predictions don't need to be right and they can be forgotten along the way, as long as the message about the future remains on-topic and intact. Tell stupid people what they want to hear and stupid people will give you money, it's the American Way and Doug Casey has been harvesting the fruits of the financially inept ever since he hit on the formula. As for their mining picks, you have first-hand experience of the fake geologist Louis Lobito Little Wolf James so I need tell you no more, but to give you an idea of how stupid Jeff Berwick is on mining try Googling his name and the word Batero.

Anyway, that's a paragraph you didn't want to read and ultimately I'm not trying to convince you, because if you think people who've consistently called the market wrong are smart about money you're already a lost cause. I decided to answer your mail on the public blog because it might just save some other sap from falling into the Multi-Level-Marketing hellhole they've created to trap greenhorns and fools. Thus ends another IKN rant.

Regarding Buenaventura (BVN) at San Gabriel (ex-Chucapaca), from IKN344

This was in Sunday's edition of the Weekly. The only thing that's changed is the chart, which is a 10 day chart updated to today and shows the considerable drop BVN took yesterday Monday, too.

xxxxxxxxxxxxxxxxxxxxx



Buenaventura (BVN): As this five day chart shows, at the end of Thursday there was a rough 2% gap between BVN and the GDX benchmark, but come the end of Friday that gap was up to nearly 8%.



The reason may be that BVN just sucks, but it’s more likely that the negative news from its San Gabriel project (13a) was already filtering through. The simple equation is...

Community known to be difficult + company with poor community relations record = accident waiting to happen

... so in a nutshell, last week BVN was due to hold its Environmental/Social Impact Presentation to the community of Ichuña regarding its San Gabriel (previously known as Chucapaca) gold project in the Southern Moquegua region of Peru.

The day arrived, as did the local authorities, representatives of the national government and the mining ministry (MEM), the BVN team and an estimated 1,000 members of the local population to attend to presentation, but before it could start the local authorities and BVN got into a “strong discussion” and after a prolonged discussion (that apparently happened in the police station) the meeting was eventually called off before it could begin. Adding to the mess, the locals who were to attend weren’t let into the meeting hall at any point (doors blocked by guards touting guns) and had to mill around in the main square, waiting for a yea or nay decision on the meeting happening for a few hours (until the nay was announced). Also, adding insult to injury the MEM representative, one Abel Díaz Berrios, told the local authorities that they could be subject to criminal prosecution if they continued to block the meeting from happening. That message went down like a lead balloon and hilarity ensued (though no meeting). In the words of regional council member Máximo Ramos Apaza who was part of the local authority group, “You don’t enter somebody’s else house and then treat them with a lack of respect. But the most important is that the people’s decision is respected”. According to reports, locals were upset about the lack of social outreach and communication from BVN up to last week and considered the company was trying to push through its obligatory Environment and Social meeting on the sly without having done enough beforehand.

It’s fair to call BVN’s track record in community relations as “patchy at best”, for example it has some of its non-core assets up for sale because locals want the mines to go back into operation, but not under the command of BVN. For another example, Conga. It has got to decent agreements and cordial relationships with some of its communities, for one example it manages to keep working at Tantahuatay in Cajamarca which is no mean feat, for another the word from its new Tambomayo project is positive. But you never know with this Roque Benavides guy (who could do with a lesson or two from his cousin, I think).  Then again, it’s also fair to call the population of Ichuña difficult, as even a company with a strong track record of community relations success such as Rio Alto made no progress there (when it took the option on a different Ichuña property held by Duran Ventures at the time, only to hand it back with no progress made).

The upshot is that BVN, once again, has a community problem on its hands that could be serious enough to block a key development project. The share price drop of Friday probably doesn’t reflect all of that yet. I still like the idea of buying into BVN due to its leverage to gold, but I’m also glad that I haven’t bit at it yet.

12/14/15

Tahoe Resources (TAHO) (THO.to) makes The Guardian

Good thing too, as any World Class company wants the chance at world-level publicity, right Ira Gostin VP investor relations at Tahoe resources?
"Ira Gostin, speaking for both Tahoe and Minera San Rafael, declined to answer questions about the case, stating “We are currently not granting interviews.”"

Oh, maybe not. Anyway, read all about TAHO here.

Minera IRL (IRL.to) (MIRL.l): The latest round of Jaime Pinto BS

Here's how the criminal charge system works in normal countries:
  • I accuse you of eating a live dog in public
  • You tell me not to be silly
  • I tell you I'm going to report you for eating a live dog in public
  • I report you to the police
  • The police ask me for proof or evidence
  • I don't have any
  • No charges are filed (and I might face my own charges of wasting police time)
 
And now here's how the criminal charge system works in Peru:
  • I accuse you of eating a live dog in public
  • You tell me not to be silly
  • I tell you I'm going to report you for eating a live dog in public
  • I report you to the police and I file criminal charges with the public prosecutor
  • The police and prosecutor then have to investigate
  • I can then tell everyone that you're under investigation for eating a live dog in public
  • Animal Rights campaigners beat you up in the street the next day.

In other words, I personally can bring criminal charges against you and until they're dropped by the authorities, your name gets dragged through the mud. It's also pretty easy to spin out the investigation process and have the charges hang round your neck for an extended period, especially if you're a lawyer and know the tricks (eh Jaime?).

Which brings us to the following, a news release that Minera IRL Ltd has distributed today, but only in Spanish and only in Peru (let's see if they go for it in the world sphere tomorrow morning, now that it's on the IKN blog) and to this point, there's no link to it anywhere, they're just sending it in mails to reporters and industry people. Cute. And once again they're basing the whole thing around things that anonymous callers told the IRL "Ethics Hotline" back in July, which means that 

1) Anyone can accuse a Team Benavides member of anything, made up stuff or whatever.
2) Team Hodges people will accept the anonymous word
3) Team Hodges people can then tell the world the person is facing "criminal charges" (see above).

It's interesting to note that this is exactly the same Modus Operandi that Daryl Hodges used when he was put in charge of Jennings Capital, until he was kicked out by the board for ruining the brokerage (that is quite literally ruin, too).

Here's an English translation of the Minera IRL news release in Peru only today, Monday December 14th.

UPDATE: IRL has published the criminal charge document here. But not the NR below, even though they sent it to dozens of journalists and industry people.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
 


New accusation regarding wrongdoings in subsidiary of Canadian company

Minera IRL S.A. accused of paying illegal commissions to obtain environmental and operating permits

Minera IRL Ltd. has discovered that several of the employees belonging to its subsidiary company have committed irregularites and corrupted public officials. These discoveries  concern members of the current management of the operations located in Ollachea, Puno who, according to accusations received via its “Ethics Hotline” and controlled independently, have paid illegal commissions in order to obtain environmental permits, among other serious crimes.

This has been brought to the attention of the relevant authorities by the board of directors of Minera IRL Ltd, via an expanded criminal accusation signed by the President of the board of directors and presented to the 4th Lima Super-Provincial Court Specialized in Organized Crime. In the expanded charge, it states that Diego Benavides Norlander, Oswaldo Nilton Sánchez Casas, José Antonio Cabia Vega and Patricia del Pilar Matsuda Ysa, among others, committed improper passive bribery, generic active bribery and illegal association in order to commit crimes.

In the text of the charge, the company noted that Benavides Norlander, who exercises absolute control over the administration of the subsidiary, refuses to leave the positions he holds despite the demands of the parent company, in direct denial of the board of directors who are looking to audit due to indications of underhand dealings by the current administration. It also states that on November 5th a criminal charge was filed against Benavides Norlander, Cabia Vega and Matsuda Ysa accusing them of organizaed crime and committing the crimes of aggravated fraud and illegal association connected to the deal in which the parent company obtaind a US$70m loan from COFIDE, but costing the parent company for commissions of  nearly US$3m that benefited an “intermediary” company, Inversiones y Asesorías  Sherpa S.C.R.L., that charged the company for non-existent services.

The new information regarding payment of illegal commissions has come to light from the conclusion of the processing of a series of accusations made since last July, administered independently by the firm Ernst & Young, which came from inside the subsidiary and reveal, among other things, the following irregularities:

  • Payments for access and attention of public funcionaries, including the incorrect use of company resources. This relates to a series of “money deliveries” that employees of Minera IRL S.A. made to several public functonaries in the Ministry of Energy and Mining (MEM) in order to “speed up” the revision of documents. These payments are hidden in accounts of “administrative costs” of “costs of representation” without adequate documentation. Also, it has been detected that some MEM evaluators have been given vehicles for their personal use.

  • Payment of leaders and community members in Ollachea, to which is added that the improperly delivered money did not fully arrive at its destinations. That is to say, part of the money was lost in transit and the payment of “expenses” was inflated so that a quantity was diverted from the object of the supposed expenses repayment.

“The information received from inside the subsidiary is evident and overwhelming; employees of Minera IRL SA have been bribing public employees of the Ministry of Energy and Mining. All these bribes to public functionaries were approved by Benavides Norlander and carried out by Oswaldo Sánchez, who worked in the post of Consultor to the General Management. In other cases, the method was the delivery of expensive gifts to certain key public functionaries. All this configures a systematic enactment of corruption of public employee in distinct entities of the State”, this according to the text of the criminal accusation presented to the 4th Court Specialized in Organized Crime.

According to the charges, between 2013 and 2014 the bribes totalled around US$11.5m. “However, it should not be a surprise that in the course of investigations there have been larger acts of corruption identified that have not been reported out of fear, or because other employees of Minera IRL SA have been implicated. This explains the motive as to why Benavides does not want to leave the management of the company”, states the text of the criminal charge.

As is known, passive bribery is a crime according to Article 394 of the Penal Code and consists of soliciting or accepting donations, promises or any type of unfair advantage in exchange for enacting a act connected to the obligation of one’s employment position. Generic active bribery is a crime according to Article 397 of the Penal Code and consists of “buying” a public functionary via donations, promises or advantages, that aims to obtain a determined conduct from the public employee involved. The crime of illicit association in order commit crimes, is a crime according to Article 317 of the Penal Code and is the grouping of two or more persons in order to commit crimes.