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4/27/17

Sandstorm Gold (SAND) (SSL.to) in the next edition of The IKN Weekly

In The IKN Weekly this weekend, your humble scribe will explain why John Doody is a freaking idiot.

By mouthbreather demand: IKN writes nice things about a junior mining stock

I'm getting another round of dumbasses asking me why I'm so negative on the mining industry, why I always post nasty things about juniors, why don't I have a life and seem to be such a bitter twisted piece of crud and, just to prove they don't have the first freaking clue about the word, asking me why I'm such a troll.

Yes indeed, another day in mailbag paradise, wading through mouthbreather mails and their painful grammar.

But hey, I'm supposed to be a capitalist and want growth and recognition and the customer is always right and all that shit, so today I've decided that it's time to kow-tow to the market braindead and give them a reco for a stock that's truly worth their time owning. By way of disclosure, yes indeed I own shares in the company I'm about to mention and it's also covered in The IKN Weekly, so I'd assume a portion of IKN Weekly subbers also own some. I bought at lower prices and have a target that's substantially higher than today's market price, so I'm not trying to rip you off like Marin Katusa does and sell into any new buying, I'm a strong holder until my target is hit. This stock is going to have an excellent financial 2017 and the next quarter in particular is set to be a blow-out, which will make all the sell-side anal ysts who doubt its balance sheet STFU once and for all. So buy yourself some Atico Mining (ATY.v) mouthbreathers, anything under 70c is a drop-dead knockdown bargain, even paying 80c is dirt cheap and a no-brainer. Which is perfect for people like you.

Have a nice day. Love and kisses, Otto.


Mailbag. Detour. Goldcorp.

Main man mailer 'H' today asks:

If Detour drops by a third, I have to think it would get GG's attention and warrant a bid.  Thoughts?


The IKN reply: If Garofalo is crazy enough to buy Caspiche and half of Cerro Casale, he's crazy enough to buy anything. In fact, if I were CEO of ITH, GOLD.v, CKG, NG, NAK, VGZ or any other of these low grade wastes of time that only a geologist could love, I'd be mailing him every other day.

Barkerville Gold (BGM.v): Ah wuz shocked...

...to learn that on the back of its grade-smear bullshit NR, it now wants you to exchange over thirty million of your dollars for its newly printed paper. That this utter joke has a market cap of over $300m is off-scale crazy. That it gets a bought deal at these levels is an indication of the way in which the brokerage houses are in cahoots with these liars and thieves.

Why is it that these days, in 2017, you'll hear howls of derision when recidivist a scam junior explorer tries to scam the idiot mouthbreather end of the market, but not a peep when it's an Eric Sprott company?

UPDATE: And ah wuz shocked when they upsided the bot deal. Shocked.

4/26/17

New Gold (NGD): And for the first quarter in living memory...

...New Gold (NGD) has managed to file its quarterly financials, its MD&A and the accompanying news release without adding to the capex or further delaying the construction timeline of Rainy River.

The IKN theory on the new US government's tax reform plans*

They've decided to make the proposal so fucking stupid that it doesn't have a chance in hell of passing. End of theory.

*You see how I managed to avoid the T word in the title?

The Paul van Eeden "Better Sleep Principle" and Rye Patch Gold (RPM.v) (from IKN412)

A little background is needed.

1) The IKN Weekly has a "15 stocks maximum" holding policy. There are several reasons for this, but the main thrust is to promote portfolio discipline and keep things real.
2) In IKN 412 dated April 9th I had 15 open positions and decided I wanted to buy a new one. Therefore, one of the open stocks had to go.
3) Even though I'd just run the numbers on Rye Patch Gold (RPM.v) in IKN411 in light of its news of the receipt of its long-delayed cyanide usage and decided to hold through, it was RPM.v that got the chop.
4) Since that date, RPM.v has dropped 22.4%. I got out with a small profit, which after commish wasn't much more than breakeven. In other words my trade was a real world failure, but it would have been worse if I hadn't paid heed to Paul van Eeden's "Better Sleep Principle". 

Read on (name of new purchase edited):

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Rye Patch Gold (RPM.v): SELLING: The short story; to make way for the new position in (EDIT) and to maintain the integrity of the “15 positions maximum” philosophy* here at The IKN Weekly (though I have bent the rules a couple of times over the eight years) something has to give. That’s RPM.v and so I’m going to sell this position in the next five days and close the position.

The slightly longer story; Even after running the numbers last week and summing up by writing a conclusion along the lines of...

  • Good news about the permit arrival
  • I’m holding on the numbers and its potential
  • But financials and cash position now look tight
  • And if they decide to run a placement it will be a bridge too far and I’m out

...as the week wore on that uncomfortable feeling about the corporate balance sheet came back again. I want to believe in this story because, if it goes to plan, RPM has a great looking operation at Florida Canyon that’s currently heavily discounted. The problem is, my wanting to believe ended in me deciding to ignore the risk that RPM dilutes my shares in a final, top-up placement which would deliver my profits to somebody else. And on re-consideration it’s more like a probability than a possibility, plus rumours about things not going as well as we on the outside would like at Florida Canyon have not gone away and keep coming around. If things had run more smoothly on the permitting track it would be much easier for me to brush off the chatter-talk and have more confidence in RPM, but where we are today and how we’ve got here means that I don’t. It’s at the stage where I’m worrying about this trade and it floats back into my brain at nighttime...not a good sign at all. I’m a long-term fan of Paul van Eeden’s “Better Sleep Principle” and here’s an excerpt from one of the times he’s written about the concept (8):

“This is where the Better Sleep Principle comes to play. I had not really thought about it but I have for many years now subconsciously followed the Better Sleep Principle in my own investing. It works like this:
If I start worrying about something when I go to bed at night I fix it the next morning. For example, if I own too much of a stock and am concerned about what would happen if the price falls, I sell some. If I don’t own a particular stock and I lie in bed worrying that the price would go up before I get a chance to buy it, I buy some. I do whatever it takes to make me sleep better at night.
Here’s why you should follow your own instincts to make sure you sleep well at night: it doesn’t help if you follow someone else’s advice and they sleep well while you lie awake. Investing is a very personal endeavor; only you know what you need to do.”

Result: When I made the decision to buy some (EDIT) last week it was easy to choose which company to drop from the ‘Stocks to Follow’. It means it’s likely to be a booked as a small profit of little consequence, but even if the price dives next week and it is closed at a minor loss it’s still nothing much more than a failed breakeven trade, 10% either side is not why I buy junior mining stocks. So, rack it up as another IKN Weekly failure, not the first and won’t be the last.

*Perhaps a bit too grand, it’s an idea.



The other thing about this Sandstorm (SAND) deal is the newco market cap

When SAND is joined by MARL, we're going to be close to the U$1Bn market cap threshold, something that Nolan Watson has been keen to promote as a target due to the way it will open up the door to a new tranche of insto cash.

Sandstorm buys Mariana (UPDATED)

Woah! Here's the chewy bit:


Under the terms of the Combination, Mariana shareholders will receive 28.75 pence in cash and 0.2573 of a Sandstorm share for each one Mariana share held. The Combination values Mariana at approximately 110 pence per Mariana share based on the closing price of US$4.04 per Sandstorm Share on the NYSE MKT and a currency exchange rate of £0.7788 per USD, on April 25, 2017.
The terms of the Combination represent a premium of approximately 84% to the closing price of 59.50 pence per Mariana share on April 25, 2017 and a premium of approximately 88% to the 20-day VWAP per Mariana share.
If successful, the Combination will result in Mariana shareholders, together, owning approximately 19.0% of the ordinary share capital of the Combined Group.
Sandstorm holds 8,980,243 Mariana shares, representing approximately 7.0% of the issued ordinary share capital of Mariana, and Mariana warrants over a further 4,490,122 Mariana shares.

UPDATE: MARL has opened at 87p in London on 3m shares traded. That's only just above its recent January highs and plenty below the nominal 110p offer price, probably due to UK capital gains tax laws. The lack of percentage lock-up is the main barrier to deal success here, so SAND may look like it's pitching high, what it's really doing is telling UK instos that this is a tax-efficient way of buying their shares. You can think what you like about the Hot Maden asset (for what it's worth, I like it and like it even more after the Yes vote in the recent referendum), but it's clear that Nolan has done his homework on the deal structure and thought it through well. After all, they'll still be 81% of the newco...that doesn't leave room for a massive price dumpage for SAND today.

4/25/17

Crapstone Mining (CS.to) 1q17 financials and that "costless" collar

Dear reader, cast your mind back to November 9th, the day Crapstone Mining (CS.to) announced it had hedged a large chunk of its production for the next year and a bit:
VANCOUVER, Nov. 9, 2016 /PRNewswire/ - Capstone Mining Corp. ("Capstone") (CS.TO) today announced that it has entered into zero-cost collars for 43,000 tonnes of copper with settlements between January and December 2017 at a minimum of US$5,025 and a maximum of US$5,585 per tonne of copper. There was no cost to Capstone to put this protection in place.
Oh how we laughed when Darren 'drop the' Pylot told us there was no cost, it was protection, it was zero cost. In IKN's words that day...
"...those of you wondering why all the gross profits have suddenly disappeared from the CS.to 1q17 and 2q17 results will receive a sharp lesson in just how "zero cost" this all is."
...and on fact we didn't even have to wait until the 2017 numbers showed up, the effect was felt in the 4q16 numbers. So with the 1q17 financials posted tonight and two quarters booked since this executive decision was enacted, we can check on just how much the device is hurting the company. We do that via checking on the "gain/loss on derivatives" line item in the P+L and here's a chart on that:

 Before Darren Pylot put his "costless" collar hedge on copper production in place, CS.to reaped a small dividend on other minor instruments. But with the hedge in place, as soon as the price of copper busted out of the upper end of the range (around U$2.54/lb) it caused and is still causing Crapstone significant financial losses, a total booked of $43.742m in just two quarters. And be clear, these are not fictitious, accountancy, non-cash losses. These are real cash losses and they literally involve writing cheques to the counterparty, cash that would otherwise have made it to the company treasury.

In short, the reason CS.to has files a 1q17 operating profit of $16.759m but a net loss of $7.395m and the reason its cash treasury position dropped by nearly $19m in this first quarter is due to the blithering idiots pretending to be intelligent executives making dumbass decisions as they fail to run this joke of a copper producer. The end.




The GMO piece on diamonds, De Beers and Stephen Lussier is a bona fide tour de force

In the post earlier today we featured two of the pieces in the latest edition of Global Mining Observer, but didn't point you to the major event, the interview on the evolution of the diamond market with Stephen Lussier of De Beers. I kind of left it to last to read because the diamond sector has never really been my thing, but it turns out to be the best single article that's ever come out of GMO. I've now read the whole thing twice and I'll go back to it a again later, too.

Insightful, intelligent and top class prose to boot, Alex W has out-done himself. You have to read this so do so by clicking this link.

Continental Gold (CNL.to) gives us an update

This morning Continental Gold (CNL.to) gave us one of those "hello we're here stop selling our shares please" NRs that didn't work, the stock is down another 6% as your humble scribe writes these words. Add that to the performance so far this year and...

...there's no doubt about it, you just gotta laugh about the way Louis Lobito Little Wolf James of Scamsberry / Casey Research told you to buy it on January 18th this year (after telling you to sell it in January 2016 when it was a $1.40 stock...bless him).

But leaving monkeys with dartboards aside, what is it with CNL recently, why has it been going down like a porn star at a stag night? Well for me the answer is to look at today's NR with the eyes of a newbie to the story, albeit a newbie who knows their way around the financial world. Such a person would see this in the top paragraph...
"With the senior secured debt facility in place, the Company remains funded for its 2017 planned activities with approximately $100 million in available cash and liquidity and remains on track for first gold pour in early 2020."
...and surely think:

1) Took $100m in debt 
2) Good for 2017
3) No production until 2020
4) So how are they going to fund 2018 and 2019???

And there's the rub. Why own this company now while it's owned by the banks? Why not wait until the end of the construction process when we'll know more about whether this mine will work? 

Still, never mind, CNL are conducting a site tour this week, Sprott, and Oppenheimer and a bunch of others in attendance with Ari and Don Gray leading the tour. We should get another round of pumpy pumpy from the sell side whores soon enough.

Why is it that nearly all mining stocks are going down...

...except the two I want to buy/add?

“The Clintons are family friends, I just want to leave it at that.”

Robert Giustra is featured in the latest edition of the best publication in all of the mining forever, Global Mining Observer. Read about Giustra's connected world of Russian oligarchs, France's hot favourite for President Macron, and the Clintons. Of course, the Clintons. That's linked here.

Also don't miss GMO's review of the book on the gold industry written by one Pierre Lassonde, way back in 1994. That's here.

The Copper Mountain (CMMC.to) financial disaster zone

The company formerly known as CUM (tcfka-CUM), Copper Mountain (CMMC.to), reported its 1q17 financials last night and in the NR this morning, was quick to trumpet its sales of $74.1m and net earnings of $7.1m (4c/share). Sound like strong financials, no? Stock will rally, no?

Nope, sorry, it's complete bullshit because there's no way O'Rourke and his collective band of mediocrity are going to point you to the reality of tcfka-CUM's financial disaster area. To do that you need to care enough to download its Reg F and when you do, even if you ignore the house of pain that is the Statement of Cash Flows there's no way you can ignore the dog's dinner balance sheet



They made a net profit of over $7m, but cash dropped and working cap went deeply into negative territory and the reason is down there at the bottom. Yes indeed madame and sire, tcfka-CUM has real and nasty cash debt to pay back at the rate of around $13m a quarter (which happens to be around $13.7m/qtr for the next three quarters of 2017), so how making less than $8m/qtr in operating profit (at U$2.65/lb copper, you're not going to see that average in Q2) is going to help the cause is beyond my ken.

It also beats me why this utter dog remains popular with the Canadian retail community, the only reason I can think of is that it's propped up by rah-rah boys and bought by people who wouldn't even know how to access SEDAR, let alone read and understand a company's financials. This company has 133.1m shares out and at its current share price, a market cap of $126.4m. Its true equity value is zero, unless of course copper prices come to the rescue. If they do tcfka-CUM goes up (but then again so do a whole lot of copper miner shares). If they don't, this company is destined to implode. Math says so.

This Angry Geologist piece on Barkerville Gold (BGM.to)...

...isn't just good geology and mathematics, it's damned funny too. Read it here.

Pirsig

I first read Zen and the Art of Motorcycle Maintenance 26 years ago and though I'm not sure it changed my life, it certainly woke me up at the right time. 


Hold quality undefined.




Robert M. Pirsig, Sep 6 1928 - April 24 2017. RIP.

UPDATE Tuesday: The Graun has published a decent obituary of the man, here.

4/24/17

Dalradian (DNA.to). Galantas (GAL.v). Northern Ireland Police. Explosives. Mailbag.

Your humble scribe receives mail this morning from reader 'GA', a nice lady who has agreed to let me reproduce this part on the blog:
"...do you think the GAL news affects Dalradian?  They use explosives don't they?  Do Northern Ireland not like Canadian miners and are stopping them with this?"
For the record GA is currently a holder of DNA.to stock and I'm not. Answer: To begin, DNA uses explosive to a certain extent in its current exploration phase, but they'll really need explosives a lot if/when the mine goes into production. As for the question my best guess, after reading the last couple of NRs from GAL.v carefully, is that there's more than meets the eye about the Police Service of Northern Ireland (PSNI) decision not to play ball with GAL.v and its Omagh mine. There are two things that stick out:

1) There may be specific problems between the mining company and the police (or locals) and this is a way they've found of putting the kibosh on the project. If so, DNA isn't likely to suffer in the same way.

2) There's a payment issue which seems to revolve around the failure to close on the "cost-recovery agreement" (i.e the police want the mine to pay for their time). The way GAL.v frame it, stating that other mines don't have to pay so why should they, suggests this may be a new policy at the PSNI. If so then yes, this could well become an issue further down the line for DNA.

Either way, it certainly doesn't help the political risk perception of working in Northern Ireland. All that and Brexit, too.

Galantas Gold (GAL.v): Chalk up another success for "The IKN First Law of Mining News Releases"

Remember this post back on April 13th, less than two weeks ago? In it we noted that Galantas Gold (GAL.v) says its tunnel development was "temporarily on hold" while they work out a deal with the Northern Irish police on explosives handling, but the problem "is not expect to exceed one month". This set off the red flags at this humble corner of cyberspace because around here, we have the tried and tested First Law of Mining NRs which goes like this:
"The IKN First Law of Mining News Releases: Considering that anything contained in a mining news release is presented in the best possible way for the company in question, any piece of information contained in a NR that comes across in any way negative means the real news and/or events behind it must be very, very bad indeed."

Cut to the wee small hours of this morning and the latest NR out of GAL.v. Read it here and there's plenty in it, but the pay dirt is this:
Galantas Gold Corporation ("Galantas" or the "Company") (TSX VENTURE:GAL)(AIM:GAL) has received notification that the Police Service of Northern Ireland ("PSNI") will not provide its required anti-terrorism cover in regard to blasting operations required for mine development at the Omagh Gold Mine.

The First Law of Mining NRs told you to stay away. This morning GAL.v is already 16% down and we'd wager there's a lot lower to go.

4/23/17

The IKN Weekly, out now



IKN414 has just been sent to subscribers. As for the Cessna 414, I'll let my pal and mega-pilot "W" explain all:
Everybody loved it because it was roomy and comfortable and, for the time, had good cruise performance.  However the airplane was really quite underpowered and in today's world not many pilots are still comfortable flying them.  If you lose an engine right after takeoff you can only manage about 300ft/minute climb rate on the remaining engine, which is not a lot when you consider minimum safe speed is about 120kts.  And then only if you were careful about weight and balance, if not get ready to meet your maker.

He has IKN421 reserved, too. What a total propellerhead nerd.

Messi and The Matrix

Here's an excerpt from this piece entitled "What if we’re living in a computer simulation?" that I found myself reading yesterday:

The simulation hypothesis has entered the culture as an explanatory meme. Writing in the New Yorker earlier this year, the critic Adam Gopnik suggested that the Oscar confusion, in which La La Land was wrongly given the best film award meant for Moonlight, the election of Donald Trump, and the improbable late comeback by the New England Patriots in the Super Bowl showed “that we are living in the matrix, and something has gone wrong with the controllers”.

Anyone who watched Leo Messi score in the 92nd and last minute of the Real Madrid/Barcelona game today to win the game for Barsa 3-2 will know the feeling.

Macro(n)-economics



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

...in reverse order:

Third Place: "How to add breadth to the GDXJ: A proposal". I got some really interesting feedback from this post.


Second Place: "A rarity: A geopolitical event that may affect the price of gold for longer than a day", a post very early in the week carrying a France voter intention poll that showed how close it was between the top four candidates. Now somewhat out of date, as these words are written we're just hours from the results of the round one vote.
 
First Place: "If you knew what I knew about Red Eagle Mining (R.to)...", because the peanut gallery loves posts like this. I really shouldn't get tempted into writing them. The third placed post is what IKN should do more often, not this clickbait crap.

4/22/17

The 2017 Colombia Gold Symposium is taking shape

Over at his blog, Paul Harris of The Colombia Gold Letter and organizer of the Colombia Gold Symposium updates us today on how this year's event, scheduled for November, is shaping up. We already know that Rick Rule is keynote speaker at the event (a decent catch) and now we have news that Atico Mining (ATY.v) and Red Eagle Mining (R.to) are sponsors and will offer site visits to participants this year.

If you're interested in attending, you can find out everything you need to know on those links. And as IKN is also a sponsor of this year's event, your humble scribe is bound to be there for the week as well (though that may well put you off the idea).

4/21/17

Angry Geologist does Arizona Mining (AZ.to)

And does it well. Go here.

The Friday OT: Prince at the 2004 Rock and Roll Hall of Fame

This brought a lump to my throat, it's one year ago that the world saw the headline "Prince dead" and the measure of his greatness is that nobody asked "who?" or "which Prince?", the one word was enough for global mourning to set in.

However we must celebrate his talent. He was a peerless live act and went way too soon but here's a reminder of how good he was on stage, the full ten minute opening act from the awards ceremony which includes a top Kiss and the best and I mean the very damned best version of Let's Go Crazy ever.



And once again, marvel at his world class guitar work, he was up there with any of them just on that instrument. Youtube here.

Mongolian Airlines, the exciting way to fly

From a pal, who sent this picture over with the note, "From the Mongolian Airlines website translated by Google":



Bless them forever. In the mood for an exciting flight?

Crapstone Mining's (CS.to) debt: Parsing The Pylot

Here are the comments of CEO Darren "Drop The" Pylot in today's NR just out that announces amendments to its credit facility. IKN explains what he's saying in the blue type.

"This extension of our current low-cost, flexible credit facility, gives Capstone significant financial flexibility (we were in the shit) and right sizes the facility to meet our current and anticipated operating requirements," said Darren Pylot, President and CEO of Capstone. "Our current drawn debt of approximately $300 million is comfortably within this amended availability (uncomfortably high) and we have a cash balance of over $100 million (which should frighten the crap out of you, because it was over $130m at the end of 2016)."
"We plan to apply free cash from operations to reduce debt to a sustainable level (our debt is currently unsustainable) at commodity prices that reflect bottom of the cycle prices (if today's price are at the bottom why did we hedge our production?), which will provide an additional cushion of undrawn credit," continued Mr. Pylot. "This effectively addresses financing risk over the term of the facility (we are financially risky), which we believe will correspond to a stabilization and gradual improvement in copper prices."

Further questions?

Asanko Gold (AKG) is now hiding data

If you remember back to April 13th, this humble corner of cyberspace noted the rumour about an upcoming faked geotechnical safety issue at Asanko (AKG) and its Nkran mine, something the company was planning to use in order to hide the fact that it was running out of mineral ore way before they'd previously promised (but on track with the K2 short thesis, strangely enough). We ended that post with these words:
"For an early signal that this is the plan, watch the Q1 and Q2 strip rates as well as any minority use of the stockpile."
Cut to April 18th and the AKG 1q17 production report (out while your humble scribe was on the road and visiting a different company's project) which you can find here. In it we see that yes indeed, the headline strip rate moved up sharply, from 4.6X to 5.5X. But Wait! There's More! Because their overall grade dropped as well (ugh) so if you adjust for that, their apples-to-apples strip rate was more like 6.25X in Q1, bigtime higher.

However the really funny thing in the 1q17 NR was that they didn't include any stockpile commentary or the stockpile data table. Yes AKG, of course it's mere coincidence that just days after the IKN post you decided that stockpile information was no longer worthy of market scrutiny and so you left it out for the first time ever in all your production NRs ever since declaring commercial production. Got something to hide, guys?

PS: AKG is down 10.1% since April 13th. Just sayin'.

4/20/17

Shrek Mining (TREK.v): Looking ugly there, Marin

Looks like a stillborn.


If you knew what I knew about Red Eagle Mining (R.to)...

...you'd be buying the stock today, too.

PS: To answer a couple of mails and add to the cryptic feel, it's something good that's going to happen at the mine next week.

How to add breadth to the GDXJ: A proposal

Your humble scribe has been spending the morning catching up with market things after a couple of days on the road and reading up on the whole GDXJ snafu. The basic problem is that the ETF is getting to the stage where it threatens to collapse in on itself due to its own excess gravity, black hole style. When money flows into the ETF, is has to distribute that around its component part shareholdings and as a lot of these juniors don't have much market cap heft compared to the massive ETF NAV, we're now at the stage where GDXJ holds more than 10% of stock in many of its components and gets close to the all-important 20% in some of them.

So trouble's been brewing for a while and the VanEck solution, just announced, is to widen the number of companies included in the GDXJ universe. It's the obvious move but due to the fact that the big player needs liquidity in holdings as well as size, we're now into the weird-assed situation in which companies like Kinross, Pan American, Gold Fields, Buenaventura and a whole lot more like them are being added to the "juniors" precious metals ETF. Now you can call those companies a lot of names (and I often do), but "juniors" they are not.

Real juniors, ones outside the GDXJ universe, find themselves excluded due to size, float, price, market cap restrictions. That's something I also understand, you can't have GDXJ piling into a stock that trades 50k avg per day as its metrics will immediately go wappy. So here's a potential solution for some or other intrepid brokerage or insto (and I'd wager it would be extremely profitable for the first footer too). The framework can be summed up in three simple stages:

1) Create a whole bunch of "mini junior ETF" vehicles. You could do it by geography, e.g.:
  • Canadian exploreco ETF
  • Canadian junior producer ETF
  • Asia exploreco ETF
  • Asia junior producer ETF
  • Latin America exploreco ETF
  • etc
Or you could do it by metal:
  • Copper exploreco ETF
  • Copper smallcap producer ETF
  • Uranium exploreco ETF
  • etc
2) Then choose a bunch of smallcaps from each junior sub-sector and weight your ETF. These in effect become bundles of stocks that together, under a larger (but still small) ETF umbrella get the necessary size to become attractive to GDXJ as a part of its holdings.  

3) The result is that after time GDXJ gets to broaden its share base and the money filters down into the junior section, instead of money theoretically destined for the junior mining world filtering up into midcaps. The type of cash flow that would benefit the mining industry at a grassroots level.

FWIW, I could see Sprott doing this.

In Vancouver, style beats substance every time

I am so impressed with the way that Arizona Mining (AZ.to) is trading today that this isn't really about AZ.to any longer, it's about the way in which the Vancouver industry goes about its business. We saw the substantive reaction to the PEA put from the company in the first two weeks of April, when first the NR on its contents failed to lift the stock then the filing of the full 43-101 PEA document to SEDAR caused serious people who read the real documents to turn their backs wholesale on this over-bloated and obviously flawed story, because even the Everything Is Awesome scoping study stage report couldn't hide the nasty facts that undermine the (ironically named) Hermosa zinc/lead/zsilver project*. And there are several.


But that doesn't mean a thing, because in the wonderful world of make-believe where junior mining resides, all you need is that powerful combo of 1) re-hashed news 2) breathless prose 3) sellside brokerages with sycophantic anal ysts and a whole row of people unafraid to make a lot of telephone calls and retail (the crop that never fails) will get led by the nose of "thought leaders", quickly come to your rescue and save your stock from moving further towards its true dollar value.

IKN salutes you, Vancouver financial professionals. Your mothers must be proud of you. 

*Sorry to confuse your pathetically small brains, Warke fanboys and IKN haters, but all three metals must be named as zinc provides less than half of potential revenues.

4/18/17

Posting will be light on this blog for a couple of days

For secret reasons.

UK snap election

Political and personal preferences aside, that was one smart move by Theresa May.

4/17/17

Arizona Mining (AZ.to): How's the conference call going, guys?

That well?



I wonder who they're going to blame? Who are they going to spy on because their stock price is going down this time?

4/16/17

The IKN Weekly, out now




IKN413 has just been sent to subscribers. Mainly numbers and words.

4/15/17

A rarity: A geopolitical event that may affect the price of gold for longer than a day

And it's got nothing to do with the orange haired guy:



Four people fighting for two run-off spots. Hard right populist and hard left populist in the mix, too. France votes next Sunday. Could be an interesting week or two.

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

...in reverse order:

Third Place: "Arizona Mining (AZ.to): So much for "clean concentrates"". It's pretty rare to see a late Friday post make the Top Three list the next day, this one must have struck a nerve out there. Still want the name of my kids' school, Richard?


Second Place: "The impressive bullshit artists at Northern Dynasty (NAK) (NDM.to)". Last week's move by this company's management and board has removed all doubt about their intentions. This isn't just some innocent junior that's seen a bunch of promo hype BS artists latch on, the scam here starts and finishes with the company itself.
 
First Place: "MarkITorpedo is Michael Ballanger". Hilariously, my sources at CEO.ca tell me that Ballanger is still trying to pretend that it's not him. Pathological liars are like that.

The Friday OT on an Easter Saturday: JS Bach; Jesu, Joy of Man's Desiring (Cantata, BWV 147)

After searching Youtube for a few minutes I found this version, upbeat and better than the normal, modern,  over-reverential approach to one of Bach's signature melodies.



Music for the rest day of Holy Weekend. Youtube here.

4/14/17

Arizona Mining (AZ.to): So much for "clean concentrates"

The devil is in the details. For the last year, we've listened as Arizona Mining (AZ.to) has insisted that its Hermosa Zn/Pb/Ag project would produce what it auto-denominates a "clean concentrate" for smelters. Even when Global Mining Observer pointed out its dirty little Manganese secret, set to screw up the Zn conc, they denied everything and continued with its marketing spiel on how its conc would be "clean" and rather than address the project's fatal flaw weaknesses decided to try and kill the messenger and tried to dig up dirt on the people who dared to point out a few basic truths about its overhyped and overexpensive stock price. 

But reality bites. Come the day that a third party needs to sign off on the idea, i.e. the 43-101 compliant PEA compiled by AMC and filed to SEDAR last night, we get the following (and IKN does a bit of highlighting for you) from page 182 of the PEA:

19.2 Concentrate terms

19.2.1 Zinc concentrates
The project is expected to produce approximately 235,000 dmt zinc concentrates on average annually. Based on indicated grades, the zinc concentrates should be suitable for most zinc smelters; however, elevated levels of manganese may result in the imposition of minor penalties for AMI.

19.2.1.1 Commercial terms
For the purposes of project evaluation, the following terms were used in derivation of the zinc concentrate NSRs (all figures in US dollars).
Payable metals:
  • Zinc: 85% of the Zn content, subject to a minimum deduction of 8 units
  • Silver: Deduct 3.0 ozs/dmt and pay for 70% of the balance of Ag content
  • Treatment charge: US$210.00/dmt ($190.51/dst)
  • Penalties: All inclusive, US$12.60/dmt (Mn - 0.50% free; US$1.50 per dmt for every 0.10% above 0.50%)

19.2.2 Lead concentrates
The project is expected to produce approximately 189,000 dmt lead concentrates on average annually. Based on the expected analysis, the concentrates can be considered ‘clean’, high grade with valuable levels of payable silver and no deleterious elements which might affect their marketability.

You see that? Cool, huh? Suddenly, and even at this early PEA stage when Everything Is Awesome (will we ever see a PFS or is the spymaster Warke going to try and flog it first?), AMC are only willing to call the Pb conc "clean", as when it comes to the Zn conc we only get "suitable" and that guff about minor penalties again (and repent at thy leisure on that one, true believers). Oh to have been a fly on the wall when AMC refused to sign off on "clean Zn concs".

And that's just one thing that stands out about the difference between the AZ.to promotions to date and the PEA we finally got to see yesterday (ConfCall Monday, I hope GMO calls in). Others include the way they've decided to build the dry stack tailings on top of the Central deposit (in other words, kiss that goodbye forever) or the way they're so land constrained they've had to jam the whole above ground into postage stamp dimensions.





4/13/17

Galantas Gold (GAL.v) offers us another example of the IKN First Law of Mining NRs

Galantas Gold's (GAL.v) "development update" (love the words) came out last night while your humble scribe was computerless, but it wasn't going to pass us by so here we are, second ever post with the new machine. To start, here's a reminder of the IKN First Law of Mining NRs:
"The IKN First Law of Mining News Releases: Considering that anything contained in a mining news release is presented in the best possible way for the company in question, any piece of information contained in a NR that comes across in any way negative means the real news and/or events behind it must be very, very bad indeed."

With that in mind, here's part of the script out of GAL.v yesterday evening:
The Company has also been in discussions with Police Service Northern Ireland regarding further blasting arrangements for the underground mine development. Until those arrangements are in place, the tunnel development is temporarily on hold. The delay is not expected to exceed one month and the Company will advise if the delay is significantly prolonged.

The First Law writ large, they can't develop the mine because they don't have the permits. Take a cue from Brexit, folks.

A lesson in silver that, one day, you may heed

Way back in August 2016 it fell on deaf ears, perhaps this time those that know everything will listen more closely. Here's what CEOca's latest wunderkind Pamplonatrader told the world in mid-August 2016 when IKN had the temerity to explode the silver myth and patiently explain, once again, that the joke precious metal wasn't going anywhere.


And here were are today:


Anyone eating their words yet?

UPDATE post close: We learn the arrogance of the trader who is either...

1) Correct
2) Will be correct in the future.

 

The Asanko (AKG) rumour

It's been doing the rounds this morning, it's probably why the stock is off in early trading, your humble scribe passes it on. We already know that K2 Associates were mocked by the Canadian sellside dumbass brigade for their short call on the stock in mid-2016, but we now know K2 called things well and AKG has been a serious underperformer and for all the reasons pointed out by K2. But now it seems AKG may be in more trouble more quickly than even K2 expected, according to today's buzz at least.

The rumoured reason AKG has been so keen on building a stockpile at Nkran in recent quarters is that at some point in 2017 they're going to fake a geotechnical safety issue, say "sorry guys, this has only been discovered and for the good of our employees we must halt normal production", then move production over to the stockpiled material, which will allow them to try (and probably fail) to remedy the fakey high-grading they've done in the last year in order to pretend their mine is so much better than it really is, all under the cover of "unforeseen" circumstances. They will, of course, pat themselves on the back for their foresight in building up the stockpile and being all clever and that.

For an early signal that this is the plan, watch the Q1 and Q2 strip rates as well as any minority use of the stockpile.


4/12/17

The impressive bullshit artists at Northern Dynasty (NAK) (NDM.to)

Only a company dead set on hoodwinking the stupid would do what they did today. Instead of being granted a real and serious permit, they were given a temporary, 12 month permit that was granted to give strictly limited surface access to their own property and only means they are obliged to make environmental reparations to the shit they've already done to the land there (they even have to deposit U$2m in an escrow account to convince authorities they'll do the repair work). But then comes the magical moment as they the zero-moral scum at NAK spin it to the world of the believe-anything gullibles in junior world that the piece of paper they received is in fact a positive, rather than the reality. It's a de facto fine and news that NAK cannot drill, explore or in any way advance its project. And the market falls for it.

My stars, you junior mining speculators are fucking stupid. And that's what scamsters like the management at NAK rely upon.


A hardware thing

The nice man at the computer shop has finally convinced me to upgrade my eight year old HP machine. Which means that instead of lugging around a 5kg brick with a 14" screen and a battery that lasts 90 minutes tops, as from tomorrow I get to play on a supercool thing with a fabbo resolution screen, tons of extra memory and a processor of suitable speed for this modern day and age. It also means no posting until tomorrow, while I wait for all the collective junk in the memory of my old laptop to get transferred to the new one. Enjoy your Wednesday.

Belo Sun (BSX.to) and some beautiful chocolate cake

I was sitting at the table. We had finished dinner. We are now having dessert. And we had the most beautiful piece of chocolate cake that you have ever seen. And President Bharti was enjoying it. And I was given the message from the generals that the concessions are suspended. What do you do? And we made a determination to do it. So the sell orders were on the way.

“And I said: ‘Mr Bharti, let me explain something to you … we’ve just launched 59 sell orders on BSX heading to Vancouver [sic] … heading toward Toronto and I want you to know that.’ 
“I didn’t want him to go home … and then they say: ‘You know the guy you just had dinner with just attacked Volta Grande.’”

4/11/17

Freeze Frame

IKN salutes John Warren Geils.



Youtube here.

Atico (ATY.v) 1q17 production

Another good quarter.


NR here.

The IKN Weekly called this move in gold last Sunday

The intro to The IKN Weekly IKN412 out Sunday evening had an unusual direction, as your non-goldbug author moved to bullish on the price of gold. Here we are, two days later and gold has broken away from its 1250 anchor. Just lucky i guess...



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Gold still lacks US buyers and that’s not a bad thing (from IKN412)

We like war! We’re a war like people. We like war
 because we’re good at it. Do you know why we’re
good at it? Because we get a lot of practice.
George Carlin, 1992

I wrote on this subject at the start of last week’s edition and also stuck something on the blog last week, but there’s more to say about the way in which gold is being ignored by the self-appointed Smartest Guys In The Room over on Wall St. We have noticed the way in which gold bullion inventories at GLD, the financial jocks’ preferred method of playing the gold market, have done little else but flat-line over the last few weeks. GLD inventories have been in a tight, 830 metric tonne (mt) to 840mt range for a full month except for one day when they dropped to 825mt and that shows up in the first chart you see below.




But as you also see, I’ve highlighted another time in which GLD holdings did very little recently, the block of time just before and after the Trump inauguration, even though the holdings at that point were rather lower at around the 800mt mark. Why that period interests me is in the second of the chart, that’s the ratio chart I like the GLD inventory/price ratio and the two red boxed periods show when the ratio has traded at the 7.0X level. As scribbled directly on the chart there, the tentative theory is that it denotes a period in which gold gets ignored by the flash financial jocks, bullion goes out of fashion and the higher-speed big money looks for somewhere else to park. And once that’s understood, the implication is clear; these are good times to think about gold because when Wall St comes back to the gold market and starts to buy, it becomes a new cycle of interest for the price and the metal. Once fashionable Gordon Gekko buyers return the ratio goes up (because GLD isn’t the only buyer of gold out there) but so does the price and it’s typical to see the gold price pop jump higher after a sustained period of GLD inaction (e.g. the 4.5% rise in just eight days after the quiet period that ended early February). With gold now nearly at 2017 high close on Friday, even after the pop and drop it got on the Syria/US Jobs news and failure on Friday, it’s not going to take an extra catalyst to get gold up and over at U$1,300/oz any longer. Less than four percent’s worth of move, in fact.

So yes, no matter if I’m mocked as A. N. Other goldbug I’ll say it clearly, I’m more bullish about gold’s prospects this weekend than for a while and not because those few showman-type bombs, a measured dose for public flag-waving consumption dropped on some strategically chosen airstrip which now let all sides say things how right they are without anything changing much (at this point I’ll add that although I’m no Trump fan, he should be congratulated for replacing that dubious Flynn guy with the morally upright and undoubtedly smart H.R. McMaster as National Security Adviser, there’s “smart strategy” written all over last week’s action). Do NOT be bullish on gold for geopolitical events and repeat the mantra with me:

Geopoliticals have no long-term effect on gold.
Geopoliticals have no long-term effect on gold.
Geopoliticals have no long-term effect on gold.

They might have done before, but the information highway and fly-attention-span news cycle first brought the half-life down to days, now it’s barely more than hours. Remember the very last scene in Peter Weir’s somewhat flawed but still darned wonderful ‘The Truman Show’? The two security guards? Literally the last seconds of the movie? Welcome to 2017. No madam and no sir it’s not the Tomahawks and its not CNN’s shrill, hand-wringing or Fox’s flag-wrapped coverage, it’s the economy stupid because gold has quietly slipped away from its TIPS ratio anchor (that’s still in the ‘New Normal range’) and may be ready to run. My best guess (and it’s only that, a guess) is the holding pattern period is coming to an end so call me a goldbug, I don’t care. To da moon, Alice! Audit Fort Knox! Live Free Or Die!



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Nobody loves Peter Marrone as much as...

...the Yamana Gold (YRI.to) (AUY) compensation committee:


That list of wonderful, found by A. Reader (ty sir) and sent into IKN Nerve Centre, is how Peter Marrone got his big fat performance bonus for 2016, despite his company severely underperforming the benchmarks such as XAU and GDX.

Q1 crapness from EDR, GPR and CS

Crapstone (CS.to) this morning reported a disappointing set of 1q17 production numbers.

Endeavour Silver (EDR.to) this morning reported a disappointing set of 1q17 production numbers.

Great Panther Silver (GPR.to) this morning reported a disappointing set of 1q17 production numbers.

Mediocrity, like misery, loves company.

4/10/17

Compare and contrast: Ross Beaty and Mario Das Neves on Navidad

Ross Beaty, Chairman of Pan American Silver (PAAS), at the World Economic Forum in Buenos Aires Argentina last week:
"I remain optimistic that we will find a solution that works for the government of Chubut."
Governor of Chubut province, Mario Das Neves, on the Navidad project and other mining projects in his province yesterday:
"As long as I am governor, mining activity will not be established in any way, shape or form."
Das Neves also went on to say this about the decision of Barrick (ABX) to sell half its Veladero mine to Shandong, "You can see it in the newspapers, like yesterday when these shameless people like the company Barrick Gold who are leaving San Juan, and these are the people who told us that theirs was the model to follow. Don't fall for their tall tales".

MarkITorpedo is Michael Ballanger (UPDATED)

I'd just like to thank Tommy Humphreys for tipping me off that the basher trying his very hardest to get people to sell their shares of Tinka Resources over at CEO.ca is none other than Michael Ballanger, the guy who used to consult for Tinka but was fired by the company last year for being a twat. Sour grapes, Mikey?

UPDATE: It's a measure of the absolute intellectual dumbassery of this abject idiot Ballanger that he thought he could be anonymous on the internet. You have to wonder what century these faded heroes think they're living in.

UPDATE 2: A wonderful, face-saving, lawyer-dodging lie from Tommy H:


Oh c'mon Tommy, admit for once! Both you and I know the truth and the way you decided to mis-spell Michael's last name isn't going to get through any lawsuit. Plain Fact: Michael Ballanger has been slagging off Tinka Resources for months. Not only that, but he's short the stock and in a painful loss-making place since the company saw its project take off and run, so now he's trying any underhanded slimy method that comes to mind in order to con the idiot end of the market out of their shares. Why the two-faced Giustra fellator Humphreys should decide to dox Ballanger and then just hours later go back on his word is an issue you should take up with his paymaster Frankie, not IKN.

4/9/17

The IKN Weekly, out now




IKN412 has just been sent to subscribers, dance to the funky music here.


Matt Kuchar wins The Masters

I don't care who takes home the famous Green Jacket this evening, because what Matt Kuchar did on the 16th...
  • Hits hole in one (crowd go wild)
  • Picks ball out of hole
  • Signs it
  • Hands it over to a little kid in the gallery
...makes him an all-time champion. He won The Masters.

UPDATE: Ahh, Sergio at last! That's wonderful, and on Seve's birthday too. Two winners, then.




4/7/17

The Friday OT: Los Rodriguez; Mucho Mejor

Dedicated to reader M. There's been a lack of Spanish language music at The Friday OT in recent times and that's not fair, so to help fill the hole here's one of the most played rock/pop tracks of all time down this way (and great lyrics).


Spend more than a week on the continent and time in taxis, it'd be difficult not to have heard this song. Youtube here.

Posting will be very light today...

...for secret reasons.

4/6/17

In The IKN Weekly this Sunday

It's one of the hottest zinc juniors out there and your humble scribe lunches with its CEO this week. Yes, we're talking Tinka Resources (TK.v) with Graham Carman. Then it's another one of the hottest juniors out there, but this time copper and your humble scribe lunches with its CEO this week. Yes, we're talking Regulus Resources (REG.v) with John Black. And if that weren't enough, a brand new base metals pick coming your way as well. All that, plus the usual guff and nonsense, in IKN412 out Sunday evening.

Wall St ignores gold

For two months and counting, GLD inventories have basically flatlined:



Big money doesn't care.

4/5/17

More on Goldcorp (GG) and its bad habits

Dennis da Silva of Middlefield Capital was on BNN's Market Call today and he said the same thing as this humble corner of cyberspace on GG (and Barrick, for that matter). Watch it here.

If you're still falling for the mainstream press views on "The New Argentina"...

...that's getting better and wonderful under President Macri, do yourself a favour and watch what goes on there tomorrow, Thursday April 6th. You'll get a glimpse of how bad it's got in the first year and a bit and how badly it's going to go for Macri on October 22nd.

No wonder Barrick wants out of the country.

Continental Gold (CNL.to): Snowflake alert

The selling witnessed in Continental Gold (CNL.to) must have hurt all those CNL insiders who bought at higher prices recently. But the response is bizarre and is straight out of the little leagues, CNL's NR today isn't much more than a petulant "It's Not Fair!" piece of foot stomping about what looks like one fund liquidating a medium-sized position as the reality of the situation finally sinks in, that there is no buyout offer coming for this stock and the price is destined for a long period of flatline.



It doesn't help that the man at the head of CNL, Ari Sussman, has the baggage of being in charge of companies that suddenly come under selling pressure on no news, with retail finding out the reasons a long time afterwards. And that Sussman quietly sold millions of dollars of his shares at that previous gig at higher prices. History rhymes, so maybe retail are right to be nervous.

The new Global Mining Observer is out

Cool stuff this edition includes this link, which takes you to Goldcorp's (GG) CEO Garofalo on the stupid idiot Cerro Casale/Caspiche deal. Unsurprisingly, he likes it more than either IKN or the market does. 20/20/20 and my ample hind quarters, David.

4/4/17

Adventures in investor relations, Paramount Gold (PZG) edition

Your humble scribe is forwarded the following NR from Christos Theodossiou, the IR "professional" (term used loosely) at Paramount Gold Nevada (PZG), sent out yesterday and today:


See the fun bit? Check this section a little more closely:




Winning, Christos. Winning.

What we've learned from the Metanor/Kirkland Lake deal today

1) Makuch is Eric's poodle.
2) Wexford would love to sell a chunk of Marlin to Eric.
3) Nobody's going to worry about Sandstorm's royalty there any more.
4) Retail shareholders have been hosed. Again.

Gold miners are real companies too (from IKN411)

A small op-ed on Goldcorp (GG) and Barrick (ABX) that helped open IKN411, last Sunday evening.
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Gold miners are real companies too
As I put together my thoughts on the deal done by Goldcorp (GG) this week to buy half of Cerro Casale and all of Caspiche (see ‘Producer basket’ below) I got to thinking about the way these tier one stocks are being run at the moment. The big turnaround story of the sector is, of course, Barrick (ABX), which has managed to pull back from the precipice since ex-GS-orthodox-capitalist Thornton took over from gold-prospector-hit-it-big Munk and the decision was made to run ABX like a normal company instead of applying the crazy pretzel logic that seems to prevail in the sector.

The difference at ABX has been its new, hard-nosed attitude towards the balance sheet and particularly to its debt position. In the 2009 to 2011 period Munk added nearly U$12Bn to the company’s liabilities, most of that as straight financial debt. Which is all well and good if the gold bull goes on forever, but what we now know is that the party came to a shuddering halt in 2013 and left ABX staring down the barrel of real financial problems. And that’s what has made ABX under Thornton the big turnaround success; he’s sold fixed assets, hacked down the debt and plans to continue to do so in the next two financial years (another U$2.4Bn or so to come off the debt in order to get it down to U$5Bn, he says).

What with the Garofalo decision last week to follow the samo samo route of mining companies and buy mediocre assets with real money, I got to thinking about the two companies and compared their balance sheets over the important recent period. There are plenty of interesting comparisons that show up and we could take a lot of space to chew them over, but the crux is in two datasets comparing the crisis year end of 2013 to the end-of-tunnel year end of 2016:

  • In the period end 2013 to end 2016, Goldcorp increased its financial debt by U$1.0Bn
  • In the period end 2013 to end 2016, Barrick reduced its financial debt by U$5.1Bn

  • At end 2013 Goldcorp had a market cap of U$17.1Bn. Today its market cap is U$14.6Bn
  • At end 2013 Barrick had a market cap of U$18.1Bn. Today its market cap is U$19.0Bn

In a nutshell, the decision by Thornton to treat ABX as a normal company that needs to show financial discipline and balance sheet strength has seen the market cap of the company under his charge increase by close to a billion from the start of the slump to the end of the tunnel. However the collective decisions of Telfer and Garofalo, prizing gold ounces and project collection over basic financial well-being have seen GG’s market cap (aka “the sliver of hope that lies between assets and liabilities”) drop by over U$2.5Bn.

The decision last week by GG to buy into Cerro Casale, plus the stated intention of ABX to keep reducing its financial debt by selling fixed assets (and apparently the next deal is close to hand) show that the trends we saw in both companies in 2013 to 2016 are only set to continue. In other words, one of these companies is doing it the old-school way, betting on projects and hoping gold prices makes it look smart later. Meanwhile, the other company is being run well.



Graña y Montero (GRAM) continue to rally

The IKN Weekly focus on this stock (right here) was timed pretty nicely. Now up 43% in a week and a half.




x

4/3/17

How good was Sandstorm's (SAND) (SSL.to) Q1?

This good:


They bought back 290k shares in 1q17, too. NR here.

Have cake/Eat cake

The second best bit of the Arizona Mining (AZ.to) PEA NR (right here) is the have/eat cake mathematics on silver.
Have: The operating economics assume they sell 5.5m ounces of silver per year at $20/oz.

Eat: The company proposes between $200m and $350m of the capex raise will come from selling a stream on the silver. Bless em.

But the best bit is the confident assertion that the mine will be permitted and in operation by 2020. Welcome to Arizona.