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9/30/16

Frank Holmes Says

Alicia Machado is bullish for gold. 


This is of course a developing story.

This is why I was so pissed about Lake Shore Gold selling out to Tahoe Resources in February*

Here's the TAHO share price chart compared to the Gold/Silver index (XAU), from the weekend of the all share deal to date:


Six months later, the truth is clear. I was a Lake Shore Gold long at the time because it was set to be bought out and because of its obvious price appreciation potential, but Makuch took any old freakin' crappy deal (plus his sale bonus, then decamped to Kirkland Lake) instead of finding a place that would add real value for LSG shareholders. Now look at the same comparative price chart of the mine TAHO tried very hard and failed to buy, Richmont (RIC.to):


Spot anything different? Yeah me too and LSG failed to get that kind of move this year because Makuch was more interested in getting his hands on his multi-million dollar change of control bonus. Tahoe's corporate is such a heap of mediocrity, even while sitting on some of the best silver veins in the world. Makes you wonder about reversions to the mean, Kev.

*Example, this post dated Feb 9th that contains "... TAHO is stealing LSG and Tony Makuch is doing his shareholders no favours by accepting this particular purse of silver (30 pieces)....", but most of the numbery work I did was for subscriber consumption in the IKN Weekly at the time, not on the open blog.

The Friday OT: Andrés Calamaro: Crímenes perfectos

Not the first time for this song as the Friday OT. I don't care.

The genius of Calamaro is in the lyrics, below.



Sentiste alguna vez lo que es tener el corazón roto
Sentiste a los asuntos pendientes volver hasta volverte muy loco
Si resulta que sí, si podrás entender lo que me pasa a mí esta noche
Ella no va a volver y la pena me empieza a crecer, adentro
La moneda cayó por el lado de la soledad y el dolor
Todo lo que termina, termina mal, poco a poco
Y si no termina se contamina más y eso se cubre de polvo
Me parece que soy de la quinta que vio el mundial 78, me tocó crecer viendo a mi alrededor paranoia y dolor
La moneda cayó por el lado de la soledad otra vez
No me lastimes con tus crímenes perfectos, mientras la gente indiferente se da cuenta
De vez en cuando, solamente sale afuera la pena real
Si resulta que sí, si podrás entender lo que me pasa a mí esta noche
Ella no va a volver y la pena me empieza a crecer, adentro
La moneda cayó por el lado de la soledad y el dolor
La moneda cayó por el lado de la soledad otra vez
La moneda cayó por el lado de la soledad.

Updating the Philippino* pair trade

Late Tuesday just before the close, this humble corner of cyberspace floated the idea of running a long BTO/short OGC pair trade, what with the bucket of cold water that had been dumped on their collective heads by the mining ministry in the Philippines. 

  • At the time of publication, BTO was trading at CAD$3.38. Here and now, 90 minutes after the open on Friday, it's now CAD$3.51. 3.8% up.
  • At the time of publication, OGC was trading at CAD$4.07. Here and now, 90 minutes after the open on Friday, it's now CAD$4.01. 1.5% down.

So a little over 5% up on that theoretical pair trade already. Hardly a cojones-busting king's ransom, but the right side of the trade already and I think there's more to come even if both companies receive the same final decision from the whackjobs now running the islands. And whackjob is not used lightly either, this new President is now comparing himself to Germany's leader in the 30's and 40's and wants to kill 3m or so of his fellow citizens.
Philippines President Rodrigo Duterte appeared to liken himself to Nazi leader Adolf Hitler on Friday and said he would "be happy" to exterminate three million drug users and peddlers in the country. continues here

Bless him. The fate of OGC and BTO operations is in the hands of a lunatic, basically. OGC's position looks shakier, but under normal circumstances I'd be supremely confident that BTO's issues would be resolved simply. But hey, I bet the trains start running on time.




*Sorry if the spelling annoys you, reader W and others.

Argentina: Well this surprised me

Earlier in the week IKN noted the pending judicial decision on lifting he suspension at Veladero, but assumed the judge would sign off on the papers and he mine could get back to work. Looks like ABX did too, but the reality turns out to be otherwise. Here's Reuters:
A judge in Argentina ruled on Friday to keep Barrick Gold Corp’s operations at Veladero mine suspended, saying repairs were not sufficient to reopen it after a leak of processing solution containing cyanide earlier this month.
State news agency Telam said the judge’s decision was based on a report from mining police in San Juan province that said the Toronto-based company had not installed security cameras and sensors as the local government had required. Continues here.


9/29/16

Richmont Mines (RIC.to), Kirkland Lake (KLG.to), Renaud Adams, Louis CK and Native Americans

As luck would have it, last night I just happened to re-watch "Louis CK Live at the Beacon Theater", arguably his best one hour stand-up special and on a par with the great Carlin. Here's a bit of the show (in the first minute of the youtube, NSFW but highly recommended and very funny), in which LCK talks about how the white settlers first arrived in North America and stuck the name "Indians" on the indigenous population.



...and here's the transcript of the centrepiece:
"We came here, they're like "hi",
And we're like, "Hi, you're Indians, right?"
They're like, "No."
"No, this is India, right?"
"Nah, it's not, it's totally another place."
"You're not Indians?"
"No"
"Ahhhh, you're Indians!" 

That segment came to mind just hours later, this morning when reading about Kirkland Lake's (KLG) friendly takeover of Newmarket (NMI) and the way in which Richmont Mines (RIC) sold off hard on the news today. Rumours about Kirkland Lake aggressively pursuing a merger deal have been constant and rife since Tony Makuch took over the helm a couple of months ago. Newmarket has come as a bit of a surprise to the market, because the two most talked about targets since Makuch became Eric Sprott's trigger guy have been Wesdome Gold (WDO) and Richmont (RIC). Once WDO was off the menu (the Tom Stanley rebuff and then Kiena taking the pressure away completely) talk about Richmont and KLG became so strong that we even had Renaud Adams popping up on Bloomberg TV a few days ago saying "We're not for sale". But even when he looked the market straight in the eye and told it how things really were, nobody believed him. Or to paraphrase Louis CK;

"We came here, Renaud's like "hi",
And we're like, "Hi, you're merging with Kirkland, right?"
He's like, "No."
"No, this is the company Makuch is buying, right?"
"Nah, it's not, it's totally another company."
"You're not getting bought?"
"No"
"Ahhhh, you're getting bought!"

And as the five day chart of RIC versus the gold/silver index (XAU) shows, it looks like they finally believed him today.



Moral of the story: They're rare but they exist, so when you come across an honest and sincere man of integrity in the mining world, a guy such as Renaud Adams, don't mistake him for one of the usual riff-raff that hold most of the executive seats in the sector.

Posting will be light today

For secret reasons.

9/28/16

OGC and BTO, analyst opinion wrap-up from a Bloomberg terminal piece

Thanks A Reader for punting this one on:

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

(BFW) OCEANAGOLD/B2GOLD STREET WRAP: Philippines Suspension Unlikely

+------------------------------------------------------------------------------+

OCEANAGOLD/B2GOLD STREET WRAP: Philippines Suspension Unlikely 2016-09-28 13:22:29.743 GMT

By Aoyon Ashraf
    (Bloomberg) -- B2Gold fell ~12%, OceanaGold 14% in Canadian trading yday, after Philippines govt. noted that audit of roughly three quarters of mines in the country could see operations suspended; most analysts expect issue to be resolved, and mine suspension unlikely for both cos., although stocks likely to be volatile in S-T until issues are resolved.


CIBC (Jeff Killeen)
  * OGC CN, BTO CN have sufficient balance sheet strength be able to develop mines in Philippines (based on $1,300/oz gold price) uninterrupted
  * Says during previous site visits, it was observed, that operations at Didipio and Masbate mines seemed to be employing industry best practices; would be surprised if ops ultimately halted
  * Didipio represents ~37% of NAV for OGC CN; Masbate ~29% of BTO CN’s NAV


BMO (Brian Quast)
  * Masbate comprises 22% of BMO’s NAV, 28% of 2017 production ests.
  * Didipio represents 31% of asset-level NPV, 30% of 2017 gold eq. production for OGC CN
  * Expect weakness for OGC CN until further clarity is provided


RAYMOND JAMES (Chris Thompson)
  * OGC CN’s social license, strong environmental track record from operating in New Zealand and Philippines for several years underscore its commitment to safe and responsible mining
  * Also OGC CN has strong local support, which will help OGC CN in resolving this matter
  * Didipio is 30% of NAV for OGC CN; Masbate represents 28% of NAV for BTO CN


HAYWOOD (Geordie Mark)
  * OGC CN will be able to resolve issues raised in audit, even though DENT announcement presents negative headline risk, heightened investment risk for Philippines
    * Didipio accounts for roughly 23% of project NAV
  * BTO CN’s Masbate mine represents 20% of project NAV; notes that mine received ISO 14001 accredition earlier this yr, which confirms environmental mgmt system is up to ISO standard required by country’s law


CANACCORD (Reg Spencer)
  * Says unlikely that OGC CN can’t satisfactorily address listed social issues; notes that suspension is based on “soft” social issues rather than any specific environmental breaches
  * Didipio represents 30% of NAV ests; OGC CN ultimately will be able to resolve these issues, uncertainty will be elevated until situation is resolved


CORMARK (Richard Gray)
  * Ascribing low probability for suspension of BTO CN’s Masbate mine
  * BTO CN now trades at 0.97x NAV, 8.2x CF, which is “attractive value” for investors looking to build or add to position in high quality, growth co. in gold sector
  * Finds it “hard to believe that a well-run operation such as
    Didipio would actually be suspended;” also sees OGC CN trading on attractive valuations


NATIONAL BANK FINANCIALS (Raj Ray, Steve Parsons)

  * Doesn’t see any balance sheet risk for OGC CN, in case of potential suspension of Didipio (~22% of asset NPV)
  * Reiterating sector perform rating, PT of C$4.50 for BTO CN given potential for resolution of cited violations without production interruption or material impact to costs
    * Says Masbate represents 17% of mine/project NAV at C$0.54/shr


SCOTIABANK (Ovais Habib)
  * For OGC CN, under a worst-case outcome, oper. license at Didipio (39% of asset NAV ests.) would be suspended; although at this time its low-probability scenario
    * More likely that there will be requirement for more stringent operating conditions
  * For BTO CN remain optimistic that Masbate (23% of asset NAV) operating license can remain in good standing; final negotiations between co. and govt expected in coming weeks

Global Mining Observer brightens an otherwise quiet day...

...by quoting Ian Ball of Abitibi Royalties quoting Justin Bieber in this interview. It's actually a pretty good piece.

Chart of the day is...

...the gold/silver ratio:


I really don't know what to make of the current action in the GSR, aside from the fact that the immediate drop in the ratio to 55X that the silverbugs promised us was just another crock of delusional excrement from that bunch of permawrongs.

The Barrick (ABX) Veladero mine's suspension is likely to be lifted on Friday

That's what the Argentine judge in charge of the paperwork and the decision said today, after conducting a visual inspection of the mine yesterday. He said that the repairs and preventative work demanded by government and judiciary had been done by ABX and the only thing stopping the mine from going back into production was a Mining Police report on the quality of the work done, which is due in the next 48 hours.

So now you know.

Frank Holmes Says

Killer clowns are bullish for gold. 


This is of course a developing story.