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4/30/16

This Thing Isn't Like That Thing, HudBay (HBM) and Alan Hair edition

My thanks to reader and IKN Weekly subscriber 'DG' for the heads-up on this.

Here's an interesting segment of BNN TV dated April 29th 2016. It features at minute 29:00 Alan Hair, the CEO of HudBay who says on Canadian national TV that there have been no trucking problems, accident or incidents at the HudBay Constancia mine this year. 

Now compare his statements to the cruel reality. This is from IKN363 last weekend, April 24th 2016:
"On April 16th (and confirmed (3) by Peru’s OEFA enviro people on April 20th) yet another 30 tonne truckload of concentrate out of Constancia was spilled in an accident outside the mine. The area affected was around 200m2 (and to its credit, the company went about remediation and recovery of the affected area quickly this time) and thanks to the lack of strong winds, environmental damage was minor. Plenty of different Peru media channels carried the news (here’s a sample (4) (5) (6) but unsurprisingly, you up North didn’t get to hear a whisper. By my reckoning this is the seventh (crazy but true) truck spill accident out of Constancia since the mine started up last year and notably, the last time one happened it caused the protest by locals that blockaded the mine. HBM’s logistics problems in Constancia have been previously documented and the series of accidents, using overloaded trucks under time and performance pressure, is a direct result of this. Another mine-blocking protest may or may not happen this time but, it wouldn’t take much more for HBM to hit a real Black Swan event."

Amazing how Alan Hair can't remember a truck accident that was serious enough to get the Peru OEFA environment control people out and make a full report on the incident. Incredible how he didn't manage to read about it in the press. Innit guv?

So Alan, it's either that you're a bare-faced liar or you as CEO are ignorant and unaware of what's going on at your flagship operation Constancia. Dishonesty or stupidity, Alan, what's the greater crime for a CEO?

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

...in reverse order:

Third Place: "Oceanagold (OGC.to) needs a Haile Mary pass". OGC can deny it ll they like but reliable word from the Haile project is that the OGC "improvements" as planned in its February NR haven't worked out. 
Second Place: "Richmont Mines (RIC.to) (RIC) and Tahoe: "Criss de calisse de tabernak d'osti de sacrament!"". IKN mentions the name of Greg Chamandy for the first time ever on its pages, then M. Chamandy "is resigned" from the company 24 hours later. Which is just a coincidence, of course. By the way, if the mail feedback is anything to go by, this post got popular just for its juicy use of Quebecois slang. RIC clearing the decks? You be the judge.

First Place: "Nevsun (NSU.to) and Reservoir Minerals (RMC.v) to combine???". This post went up Sunday mid-afternoon and the screenshot it contains bore witness to the large SNAFU that somebody at Nevsun created. Please be clear that IKN didn't break this news, we just managed to get a screenshot that confirmed the weirdness. By the time the post went live, Nevsun (under orders from its lawyers Stikeman) hadn't just pulled the web page but decided to take the whole of its website offline! We no know that at 9pm or so that evening the merger of RMC and NSY was formally announced (they were hurried into the news that was planned for Monday morning). Anyway, in the six hours or so between the post and the announcement this story went viral and got hit by the world and his wife, a rare thing for a weekend post. Once the news became official, hits backed off. Thus ends another chapter in backroom hit stuff and nonsense.

Brent Cook on optionality

You may have seen this before (published April 20th) but reader 'UT' sent it over this morning and it's a good reminder of the gaping hole of danger and value destruction waiting for those who think "optionality plays" are a sound way of investing. They're not, they're roulette gambling, so if you're comfortable in casinos go ahead, don't let me stop you.


The Cookie Monster also prefers gold over silver. Agreed on that too.

4/29/16

The Friday OT: Kula Shaker; Grateful when you're dead

This band was so talented they could write killer tribute songs. They should have been a lot bigger than they were.



Part Two of our Kula Shaker appreciation series (there may not be a part three), when I stuck the first one up the other day I got this mail from fellow fan MZ:
I never thought I'd encounter another soul in such a random fashion, who likes Kula Shaker. Funny world we live in. I own a couple CDs. They're far from my favorite music, but they're fun occasionally. To my ears, they're some kind of mix of Pink Floyd, Beatles, The Who, The Doors. Until your post, I had no idea they re-formed.
And here was my mail back:
I listen to absolutely everything. And the thing is, even moderate composers/musicians/singers/bands are allowed to hit one out the park on from time to time (e.g. Oasis). Kula Shaker had the shot at being very good, they decided to be occasionally good instead. So be it. But I liked Tattva from the first 15 seconds of the first listen and have a soft spot for them.

And Hush simply rocks.

Just sharing for the fun of it, I like the mails that come from the Friday OT series. Youtube linko to today's vid here.

Gold market action: VERY strange

Reader 'AK' sends in these two charts of the gold price this morning and this cover note:

"Dont know what just broke - but something did. I'm an avid chart watcher (read - addict). I've never seen anything like this before."

And I agree, this is strange as strange can be. This chart is gold trading the US Dollars today:



This chart is gold in Euros today:



Explanations, anyone?

Choose your battles (from IKN361)

This is how the intro section of IKN361, three weeks ago, wrapped up. As the days click by and the bullish set-up in the miners gains momentum it's getting more relevant, not less:

"In this bullish phase, money will be made by many people and stocks of companies of all stripes and forms get to climb high. Not all of them of course (Do Not Feed The Animals) but a decent proportion will, that’s for sure. Some of those people and companies may or may not be deserving of their rewards according to your own criteria, but they’re going to win all the same. It won’t matter a jot whether you applaud or begrudge their success, whether you are in or out of the same stocks. Unlike Bono from U2, mining companies and their sponsors can indeed live without or without you and as noted on Saturday (1) it’s really nothing personal, it’s just capitalism baby. To that end, a small suggestion: Don’t try and participate in every hot trade idea, don’t feel envy for the success of others, don’t get downhearted when that trade you passed on nails big wins for somebody else. There’s going to be money to be made, but pick your own battles and win your own money. Jealousy doesn’t become anyone."

GLD bullion holdings

Interestingly the holdings of bullion in the biggest gold ETF, SPDR Gold Shares (GLD), are some 20 tonnes lower than this time last month despite the recent pop in gold.

NB: Please note cut down Y-axis

And 20 tonnes of gold is about U$820m worth at current prices, that's not loose change. Data from here.

Chart of the day is...

...the US Dollar:


BE CAREFUL OUT THERE, FOLKS. You're getting fed headlines such as "Gold heads for 15-month high as dollar gets crushed" and while gold's certainly doing just fine, the dollar isn't "crushed"...not yet anyway.

I'd agree that if it clicks down another point from here those headlines will be justified, but note that we saw this very same level three times in 2015, only for the greenback to rebound again. So crushed?...not yet...close yes but not yet. 

If you like to bet on hunches, buy the "weak dollar" story today and if you're right you'll make more money than me on the trade. Because I'm going to wait out on the trade until the odds are stacked more highly in my favour. If that happens it's going to be soon, if it doesn't I save myself pain and a loss.

4/28/16

HudBay (HBM) (HBM.to) 1q16 numbers

IKN Nerve Centre has had a freakin' fascinating evening checking out the HBM 1q16 financials (more a reflection of my sad-ass life than anything else but hey, I'll live). Anyway, about a thousand things worth commenting about in the report and most of them will be on Sunday in IKN364, but here's just one little taster:
  • HBM 2q15 liquidity position, to quote that quarter's MD&A: "At June 30, 2015, we had total pro-forma available and committed liquidity of approximately $436.6 million..."
  • HBM 3q15 liquidity position, to quote that quarter's MD&A: "As at September 30, 2015, we had total liquidity of approximately $300 million..."
  • HBM 4q15 liquidity position, to quote that quarter's MD&A: "As at December 31, 2015, we had total liquidity of approximately $288 million..."
  • HBM 1q16 liquidity position, to quote that quarter's MD&A:"As at March 31, 2016, we had total liquidity of approximately $190.1 million..."

Can't see any problem there. Oh...Wait...

Buriticá Colombia: News on how the eviction operation against illegal gold miners is going

And for that we tune into the words spoken by General Humberto Guatibonza Carreño, comamander of Region Six of Colombia's National Police Force, at a press conference today. Colombia's Caracol Radio does the reporting (translated):
"The operation is going very well. We have intervened in 119 localities, 700 people have been evicted, 19 people have been arrested, nine whorehouses have been closed down. The task continues, it's a long-term objective and it has only recently begun. What I can say is that miners are no longer entering the illegal mines."
For context, the operation has an objective of evicting 6,000 people from the settlements that have sprung up around the illegal mines, which means that a little over 10% have gone in the four days of the operation so far. It's also worth noting here (because I've been asked in mails too) that the illegals and the mines they're working are NOT in the same place as the Continental Gold (CNL.to) project, that's a little further up the valley.

IKN recommends: The Angry Geologist

The Angry Geologist is a new blog set up by somebody known to your humble scribe, which makes it much easier to recommend to you even in its early days because I know the author has a serious geol brain. As for the objective of his blog, here's a part of the first post that lays it out:

"I want to use this blog as a forum to help pull away the layers of BS that junior exploration companies use to massage the data they put in press releases from their projects to 'maximize' the impact of this information on drawing in retail investors into buying their shares.
"I will be presenting a series if opinions on exploration stage project, using all available data on them to try and present them in a way that can be easily understood by people that don't have degrees in geology and mining engineering."

Go over and check out The Angry Geologist blog yourself for more. There's already a geologist's look at the Orex Minerals (REX.v) Sandra Escobar project and hot new discovery to get your teeth into, among other things.

IKN proposes a new industry standard: "Centerra's First Law of Mining"

The concept would be simple enough:

"If you can't spell the name of the place, don't invest there".
See CG.to and its series of NRs over the years for further details, including the jewel out just today of course. Or Lydian. And this law would also apply to bullboard "experts" when they confidently expound on "Equador" and "Columbia". The stupid isn't just confined to pol risk decisions made by mining companies.