Birdwatching Alert! Lens-wearing Albatross spotted over Argentine Andes area: Investors should be aware of the wealth removal powers of this bird

They're putting the band back together, folks, so if you got ripped off by The Albatross and company last time, why not just plough right back in and let yourself get sold out for peanuts a second time? Yes indeedy, the Aurelian guys have got back together (with the exception of Barron and Leary....why that should be oh er nobody could guess) and are about to pump their new high altitude next to Pascua Lama all over a mining news information service near you. It's called Malbex, by the way, and they've already raised nearly $10m in seed capital (aka the people who will make money on this). Here's the PR that pre-announces the media onslaught expected in September. Caveat emptor multiplied 1000 times and tattoed on your forehead.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 27, 2009) -
NOT FOR DISSEMINATION IN THE UNITED STATES OF AMERICA
Arapaho Capital Corp. (TSX VENTURE:AHO) ("Arapaho") and Malbex Resources Inc. ("Malbex") report that they continue to progress towards completion of their previously-announced business combination (the "Proposed Transaction").
The Proposed Transaction will be effected by way of a three-cornered amalgamation whereby Malbex will amalgamate with a wholly-owned subsidiary of Arapaho and shareholders of Malbex will receive common shares of Arapaho on the basis of one common share of Arapaho for 1.5 common shares of Malbex.

It is currently anticipated that the closing of the Proposed Transaction will take place on or before August 31, 2009.

Ecuador: Mining Law Approved

Yep, despite the protests from small but vociferous groups of treehuggers and the people that they'd either bribed or brainwashed, it's going on the books.

Last night Ecuador's new law passed its second reading and is now headed up to the executive (i.e. the Muffin) for final i-dottin-and-t-crossin. As this next part is a simple formality we can say for all intents and purposes that the law is on the books and miners can get back to doing what they do best; mining. Here's the official Ecuador Assembly report link.

So let's watch that DMM.to chart today and see if it can't get a bit closer to the gap shown in that previous post. And let's also spare a thought for the Aurelian shareholders who were royally screwed by a self-serving board of directors last year; what price ARU.to today if it still existed?

But my best and warmest thoughts are for Ecuador itself; it might have been an extremely drawn out process, but Correa has done great service to his country via this new law. It banishes the speculators and wide-boys from the scene, it protects the environment (I mean, woe betide any miner that tries to cut corners on this piece of statute) and it will allow Ecuador to grow as a country in a responsible way. Correa might have made a grand-scale error with the bonds issue but this law is a net positive for him, his eventual legacy and his country. Applause.

So what does Dominic Channer of Aurelian think of Ecuador's new mining law?

Dominic Channer (for it is he)

This morning, Aurelian's (now a branch of the Kinross empire) President Dominic Channer spoke on Radio Quito. Here are a few direct quotes from the interview (via OttoTrans™):

"We have followed with great interest the advance of the mining law and we have participated at several points in the mining debate to present our opinons."

Channer then pointed out that the debate goes ahead tomorrow and made a point of mentioning that the law has changed from organic to ordinary. Then there was a whole section about the contentious issue of water (one of the battlegrounds for the treehugger NGOs that have been brainwashing locals about the big nasty miners). Channer said;

"On the subject of water, we see this as a fundamental issue in the law and the fact that there will be many controls with a new water law. We see this as extremely important in the mining sector."

Next came talk about the environment in general. Channer again did himself a service by telling it like it is.

"I think it's important everybody understands that mining has an effect on the environment, but the same as any human activity, any industry, agriculture, daily human life affects the environment. The important thing is how we manage these impacts, and that is why the standards used by modern mining and the control applied by the State are so important."

"(The new law)..has many controls and is much better in this aspect than the current law. This is why a new law was created that has all necessary controls in the environmental area, the social area, the labour area. It's very important people understand that the new mining law takes cares of these uncertainties and is the result of over a year's work."

All in all, a good job done in the interview by Channer and kudos to you, sir. By the way, it's news to me that the debate will go ahead tomorrow (I thought it was just the report handing-over ceremony tomorrow)...let's hope that's true. The sooner the better, I say.

UPDATE: Silvia Santacruz of Ecuador Mining News clears up the slight confusion. Thanks, Silvia!

Hey Otto,

The Assembly's Economic Commission will present their observations to
legislators, tomorrow. Then, they will have two days to read it, and then the mining law will be presented for second debate. Here is the link to the Assembly's website.

http://www.asambleanacional.gov.ec/index.php?option=com_content&task=view&id=16811&Itemid=1

Albatross update

I've been quiet on the subject because Noront (NOT.v) isn't anything LatAm, but the quote from ousted NOT.v headguy Richard Nemis just about sums up what I think of the new board at the company that includes Patrick Albatross Anderson, destroyer of shareholder value at Aurelian and Colossus Minerals.

Richard Nemis said in Canada's Globe & Mail that the ex-Aurelian managers "certainly would not have been my first choice," for board seats because Aurelian shareholders "got shafted" in the Kinross deal.

Well said, Richard. The world of retail investors is waking up to the fact that management is every bit as important as projects for a junior miner. Mediocre, self-centred and self-serving arrivistes such as Anderson need to be called out. He thinks he can just waft in and take over one of the most exciting mine projects in Canada after the stunt he pulled at Aurelian and not be the centre of well-deserved vitriol? You have to be joking, Albatross!

How Ari Sussman must be regretting his decision to add Albatross to the Colossus BoD. After the latest NOT.v mercenary act from Anderson, I wonder how long it will be before Sussman (a guy with a decent reputation) decides to issue the "we thank Patrick for the contribution he has made and wish him the best in........." press release?

CSI.to (Anderson joined early September)

A final word; the last time I mentioned the albatross was in this post. A few days later I got a mail from a person in the mining world that said (words to the effect) that it wasn't very fair of me to keep attacking Anderson, and that it wasn't a way for me to make new friends.

You see, dear reader, that's how the insider's club of junior miners keeps itself going. "You want to make money with us? Well stop the badmouthing, be a good little boy and then we might let you join." All I can say to that person is, "Expect more on Anderson and his type at this blog, because I really don't need any new friends, and I certainly don't need the soiled money." I wrote back to that person and said that if Anderson wants to spend the rest of his life as a geologist and bang rocks together, well that's fine by me. But he has decided to cross the line and become a business-oriented CEO/director and is now fully and clearly in the world of finances, money and shareholder responsibility.

So far Patrick Anderson has done nothing...absolutely nothing...to warrant the trust or praise of anyone outside the small, self-interested mining clique. He's in my world now, the world of looking after shareholders. And I'll be damned if I'm going to put up with people like him snatching money away from the people he should be caring about for the next twenty years.

Got it?

Related Post
Colossus Minerals (CSI.to) and "The Anderson Effect": An update

Colossus Minerals (CSI.to) and "The Anderson Effect": An Update

"There is an ancient mariner
and he stoppeth one in three (projects in their tracks)"

It hasn't taken shareholders in Colossus Minerals (CSI.to) long to find out about Patrick 'Albatross' Anderson's uncanny knack of relieving them of shareholder value in short spaces of time. Here's the updated share price chart of CSI.to with Anderson's arrival date marked nice and clearly;

This despite the words of CEO Sussman who said at the time, "Patrick's wealth of experience in the mining industry will add tremendous value to our Company......". Maybe I'm a bit confused, but isn't a 47.7% drop in share price the opposite to what you had in mind, Ari?

Don't say that Aurelian shareholders didn't try to warn you CSI guys. At least you have the consolation of assuming that any options agreement Albatross struck must be way out the money now. So as tribute to Anderson's finely tuned powers, here's a short Monty Python sketch to send you into the weekend. Enjoy.

Related Post (Sept 8th)
breaking news: sell Colossus Minerals (CSI.to)

Message to Tye Burt, CEO of Kinross

Dear Tye,

What is it with you guys up there? Can't you find another source of intelligence on Ecuador than this blog? I mean, I didn't mind so much how you Kinross-y people kept hitting this site while the Aurelian buyout was in full swing, but since that died down you would have thought a snarky little corner of cyberspace like this wouldn't be of much interest to a multi-mega squillion goldmine dude like yourself. But no! Every time I so much as mention the word Ecuador the site gets hit half a dozen times by people from your head office.

So here we go with my list of questions, Tye.

1) Are you reading me, your minions, or maybe a combo of the two?
2) You've been talking a lot about your "on the ground intelligence" in Ecuador (like at Denver the other day...nice speech, BTW). If that's based on this blog, you guys are in serious trouble cos what I write here is about 25% of what I know.
3) If things are so interesting here, how about you sponsor the site with and advert or something? Or better still, just send me money. You know it makes sense.
4) And what is it with the gold-coloured ties anyway?

It'd be great to hear from you, and maybe you can just cut out the middleman who's been feeding you all the Ecuador intel this way (or in other words, fire the guy who's been parrotting my posts to you all this time and pay me half his salary). Feel free to mail me at otto.rock1 (AT) gmail (DOT) com, Tye*. Or just go straight for the Paypal button. Have a nice day now, y'hear?

*tye...tie....gold....gold....Ahhhh!! I get it!

Ecuador and the mining windfall tax issue

Over at Ecuador Mining News Silvia Santacruz has written an interesting story on the ongoing "will-they-or-won't-they" story on the government and its plans (or non-plans) to charge a windfall tax (WFT) to the country's nascent mining industry.

Go see the whole story for yourself over at EMN, but in a nutshell gov't mining person Xavier Cordova made a speech at last week's Denver Mining bash and seemed to say that the gov't was going to scrap plans to charge the proposed WFT, citing the negative fallout that Mongolia had suffered in its mining sector since trying to introduce a WFT there. The speech was picked up in several places, but now EMN reports that it's received communication from José Serrano, (Cordova's boss) that says Ecuador still plans to charge the WFT. Silvia's piece does a good job in presenting the whole story, and adds links to relevant articles about the whole issue. Recommended reading.

So what's going on here? For a start, we're one week before a key election in Ecuador. This means that the gov't may be acting politically to shore up support amongst those who oppose mining in the country and might change their referendum vote to "no" on the 28th because of the whole issue. Or in other words, anything said by the Studmuffin gov't right now needs to be taken with a pinch of salt. Words words words.....this is LatAm! Gimme a signed piece of paper, then you have my real attention.

More importantly, as José Serrano seems to have pointed out in his mail to Silvia, the windfall tax is not a law that is controlled by the mining (and petroleum) ministry. It is strictly a fiscal law that comes from the taxation sector of Correa's government. Therefore Cordova can say what he likes about a WFT being bad or good in Mongolia. Serrano can, too. It's not up to them.

My feeling is that the truth lies somewhere in between the two positions. The WFT is not part of the new mining law (due out in October) but I'm pretty sure that the WFT will make it to the legislative books in Ecuador as part of the new fiscal package. However the practical application of the WFT is the most important part of all this. The WFT is slated as to be applied on a case-by-case basis, which means miner X may well end up paying more than miner Y, and for myriad reasons.

Also, the WFT is applied to a base case price for the metal, and that is open to adjustment from the mining ministry (presumably in conjunction with Studmuffin Correa himself). This means that if Ecuador so decides, it can say "Ok minerguys, if gold goes above $950/oz, or if copper goes above $3.50/lb you pay the WFT", but it could also say "Ok minerguys, no need to worry about the WFT until copper breaks $4.50/lb and gold's at $1,100/oz."

To sum all that up
1) Let's wait til after the 28th to find out the real story.
2) Let's see what the new mining law brings.
3) Even then, the mining law doesn't control the WFT.
4) And even when the gov't says "yes, we'll apply the 70% WFT as planned", the whole thing is still open to wide-ranging interpretation.

The bottom line is that anyone who expects the next few weeks will bring total closure on the market doubts about the future Ecuador's mining industry is going to be disappointed. I am confident that the whole package will be resolved in way that's fair to both sides at some point in the future. Just don't ask me 'when', ok?

Message to the Aurelian Agoracom bullboard

We must be humble. We are so easily baffled by appearances
And do not realise that these stones are at one with the stars.
It makes no difference to them whether they are high or low,
Mountain peak or ocean floor, palace, or pigsty.

There are plenty of ruined buildings in the world but no ruined stones

Hugh MacDiarmid, 'On a Raised Beach'


It's over. You need to come to terms with that. If it were 65% or 70%, you'd have a chance in putting up some rearguard action fight. But Kinross has already bagged 80.8% of the total float (As a sidebar, yep it's 80.8%. That's also the way it is. Also, be clear that Kinross will be snagging remnants on the open market). It's now an easy technique for Kinross to reach 90%, and I read just one post on your board that mentioned the technique (I apologize but I can't remember who the poster was or what page it was on or what the title was, either). All Kinross needs to do is use the time-trusted method of dilution. It goes a bit like this, with simplified mathematics:

Company X has 150m shares
Company Y takes over by bagging 80% of those shares (120m shares)
Company X then dilutes 200m shares to raise capex capital, all of which go to company X or friends

Company X now has 320m of 350m shares (over 90% of total float). Compulsory purchase then enacted. Game, set, match. It may not be very pretty, but who said capitalism was?

So from here, I think you have three options:

1) Tender your shares to Kinross. Yes, it means you admit defeat somewhere inside. However it must be said that losing in the stock market is a healthy activity as long as the investor can learn from the experience and apply it to future trades.

2) Hold out. To be honest I see no harm in this, but be clear that holding ARU is for all intents and purposes holding Kinross. Aurelian will now trade in total lockstep with Kinross unless;

a) The Mining Law turns out to be unfavourable to business, in which case both stocks will drop but ARU will drop harder than Kinross (for the record, I think this scenario is very unlikely).

b) Any legal action becomes fruitful to Aurelian shareholders, in which case Aurelian stock will go up compared to Kinross. This brings me to point three.

3) Begin the class action suit you have talked about. I do not know at this point where you stand with this. If you 'go for it' you need to be clear that you are up against a whole ingrained system that may or may not be injust (and in no particular order upset the cozy game played by Canadian companies, brokerages, analysts and the OSC) and will therefore be a tough battle. I'd consider two paths and their consequences right now.

• a) You go for it, start a class action. It either goes to court or it doesn't. If it goes to court you may or may not win. I am not even trying to guess the outcome right now as I have no idea what arguments would be used to prove breach of fiduciary duty. If it doesn't get to court it means you settle at some point with Kinross. This would certainly be an ostensibly better deal than the one on offer, but I'd ballpark guess you'd have to pay maybe a third of the winnings (or maybe even the total payout, which would be worse) to your legal team.

• b) You don't go for it and decide not to prosecute a class action. Fair choice too, but it means admitting defeat. See point 1) above.

I've read you guys regularly over these months, and FWIW I think that you're a bunch of excellent people overall. I think it would be a pity, a true pity, to see you descend into the kind of attitudes demonstrated in the radical goldbug and silverbug world where people claim to have absolute 100% proof of illegal conspiracies, manipulations and suchlike but prefer to hold a grudge against the world for literally years than either do something about it or admit they're wrong. The reason I mention this now is that as I read through the board last night, the word "denial" was uppermost in my mind. Shit, I have my moments of denial too; no-one is innocent here, but that doesn't mean to say I can't recognize the genuine article, either. Denial is a valid part of the process, as long as you don't get stuck on it. For denial to be healthy, it needs to be temporary.

I hate this ARU/KGC deal, but i also live in the real world. The most important thing here is to come away from this sorry episode as better investors. If you hold on to the present situation, shake your fist at the world and deny that it's over, the chances of actually learning from this are lowered. Hell, I've learned valuable lessons from all this mess myself. The main one for me, personally, was the absolute reinforcement of the importance of a good management team. As a e-mail friend wrote to me "CTQ would never, never, never have accepted this deal." I'm not putting CTQ mgmt on a pedestal via that comment, I'm just showing that an experienced (and already wealthy) CEO would have been a better person to have at the helm at ARU than greenhorn who has to sell stock to buy a house.

However, if you do learn from all this and you do become a better, more astute, more cynical and an altogether wiser investor, profit missed or money lost this time will be money well spent in the long-term. Basically you'll be better at this game than before. Every cloud etc etc, which sounds cheesy perhaps, but it's also true.

If you didn't enjoy the contents of this post I wouldn't be surprised, but somebody has to tell you. Feel free to kill the messenger if you like. I'll leave you with another block of Hugh MacDiarmid's poem "On a Raised Beach," simply because I'm feeling all philosophical and insular on this Sunday morning. His complete works are available in the Penguin Classics series, if you're interested in "The Geologist's Poet".

What happens to us
Is irrelevant to the world's geology
But what happens to the world's geology
Is not irrelevant to us.
We must reconcile ourselves to the stones,
Not the stones to us..

Kinross and Aurelian

I have to applaud Tye Burt and Kinross (KGC) for blind-siding the entire field and snagging nearly 75% of Aurelian (ARU.to) shares at a knock-down bargain price (which will rise to over 80% once the employee options go through the system). Once Ecuador's constitutional referendum is over and done with, the country's new mining law will hit the streets, the world will see that Fruta del Norte will have a a stable economic and political base on which it can move forward, and Kinross stock will undoubtedly benefit. Kinross has proved the old adage about fortune favouring the brave. Kudos, Tye Burt.

The losers are the small retail investors, and that includes me. The only silver lining that can be offered right now is to say that the band of brothers and sisters that formed around safeharbour and his agoracom bullboard will certainly become better investors thanks to this experience. I also applaud you all over there. Of course, there are still 20% of Aurelian shares untaken, so the remnant will still trade. No need to be a part of the Russian exposure to keep a hold of FDN (for the moment, at least).

As for Patrick Anderson, I'm going to refrain from saying a lot of the things I could say (there are posts already written, anyway). I'll limit myself to "not a good businessman", and be very clear about the fact that in the future I am very unlikely (and only because 'nevers' don't exist in CapMkts) to invest or to recommend investments in any company with him as a board member.

Aurelian Resources: how some people reacted to the news

This is simply unmissable, so I've made this the first embedded video to grace the site. I have no idea who SOCKOFAN is, but he has my undying gratitude.

As the blurb left by SOCKOFAN says on the youtube page:

"This was Hitler's reaction when he was told of the Kinross Gold offer to buy out Aurelian Resources. My German is rusty, but I translated it as best I could."

Absolutely wonderful stuff, though I should mention there's a little bit (not much) of adult language about half way through, so no viewing if offended easily or in the company of seven year old nieces, please. Caveat over with. Click and enjoy.