Bolivian holiday traditions

aaah, the good old days....

One thing we know about Evo Morales is that he sure likes May 1st to make Presidential decrees:

• In 2006 he chose May 1st to nationalize the oil and gas industry in Bolivia
• In 2008 he nationalized a telephone company then run by Euro Telecom Intenational
• In 2010 he took over four electricity companies, including that of GDF Suez (which pissed off the French press for some time).

Though let's point out before going on that none of these were straight expropriations and Bolivia always reaches a negotiated agreement on the buy out price for the companies. So anyway, what's in store for May Day 2011? Well, let's check on what he said yesterday according to AP:

"AP: President Evo Morales announced the nationalization of some mines that previously belonged to the State. Without giving further details of the companies that may be affected, he said that he would emit an Executive Decree on May 1st "....to nationalize some mining companies that previously were of the State." while assuring that those mines that have always been in private hands would not be touched. "We are going to respect private property", he said."

Which mines come out of this reverse lottery in less than a month is still unknown, but all fingers are currently pointing to Pan American Silver's (PAA.to) (PAAS) San Vicente mine, Coeur D'Alene's (CDE) San Bartolomé mine and Glencore's Bolivian subsidiary company 'Sinchi Wayra' that runs five mines in the country including JVs or Mining Operations Contracts with Bolivia's Comibol State mining company at three of them.

Fortunately, those people your author contacted today with exposure to Bolivia via junior mining companies (this humble scribe has none) seem to think that this won't affect them at all....because Evo said so. Meanwhile your author will feel much more comfortable today as soon as the monkey stuck in his butt has flown out of said part of anatomy.

Mexico's drug violence reaches the mining industry

Here's another excerpt from IKN76, out last weekend, that catches up on the latest developments in the Mexico drug violence as pertains to mining companies there. We first noted the rising political risk for miners operating in the North of Mexico in our September 5th edition and since then things seem to have got a little worse. This is one of the themes that we hope doesn't start developing into a major factor for investors going forward.

Mexico’s drug violence now affecting junior exploration mining companies

A very interesting report came out of Reuters last week (15) that we’re going to reproduce here in its entirety (and thanks to JS for the headsup). Your author has heard plenty of underground rumblings over the last year about this-or-that project that isn’t moving forward very quickly in the northern part of Mexico due to the threats of violence from drug gangs but this report, I believe, is the first time a mainstream news source has picked up on the story, got quotes from a mining executive whose company is exposed to the region (which probably was’t easy either) and shone a light on the potential problem.

 (Reuters) - Mining firms have shuttered a handful of exploration projects in remote areas of Mexico as the industry grapples with threats from drug cartels and rising security costs, Mexico's mining chamber said on Thursday.

Cartels are threatening mining operations not just in the violent corridor along the U.S.-Mexico border but in isolated, mountainous regions in other parts of Mexico, where traffickers grow marijuana and heroin poppies, the chamber said.

Executives belonging to Mexico's National Mining Chamber have reported cases of drug traffickers extorting, kidnapping, attacking and selling drugs to their workers.

Theft of precious metals is on the rise in Mexico, executives said. The government also said this week it caught one cartel member selling iron ore to firms exporting to China.

"We are living a very difficult situation," said Ramon Davila, the COO of Vancouver-based First Majestic Silver Corp.

"There are more and more specific cases of threats from organized crime trying to penetrate areas of mining exploration and operation," he said.

Miners have long seen Mexico, a major copper and silver producer, as a top destination for investment in Latin America. Spending on new projects is on the rise and the industry sees investment at over $13 billion from this year through 2012.

But as bloodshed mounts in Mexico's war on drugs, which has killed over 29,000 people since late 2006, there are some cases of small companies fleeing the country's most perilous areas.

Davila said he knew of at least two companies in Durango state that had shut down exploration projects due to fears of drug violence.

President Felipe Calderon has pledged to crack down on drug cartels and says spiraling violence is a sign the government is making progress as it captures capos and cartels splinter.

But some analysts warn drug violence could eventually undermine the economy as Mexico struggles out of a deep recession and courts international investors.

"Unfortunately, where we operate the response from authorities has not been as fast as we would have liked," Manuel Luevanos, the mining chamber president, said.

STOLEN GOLD, ORE

About two weeks ago, 150 gold and silver bars worth $3 million were stolen from a mining company in the central state of Zacatecas, said Luevanos, also an executive at top silver producer Fresnillo.

Canadian mining giant Goldcorp built a landing strip to fly gold out of its Los Filos mine as the country's highways become more fraught with banditry, said Salvador Garcia, the company's Vice President.

Garcia said security costs had risen 5-10 percent this year compared to last year.

Some traffickers have started their own side business in illegal mining, the attorney general's office said this week.

Steel giant ArcelorMittal recently lodged a complaint claiming iron was being sacked from its concessions in the western state of Michoacan, Jesus del Campo, an official at the economy ministry, told Reuters.

He said some foreign mining companies were encouraging illegal mining by paying cash for tonnes of iron ore, used to make steel in China, without asking for permits.

Mining executives said drug traffickers were encouraging drug use among some of their employees who make relatively high salaries in poor areas.

"A mining camp is an attractive market for drug dealers," Luevanos said. Companies have taken to giving workers drug tests and firing those who turn up positive.

Drug violence around mining facilities has caused concern for the industry. Fresnillo had a case of workers gunned down in front of their families at a mining camp where employees live, Luevanos said.

"This is not just worrying the management. It is sowing terror among (mining) families and many have fled," he said.

IKN back. This, I believe, is a story we’ll need to watch very closely going forward. The only company on our ‘Stocks to Follow’ list that would fit into the potential danger zone right now is (name removed from public blog) so our own exposure is low. Also, let’s be absolutely clear and say XXX.XX has not reported or mentioned any problems vis-á-vis the drug gangs. However, it’s definitely a factor that we need to consider as part of the political risk melting pot going forward, something we made a point of mentioning the last time we ran our regional political risk table in IKN70, September 5^th. This is what we wrote on that occasion, by way of a reminder:

Mexico: We drop Mexico down to 31 this quarter, taking two points from the ‘political stability’ column due to the ever-worsening image problem Mexico has with its so-called “narco-war”, which is hardly a real war but more a three-cornered fight between narcogroup, narcogroup and police/army that’s spiralling a little too far out of control.

The problem is mainly one of national image right now compared to any direct threat to the mining industry, but that’s still something we need to take into account. Also, the risk is clear for any junior mining company operating in the North of the country and it wouldn’t take much more than an unfortunate incident between the narcos and a mining camp or exploration geologists to get really bad looking headlines in the mining trade papers.

Be clear that the vast majority of Mexico is unaffected by this current escalation of drugs related violence, with business continuing as usual. The problem for juniors is mainly one of negative image (the potential investor asks the company IR person, “You’re in Chihuahua/ Sonora/Coahuila/etc State? Oh, any cocaine problems around your way?”) but the risk of future direct problems has grown somewhat, it must be admitted.

Antioquia, Colombia: A post for anyone who is thinking of investing in junior gold miners there

You always have a choice of information sources. If, for example, you prefer to take your Colombia pol risk appraisals only from the IR departments of Antioquia Gold (AGD.v) or Colombia Mines (CMJ.v) or other juniors currently operating and exploring in the Antioquia region of Colombia, then that's fine by me. Or if you prefer to swallow the biased bullshit of stock promoters in trade show presentations using glossy powerpoints and "everything's all right in Colombia now" lines, that's also fine by me.

It's your money after all, waste it the way you want.

However, if you ever get round to doing a bit of serious DD on the region you'll find out something different than the corporate line. Take for example the report linked here, all ready for you to download. It's the latest from the United Nations' OCHA office in Colombia, dated April 2010 (i.e. now). It's one of the typical weekly or bi-weekly dispatches from OCHA. It'll show you just what you're letting yourself in for by throwing money at a bunch of wildcat explorers in the most dangerous region of all South America. It'll also give you a taste of what the IR departments of juniors hanging in Antioquia haven't bothered to tell their willing sheep. Me personally I read this kind of stuff all the time, but I had to rootle around to find something in English. Anyone versed in Spanish has reams of information at their disposal about the dangers of Antioquia. If you don't speak Spanish, you're at the mercy of those who will distort facts to suit agendas.

To wrap up, while you author continues to be very leery on Colombia exposure in general, he makes no bones about avoiding anything Antioquia like the veritable plague, avoiding any junior with liars at the helm who tell me there's no risk and mentally scrawling a great big red "do not trust this person ever again" on the forehead of any newsletter paid bullshit pump pusher who tells me Antioquia is a great place to expose my investment cash. But that's just whussy old me.....

More IFC money flows into mining

What the below means is that Antares Minerals (ANM.v) can get on and drill its 2010 campaign without having to go to market. The fully diluted shares number stays where it is, and $7.5m goes to the cash line. This is a real endorsement of the Haquira project from bigboy financiers that didn't need to exercise these warrants right now but decided to do so in order to add financial backbone to ANM. We very like this news.

Antares Announces Early Exercise of Warrants by IFC

WATERDOWN, ONTARIO, Mar 29, 2010 (Marketwire via COMTEX News Network) --

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Antares Minerals Inc. ("Antares" or the "Company") (TSX VENTURE:ANM) is pleased to announce that IFC, a member of the World Bank Group, has agreed to exercise all 3,750,000 warrants that it holds to acquire 3,750,000 common shares of the Company for a total subscription cost of $7,500,000. These warrants were acquired by IFC in July of 2009 in connection with a private placement. Each warrant entitles IFC to acquire a common share at an exercise price of $2.00 until July 22, 2014. If at any time following July 22, 2011, the Company's common shares trade at $2.75 or higher for 30 days on a volume weighted-average basis, the Company can give notice accelerating the expiry date of the warrants to 60 days following the date of such notice.

As consideration for IFC agreeing to this early exercise of its warrants, Antares has agreed to issue 1,875,000 new common share purchase warrants to IFC. Each new warrant will entitle IFC to acquire a common share at an exercise price of $3.00 until July 22, 2014. In addition, the Company will grant IFC a contractual right to participate in any future Antares financings to maintain its pro-rata equity interest in the Company.

Closing of this transaction is subject to approval of the TSX Venture Exchange and the negotiation and execution of definitive agreements. The new warrants to be issued pursuant to this financing will be subject to a four month hold period in accordance with Canadian securities law.

John Black, President and CEO of Antares Minerals Inc. commented as follows:

"We appreciate the support that IFC is providing as a significant shareholder in the Company. The funds received from this warrant exercise will enable the Company to aggressively proceed with pre-feasibility and exploration drill programs at Haquira while maintaining a solid balance sheet with minimal share dilution. We expect these programs to start with four rigs in April, pending receipt of updated environmental permits.

In addition to ongoing drill programs in 2010, we are also looking forward to the receipt of a preliminary economic analysis (PEA), or scoping study, of the Haquira project. This PEA will incorporate both the secondary SX-EW and primary sulphide zones that have been established to date at Haquira. We believe that this fully integrated study of the proposed SX-EW/mill-concentrator operation will reveal more fully the potential value of the Haquira project. We expect to receive this report in the next quarter."

CONTINUES HERE

Copper Fox (CUU.v) and one teeny tiny piece of The IKN Weekly, issue 44, published yesterday

There were over 13,000 words in The IKN Weekly issue 44 yesterday. Here are 114 of them:

Copper Fox (CUU.v): This is my idea of a near-term springer (a thought that has been the kiss of death to many a speculation). Not only is it cheap right now, it’s sitting next to the overhyped Novagold (NG) that has just secured $100m worth of financing from a man with more money than sense. If PDAC gossip starts swinging round to the chances of NG hoovering up neighbour plays cheaply, CUU might just decide to go on a run. And for what it’s worth, volumes on Friday suddenly lifted off with just an hour left on the clock and broke though what looked like a mini-iceberg at 16.5c. A short-term flip speculation possible.

Then just to make sure, in the conclusion there was this little reminder:

Aside from the usual suspects, keep Copper Fox (CUU.v) on your radar as a potential quick flip trade for the reasons mentioned above....I have a feeling in my bones about that one.

So how's this CUU.v stock getting on today?

Oh look, 23.5% up. Just sayin'....

Exeter Resources (XRC.to)(XRA): Count me in on the spin

I 100% agree with the fine-eyed Toby Shute over at TMF and his call on Exeter Resources (XRC.to)(XRA) as regards the spin out of the Cerro Moro gold asset in Argentina (apart from a small quibble over numbers, as the 646k oz Au is bound to go up while the 16g/t grade is bound to go down and Shute makes no mention that the current inferred resource is still in early days......check the maps, Toby).

Anyway, here's the link to Toby Shute's article on Exeter published today; it does the heavy lifting for me and I like his call, here so go read over at his house. A good, succinct report.

And by the way, If you're wondering where you heard the spin out story first, it was here at IKN on November 18th, 2009. Pip pip!

Canada-Ecuador: When Stock Exchanges Fuel Human Rights Violations

A very interesting article came up on upsidedown world just before Christmas concerning the methods of the junior mining company in South America (Ecuador, to be exact). Written by the author of Ascendant Copper's dsownfall, Carlos Zorrillo, it examines the role of the stock exchange in cases of human rights abuses, using what happened at Intag as its base point. Well worth reading, even if you don't necessarily agree.

Canada-Ecuador: When Stock Exchanges Fuel Human Rights Violations

Recently, Toronto-based Pinetree Capital bought a few million shares of Copper Mesa Mining Corporation, making it the largest share owner of a failing company currently embroiled in a lawsuit. The takeover raised the price of its penny stock upwards to between three and five cents.

Copper Mesa, however, got a lot more than what it bargained for.

Copper Mesa, until last year, was the owner of a couple of mining concessions in the Intag region of Ecuador. But the company ran into a strong, organized opposition from communities, local government and, eventually even the national government, which eventually stripped Copper Mesa of its concessions in the country. The company then had to shed itself of its mining projects in the US to pay off debts, leaving it as empty handed as when it was first aborted.

Needless to say, Copper Mesa’s directors and a select number of employees and shareholders have never been the worse for the disaster they created, which happens to be an established norm in the world of Canadian stock exchange business. The Bre-X case is one which comes to mind. Bre-X was the Canadian company that fleeced thousands of investors of billions of dollars all based on a non-existent gold mine in Indonesia.

Copper Mesa, based in Vancouver, is infamous for other reasons, in addition to wasting millions of dollars on a mining project that has gone nowhere. Its notoriety mostly comes from using the equivalent of paramilitaries in the Junín community to forcefully trying to gain access to its concessions (which they never were able to access even to explore). Interestingly enough, the shootout took place almost exactly three years ago to the day that Pinetree took over the shipwreck called Copper Mesa. The assault against the community of Junin failed completely, but the graphic images and video of ex-military thugs dressed as security personnel shooting at defenseless campesinos went round the world, and is featured on several full-length documentaries about Intag’s successful resistance to mining.

In the rich and varied annals of corporate abuse and stupidity, and in record time, this has become a classic.

CONTINUES HERE

Riverside Resources (RRI.v) and a Live Online Investor Presentation Today

Riverside Resources (RRI.v), the likeable junior exploration play with Mexico expertise and also a hot looking Arizona property in the works, is running a live, interactive free-to-join online presentation today. Here's the company blurb (dated yesterday, so the Dec 8th date is in fact today) and here's the link to go see. Note the time, 10am California/Vancouver.

We are pleased to invite you to Riverside Resources Live Online Investor Presentation (LOIP), taking place tomorrow, December 8, 2009 at 10:00 am (Pacific Standard Time).

John-Marke Staude, President & CEO of Riverside Resources, will provide an overview of the Company and an update on the Company's various Gold Projects located in Mexico and the USA.

So now you know. Here's the link to the Presentation again...be there or be square.

Sandspring Resources (SSP.v): Time to mark your cards

A nice, chunky post for a change.



Sandspring Resources (SSP-H.v) is a shell junior that's about to come out of hibernation and start trading as a DOT V (SSP.v). It's also being massively pumped by that 21st century Barnum, Thom Calandra via his Stockhouse outlets and according to ShillForHire will start trading as early as next week. By the way, if you don't know how Calandra operates the excerpt from this note (or many other like it) will give you an idea of what he was doing just five years ago:

The latest stock jock to retake the field is Thom Calandra, the founding editor of MarketWatch, a financial-news site now owned by News Corp. He has launched a new investment newsletter, Ticker Trax, on Stockhouse.com. A gutsy move, considering that's exactly the vehicle which crashed his career at MarketWatch; an SEC investigation found that Calandra was buying shares of stocks he recommended before he wrote them up in a MarketWatch newsletter, and then selling them after publication. He surrendered $416,109.58 in illegal profits, and paid a $125,000 fine.

So what follows is part of The IKN Weekly issue 14 dated August 2009. In IKN14 we took a good look at this SSP company at the time it was raising capital for its seed financing (cos at the time several subscribers were being invited to join in the cheapo share deal).



For the record, the private placement mentioned in the future tense in the text that follows closed on August 28th, and therefore the escrowed shares also mentioned are unleashed upon the world on December 29th.

DYODD, dude.

Sandspring (SSP.P.V): A new company, a bought deal, DD and ‘cui bono’

Here follows a little walk-thru on a company about to go public named Sandspring Resources. The idea is to show you what to look for when considering a new entrant and how you can decide whether the play can benefit you. On Tuesday 28^th, Sandspring published a PR (8) that piqued my interest. Here’s the first paragraph of the presser:

TORONTO, ONTARIO--(Marketwire - July 28, 2009) - Sandspring Resources Ltd. (TSX VENTURE:SSP.P) (the "Corporation" or "Sandspring") today announced that it has entered into an agreement with a syndicate of underwriters led by Research Capital Corporation (the "Underwriter"), whereby the Underwriter will purchase, on a bought deal basis, 14,285,800 subscription receipts of the Corporation (each a "Subscription Receipt") at a price of $0.35 per Subscription Receipt, for aggregate gross proceeds to the Corporation of $5,000,030 (the "Offering")..........."



It then continues (please check link). So why did this offering grab my attention and why is it a good case-study in DD? The answer is a combination of several factors that should always interest the investor when looking for an investment in the sector, including, company structure, management, resource size, resource quality etc. First a little about the company.

Share structure. The first place I went was, of course, the regulatory filings. According to the last quarterly, SSP is a shell company with has 5.7 million shares out, 600,000 options at $0.10 and no warrants. So my quick math added the offering and then presumed full takeup of the overallotment (Research Capital can place another 2,857,200 units) and got the share structure as

Shares out: 22,843,000

Options: 600,000 (at 10c)

Warrants: 10m approx (at 50c)



This looked perfectly acceptable at face value for a start-up. So it was now time to find out what the company has by way of assets.



Company asset and valuation metrics. The SSP main asset is the 'Toroparu' gold project in Guyana. It is envisaged as an open pit mining operation. In the 43-101 compliant report that was signed off in January 2009 (I can send you a copy, but it's 11 mega), the Toroparu resource was given an indicated and inferred estimate of around 2.3m oz Au, breaking down as follows:



Indicated: 1,369,400oz Au (at 0.93g/t)

Inferred: 973,400oz Au (at 0.82g/t)



It also has copper in the mineral. In fact the resource (low grade gold, copper credit, open pit possible) strongly resembles the Gold Reserve (GRZ) 'Brisas' property in neighbouring southern Venezuela. Contained copper is estimated at 265.5 M Lbs, breaking down as follows



Indicated: 45.574MMT at 0.16% Cu = 160m Lbs Cu

Inferred: 36.8MMT at 0.13% Cu = 105.5M Lbs Cu



From these numbers, the company claims a gold equivalent resource of over 3.3m oz Au, which is debatable. Personally I would use gold at $900/oz, copper at $2/lb to give a 1:450 ratio. This would put Au Eq at 2.89m oz Au..but that's just me. Most of this mineral is in fresh rock, with a little in saprolite rock. As fresh rock is more expensive to process the 43-101 report estimates that mining and processing costs total U$10 per metric tonne. If we assume U$900/oz gold, 0.88g/t gold in the mineral and a 90% recovery rate, this mean the contained gold per tonne of rock is worth $22.92. If we assume $2 for copper and 80% recovery that adds $2.55 to the rock worth. Therefore theoretically (and at the low end of current prices) the mine has a good operating margin.

So after about five minutes of checking out the apparent share structure and the asset I’m interested. This is because if we assume 2.3m oz gold and 23m S/O, it's approx 10 shares per ounce of gold. So from there the approximate in situ gold calculation is easy:



PPS $0.35 = gold is valued at $3.50/oz

PPS $0.50 = gold is valued at $5/oz

PPS $0.70 = gold is valued at $7/oz

PPS $1.00 = gold is valued at $10/oz



And of course these metrics become even more interesting if we add the possible copper credit and calculate using the 2.89m oz Au Eq number (or even 3.2m oz Au Eq). I am assuming CAD$1 = U$1 for convenience in these simple in situ valuations.



These are interesting numbers, especially when you consider that the current $0.35 placement offer comes with a half warrant priced at 50c. In baseball parlance, this company has got to first base in my DD and I’m thinking about just how cheap it seems to be. At this point on Tuesday I even made contact with somebody I sometimes bounce ideas off and said “hey, have a look at this”. However, as you’re about to see, you should never rush into these things on half-baked due diligence.

Share structure revisited. So now that my greed glands had been opened and I was thinking about all that cheap gold about to plop into my lap, it was time to do the careful checking. The first thing was to check all press releases and filings, not just the ones that suited my initial DD pattern. And sure enough the Utopia-like scenario I’d imagined of $3.50/oz in situ gold soon faded away. In a May 20^th press release (9) the terms of the acquisition of the Toroparu property are laid out. Feel free to read the whole thing, but in effect the owner of the property gets 38,156,288 shares of SSP for handing over his gold project. The debt of the middleman company arranging the transfer of Toroparu from the current private owner to SSP (that’s also run by one of the directors of SSP) is also paid off by issuing 3,282,740 shares and 1,804,747 units (presumably share+1/2 warrant) of SSP in lieu of debt accrued. Then $850,000 of the initial placement capital raised by selling shares of SSP also goes to the vendor of the Toroparu property to pay off the capital he placed in the middleman company.

Or in other words, assuming the bought deal placement run by Research Capital goes to plan and the full overallotment is also taken up, the company will have...

Shares out: 66,086,775

Options: 600,000 (at 10c)

Warrants: 15m approx (at 50c and 75c)

...and the owner of the private property will have 57% of the new company and gets all the money back that he put up to get the deal running. All this, of course, makes a big difference to the in situ valuations of the Toroparu gold made earlier. Again assuming 2.3m oz Au here are the revised figures:

PPS $0.35 = gold is valued at $10/oz

PPS $0.50 = gold is valued at $14.36/oz

PPS $0.70 = gold is valued at $20/oz

PPS $1.00 = gold is valued at $28.72/oz

These numbers aren’t half as attractive any longer (for example, market hotpot Keegan is valued at $21/oz right now). However they still look possibly cheap and worth further investigation, so at this point the DD turns to asset quality and to the management team behind the deal.



Management. Firstly the management and there are three directors at the moment. The CEO is Mark Maier, whose main job is working for The Aurum Group. This sounded to me like a mining-related company, but it turns out to be a dental supply company. Maier has a background in finances, holds a CFA qualification and used to work for Merrill Lynch in London. He also plans to step down as CEO and hand the baton to a certain Richard Munson, who is the abovementioned director of the company selling Toroparu to SSP, so if this transaction is claimed to be arms’ length we’re talking about very short arms indeed. The two other named directors at present are the above mentioned Richard Munson and Charles Gryba, an experienced mining executive who knows his job but (and trying to avoid character assassination after getting some off-record opinions from contacts) doesn’t seem to be the greatest of team players.

The role of Maier perplexed me the most, however. Why should a CEO who is also experienced and knowledgeable in finances step down at the precise moment the company goes public? Then on swapping mails with A.N. Other, a possible answer to that mystery came to light. As mentioned Maier works for the Aurum Group, a dentistry/dental supplies company. Here's what my correspondent said on this angle

"The Dental-connection is very interesting. I've seen a number of what I call Dental-deals over the years and they tend to be unmitigated disasters. A very close childhood friend is a dentist in (removed from blog post) and was several years ago President of the dental Assoc of (removed from blog post); He says dentists are the dumbest investors on the planet (he admits he is but at least recognizes it and refrains from all investments...has kids to consume his $). My dream company would be one with a lot of Dentist and Hockey players as major investors!"

So I hope there are no dentists or hockey players in my audience that are now about to unsubscribe from the Weekly :-). But the reason for Maier’s presence may be explained by this; his job may be to sell the seed capital placement to an established circle of investors he knows through his sector. This may also explain the confidence Research Capital has in making the placement offering a bought deal. You may have noted in the first PR excerpt that the offering is a bought deal, i.e. is being underwritten by the brokerage itself and any units left unsold are taken up by Research Capital. A bought deal scenario usually means that the brokerage is extremely confident of a full take-up in the offering, as it doesn’t want to be left holding any excess baggage; it just wants its commission (which in this case is a juicy 8% cash and one warrant for every 10 units placed).



Downsides to the property

The main problem with the SSP asset is that it’s located in the middle of nowhere in the jungle area of Guyana. Water supply is easy enough. It's one day by road in the dry season and unpassable in the wet seasons. River transport is possible. There is an airstrip for light craft with a one hour flight time to the capital, Georgetown. During the main wet season from November to February it rains like you cannot possibly imagine unless you've witnessed it previously (it's not called the rain forest for nothing) and holes in the ground, such as the open pit mine envisaged here, quickly become lakes unless continually and efficiently pumped. There is a second minor rainy season from May to June. Finally there is no power supply anywhere near the place (which shouldn't be a surprise after the previous descriptions).



The other main downside is the relatively small deposit size and low grade. Brisas (the GRZ project) is over 10m oz Au and this is not, but 2m oz or 10m oz still needs a lot of capex spent at the site. Combined with the remote location, this may well turn out to be a project killer. Even in the best of circumstances, a 0.8g/t property needs a lot of work to turn it into a viable proposition for a mine, even if benefitting from viable roads, energy supplies, on-hand labour, clement weather conditions, etc. The $4m or so that SSP will have in the bank once the placement is closed is enough, according to the 43-101, to fund exploration operations in year one. After that there will surely be more financing rounds to come and the mine will still be a long way off.

The bottom line to all this has a practical trading suggestion. I think you’d be stone mad to go for this offer and lock up money in this placement, however there may well be a trading opportunity on the horizon. If you can get shares at the 35c level on the open market when the stock comes out of shell status and starts trading as a ‘dot V’ there is every chance that the promotional aspect will send the share higher while the placement cash is still under escrow. The short-term trade envisaged is to buy early and then sell during the initial promotional push while initial interest is high (that will surely involve mention of 3.3m oz gold controlled by a company with a tiny $25m (or so) market cap). However anyone considering this tactic must make sure s/he is sold and long gone before the dentists’ (and more importantly the owners’) shares move out of lock-up.

John Kaiser skewers the Casey BS show

Still on the road, but this one can be done quickly

I was sent this, written by John Kaiser of Kaiser's Bottom Fish, by A. Reader. Well worth consideration by anyone who reads mining newsletters

Missing the boat and even being dead wrong, however, has not stopped the Casey
gang from tooting its horn in self-congratulation, a having your cake and eating
it habit that Stockwatch's John Woods delights in documenting, much to the
displeasure of the Casey Research team. In a recent egregious example Louis
James of the Casey team reiterated his sell recommendation of Rare Element
Resources Ltd, which he had originally recommended at $1.20 on October 19, 2007.
After watching it sag below $0.50 during 2008 and then jump in late May 2009
after Jim Dines recommended the stock, the writer on June 1, 2009 recommended
"recovering your original investment" at $1.41 to his readers, which meant
effectively selling most of the Rare Element position bought at the original
$1.20 recommended price. After Rare Element shot over $4.50 Louis James
described his pick as being up 228.3% at $3.94 and urged any readers who have
not already done so to take profits. Chalk up another big score on behalf of the
Casey stock-picking team. But in an even more cynical practice widely used in
the group's energy report, the Casey team will write up some expensive oil
stock, recommend buying it with a "stink bid" as much as 50% below the market
price, which is in effect a short sale recommendation, and when the stock moves
higher instead, they "close the position" while listing the stink bid price as
the initial recommendation price. For example, in June the energy group
recommended that readers buy Linn Energy LLC at $13 even though it was trading
at $20, and when the stock instead moved to $24, they closed out the position in
October which in the report is listed as "initially recommended at $13 in June
2009". John Woods probably goes to bed every night praying, "please, please,
Casey Research, please sue me".

Sure fire tell for scammy stocks moving into LatAm

They can't spell the names of the countries correctly.

From New Dimension Resources (NDR.v) press release yesterday:

".. is situated in Equador near the Peruvian border and was acquired by...."

For sure the stock is up on big volumes....

...cos that's what scam pumps do (the insiders know exactly when it's getting the treatment, the rest tag along and get sheared). But what they forget to tell you is the extremely strong anti-mining sentiment in that very northern Peru border region, exactly where NDR.v want to play, in fact. If you don't believe me, ask Dorato (DRI.v) just how far their prospecting has got these last two years...and the kidnappings they suffered. Oh, and did it suddenly slip their mind as to how no mining activity is allowed in national reserves like this one? And wow!, the whole thing about the laws in Peru not allowing foreign ownership of land within 50km of any border. And then there are the tens of thousands of land mines (not kidding) that were left in the area after the Cenepa war (more like a skirmish, but a fight's a fight) between Ecuador and Peru in the 90s. Then there's the total inaccessibity of the area and the way they'll need very expensive 'copter support to go in and visit....and that's tough when you run a company with a around $300k in working capital. But hey...details right? Party on, Garth.

Need I say it? Avoid NDR.v like the plague.

Ka-Ching! Insiders cashing in

Small Ka-Ching! at Great Panther (GPR.to)

Great Panther Resources Limited (GPR)						As of October 8th, 2009
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Oct 08/09	Oct 07/09	Brown, Charles Parsons	Indirect Ownership	Common Shares	10 - Disposition in the public market	-19,500	$0.900
Sep 21/09	Sep 21/09	Brown, Charles Parsons	Indirect Ownership	Common Shares	10 - Disposition in the public market	-13,000	$0.830

Doubleplay Ka-Ching! at Jaguar Mining (JAG.to)(JAG)

Jaguar Mining Inc. (JAG)						As of October 8th, 2009
Filing Date	Transaction Date	Insider Name	Ownership Type	Securities	Nature of transaction	# or value acquired or disposed of	Unit Price
Oct 08/09	Oct 08/09	Roller, James m	Direct Ownership	Common Shares	10 - Disposition in the public market	-8,000	$10.010 USD
Oct 08/09	Oct 08/09	Roller, James m	Direct Ownership	Common Shares	51 - Exercise of options	8,000	$4.000
Oct 08/09	Oct 08/09	Roller, James m	Direct Ownership	Options	51 - Exercise of options	-8,000	$4.000
Oct 08/09	Oct 07/09	Zwerneman, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,000	$10.030 USD
Oct 08/09	Oct 07/09	Zwerneman, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-1,300	$10.010 USD
Oct 08/09	Oct 07/09	Zwerneman, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-3,400	$10.000 USD
Oct 08/09	Oct 07/09	Zwerneman, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,300	$9.880
Oct 08/09	Oct 07/09	Zwerneman, Robert	Direct Ownership	Common Shares	10 - Disposition in the public market	-10,000	$9.855 USD
Oct 08/09	Oct 07/09	Zwerneman, Robert	Direct Ownership	Common Shares	51 - Exercise of options	25,000	$5.250
Oct 08/09	Oct 07/09	Zwerneman, Robert	Direct Ownership	Options	51 - Exercise of options	-25,000	$5.250

Oddlot Ka-Ching at Keegan (KGN) (cos they might not notice if i do it like this, right?), quickly followed by the cute options top-up...nice work if ya can get it, right?

Oct 08/09	Oct 01/09	Fretwell, Gordon	Direct Ownership		50 - Grant of options	25,000	$3.750
Oct 07/09	Oct 07/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-1,000	$5.050
Oct 07/09	Oct 07/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-1,000	$5.010
Oct 07/09	Oct 07/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-500	$5.060
Oct 07/09	Oct 07/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-500	$5.060
Oct 07/09	Oct 07/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-1,000	$5.092
Oct 07/09	Oct 07/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-1,000	$5.092
Oct 05/09	Oct 02/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,000	$3.950
Oct 05/09	Oct 02/09	Fretwell, Gordon	Direct Ownership	Common Shares	10 - Disposition in the public market	-5,000	$3.920

But at least none of the above tries to use the companies as their own regular salary top-up and fleece-em system, unlike scammy things such as TVI Pacific (TVI.to): This is the kind of pattern that throws up serioud red flags. This company puts the benefit of its shareholders, way down the list of priorities (approx eg, 1: mgmt, 2: purchasers, 3: creditors, 4: the cat, ......83: you suckaz) be in no doubt.

Oct 08/09	Sep 30/09	Ridsdel, John Bramwell	Indirect Ownership	Warrants	53 - Grant of warrants	349,740
Oct 08/09	May 24/06	Ridsdel, John Bramwell	Indirect Ownership	Warrants	00 - Opening Balance-Initial SEDI Report
Oct 08/09	Sep 30/09	Ridsdel, John Bramwell	Indirect Ownership	Common Shares	10 - Acquisition in the public market	3,497,395	$0.043
Oct 08/09	Sep 30/09	James, Clifford Michael	Indirect Ownership	Warrants	53 - Grant of warrants	3,458,132
Oct 08/09	May 22/03	James, Clifford Michael	Indirect Ownership	Warrants	00 - Opening Balance-Initial SEDI Report
Oct 08/09	Sep 30/09	James, Clifford Michael	Indirect Ownership	Warrants	53 - Grant of warrants	4,591,811
Oct 08/09	Sep 30/09	Cramm, C. Brian	Direct Ownership	Common Shares	10 - Acquisition in the public market	290,698	$0.043
Oct 08/09	Sep 30/09	James, Clifford Michael	Indirect Ownership	Common Shares	10 - Acquisition in the public market	3,458,132	$0.043
Oct 08/09	Sep 30/09	James, Clifford Michael	Indirect Ownership	Common Shares	10 - Acquisition in the public market	4,591,811	$0.043
Oct 07/09	Sep 30/09	James, Clifford Michael	Indirect Ownership	Common Shares	11 - Disposition carried out privately	-714,286	$0.070

DYODD, dude.

Whatever makes you think Ecometals (EC.v) is full'o'bull, Otto?

Ahh, just a feeling, y'know....

On August 12th, Ecometals (EC.v) said this, adding a new layer of smoke'n'mirrors to its bullshit operations in order to dazzle its obedient sheep-like followers over its Zarza crapshoot project in Ecuador:

The final remaining Environmental Management Plan and Environmental License approvals are expected to be received this month.

Result? Pumpy pumpy, up she goes again.

But wait! Today isn't August any longer. Today be September and there's still no news on those permits. Could it possibly be true that EC.v has been bullshitting the market again? After all, on that same August 12th date I wrote this, offering to accept bets on that permit (non) issuance. Damn pity that nobody took me up on the deal....not even EC.v management.

Question of the day: What common word in capital markets, used when stock drops in price on high volumes, rhymes with the word "pump"?