Congratulations to Pan American Silver (PAA.to) (PAAS)...

...for managing to kill two of its workers in Peru in separate accidents this last month. An impressive tally even by your pathetic health and safety record

And as is usual for the PAAS there are no work stoppages, no inquiries, no announcements in the press about the fatal accidents. The only place to find out about the PAAS deaths is at the right page buried in the centre of the Peru Mining Ministry website and it's only there because PAAS is obliged by law to pass the information along.

So spare a thought for Ronald Edson Comun Espinoza who was working as a contractor at Pan American Silver's Huaron mine. And spare another thought for Santos Martin Solano Salvador, who was a full-time employee at Pan American Silver's Quiruvilca mine. Because they're both dead now.

Thinking about Pan American Silver (PAA.to) (PAAS)

It does seem like good value compared to specific market peer tickers.

What might put you off buying PAAS is the belief that the silver market is currently going up shit creek without a paddle, but if you believe that you're probably a technical analyst and it's beyond the ability of this humble corner of cyberspace to help you. So overall it's probably a pity your author won't ever buy the stock, what with its cruddy record on environment, health & safety and social issues in Peru. Money isn't everything, y'see. DYODD

No nationalizations in Bolivian mines

Bolivia Weekly has the English language scoop on it, which includes:

"Last week, Coeur d’Alene announced that the Morales administration had assured it that it wouldn’t be nationalized; now it appears that the Pan American Silver’s San Vincente and Swiss-owned Sinchi Wayra’s mines will not be affected."

The reason? It seems that the unions at the mines don't want them to be "recovered" (i.e. nationalized) by the State. Meanwhile the deputy mining minister said, "A recovery of the mines that were owned by the State mining company Comibol and had been passed over to private mining companies for their administration and exploitation had been considered; but the condition was that the unions working in each of the mines were to agree to this (recovery). All the unions are against (this move), it's not going to happen."

Read more at Bolivia Weekly here.

It's easy to win an award in Peru

Take for example the Sustainable Development Award (in the Promotion Initiatives for Local Development - Mining category) announced by Pan Pamerican Silver (PAAS) (PAA.to) yesterday evening. One reading the self-congratulation blahblah your humble scribe couldn't help but wonder why PAAS, a company with an abysmal record for Health & Safety in Peru, could manage to get a gong for social stuff. Then I worked it out:

• Between 2000 and 2010, PAAS has seen 25 worker deaths in its Peru operations.

• Between 2000 and 2009, there were 23. That works out at an average of 2.55 every year.

• In 2010 PAAS has only managed to kill 2 of its workforce.

There you have it! PAAS has got its killer ratio down by over half a person this year. Gotta be reason to celebrate, right? And a final thing before we leave; check out the PAAS perforomance next to the silver ETF (SLV). 

Is there any reason to hold this stock? Just buy the metal and be done.

Mexico drug gangs and Pan American Silver (PAA.to) (PAAS)

Here's a small clip from IKN78, out yesterday. Funny how PAAS hasn't bothered to tell its shareholders about the robbery, innit?

Mexico Mining and drug violence update

Further to our feature in IKN76 of the Reuters story about the rise in drug violence crime that is beginning to affect Mexico’s mining industry, your author has noticed an upsurge in reporting in the Spanish language on this issue that include declarations from Mexico’s Camimex that (we quote), “some murders have already been registered in mining camps in the country.”

We can also confirm via a report in Spanish language business magazine Milenio (14) that the mine affected by a recent robbery was Pan American Silver’s (PAA.to) (PAAS) La Colorada mine, when 150 bars of silver/gold doré were stolen with a metal value of $3m. Your author finds it interesting that the victim of said robbery was one of Mexico’s larger, internationally owned mines with an annual production that ranges between 3.5m and 4m ounces of silver per year, not some small artisanal company with probably much less in the way of security infrastructure. By way of a geographical location reminder, La Colorada is situated in Zacatecas state, roughly midway between the cities of Zacatecas and Durango.

Gold Fields (GFI) and Pan American Silver (PAAS) (PAA.to): One thing in common, one thing different

One Thing In Common

Both Gold Fields (GFI) and Pan American Silver (PAA.to) (PAAS) have plenty of mine worker deaths on their track records. Here's the latest from GFI, meanwhile the 14 deaths suffered by the PAAS workforce in Peru since 2006 (in many and varied accidents) are noted here.

One Thing Different

Gold Fields shuts down its operations to investigate the deaths on its shifts. Meanwhile PAAS  clearly doesn't give a rat's ass about the people it employs and just keeps the machine rolling, never closing down to investigate its long track record of negligence. 

The mining company I'd prefer in my portfolio is the one that at least tries to make an effort on its accident rate. The company I reject out of hand is the twisting bullshitters who hide the multiple deaths behind award gongs received in other countries from other mines. Ross Beaty, do you really give a damn? Is it all just for show and the money? C'mon dude, explain why so many people have died at your mines one time, willyaz?

Mining PRs and the Ottotrans™, Part 29

Today, we look at the NR released just a few minutes ago by Pan American Silver (PAA.to) (PAAS).

This is what they wrote:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 13, 2010) - Pan American Silver Corp. ("Pan American" or the "Company"), (TSX:PAA)(NASDAQ:PAAS) is pleased to report that its two Mexican mines, La Colorada and Alamo Dorado, have received the prestigious 2009 Casco de Plata (the "Silver Hardhat") safety awards. The awards are granted annually by the Mexican Chamber of Mines (CAMIMEX), to the safest open pit mine and underground mine in Mexico.

The La Colorada mine won the 2009 Casco de Plata in the category of underground operation with more than 501 workers. La Colorada currently has approximately 669 employees and contractors. The Alamo Dorado mine won the 2009 Casco de Plata in the category of open pit operation with fewer than 500 workers. Alamo Dorado currently has approximately 280 employees and contractors.

Commenting on the awards, Steve Busby, COO said, "We take great pride in the safety record at our Mexican operations. Both our Mexican mines are consistently ranked among the safest operations in the country. CONTINUES

And this is what it means:

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 13, 2010) - Pan American Silver Corp. ("Pan American" or the "Company"), (TSX:PAA)(NASDAQ:PAAS) is pleased to report that its two Mexican mines, La Colorada and Alamo Dorado, have received the prestigious 2009 Casco de Plata (the "Silver Hardhat") safety awards. The awards are granted annually by the Mexican Chamber of Mines (CAMIMEX), to the safest open pit mine and underground mine in Mexico.
The La Colorada mine won the 2009 Casco de Plata in the category of underground operation with more than 501 workers. La Colorada currently has approximately 669 employees and contractors. The Alamo Dorado mine won the 2009 Casco de Plata in the category of open pit operation with fewer than 500 workers. Alamo Dorado currently has approximately 280 employees and contractors.
Commenting on the awards, Steve Busby, COO said, "We take great pride in the safety record at our Mexican operations. Both our Mexican mines are consistently ranked among the safest operations in the country. On the other hand, we don't give a rat's ass about the workforce in Peru, as is clear from the current government statistics. Since 2006 we've seen 14 deaths from accidents at our mines in Peru. But hey, who gives a damn, right? Only miners."

The main difference between Chile's mining industry and Peru's mining industry is that........

....Chile, being the closest thing LatAm has to a serious country, takes a responsible attitude towards Health & Safety issues. Meanwhile Peru doesn't give a rat's ass about the number of people that die on the job.

Take for example the news out today from Breakwater Resources (BWR.to), that reports its Toqui mine in Chile has been closed down pending the investigation into an accidental death on site this weekend. One death = mine closed and authorities wanna know what's going on (which is how it's supposed to be, folks).

Now take the example of Pan American Silver (PAAS) (PAA.to) that has managed to see not one but 24 deaths at its operations in Peru (yeah seriously, TWENTY FREAKIN' FOUR!!) in the last ten years but its operations have never been shut down by the authorities, its accident record never questioned in the official offices and therefore has just kept on killing and killing and killing.

Hey Ross, maybe that Curly flower is telling you something after all....

Pan American Silver (PAA.to) (PAAS), the long-term pattern of fatal accidents at its mines, and Oscar Wilde

Let's kick off this post by paraphrasing the great playwright: "To lose one miner may be regarded as a misfortune, to lose twenty-four looks like carelessness."

Pan American Silver (PAAS) really likes to impress people with its growth, its profit margins and even its talk about health & safety, concern for its workforce and all such smokeblowing exercises. But beneath the shiny happy corporate façade, the record of PAAS when it comes to accidents isn't bad, it's downright awful. Here's a little list of names, dates and place to mull over:

Pan American Silver (PAA.to) (PAAS): 24 deaths in its Peru mines
Date of Accident	Mine Unit	Region	Full Name of Victim	Accident by type
09/11/2000	Quiruvilca	La Libertad	FREDY HERNAN MENDOCILLA VILLANU	Machinery Op.
09/11/2000	Quiruvilca	La Libertad	JUAN ESPINOSA CASAMAYOR	Machinery Op.
18/12/2000	Quiruvilca	La Libertad	RONALD RAUL ASTO CAMPOS	Explosion
27/03/2002	Quiruvilca	La Libertad	SEGUNDO BASILIO CASTILLO	Rock fall
06/04/2002	Quiruvilca	La Libertad	SANTOS TEODORO REYES RODRIGUEZ	Rock fall
21/10/2002	Quiruvilca	La Libertad	YSIDRO FRANCISCO GIL ARANDA	Asphyxia
30/03/2003	Quiruvilca	La Libertad	WILMER AGUILAR ROSAS	Asphyxia
07/05/2003	Quiruvilca	La Libertad	FREDY ROY VALENCIA ZAVALA	Rock fall
13/02/2004	Quiruvilca	La Libertad	PEDRO MELANEO REYES RODRIGUEZ	Electrocution
27/05/2005	Quiruvilca	La Libertad	JULIAN TANTAQUISPE MENDEZ	winch malfunction
03/09/2005	Quiruvilca	La Libertad	JULIO CELSO SOLORZANO SANCHEZ	toxic gases
27/10/2005	Quiruvilca	La Libertad	SANTOS RUPERTO LUJAN CAMPOS	Rock fall
19/03/2006	Huaron	Pasco	ABEL ANGEL PALOMINO LOPEZ	Rock fall
21/03/2006	Huaron	Pasco	EDMUNDO ANGEL SUCARI MATEO	Rock fall
23/02/2007	Huaron	Pasco	RICARDO ZACARÍAS PINO BORJA	Rock fall
25/05/2007	Quiruvilca	La Libertad	RUBÍ DANIEL INFANTES AGUILAR	Asphyxia
16/08/2007	Huaron	Pasco	JESUS ANIBAL ALBERTO ALCANTARA	Rock fall
20/12/2007	Quiruvilca	La Libertad	ROBERTO EMITERIO TOLEDO GARCIA	Rock fall
08/02/2008	Huaron	Pasco	LUCAS ANTEDORO ALVAREZ LOYOLA	Asphyxia
20/05/2008	Quiruvilca	La Libertad	EDWARD ELIVEL GIL VERA	Rock fall
26/09/2008	Quiruvilca	La Libertad	MARTIN DANIEL VELASQUES BRUNO	Asphyxia
13/11/2008	Huaron	Pasco	OSWALDO RAMIREZ GUTIERREZ	Rock fall
03/06/2009	Huaron	Pasco	ELDELFONSO ISAIAS BALVIN SIERRA	Rock fall
02/02/2010	Huaron	Pasco	PERCY YDDAR CHUCAS HUAMAN	Suction and/or burial

All data from Peru's Ministry of Energy and Mining

Yes indeed, in the space of the last ten years at its Huaron and Quiruvilca mines in Peru, Pan American Silver has seen no fewer than 24 of its workforce die in mining accidents. Now for sure mining isn't a job like needlepoint or macrame; it's a dangerous world and fatalities will happen. But when there's a never-ending line of deaths from mining units operated by the same company, you have to wonder when the phrase "accidental death" needs to be replaced by the phrase "criminally negligent". It's certainly interesting to note the different reactions to the terrible coal mining accident in the USA recently, where 29 poor souls have lost their lives (and may they rest in peace). Here we have a closely equivalent 24 people that haven't mustered up a single headline between them, but surely the slow, steady but non-stop drip drip drip of deaths at a single mine speaks far more loudly of negligent practices by the company in question than a single, tragic event?

To make matters worse, PAAS President Geoff Burns is all too aware of the poor safety record of his mining units and doesn't seem to care much. As part of a recent mail exchange with a reader of IKN, who tackled him on the deaths at Huaron and Quiruvilca (I got all the exchange here, fwiw) Burns wrote that:

"...... the health and safety of each and every employee and contractor that works at one of our mines is and always will be of the highest priority. I am informed within hours in the unfortunate event of a fatal accident, should it occur at one of our operating or development properties. Our staff if mobilized immediately and I am then provided with full details on each incident once a thorough investigation has been conducted. This information is then shared with the senior safety and operating professionals throughout our organization and we then ensure that the proper actions are taken to try and prevent recurrences and further mitigate risks to our personnel."

Well, let me tell you something, Burns; your health and safety policy way sucks and doesn't work, however much you try and talk it up. And how can H&S be of the highest priority to the company when you never report fatal accidents to your shareholders, your "prevention of recurrences" policy clearly doesn't work (and there are 24 reasons right above these words to prove that) and you never have the common decency to mention the pisspoor company H&S record in the company annual reports, unlike so many other large mining companies who are rightfully proud of their records and aren't trying to cover up the blood of its workforce?

By the way, Burns, the reason why I have all the e-mail exchange you had with the IKN reader (and now EX-shareholder of PAAS who was a shareholder at the time the exchange started) is that he got fed up waiting for you to answer him. So your IR policy sucks bigtime, too.

With something approaching irony, PAAS founder and chairman Ross Beaty this year won the Viola R. MacMillan award at PDAC, a gong handed out for mining development. Apparently, the award does not take into account everything that should be developed by a modern mining operation, such as a board of directors who pay more than simple lip service about the welfare of its workforce.

Peru's Roll Call of Shame: Reaction

Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them?

Manic Depressive Prince, Elsinore
Long time ago and quoted out of context

I've had plenty of mailbox regarding this post on Feb 5th (which contained the chart you see above) about the number of deaths in the Peruvian mining industry over the last four and a bit years, but none better than a mail received yesterday evening from reader 'TK'. Said reader has kindly given me permission to paste an excerpt from his mail and here it is:

I have to admit the roll call of shame on your website 5 Feb was a shocker to me.

Not that I thought miners all walked around with halos over their heads, but I own some Pan American Silver and the news that there have been so many deaths at their operations in Peru is disturbing. I have been hearing more about, and starting to pay more attention to, the nasty stuff some of these companies are up to, and getting away from owning them and moving to ones that can actually live up to their claims.

Pan American isn’t one I expected to hear this about, as they have a pretty clean image. That they have worked with Doe Run Peru, another on your list, makes it worse.

TK, you're my kind of investor. Mining is a positive thing for society and the good players in the industry should be supported, but the modern responsible miners are still offset by those that are using dubious practices to forward their bottom lines. People should ask serious questions of companies such as Pan American Silver (PAAS) (PAA.to),Volcan (VOLCABC1), Buenaventura (BVN) and any other company with a clear, long-standing track record of neglect towards their workforces. At the same time, why aren't there voices congratulating those miners such as Southern Copper (PCU) that show us exemplary attitudes and minimal accident rates? Australian mining companies are very hot on their worker accident rates.....why doesn't the USA or Canada care about these things?

UPDATE: Reader 'PR' writes in to note that Pan American Silver (PAAS) (PAA.to) has its earnings call coming up on Feb 16th. Any of you mighty analyst suits ready to ask the brass about the company's health and safety record on the conference call? Go on, I double dog dare you.

The roll call of shame: Peru's most dangerous mining companies

News this week from Peru's mining industry wasn't very good, with eight miners dead in an accident in an informal coal mine in the Oyon region of the country. The Minister in charge promised to levy severe sanctions against the unlicensed company in question and its owner (quite right too), but it has thrown a bit of a spotlight on the dangerous life that miners face in the country.

So eight dead and sanctions to come. Fair enough, but what about the other mining companies in the region that are also tried and tested deathtraps for its workforce. Here is a table showing the top 20 offenders in this category (that account for 57% of all mining deaths in Peru in the period) and to my surprise, it features not just little, national based companies but some of the large multinationals that quote in the northern exchanges.


Top of the list is the very large zinc/lead/silver miner Volcan (Lima stock exchange, ticker VOLCABC1) which doesn't have a bad safety record, but an abysmal one. In the last four years (including one death at the end of last month), it has watched as no less than 31 of its employees die on the job. Run by the ......errr.....eccentric Letts family, it's infamous for its poor working practices. Look above and see why, cos that's 12% of ALL mining deaths in the country from this single company and they don't get so much as a slapped wrist. Oh, how great it is to have friends in power, eh.........

Next on the roll call of shame comes Pan American Silver (PAAS), which should bring shame upon those up North. This large North American silver company is quoted on both the US and Canadian exchanges, but strangely doesn't make much mention of the thirteen Peruvian deaths at its operations since 2006. This company is a stain on those who talk the good talk about responsible mining practices but can't walk the walk.

Then comes Buenaventura (BVN), a Peruvian company quoted in the USA. Again, how can these publicly quoted companies get away with this? As we go down the list, there are plenty of Lima stock exchange-quoted companies, but ones that will catch the eye of those not so au fait with the local companies are Doe Run Peru (natch) and Barrick at its Misquichilca gold mine.

Not all foreigners are bad ones, though. Companies such as Southern Copper or Xstrata at Tintaya would have preferred zero deaths in the entended period shown, but as it is both companies have one death to their names. Nobody is claiming that mining isn't anything but dangerous and death, sad as it may be, will happen. But when companies such as VOLCABC1 and PAAS have an ongoing and regular pattern of above-average fatalities at their operations, there's something not right at all. Here's the monthly Peruvian death toll chart (2000 to date) that puts it all into its macabre context:

Aquiline (AQI.to) and PAAS

No further comment

Pan American Silver Corp. ("Pan American") (TSX:PAA - News)(NASDAQ:PAAS - News) and Aquiline Resources Inc. ("Aquiline") (TSX:AQI - News) are pleased to announce that they have signed a support agreement (the "Support Agreement") pursuant to which Pan American will make a formal take-over bid to acquire all of the issued and outstanding shares of Aquiline (the "Share Offer"). Contemporaneously with the Share Offer, Pan American also proposes to make formal take-over bids for each outstanding series of Aquiline warrants and the Aquiline convertible debenture (together, the "Convertible Security Offers"). The transaction value implied by all of the offers is approximately $626 million.

The Share Offer will be made on the basis of 0.2495 of a Pan American common share, plus 0.1 of a Pan American common share purchase warrant for each Aquiline common share. Each of these warrants will entitle the holder to acquire one Pan American common share at a price of $35.00 per Pan American common share for a period of five years after the date on which Pan American first pays for Aquiline common shares tendered to the Share Offer (the "Five Year Pan American Warrant"). The consideration offered pursuant to the Convertible Security Offers will consist of replacement Pan American securities, exercisable to acquire Pan American common shares, with similar terms to the respective Aquiline securities, subject to an adjustment based on a 0.2495 exchange ratio.

Silver is a base metal

That's what this chart is saying.

I find this chart enlightening on several levels and an excellent roadmap for trading the near future. Using GLD as a proxy for gold and SLV as a proxy for silver, we can clearly see that silver performed as a classic precious metal asset class for a long time. Then with the onset of crisis that notion was blown away, silver immediately stopped tracking gold and dropped with the industrial indices (I'm using the Dow as proxy, as it's not called the Dow Jones Industrial Average for nothing).

The crossover drop happened just before the big swoon in the broad markets at the end of September 2008. Was silver the canary in the coalmine? I don't know about that one, but 20/20 hindsight makes it an intruiging thought.

It also explains, without recourse to silverbug paranoia and all that tosh about the PTB manipulating every given moment of our financial life, just why silver dropped as hard as it did when it did. Put simply, the market has rejected the notion that silver is an asset class...for the time being, at least. I more than suspect that silver's behaviour has a lot to do with this previously published chart that demonstrates the big rise in modern silver production.

This in turn is due to the fact that a large portion of modern-day world silver production is as a by-product of other metals, notably zinc and lead (and no doubts that they're base metals).

So what does this tell us? In my view it tells us that we can throw out the gold:silver ratio for the time being, as silver and the miners that produce silver will perform as a direct function of the broad economy. Or in other words, silver is operating as a classic commodity. Stick the Ag price up on the kitco basemetals page and strike it from the main website page as of this moment.

Also, taken with the chart above that shows SLV compared to a cross-section basket of silver miners (PAAS, SSRI, FVI.v, FN.to and GPR.to), it's clear that the silver miners offer significant leverage to the metal going forward (having been punished more severely from late September onwards).

Bottom line: Rules to trade silver as of today:

1) Watch the dow and forget about the price of gold. Silver is not tracking gold, it is tracking the broad markets. Silverbugs won't like the idea of that, but since when have they been right about the market anyway?

2) If you feel there is significant upside in silver the metal, trade the silver stocks. They will give you more bang per buck, at least for the time being.

The final question to be asked is; "What would make silver 'cross back', leave the industrials behind and allow it to start tracking gold again?" That's something that is worth thinking about for the medium term, but I really feel we have enough on our plates trying to survive on a week-to-week basis for the time being. Any suggestions for an answer to this part of the riddle gratefully received.

DYODD, dude

Related Post
A couple of interesting* charts on silver