Goldfails, 2010

In a year like 2010, when gold bullion hit new highs and the world finally began to wake up, smell the coffee and look at gold as a decent safehaven alternative, anyone who aimed some cash at the junior gold producers should have been on a good winner, right?

Well maybe yes but maybe not, because amongst the leveraged wins there's a group of gold producers with more than one thing in common:

1) They're small gold producers working in Latin America

2) They have a dubious track record of promising more than they can deliver

3)  Their share prices have all performed much worse this year then their main product, gold.

4) They all quote on the US exchanges

5) They've all, in their time, been pumped to death by brokerages and analysts who care more about the commissions and cheap shares thrown their company's ways than decent, unbiased analysis

So a warmly sarcastic round of applause as we ask these three 2010 goldfails to step forward: Give it up for Minefinders (MFN), Gammon Gold (GRS) and Jaguar Mining (JAG):

The chart shows the 2010 year-to-date performance of MFN, GRS and JAG compared to GLD, the gold ETf that serves as an accurate proxy to the metal. So Minefinders has managed to scrape out an "unchanged on the year" performance due to a late year rally, but it's still some 20% under an investment in gold, certainly not the type of performance that wins friends an influences people in junior mining. As for JAG and GRS, it just goes to show (once again) that you gringos will buy anything, especially if it's available on the NYSE and has the word "gold" in its corporate title.

Jaguar Mining (JAG): Another fail

JAG's 3q10 results yesterday were the usual dosage of underperformance. Cash costs higher, another nasty net loss etc etc ad infinitum...all the line items we're used to from this dog.

But we note that even the way lower guidances that JAG handed out after its 2q10 trainwreck quarter (that we documented right here) we missed by some distance. Back then, JAG guided for 43,500oz production in 3q10. The result, just 23 days after that 3q10 was given to the market, was quarterly production of 38,861 oz Au produced.

If you do the math, that 4,639 oz if sold by JAG at its sales average for the quarter of U$1,254/oz means that JAG promised the market U$5.8m worth of production more than it could deliver....just 23 days before the quarter closed! Compare that to the $3.8m net loss JAG just announced for 3q10. And think about it.

JAG is gold mining's Boy Who Cried Wolf writ large. Avoid forever.

Jaguar Mining (JAG): Just how bad was the 2q10 earnings report, Otto?

Ohhhh, it was very bad. Very nasty, smelly and badly bad.

In the world of OPUD (over-promise, under-deliver) so normal to the world of gold mining (GRS, MFN, countless others) one small producer stands head and shoulders above the rest in terms of utter mediocrity. Jaguar Mining (JAG) has always managed to disappoint its shareholders and the market on its earnings day each quarter but this one, published after the bell yesterday, takes the biscuit.

The miss was so bad that it's left even the cynical amongst us (i.e. me and hopefully you) open-mouthed. Go see the numbers yourself in the NR and the way the company has no idea how to guide for the future due to the complete snafu it's made of its Turmalina mine, but I'd just like to offer up one chart generated from company projections that shows just how moronic JAG thinks its shareholders are:


Here we have the last 10 quarters results. Now this is the same company that said in late 2008 it would be "leaving 2009 at a 200,000oz per year production rate". It's the same company that saw its Pres/CEO Titcomb say on March 25th 2008:

"Today I am going to focus primarily on our growth initiatives and the program to grow the company from its program that was announced shortly in the past year, about a month ago. We’re moving the company from a 400,000-420,000 oz Au producer to a 700,000 oz Au producer."

Honestly I shit thee not, dear reader. That's how this bullshitter started the YE conference call that day, transcript available on request. I mean, Jeebus Creepus! How in the name of all things good and sweet can you move a company from 400k if you can't even put together a 200k production year two years later?

But no, this doesn't stop the stream of drivel and balderdash from flowing out of JAG, as we see that it's now guiding the next two quarters as the highest production numbers ever at the company! YOU CANNOT MAKE THIS SHIT UP!

There's only one thing left to be said here. Daniel Titcomb, will you please just...

And while you're at it, resign in disgrace.

UPDATE: Not only that, but they've gone chicken on us and hedged. Truly pathetic. This from the 2q10 financials:

12. Subsequent Event
During July 2010, the Company entered into a limited ‘no-cost gold collar’, which is a financial contract to mitigate gold price risk in the event of an unforeseen significant global financial event. These no-cost collars will be measured at fair value on a recurring basis, using significant observable inputs (fair value hierarchy level 2). To place the no-cost collars, the Company purchased gold puts for 59,600 ounces with a strike price range of $1,050 to $1,117 per ounce and sold gold calls for 60,000 ounces with a strike price range of $1,300 to $1,475 per ounce. The contracts are time-matched and settle prior to December 31, 2010.

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.

The boyz are back in town

It's been a barren six months or so for da boyz, but it looks like they're back with a vengeance. Here are two examples of how the Canadian brokerages never lose.

Jaguar Mining (JAG) yesterday announced a $75m placement late yesterday afternoon. This is a royal pain in the behind for many people who have been lead to believe JAG didn't need to go to market this year. It's a stock this humble corner of cyberspace follows closely, and I was looking for a sub $5 number to buy back in (after selling nicely recently). Frankly, I was lucky that it didn't break 5 to the downside as I'd now be one of those swallowing this brokerage-inspired episode of greed. Luck plays its part in this game. Period.

As said before, I like JAG as a story. Also said before is that I don't like the lack of gold mining expertise and the overburden of numberheads at the director level. Gold miners are best run by gold miners, not slide-rulers. I certainly don't like this unecessary dilution, as adding 15m or so shares to the 53m oustanding isn't something to be taken lightly. Meanwhile.......

Colossus Mineral (CSI.to) announced a $21.5m placement this morning. This is about as subtle as a poke in the eye with a pointed stick. Here's how it goes, folks;

1. Stick your diamond drill machine into a place where you KNOW you'll hit a beautiful return. I mean if lil' old me, in just one morning, can grab hold of this PDF dated 2002 that says the Serra Pelada zone just drilled would be hot, would you call this info a brand new discovery?

2. Announce the results with pipes and whistles, and make sure all your Canadian friends with CFA after their names hit the phones and make their client base fully aware of the numbers.

3. Don't mention anything about the very iffy local politics in Serra Pelada.

4. Watch that share price rocket on volume

5. The very next day, go to market and squeeze 'em all to the tune of $21.5m.

"Carpe Diem", or "You takin' the piss 'ere, pal?"....YOU BE THE JUDGE!

Strange coincidence to see The Albatross on the roster at Colossus, isn't it? I mean, Aurelian never tried to screw its shareholders into the ground in this way, did it? Oh, by the way, Albatross...nice timing on those options, dude.

Jan 21/09

Jan 21/09

Anderson, Patrick Fergus Neill

Direct Ownership

Options

50 - Grant of options

200,000

$0.480

The Canadian markets, the chummy-cosy managers of junior miners and the sleazy brokerages that have them all by the balls are a prize joke. And the funniest people of all are you retail shareholders up there who fall for these tricks every single time. Isn't it about time you got yourself a regulatory body that actually does something about the corporate criminals that ruin your investment life in quasi-legal ways? Nah...don't wanna ruin a good thing now, do we......?

Related Post
Ventana Gold: How placements can be done to benefit all concerned
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Bot GLD at the bell

Is that a breakout? Time will tell
(click to enlarge)

Hell, there's something very strange going on when Berkshire Hathaway CDS's are running at +415bps. Also, take a close look at the three month T-Bill at 0.07% yield. The last time that squeeze happened was the day gold shot up $100 (and I mentioned the reasons why in this post).

So, your humble blogger has bot some of that paper that says I own some of that yellow metal. Trading position only. And I don't wanna put the mojo hex on but I'm already 1% on the trade ex-comms....just hoping that JAG decides to join in the fun (BTW, I didn't add to my JAG yesterday...too chicken).

DYODD, dude.

An interesting move in Gold this morning

click to enlarge

Gold went under $700/oz as a continuation of the last few days' market action, but then the reversal to $720/oz has been pretty quick and perky.

FWIW, I'm going to take the first real risk I've taken in weeks and add to my severely underwater JAG (bot yesterday at $3.30). My normal chickens*** attitude would have me bailing at a loss, but this time I say "Aaaah, what da hell...double down!".

So I've added at U$2.77. Average now a touch over $3.

Bought Jaguar Mining (JAG)

Grrrrr

Oh, I feel all giddy! I've actually bought a real stock in a real company.

The rationale is pretty simple: Although JAG has lagged behind its growth timetable it is still growing. The company is now shaving about $70 or $80 off its last quarter's reported cash costs because the Brazilian Real has dropped to R$2.12 against the greenback. Once you add that not inconsequential saving to the mix, there's plenty of reason to see EBIT per share of around $0.48c per quarter (according to my calculator, spreadsheet and finger-in-the-air, at least). That won't make it to the bottom line, of course, because JAG is still on its growth cycle and there's capex to be spent, but it does show the robust nature of its operations even with gold at $800/oz.

So at U$3.86, I think it's time to pick up a bargain. I'll take a decent percentage profit if the market offers me one (be that in the short term or long term...we shall see), and there's a puke point to bail on the play already pencilled in if the market goes against my wishes. Keeping it nimble. DYODD, dudes.