This just gets worse and worse to watch. Rusoro is now launching and all share bid for Gold Reserve, read the details of the proposed deal here. The offer values GRZ and its Las Brisas property at a buck 8. Yes, that's a possible 10 million ounces of gold worth...61 million dollars? Am I doing my math right? Rusoro obviously talks like they are doing something great here offering them a 108% premium to Friday's closing price and over 200% premium to the last 30 days trading but my goodness. They are obviously avoiding the fact that the reason the stock is worth garbage is because they entered into an agreement with the Venezuelan government in November announcing they were going to rob Gold Reserve and Crystallex of the land they have been working so hard on developing all these years.
This is an insult to the mining and investment community. Venezuela and Rusoro created the stock collapse of GRZ, it was purely fabricated so they could sweep in and "legally" take over the asset. Worse part is that I have no doubt that those snakes bought at those low, low prices, they knew exactly what they were going to do, not only will they be stealing a huge gold deposit but they will make millions in the process. It's lunacy! How can we sit and watch this unfold without acting, this will set a dangerous precedent if it is allowed to develop the way it is going and we as investors and miners will be setting ourselves up for more of it unless we take a hard stand.
It's one thing to accept your losses and move on but it is another to submit yourself to the will of others. Gold Reserve deserves better, I doubt they will receive it, but this just isn't right.
Tuesday, December 16, 2008
Barrick, taking the lead in innovation
This is a story that I enjoy very much, Barrick last year announced they were going to award a $10 million prize to the winner of a contest. The goal? to improve their silver recoveries at their Veladero gold mine in Argentina where they were struggling with 6 to 7% recovery of the metal. Barrick was unlocking a fraction of its estimated 180 million ounces of silver at the mine so they decided to let the general public and scientific community help them out in finding environmentally safe and economic ways to better the extraction process.
So far nine finalist have advanced to the final testing process and they have each been given a $25,000 prize, the remainder of the research and test costs will be covered by Barrick.
I wish all the candidates the best of luck and hope that the winning method greatly improves the silver recoveries.
So far nine finalist have advanced to the final testing process and they have each been given a $25,000 prize, the remainder of the research and test costs will be covered by Barrick.
I wish all the candidates the best of luck and hope that the winning method greatly improves the silver recoveries.
Monday, December 15, 2008
Mining bailout?
Am I reading this right? The Canadian Conservative government wants to add the mining industry to its proposed bailout list? It doesn't make a whole lot of sense to me right now but we also haven't really seen what they are proposing, it's not like they can give money to big producers who made bad decisions and force them to keep mines open. Unless they can manipulate the commodity prices there's not much a government can do.
If subsidies is what they're after it's a different story and it's about damn time we get the respect we deserve, as Canada's leading industry, mining is what makes us a world power and it's what makes our economy one of the strongest in the world. For too long we were taken for granted to provide high paying stable jobs and generate millions in taxes.
When the times for mining are good we're ignored and they try to squeeze every penny out of us. Now the times are bad and they are reversing course to "save jobs", it's all become a big show. Facts and basic economics are being ignored for the sake of a stimulus package that is being forced down the throats of Canadians. I'm sorry, but I'm not buying it. Mining in Canada is controlled by investors and the cycles of commodity prices, not by governments.
If subsidies is what they're after it's a different story and it's about damn time we get the respect we deserve, as Canada's leading industry, mining is what makes us a world power and it's what makes our economy one of the strongest in the world. For too long we were taken for granted to provide high paying stable jobs and generate millions in taxes.
When the times for mining are good we're ignored and they try to squeeze every penny out of us. Now the times are bad and they are reversing course to "save jobs", it's all become a big show. Facts and basic economics are being ignored for the sake of a stimulus package that is being forced down the throats of Canadians. I'm sorry, but I'm not buying it. Mining in Canada is controlled by investors and the cycles of commodity prices, not by governments.
Thursday, December 11, 2008
Shareholders sue Crystallex
So shareholders of Crystallex have launched a class action law suit against the company claiming fraud. As has become common practice lately when a company gets screwed, the shareholders think they were entitled to certainty and security and want some of their lost money back. Sorry, but you invested in an extremely volatile sector (junior mining) in an extremely risky part of the world (Venezuela). You knew your investment was a big risk, if you didn't know and believed every word the company said well I'm afraid you've just been taught a big lesson in due diligence.
Yes, you were robbed, Venezuela played you and Crystallex for chumps, good luck in your other investments. I hope this case gets thrown out of court though, Crystallex will be busy enough fighting (and failing) to win their claims to Las Cristinas in courts. They don't need this side drama.
Yes, you were robbed, Venezuela played you and Crystallex for chumps, good luck in your other investments. I hope this case gets thrown out of court though, Crystallex will be busy enough fighting (and failing) to win their claims to Las Cristinas in courts. They don't need this side drama.
Labour shortages in mining, continued
As the onslaught of negative news from miners flood the news, from Rio Tinto cutting 14,000 jobs to Sudbury losing more mines and Cameco laying off staff, closures and project cancellations are everywhere. Good, skilled workers are sent to the streets to look for more work and the lucky ones get severance or early retirement packages. These aren't average jobs or low paying wages either, the mining industry is the highest paying industry in Canada with weekly salaries at over $1000 on average.
Miners shell out big bucks to grab top talent, experienced engineers, geologist, drillers, miners, heavy equipment operators and metallurgist can easily make over $100,000 a year. Forestry workers were flooding over to mining in the last few years, students at Universities were hired before graduating and promised jobs making $300+ a day. But the sad reality is that this industry is hard on people and a lot of individuals can't cut it and quit after a few years or months. The isolation, long rotations and harsh environments can take a tole on any person.
I remember working 90 or 95 days without ever having a day off. Stuck in a shack no bigger than a living room for months on end through a northern Ontario winter. I remember pulling rods from the top of a drill tower at 2am on a cold November night and I remember getting ready for a big staking rush the very next week. I recall walking through a swamp with my map over my head for fear of getting it wet and I remember (3 hours ago) trying to map over a mile underground, with 2 scoops loading trucks and a jumbo drilling right by my side. The air was dusty and it must of been 40 degrees or more with the exhaust of the equipment running. For some, they thrive in this environment, others just can't be bothered.
Many mines or exploration projects are located in isolated areas and long rotations are a given, being away from family and friends just isn't worth it for some people. Fortescue in Australia just recently announced they wanted to reduce the amount of fly in fly out people, too many marriages and families were being broken they claimed. They are 100% right too, anyone who's worked in mining for a while knows of someone who's gone through something like this. The big mines in Sudbury or Timmins don't have a hard time getting staff, it's the ones in the Arctic or northern Saskatchewan that do.
Whatever the case, someone who works in mining has to be passionate about what they do, otherwise no amount of money will keep them working.
Miners shell out big bucks to grab top talent, experienced engineers, geologist, drillers, miners, heavy equipment operators and metallurgist can easily make over $100,000 a year. Forestry workers were flooding over to mining in the last few years, students at Universities were hired before graduating and promised jobs making $300+ a day. But the sad reality is that this industry is hard on people and a lot of individuals can't cut it and quit after a few years or months. The isolation, long rotations and harsh environments can take a tole on any person.
I remember working 90 or 95 days without ever having a day off. Stuck in a shack no bigger than a living room for months on end through a northern Ontario winter. I remember pulling rods from the top of a drill tower at 2am on a cold November night and I remember getting ready for a big staking rush the very next week. I recall walking through a swamp with my map over my head for fear of getting it wet and I remember (3 hours ago) trying to map over a mile underground, with 2 scoops loading trucks and a jumbo drilling right by my side. The air was dusty and it must of been 40 degrees or more with the exhaust of the equipment running. For some, they thrive in this environment, others just can't be bothered.
Many mines or exploration projects are located in isolated areas and long rotations are a given, being away from family and friends just isn't worth it for some people. Fortescue in Australia just recently announced they wanted to reduce the amount of fly in fly out people, too many marriages and families were being broken they claimed. They are 100% right too, anyone who's worked in mining for a while knows of someone who's gone through something like this. The big mines in Sudbury or Timmins don't have a hard time getting staff, it's the ones in the Arctic or northern Saskatchewan that do.
Whatever the case, someone who works in mining has to be passionate about what they do, otherwise no amount of money will keep them working.
Wednesday, December 10, 2008
Labour shortages in mining
The skilled worker shortage that has gripped mines, exploration companies, contracting firms, mining supply chains and every thing else related to mining was a very big issue for the last few years and it will be an even larger one by the time the next commodities boom arrives. Having a lack of qualified and trained engineers, geologist, miners, drillers and other important mining personnel can cripple, delay, make them less efficient or profitable or even downright shut them down. As cliché as it sounds, the most important thing for any company is not its assets, properties or cash reserves, it is the men and women who make up its workforce.
This latest crash in commodities has been devastating for skilled mining industry workers but the huge shortage of people that was already in place has helped people in finding new work. Most mines were operating short an engineer or geologist, two or three in some cases. Good miners and drillers were harder to find than deposits and it wasn’t uncommon to find exploration companies delay drilling programs because they had no one to log the core. The causes of these shortages were numerous; the infrastructure to train and educate mining industry people simply didn’t exist or were woefully inadequate and underfunded being the biggest factor. Most older geologist will talk of the early 1990’s when jobs for geologist were almost non-existent, this pushed many to look for work in different industries. Enrollment into Mining Engineering or Geology programs dropped drastically and funding for those programs were greatly reduced. By the time Universities and Colleges caught up with the industry it was almost too late. Just last year Confederation College in Thunder Bay started offering diamond drilling and line cutting courses. A good idea but 5 years too late, I wouldn’t be surprised if the program gets cut or its funding reduced in a year or two when no one signs up for it.
It’s a terribly frustrating cycle, but the next boom will be even worse because of our ever aging workforce. It’s no secret that our skilled workers are primarily made up of people close to retirement age, this crash will probably speed up the process and force many into retirement. By the time the next boom comes along, and be sure that it will come, we will be so unprepared and short of workers it’ll be a scary place out there. For geologists like me, it’ll be great, but for an investor, mine manager or project manager, it'll be a hard fight to get the few qualified and experienced personnel running their projects and most will suffer as a result. Many drill programs will be delayed, many mines will be inefficiently run and a lot of job postings will be featured on InfoMine.
Be sure of it.
Thursday, November 27, 2008
Gold prices and the Canadian dollar, now and then
The price of Gold has gone up exponentially in the last 6 or 7 years, from $300 to $1000 the change has been dramatic and a big welcome to Gold miners around the world. But for Canadian, Australian and other world miners, the change of price hasn't been as great as it may seem and its fall from $1000 is not really a fall at all. I'll focus on Canada for this post but the calculations can be applied for any other currency.
When the dollars are at par, the price of Gold is the price of Gold, simple enough.
So using ($1USD)/($CDN) x (price of gold).
In 2001 when Gold was $300 and the dollar at .65, Gold was actually at $461
in 2003 when Gold was $430 and the dollar at .75, Gold was actually at $573
in 2006 when Gold was $650 and the dollar .87, Gold was actually at $747
in 2007 when Gold was $800 and the dollar .98, Gold was actually at $816
in 2008 when Gold was $1000 and the dollar 1.05, Gold was actually at $952
Today, when Gold is at $815 and the dollar at 0.81, Gold is actually at $1006
$1000 Gold was nice for Canadian producers, but cheaper gas, a lower dollar and $815 Gold is even better. If Gold returns to $1000 dollars and the Canadian dollar continues to falter against its American counterpart, miners will continue to make healthy profits.
When the dollars are at par, the price of Gold is the price of Gold, simple enough.
So using ($1USD)/($CDN) x (price of gold).
In 2001 when Gold was $300 and the dollar at .65, Gold was actually at $461
in 2003 when Gold was $430 and the dollar at .75, Gold was actually at $573
in 2006 when Gold was $650 and the dollar .87, Gold was actually at $747
in 2007 when Gold was $800 and the dollar .98, Gold was actually at $816
in 2008 when Gold was $1000 and the dollar 1.05, Gold was actually at $952
Today, when Gold is at $815 and the dollar at 0.81, Gold is actually at $1006
$1000 Gold was nice for Canadian producers, but cheaper gas, a lower dollar and $815 Gold is even better. If Gold returns to $1000 dollars and the Canadian dollar continues to falter against its American counterpart, miners will continue to make healthy profits.
Wednesday, November 26, 2008
Teck, giving lessons on what not to do
Fording, Jericho, Galore Creek, Nautilus. What do all these things have in common? They were all recent business ventures of Teck Cominco and they have all proven to be terrible decisions that are helping bring the company down.
The Fording deal is the most publicized, Teck payed $13.5 billion dollars to acquire Fording Canadian Coal Trust literally days before the credit crunch starting destroying the markets. They refused to revise the deal even when the markets and commodities were obviously heading towards lows, it's like a stubborn child sticking to his decision even when it was obvious that it's not a good one. Buying Fording might of seemed like a great idea last year when Teck was cash rich, coal was at all time highs and the future looked promising but going through with this in September was just foolish. Now Teck is stuck with a monstrous debt, a coal company that is worth a fraction of what it was when it paid a premium for it and Teck is now forced to sell off solid assets just to make ends meet. Their dividend payments were suspended and the share price of one of the pillars of Canadian mining has hit 20 year lows, imagine if Teck had not done this deal, they would be one of the best looking mining companies out there right now, cash rich and looking at growing their influence instead of selling it off.
Teck was also involved with Tehera Diamonds, giving them $30 million so they could continue mining operations at their Jericho mine. This was after Tehera had recorded losses on lower than expected grades of kimberlite. Not too long after, Tahera put the mine on care and maintenance and their stock is at around a penny now. $30 million flushed down the toilet.
Teck also acquired 50% interest with NovaGold for the Galore Creek project in British Colombia. The projects development costs were expected to be $2.2 billion dollars which quickly ballooned to over $5 billion before the project was scrapped and put on hold. NovaGold is a whole different story in itself, maybe I'll cover them tomorrow because they rival Teck with bad decisions lately.
Last but not least is Nautilus Minerals, Teck, among others, poured millions into a company planning on mining the sea floor. Giving hard cash for unproven technology, without even an idea as to when, what and how anything will be mined.
This is just a short list of some of Teck's financial decisions that they have done lately and has let up to a steep and major decline in their stock price and financial fact sheet. Until a major turnaround happens in the industry and in the company, they will suffer and will lose millions of dollars worth of assets, the only question now is what will remain of Teck once all the bleeding is over.
I guess we'll just have to wait and see.
The Fording deal is the most publicized, Teck payed $13.5 billion dollars to acquire Fording Canadian Coal Trust literally days before the credit crunch starting destroying the markets. They refused to revise the deal even when the markets and commodities were obviously heading towards lows, it's like a stubborn child sticking to his decision even when it was obvious that it's not a good one. Buying Fording might of seemed like a great idea last year when Teck was cash rich, coal was at all time highs and the future looked promising but going through with this in September was just foolish. Now Teck is stuck with a monstrous debt, a coal company that is worth a fraction of what it was when it paid a premium for it and Teck is now forced to sell off solid assets just to make ends meet. Their dividend payments were suspended and the share price of one of the pillars of Canadian mining has hit 20 year lows, imagine if Teck had not done this deal, they would be one of the best looking mining companies out there right now, cash rich and looking at growing their influence instead of selling it off.
Teck was also involved with Tehera Diamonds, giving them $30 million so they could continue mining operations at their Jericho mine. This was after Tehera had recorded losses on lower than expected grades of kimberlite. Not too long after, Tahera put the mine on care and maintenance and their stock is at around a penny now. $30 million flushed down the toilet.
Teck also acquired 50% interest with NovaGold for the Galore Creek project in British Colombia. The projects development costs were expected to be $2.2 billion dollars which quickly ballooned to over $5 billion before the project was scrapped and put on hold. NovaGold is a whole different story in itself, maybe I'll cover them tomorrow because they rival Teck with bad decisions lately.
Last but not least is Nautilus Minerals, Teck, among others, poured millions into a company planning on mining the sea floor. Giving hard cash for unproven technology, without even an idea as to when, what and how anything will be mined.
This is just a short list of some of Teck's financial decisions that they have done lately and has let up to a steep and major decline in their stock price and financial fact sheet. Until a major turnaround happens in the industry and in the company, they will suffer and will lose millions of dollars worth of assets, the only question now is what will remain of Teck once all the bleeding is over.
I guess we'll just have to wait and see.
Monday, November 24, 2008
Poor Teck...things couldn't of gone worse for them. The timing of the Fording deal was terrible, the choice to buy Fording was terrible and now they're spinning their wheels trying to get out of debt. Investors are abandoning them faster than we can refresh our portfolio web pages.
The COO resigned this morning, Kinross and others will pick away at it and Teck will become a shadow of what it used to be. One of the mining powerhouses of Canada will never be the same after this market crash.
The COO resigned this morning, Kinross and others will pick away at it and Teck will become a shadow of what it used to be. One of the mining powerhouses of Canada will never be the same after this market crash.
Friday, November 21, 2008
The decline of Junior mining
Junior mining, the companies we love to gamble our hard earned money on and speculate which ones will find the next big mine. Realistically, 90% of the time finding a mine isn't what we're gambling on, we're playing the ups and downs, the pumps and dumps and putting our trust with the management of the company.
Junior mining companies aren't trustworthy, plain and simple. They are greedy, corrupt and shifty organizations that flip from one area to another and fleece the investor time and time again. The ones who actually do find mines or good properties are forced to become legit (or more so) and usually bring in a new board of directors or a new president to revamp its image. It can no longer contract all it's work to its buddies at ridiculously inflated prices or option ground from old friends they used to work with in the "rough times". When times are good, juniors will act like they are spending the investors money wisely, but they are passing it to their friends and families and doing everything they can to line their own pockets. They will do legitimate work, there is no doubt about that, but they will exaggerate in press releases and do everything they can to keep a story alive. Every ethical boundary is flirted with if not blatantly crossed, junior mining is an industry where snakes thrive, the good honest people are lost in the sea of deceitful money grubbers.
Yes, I'm a little bitter, but I also understand that they provide a great service to the mining industry, they get to do the dirty work for the majors and sometimes, they actually find a great deposit and become a mid-tier or major themselves. This economic crash, for all the bad that it has brought to the mining industry, is at least doing some good. It is going to trim the bloated junior mining industry into a slimmer, more competitive industry. The bad properties will be abandoned and the good management teams will survive. Good, honest people will lose their jobs, which is unfortunate, but at least we can hope to see a departure of the bad guys because frankly, mining doesn't need them, they brought us Bre-X, they brought us countless scams, they give a black eye to the mining industry every day. You know who they are, I know who they are, I shake hands with some of them regularly. We don't need them.
I urge everyone who invests in the TSX-V to read the book "Fleecing the Lamb" by David Cruise. It will make you a much better investor, I guarantee it.
Junior mining companies aren't trustworthy, plain and simple. They are greedy, corrupt and shifty organizations that flip from one area to another and fleece the investor time and time again. The ones who actually do find mines or good properties are forced to become legit (or more so) and usually bring in a new board of directors or a new president to revamp its image. It can no longer contract all it's work to its buddies at ridiculously inflated prices or option ground from old friends they used to work with in the "rough times". When times are good, juniors will act like they are spending the investors money wisely, but they are passing it to their friends and families and doing everything they can to line their own pockets. They will do legitimate work, there is no doubt about that, but they will exaggerate in press releases and do everything they can to keep a story alive. Every ethical boundary is flirted with if not blatantly crossed, junior mining is an industry where snakes thrive, the good honest people are lost in the sea of deceitful money grubbers.
Yes, I'm a little bitter, but I also understand that they provide a great service to the mining industry, they get to do the dirty work for the majors and sometimes, they actually find a great deposit and become a mid-tier or major themselves. This economic crash, for all the bad that it has brought to the mining industry, is at least doing some good. It is going to trim the bloated junior mining industry into a slimmer, more competitive industry. The bad properties will be abandoned and the good management teams will survive. Good, honest people will lose their jobs, which is unfortunate, but at least we can hope to see a departure of the bad guys because frankly, mining doesn't need them, they brought us Bre-X, they brought us countless scams, they give a black eye to the mining industry every day. You know who they are, I know who they are, I shake hands with some of them regularly. We don't need them.
I urge everyone who invests in the TSX-V to read the book "Fleecing the Lamb" by David Cruise. It will make you a much better investor, I guarantee it.
Saturday, November 15, 2008
ino
I'll be displaying ads from ino from now on, it's a cool site with lots of good features, inotv is pretty cool and the vids there are pretty informative, the trend analysis thing is also a good feature. Check them out if you want.
Friday, November 14, 2008
Markets need to do their job
Uncertainty can be the killer of markets and mining, the impact it has on an industry can be absolutely devastating. It can (and does) destroy companies, close mines, cancel exploration projects and turn an incredible asset into a crippling liability.
When people think of uncertainty and risks in mining people inevitably think of the obvious social, political and environmental factors. A mining company wishing to operate next to or in a park or nature reserve will never have its deposit evaluated to its full potential, the risk of the government, environmental groups or aboriginals interfering and either restricting or denying mining or exploration rights scares and turns away investment dollars. The same goes for a project in a country like Venezuela, recent examples are Crystallex and Gold Reserve who are the victims of a over controlling government that can't be trusted. Ivanhoe and Aurelian had the same problems, sitting on a great deposit but the stock could not respond because the government provided too much uncertainty. New laws, new regulations...change. It just doesn't sit well with investors.
The recent credit issues surrounding the world and crash in commodity prices, mostly due to people expecting less demand for metals has broken down mining and beaten it to a pulp. The demand for metals has helped in shrinking the industry but the uncertainty of markets and mining operations has obliterated it. Mining is already exceptionally vulnerable to risks and uncertainty for the reasons I mentioned above, recent bailouts, stimulus packages and whatever else "help" federal governments have been trying to implement has done nothing to improve the situation.
The confusing nature of all the recent legislation passed has just caused people who were already unsure as to what was going on to get out and abandon the markets in droves. We need to take a step back, evaluate what we have done and respond accordingly, knee jerk reactions to "save" the free market system have ignored the fact that the free market is supposed to correct itself. The only true job of the market system that we are so desperately trying to save by force is to identify a value and price for something. Its job is to wade through the political factors a company faces, calculate its costs, revenue, assets, potential and to come up with a price. One, which is controlled by investors. By throwing a new quick fix every two days we're hurting the shell shocked investor from participating in the free market system and we're increasing to the levels of uncertainty.
Mining already has to deal with too much uncertainty and risks, if we have to implement changes and packages to help instituations from collapsing we have to be able to present them clearly and transparently to the investor. Until then, continue to expect wild volatility in commodities and stocks.
When people think of uncertainty and risks in mining people inevitably think of the obvious social, political and environmental factors. A mining company wishing to operate next to or in a park or nature reserve will never have its deposit evaluated to its full potential, the risk of the government, environmental groups or aboriginals interfering and either restricting or denying mining or exploration rights scares and turns away investment dollars. The same goes for a project in a country like Venezuela, recent examples are Crystallex and Gold Reserve who are the victims of a over controlling government that can't be trusted. Ivanhoe and Aurelian had the same problems, sitting on a great deposit but the stock could not respond because the government provided too much uncertainty. New laws, new regulations...change. It just doesn't sit well with investors.
The recent credit issues surrounding the world and crash in commodity prices, mostly due to people expecting less demand for metals has broken down mining and beaten it to a pulp. The demand for metals has helped in shrinking the industry but the uncertainty of markets and mining operations has obliterated it. Mining is already exceptionally vulnerable to risks and uncertainty for the reasons I mentioned above, recent bailouts, stimulus packages and whatever else "help" federal governments have been trying to implement has done nothing to improve the situation.
The confusing nature of all the recent legislation passed has just caused people who were already unsure as to what was going on to get out and abandon the markets in droves. We need to take a step back, evaluate what we have done and respond accordingly, knee jerk reactions to "save" the free market system have ignored the fact that the free market is supposed to correct itself. The only true job of the market system that we are so desperately trying to save by force is to identify a value and price for something. Its job is to wade through the political factors a company faces, calculate its costs, revenue, assets, potential and to come up with a price. One, which is controlled by investors. By throwing a new quick fix every two days we're hurting the shell shocked investor from participating in the free market system and we're increasing to the levels of uncertainty.
Mining already has to deal with too much uncertainty and risks, if we have to implement changes and packages to help instituations from collapsing we have to be able to present them clearly and transparently to the investor. Until then, continue to expect wild volatility in commodities and stocks.
Monday, November 10, 2008
Ecuador mining law to be presented
The piece of legislation thousands of investors, Ecuadorians and mining industry personnel have been waiting for to be released is about to come out. Since Kinross picked up 17 million ounces (or more) for 1.2 billion dollars, outrage ensued and Patrick Anderson is now on the board of directors of Noront (what were they thinking?). Now since the mining investment sector collapsed I've heard a few people say this wasn't a bad deal...thinking short term I can agree but long term, which is what people who had invested in ARU were thinking...this was far, far from a good deal. The only solace the ARU shareholders have is that at least they didn't get robbed like Crystallex and Gold Reserve.
Everyone expects the mining mandate to be pro-mining, even though the president has some extreme factions inside his government he was quoted as saying:
"If there are deep changes to the law, I will veto it and put it up for a popular referendum," Correa said during his weekly media address on Saturday. "The government's political decision is to develop the mining sector."
At least there's some positive news coming out of the mining sector. We'll see what the details of the bill say when it's released but after reading a few drafts, I think it's safe to say this won't have anything major in it that will make people's head spin.
Everyone expects the mining mandate to be pro-mining, even though the president has some extreme factions inside his government he was quoted as saying:
"If there are deep changes to the law, I will veto it and put it up for a popular referendum," Correa said during his weekly media address on Saturday. "The government's political decision is to develop the mining sector."
At least there's some positive news coming out of the mining sector. We'll see what the details of the bill say when it's released but after reading a few drafts, I think it's safe to say this won't have anything major in it that will make people's head spin.
Sunday, November 9, 2008
Liberty forced to close
Liberty mines (LBE) announced on Friday that they will be putting their Timmins area nickel mines on care and maintenance. This is a tough place for them to be, another one of those new producers who got a couple mines started right in the thick of record nickel prices. Still dealing with development and start up debt, they needed financing to keep them going, once they realized that wasn't going to happen they were forced to do what many others have done lately and that's go on care and maintenance.
I don't expect this one to be doing anything spectacular for a while, even when nickel prices recover they will be dealing with their debt for a long time, they're not a very attractive company at the moment.
Best of luck to all the workers who got laid off. There's still a shortage of skilled men in the industry.
I don't expect this one to be doing anything spectacular for a while, even when nickel prices recover they will be dealing with their debt for a long time, they're not a very attractive company at the moment.
Best of luck to all the workers who got laid off. There's still a shortage of skilled men in the industry.
Copper outlook
Consider this, the world uses up one Escondida per year. That's the world's largest copper deposit, swallowed up by humans every single year. Do we find an Escondida every year? Not even close.
We all know commodity prices don't reflect their true supply and demand but they reflect what speculators think. With the markets contracting, copper is sitting well under $2 and a lot of copper mines are feeling the tight pinch and at risk of closing if these prices remain where they are. This, as we all know it is a cycle, copper will rebound and I think sooner rather than later, we simply use up too much copper and are not finding enough of it. The demand will shrink in the next little while but like the other metals, it will recover, maybe $4/lb was too much but $1.68/lb is definitely too low. Copper is a safer bet than most other base metals, we just don't chew through as much nickel, lead and zinc as we do copper, China and India are the especially strong buyers of the stuff and I don't care what "reduced growth" they keep talking about they are still predicting 8-9% growth for China over the next few years. It's not 12% but it's still a hell of a lot. Unless we find a few Escondidas we're going to be setting ourselves up for some more copper theives running around construction sites robbing people in a few years.
I was talking to the exploration manager of one of the world's largest copper miners the other week and this was the point he kept repeating, the suppression of copper prices simply cannot last very long. Juniors are still scary material to touch but a major or mid-tier producer might become pretty attractive right now.
Of course, do your own due diligence, it's still a rough place out in the mining investment sector but there's money to be made.
We all know commodity prices don't reflect their true supply and demand but they reflect what speculators think. With the markets contracting, copper is sitting well under $2 and a lot of copper mines are feeling the tight pinch and at risk of closing if these prices remain where they are. This, as we all know it is a cycle, copper will rebound and I think sooner rather than later, we simply use up too much copper and are not finding enough of it. The demand will shrink in the next little while but like the other metals, it will recover, maybe $4/lb was too much but $1.68/lb is definitely too low. Copper is a safer bet than most other base metals, we just don't chew through as much nickel, lead and zinc as we do copper, China and India are the especially strong buyers of the stuff and I don't care what "reduced growth" they keep talking about they are still predicting 8-9% growth for China over the next few years. It's not 12% but it's still a hell of a lot. Unless we find a few Escondidas we're going to be setting ourselves up for some more copper theives running around construction sites robbing people in a few years.
I was talking to the exploration manager of one of the world's largest copper miners the other week and this was the point he kept repeating, the suppression of copper prices simply cannot last very long. Juniors are still scary material to touch but a major or mid-tier producer might become pretty attractive right now.
Of course, do your own due diligence, it's still a rough place out in the mining investment sector but there's money to be made.
Thursday, November 6, 2008
Rusoro steps into the picture
...I don't know what to say about all of this, all I can do is reiterate what I said earlier. Invest in Canada. You just can't trust the rest of the world....ugh.
Venezuela, who yesterday claimed they were stealing the Las Cristinas property are now saying the Gold Reserve's (GRZ) Brisas project will also be taken and their favorite Russian buddies will step in and mine them instead.
What a slap in the face, I love mining and I hate to wish for a mine to pull a Jericho or Southwestern but.....
Karma can be a terrible thing and Venezuela and Rusoro deserve a lot of bad karma
Venezuela, who yesterday claimed they were stealing the Las Cristinas property are now saying the Gold Reserve's (GRZ) Brisas project will also be taken and their favorite Russian buddies will step in and mine them instead.
What a slap in the face, I love mining and I hate to wish for a mine to pull a Jericho or Southwestern but.....
Karma can be a terrible thing and Venezuela and Rusoro deserve a lot of bad karma
Wednesday, November 5, 2008
AWOL
I haven't posted in the last while, I moved into a new place and started a new job, it was a busy time. Now that I'm settled (sort of) I'll try to keep on top of things.
Las Cristinas to be stolen
So Venezuela finally stepped in and took Las Cristinas...what a shame. Can and should we expect any different though? Honestly, this is a disgrace and all that, but who didn't see something to this effect coming a mile away? Investors poured millions and millions into this project and in turn developed one of the largest gold deposits in South America while Chavez stood back and waited and waited. Once it was clear Crystallex had done all the necessary work and they couldn't keep on making excuses for not letting them start mining, (Remember all the BS about the national forest and the mine would never open, the environment comes first crap?) they sweep in and steal 17 million ounces.
And I don't care how you put it or what "deal" Crystallex takes, this deposit is STOLEN. You thought Kinross stole Fruite Del Norte? HA! The worst part is this will stay in courts for years and years and people will continue to keep hoping KRY can maybe possibly win it back. They won't.
It's over.
When you invest in areas such as Venezuela, be prepared to lose all your money in an instant. In fact, I wouldn't rule out the chance that not only will you lose your money, but someone will break into your house and steal your TV...yeah, it's that risky.
Invest in Canada, you can't trust the rest of the world, plain and simple.
And I don't care how you put it or what "deal" Crystallex takes, this deposit is STOLEN. You thought Kinross stole Fruite Del Norte? HA! The worst part is this will stay in courts for years and years and people will continue to keep hoping KRY can maybe possibly win it back. They won't.
It's over.
When you invest in areas such as Venezuela, be prepared to lose all your money in an instant. In fact, I wouldn't rule out the chance that not only will you lose your money, but someone will break into your house and steal your TV...yeah, it's that risky.
Invest in Canada, you can't trust the rest of the world, plain and simple.
Tuesday, October 28, 2008
Playing favourites, continued
The Ontario government has recently opened up the doors for discussion (if that's what you want to call it) on amendments to the hundred year old Mining Act. Basically they listened to certain groups, quickly threw together changes and opened them up with discussion across the Province. Stopping in Thunder Bay, Timmins, Sudbury, Peterborough and Toronto for town hall style discussions, the government could not have screwed this up any more than they have and have angered pretty much everyone in the process. The town hall meetings were held on short notice in August which is in the middle of exploration season and many prominent members of the mining community were busy working and couldn't attend. The "discussion" was pretty much a list of changes and how we felt about them. It didn't leave us an opportunity to recommend changes, it didn't give us the chance to debate their ideas, it was pretty much a document saying "This is what we're changing, deal with it, oh and by the way hurry up".
Not only was all this done on short notice but they informed us they wanted it passed in parliament in the October session, this drew some pretty serious outrage, especially in communities such as Thunder Bay, Timmins and Sudbury. It's almost November now and it hasn't gone anywhere, the land owners, natives, prospectors and government officials are still arguing about the piece of paper that legislates this provinces most profitable industry.
The worst part of it all (or best?) is that they opened up the discussion by stating Ontario was a world leader in mining, as a province we're on the top of the list when compared to entire nations. Why are we so eager to change something that isn't broken then? Why can't we continue on the leads of respected mining companies who have struck great deals with native communities and why can't we be proud of an ever expanding environmental safety record? Why can't people from Southern Ontario learn that just because companies are prospecting near their farmland it doesn't mean they will stomp on their crops and build a mine on their house.
Let's stop trying to please every single group by government action and let's stop pretending to all these groups that they are the favourites. For a sustainable and profitable mining industry we need all members involved and the only one who in on this latest round was the Government of Ontario.
Not only was all this done on short notice but they informed us they wanted it passed in parliament in the October session, this drew some pretty serious outrage, especially in communities such as Thunder Bay, Timmins and Sudbury. It's almost November now and it hasn't gone anywhere, the land owners, natives, prospectors and government officials are still arguing about the piece of paper that legislates this provinces most profitable industry.
The worst part of it all (or best?) is that they opened up the discussion by stating Ontario was a world leader in mining, as a province we're on the top of the list when compared to entire nations. Why are we so eager to change something that isn't broken then? Why can't we continue on the leads of respected mining companies who have struck great deals with native communities and why can't we be proud of an ever expanding environmental safety record? Why can't people from Southern Ontario learn that just because companies are prospecting near their farmland it doesn't mean they will stomp on their crops and build a mine on their house.
Let's stop trying to please every single group by government action and let's stop pretending to all these groups that they are the favourites. For a sustainable and profitable mining industry we need all members involved and the only one who in on this latest round was the Government of Ontario.
Playing favourites isn't good for anyone
A state owned mining firm is in the process of being created in South Africa and the government wants to give it certain exemptions from the mining act, including the application for mining permits and prospecting rights. The reasoning is that mining rights are granted to public companies after a rigorous and often lengthy application process which hampers project development. The state owned firm would simply notify the government of it's intentions instead of applying like everyone else.
I see a lot of things very wrong with this. The Chief Executive of the Chamber of Mines was quoted as saying:
"Our view is that the state should be subject to the same requirements as the private sector in terms of prospecting for or operating a mine. This type of notice seems to negate the principle of equality before the law. It sets an unfortunate precedent with regard to the extensive range of other obligations that mining companies need to comply with."
This speaks of a pretty skewed system which has caused mining and mining exploration to suffer recently in a country where it has dominated the economy. Instead of giving exemptions to their little pet project, how about reforming the application and permitting sections of the mining act? Or simply increasing the amount of staff to review these applications? I know those are dumbed down simplified answers to a complex problem but giving exceptions to a state owned firm won't do anything but create dissent and send a message to the mining industry, and it's investors, that they come second and that the state owned firm is above national law. Although it mentions environmental research, labour regulations and a financial check to verify that the project is profitable would still be done, one can only wonder if those could get overlooked as it is fast tracked.
The government of South Africa decided that change was needed for the industry, this wasn't the right choice.
I see a lot of things very wrong with this. The Chief Executive of the Chamber of Mines was quoted as saying:
"Our view is that the state should be subject to the same requirements as the private sector in terms of prospecting for or operating a mine. This type of notice seems to negate the principle of equality before the law. It sets an unfortunate precedent with regard to the extensive range of other obligations that mining companies need to comply with."
This speaks of a pretty skewed system which has caused mining and mining exploration to suffer recently in a country where it has dominated the economy. Instead of giving exemptions to their little pet project, how about reforming the application and permitting sections of the mining act? Or simply increasing the amount of staff to review these applications? I know those are dumbed down simplified answers to a complex problem but giving exceptions to a state owned firm won't do anything but create dissent and send a message to the mining industry, and it's investors, that they come second and that the state owned firm is above national law. Although it mentions environmental research, labour regulations and a financial check to verify that the project is profitable would still be done, one can only wonder if those could get overlooked as it is fast tracked.
The government of South Africa decided that change was needed for the industry, this wasn't the right choice.
Monday, October 27, 2008
Patrick Anderson is back
Oh boy, Noront Resources (NOT), by force of Rosseau Asset Management have agreed to a new board of directors and new CEO which include the controversial Patrick Anderson, former CEO of Aurelian Resources.
This concession came after Rosseau Management, which is a hedge fund company, became angry at the way Noront directors were running the company, so they recommended a new board of directors in a press release (Noront stock shot up 10% on the news). Noront responded by telling shareholders to reject Rosseau nominees and vote for their guys. Anyways it was getting a little ugly to watch it all so I'm glad they came to an agreement, but Anderson on the board? So for a little background on all of this, Rosseau was mad because Nemis, the CEO, was running joint ventures with everyone and their dogs out in the "Ring of Fire" area which is host to one of the most exciting Ni-PGM discoveries of our time, Noront made rediculous news with releases such as this showing 68.3m of 5.9%Ni, 3.1%Cu, 2.8g/t Pt and 9.8g/t Pd. The stock went from a 10-30 cents to 7 bucks and all of a sudden strong management became a very important issue. This is where Patrick Anderson comes in.
We all know the story of Aurelian, they had one of the biggest known gold deposits not currently being mined in the world. Stock is doing great, people are talking about aquisitions or possibly ARU going at it alone, this stock is a can't-lose bet...until the Ecuadorian mining law uncertainty kicks in and the stock crashes, Patrick Anderson and his board panick and sell a world class asset to Kinross for a few bucks. Canadians and investors around the world were floored, go to Agoracom, got to Inca Kola news, youtube, stockhouse and you'll find someone ranting about how much they hate P. Anderson. The man was so villified and hated for what he did to that company I would of never thought I'd see his face in Canadian mining stocks for a long time, I figured he'd be a good fit in Australia or Asia, but in Northern Ontario? ugh.
Update: The Financial Post picked up the story but they're a day late since they don't mention that a deal was reached for the new board.
This concession came after Rosseau Management, which is a hedge fund company, became angry at the way Noront directors were running the company, so they recommended a new board of directors in a press release (Noront stock shot up 10% on the news). Noront responded by telling shareholders to reject Rosseau nominees and vote for their guys. Anyways it was getting a little ugly to watch it all so I'm glad they came to an agreement, but Anderson on the board? So for a little background on all of this, Rosseau was mad because Nemis, the CEO, was running joint ventures with everyone and their dogs out in the "Ring of Fire" area which is host to one of the most exciting Ni-PGM discoveries of our time, Noront made rediculous news with releases such as this showing 68.3m of 5.9%Ni, 3.1%Cu, 2.8g/t Pt and 9.8g/t Pd. The stock went from a 10-30 cents to 7 bucks and all of a sudden strong management became a very important issue. This is where Patrick Anderson comes in.
We all know the story of Aurelian, they had one of the biggest known gold deposits not currently being mined in the world. Stock is doing great, people are talking about aquisitions or possibly ARU going at it alone, this stock is a can't-lose bet...until the Ecuadorian mining law uncertainty kicks in and the stock crashes, Patrick Anderson and his board panick and sell a world class asset to Kinross for a few bucks. Canadians and investors around the world were floored, go to Agoracom, got to Inca Kola news, youtube, stockhouse and you'll find someone ranting about how much they hate P. Anderson. The man was so villified and hated for what he did to that company I would of never thought I'd see his face in Canadian mining stocks for a long time, I figured he'd be a good fit in Australia or Asia, but in Northern Ontario? ugh.
Update: The Financial Post picked up the story but they're a day late since they don't mention that a deal was reached for the new board.
Sunday, October 26, 2008
Premier move
Premier Gold Mines (PG) is a junior gold miner from Northwestern Ontario with assets in Red Lake and Geraldton, they made an interesting move last week by grabbing a slew of properties in the Geraldton area from Lac Properties Inc. (Barrick owned company). They did the deal for about half a million shares and a couple million dollars. Why is this so interesting? Well, besides the fact that it's done right in the middle of a mining crash there are a couple of things to consider.
PG is in a 49-51 joint venture with Goldcorp in Red Lake and are stuck spending million of dollars, whether they like it or not, on the Rahill-Bonanza property. Goldcorp is operator and PG has to pay half the cost of whatever they decide to do, which at this time happens to be quite a bit. That's not necessarily a bad thing, you have a major like Goldcorp doing quality advanced work on your ground, but when financing is tight it can be harder to come up with the capital to fund the work. Now when you forecast financing to be tight in the coming years, the last thing you want to do is throw your money around at new properties, what you're seeing nearly every other junior out there do is hunker down and conserve cash, not spend it by aquiring new stuff. Goldcorp doesn't need to do financing to raise cash, the world's richest gold mine is literally 3 kms from Rahill-Bonanza, it can keep on trucking and charge half the bill to Premier for a long long time if it wants to.
So, what does this all mean? Goldcorp has become very defensive of the Red Lake area, with the recent aquisition of Gold Eagle Mines, Premier is probably looking pretty tasty for them. Goldcorp is probably looking at taking PG's Red Lake assets, this means PG could survive with fresh cash and continue work on it's Geraldton properties, before they only had a bit of land, not enough to prop up a company with, now with the new ones they got last week...they have enough.
Time will tell.
PG is in a 49-51 joint venture with Goldcorp in Red Lake and are stuck spending million of dollars, whether they like it or not, on the Rahill-Bonanza property. Goldcorp is operator and PG has to pay half the cost of whatever they decide to do, which at this time happens to be quite a bit. That's not necessarily a bad thing, you have a major like Goldcorp doing quality advanced work on your ground, but when financing is tight it can be harder to come up with the capital to fund the work. Now when you forecast financing to be tight in the coming years, the last thing you want to do is throw your money around at new properties, what you're seeing nearly every other junior out there do is hunker down and conserve cash, not spend it by aquiring new stuff. Goldcorp doesn't need to do financing to raise cash, the world's richest gold mine is literally 3 kms from Rahill-Bonanza, it can keep on trucking and charge half the bill to Premier for a long long time if it wants to.
So, what does this all mean? Goldcorp has become very defensive of the Red Lake area, with the recent aquisition of Gold Eagle Mines, Premier is probably looking pretty tasty for them. Goldcorp is probably looking at taking PG's Red Lake assets, this means PG could survive with fresh cash and continue work on it's Geraldton properties, before they only had a bit of land, not enough to prop up a company with, now with the new ones they got last week...they have enough.
Time will tell.
Market pessimism
A couple days went by without a mine closing, the "calm" was much needed, although no promises for next week, it could be just as bad. The week of Oct20-26 started as one of the worst in memory for the industry in a long time...Don't get me wrong the month has been terrible but hearing about all these people and friends of mine losing their jobs in such a short amount of time, that has been hard to take in. It was the week where the losses on the commodities market were finally going to start directly reflecting job losses.
Some of my friends have told me that I'm unfairly negative and pessimistic towards the market, we all knew the boom was going to end sometime, and most of us knew it would be sooner rather than later. The first thing to go in a downturn is the commodities and with it all related mining activity, if there's one thing we can be optimistic about it's that mining is also the first thing to return. Besides that, I can't find a good reason to be optimistic about anything money related right now, even my pickup truck is losing value by the day. I was so so wrong about the timing and scale of the crash though, it's hurting everyone. No matter who you are, you are being directly affected or know someone who is. If you're in the mining industry there are good odds you are very scared of your own job security right now, you're rethinking buying that car and passing on flying to Toronto for PDAC next year and other trips. That's going to be one hell of a depressing PDAC anyways...you don't want to go, trust me.
I read an article a week back (can't find it anymore) saying Jim Cramer should be fired for being so pessimistic towards the market, for saying that if you want to spend your cash in the next five years you should take it out of the market NOW. The guy said he should be fired for telling people that they should only invest or keep their money in now if they're willing to stick it for the long run. He said Cramer was causing panic and it was irresponsible for someone in his position to scream this out to the masses, adding that it was only helping the massive selloff. Why the hell should he not be pessimistic and tell people what he thinks? That's what NBC pays him for, he gives advice and opinions to investors who watch his show and in this particular case...he's probably right. The dude asking for him to get fired is one of those guys watching his job and money flushed down the toilet and he's looking for someone to blame. NBC doesn't pay him to be an investment broker who'll tell you the world is wonderful and everything will be alright, he's an entertainer who tells it how it is, take his stock market info with a grain of salt, he's wrong a lot (who isn't?) but you can't deny he's fun to watch.
I also seem to recall the outrage in August about his blowup at the Fed, people said he was overreacting and a drama queen, those people sure are quiet now. Check it out on YouTube, it's a good one.
Completely losing his cool, Cramer screamed that Federal Reserve Chairman "Bernanke needs to open the discount window... Bernanke has no idea how bad it is out there. He has no idea. No idea. I have talked to the heads of every one of these firms in the last 72 hours. My people have been in this game for 25 years and they are going to lose jobs, firms are going to go out of business. This is a different kind of market and the Fed is asleep. They're nuts. They know nothing. They have no idea what it is like out there. 14 million people took mortgages out in the last 3 years. 7 million of those were based on teaser or piggy back rates. They will lose their homes. This is crazy. I worked at fixed income at Goldman Sachs. This is not the time to be complacent. We have Armageddon in the fixed income market."
Some of my friends have told me that I'm unfairly negative and pessimistic towards the market, we all knew the boom was going to end sometime, and most of us knew it would be sooner rather than later. The first thing to go in a downturn is the commodities and with it all related mining activity, if there's one thing we can be optimistic about it's that mining is also the first thing to return. Besides that, I can't find a good reason to be optimistic about anything money related right now, even my pickup truck is losing value by the day. I was so so wrong about the timing and scale of the crash though, it's hurting everyone. No matter who you are, you are being directly affected or know someone who is. If you're in the mining industry there are good odds you are very scared of your own job security right now, you're rethinking buying that car and passing on flying to Toronto for PDAC next year and other trips. That's going to be one hell of a depressing PDAC anyways...you don't want to go, trust me.
I read an article a week back (can't find it anymore) saying Jim Cramer should be fired for being so pessimistic towards the market, for saying that if you want to spend your cash in the next five years you should take it out of the market NOW. The guy said he should be fired for telling people that they should only invest or keep their money in now if they're willing to stick it for the long run. He said Cramer was causing panic and it was irresponsible for someone in his position to scream this out to the masses, adding that it was only helping the massive selloff. Why the hell should he not be pessimistic and tell people what he thinks? That's what NBC pays him for, he gives advice and opinions to investors who watch his show and in this particular case...he's probably right. The dude asking for him to get fired is one of those guys watching his job and money flushed down the toilet and he's looking for someone to blame. NBC doesn't pay him to be an investment broker who'll tell you the world is wonderful and everything will be alright, he's an entertainer who tells it how it is, take his stock market info with a grain of salt, he's wrong a lot (who isn't?) but you can't deny he's fun to watch.
I also seem to recall the outrage in August about his blowup at the Fed, people said he was overreacting and a drama queen, those people sure are quiet now. Check it out on YouTube, it's a good one.
Completely losing his cool, Cramer screamed that Federal Reserve Chairman "Bernanke needs to open the discount window... Bernanke has no idea how bad it is out there. He has no idea. No idea. I have talked to the heads of every one of these firms in the last 72 hours. My people have been in this game for 25 years and they are going to lose jobs, firms are going to go out of business. This is a different kind of market and the Fed is asleep. They're nuts. They know nothing. They have no idea what it is like out there. 14 million people took mortgages out in the last 3 years. 7 million of those were based on teaser or piggy back rates. They will lose their homes. This is crazy. I worked at fixed income at Goldman Sachs. This is not the time to be complacent. We have Armageddon in the fixed income market."
Tuesday, October 21, 2008
Lac Des Iles says bye
North American Palladium is putting its Lac Des Iles Mine on care and maintenance, the latest in a series of Canadian mine closures. LDI was nearing a critical point in it's mine life, either it continued to expand or it simply closed down. There was no middle ground that it could achieve. The current pit is nearing the end of phase 4 and phase 5, which would of extended the mine life another 2 years would of greatly increased production cost. The pit has a very low head grade and unless they are producing a enormous amount of tonnes, they simply cannot produce a profit. It would come as no surprise then that phase 5 was canceled and the pit would stop production after phase 4 was completed and all the high grade was taken.
The underground is a different story though, much higher grade and much higher cash cost. The current Roby zone had at best one year of life left to it, after that it would be off to the Offset zone where mining could continue for another decade. Although the offset zone grades were better, it was deeper and a conveyor system, shaft or more trucks were needed to extract the ore. The preliminary economic assessment done by consultants established that at 2 year average Pd prices the offset zone would return 29% profits....(2 year average prices is $325, a far cry from the $180 we're looking at now) Unfortunately, it then comes as no surprise that the offset zone and phase 5 of the pit were canceled. But I must say I am surprised that they will hold off on extracting the ore from the Roby zone underground, the development has been established all that remains is the blasting of the stopes and extraction of the ore.
Oh well, I wish all workers from Blue Notes to Lockerby and LDI, the best of luck job huntin'.
Edit: I take my last word on LDI's planning back, they made the right choice and it makes sense to leave the ore in place, might as well go after it when you can make money instead of spending all your money moving it and not getting a return. I was a little shaken up on the day I wrote this, some good friends of mine lost their jobs.
The underground is a different story though, much higher grade and much higher cash cost. The current Roby zone had at best one year of life left to it, after that it would be off to the Offset zone where mining could continue for another decade. Although the offset zone grades were better, it was deeper and a conveyor system, shaft or more trucks were needed to extract the ore. The preliminary economic assessment done by consultants established that at 2 year average Pd prices the offset zone would return 29% profits....(2 year average prices is $325, a far cry from the $180 we're looking at now) Unfortunately, it then comes as no surprise that the offset zone and phase 5 of the pit were canceled. But I must say I am surprised that they will hold off on extracting the ore from the Roby zone underground, the development has been established all that remains is the blasting of the stopes and extraction of the ore.
Oh well, I wish all workers from Blue Notes to Lockerby and LDI, the best of luck job huntin'.
Edit: I take my last word on LDI's planning back, they made the right choice and it makes sense to leave the ore in place, might as well go after it when you can make money instead of spending all your money moving it and not getting a return. I was a little shaken up on the day I wrote this, some good friends of mine lost their jobs.
FNX is the latest victim
Another one bites the dust, FNX stops "commercial" production at Levack but will continue work there through the year. Unless nickel recovers it'll go on care and maintenance pretty quick.
FNX was always very vulnerable to volatile commodity prices, they made their name by acquiring known deposits from INCO, these deposits were too small or not profitable enough for the big miner. FNX, who's upper management is all old INCO dudes grabbed these marginal deposits and with the help of record nickel prices produced another major company in the Sudbury district. This is why FNX is really going to have to start squeezing pennies, with nickel under 5$ we know Xstrata and ValeINCO can survive, they've been there before. FNI, who shut down their mine yesterday and FNX...they haven't proved they can do it yet.
One other interesting thing about the Levack mine is that the Levack Footwall deposit was discovered right underneath it, this is a high grade deposit that will be mined. FNX has a lot of properties as well, they'll be alright.
They have some good properties and they are in the holy grail of mining, but it'll be a rough ride for them until metal prices come back up.
LDI Mines also was to be put on care and maintencance starting Oct. 29th.
FNX was always very vulnerable to volatile commodity prices, they made their name by acquiring known deposits from INCO, these deposits were too small or not profitable enough for the big miner. FNX, who's upper management is all old INCO dudes grabbed these marginal deposits and with the help of record nickel prices produced another major company in the Sudbury district. This is why FNX is really going to have to start squeezing pennies, with nickel under 5$ we know Xstrata and ValeINCO can survive, they've been there before. FNI, who shut down their mine yesterday and FNX...they haven't proved they can do it yet.
One other interesting thing about the Levack mine is that the Levack Footwall deposit was discovered right underneath it, this is a high grade deposit that will be mined. FNX has a lot of properties as well, they'll be alright.
They have some good properties and they are in the holy grail of mining, but it'll be a rough ride for them until metal prices come back up.
LDI Mines also was to be put on care and maintencance starting Oct. 29th.
Monday, October 20, 2008
First Nickel shuts down Lockerby
FNI puts Lockerby on care and maintenance. Well, this is now the second (Blue Notes Caribou mine in NB getting the first spot) mine to be closed in Canada in recent weeks. The market conditions are wreaking havoc on the mining industry in Canada and around the world.
If the commodity prices keep declining or even stay at the current levels, we will continue to see mines closing across the country tossing hundreds of skilled workers into the workforce and into the operational mines. These people will be able to find jobs, the Canadian mining sector has been brutally under-staffed for a long time with several mines operating at 60-70% productivity. We're not just experiencing a market correction, we're experiencing an industry correction. One where bloated salaries, extremely optimistic speculative juniors, high services cost and mines operating on wishful commodity outlooks are all going to have to take a serious step back...
it sucks, but it was needed.
This is hitting me particularly close to home, I was "laid off" (told work wasn't guaranteed in the future) from a junior mining company only a few months ago and now the mid-tier miner I'm working for is on the verge of going on care and maintenance.
We'll see what the future brings, one thing is for sure, it'll be interesting as hell.
If the commodity prices keep declining or even stay at the current levels, we will continue to see mines closing across the country tossing hundreds of skilled workers into the workforce and into the operational mines. These people will be able to find jobs, the Canadian mining sector has been brutally under-staffed for a long time with several mines operating at 60-70% productivity. We're not just experiencing a market correction, we're experiencing an industry correction. One where bloated salaries, extremely optimistic speculative juniors, high services cost and mines operating on wishful commodity outlooks are all going to have to take a serious step back...
it sucks, but it was needed.
This is hitting me particularly close to home, I was "laid off" (told work wasn't guaranteed in the future) from a junior mining company only a few months ago and now the mid-tier miner I'm working for is on the verge of going on care and maintenance.
We'll see what the future brings, one thing is for sure, it'll be interesting as hell.
Tuesday, October 14, 2008
futurama and margins
As I said earlier, the CEO of Connacher was caught with his pants down and forced into a margin call. Here's his comments to the affair as reported by the Globe and Mail.
I don't get what accomodations he expected, another loan? more time to cover his margin? sell off other stocks and assets so he can stick it through with this one? This market crash sucks, but it's teaching everyone a very good lesson that needed to be clearly taught. Just because times are good now doesn't mean it'll last forever. Greed, over-confidence and the casualness of taking in debt is what started this whole mess in the first place and the cautious investor is getting screwed because of it. If I was an investor of CLL and just watched the guy who's suppose to steer my company through tough times dump 615,000 shares into the bid and look like a deer in headlights after it happened...I'd be scared and pissed off.
In an episode of Futurama, brain leeches attach themselves to everyone and turns them all dumb, except for Fry.
Fry: What are we going to do?
Professor: Duh, I know, let’s play the lottery.
Amy: No, let’s buy stock!
Zoidberg: On margin! Zoidbee wants to buy on margin.
Fry: Wait a minute, I know what’s going on here. You’ve all become idiots!
Well put dude.
"Would accommodation have been preferred? Yes," he said. "Was I able to secure that? No. But I'm not crying over spilt milk."
Mr. Gusella said that he had taken on additional debt to increase his asset positions, and "unfortunately the events of the day overtook me at a time when you can't find liquidity overnight… Never in my wildest dreams did I expect, with the progress we've made as a company, that we'd have a market meltdown as we've seen. Nobody did."
I don't get what accomodations he expected, another loan? more time to cover his margin? sell off other stocks and assets so he can stick it through with this one? This market crash sucks, but it's teaching everyone a very good lesson that needed to be clearly taught. Just because times are good now doesn't mean it'll last forever. Greed, over-confidence and the casualness of taking in debt is what started this whole mess in the first place and the cautious investor is getting screwed because of it. If I was an investor of CLL and just watched the guy who's suppose to steer my company through tough times dump 615,000 shares into the bid and look like a deer in headlights after it happened...I'd be scared and pissed off.
In an episode of Futurama, brain leeches attach themselves to everyone and turns them all dumb, except for Fry.
Fry: What are we going to do?
Professor: Duh, I know, let’s play the lottery.
Amy: No, let’s buy stock!
Zoidberg: On margin! Zoidbee wants to buy on margin.
Fry: Wait a minute, I know what’s going on here. You’ve all become idiots!
Well put dude.
margin call and gold trading
CEO forced to sell stock because of margin call
I can't help but laugh a little at this, as someone who has been there before (don't be lazy and always fund your trading accounts!) I feel his pain. This is even worse because it makes national news, how embarrassing.
I picked up some Yamana this morning, there's a very good chance that it'll go in my "long" portfolio along with Kinross.
I can't help but laugh a little at this, as someone who has been there before (don't be lazy and always fund your trading accounts!) I feel his pain. This is even worse because it makes national news, how embarrassing.
I picked up some Yamana this morning, there's a very good chance that it'll go in my "long" portfolio along with Kinross.
Monday, October 13, 2008
major volatility
Well after seeing the American markets rally yesterday the Canadian investors who had a break due to Thanksgiving should do their best to push the TSX up. It'll be an interresting morning for day traders, I'm looking forward to it.
Metal prices have also gone way up, copper alone is up almost 12%, not too many times you'll see that in a day, nickel is up 7.5% while lead is up 6%. Good ol' fashioned "dead cat bounce". Watch for some majors to follow the extreme volatility of their respective commodities.
Metal prices have also gone way up, copper alone is up almost 12%, not too many times you'll see that in a day, nickel is up 7.5% while lead is up 6%. Good ol' fashioned "dead cat bounce". Watch for some majors to follow the extreme volatility of their respective commodities.
Sunday, October 12, 2008
cheap tricks
I'm considering looking to buy some majors during the next week, depending on what the markets start to look like on Monday. Common sense is telling me "Don't do it, stupid!" but it's getting hard to ignore some of them. Who would of thought Yamana and FNX would be around 5 bucks ever again? Nickel is in for a rough ride so I won't touch FNX but Yamana and other gold producers are starting to look pretty sexy. The biggest thing to remember (and that I have to remind myself of) is that bottom might still be far away and getting caught in a stock that goes sideways for months is an easy possibility. Do your own dilligence and don't rush into anything.
Saturday, October 11, 2008
ouch
Well, I was going to make a post earlier. I had a couple ideas for things to write about. Then the slaughter started to happen....and well. What can I say.
Carnage, pure bloody carnage. I don't know what "bottom" is or how bad it's going to be, I just hope we get there soon and get this over with. Sadly I don't think that's going to happen though, once we hit bottom we'll go sideways for a long time before mining stocks (forget about juniors) go up again.
Carnage, pure bloody carnage. I don't know what "bottom" is or how bad it's going to be, I just hope we get there soon and get this over with. Sadly I don't think that's going to happen though, once we hit bottom we'll go sideways for a long time before mining stocks (forget about juniors) go up again.
Sunday, September 28, 2008
main street vs. wall street
If I hear another politician or read another news article that talks about "Main Street" as if it were a place I'm going to strangle someone. It makes me cringe everytime.
breaking things is fun
It takes a special kind of person to work in the mining industry, whether you're a geologist or an engineer or a miner or a bush worker, you need to been passionate about what you do. A teacher used to tell me that "without the heart, there can be no connection between the mine and the hand". The working conditions can be terrible, from extreme heat to frigid colds, and there's always the fact that you're probably going to be working long days for long stretches of time in the middle of nowhere. The business can be a killer to your social life, I see a lot of people bail out after a couple years or months because they just can't hack it anymore and really, I can't blame them one bit. so..where am I going with this?
One thing I used to do, besides fish every day and break things (if you keep breaking things, you'll always have something to fix, thus, you'll never be bored) is play the stock market. The rush of making a quick buck and the time it takes to do all your research can keep you pretty level headed. Over the past few years you couldn't lose if you played the junior market, honestly, you had to be retarded to not at least make some money on some stocks if you played it regularly, every commodity was up, every major was swallowing juniors...times were good. This of course breeds the "I r smrt" crowd of people who think the good times will never end and it was their savy inestment knowledge that predicted a gold junior with extremely narrow high grade gold would jump from 0.20$ to 0.50$ when they released news that they were now changing said gold property into a rare-earth metals play with values that were...normal earth crust values at best (MJO.t)....wtf, sometimes the market confuses the shit out of me and people are willing to buy into anything. But of course we all know how things have turned, it's much harder for anyone to convince Bay street that what they have is worth some cash, speculative stocks isn't something people look for in times of economic turmoil. But it's not all bad, a good and well informed investor should be alright if he/she sticks to the basics.
Companies with cash in the bank are your friends, they are the ones who will wheather the storm and possibly grab good properties or companies at firesale prices, besides them and majors with producing mines, there aren't too many places I would invest my money into, a lot of companies who have good properties will need to dilute their shares if they want to keep working, either that or they will sit out for a while until the good times and commodity prices roll up again. Gold is still very bullish, so if there's one place I wouldn't be scared of it would be gold juniors in established mining districts.
I now own my first Gold major stock, I just tendered my Aurelian shares for Kinross, the buyout that I was waiting for came, it just came at a much lower price than I was hoping for. Besides that I own a few gold juniors and one Mcfauld's area play. I've shrunken my exposure to the markets and it seems my timing was pretty good (lucky). Keep an eye out for bottomed out companies, just watch out and don't buy dogs that won't recover from the crunch.
One thing I used to do, besides fish every day and break things (if you keep breaking things, you'll always have something to fix, thus, you'll never be bored) is play the stock market. The rush of making a quick buck and the time it takes to do all your research can keep you pretty level headed. Over the past few years you couldn't lose if you played the junior market, honestly, you had to be retarded to not at least make some money on some stocks if you played it regularly, every commodity was up, every major was swallowing juniors...times were good. This of course breeds the "I r smrt" crowd of people who think the good times will never end and it was their savy inestment knowledge that predicted a gold junior with extremely narrow high grade gold would jump from 0.20$ to 0.50$ when they released news that they were now changing said gold property into a rare-earth metals play with values that were...normal earth crust values at best (MJO.t)....wtf, sometimes the market confuses the shit out of me and people are willing to buy into anything. But of course we all know how things have turned, it's much harder for anyone to convince Bay street that what they have is worth some cash, speculative stocks isn't something people look for in times of economic turmoil. But it's not all bad, a good and well informed investor should be alright if he/she sticks to the basics.
Companies with cash in the bank are your friends, they are the ones who will wheather the storm and possibly grab good properties or companies at firesale prices, besides them and majors with producing mines, there aren't too many places I would invest my money into, a lot of companies who have good properties will need to dilute their shares if they want to keep working, either that or they will sit out for a while until the good times and commodity prices roll up again. Gold is still very bullish, so if there's one place I wouldn't be scared of it would be gold juniors in established mining districts.
I now own my first Gold major stock, I just tendered my Aurelian shares for Kinross, the buyout that I was waiting for came, it just came at a much lower price than I was hoping for. Besides that I own a few gold juniors and one Mcfauld's area play. I've shrunken my exposure to the markets and it seems my timing was pretty good (lucky). Keep an eye out for bottomed out companies, just watch out and don't buy dogs that won't recover from the crunch.
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