Sunday, May 31, 2015

Geopolitics and Mining; Guyana Edition

When I first became interested in the mining sector I was focused, almost solely, on a projects technical merit, how many oz Au, at what grade, vein system etc. I looked at drill results, pre-feas studies and just about every other piece of technical data that a company released. When I first became interested in the mining sector... I was only considered whether "Project X" could become a producing and profitable mine at some point in the future.

As I have followed the industry over the years Geopolitics became important. I was really into RoxGold in Burkino Faso, which was touted as being as safe as they come in Africa; then they burnt down Parliament. Costa Rica was the jewel on Central America, then they shut down a few Canadian Companies for environmental concerns.

Just two examples, but I learned that most of the world is a volatile place, where things can change quickly and without much warning, especially when your interest in a country stems from the investment you made in a Junior miner and not any actual interest in a countries political climate per se.

Now as anyone who occasionally browses this blog is surely aware of, I follow a sketchy little company called Mahdia Gold (read here for back story). These guys were the guys who were going to re-open the old Omai mine, process the tailings left behind, and further quantify the historical drill results they inherited to NI 43-101 standards. Of course, none of this ever happened, but I have covered this whole ordeal in depth.

Al Zaakir, the companies head honcho, was able to maintain the property, doing very little, re-negotiating payment deadlines, pushing unpaid wage scandals to the side. He was the target of a lawsuit, paid himself excessive amounts of money for his position, took a multitude of stock options but continued fairly untouched, in spite of the fact that even the companies legal obligations to the Guyana Geology and Mines Commission (GGMC) were continuously unmet.

The reason for this is simple; Political connections. Guyanese politics have been dominated, for 23 years, by the Progressive Peoples Party (PPP). The PPP's official stance was to transcend race. class, education, etc but in reality, the party is supported by, and operates for, the Indo-Guyanese (Guyanese people with either Indian or Asian descent....yes this country is located in South America). The PPP held power from 1992 too 2015; 23 years. In this time, the other demographics, mostly people of African descent, routinely complained of being marginalized. In the 23 year rule of the PPP Indo-Guyanese prospered over those Guyanese of African descent. Al Zaakir was Indo-Guyanese.

This year, an conglomeration of  six parties called the Partnership for National Unity and Alliance for Change, led by David Granger (a man with an interesting history in his own right) unseated the the PPP by roughly 5000 votes.

The political landscape has changed in Guyana. Everynow I stroll the wasteland that is Bullboards and read the MGD board. Those with the last shred of hope are giving up as they begin to realize the importance that this change in party has on the Omai project. I doubt the new party will allow it to be a marketing piece used to line the pockets of a few well connected Indo-Guyanese any longer. Mahdias form 7 is still not out and, past their payment dates, I think it is finally the end in this sad, drawn out saga.

Sunday Funday

Well. it seems I post more and more items unrelated to the actual theme of this blog...but its mine.

I played FarCry, thought it was fun.

Here is a guy playing it with funny commentary. Well worth the nine minutes (assuming you have nothing going on in your life).

Thursday, May 21, 2015

Sabina Release Feasability Study

A lot of people were waiting for this and it was, all in all, quite impressive.

I no longer hold a position in SBB, but have been in this stock a great number of times. I've held it for fundamental reasons, and I've traded its swings a while back when it was fairly predicatble around the$1 mark.

The stock was even yesterday on the news, but gained a bit today. I plan a decent entry as I was worried about cash costs in the northen environment, but I guess the high grade makes it quite economical.

Another note for those out of the loop, Rob Pease is no longer the CEO after a numer of years with the company. Stepping in is Bruce McLeod; the man who sold Mt Milligan to Thompson Creek Metals. below is a list of the basic highlights. You can read the release here.

-The Project could generate a post-tax IRR of 21.7% and net present value ("NPV") (at 5% discount rate) of $539 million

-The Project could generate Life Of Mine ("LOM") post-tax net cash flow of $914 million on gross revenues of $4.5 billion with a payback period of 2.2 years (from start of operations);

Processing rate of 6,000 tonnes per day ("tpd") could produce an average of ~346,000 oz Au per year (post commencement of commercial production)

-Average production of 413,000 oz Au in years 1 through 4;

-Majority of production from open pit;

Initial capital estimate of $695 million and sustaining capital estimate of $529 million (including closure);

-Total LOM cash cost estimate of US$535/oz Au (including third party royalties, refining and transport). LOM all-in sustaining cash cost estimates of US$671/ oz Au LOM (including sustaining capital);

-A total of 19.8 million tonnes of ore could be milled over 10 years with a LOM average grade of 5.70 grams per tonne ("g/t") Au and metallurgical recoveries of 93%;

-Base case assumptions of delivered diesel price of $0.94/L for power generation; and
Open Pit strip ratio of 7.2:1 over LOM.

Tuesday, May 12, 2015

I don't like Tuesday very much and....Vicente Amigo

Well, its Tuesday, and the weather is nice. So, some random hipster IPA from the liquor store and flamenco in the back yard.

You should check this guy out if you haven;t already...

Sunday, May 10, 2015

Hey, do you know anyone who has Vanadium?

Sometimes in the junior sector you can't find anything serious and actual investment worthy to talk about. In fact, I find most of my conversations with other people concerned with the sector to degrade fairly quickly into poking fun at companies/CEOs/Projects etc. Its, well, to easy...and making a good investment in this sector these days is whole lot difficult.

That being said, every now and then you come across a bit of promo that is so amateurish, so poor, it becomes something special. Here is Micheal Vaughan, a financial journalist, inteviewing Lee Barker, CEO of Sparton Gold. I can't find anything on Micheal Vaughan when searching google. In fact, the results that come up are all linked to Sparton Resources.

This interview contains such epics like

"Thats always the way, all the justice you can afford!"

"That is disgusting!"

"Im seeing alot of news about Vanadium Redux Batteries these days" (wait...really..where?)

"And you might have some of the purist Vanadium in the world"

"Hey, do you know anybody who has Vanadium?"

"Now, I'm not a great scientist but I have not seen a large battery that can store as much energy in an economical way...erm...if your trying to store solar power for example, than vanadium flow batteries"

"china is making a big push to clean up their filthy air!" 

" could do a closed loop project"

"Don't give up Lee, carry on...Land it!"

The interview says that they have received a settlement which will, after legal fees, put about 250k into the companies kitty. They say the settlement is unsatisfactory, which is understandable considering that managment fees for 2014 were $275k, $400k in 2013.

Here is the video...although its not all that interesting.