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Ortega said to win Nicaraguan election
Victory would expand club of leftist leaders in Latin America
By Traci Carl
The Associated Press
Originally published November 6, 2006, 8:45 AM EST
MANAGUA, NICARAGUA // Leftist Sandinista leader Daniel Ortega appeared today to have easily defeated four other presidential candidates in his long quest to return to power 16 years after a United States-backed rebellion helped force him from office, according to an electoral observer group projecting victory based on a sampling of the votes.
Ortega's victory, if confirmed by final results, would give Venezuelan President Hugo Chavez a strong ally in the region while threatening U.S. aid to the second-poorest nation in the hemisphere.
Many here still have bitter memories of the Sandinistas' decade in power, in which homes and businesses were seized and a war with Contra rebels left 30,000 dead.
The race was Ortega's fifth consecutive presidential campaign. He won an 1984 election boycotted by Sandinista opponents, then lost in 1990 to Violeta Chamorro, ending Sandinista rule and the Contra war. His next two presidential attempts, in 1996 and 2001, were also failures.
The quick count by the Nicaraguan Civic Group for Ethics and Transparency gave Ortega 38.5 percent of the vote to 29.5 percent for Harvard-educated Eduardo Montealegre of the Nicaraguan Liberal Alliance, a party that broke from the ruling Constitutionalist Liberal Party after former President Arnoldo Aleman was convicted of corruption.
Trailing were Sandinista dissident Edmundo Jarquin, ruling-party candidate Jose Rizo and former Contra rebel Eden Pastora.
The quick count, based on results from a representative sample of polling stations, had a margin of error of 1.7 percentage points. Amid concerns of fraud, the group carried out the count as a gauge to judge the final results. Some candidates expressed concern that the Supreme Electoral Tribunal was controlled by the Sandinistas and could influence the final vote.
Thanks to a change in electoral law, Ortega needs only 35 percent of the vote and an advantage of 5 percentage points over his closest rival to avoid a runoff in December. Before, he would have needed 45 percent to avoid a runoff.
The U.S. Embassy issued a statement late Sunday saying it was too soon to "make an overall judgment on the fairness and transparency of the process."
"We are receiving reports of some anomalies in the electoral process, including the late opening of (polling places), the slowness of the voting process and the premature closing of some" polling places, it said.
Roberto Rivas, president of the Supreme Electoral Council, blasted the U.S. statement, saying, "We have promised the Nicaraguan people transparent elections, and that's what we've done. I think there were enough observers to witness that."
Ortega's supporters flooded the streets, setting off celebratory fireworks, waving the party's red-and-black flag and swaying to the candidate's campaign song, set to the tune of John Lennon's "Give Peace a Chance."
Montealegre brushed aside Ortega's lead, saying: "No one has won here. The Nicaraguan people, in a runoff, will determine the next president."
Ruling party spokesman Leonel Teller warned that electoral authorities were "inciting something could end in blood and violence."
At stake are millions of dollars in potential investments, many from foreign companies drawn to Nicaragua by its cheap labor, low crime rates and decision to join the new Central American Free Trade Agreement. Many are waiting to see if Ortega wins and stays true to promises to continue free trade policies.
"We are playing with the stability of the country," said Jose Adan Aguirre, president of the Chamber of Commerce.
Observers said voting overall was peaceful, although many polling stations opened late, leaving long lines of people waiting to cast their ballots. After the polls closed, groups of angry voters pounded on shuttered doors, screaming at officials inside to let them vote.
Ortega didn't make any public statements early today.
Ortega says he has changed. In fact, his vice presidential candidate was once one of his biggest enemies: Jaime Morales, who served as the spokesman for the Contras.
As Sandinista leader, Ortega seized Morales' six-bedroom estate, but they reconciled after Ortega offered to pay Morales for his former home -- now Ortega's campaign headquarters.
Marvin Lopez, a 46-year-old doctor waiting in a long line at the same polling station where Ortega voted, said he feared an Ortega would bring back uncontrollable inflation and conflict.
"I don't want to return to a dictatorship, the misery, the abuse of families' rights," he said.
Waiting at the end of the line was 26-year-old student Gema Amaya Larios, who said she woke up at dawn to cast her vote for Ortega.
"He's the only one who will give the people what they need," she said. "Everyone else just cares about their own interests."
If Ortega wins, she predicted that his presidency would be different from his 1985-1990 term.
"There was an embargo, a war," she said. "Besides, we all learn from our mistakes."
Armed soldiers kept guard at polling stations monitored by more than 18,000 observers -- including three former presidents: the United States' Jimmy Carter, Peru's Alejandro Toledo and Panama's Nicolas Ardito Barletta.
Nicaraguan presidents cannot serve two consecutive terms, and President Enrique Bolanos steps down Jan. 10.
Ortega Extends Advantage in Nicaragua
In the event no presidential contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by reaching the 35 per cent mark and holding a five-point advantage over the closest rival.
Ortega needs to get from 33% to 35% to win on first ballot...
October 29, 2006
- Former head of state Daniel Ortega is still the candidate to beat in Nicaragua, according to a poll by CID-Gallup published in La Prensa. 33 per cent of respondents would vote for the Sandinista National Liberation Front (FSLN) candidate in next month’s presidential election, up four points since August.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 22 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) with 17 per cent, Edmundo Jarquín of the Sandinista Renewal Movement (MRS) with 13 per cent, and Edén Pastora of Christian Alternative (AC) with one per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre once belonged to the PLC, and the MRS was assembled by former FSLN members.
In March 2005, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
On Oct. 27, Ortega refused to attend a debate with Montealegre in Managua. The ALN-PC candidate expressed disappointment, declaring, "It was important for (Ortega) to show up, but he unfortunately decided not to do so. (...) During his government, we had alliances with conflictive countries, wars, divisions, press censorship and half a million Nicaraguans emigrated to look for a better life."
The Nicaraguan presidential election is scheduled for Nov. 5. In the event no presidential contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by reaching the 35 per cent mark and holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election?
Oct. 2006
Aug. 2006
Jun. 2006
Daniel Ortega (FSLN)
33%
29%
23%
Eduardo Montealegre (ALN)
22%
23%
17%
José Rizo (PLC)
17%
14%
11%
Edmundo Jarquín (MRS)
13%
14%
--
Edén Pastora (AC)
1%
1%
1%
None / Undecided
14%
19%
32%
Ortega Leads, Run-Off Likely in Nicaragua
October 3, 2006
- Former head of state Daniel Ortega is holding on to the top spot in Nicaragua’s presidential race, according to a poll by M&R. 30.9 per cent of respondents would vote for the Sandinista National Liberation Front (FSLN) member in this year’s election, down 1.2 points since August.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 26.4 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) with 16.3 per cent, Edmundo Jarquín of the Sandinista Renewal Movement (MRS) with 15.9 per cent, and Edén Pastora of Christian Alternative (AC) with 0.9 per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre once belonged to the PLC, and the MRS was assembled by former FSLN members.
In March 2005, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
On Sept. 27, the MRS issued a communiqué, accusing Ortega of betraying the principles of the Sandinista revolution. The statement claims Ortega’s pact with former president and PLC member Arnoldo Alemán "only served to assign positions, pay huge salaries and establish a system of institutional corruption that benefits drug traffickers and the powerful, who can pay off judges."
The Nicaraguan presidential election is scheduled for Nov. 5. In the event no presidential contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by reaching the 35 per cent mark and holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election?
Sept. 2006
Aug. 2006
May 2006
Daniel Ortega (FSLN)
30.9%
32.1%
27.2%
Eduardo Montealegre (ALN)
26.4%
27.2%
27.9%
José Rizo (PLC)
16.3%
14.9%
13.3%
Edmundo Jarquín (AH)
15.9%
21.6%
--
Edén Pastora (AC)
0.9%
1.4%
1.2%
Ortega Gets 15-Point Edge in Nicaragua
September 18, 2006
- Former head of state Daniel Ortega is the clear frontrunner in Nicaragua’s presidential election, according to a poll by Zogby International and the University of Miami School of Communication. 34 per cent of respondents would vote for the Sandinista National Liberation Front (FSLN) member.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 19 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) with 13 per cent, Edmundo Jarquín of the Sandinista Renewal Movement (MRS) with 10 per cent, and Edén Pastora of Christian Alternative (AC) with one per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre once belonged to the PLC, and the MRS was assembled by former FSLN members.
In March 2005, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
On Sept. 14, Bolaños urged young voters to not vote for a "has-been." These and other references from the current president have been interpreted as direct criticisms of Ortega.
The election is scheduled for Nov. 5. In the event no presidential contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by reaching the 35 per cent mark and holding a five-point advantage over the closest rival.
Polling Data
If the presidential election were held today, for whom would you vote?
Daniel Ortega (FSLN)
34%
Eduardo Montealegre (ALN)
19%
José Rizo (PLC)
13%
Edmundo Jarquín (MRS)
10%
Edén Pastora (AC)
1%
Other
1%
Not sure
23%
Ortega Leads by Six Points in Nicaragua
September 1, 2006
- Former head of state Daniel Ortega remains ahead in Nicaragua’s presidential race, according to a poll by CID-Gallup published in La Prensa. 29 per cent of respondents would support the Sandinista National Liberation Front (FSLN) candidate in this year’s ballot, up six points since June.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 23 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) and Edmundo Jarquín of the Sandinista Renewal Movement (MRS) with 14 per cent each, and Edén Pastora of Christian Alternative (AC) with one per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre once belonged to the PLC, and the MRS was assembled by former FSLN members.
In March 2005, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
In an interview with the Associated Press published on Aug. 30, former Nicaraguan president Arnoldo Alemán acknowledged Ortega’s recent success, saying, "It is very possible that the FSLN will win, unless the Liberals unite."
In 2004, Alemán—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement. The former president has been kept under house arrest due to medical reasons.
The Nicaraguan presidential election is scheduled for Nov. 5. In the event no presidential contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by reaching the 35 per cent mark and holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election?
Aug. 2006
Jun. 2006
Apr. 2006
Daniel Ortega (FSLN)
29%
23%
16%
Eduardo Montealegre (ALN)
23%
17%
22%
José Rizo (PLC)
14%
11%
13%
Edmundo Jarquín (MRS)
14%
--
--
Edén Pastora (AC)
1%
1%
--
None / Undecided
19%
32%
28%
COHA Report:
The Upcoming Nicaraguan Elections
The 2006 Nicaraguan presidential campaign leading up to the November 5 election has been book-ended by events wholly unprecedented in Nicaraguan history. In addition to the sudden death of presidential candidate Herty Lewites on July 2, the race has been witness to the division of the two political parties that traditionally have dominated the Nicaraguan political system. This is demonstrated by the addition of three new presidential contenders running on alternative platforms. Two of these candidates, Eduardo Montealegre and Edmundo Jarquín, have been extremely successful in courting the support of traditionally partisan conservatives and liberals – thus successfully presenting options to the electorate; while the third, Edén Pastora, has rarely gathered more than 1.5 percent support in the polls. Never before in the country’s modern electoral history has the transcendence of the two primary parties, the Sandinista Liberation Front (FSLN) and the conservative Constitutional Liberation Party (PLC), been so challenged. This splintering has been largely caused by the popular disillusionment with the endemic corruption that has plagued these parties since the early 1990s. Thus, as the country recuperates from Lewites’ death, and prepares to see the presidential race through to the end, the Nicaraguan people will be given the unique opportunity to break with a past filled with venality and political scandal and pursue a future of political plurality and accessibility.
Three’s Company
The formation of the bipartisan system that has dominated Nicaragua in recent years began in the late 1980s with the development of a conservative electoral opposition to the revolutionary Sandinista movement. However, the solidification of two-party dominance was not orchestrated until 1999, when a cynical political pact, called el Pacto, was brokered between the PLC’s Arnoldo Alemán and the FSLN’s Daniel Ortega. This undemocratic arrangement, which was negotiated by self-serving political elites to the detriment of the electorate, has been continually characterized by corruption and represents a telling blow to free electoral process and legitimate governance.
The 1999 political pact between Daniel Ortega and Arnoldo Alemán (president from 1996 – 2001 who is now facing 20 years in jail for fraud and embezzlement) is the culmination of years of political venality from which Nicaraguans are clearly trying to escape with the upcoming election. The agreement united their two parties in the National Assembly and gave Ortega and Alemán control over nearly 90 percent of the legislature – granting the unified duo near dictatorial powers over the nation. The leaders used their majority control for the cynical assertion of conclusive influence over many facets of Nicaraguan public life, including the Supreme Court and the Supreme Electoral Council (CSE). Their sway even gave them the political clout necessary to exert power over the executive, should it deviate from their political agenda. The pact also ensured both Ortega and Alemán seats in the national assembly for the next two terms, a position coveted by both men because of the parliamentary immunity that it afforded. Because of this privileged protection, Ortega and Alemán avoided prosecution for various crimes committed in previous years, Ortega for sexual abuse charges and Alemán for fraud and embezzlement.
The reaches of the pact have also, predictably, extended into Nicaraguan electoral politics – a fact that will surely have consequences for November’s election. In a recently released report by the Organization of American States (OAS) in preparation for their involvement in the observation and monitoring of the November 5 election, the body highlighted several deficiencies in the Nicaraguan Supreme Electoral Council (CSE) that can most likely effect the upcoming election. Most notably, the OAS reported power struggles within the CSE that bode poorly for the body’s legitimacy. Ortega and Alemán used the 1999 agreement to capture the CSE by overhauling the organization of the group, agreeing to increase the number of members, which provided each man the opportunity to select three allies to sit on the council. The seventh member, Roberto Rivas, generally regarded to be neutral between the two political parties, was selected by Ortega and Alemán as the swing vote – the proverbial Sandra Day O’Connor of the CSE. In the past year, however, Rivas has shown a preference toward Ortega’s FSLN party, thus tilting the scales of the CSE in favor of Ortega and creating both a dramatic rise in public mistrust of the body’s legitimacy and suspicions surrounding the Nicaraguan electoral system as a whole.
The Ortega and Alemán-controlled National Assembly passed legislation in January 2000 that increased the electoral threshold for political parties seeking to participate in the National Assembly, further establishing the dominance of the FSLN and the PLC. Lastly, Ortega saw to the passing of legislation through the National Assembly that lowered the percentage necessary to win the presidency in the first round to 35 percent of the popular vote (In the case that no one candidate reaches 35 percent of the vote, the two top candidates are subject to a runoff election). This is a key advancement for his position in November as his party has, in past elections, attracted between 35 and 40 percent of the vote, just falling just short of the previous presidential threshold. Thus, with the new requirement now in place, and with his predictable support base, Ortega’s chances for victory are greatly increased. The duopoly created by means ofel Pacto, effectively brought about the gutting of Nicaraguan democratic legitimacy. Ortega and Alemán’s negotiation of a closed political system and their resulting complete dominance represents a regression into the power politics of the Somoza era.
The Demise of the Open Political Process: The Case of the FSLN
In addition to the damage done to the Nicaraguan political system by way of el Pacto, Ortega and Alemán have further ensured their dominance in Nicaraguan politics by limiting political participation within their own parties. This has primarily been the case with the FSLN party which, once a leftist revolutionary movement representing the hope of political freedom for Nicaragua, has, through the internal supremacy of party leader Daniel Ortega, become the embodiment of the caudillo politics that have long plagued Nicaragua.
Many of the FSLN’s fundamental political failures are due to a lack of internal democratization, which has given rise to the authoritarianism of Daniel Ortega. For example, the Ortega-dominated Consejo Sandinista Nacional (the highest decision-making body of the FSLN) has maneuvered the expulsion from the party of any other potential presidential candidate who could pose an effective challenge to Ortega. Most notably, the late presidential candidate Herty Lewites, who was a key actor in the revolution and closely collaborated with Ortega during the 1980s, was expelled from the party in March 2005 after expressing his intentions to contend for the FSLN candidacy in the 2006 presidential election. In the midst of this process, Lewites told Washington D.C.-based social justice group the Nicaraguan Network that he would continue his demand for an FSLN primary election, proclaiming, “I will do everything I can to liberate the Sandinista party from the current internal dictatorship it has to put up with.” Lewites’ presidential bid was supported by many important ex-FSLN leaders such as Dora Maria Tellez, Sergio Ramirez, Ernesto Cardenal and Carlos Mejía Godoy, who were all once influential revolutionaries before similarly defecting from the FSLN because of Ortega’s dominance and his cult of personality politics. Lewites ultimately joined the presidential race, albeit under an independent ticket aligned with the Movement to Restore Sandino (MRS), the premier FSLN-dissident party of Tellez, Ramirez, Cardenal and Godoy.
The support that Lewites attracted, both in his demand that a primary election be held within the FSLN and in his subsequent independent candidacy for Nicaragua’s presidency, makes it clear that many within the party are dissatisfied with the current reign of Daniel Ortega and have sought ways to unseat him. In July, in opposition to Ortega’s traditional commemoration of the 1979 revolution in Managua, former Sandinistas held an alternative celebration in the city of Masaya. This strategic move was a symbolic protest of the ascendancy of Ortega over the revolutionary party. After the celebration, in an interview, former Sandinista and prominent MRS member Victor Hugo Tinoco said, “Daniel and his group don’t fulfill their promises …The majority of them have become millionaires. They are now just a powerful economic group whose only goal is to protect its interests by using anti-democratic means to control the party, and by using false leftist speech and inflammatory anti-American rhetoric to gain the support of Nicaraguan society.” Ortega’s chokehold over the party has frustrated attempts to reform from within, and has thus caused political diversity to be sought after in the rise of the MRS party and its current push for the presidency.
MRS: A Third Way?
The potency of the MRS’ presidential campaign was delivered a massive blow when its preferred candidate, Herty Lewites, died suddenly of a heart attack on July 2. However, while mourning Lewites with appropriate solemnity, party leaders did not hesitate to name his running mate, Edmundo Jarquín, as Lewites’ successor, and national folk singer and leftist political activist Carlos Mejía Godoy as its new vice-presidential candidate. Lewites was known for his charisma, humor, and honesty, three traits that made him a unique and lovable politician, and in this sense, he leaves Jarquín with large shoes to fill. However, MRS party leaders, as well as the candidate himself, have expressed their confidence that Jarquín is very capable in clinching the race that Lewites began.
The independent candidacy of Herty Lewites had gained momentum as a result of deepening divisions in the Sandinista party. Lewites, who participated actively in the revolution alongside Ortega and remained in the party until 2005, possessed strong leftist credentials which offered a potent challenge to Ortega on his own ideological turf. After expulsion from the FSLN thwarted Lewites’ bid for the FSLN candidacy, Lewites attracted the support of other prominent Sandinista dissidents, small businessmen and traditionally leftist voters. It is uncertain, however, whether that strength will transfer to his successor and translate into a victory for the MRS party.
The MRS platform is centered on ridding the Nicaraguan political system of the corruption that has been a legacy of el Pacto. It also seeks to empower Nicaraguan civil society by opening up the political system and reintroducing a democratic tendency in which the common citizen can influence the political process.
(For more on the life and death of Herty Lewites, and the prospects of the MRS party in the upcoming election, please read: “The Death of a Good Man” by the same author.)
Arnoldo Alemán and the Splintering of the Right
Like the FSLN, the conservative PLC party has seen a recent fallout as a result of Arnoldo Alemán’s iron-fist hold on the reins of the party, combined with the widespread disillusionment surrounding Alemán due to a series of corruption scandals leading up to the 1999 pact with Ortega.
In 2002, Alemán was sentenced to 20 years in prison for a myriad of crimes he committed during his presidency (1996-2001) – derelictions which then drove his all-consuming quest for impunity and which led him to the 1999 pact with Ortega. These offenses included embezzling millions of dollars from the Nicaraguan state, nepotism, money laundering, and using illicit funds to influence the 2001 presidential campaign of Enrique Bolaños. Ironically, Alemán’s trial and conviction were helped along by his protégé and successor, then-president Bolaños, who pursued an anti-corruption campaign after splitting from the PLC early in his presidency. The National Assembly, encouraged by Bolaños, voted to withdraw Alemán’s parliamentary immunity, thus forcing him to stand trial. The ex-President is now serving time under house arrest due to a medical condition. However, such disgrace did not dislodge him from a position of plenary power within the PLC, despite the fact that the taint of corruption was fast eroding his popular support outside the party.
With the public acknowledgement of Alemán’s crimes and his conviction in 2002, many prominent PLC members concluded that the popular disillusionment surrounding the party leader would stain their political careers as well. Therefore, in the aftermath of Alemán’s presidency, prominent party members defected from the PLC in order to escape the former leader’s disgrace, as well as to pursue their own political careers. Most notable of those who split from the party is the country’s current president, Enrique Bolaños, who broke with PLC leadership during his presidency to form his own party, Alliance for the Republic. Furthermore, Eduardo Montealegre, foreign minister in Alemán’s administration, broke from the party to run for the presidency in the coming election, on a conservative platform: the Nicaraguan Liberal Alliance – Conservative Party (ALN-PC).
Additionally, the PLC has not managed to effectively coalesce around the Alemán-designated candidacy of José Rizo and running mate José Alvarado, and the pair has consistently trailed in the polls. Furthermore, Rizo and Alvarado, have begun to challenge Alemán’s penchant for authoritarian leadership. Indeed, as the Nicaraguan Network reported on June 6, “The leader of the Liberal Constitutional Party (PLC), former president and convicted felon, Arnoldo Alemán, admitted that his party is going through a period of crisis as a result of disagreements over the list of National Assembly and Central American Parliament candidates for the upcoming election.” Also, in a June 12 presidential debate held in Miami, Rizo took the opportunity to further distance himself from the former president, alleging that the PLC party is moving toward independence from Alemán’s heavy-handed rule. Earlier indicators, however, point to the contrary. The heavy-handed control of Arnoldo Alemán contributed greatly to the splintering of the party for the 2006 elections, and has thus produced an additional challenge for current PLC candidate José Rizo in trying to best his conservative opponent Eduardo Montealegre.
The Rise of Montealegre
Eduardo Montealegre has built his support base largely with those PLC partisans who had become discontented due to Alemán’s unsavory reputation, which has tainted the party’s legitimacy. Running under the banner of the ALN-PC, Montealegre has been consistently second to Ortega in the polls. Furthermore, Montealegre is Washington’s preferred candidate in the race, which has earned him the specific support of U.S. Ambassador Paul Trivelli.
At a June 15 speech given at George Washington University, Montealegre promoted his platform focused on “growth with equity.” He proposes that the fastest and fairest way toward achieving this goal is to employ the neoliberal economic model outlined by the ‘Washington Consensus,’ but with a focus on broad economic growth through the logistical and financial support of small farmers. To combat the country’s legacy of corruption, in particular from within his former party, Montealegre plans to double the budget for the ministry of education. These increased funds will raise the level of primary education in the country and theoretically spread values of honesty and accountability to the youth. In the short term, Montealegre speculates that he will be able to break the hold that Ortega and Alemán have on government agencies by revising the laws and regulations that resulted from el Pacto and by negotiating the ouster of political actors selected by either Ortega or Alemán solely to service their ends. Lastly, he seeks to use ‘growth that permeates’ within all levels of society which would entail increasing the level of public health and national infrastructure by employing methods of grassroots development to support a growing economy.
If anything, Montealegre is an adroit politician – he certainly has Washington convinced of his usefulness, and he respectfully registers in the polls; he appears to be doing a passably good job of convincing the Nicaraguans of the viability of his platform. However, his neoliberal economic model has been employed by three successive conservative presidents – Violetta Chamorro, Arnoldo Alemán and Enrique Bolaños – with few equalizing effects. Nicaragua remains one of the poorest countries in the hemisphere, with awesomely high wealth disparity rates. Montealegre has struggled to distinguish his campaign promises from the failed ideas of his predecessors – but his pledge of ‘growth that permeates’ is mostly tepid and relatively unsupported. Less ambiguous is the fact that Montealegre is specifically campaigning against an Ortega victory, and it seems that he will go to any lengths to further discredit the former leader. It is also clear that, to some extent, the success of his campaign has been augmented by Washington’s support and the U.S. embassy’s tireless involvement.
The Constant Specter of U.S. Involvement
In keeping with the precedent that the 1980s Contra War set for modern U.S.-Nicaraguan relations, Washington has once again proven to be a force of intervention in Nicaragua’s internal affairs – most recently targeting the 2006 campaign. Spearheaded by Ambassador Trivelli, the U.S. has thrown aside all diplomatic niceties to aggressively support Montealegre, while displaying an unwavering determination to prevent leftist, Daniel Ortega from returning to power. Trivelli has attempted to unify the right against the threat of the former revolutionary’s election, by convening meetings between the divided right-wing factions of the presidential race, acting almost as if he were a paid political spin doctor charged with maintaining the conservative status quo. According to the Nicaraguan Network, in an effort to coerce them to unite against Ortega, Trivelli has offered the leaders and candidates of the right-wing factions U.S. financial and technical support. The PLC has been specifically targeted in these attempts to unify the conservative forces; as their candidate, José Rizo, poses the greatest threat to splitting the conservative vote that would otherwise rally behind Montealegre. However, the PLC’s leadership has made one thing very clear: Rizo’s candidacy will stand regardless of U.S. disapproval.
Trivelli has made no secret of the fact that U.S.-Nicaraguan relations would be strained by an Ortega victory in November. This threat is likely to significantly sway the voters’ opinions in favor of Montealegre, considering their memories of Washington’s hardball role in the aftermath of the Contra War, as well as the country’s economic reliance on close trade relations with the United States. Trivelli’s blatant intervention on behalf of the State Department raises questions about his own professionalism, which could come to haunt him in later phases of his career and which comes very close to violating Vienna Convention provisions that “expressly prohibit diplomats from interfering in internal matters of the country where they are assigned.”
(For more on the U.S.’s involvement in this election, please see “COHA Report on Nicaragua” published on June 22, 2006)
As November 5 Approaches…
Despite unyielding pressure from Ambassador Trivelli, at the present time it appears as though this campaign will come down to a competition between the left, divided between Ortega and Jarquín, and the right, divided between Montealegre and Rizo. Most likely, on November 5, no single candidate will reach the 35 percent threshold necessary to secure victory in the first round, though Ortega will probably come close. Thus, the two top candidates, most recently Ortega and Montealegre, will be forced to face each other in a runoff election. It is here that Montealegre will most likely be successful, as he, unlike Ortega, has demonstrated the ability to reach out beyond his traditional moderate support base to constituents from both the far left and the far right. Indeed, Manuel Orozco from the Washington-based Inter-American Dialogue has told the Miami Herald that, “For [MRS voters] to head back to the Sandinista Front would be a betrayal of everything Herty [Lewites] stood for. If anything, they are closer to Montealegre’s position than Ortega’s.” However, the November election remains far from predictable as the most recent polls have shown that over 33 percent of the electorate has yet to make up its mind. In any event, regardless of who is victorious, the ideological splintering within the left and the right has benefited the Nicaraguan people by giving the voting public an alternative to the iron grip of Ortega and Alemán.
- Former head of state Daniel Ortega remains the top contender in Nicaragua’s presidential race, according to a poll by Borge y Asociados. 31.4 per cent of respondents would vote for the Sandinista National Liberation Front (FSLN) member in this year’s election.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 29.1 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) with 15.7 per cent, Edmundo Jarquín of the Sandinista Renewal Movement (MRS) with 15.2 per cent, and Edén Pastora of Christian Alternative (AC) with 1.1 per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre once belonged to the PLC, and the MRS was assembled by former FSLN members.
In March 2005, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
Yesterday, Ortega claimed that Cuban president Fidel Castro "is active" and "holding telephone conversations with his friends." Castro has not been seen publicly since Jul. 31, when the Cuban government announced a "provisional transfer of duties" to vice-president Raúl Castro, Fidel’s brother, after the president suffered "an acute intestinal crisis, with sustained bleeding" which required immediate medical intervention.
The presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election if the candidates were these?
Jul. 2006
Jun. 2006
May 2006
Daniel Ortega (FSLN)
31.4%
30.1%
28.4%
Eduardo Montealegre (ALN-PC)
29.1%
24.4%
26.5%
José Rizo (PLC)
15.7%
21.6%
17.1%
Edmundo Jarquín (MRS)
15.2%
--
--
Edén Pastora (AC)
1.1%
1.0%
1.3%
Nicaragua's Leading Loser
Can a candidate despised by most of his countrymen still win a presidential election? Ask Daniel Ortega.
Friday, August 4, 2006; A16
DANIEL ORTEGA, the failed former Marxist dictator of Nicaragua, ought to be facing a dim political future this summer. He's a candidate for president in elections in November, but he's already lost three previous votes, including the one that removed his Sandinista party from power in 1990. As he has acknowledged, no more than 40 percent of Nicaraguans would ever support him -- most are disgusted by his record of misrule or the charges of corruption and sexual abuse that trail him.
This time Mr. Ortega has the backing of Venezuelan President Hugo Chávez, who has supplied Sandinista-controlled firms with fertilizer to distribute to peasants and offered cut-rate oil. But Mr. Chávez's blessing has proved a liability in a couple of recent Latin American elections, and Nicaragua appears no different: 49 percent of Nicaraguans surveyed in a recent poll said they believed Venezuela was meddling in their country's affairs -- significantly more than felt that way about the United States.
Mr. Ortega, however, has an advantage over the other leftist populists who have tried and failed to take power in Peru and Mexico. Through a patient strategy of corrupt manipulation, he has gained control over much of Nicaragua's fledgling democratic political system and is steadily twisting it to his advantage. Knowing that a majority of voters would never choose him, Mr. Ortega has managed to alter the electoral rules so that he could win election as president with as little as 35 percent of the vote. He has managed to stack Nicaragua's supreme court with his cadres. He has stripped the current president, Enrique Bolaños, of much of his power. Consequently, Mr. Ortega is regarded by many as the favorite to become Nicaragua's next president.
The story of how Central America's poorest country reached this point provides a lesson in the vulnerability of new democracies to cynical and ruthless opportunists. Mr. Ortega's chief gambit has been an alliance with a former right-wing president, Arnoldo Alemán, who was convicted in 2003 of stealing tens of millions of dollars from government coffers. Not allowing his ideological differences with the disgraced president to get in the way, Mr. Ortega sealed a political pact with him. The two leaders' followers in Nicaragua's Congress then teamed up to rewrite the constitution and stack the courts. Until they were constrained by the Bush administration and the Organization of American States, they were preparing to remove Mr. Bolaños from office.
The "pact," as it is universally known in Nicaragua, has produced a healthy backlash: Both the Sandinista party and Mr. Alemán's Liberals have split. The reformers in each party have nominated their own presidential candidates; they include the Liberal party's Eduardo Montealegre, a former finance minister whose commitment to democracy and free markets is unquestioned. The Sandinista challenger to Mr. Ortega, however, died unexpectedly last month, increasing Mr. Ortega's chances of winning by his own rules.
At this point, the best chance of thwarting a ballot-box coup probably lies with the OAS and its member governments, which between now and November must insist on a free and fair election. If Nicaragua remains a genuine democracy, Mr. Ortega will lose.
Not that Ortega guy again ...
Published July 28, 2006
Sixteen years and three elections ago, war-weary Nicaraguans ousted Sandinistan strongman Daniel Ortega from the presidency. He's been working on a comeback ever since. Now, with the untimely death of a former lieutenant and the largess of (who else?) Venezuelan President Hugo Chavez, Ortega suddenly has a good shot at winning the Nov. 5 election.
Ortega, a former Marxist, came to power in 1979 after helping topple dictator Anastasio Somoza. He spent the 1980s battling the CIA-financed contra rebels in a civil war that left the country in ruin. Accused of corruption and sexual misconduct, he was knocked out of office in 1990. Still, Nicaragua has never been able to get on its feet.
It didn't help that voters in 1996 elected another scoundrel, conservative Arnoldo Aleman. He was convicted in 2003 of embezzling more than $100 million from the impoverished citizens of Nicaragua. Aleman, who is under house arrest, still controls the rightist Liberal Constitutional Party, which dominates the legislature; Ortega's leftist Sandinista Front controls the judiciary.
Under a bizarre left/right alliance dubbed "el pacto," the two former presidents operate as twin strongmen, having dismantled the checks and balances intended to protect the new democracy.
Hopeful signs emerged recently as both parties spawned splinter groups. Eduardo Montealegre, a Harvard-educated banker, left Aleman's camp and founded the center-right Nicaraguan Liberal Alliance Party. Herty Lewites, a former Sandinista guerrilla, Cabinet member and mayor of Managua, was expelled from the Sandinista Front and formed the center-left Sandinista Renovation Movement. Both launched campaigns for president, making the 2006 election an unprecedented four-way race. Even more encouraging, Lewites and Montealegre pledged that they would eliminate el pacto. Fresh air!
In late June, polls showed Ortega in first place, but far short of the 40 percent needed to avoid a runoff, which he likely would lose. Then on July 2, Lewites died of a heart attack. The question now is whether his followers, mostly disaffected Sandinistas, will return to Ortega's fold. If so, the divided conservatives could hand Ortega the election.
Meanwhile, Venezuela's Chavez has gifted Nicaraguan farmers with huge fertilizer subsidies billed as "foreign aid," but channeled through an agricultural cooperative with ties to Ortega. He also offered to send 10 million barrels of oil--on credit--to the energy-starved nation, where gas is $5 a gallon and power outages are a daily occurrence. That offer, too, was brokered through a Sandinista group, and so far the government has refused to let it materialize. Still, Ortega comes across as the good guy, trying to ease the burdens of ordinary Nicaraguans.
Grateful for cheap fertilizer and disgruntled about the stalled oil deal, Nicaraguans nonetheless think Chavez is meddling in their affairs. A poll last month in the political journal Confidencial found that 49 percent think Venezuela is interfering in the election.
U.S. officials, worried about Latin America's swing to the left, have openly criticized Ortega's "undemocratic tendencies" and suggested that his election could cause Nicaragua to lose aid and trade opportunities. Forty-six percent of Nicaraguans think the U.S. is meddling, too. They probably have a point. But it would be a lot easier to butt out if Nicaraguans had a track record of choosing good leaders.
Ortega's status as front-runner is a sign that the electorate has a short memory--and way too little experience with good government.
Ortega Reaches 30% in Nicaraguan Race
July 10, 2006
- Voter support for former head of state Daniel Ortega increased last month in Nicaragua, according to a poll by Borge y Asociados. 30.1 per cent of respondents would back the Sandinista National Liberation Front (FSLN) member in this year’s presidential election.
Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 24.4 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) with 21.6 per cent, Herty Lewites of the Sandinista Renewal Movement (MRS) with 17.3 per cent, and Edén Pastora of Christian Alternative (AC) with one per cent.
The survey was completed before the death of Lewites on Jul. 2. The MRS has announced that economist Edmundo Jarquín would be its new presidential candidate, with singer-songwriter Carlos Mejía Godoy as his running mate.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The PLC and the FSLN have traditionally been the dominant parties in the Central American country’s political scene. Montealegre is a former member of the PLC, and Lewites was expelled from the FSLN.
In March 2005, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
On Jul. 8, Ortega criticized the American government’s immigration policies, saying, "They can raise as many walls as they want, but they will not be able to stop Latin Americans from getting there."
The presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election if the candidates were these?
Jun. 2006
May 2006
Feb. 2006
Daniel Ortega (FSLN)
30.1%
28.4%
18.3%
Eduardo Montealegre (ALN-PC)
24.4%
26.5%
21.7%
José Rizo (PLC)
21.6%
17.1%
--
Herty Lewites (MRS)
17.3%
14.8%
27.3%
Edén Pastora (AC)
1.0%
1.3%
--
Source: Borge y Asociados
Methodology: Interviews with 1,008 Nicaraguan adults, conducted from Jun. 20 to Jul. 2, 2006. Margin of error is 3.2 per cent.
Unexpected Death of Lewites Further Complicates Nicaragua’s November Elections
Written by Kristen B. Shelby
Tuesday, 04 July 2006
The outcome of the November 2006 presidential elections in Nicaragua has become even more uncertain in the wake of the unexpected death of Herty Lewites, the presidential candidate for the Movimiento de Renovación Sandinista (MRS).
Herty, who served as Minister of Tourism during the revolutionary decade of the 1980s and mayor of Managua from 2000-2005, died from a heart attack Sunday, July 2, in the Hospital Metropolitano Vivian Pellas in Managua. Herty was expelled from the Frente Sandinista de Liberación Nacional (FSLN) in February of 2005 over a dispute with the party’s president, Daniel Ortega, regarding the party’s selection of a presidential candidate. The FSLN led the 1979 Nicaraguan Revolution, which overthrew the decades-long US-backed Somoza dictatorship. The revolutionary government’s socialist-inspired reform programs and its adoption of a mixed economy brought it head to head with the Reagan administration in the United States. The US imposed an economic embargo on Nicaragua and funneled money and arms to the Contras, the ex-dictator’s National Guard, fueling a bloody civil war that resulted in 50,000 deaths. Daniel Ortega served as Nicaragua’s president from 1984-1990, when a coalition headed by Violeta Barrios de Chamorro defeated the FSLN in internationally observed elections. Since 1990 and the end of the Revolution, Nicaragua has seen a drastic cut in social spending and a push towards free-market reforms, culminating in the CAFTA agreement, which went into affect in April 2006.
The November elections, which will take place under close international scrutiny, mark a historic shift in the Nicaraguan political landscape. The four-way electoral split reflects the crisis that the two main political parties, the FSLN and the Partido Liberal Constitucional (PLC), have entered into since the last presidential elections in 2000. The FSLN has been the mainstay of the left since the Revolution, though it has lost credibility since 1990 due to corruption scandals and pacts with the right, most notably the pact formed in 1998 between Daniel and PLC leader and then-president, Arnoldo Alemán, to divide the major branches of the government between the two parties. The FSLN’s opportunism combined with Daniel’s iron grip on the party has angered many former Sandinistas, and many leaders prominent in the 1980s, such as former Vice-President Sergio Ramirez and former Minister of Health Dora Maria Tellez, broke with the FSLN to form the Movimiento de Renovación Sandinista (MRS) in 1994. However, the MRS remained on the margin of Nicaraguan politics and in a strategic alliance with the FSLN until recently, when it decided to end this alliance and fully support Herty’s presidential candidacy. This created a sharp split among voters of the Nicaraguan left, divided between supporting another presidential bid by Daniel Ortega on the FSLN ticket or Herty Lewites on the MRS ticket.
The right has undergone a similar crisis due to corruption. The PLC’s leader, Arnoldo Alemán, was sentenced to 20 years in prison in December of 2003 after being convicted of money laundering, embezzlement, and corruption. Through his connections in the judicial branch, he has been permitted to serve his sentence under house arrest at his private estate, and remains the strongest force in the PLC, despite his incarceration and supposed retirement from political life. The PLC’s presidential candidate for this year’s elections, José Rizo, has attempted to distance himself from Alemán, but frequent meetings between Alemán, Rizo, and other important PLC functionaries at the former president’s ranch severely undermine Rizo’s credibility in the eyes of many Nicaraguans. The PLC’s problems have been capitalized on by Eduardo Montealegre, a US-educated diplomat who is running as tbe Alianza Liberal Nicaraguense’s (ALN) candidate on an anti-corruption neoliberal platform. US Ambassador Paul Trivelli has made it clear that Montealegre is his government’s favored candidate, though he has also made it clear that anyone is more acceptable in the eyes of the US than Ortega. Trivelli even went so far as to write a letter on April 5th to the PLC and the ALN offering financial and technical support to help unite the right wing in order to prevent an Ortega victory. However, the official date to form alliances passed in May, leaving a last minute drop-out by the ALN or the PLC as the only possibility for a united right in November.
According to recent statistics, a Daniel victory is more likely than in any recent election (Ortega has been the FSLN candidate in every election since 1984). A June 29th CID-Gallup poll showed Daniel in a clear first-place lead with the support 23% of likely voters. Montealegre came in second, with 17% of the expected vote, and Herty polled close behind at 15%. Rizo polled at 11%, while 3% of voters said they supported "other candidates." However, 32% of those polled were undecided about which candidate they would vote for in November. Nicaraguan electoral law allows for a candidate to win with only 35% of the vote as long as the winner has a 5% margin over the runner-up, thus creating the possibility for a first-round victory despite the four-way split. If none of the candidates is able to garner this 35%, a runoff will occur between the top two candidates.
In this context of an extremely divided electorate, Herty’s death is likely to have a huge impact on the November elections. Perhaps all of the publicity surrounding his death will pull more voters to the MRS. Those close to Herty have vowed to continue fighting for the Nicaragua he sought to create, yet finding a replacement for the charismatic Herty, who in the recent CID-Gallup poll garnered a 45% approval rate, the highest of all of the presidential candidates and the current president, is a tricky task. The MRS’s vice-presidential candidate, Edmundo Jarquín, is not nearly as well-known as Herty, and many of the other important figures in the MRS might be too intimately linked to the controversial decade of the 1980s to attract undecided voters. Though Herty, who became involved in the anti-Somoza struggle in 1960 and spent the 1960s and 70s involved with arms smuggling and international relations for the FSLN, obviously had an intimate history with the Nicaraguan Revolution, his able performance as Minister of Tourism in the 1980s and as mayor of Managua 2000-2005 earned him a reputation for efficiency and transparency. Additionally, his rhetoric was not generally viewed as radically leftist. While Herty promised to increase spending on education, health, and housing, he is viewed as a moderate leftist who will not greatly hinder foreign investment. He pledged to help Nicaragua overcome its position as one of the poorest and most unequal countries in Latin America through investment in alternative energy and tourism, not by rejecting CAFTA and embracing the Venezuela, Cuba, and Bolivia-backed Alternativa Bolivariana para América (ALBA), as Daniel Ortega has avowed to do (though it is interesting to note that the FSLN’s sudden decision in October 2005 to no longer keep CAFTA off the agenda in the National Assembly was integral to its passage in Nicaragua).
If voters turn away from the MRS, it is unclear which candidate they would support. While some Herty supporters might support Daniel as the only other viable left-wing candidate, the recent CID-Gallup poll showed that 46% of voters would never vote for Daniel under any circumstances. In fact, Herty recently announced that if the elections came to a run-off and the MRS was not included, he would still not support Daniel. In a similar show of disaffection with the PLC, 21% of those polled said they would never vote for Rizo. Meanwhile, only 5% would never vote for Montealegre and 3% said they would never vote for Herty. It is therefore very likely that former Herty supporters fed up with corruption and caudillo politics could support Montealegre, despite obvious ideological differences. In the volatile political context of Nicaragua, nothing about the outcome of the November elections is certain.
Yet, despite the ambiguity surrounding the November elections, it remains clear that Herty Lewites has left an irreversible mark on Nicaraguan history by opening up a space for a left free from corruption, pact-making, and domination by Daniel Ortega.
Ortega Takes First Place in Nicaragua
May 19, 2006
(Angus Reid Global Scan) – Former president Daniel Ortega has become the top contender in Nicaragua’s election, according to a poll by Borge y Asociados. 28.4 per cent of respondents would vote for the Sandinista National Liberation Front (FSLN) candidate in this year’s election.
Former presidency secretary Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 26.5 per cent, followed by José Rizo of the Constitutionalist Liberal Party (PLC) with 17.1 per cent, former Managua mayor Herty Lewites with 14.8 per cent, and Edén Pastora of Christian Alternative (AC) with 1.3 per cent.
In March 2005, the FSLN officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots. Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN and assembled the Herty 2006 Alliance (AH). Montealegre is a former PLC member.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The president lost the support of the PLC in January 2002, when his government decided to take legal action against Arnoldo Alemán. In 2004, Alemán—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
Earlier this month, former defence minister José Antonio Alvarado rejected a presidential bid of his own, and became Rizo’s running mate. Ortega has announced that he will settle on a vice-presidential nominee later this month.
The presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election if the candidates were these?
May 2006
Feb. 2006
Daniel Ortega (FSLN)
28.4%
18.3%
Eduardo Montealegre (ALN-PC)
26.5%
21.7%
José Rizo (PLC)
17.1%
--
Herty Lewites (AH)
14.8%
27.3%
Edén Pastora (AC)
1.3%
--
Montealegre Leads Lewites in Nicaragua
April 21, 2006
(Angus Reid Global Scan) – Presidency secretary Eduardo Montealegre remains the top contender in Nicaragua’s presidential race, according to a poll by CID-Gallup published in La Prensa. 22 per cent of respondents would vote for Montealegre in this year’s election.
Former Managua mayor Herty Lewites is second with 18 per cent, followed by former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) with 16 per cent, and José Rizo of the Constitutionalist Liberal Party (PLC) with 13 per cent.
Montealegre is a former PLC member who has formed the Nicaraguan Liberal Alliance (ALN). Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February. Lewites has assembled the Herty 2006 Alliance (AH).
In 2001, the PLC’s Bolaños won the presidential election with 56.3 per cent of the vote. The president lost the support of the PLC in January 2002, when his government decided to take legal action against Arnoldo Alemán. In 2004, Alemán—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
Yesterday, Montealegre welcomed the result of the latest survey, declaring, "These polls are important to see where we have weaknesses, because they represent a snapshot, and we must study to see which weaknesses must be overcome."
The next presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election?
Eduardo Montealegre (ALN)
22%
Herty Lewites (AH)
18%
Daniel Ortega (FSLN)
16%
José Rizo (PLC)
13%
Other
4%
None / Would not vote
13%
Undecided
14%
Source: CID-Gallup / La Prensa
Methodology: Telephone interviews with 1,238 Nicaraguan adults, conducted from Apr. 3 to Apr. 9, 2006. Margin of error is 3 per cent.
Managuans Like Lewites as President
April 6, 2006
(Angus Reid Global Scan) – Voters in Nicaragua’s capital area pick a former mayor to be their country’s next head of state, according to a poll by Borge y Asociados. 39.7 per cent of respondents would vote for Herty Lewites in this year’s presidential election.
Former presidency secretary Eduardo Montealegre of the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) is second with 31.7 per cent, followed by former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) with 18.4 per cent, and Constitutionalist Liberal Party (PLC) nominee and former vice-president José Rizo with 8.1 per cent.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. Bolaños lost the support of the PLC in January 2002, when his government decided to take legal action against Arnoldo Alemán. Last year, the former head of state—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February 2005. Lewites will represent the Sandinista Renewal Movement (MRS). Managua is home to 30 per cent of the Nicaraguan electorate.
Yesterday, former members of the FSLN youth wing threw their support behind Lewites. Coordinator Silvio Gutiérrez explained their rationale, saying, "We think the Herty alliance is the best option to destroy the pact (between the PLC and the FSLN) that has this country on the verge of a crisis." 63.7 per cent of respondents want Lewites and Montealegre to work together to offset the pact between Ortega and Alemán.
The next presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election if the candidates were these?
Herty Lewites (MRS)
39.7%
Eduardo Montealegre (ALN)
31.7%
Daniel Ortega (FSLN)
18.4%
José Rizo (PLC)
8.1%
Should Eduardo Montealegre and Herty Lewites work together to offset the pact between Daniel Ortega and Arnoldo Alemán?
Yes
63.7%
No
32.6%
amarksp, I completely agree that RNC had huge potential for excellent earnings. Unfortunately, they failed quarter after quarter after quarter to realize that potential. They never even came close to meeting their OWN goals. Every quarter, they had some lame excuse why their goals were missed. The only conclusion I can reach is that the mines and the company were poorly managed. By repeatedly missing their own expectations, management drove the stock price into the ground and made it increasingly difficult to raise the money they needed.
Maybe things were just about to turn around, but in my opinion, RNC management had their chance, and they blew it. Yamana deserves to profit for finding the value in the properties and building the share value needed to purchase them. Yamana seemed to be the only company willing to take on the challenge.
Maybe RNC management did sell the assets at too cheap a price without engaging other potential buyers. Maybe they were more interested in getting a deal where they got to keep one of the properties for almost nothing. In my opinion, that is one more reason we should be happy to be rid of them.
Well, I tend to disagree. After the 1Q06 results from RNC operations (especially Honduras), I bet RNC would have earned US$.10 or more for the quarter, US$.40 annualized. I believe a 5x annualized PE or US$2.00 per RNC share would have been achieved shortly after these results. We will never know, but sure wish RNC would have hedged 20% of their production for 3 years and diluted a few shares. The market could not have ignored US$.10 earnings for the 1Q06, IMO.
RNC operations are largely responsible for Yamana's share price doubling...
just my opinion...
Yamana shares have doubled since the deal was announced.
The closing price of Yamana on Fri, 12/2/05 was $4.86. Today it closed at $10.39. The corresponding RGDIF prices would have been $.58 and $1.25 respectfully based on the .12 shares deal.
I am now showing very close to breakeven on my most expensive RGDIF shares, and I am showing a pretty good gain on my $.29 shares.
I guess the deal turned out to be good for share holders because the properties are finally in the hands of management that might actually be able to turn a profit.
My $1.08 DEZ shares are looking pretty good now also.
Montealegre Climbs to First Place in Nicaragua
March 23, 2006
(Angus Reid Global Scan) – Former Constitutionalist Liberal Party (PLC) member and presidency secretary Eduardo Montealegre is the top contender in Nicaragua’s presidential race, according to a poll by the International Republican Institute. 31.8 per cent of respondents would vote for Montealegre in this year’s election.
Former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) is second with 25.4 per cent, followed by former Managua mayor Herty Lewites with 23.7 per cent, and former head of state Arnoldo Alemán with 10.9 per cent.
The PLC will choose its presidential nominee during a convention of party members in April. In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. Bolaños lost the support of the PLC in January 2002, when his government decided to take legal action against Alemán. Last year, the former head of state—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
Montealegre assembled the Nicaraguan Liberal Alliance - Conservative Party (ALN-PC) last year. Earlier this month, the political organization added an eighth member, after Nicaraguan Christian Path (CCN) lawmaker Delia Arellano announced she was supporting Montealegre because the country needs "a change of people and a new frame of mind."
Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February 2005. In March 2005, the party officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
The next presidential election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Which candidate would you vote for in the presidential election?
Eduardo Montealegre
31.8%
Daniel Ortega
25.4%
Herty Lewites
23.7%
Arnoldo Alemán
10.9%
Source: International Republican Institute
Methodology: Face-to-face interviews with 1,008 Nicaraguan adults, conducted from Mar. 13 to Mar. 15, 2006. Margin of error is 3 per cent.
Lewites Becomes Frontrunner in Nicaragua
March 16, 2006
(Angus Reid Global Scan) – Former Managua mayor Herty Lewites is the early favourite in Nicaragua’s presidential election, according to a poll by Borge y Asociados. 27.3 per cent of respondents would vote for Lewites in this year’s ballot.
Former Constitutionalist Liberal Party (PLC) member and presidency secretary Eduardo Montealegre is second with 21.7 per cent, followed by former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) with 18.3 per cent, José Antonio Alvarado of the Liberal Democratic Party (PLD) with 5.6 per cent, and former president Arnoldo Alemán with 2.6 per cent.
Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February 2005. In March 2005, the party officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
The PLC will choose its candidate during a convention of party members in April. In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The president lost the support of the PLC in January 2002, when his government decided to take legal action against Alemán. Last year, the former head of state—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
The next presidential and legislative election is scheduled for Nov. 5. In the event no contender receives 40 per cent of all cast ballots, the first place finisher can only avoid a run-off by holding a five-point advantage over the closest rival.
Polling Data
Who would you vote for in the presidential election if the candidates were these?
Feb. 2006
Nov. 2005
Herty Lewites
27.3%
28.0%
Eduardo Montealegre
21.7%
26.2%
Daniel Ortega
18.3%
18.5%
José Antonio Alvarado
5.6%
5.8%
Arnoldo Alemán
2.6%
--
Not sure
16.3%
2.8%
Source: Borge y Asociados
Methodology: Interviews with 1,008 Nicaraguan adults, conducted from Feb. 6 to Feb. 26, 2006. Margin of error is 3.2 per cent.
NICARAGUAGuard against foul play in presidential electionsBY MARIFELI PEREZ-STABLEMPS_opinion@comcast.netOn March 5, Nicaragua's Atlantic Coast held elections for its regional council. The coast, where 10 percent of the population lives, has elected its councilors every four years since 1990. But for the fact that 2006 is also a presidential year, all eyes would not have been on the region's elections.
The Liberal Constitutional Party -- the machinery of former President Arnoldo Alemán, who is under house arrest for embezzlement -- garnered the most votes. The Sandinistas, whom polls had projected to win, came in second. Candidates supporting Liberal Eduardo Montealegre and Sandinista Herty Lewites, dissidents who are running for president, came in a distant fourth and fifth. Third-place Yatama (Motherland), the region's indigenous party, holds the balance of power.
The coast, however, is not a political vane for November. Rather, civil society and international actors worried that the Supreme Electoral Council (CSE) lacked the disposition to tend the process properly. Professionalism has not been the CSE's hallmark. The regional elections offered an opportunity to do it right, or play fast and loose, and the CSE did it right. Domestic and international observers certified the integrity of the coast elections. Had fast-and-loose been the tenor, the ride until the presidential election in November would have been even bumpier.
Unfortunately, a free and fair process in March does not set a binding precedent. When Violeta Chamorro defeated Sandinista Daniel Ortega in 1990, no one thought that the Nicaraguan transition would be easy. Yet, few could have then imagined what happened in the late 1990s under Alemán's presidency. Alemán and Ortega, until then go-for-the-jugular antagonists, drew a pact to control all major institutions, which undermined the separation of powers at the heart of democracy. The fledgling transition was, in effect, hamstrung.
Since last year, several developments have signaled trouble for the Liberal-Sandinista pact.
• The Alemán-Ortega effort to weaken President Enrique Bolaños' powers -- or even give him the boot before his term was up -- failed. Ortega and Bolaños reached an agreement that respected his term and the presidency. Alemán Liberals stood on the outside looking in.
• Montealegre and Lewites launched their presidential campaigns and quickly took the lead in the polls. Other Liberals and Sandinistas, too, have broken ranks with their respective caudillos.
• The Organization of American States and the Carter Center established missions in Nicaragua and are there through November. In addition, the United States no longer supports Alemán and is ready to accept a dissident Sandinista as president even if it prefers Montealegre.
The Alemán-Ortega duopoly is in danger. That is why the citizenry, the anti-pact forces and international actors must keep up their guard without quarter against foul play in the presidential contest. Montealegre and Lewites are disadvantaged by their weak electoral machineries. Still, a free and fair election in which both are allowed to run would likely make one of them president.
Montealegre and Lewites have promised to work together to bury el pacto and restore institutional checks and balances.
An unprecedented four-man race -- the two dissidents, an Alemán-backed candidate and Ortega -- fairly represents the electorate. Who benefits, and who loses? Ortega might, as the anti-Sandinista vote would divide for the first time since 1990. Still, polls suggest that three-time loser Ortega cannot win with Lewites in the race. Might chicanery prevent one or both dissidents from registering as candidates?
If a four-man race goes ahead, other concerns would come to the fore. Could the Liberal and Sandinista machineries be used to selectively suppress the vote? Would the dissidents be able to mount effective nationwide campaigns? How well would the CSE do in a tightly contested election?
Let's imagine a happy ending with a win for Montealegre or Lewites. Their challenge would be to establish common ground and move Nicaragua forward.
Bolaños is leaving his successor a sound macro economy that cannot be upset. Yet, the majority who lives in poverty must be brought on board. Compromise is the essence of politics. Alemán and Ortega embraced it to pursue raw power; Montealegre and Lewites must raise it to make Nicaragua better. In that sense, they would be picking up where Violeta Chamorro left off in 1996. Not an ideal place, perhaps, but a hopeful one nonetheless.
Marifeli Pérez-Stable is vice president for democratic governance at the Inter-American Dialogue in Washington, D.C.
should have them in next few days...
If the acquisition has been completed, when do we get our AUY shares in exchange for our RGDIF shares?
Yamana Completes Acquisition Of RNC Gold
Tuesday February 28, 4:40 pm ET
TORONTO--(BUSINESS WIRE)--Feb. 28, 2006--Yamana Gold Inc. ("Yamana") (TSX:YRI - News; AMEX:AUY - News; AIM:YAU) and RNC Gold Inc. ("RNC") (TSX:RNC - News) today announced the completion of Yamana's previously announced acquisition of RNC. Pursuant to the transaction, shareholders of RNC will receive 0.12 of a Yamana common share for each RNC common share. Yamana will issue 5,782,376 common shares in connection with the transaction and will have 199,238,320 common shares outstanding after giving effect to the transaction.
The RNC transaction adds two mines and another advanced development property along with a portfolio of exciting exploration targets in Central America to Yamana's current portfolio of projects.
Combination of Yamana and Desert Sun Creates Leading Intermediate Gold Producer
TORONTO, ONTARIO--(CCNMatthews - Feb. 22, 2006) - Yamana Gold Inc. (Yamana) (TSX:YRI)(AMEX:AUY)(LSE (AIM):YAU) and Desert Sun Mining Corp. (DSM) (TSX:DSM)(AMEX:DEZ) today announced a transaction which provides that Yamana will acquire all of the outstanding common shares of DSM in exchange for Yamana common shares. DSM shareholders will receive 0.6 of a Yamana common share for each DSM common share held. Based on the 5-Day weighted average of Yamana's share price, the transaction price is C$5.47 per DSM common share, representing a premium of 21.1% over the 5-Day weighted average price of DSM's common shares. DSM owns the long-life Jacobina gold mine in Bahia, Brazil near Yamana's Fazenda Brasileiro mine and its C1 Santa Luz pre-feasibility project.
The transaction results in Yamana becoming a leading intermediate gold producer with the following profile:
- Estimated annualized gold production of 450,000 ounces in 2006 increasing to 700,000 ounces in 2007 and to more than 800,000 ounces in 2008 from operating mines and mines under construction (includes expansion plan for Jacobina Mine proposed by Desert Sun and excludes near development stage projects held by Yamana)
- Total resource base of approximately 11.6 million ounces of measured and indicated resources plus inferred resources of approximately 6.1 million ounces
- Proven and probable reserves of approximately 7.6 million gold ounces (included in above measured and indicated resource total above)
- Proven and probable copper reserves of approximately 2.3 billion pounds
- Cash costs projected at US$270 per ounce of gold in 2006, with US$125 and US$115 per ounce of gold projected for 2007 and 2008, respectively
- One of the largest Brazilian exploration land holdings with a significant presence in three major gold belts
The transaction provides the following anticipated benefits to Yamana and DSM shareholders:
- Creates an intermediate gold producer with one of the largest production growth profiles
- Increases operational strength and management depth
- Facilitates operational and administrative synergies
- Results in a company with further growth potential from existing development-stage assets and better positioned to take advantage of additional acquisitions
- Broadens shareholder base and increases share liquidity
The transaction is accretive to Yamana in terms of net asset value and longer-term earnings and cash flow per share. DSM shareholders will benefit from an attractive premium and the opportunity to participate in the future growth of the combined company.
Increased Profile
Peter Marrone, President and Chief Executive Officer of Yamana said, "In our strategic vision which we articulated in late 2005, our goal was to produce 750,000 ounces of gold by 2008. With this acquisition, we will exceed that goal. As a result of this increased production profile and with the advancement of our development-stage or near development-stage assets, we are now targeting production of 1.0 million ounces by 2008. The purchase of Desert Sun adds a large-scale, long-life operation to Yamana's existing operations. The Jacobina Mine is near our existing operations in the State of Bahia in Brazil. The resulting synergies created by combining the Jacobina Mine with our existing operations in Bahia are tremendous. Further, the addition of the 150-km long Bahia Gold Belt's exploration potential will contribute to further growth. With the new production profile, Yamana will be one of the largest intermediate producers with projected future cash costs among the lowest in the industry. Our combined market capitalization is well below that of our peers and so we see significant upside value in the shares of the combined company."
Bruce Humphrey, President and Chief Executive Officer of Desert Sun said, "From the perspective of a Desert Sun shareholder, the transaction provides an attractive premium while still maintaining significant upside exposure. Further, it provides diversification from being a one-mine company and it combines the strength of two respected operating teams. We are confident that Yamana's shares represent good value and that we will participate in the upside through share ownership in the combined company."
Summary of the Transaction
The acquisition of DSM will be completed by way of a court approved Plan of Arrangement whereby each DSM common share will be exchanged for 0.6 of a Yamana common share. All DSM options and warrants will become exercisable for common shares of Yamana based on the exchange ratio. As a result of the proposed transaction, the combined company will be held approximately 76% by existing Yamana shareholders and 24% by existing DSM shareholders. The total number of Yamana common shares outstanding would be approximately 262.1 million, on a pro forma basis after giving effect to Yamana's previously announced acquisition of RNC Gold Inc. The transaction values DSM at approximately US$500 million on a non-diluted basis.
The acquisition has the unanimous approval of the Boards of Directors of Yamana and DSM. The Board of Directors of DSM, having received the unanimous recommendation of a special committee of directors, is recommending that holders of DSM common shares vote in favour of the transaction. GMP Securities L.P. provided an opinion to the special committee of the board of directors of DSM that the business combination is fair, from a financial point of view, to the holders of common shares of DSM.
Yamana has agreed with DSM that Bruce Humphrey (DSM President and CEO) and Stan Bharti (DSM Chairman) will join its board of directors. It is expected that Yamana's management team will be supplemented with the addition of certain officers from DSM to whom Yamana intends to extend offers of employment.
Commenting on management, Peter Marrone said, "We have a very capable management team and we welcome new additions to that team. The operational depth of the company will increase and better position us for further growth."
The transaction is subject to all requisite regulatory and court approvals, third party consents and other conditions customary in transactions of this nature. The combination must be approved by at least two-thirds of the votes cast by shareholders of DSM at a meeting of holders of common shares of DSM. The shareholder meeting is expected to be held on March 31, 2006, with the transaction anticipated to close shortly thereafter.
If the combination does not occur under certain circumstances, DSM has agreed to pay Yamana a break-fee of C$21.5 million.
Yamana's financial advisor is National Bank Financial Inc. DSM's financial advisor is Sprott Securities Inc. and its special committee of directors is being advised by GMP Securities L.P.
About Yamana
Yamana is a Canadian gold producer with significant gold production, gold and copper-gold development stage properties, exploration properties and land positions in all major mineral areas in Brazil. With the acquisition of RNC Gold, Yamana also owns two producing mines in Central America. Yamana expects to produce gold at intermediate company production levels in 2006 in addition to significant copper production by 2007. Company management plans to continue to build on this base through the advancement of its exploration properties and by targeting other gold consolidation opportunities in Brazil and elsewhere in Latin America.
About Desert Sun Mining
Desert Sun Mining is a Canadian gold mining company listed on the Toronto Stock Exchange and the American Stock Exchange with 100% ownership of the Jacobina Mine and the 155 km long Bahia Gold Belt in the state of Bahia, in northeastern Brazil.
Conference Call
A conference call is scheduled for Wednesday, February 22, 2006 at 10:00 a.m. Eastern time.
Call-in numbers: Local and international: 416-644-3433 North American toll-free: 800-814-4859
A replay of this conference call will be available from Wednesday, February 22, 2006 (1:00 p.m.) until Wednesday, March 1, 2006. (11:59 p.m.)
Replay numbers: Local and international: 416-640-1917 Passcode: 21168019# North American toll-free: 877-289-8525 Passcode: 21168019#
A presentation providing further information on these transactions and on the business combination will also be available on Yamana's and DSM's web sites at www.yamana.com and www.desertsunmining.com, respectively.
Cautionary Statements
This news release contains "forward-looking statements", within the meaning of the United States Private Securities Litigation Reform Act of 1995 and similar Canadian legislation, concerning the business, operations and financial performance and condition of each of Yamana and DSM. Forward-looking statements include, but are not limited to, statements with respect to estimated production, synergies and financial impact of the proposed transaction; the benefits of the proposed transaction and the development potential of Yamana's and DSM's properties; the future price of gold and copper; the estimation of mineral reserves and resources; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; capital expenditures; success of exploration activities; permitting time lines and permitting, mining or processing issues; currency exchange rate fluctuations; government regulation of mining operations; environmental risks; unanticipated reclamation expenses; title disputes or claims; and limitations on insurance coverage. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".
Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made, and they are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Yamana and DSM to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to: unexpected events during construction, expansion and start-up; variations in ore grade, tones mined, crushed or milled; variations in relative amounts of refractory, non-refractory and transition ores; delay or failure to receive board or government approvals; timing and availability of external financing on acceptable terms; the businesses of Yamana and DSM not being integrated successfully or such integration proving more difficult, time consuming or costly than expected; not realizing on the anticipated benefits from the Yamana/DSM transaction or not realizing on such anticipated benefits within the expected time frame; risks related to international operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold and copper; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in the completion of development or construction activities, as well as those factors discussed in or referred to in the current annual Management's Discussion and Analysis and current Annual Information Form of each of Yamana and DSM filed with the securities regulatory authorities in Canada and available at www.sedar.com, and Yamana's Annual Report on Form 40-F and DSM's Annual Report on Form 20-F, each filed with the United States Securities and Exchange Commission. Although management of each of Yamana and DSM has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Neither Yamana nor DSM undertakes to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.
Mineral resources which are not mineral reserves do not have demonstrated economic viability. Readers should refer to the respective Annual Information Forms of Yamana, DSM and RNC Gold Inc, each for the year ended December 31, 2004, and other continuous disclosure documents filed by each of Yamana, DSM and RNC Gold Inc. since January 1, 2005 available at www.sedar.com, for further information relating to the mineral resources and mineral reserves of Yamana, DSM and RNC Gold Inc.
Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: This news release uses the terms "Measured", "Indicated" and "Inferred" Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. "Inferred Mineral Resources" have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.
A table summarizing the reserves and resources for each of DSM and Yamana' projects is provided as follows:
---------------------------------------------------------------------Resources Summary Measured Indicated--------------------------------------------------------------------- tonnes grade tonnes grade (000s) (g/t) (000s) (g/t) ------ ----- ------ -----Fazenda Brasileiro - UG (1) 974 2.880 3,394 3.137Fazenda Brasileiro - OP (1) 394 2.360 898 1.620Fazenda Nova (2) 6,053 0.866Sao Francisco (2) 21,081 0.637 47,239 0.629Chapada (2) 25,200 0.300 396,200 0.220Jacobina Project (3) 3,400 2.680 24,500 2.560San Andres (2) 38,975 0.780La Libertad (2) 14,816 1.190 22,480 1.050Sao Vicente (4) 6,431 1.030 6,028 0.950C1 Santa Luz (1) 18,400 1.660Ernesto (5) 234 6.340 611 8.730Cerro Quema (2) 8,611 1.010 6,529 0.820---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------Resources Summary Measured & Indicated Inferred--------------------------------------------------------------------- tonnes grade ounces tonnes grade ounces (000s) (g/t) (000s) (000s) (g/t) (000s) ------ ----- ------ ------ ----- ------Fazenda Brasileiro - UG (1) 4,368 3.082 432.9 695 4.630 103.6Fazenda Brasileiro - OP (1) 1,292 1.844 76.6Fazenda Nova (2) 95 0.500 1.5Sao Francisco (2) 68,320 0.631 1,386.8 64,923 0.387 807.8Chapada (2) 421,400 0.225 3,045.5 250,870 0.152 1,226.0Jacobina Project (3) 27,900 2.570 2,311.0 33,600 2.800 3,029.0San Andres (2) 38,975 0.780 978.9 29,700 0.650 625.0La Libertad (2) 37,295 1.110 1,327.4 5,133 0.930 152.7Sao Vicente (4) 12,459 0.990 396.0 210 0.530 3.6C1 Santa Luz (1) 18,400 1.660 982.4Ernesto (5) 846 8.070 219.2 511 5.980 98.3Cerro Quema (2) 15,141 0.930 451.4 2,769 0.500 44.1--------------------------------------------------------------------- 11,608.1 6,091.7---------------------------------------------------------------------
---------------------------------------------------------------------Reserves Summary Proven Probable Proven & Probable--------------------------------------------------------------------- tonnes grade tonnes grade tonnes grade ounces (000s) (g/t) (000s) (g/t) (000s) (g/t) (000s) ------ ----- ------ ----- ------ ----- ------Fazenda Brasileiro - UG (1) 974 2.880 1,386 2.870 2,360 2.880 218.2Fazenda Brasileiro - OP (1) 394 2.360 394 2.360 29.9Fazenda Nova (2) 4,986 0.914 4,986 0.914 146.6Sao Francisco (2) 15,690 0.668 32,142 0.679 47,832 0.675 1,038.4Chapada (2) 17,341 0.324 279,807 0.257 297,148 0.261 2,493.5Jacobina Project (3) 3,065 2.208 18,517 2.173 21,580 2.180 1,510.0San Andres (2) 17,339 0.860 17,339 0.860 477.1La Libertad (2) 3,471 2.220 3,865 1.990 7,335 2.100 495.1Sao Vicente (4) 3,533 1.054 2,471 1.044 6,004 1.050 202.7C1 Santa Luz (1) 9,200 1.880 9,200 1.880 566.0Cerro Quema (2) 5,903 1.160 4,596 1.030 10,499 1.100 372.5--------------------------------------------------------------------- 7,550.0---------------------------------------------------------------------(1) As of August 31, 2005(2) As of December 31, 2004(3) As of December 15, 2005(4) Updated from press release May 2, 2005(5) Updated from press release June 1, 2005
RNC Shareholders Support Merger With Yamana Gold
Friday February 17, 6:36 pm ET
TORONTO--(BUSINESS WIRE)--Feb. 17, 2006--Yamana Gold Inc. ("Yamana") (TSX:YRI - News; AMEX:AUY - News; LSE(AIM):YAU) and RNC Gold Inc. ("RNC" or the "Company") (TSX:RNC - News) today announced that the shareholders of RNC have overwhelmingly voted in favour of the proposed merger between RNC and Yamana. At a special meeting of the holders of common shares of RNC this morning, more than 99% of the votes cast were in support of the transaction; approximately 72% of all eligible shareholders participated.
Subject to final court approval, the transaction is expected to be completed at the end of the month.
About Yamana
Yamana is a Canadian gold producer with significant gold production, gold and copper-gold development stage properties, exploration properties and land positions in all major mineral areas in Brazil. Yamana expects to produce gold at intermediate company production levels by 2006 in addition to significant copper production by 2007. Company management plans to build on this base through the advancement of its exploration properties and by targeting other gold consolidation opportunities in Brazil and elsewhere in Latin America.
Yamana has approximately 193.4 million shares outstanding. On completion of the RNC acquisition, Yamana would have 199.1 million shares outstanding.
I voted yes as well. Yamana acquisition was best in short term, but NOT best for long term investors...
IMO, most of Yamana price rise is likely attributable to RNC acquisition which is highly accretive. Sure wish they would have exchanged 1.5 shares rather than 1.2 shares, would have been a much fairer exchange...
FWIW, look at the Canaccord Fairness Opinion in Exhibit C. There are NO numbers!!! Just words to the effect on how they valued RNC without any numbers... Have reviewed Fairness Opinions before and my recollection is the others contained numbers to support their opinion.
I got my proxy today. As I stated earlier, I will vote yes. The decision got even easier with the rally in AUY.
amarks -- FYI & FWIW
http://www.stockhouse.com/bullboards/viewmessage.asp?no=11134079&t=0&all=0&TableID=0
I've always appreciated your efforts on the boards even if I've never said so.
Are you going to stick with YRI or are you looking at potential substitutes?
Bonanza mine is included in transaction. RNC management buying for $500K, Yamana has right to buy back within 2 years for $2M is my understanding.
Question for amarks -- http://www.stockhouse.com/bullboards/viewmessage.asp?no=11111433&t=0&all=0&TableID=0
I think I am voting yes. The offer made by Yamana was a disgrace. It was a slap in the face to all RNC investors who know the true value of the assets.
Unfortunately, a vote AGAINST the offer is a vote FOR the current RNC management. I do not trust these jerks anymore, and I would rather the assets go to a company that can realize their value.
RNC management proved to be incompetent. They never could meet their OWN goals, they ran the stock into the ground, and then they sold their stock holders down the river. The offer of .12 Yamana shares is terrible, but I do not think we have a choice. It is a shame that they could not make a reasonable offer of maybe .16 shares. Current Yamana share holders would not have noticed the difference, and RNC share holders would be a lot happier.
NICARAGUA Politics
Under Bolaños, democracy has prevailed
BY MARIFELI PEREZ-STABLE
marifeli@starpower.net
Nicaragua is now at the front line for democracy. The Sandinista Revolution ended when Nicaraguans elected Violeta Chamorro in 1990. It was a shining moment, but the light did not linger long. No wonder, we now say, given the country's history, riddled as it is with the sultanic Somozas and recurring U.S. interventions. Yet, maybe -- just maybe -- there might be a break in the clouds.
President Enrique Bolaños now looks to remain in office until the end of his term in January 2007. For a while, it seemed as if he would suffer the fate of more than a dozen Latin American presidents in the past two decades who have had their terms cut short by either social upheavals or allegations of wrongdoing. Bolaños, however, stood at the brink for other reasons.
In November 2004, Sandinista and Liberal legislators modified the constitution to restrict presidential powers. In 2000, Daniel Ortega and Arnoldo Alemán forged a pact that reined in all major institutions. Only the presidency remained beyond their reach.
All the same, Bolaños fought back. He challenged the Liberal-Sandinista infringement upon the executive power before the Central American Court of Justice, which ruled in his favor. The Nicaraguan Supreme Court -- a cog in the Ortega-Alemán cabal -- had earlier declared the changes constitutional and claimed sole jurisdiction on the matter. Nationwide protests soon followed, ostensibly, in reaction to price increases in public transportation and basic goods, but really intended to force the president's resignation.
Bolaños refused to oblige and, instead, appealed to the Organization of American States under the Democratic Charter. An OAS mission visited Nicaragua in May. Shortly thereafter, Secretary General José Miguel Insulza visited the country and charged Dante Caputo, an Argentine diplomat, as his personal representative there. In late September, Insulza sent Bolaños an emphatic letter urging negotiations and compromise sooner rather than later.
By mid-October, Bolaños and Ortega had defused the immediate crisis. The president would finish his term, the constitutional reforms would be frozen until he left office, the legislature would pass needed measures for the International Monetary Fund to release pending funds, and the Sandinistas would abstain from blocking the Central American Free Trade Agreement. After crying foul, the Liberals jumped on the bandwagon.
Alemán, no doubt, is the big loser. He will remain without amnesty and under house arrest. Let's remember that his brazen embezzlement of $100 million of public monies during his presidency is at the root of his personal troubles. Once inaugurated, Bolaños -- Alemán's vice president -- stunned the Liberals by launching an anti-corruption campaign that damned the former president.
At first the junior partner in el pacto (the pact), the Sandinistas subsequently gained the upper hand and have so retained it that Ortega sidelined the Liberals in his deliberations with Bolaños. Beware, nonetheless, the treacherous road of Nicaraguan politics! Ortega and Alemán may still embrace again.
The United States also played a part in defusing the immediate crisis. In early October, Deputy Secretary of State Robert Zoellick visited Nicaragua and minced no words about the anti-Bolaños shenanigans. Caputo characterized Zoellick's visit as one with a ''harsh public message'' and ''behind-the-scene actions that greatly facilitated'' the mediation.
The crisis, however, is far from over. In November 2006, Nicaragua will hold presidential elections. The OAS, the Bush administration and, most important, Nicaraguans demand free and fair elections. All candidates -- including the mavericks Herty Lewites (Sandinista) and Eduardo Montealegre (Liberal) -- must be allowed to stand. Recent polls indicate that Ortega is running a distant third, with Lewites and Montealegre battling for first.
Whoever wins in a fair fight must be accepted by all. At the same time, all committed to Nicaraguan democracy must fight for truly free elections. The OAS has the Democratic Charter, which Bolaños invoked and Insulza skillfully applied. Zoellick's harsh facilitation may be the right stance for Washington. So would what U.S. OAS Ambassador John Maisto has called a ``relevant multilateralism.''
Ultimately, Nicaraguans bear responsibility for their country. Politicos must know that the time for sleaziness has passed. The citizenry must regain the voice expressed so eloquently in Violeta's election. If skulduggery prevails, international actors must be prepared to impose sanctions.
Even a partly cloudy day would, indeed, be good news for democracy in Nicaragua.
Marifeli Pérez-Stable is vice president for democratic governance at the Inter-American Dialogue in Washington, D.C.
My understanding is that Marrone is a bit premature in regard to his statement, unless you read it carefully. See statement below.
As soon as Yamana actually pays the cash "loan" for San Andres, then and only then does Yamana have legal rights to San Andres. If by some miracle, another competitive bid is forthcoming it must be done prior to Yamana paying cash "loan" for San Andres. The San Andres loan MUST be closed by December 20, so if a competitive bid is forthcoming it must be done within the next 14 days.
Acquirer would still have to pay $1.8M break cost and fund the deal for San Andres by Dec 20, but break cost really is not very material if another company is truly interested. Will be interesting to see whether a new bid is forthcoming, but most gold majors and intermediates are generally NOT very interested in acquiring mines with under 100K ounces of annual production.
My further understanding is that Canaccord effectively held a gun to RNC's head. Canaccord would not give RNC a bought deal on the required US$22.5M financing, thus would not guarantee that the funds could even be raised. Canaccord was apparently alluding that a full warrant rather than 1/2 warrant might be required to finance the deal. RNC was effectively at risk for not being able to close the San Andres acquisition by Dec 20 as required because Canaccord would not "guarantee" they could raise the required $22.5M at a price certain, if at all.
Thus, my opinion is Canaccord acted in an unprofessional manner. Just my opinion.
_____________________
Marrone statement:
"We think San Andres can justify the whole transaction," Peter Marrone, Yamana's chief executive, said on a call on Monday. "We were quite harsh on the other assets when we looked at them. So we carved them back to pretty small values. San Andres is the asset here that generates the most value. Yamana will exercise RNC's existing option to buy the other 25 percent of the mine before the deal closes and said it could still acquire the mine if the bid for RNC fails."
Nicaragua Politics/Ortega...
matters less these days, but I really find Nicaragua politics fascinating...
"A time to step aside
by Silvio Sirias
One does not establish a dictatorship in order to safeguard a revolution; one makes the revolution in order to establish a dictatorship.
George Orwell
We grew up in a situation where we didn't know the meaning of freedom or justice, and therefore we didn't know a thing about democracy.
Daniel Ortega
I believe that all of us ought to retire relatively young.
Fidel Castro, Playboy Interview - January 1967
I was living in Nicaragua during the elections of 2001. One afternoon, Daniel Ortega, the perennial presidential candidate of the Sandinista party, stopped by San Marcos, Carazo, the town where I was residing, as part of his campaign stump. By then I had been in Nicaragua for two and a half years and I had listened to countless stories, from people in all walks of life, about la Revolución Sandinista and how it had fallen far short of everyone’s expectations.
Don’t get me wrong --- I’m not a right-winger. Far from it. Throughout the 1980s, when the Sandinistas governed Nicaragua, I was an ardent supporter of la Revolución and the ideals I believed it stood for. The problem was, however, that, to borrow a Spanish expression, I was watching the bulls from a distance, as I had not lived a single day under Sandinista rule.
When I returned to Nicaragua, after a nearly 20-year absence, I heard numerous heartrending, as well as shocking, testimonies about life under the Sandinistas. These made me feel naïve, and betrayed. It was the loss of my political innocence.
There is one thing, nevertheless, for which Daniel Ortega and the rest of the Sandinista leadership deserve credit: when they lost the 1990 election to Violeta Chamorro, they became the first political party in Nicaraguan history to peacefully hand over the presidency.
But they didn’t give up power.
“We shall govern from below,” they announced upon leaving office.
In the years since, Daniel Ortega has become a master at making behind-the-scenes deals. And, although he lost another two elections --- in 1995 to Arnoldo Alemán, and in 2001 to Enrique Bolaños --- he remains a formidable powerbroker. He also has demonstrated remarkable adeptness to forging alliances with those who were once his mortal enemies, such as Arnoldo Alemán, if he deems that such a union will increase his clout.
But he is also responsible for the decline of the Sandinista party.
The once gallant young comandantes, who in the 1980s made dashing, romantic revolutionary figures, are now veteran statesmen who became wealthy during what Nicaraguans have termed “La Piñata” --- the frantic repartition of government funds and confiscated property that the Sandinista leaders shared among themselves after losing the 1990 election. In fact, Ortega’s current alliance with Alemán and his cronies is, in large part, a ploy by the old Sandinista guard to protect themselves from being held accountable for the money and property they made their own only days before handing over the presidency.
At present, the Sandinista party is the refuge of a small cadre of outdated and increasingly irrelevant revolutionaries. If the party is to survive, the old guard needs to stop being enamored with power and step aside to allow a new generation to emerge as leaders. But that is not likely to happen. Many once notable Sandinistas, such as Sergio Ramírez, Gioconda Belli, Ernesto Cardenal, Dora María Tellez, the Mejía Godoy brothers, and even Humberto Ortega, Daniel’s brother, disavowed Ortega and his associates long ago because of the dictatorial control they exercise over the party. Because of this, in the eyes of the vast majority of Nicaraguans, the Sandinista leadership, which is fiercely loyal to Ortega, has lost all credibility. The polls clearly prove this.
During the 2001 presidential campaign, as I stood in the plaza of San Marcos listening to Daniel Ortega’s speech, I was struck by the poverty of his language and by his lack of imagination. He bored the small crowd of five hundred that showed up to listen to him --- out of a population of twenty-five thousand --- with rhetoric full of old, worn-out clichés from the days of La Revolución. Moreover, his delivery absolutely lacked charisma.
At the end, his presentation received lukewarm applause. A handful of ardent Sandinistas shouted slogans to which those present responded half-heartedly. Personally, I was disappointed. I expected that after three decades of public speaking Ortega would’ve become a great orator. But from the podium he is light years behind his mentor, Fidel Castro.
Today, bolstered by the prominence of Hugo Chávez, the Venezuelan maverick, Daniel believes that by climbing aboard the Latin American populist bandwagon he has a chance of making a comeback. High-ranking US officials --- who once more are showing their ignorance regarding the sentiments of the Nicaraguan people --- have crossed the line: interfering, yet again, in the affairs of this Central American nation by openly expressing their opposition to this.
What Washington doesn’t seem to get is that Daniel Ortega doesn’t stand a chance of regaining the presidency.
Everyone in Nicaragua knows that the former Comandante de la Revolución has run out of things to say.
Silvio Sirias is the author of Bernardo and the Virgin (Northwestern University Press-Latino Voices Series). He resides in Panama. For more information visit www.silviosirias.com"
Bonanza has never had high PP reserves. Bonanza has always just proved up enough ounces for the next couple of years throughout most of its history. It has always found adequate reserves for the past 50 years and my impression is finding future reserves for the next 50 years would not be a problem.
"The current operations have been in continuous production since the 1940s and have seen production of more than two million ounces during that period."
Bonanza appears to have very low PP reserves. Are these numbers realistic, or they just hadn't got around to proving up the ounces?
Bonanza valuation appears low
Bonanza Mine Acquisition by RNC Management
Annual Production …… 30,000
POG …… $475.00
Cash Cost …… $336.00
Margin …… $139.00
Annual Profit …… $4,170,000
Payback per month …… $347,500
Acquisition Price (excluding debt) …… $500,000
Payback Months …… 1.44
See stockhouse posts, beginning here...
http://www.stockhouse.ca/bullboards/viewmessage.asp?no=10886268&t=0&all=0&TableID=0
review next 12 messages for interesting comments, by clicking "Next Message".
Do not sell at C$.67 tomorrow, IMO, which is implied value of RNC at .12 shares of YRI.
The Bonanza mine is not included in the transaction:
"The acquisition will include the exploration properties surrounding the Hemco/Bonanza Mine exploitation concession in Nicaragua currently held by a subsidiary of RNC but not the exploitation concession containing the Hemco/Bonanza Mine which will be sold to a RNC management group, subject to Yamana having the option to re-acquire the mine within a period of two years."
My interpretation is RNC will have to offer shareholders fair and reasonable compensation for Bonanza mine which a RNC management group is taking over. At a minimum, this should be C$.10 more than C$.67 so buy on the open if RNC trading at C$.67 would seem viable strategy if my interpretation is correct...
Yamana may well be buying more shares tomorrow at the open to increase its ownership at bargain prices...?
Yamana to acquire RNC-Disappointing news to me unless...
Disappointing news, IMO, unless a bidding war is started on RNC. RNC shares are worth US$1.00 minimum, IMO. US$.58 is well below what I would have expected and hopefully a bidding war is initiated to get Yamana to raise this offer.
http://ca.us.biz.yahoo.com/bw/051204/20051204005037.html?.v=1
Read the assumptions and compare to sustainable production chart. My production ounces and cash costs are below management guidance in 2006. My production ounces are slightly below in 2007-09 guidance but my cash costs still remain higher than management guidance.
Of the $22.5M PP, at least $5.5M will be available for Panama capex (insiders taking shares & NSR royalty due over time).
Thanks Amarksp - great information. One thing I am not clear on - are your production and cash flow numbers best estimates? Lower bounds? Upper bounds? Read a piece in Barron's a few weeks ago where some fund manager liked to value companies for the worst case scenario. I think this is the approach that bond managers use too. Guess what I am wondering is: can things get any worse at RNC than they are now?
Another thing, is the coming placement mostly for purchase of the San Andreas mine, or does RNC need money to fund current operations? I am assuming that they are cash flow positive, as their production costs appear to be less than the price of gold.
And why are they able to buy the San Andreas mine so cheaply? If it has such a great IRR why would anyone want to sell it at that price?
That Adam Hamilton piece on leverage to the price of gold was great too - always good to be reminded of these basic principles. Would be interesting to see RNC's projected profits for various gold prices.
A Draft Report on my RNC mine visit to Nicaragua can be obtained via the link below.
This report is still not final. I am still verifying whether certain information and data contained in this draft report is accurate. Since the report is now substantially complete, I thought it best to release it now.
This report is in MS Word format. You can save this report on your computer and open this file via Microsoft Word.
http://20-248-c.onlinestoragesolution.com/amarksp/public/RNCNov05Report.doc
It is going to be a lengthy report, am having first part reviewed now and writing second part...
Anyone desiring initial rough draft can email me at:
amarksp@hotmail.com
put RNC in as subject so my email spam eater will less likely not remove your email...
You obviously don't own any CGE.
Yeah, this is tougher than waiting for drilling results!
Are you going to tell the board about your trip ?
Nicaraguan Election Will Be Closely Contested
(Angus Reid Global Scan) – There is no clear frontrunner in the early stages of the presidential race in Nicaragua, according to a poll by Borge y Asociados for the Centro de Investigaciones de la Comunicación. 28 per cent of respondents would vote for former Managua mayor Herty Lewites, while 26.2 per cent would support former Constitutionalist Liberal Party (PLC) member and presidency secretary Eduardo Montealegre.
Former president Daniel Ortega of the Sandinista National Liberation Front (FSLN) is third with 18.5 per cent, followed by the eventual PLC candidate with 10.4 per cent, and José Antonio Alvarado of the Liberal Democratic Party (PLD) with 5.8 per cent.
Lewites headed the government of Nicaragua’s capital from 2001 to 2005, but was expelled from the FSLN in February. In March, the party officially designated Ortega as its presidential nominee. Ortega governed from 1985 to 1990, but was a losing candidate in the 1990, 1996 and 2001 ballots.
In 2001, the PLC’s Enrique Bolaños won the presidential election with 56.3 per cent of the vote. The president lost the support of the PLC in January 2002, when his government decided to take legal action against Arnoldo Alemán. Last year, the former head of state—who governed the country from 1997 to 2002—was sentenced to 20 years in prison for fraud, money laundering and embezzlement.
The next presidential and legislative election is scheduled for November 2006.
Polling Data
Who would you vote for in the presidential election if the candidates were these?
Herty Lewites
28.0%
Eduardo Montealegre
26.2%
Daniel Ortega
18.5%
The PLC candidate
10.4%
José Antonio Alvarado
5.8%
None
8.2%
Not sure
2.8%
Source: Borge y Asociados / Centro de Investigaciones de la Comunicación
Methodology: Interviews with 1,200 Nicaraguan adults, conducted from Oct. 7 to Nov. 7, 2005. Margin of error is 3 per cent.
Still waiting on the PP financing, but...
GFI just paid US$279M for Bolivar Gold.
Bolivar has 1.78M of Proven+M&I Reserves
Bolivar producing 48,000 oz year currently, will ramp up to 190,000 ounces in 2006 with $50M capex.
Thus, GFI paid $157/oz.
Thus, GFI paid $1,470 per 2006 production ounce
Venezuela is politically more risky than Nicaragua/Honduras, IMO.
RNC currently selling (using 122M shares after PP) at:
Under $20 per PP+M&I ounce
Under $200 per 2006 expected production ounce
"Gold Fields bids $330m for Venezuelan
David McKay & Allan Seccombe
Posted: Mon, 21 Nov 2005
[miningmx.com] -- GOLD Fields, the South African gold producer, is to pay $330m in cash for control of Canadian listed firm, Bolivar Gold Corp. in an effort to reach its ambitious four-year gold output growth of 1.5 million oz by 2009.
According to Gold Fields CEO, Ian Cockerill, Bolivar’s main asset - the Choco 10 mine in Venezuela - could be expanded to more 400,000 oz/year from start-up output of 45,000 oz over the last five months. “This is not a knee-jerk transaction. We’re comfortable with the company and that the price we’re paying recognises the upside in the mine,” he said.
Gold Fields already owns 11.4% of Bolivar Gold after investing in the company about two years ago. About 5% of the company is held by Venezuelan parastal, CVG.
Analysts were supportive. "Shareholders can be glad they are not being diluted by the issue of shares for this," said Leon Esterhuizen, an analyst for Investec Securities in Johannesburg. "If it [Choco 10] has the potential they say it has, you could be looking at another Tarkwa. This is about half the size of Tarkwa now and that is a great operation," he said.
Bolivar Gold represents Gold Fields’ first foray into the international gold market since its failed reverse takeover of IamGold Corp, a transaction that was defeated almost 12 months ago. Gold Fields produced 4.2 million oz in its financial year, of which about 66% was mined South Africa, considered a relatively mature gold region.
“This deal is consistent with our growth strategy and gives an operational foothold in a highly prospective gold camp,” said Cockerill. The deal, which has the support of Bolivar Gold’s board, is expected to be concluded by the end of January, 2006.
Including expansions at its existing operations, Tarkwa (Ghana) and St Ives (Australia), and new projects (Cerro Corona, in Peru), as well as Bolivar Gold, the group has already secured additional offshore output of 900,000 oz to 1.1 million oz/year.
In addition, the company is hoping to develop the Essakane gold mine in Burkina Faso and there’s potential for other acquisitions including working with 20% shareholder, Norilsk Nickel which has properties in Russia.
If Gold Fields achieves its gold expansions, about 55% of 5.5 million oz/year in production will from offshore mines.
According to Bolivar’s third quarter operational and financial results, issued in November, the company has increased proposed output in 2006 from Choco 10 to 190,000 oz/year from 140,000 oz. “Cost budgets are still being finalised, but cash cost per ounce is expected to be in order of $185/oz,” the company said. If the company reaches output of 400,000 oz/year, it will be at a cash cost of $195/oz, it said.
Free news alerts: click here to subscribeGold Fields offer, which is equal to C$3.00/share, represents a 19% premium over Bolivar’s close on November 18, and a 40% premium over its 30 day weighted average price.
“We’re conservative on making acquisitions but we prefer to look at cash-on-cash return. This is the total of acquisition and capital costs per ounce, in addition to operating cost per ounce over the life of mine which must not exceed 75% of the long-term gold price,” said Willie Jacobsz, Gold Fields spokesman.
"It seems pretty expensive. Looking at the reserve base they are paying a purchase price of $220 an ounce," said Esterhuizen.
"If you look at resources they are paying about $100. They are paying a lot for blue sky, but they must have a belief there is a lot more here."
In addition to the $330m acquisition price, Bolivar estimates a first phase capital cost of about $50m in order to take Choco 10 to 250,000 oz during 2007. The company had already spent $68m developing the existing infrastructure.
Speaking at the Denver Gold Forum in September, Cockerill said the company was more likely to grow through brownfields expansion rather than acquisitions which were too expensive. “Across the globe, value-adding deals are few and far between. We prefer to grow off our own platform,” he said.
Nick Holland, Gold Fields chief financial officer, said an application had been made with the South African Reserve Bank to deploy cash offshore. "We expect a positive decision in between five to 10 days," he said. "The acquisition falls very much within the ambit of exchange controls." "
For those paying attention, RNC gold production was 10% higher than gold sold.
Gold Sales=16,924 ounces
Gold Production =18,605 ounces
In prior quarters, the difference between gold sales and production was not material. However, the 1,681 ounce difference this quarter is material and was not reported in the cash operating statistics since these are based upon gold ounce sales and not production. Gold production was higher this quarter because of the ramp up at La Libertad. These 1,681 ounces will show up as gold sales in 4Q05 although produced in 3Q05. Most of these 1,681 ounces are from La Libertad production.
The RNC total cash costs for La Libertad was reported as $415 per ounce sold. However, the total cash costs per ounce produced at La Libertad was $360. That is a very significant $55 difference... For both mines, RNC reported total cash costs of $380 per ounce sold versus $345.82 per ounce produced which is the more accurate number, IMO.
For the month of September, Bonanza production was 2,725 ounces or 32,700 ounces on an annualized basis versus "budget" of 30,000 ounces. Thus, Bonanza is now operating above plan. La Libertad is still the problem child, but appears to be turning around.
As stated, I believe total cash cost of $320 is achievable this quarter if RNC can continue to ramp up La Libertad production over 12,800 ounces this quarter and energy prices remain stable.
RNC Production Report Analysis
Making good progress at both mines. Combined total cash costs per production ounce = $345.82. If production rises as anticipated at La Libertad, then we should see $320 in 4Q05.
total cash cost La Libertad =$359.95
total cash cost Bonanza =
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