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This news is not significant or material, IMO.
Yes, it is C$20M, but read the terms.
"The purchase price of CDN $20 million is payable as: CDN $3 million at feasibility, CDN $9 million at the commencement of commercial production, and CDN $2 million on each of the first through fourth anniversaries of the commencement of commercial production."
Feasibility likely around June 2007 and commercial production likely around 2009. So RNC gets initial $12M several years from now. This further assumes the Picachos property goes into production, but Picachos is a very viable property.
But yes it does indicate at what a large discount to net asset value RNC is trading when it can sell a non-core asset for 66% of the market cap of the company.
"Quoted Market Value C$30,182,588
# of Shares Outstanding 40,243,451 "
Listen up...
Well either this man is lying to us, the Sandanistas are about to expropriate Nicaragua mines, the price of gold is going under $350, or RNC share price is headed much higher...
Listen to the man, can we trust him..., download this mp3 and have a listen:
http://www.freemarketnews.com/etvtalkradio/mediapop.php?seq=187
minute 5:40-6:25
Long Term Cash Cost:
Panama = $200
Bonanza = $265-$285
La Libertad = $220-$250
Such $250 average cash costs would put RNC in the median of cash costs for gold producers, and no longer at the high end.
minute: 8:00-9:30
1 Million Ounces very likely at new Bonanza target, not much hedging on his statements in this regard, he sure seems confident. He apparently already has the mine plan in place for the next several quarters to realize these cash cost projections.
minute 13:00-14:00
RNC can develop and construct a mine quickly since they perform the feasibility reports and mine construction primarily in-house.
minute 16:40-17:30
This man believes RNC expertise is in heap leaching of bulk tonnage clay ores in the tropics. Thus, the new Bonanza bulk tonnage clay (i.e saprolite) target seems to be RNC's specialty.
This man owns 4,759,100 shares of RNC Gold = 11.8% of total outstanding shares. Seems he has enough incentive.
The man's bio: http://www.rncgold.com/web/main.cfm?docID=4&managementID=2&m=corp
(did not know Columbia University had a mining school...)
In summary, this man is either lying and very stupid given his share position or the market is irrational, IMO. We will find out one way or the other by year end because both the income statement and drill bit are two of the greatest lie detectors ever invented...
An orgy of ambition and political revelry is dismantling the nation
BY PASTOR VALLE-GARAY—Special for Granma International—
TORONTO —The national crisis is real. It is having brutal effects, particularly on the most vulnerable: workers, children, the unemployed. In short, all of Nicaragua. In the rural areas, it is leading to desperation. From the outside, and with each passing day, one can observe a nation that is edging closer to the economic, moral and social abyss of extreme poverty. Or, the conditions for a bloody popular uprising. Like the one in 1979.
The high cost of the family shopping basket – unattainable for the average citizen – is compounded by the increased cost of oil and gasoline, an irreparable economic blockade for a country unable to produce them. Unemployment has led to an increase in suicide, homicide, violence against women, juvenile crime and child prostitution.
The presidency is failing to govern, and the opportunist opposition is taking advantage of the chaos by promoting greater violence. Both sides place the blame on the interference of stupid foreign leaders, when it is actually our own idiots who are destroying the nation.
The increase in busfare has caused strikes, and the university students – traditionally the national conscience – are protesting on their own behalf and on behalf of those who can’t. Traffic is paralyzed. We see the same burning of tires and vehicles that we saw 26 years ago, and just like then, the police charging the demonstrators. Blood runs, once again.
Donor countries and investors do not risk their capital in a country that is going down the drain. A waste of money and time. Nicaragua is a boat adrift. Without a captain. Without a course or a rudder. Inexorably, it is sinking into the waves of violence and the wake of corrupt governments. It is still being pulled by the undertow of those who – drunk on power – left the country bankrupt and today have the audacity to run for government again. Nobody throws a lifesaver to someone who is drowning on purpose.
Without a leadership on the horizon, the country is despairing. In spite of his intentions, President Enrique Bolaños is turning into a caricature of a ruler. There is no vice president. The new strongman, Nicho Marenco, Managua’s new mayor, has confined himself to repeating ridiculous and contradictory apologies for his inability to adequately carry out his responsibilities and continues failing to resolve anything at all. There is no deputy mayor.
The savior of the world has returned from Rome and is keeping his distance. This time, Cardinal Miguel Obando Bravo is choosing to watch the bulls from behind the protective barrier.
Nevertheless, not everything is lost. In a turbulent river, the fishermen do well. The legislators are raising their own salaries. The judicial branch is freeing political prisoners who deserve to be jailed for life. The electoral council is fabricating elections as though they were the lottery.
It is dubious that a people so combative, so long-suffering and still mourning the hundreds of thousands of victims sacrificed for freedom and dignity will opt for the armed struggle. It is dubious, but not impossible or remote. When the political drunkards try to take over the wheels of the state buses, everyone goes over the cliff.
Whoever can, save yourself! Right now, Nicaragua is slowly bleeding to death. Be very careful. Just like in the 1970s, this time as well, there’s not much more to lose.
*Professor, York University
RNC vs. GGG
RNC and GGG are very comparable. Both are junior producers, both have primary mine operations in Nicaragua, and both have similar cash costs. Also, both are undervalued, IMO. Nonetheless, RNC trades at a significant discount to GGG using several metrics. Namely:
Market Cap to PP Gold Ounce
Market Cap to PP+M&I Gold Ounce
Adjusted Market Cap to PP+M&I Ounce after Gold Recovery %
Market Cap to Total Resource Ounce after Gold Recovery %
Adjusted Market Cap to Total Resource Ounce after Gold Recovery %
Market Cap to Current Annualized Production Ounce
Market Cap to 2 Year Forward Looking Production Ounce
Here is the chart:
There seems to be no material "market comparable" rationale for RNC to sell at such a large discount to GGG. Maybe GGG has better exploration potential and better management to hit their 2005 gold production and profit forecast, and maybe not. FWIW, I own both GGG and RNC as well as DSM. DSM, based in Brazil, has similar production profile but DSM has lower cash cost and has a much larger gold resource all at a single mine (better takeover prospect than GGG or RNC).
In any event, comparing RNC to GGG based upon these metrics above, I show RNC share price should be valued at US$1.05 to US$2.16 versus the US$.55 it trades at today... That is, this values RNC at same metric values as GGG.
Here are some of the comparables, so you can verify some of my math.
Shares O/S
RNC 40,243,451
DSM 84,239,043
GGG 155,241,000
PP Only
RNC 927,995
DSM 940,800
GGG 852,570
PP+M&I
RNC 2,303,388
DSM 2,050,000
GGG 1,480,290
Total Resource Ounces @ R%
RNC=2,838,000
DSM=3,792,000
GGG=1,655,000
Current Production
RNC 102,000
DSM 100,000
GGG 112,000
Prod Ounces-2Yr Forward (i.e. 4Q 2006 Production Annualized)
152,000
150,000
112,000
Market Cap
RNC $22,133,898
DSM $96,032,509
GGG $50,555,052
straight talk on mining
http://www.straighttalkonmining.com/docs/pdf/stom%2024.pdf
new financialsense.com StormWatch
http://www.financialsense.com/stormwatch/2005/0520.html
Country Political Risk Map
http://www.sovereignbermuda.com/Downloads/SovPRMap05.pdf
here's a good link on currencies/gold exchange rates:
http://www.kitco.com/pop_windows/exchdetails.html
provides currency changes over prior day close and over past 24 hours.
CONRAP Debt Restructuring:
This is positive news:
*Reversal of $2.3M adds US$.057 to Net Book Value per share.
*Also, US$.057 will be added to earnings per share this quarter as the prior interest expense recorded is reversed.
($2.3M/40,243,451 shares = US$.057)
* The existing Long Term CONRAP debt will be paid off over 32 months at 0% interest. Also favorable.
2 news releases:
RNC Gold Announces Changes to Board of Directors
16:05 EDT Monday, May 16, 2005
TORONTO, ONTARIO--(CCNMatthews - May 16, 2005) - RNC Gold Inc. (TSX:RNC) today announced changes to its Board of Directors. Randy J. Martin will assume the office of Chairman of RNC replacing Wayne Beach who will remain on the board as an independent director. Mr. Martin will continue to serve as the Company's Chief Executive Officer.
In accordance with corporate governance best practices guidelines established by Canadian securities regulators, effective immediately, Harry Hopmeyer, one of RNC's independent directors, will fill the role of Lead Director. In accepting this position, Mr. Hopmeyer will fulfill a number of responsibilities including:
- Ensuring that the Board functions independently of management;
- Ensuring that the independent directors have opportunities to meet to discuss issues without the presence of management;
- Representing independent directors in communications with shareholders when necessary; and
- Being available to directors who have concerns that cannot be addressed through the Chairman.
At the Company's annual general meeting held on May 13, 2005 Mr. Hopmeyer, Randy J. Martin, Thomas Lough, Timothy Mann, Wayne Beach and Leslie Coe were re-elected as Directors.
RNC also announced the appointment of Thomas Lough as President who will now serve in that role in addition to his duties as Chief Financial Officer.
"Our objective in making these strategic changes is to streamline management while observing the key role that independent directors play in governing a modern corporation," said Randy J. Martin Chairman and CEO, RNC Gold Inc. "The Board is currently assessing several qualified candidates to bring an additional independent director on to the board."
_______________________
RNC Gold Announces Restructuring of CORNAP Debt
08:30 EDT Wednesday, May 18, 2005
TORONTO, ONTARIO--(CCNMatthews - May 18, 2005) -
Not for release in the United States
RNC Gold Inc. (TSX: RNC) today announced that it has reached an agreement with Corporaciones Nacionales del Sector Publico (CORNAP) Nicaragua's privatization agency, to restructure the outstanding $2.4 million debt owed by RNC. The debt originated from the 1992 privatization of Hemco de Nicaragua S.A. (Hemco); RNC assumed the obligation when it acquired Hemco. Hemco is scheduled to produce 30,000 ounces of gold in 2005 and owns the 205,000-hectare exploitation and exploration concessions in northeastern Nicaragua.
"This agreement formalizes the debt that had previously been dealt with on an ad hoc basis," said Thomas Lough, President and Chief Financial Officer, RNC Gold Inc. "Previously, this debt had been forgiven periodically in exchange for Hemco building and maintaining infrastructure in the region."
Under the terms of the new agreement, the outstanding $2.4 million will bear a 0% interest rate and the Company will pay US $150,000 every second month over the duration of 32 months (i.e. 16 payments) to CORNAP. Additionally, RNC will reverse $2.3 million of accrued interest in the second quarter of 2005.
The restructuring of the CORNAP debt is part of RNC's ongoing program to enhance its financial strength. The reversal of the accrued interest and the recently announced elimination of the Company's hedge book have combined to eliminate $4.4 million of liabilities from RNC's balance sheet. RNC also has improved its cash resources with proceeds from a March 2005 financing and cash flow from its producing mines in Nicaragua.
stratfor
Calculating the Political Effects of Falling Oil Prices
May 17, 2005 22 40 GMT
By George Friedman and Peter Zeihan
The international system has been operating with two major focuses when it
comes to oil prices. The first is that oil prices are high, and that in all
likelihood they will continue to rise. Some analysts have recently thrown
around upper limits in the range of $105. The second focus has been on the
effect of high oil prices in consumer countries. One of the puzzles has been
that global markets have not buckled under the weight of rising energy
prices, but seem to have weathered the storm. Many have even thrived:
overall global growth in 2004 was the fastest in over 20 years.
We have always been skeptical about some of the fantastic expectations for
energy prices, and the events of the past week prompt us to restate three
views. First, in historical terms, oil prices are not extraordinarily high.
Second, it is not at all self-evident that oil prices will continue to rise
or even hold their highs. Third, the most important question is not the
potential effect of higher oil prices in consuming countries, but their
effect in producing countries.
Oil prices, measured by NYMEX light crude, reached an intraday peak of
nearly $60 a barrel at the beginning of April. On May 13, they hit an
intraday low of just under $48 dollars a barrel. This means that in the past
six weeks or so, oil prices have fallen by nearly 20 percent. We do not know
what they will do next, but of this we are absolutely certain: oil prices
have fallen dramatically of late. There is another thing we know, which is
that major media have taken no notice of this drop. While oil speculators
have been hammered, the major media continue to talk about soaring oil
prices. The idea that we have high oil prices which will only go higher is
an idee fixe among most people.
Expressed in real dollars (adjusted for inflation), $60 was the high point
for crude prices after 1984 -- a cyclical high. However, it was barely half
the price of oil in 1979, when -- in inflation-indexed terms -- it reached
the all-time high of $95 a barrel. In other words, in real terms, oil prices
are not that high now, and they are falling.
Now, we can debate where oil prices will go in the future -- but if we and
other analysts knew that, we would not be scribbling for a living. We can
only go by what we have seen, and that gives us three points:
1. Oil prices, in real terms, were at 20-year highs for most of 2005, but
were always far from their 30-year highs.
2. Oil prices have been falling fairly dramatically for several weeks.
3. The current price (not the fantasy price) of oil is, historically,
modest.
It is, therefore, not surprising that global stock markets and economies
have not collapsed under the weight of surging prices. Oil prices have risen
from their lows but have not reached extraordinary heights. Moreover, the
stock markets appear not to have been convinced that even these prices were
sustainable. In this, the markets were certainly correct, even if things
might change.
That means, from a geopolitical point of view, that the focus ought to be
redefined. We thus far have been obsessed with the effect of higher oil
prices on consuming economies. We now need to flip the question: Whether oil
prices hold at current levels or drop precipitously, what are the potential
effects on producing countries? Assume that oil prices move back down into
the $30s or even $20s, what happens then?
We are talking here not chiefly of economic effects, but of political ones.
Expectations about the future of energy prices are built into the political
systems of key producing countries. If those expectations are not
fulfilled -- or if the assumption becomes that they won't be fulfilled --
anticipatory political maneuvering will begin. In other words, politics
follow the expected direction of things.
The events of the last week may not have substantial economic effects in
either producing or consuming countries. But they could have substantial
effects in the producing countries if the expectations of political actors
change dramatically. A political group that expected to benefit from rising
prices might change its strategy dramatically if it ceases to expect
benefits -- and in some cases, those changes could be dramatic.
Russia
For example, in Russia, President Vladimir Putin finds himself in a bit of a
bind. Like Yeltsin before him, he is trapped between the nationalists on one
side and the liberals on the other. Also like Yeltsin, Putin has had to
reach out for the support of the nation's oligarchs to maintain power.
That puts him under double constraints. On one hand, Putin needs to keep the
oligarchs reasonably happy; but on the other, the oligarchs tend to sock
their money away -- abroad -- as a matter of course, and particularly
whenever Russia's macroeconomic picture darkens. In the aftermath of the
Yukos dismemberment, capital flight has returned to highs seen in the
1990s -- and this at a time of rapid growth and high oil prices. Just
imagine the oligarchs' panic when oil prices head south.
Meanwhile, Putin is losing the public's trust. The New Year's effort by the
Kremlin to cut expenditures and to monetize social benefits -- econ-speak
for giving people a monthly check rather than free electricity, rent and bus
fare -- led to an unprecedented eruption of protests, forcing the government
to hand out another $8 billion in benefits to the country's veterans and
elderly. Without public trust or a major political faction in his pocket,
Putin is forced to attempt a complex balancing act.
Therefore, the Russian government, much like its Chinese counterpart, finds
itself held hostage to its economic growth and the resulting social
expectations -- and that growth is a result largely of oil prices. In order
to head off a nationalist uprising, Putin has little choice but to buy off
disaffected portions of the population. That takes money.
Putin does, however, have two things going for him. First, Russia is the
world's largest exporter of natural gas, giving the government another
financial leg (even if one indexed to crude prices) on which to stand.
Second, Putin's financial planning has been the most solid in recent
history. Since he became president in 2000, high oil prices have helped him
run an extremely tight ship financially. Moscow is even paying off a fairly
large chunk of its Paris Club debt ahead of schedule, and ferreting away
loads of cash for the future. The state's currency reserves now stand at a
record $144 billion, and a rainy day fund -- for use when oil prices turn
south -- now holds $30 billion.
Putin is certainly worried about the trend turning negative, but he -- more
than any other oil-dependent world leader -- has financial wiggle room.
Nigeria
At another extreme is Nigeria. Unlike many other producing countries,
Nigeria is a highly evolved kleptocracy in which oil money lubricates
everything, and yet the deaths of thousands of people during periods of
civil unrest -- in times fat and lean -- are perfectly normal.
Unlike Russia, Nigeria is barely making a dent in its international debt.
Though it is true that currency reserves have risen by nearly $10 billion
during the past year, we consider such thriftiness quite un-Nigerian, since
Abuja's primary plan is to seek substantial debt forgiveness despite record
revenues. The government knows full well that, unlike many petroleum
economies, Nigeria can both sustain and withstand a substantial amount of
chaos.
While a price collapse in another environment, such as Venezuela, could lead
to social disorder, Nigeria already has social disorder -- and has
repeatedly demonstrated that the political system can survive such
conditions. The government is already so inured to the chaos that a loss in
revenues will simply mean one more disabling element in the existing
environment. In fact, the Nigerians have a tried-and-true method for dealing
with it: more deficit spending, followed by appeals for more debt
forgiveness. Nigerian bureaucrats are already exploring how to issue new
debt most efficiently.
Kazakhstan
Kazakhstan is another story. Though Kazakhstan and Russia produce roughly
the same amount of crude on a per capita basis, they are not equally
vulnerable to price pressures. A price drop certainly would impact its
spending patterns, but Astana has three advantages Moscow lacks.
First, while oil income remains critical to the Russian budget, most of it
goes to the oligarchs who control Russia's oil companies. In Kazakhstan,
what is not siphoned off by President Nursultan Nazarbayev's family makes it
directly into the state coffers. Nazarbayev's siphoning can be held in check
without threatening any forces beyond his own family.
Second, Nazarbayev is concerned that his regime might be the next target in
the ongoing wave of "velvet revolutions" sweeping the former Soviet Union.
That has led him to be more generous with state payouts than in the past.
Finally, unlike Russia -- where the trend is toward barring foreign
participation in the energy sector, and therefore toward flat production --
Kazakhstan is aggressively seeking foreign investment and is actively
participating in multiple export projects. As a result, Kazakh oil output is
accelerating quickly -- and the state's finances are stabilizing --
regardless of price movements.
Venezuela
Meanwhile, high spending and dwindling oil output put Venezuela in perhaps
the worst political position. President Hugo Chavez will aggressively push
for OPEC to reduce production, since his mismanagement has already reduced
Venezuelan output by some 800,000 bpd under the cartel's existing quota
regime. Should OPEC slash quotas, Caracas will not have to adjust its own
plans a whit. Similarly, Chavez will threaten to cut off exports to the
United States and nationalize the Venezuelan holdings of American
companies -- anything to "talk up" the price of crude.
But such "solutions" ultimately depend upon actors that the Chavez
government cannot control. Likewise, cutting spending is simply not an
option. The government in Caracas remains in power because it continually
pays bribes for the support of the populace, to the tune of some $32 billion
per year at last measure. Cutting those payouts is simply not an option.
There are two things, therefore, upon which Chavez can fall back. The first
is the country's central bank, which currently holds $19.1 billion in its
net operating hard-currency reserves -- funds that Chavez already is
attempting to tap. The second is the country's bolivar-dollar exchange rate:
a 50 percent devaluation would double the country's oil income.
Inflation is the downside of either strategy. Dumping a few billion into an
economy worth only $85 billion while devaluing the currency would be a
horrendously inflationary move that almost inevitably would lead to social
unrest. Chavez is pursuing ties to Cuba in part for this reason: Those links
already comprise some 35,000 "advisers" whose purpose is to keep Chavez's
Bolivarian revolution going at all costs. Chavez has also steadily
militarized his politically loyal militias, aiming for a "reserve" of 1.5
million men.
Now call us kooky, but if you have 1.5 million guys running around with
surplus FAL rifles when the social order gets a little questionable, what
happens when you run out of money to pay them? Chavez is preparing for --
and contributing to -- what well could be a bloody future.
Middle East
Ultimately, of course, the Middle Eastern powers face the most dramatic
choices. Within the region we must split the countries into two groups.
The first group is the smallish states characterized by hefty production
levels relative to their populations: Kuwait, Libya, Qatar and the United
Arab Emirates. In all four examples, the question is largely which
pointless, grandiose projects -- such as Qatar's scheme to construct
artificial islands in the shape of the world's countries -- should be cut.
The one possible exception to that rule may be Libya, but since its
rehabilitation on the world stage, Tripoli's international adventurism --
and thus its adventurous budgetary outlays -- has already been grossly
curtailed. That said, prices would have to plunge well below $25 before any
of these states become even remotely concerned. Even Algeria, where oil
income is critical to continued government efforts to gain the upper hand in
its civil war, has always proven capable of finding international financing
during lean times.
The second group comprises states with larger populations and more ambitious
plans. These states are a different matter altogether. As far as the Middle
East is concerned, the two most likely to feel the pinch of falling oil
prices are Saudi Arabia and Iran.
Saudi Arabia
The Kingdom of Saudi Arabia is not in tremendous shape, and in traditional
Arab fashion has dramatically stepped up spending to make up for problems at
home. But unlike the various Persian Gulf statelets, Saudi Arabia has a
fairly small financial cushion. For example, the Kuwaitis and Qataris
produce on average more than four times as much crude per citizen as do the
Saudis. A subsidy cut for cell phones in Kuwait City would be paralleled by
a subsidy cut for public transport in Riyadh -- the difference between
imposing a level of personal discomfort and provoking civil unrest.
So belt-tightening in Saudi Arabia would have political implications largely
nonexistent in the rest of the Arab portions of the Persian Gulf. The Saudis
are well aware that they will need to dismantle portions of their generous
payouts. The dilemma is, cut the payments to whom?
The one group that Riyadh would not dare disinherit is the various tribal
leaders who are not part of the House of Saud. The tribes of Arabia both
helped to build up Islam as a force and Saudi Arabia as a state. Shutting
them out would be tantamount to national and clan suicide, things that the
Saudi royals are experts at avoiding.
In fact, the royal family is far more likely to shave down its own portion
of the government take, rather than reduce payments to supporters outside of
the family. Concerns about family infighting will, of course, limit the
amounts cut and to whom, but the top leadership believes it is high time to
trim the family dole -- and the monarchy will be looking particularly at
ways in which a cut in stipends to specific individuals could also defang
potential problem-makers.
Ultimately, however, Saudi charitable organizations are likely to suffer the
lion's share of the subsidy cuts. After two years of on-and-off sparring and
co-opting of al Qaeda supporters within the kingdom, Riyadh feels that it
has finally managed to get a grip on the militant organization. With that
grip in place, Riyadh can reduce the amount of cash it pays to groups with
links to militancy, if the need arises, without risking an immediate
backlash. And it could let up on spending for various religious causes that
quite literally give potential militants something else to do with their
lives, such as studying religious texts for four years at a time.
At the core, cuts to the family or tribal payouts would create a short-term
political crisis, while cuts to Islamic charities would raise questions
about long-term social stability. The House of Saud is notorious for
avoiding short-term inconveniences at the risk of long-term crises.
Luckily, as the world's largest oil exporter and OPEC kingpin, Saudi Arabia
need not be limited to simply cutting expenditures in order to deal with
falling oil prices. The kingdom's internal oil wealth means that, in the
event of a financial crunch, the country would be much more likely to turn
to Saudi citizens (read, someone in the royal family) than to any
international creditors to see it through.
Riyadh also has more traditional market-based options -- such as reducing
OPEC quotas -- for keeping oil prices high. The only problem with slashing
production, however, is that it can take more than two years for the effects
to feed through the system and push prices up in any sustained way. That
forces the Saudis to consider less orthodox options, should they not wish
simply to cut their own spending.
Bear in mind that the Saudis are proven masters of milking crises for all
they are worth, and then wrapping the "crisis" up quickly and -- from all
outside perspectives -- decisively. Take, for example, the beheading of
American hostage Paul Johnson in June 2004. With an hour of Johnson's death,
Saudi security forces had swept in and killed all those responsible.
Was this luck? Or did the Saudis know precisely where Johnson and his
captors were in the several-day crescendo leading up to his murder? If
Riyadh finds itself under pressure, it has ways of stoking crises that can
spook the markets and push prices higher, while making the regime ultimately
appear to be large and in charge. Intentionally spooking the markets is a
truly dangerous game to play, but it is something the Saudis apparently are
confident enough to do when the lives of American citizens hang in the
balance.
Iran
Iran is about to find itself in a very unusual bind. At the moment,
everything that Tehran is trying to achieve geopolitically -- stability at
home, nuclear capability, international recognition, regime consolidation,
influence over Iraq, achieving status as a Middle East hegemon -- is
predicated on financial stability. It takes money to pacify the population,
build a nuclear program, engage in international commerce at sufficient
levels to keep Europe's interest and tempt the Americans, and exert
influence over neighboring countries.
Though Iran does have an economy independent of oil, oil output gives Tehran
the ability to adopt proactive policies. More than any major exporter in the
world save Saudi Arabia, Iran needs its oil income to project power.
Therefore, a drop in prices will affect the extent to which, and speed at
which, it can achieve its objectives.
Iran cannot stop spending without endangering its many current geopolitical
goals. Unlike the Saudis or Russians, the Iranians have no significant
internal pools of capital to tap -- and unlike the Nigerians or the
Algerians, they cannot easily turn to international creditors either.
That leaves Tehran looking for ways to push prices up, and Iran has any
number of means of doing that that are wrapped up in its current
geopolitical ambitious. Hezbollah, for example, has its finger on the
Arab-Israeli conflict, a perennial flashpoint for the oil markets. Using
Hezbollah to provoke Israel into bombing Lebanon or Syria would do wonders
for the tautness of oil traders' nerves.
Iran can maneuver its nuclear program in a similar manner. For Tehran,
telling the EU-3 -- with whom it currently is engaged in negotiations -- to
go suck a lemon, or to recommence its own uranium enrichment activities,
would raise international tension and threaten a storm of military action
within the Persian Gulf.
Likewise, pressuring Iraq or Azerbaijan on any issue under the sun raises
the possibility that two major oil exporters could suddenly develop
complications that affect global supply levels.
this may humor you, via an email received:
"First you get the basement, then you get
the drums, THEN you get the groupies.
http://www.kenbrashear.com/
It's amazing what you can find inside a
circus matchbox these days...
http://www.thesoundoflincoln.co.uk/fly.htm "
from benign neglect and 0 trades this AM until 15:07 to some large jitney trades at 15:08...
TD Sec large cross today:
15:08...0.670...277,000...TD Securities....TD Securities
Just crossing those same shares from 5/11/05 last week:
12:10...0.68....300,000...TD Securities...TD Securities
Contrary Investor freebie today...
http://www.idorfman.com/05172005.htm
Uranium, at 23-Year High, May Extend Gain on Supply (Update3)
May 17 (Bloomberg) -- Uranium prices may extend gains after surging to a 23-year high last week as a new investment fund started buying the nuclear fuel and U.S. power producers try to rebuild dwindling stockpiles.
Uranium Participation Corp., which sold C$90 million ($79 million) of shares to raise cash to invest in uranium, began trading on the Toronto Stock Exchange May 11. It joins Portland, Oregon-based fund Adit Capital Management, which started buying uranium in December.
Wholesale uranium prices have more than doubled to $29 a pound, from $14 in January 2004, on expectations reactors being built in China, India and Russia will drain inventories. Higher prices may boost earnings at BHP Billiton, which has bid A$9.2 billion ($7 billion) for WMC Resources Ltd., owner of the world's biggest uranium deposit, and at Rio Tinto Group.
``Some U.S. utilities understand that there's no incremental supply out there and they've been aggressively adding to their inventories'' in the past month, said Bob Mitchell, who manages Adit and $200 million at Touchstone Investment Managers. The entrance of Uranium Participation into the market helped prices, he said.
Uranium for immediate delivery rose $5 to $29 a pound in the two weeks to May 11, the biggest two-week gain since January 1996, according to Metal Bulletin. That was the highest price since at least 1981, according to prices on the World Nuclear Association's Web site.
`Market Improving'
Buying WMC will give BHP Billiton, the world's biggest miner, control of Olympic Dam in South Australia, which holds more than a third of the world's known uranium. Melbourne-based WMC plans to spend more than A$4 billion on an expansion, which would triple uranium production, as well as increase gold and copper output.
``The acquisition of the world's largest uranium deposit immediately makes us a material player in this resource that is continuing to play an important role in the world's energy intensity,'' Chip Goodyear, Melbourne-based BHP's chief executive, said March 8.
Gains in uranium prices give ``considerable upside'' to BHP earnings after the takeover, Paul Xiradis, who helps manage $1.5 billion at Ausbil Dexia Ltd. in Sydney, said the next day.
London-based Rio Tinto, which controls the world's third- biggest uranium miner, Energy Resources of Australia Ltd., might buy more mines because the mineral's long-term future has improved, Chairman Paul Skinner said April 29. Energy Resources shares have more than doubled in the past 12 months.
Shares of BHP have surged 38 percent in the past year and Rio Tinto stock has gained 30 percent.
MIT
Commercial stockpiles of uranium dropped 50 percent between 1985 and 2003 because mine output couldn't keep up with demand, the Massachusetts Institute of Technology said in a September report. Mines produced about 55 percent of the 66,000 tons of uranium used in 2003, according to the World Nuclear Association.
Uranium prices may average $30 a pound next year, from a previous forecast of $27, Greg Barnes, an analyst at Canaccord Capital Inc., Canada's biggest independent brokerage, said in a May 3 report.
``The involvement of speculative funds and investment funds in the market,'' is helping raise prices faster than predicted said Barnes, who was ranked Canada's No. 2 mining and metals analyst in the past two years in the Brendan Wood survey of institutional investors. Purchases by U.S. utilities to rebuild inventories are also pushing prices higher, he said.
Increased Forecast
Canaccord increased its average spot uranium forecast for this year to $25.50 a pound from $23.50. Prices might average $35 a pound in 2007, Barnes said. The spot market, which makes up about 12 percent of uranium sales, sets a price reference for long- term contracts between miners and utilities.
China plans to build 27 plants to boost nuclear energy output fourfold by 2020, according to the World Nuclear Association. India aims to build up to 24 reactors, the WNA said on its Web site. Russia plans 24 reactors by 2020, more than doubling its nuclear power capacity.
National Bank Toronto-based analyst Ian Howat said May 14 that he expects contract prices of uranium, which are set monthly, to rise above $30 a pound when they are set in June, from $28.
Recent gains and a shortage of mine supply might push average prices higher than a forecast $30 a pound in 2007, UBS AG Sydney- based analysts Glyn Lawcock and Fleur Grose said in a May 13 report. UBS didn't change its forecast.
`Headed Higher'
``Uranium prices will be headed higher and even at $30 a pound there's next to nothing in incremental supply that will come to market'' to ease the shortage, Adit's Mitchell said. He declined to say how much uranium his fund held. In December, Mitchell said Adit had physical uranium valued at $26 million.
Shares of Saskatoon-based Cameco Corp., the world's biggest uranium miner, have more than doubled to C$47.72 in the past year as the miner was able to negotiate prices at a premium to market. Canaccord's Barnes said on May 3 he expects the stock to reach C$62.50 in the next 12 months, from a forecast of C$55.
``Under rapidly evolving contract terms, Cameco is locking in higher long-term prices that are leading market prices higher,'' Barnes said.
Uranium Participation, which is managed by Canadian uranium miner Denison Mines Inc., agreed to buy 1.85 million pounds, or 835 tons, of uranium at $27.87 a pound for a total of $52 million, the Toronto-based fund said in a May 10 statement.
Share Drop
Shares of Uranium Participation have fallen 6.8 percent to C$4.94 since they started trading on the exchange May 11 at C$5.30.
``Traders setting offer prices well above market and the very visible solicitation for 3 million pounds of uranium by the newly launched uranium commodity fund'' led to the recent price jump in uranium, H. Fraser Phillips, an analyst at RBC Capital Markets in Toronto, said in an May 3 report.
Adit's Mitchell said he was aware of only ``a couple'' of other funds which had bought small positions in physical uranium.
``The unique characteristic of uranium is that there is so little in the way of physical ownership by investors'' compared with other commodities, Mitchell said. ``The price advance of the material has actually accelerated even as other commodity prices generally decline as investors exit.''
To contact the reporter on this story:
Matt Chambers in Melbourne at mchambers1@bloomberg.net
Last Updated: May 17, 2005 07:00 EDT
yes, and GBN chart looks just as bad...
but, if Rand goes to 7.50:1, then Rand POG = 100,000 Rand per Kg. Most all SA Mines show good profitability at over 95,000 Rand per Kg.
Current SA Rand per Kg = 86,450
16% Depreciation of Rand from 6:48 to 7:50 = 16%
86450 * 116% = 100,050 SA Rand per KG
Burnstone would be highly profitable...
TIC Data/Forex-good article
http://www.forexnews.com/AI/default.asp?f=A20050516A.mgn
TIC Data-U.S. capital inflows slow in March
Foreign central banks net sellers first time in 19 months
By Rex Nutting, MarketWatch
Last Update: 9:30 AM ET May 16, 2005
WASHINGTON (MarketWatch) - Foreign capital inflows into the United States slowed 46% in March, the Treasury Department said Monday.
Net capital inflows fell to $45.7 billion in March from $84.1 billion in February as foreign central banks became net sellers of U.S. assets for the first time in 19 months. Read the full report.
It was the lowest level for capital inflows since August 2003.
The United States demands nearly $2 billion a day in foreign capital to finance its current account deficit. So far, the requirements have been met, even though U.S. interest rates remain relatively low.
In March, net foreign purchases of domestic securities fell to $60.1 billion from $98.1 billion in February. U.S. net sales of foreign securities, meanwhile, were little changed at $14.4 billion.
Foreign central banks sold $14.4 billion in U.S. securities on net, the first net sales since August 2003, after the central banks purchased $18.7 billion in February.
Foreign central bank purchases have supported the U.S. current account deficit over the past two years. Asian central banks purchased about $200 billion in Treasurys in 2003.
Foreign central banks sold $15 billion in Treasurys in March after buying $11.3 billion in February. It's the first net sales of Treasurys by the official foreign sources since August 2003.
The Chinese central bank has been buying U.S. Treasurys to maintain the peg of its currency, the yuan, to the U.S. dollar.
Chinese holdings (both official and private) of U.S. Treasurys dropped for the first time in just over a year. Japanese holdings fell for the second time in the past three months, while investors in the Caribbean banking centers increased their holdings by 31%.
Private foreign demand held up better in March. Net purchases fell to $74.5 billion in March from $79.4 billion in February. Private purchases of Treasurys rose to $42.9 billion from $31.2 billion, while net purchases of U.S. equities fell to $1.7 billion from $7.4 billion.
Faber-believe this is a repost...
If the Fed engages one more time in 'printing money' the decline of the US dollar will lead to soaring import prices, accelerating consumer price inflation and higher interest rates. Hardly a favorable environment for the highly priced and highly leveraged US stock and real estate markets!
Saturday, May 14 - 2005
In the late 1990s, numerous economists and strategists distinguished between the 'old economy' and the 'new economy'.
'Old economy' companies were companies that made some money, had reasonable stock market valuations, and a relatively high earnings visibility. 'New economy' companies, on the other hand, were engaged in new and unproven industries, in which were the pace of technological innovation was extremely rapid and, therefore, also obsolescence.
Moreover, all the profits and some more had to be reinvested in research and development. New economy companies were also characterized by very high valuations (in March 2000, NASDAQ at 5000), and almost no earnings visibility.
Well, we now know what happened to the then popular buzzword 'new economy', but to be fair, there is indeed a new economy in the world. It is just different than what the visionaries had anticipated.
The new economy is characterized by the rise of China, India and to some extend also Russia as global economic and geopolitical players. Out of the blue and certainly totally unexpected to the American visionaries that spent their days counting irrelevant eyeballs in order to value Internet stocks, China has overtaken the US in many markets such as for steel, iron ore, copper, not to mention in the production of appliances and consumer electronics.
But more importantly the 'newest economy' is characterized by seemingly endless bubbles, courtesy of the man who has done more to destroy the value of paper money than any one else in the 200 year history of capitalism: Mr. Alan Greenspan.
The destruction of paper money as a store of value - the most important quality paper money should have - occurs only in one way and that is through increasing the quantity of paper money at a higher rate than real GDP growth.
At times this excessive money supply growth will lead to real wages rising strongly, such as in the 1960s, or to commodity and consumer prices soaring, such as in the 1970s. But, excessive money supply growth can also lead to the most dangerous form of inflation and this is asset inflation, which at times will boost equity prices to lofty levels (Kuwait in 1980, Japan in 1989, Taiwan in 1990, NASDAQ in 2000, etc) and on other occasions boost the value of real estate into cuckoo-land (Tokyo in 1990, Hong Kong in 1997, and now in the Anglo Saxon countries).
The reason asset inflation is so dangerous is that central bankers - usually unemployable in any other capacity - not even as waiters - only pay attention to consumer price inflation. Therefore, when consumer prices do not rise much, for example because of international competition (as is now the case), they print money like water.
So, with the entry of China and India into the global economy we had low consumer price increases around the world - although higher than the statisticians in the US are under political pressure computing, calculating and doctoring - and this led Mr. Greenspan to create, after he fueled the NASDAQ investment mania with easy money, another gigantic bubble: the housing bubble!
How to spot bubbles
There are many ways to recognize a bubble. One of the most reliable indicators that an investment mania is underway is always very high volume. In the case of US housing it is the number of home sales as a percentage of households that show how speculative the market has become.
Annual home sales as percentage of households is now at all time high. I am not suggesting that US housing cannot get even more over-heated but very clearly we are in housing not near a low such as was the case in 1971, 1982, and 1992. Moreover, since 1994, housing stocks rose actually more than the NASDAQ had risen between 1994 and 2000.
Now, there are several interesting development in the housing markets. In Britain home prices are no longer rising and turnover is down. In Australia, in many markets home prices are already down and in the US, on record home sales in March, stocks of homebuilders failed to make a new high.
Usually if a new high in a physical market is not confirmed by the stocks in the respective sector - that is if there is a divergence in the performance between physical and financial market we call it a non-confirmation.
If the non-confirmation occurs following a long term up or down trend it frequently leads to a very sharp reversal whereby an uptrend is followed by a collapse in prices and a downtrend is followed by an explosive upward move.
There is another reason to be negative about US homebuilding stocks. Homebuilding companies have traced out a Head and Shoulders top, which is an important reversal pattern. I must stress that there are occasions when prices break out on the upside from a Head and Shoulders formation, but usually they will not rise significantly above the 'Head' of the Head and Shoulders pattern.
Thereafter they reverse very quickly and break down almost vertically. But there is another reason I am inclined to think that the housing boom is nearing its end: International liquidity (FRODOR) has been diminishing.
FRODOR is a creation of my friend Ed Yardeni and stands according to him for 'Foreign Official Dollar Reserves of central banks' and is 'the sum of U.S. Treasury and U.S. Agency securities held by foreign central banks'.
It is probably the best available measure of world liquidity because foreign central banks tend to transmit and to amplify U.S. monetary policy globally (emphasis added). The yearly growth rate of FRODOR is extremely pro-cyclical. It tends to rise during global economic expansions and to fall during recessions.
When FRODOR expands asset markets including stocks, commodities and real estate tend to perform well while the US dollar tends to decline. Conversely, when FRODOR growth decelerates, asset markets come under pressure while the US dollar strengthens. Also commodity prices and oil demand correlate very closely with the rate of change in FRODOR.
Since the takeoff in commodity prices in 2000 coincided with the takeoff in homebuilding stocks I assume that shrinking global liquidity will not only have a negative impact on industrial commodity prices - including oil - but also on other asset markets such as housing.
Now, I admit that it is always possible that Mr. Greenspan will ease once again massively - if the economy weakens. That should almost certainly be the case if home prices begin to weaken since housing inflation was driving consumption or more appropriately put over-consumption in the last few years.
But this might be one of the rare moments in financial history were 'printing money' becomes totally ineffective because any easing move now would hurt the bond market.
Why would that be so if the economy weakens? Because commodity prices would soar and the US dollar tumble as investors would once and for all recognize that paper money under the guardianship of central bankers is no longer a store of value but a recipe for impoverishment due to paper money's loss of purchasing power.
Needless to say that if the Fed engages one more time in 'printing money' the decline of the US dollar will lead to soaring import prices, accelerating consumer price inflation and higher interest rates. Hardly a favorable environment for the highly priced and highly leveraged US stock and real estate markets!
Short in May and go away
I do admit that my expectation, a month ago, of an April stock market rally was plainly wrong (there was a rally but it only lasted for one day and pushed the Dow up by 200 points).
Still, stocks around the world were from a near term point of view somewhat oversold and rallied in the first two weeks of May. I believe that a better shorting opportunity has now arisen and that the stock markets will again weaken in the second half of May and in June. I strongly feel that for the most stock markets new 2005 highs will be very difficult to achieve.
For the S&P 500 there is strong resistance between 1195 and 1230 and numerous stocks have already broken down and inflicted serious technical damage to the entire market.
So, I would use any strength to liquidate stock positions around the world. The risk reward ratio remains unfavorable. Moreover, based on the deceleration of growth in FRODOR I would avoid all industrial commodities including oil.
Lastly it will be fascinating to watch whether the 'newest economy', which is characterized by bubbles everywhere and was the creation of the destructor of the value of paper money, Mr. Alan Greenspan, will last for much longer than the 'new economy' of the late 1990s!
1st Qtr 2005 SEDAR Financials
http://www.sedar.com/csfsprod/data56/filings/00783107/00000001/k%3A%5CSedar%5Cfilings%5Clivework%5Cw...
My understanding on AGM:
1) Not much attendance.
2) All resolutions passed.
3) Randy Martin presented slide presentation which was materially the same as March 05 presentation at website.
4) Bonanza on target to meet its 30K ounces for 2005. They are now mining higher grades which are likely to continue through the rest of 2005.
5) La Libertad mine managers still believe they can substantially make up the 1Q 2005 shortfall. My estimate is La Libertad will hit 65K ounces for 2005
6) Thus, total gold production = 95,000 troy ounces.
7) Randy Martin also went over Bonanza and La Libertad exploration programs, and RNC continues to be upbeat on their Bonanza bulk mining target.
The RNC Presentation will likely be updated for the NY Gold Show and likely be made available at website.
FWIW, it was encouraging to see Jennings on the buy side today. Jennings took RNC public and was the sole underwriter for RNC first 2 placements at C$3 and C$2. Would like to see Jennings analyst Ron Koll issue another research report, but Koll is likely prone to wait several weeks/months before issuing any updated research report.
some one needs to munch on MFN....
Size seen pinching world's biggest gold miners
Tue Mar 8, 2005 03:29 PM ET
By Nicole Mordant
TORONTO, March 8 (Reuters) - The world's biggest gold producers won't be able to sustain the millions of ounces mined every year, according to an industry consultant, because discoveries are not keeping pace with output and building new mines takes a long time.
Over the past 15 years, a spate of mergers and acquisitions has created a clutch of mega-sized gold miners, with the top five each pulling between 3.5 million and 7 million ounces out of the ground every year. Mined-out reserves need to be replaced through exploration if miners want to keep producing at these rates over the medium to long-term.
"The drive for increasing size in annual production has resulted in very large gold producers. But they are unlikely to survive at current extraction rates over the ... next five to 10 years, " Edmonton-based consultant Ralph Bullis told the Prospectors & Developers Association of Canada conference in Toronto.
"It is highly unlikely, at least in my opinion, that new discoveries of a world-class size can be made on an annual basis by each of the very large gold producers," Bullis said, defining "world class" as deposits of 5 million ounces of gold or more.
Bullis worked for Echo Bay Mines for more than a decade in several positions, including exploration director. Echo Bay was bought by Kinross Gold (K.TO: Quote, Profile, Research) in 2003. He was also a member of the Canadian Institute of Mining committee, which helped set up guidelines on how to estimate mineral resources and reserves.
Bullis said that while large producers have increased their output over the years, their reserve bases have not kept pace.
U.S.-based Newmont Mining Corp. (NEM.N: Quote, Profile, Research) , the world's No. 1 gold producer, lifted production from 1.7 million ounces in 1992 to about 7 million ounces last year, mostly through acquisitions. But over that same time, reserves fell from 17 years of unmined production to 11.
Output at No. 3 producer, Canada's Barrick Gold Corp. (ABX.TO: Quote, Profile, Research) , rose nearly four-fold over the same period but its reserve life has dipped from 15 to 13 years, Bullis said.
Neither Newmont nor Barrick was immediately available for comment.
According to the U.S. Geological Survey's database of global gold deposits, of the 792 finds listed of greater than 100,000 ounces, only 6 percent contained 5 million ounces of gold or more, Bullis said.
"Due to the nature and size distribution of gold deposits, along with their location and the difficulty of finding and delineating them, it does appear that this task (of replacing mined gold) is going to be extremely difficult," he said.
In the past three years, the world's largest miners have all increased their exploration budgets.
Even if a big discovery is made, Bullis said it can take anything between three and 10 years to permit a mine in Canada and the United States, prospective areas where the major miners are looking for gold.
Nicaragua politics - Facing down the Sandinistas
By Enrique Bolanos
On Tuesday, April 26, in Managua, Nicaragua, I approached, face-to-face, a crowd violently protesting a 3-cent increase in the public bus fare -- a rise triggered by the recent world oil price surge.
There had already been four days of violent street demonstrations centered around three national universities and orchestrated by the Sandinistas. Private buses and government vehicles had been burned and several policemen injured, two of them seriously. Public transportation had been paralyzed for several days and smoke from protesters burning tires in the streets wafted above the city, and the long-gone violent days of our history were remembered by our people.
The demonstrations were a carefully crafted trap designed to lure the government into overreacting in the use of force so it could be accused of human-rights violations and incompetence in solving the energy crisis. The outlines of the trap started to become clear when I convened a national round table to find ways to ease the effect of the oil price increase. The president of the Universities Council and the students delegate (both Sandinistas) refused to participate in the discussions. Instead, they were outside, heading the violent rallies.
We soon learned more details of the Sandinista plan. After a few days of street protests, the Sandinistas would convene a march on April 26 directly on the Presidential House, ostensibly to demand "a dialogue" with the president. We feared they might push through the police lines and strike the Presidential House. If that happened, the police would be compelled to use live ammunition or the Army special reaction force would spring into action. In either case, the objective was to instigate "human rights violations" by a "bloodthirsty" government and use the incident to spread protests and chaos throughout the country. Sandinista organizers in the provinces outside Managua lay in wait to spread the chaos.
I know complex problems often require simple solutions. On the night of April 25, I discussed the situation with my family, especially my most trusted adviser, my wife Lila. We all agreed a bold move, an audacious and complete surprise was needed.
The next day, as the protest neared the Presidential House, I announced to my startled Cabinet that I would go out to meet the protesters and invite their leaders to join a dialogue. My security chief immediately and vigorously protested. I told him this was needed.
My ministers and I drove near the protest and got out of our vehicles. With only my head of security at my side, I advanced toward the protesters, with my ministers 10 paces behind me. This gesture of an unarmed 77-year-old president calmly advancing toward the rowdy protest completely disoriented the protest organizers. They did not know how to react. Some members of the protest started throwing rocks and bottles of water and launching homemade projectiles at us.
I reached the protesters, held my hands out to them and made a public call for the four main protest organizers to join us in a serious dialogue to solve this problem of public bus fares.
With the rocks still falling, a group of riot police stationed a block away came to cover our return to the vehicles. There was only one casualty, not serious: my son, who was hit in the head with a rock and taken to the hospital for stitches.
The entire nation witnessed the incident on television. Within 20 minutes, the streets were vacant and the burning of tires and vehicles had stopped. When I returned to the Presidential House, my wife was waiting. She said, "I knew God would help us and it would all come out OK." The next day all major leaders signed an agreement on the bus fare issue. The protests ceased and buses rolled again in the streets of Managua.
As president of Nicaragua, I am opposed to what the Economist magazine recently labeled an "unholy alliance" between the leader of the extreme left, Daniel Ortega of the Sandinista Party, and the leader of the extreme right, ex-president Arnoldo Aleman of the Liberal Party. Aleman is serving a 20-year sentence for corruption-related charges.
I am sure this alliance will continue launching fresh attacks on democratic institutions and procedures in my country.
But with God's help, we will be able to face down each and every challenge to democracy as it arises.
Enrique Bolanos is president of Nicaragua.
TORONTO, May 13 /CNW/ - RNC Gold Inc. (TSX: RNC) today announced its first quarter financial results and operational highlights. The interim financial statements can be viewed at our website at www.rncgold.com and have been filed on SEDAR (www.sedar.com). All amounts are expressed in USD unless otherwise noted.
During the first quarter, RNC's management undertook a number of activities designed to improve the Company's financial stability, increase production, move development of the Cerro Quema gold project in Panama forward and kick off aggressive exploration programs at its Nicaraguan properties. Highlights for the first quarter of 2005 included:
- Completion of a private placement financing for gross proceeds of
CAN$8,952,000;
- Improvement in the Company's working capital position from a deficit
of $4,822,185 at December 31, 2004 to a working capital surplus of
$896,318 at March 31, 2005;
- Reduction of the outstanding ounces under option contract from 21,343
at December 31, 2004 to 6,128 at March 31, 2005 and the subsequent
complete elimination of the option contracts in early May;
- Sale of 14,753 ounces of gold;
- Purchase of capital equipment for Cerro Quema development project
Financial Results
For the three months ended March 31, 2005, RNC reported a loss of $1,810,007 or ($0.06) per share, as compared to a loss (before non-controlling interest) of $692,914 or ($0.04) for the comparable period in 2004. The main factor in the increased loss was a reduction in production and subsequent gold sales. RNC had revenue of $6.3 million during the first quarter of 2005 compared to $7.8 million a year earlier.
Consolidated Financial Results Summary
(All amounts are in USD, 000's unless otherwise stated)
Q1 2005 Q1 2004
Gold sales (ounces) 14,753 19,297
Gold sales $6,302 $7,816
Average net realized gold price per ounce $381 $367
Cash operating cost per ounce sold(xx) $399 $272
Net operating margin (deficit) ($693) $888
Loss before non-controlling interest $1,810 $693
Loss $1,810 $768
Loss per share - basic and diluted ($0.06) ($0.04)
Weighted average common shares outstanding 32,186,651 17,733,015
Diluted common shares - end of period 50,790,560 28,135,339
(xx) Calculated in accordance with the Gold Institute Standard to include
all direct mining costs, refining and transportation costs and
by-product credits.
Production Summary
As previously announced by the Company, RNC's production declined in the first quarter of 2005 versus the same period in 2004. Reduced working capital was the principal factor affecting production. To address the need to supplement working capital, management planned a private placement financing for early 2005 to provide funds for exploration, the development of Cerro Quema, and to cover the Company's ongoing cash requirements until the option contracts requiring RNC to sell a portion of La Libertad's gold production at $340 per ounce were settled.
The planned financing was completed March 22, 2005. Exploration
activities at Bonanza, as well as development activities in Panama were delayed. In addition, limited cash was available at the mine sites for investment in inventory parts and supplies, which particularly impacted La Libertad. Mobile equipment availability could not be improved in the short term.
During the first quarter, La Libertad produced 8,269 ounces of gold, a 38% decrease from production in the comparable period of 2004. With funds now available as a result of the financing, mine management expects that La Libertad production will ramp up to a rate consistent with its designed capacity of approximately 70,000 ounces of gold per year.
During the most recent quarter, Bonanza produced 6,501 ounces as compared to 7,000 ounces in the comparable period of 2004, primarily the result of mining lower ore grades. Grades in April 2005 have increased significantly, and mine management predicts that production for the year will continue to be approximately 30,000 ounces.
Cerro Quema Development
In the first quarter of 2005, RNC invested $256,495 in the Cerro Quema mine development project in Panama. RNC purchased an ADR plant, a laboratory complex, an agglomerator and conveying equipment as well as some parts and supplies inventory. This equipment and material originates from an existing site in Honduras where mining activity was recently suspended. Management
believes the purchase of existing equipment represents a significant cost savings to the alternative of buying new. RNC's team disassembled the buildings and equipment during the first quarter, and shipment to Panama is in process. Construction of leach pads and other "earthwork" will begin during the next dry season in Panama (typically November/December); the project is slated to begin production during the third quarter of 2006. Upon the start of production, RNC will increase its ownership in the project to 100% at no additional cost.
Exploration Summary
RNC has made a significant commitment to exploration in 2005 at its Nicaraguan properties. Each of RNC's producing and development assets - the 205,000-hectare Bonanza property, the 18,300-hectare La Libertad property and the 14,900-hectare Cerro Quema property - has significant blue sky exploration potential in addition to current production.
In anticipation of the completion of the first quarter financing and subsequent availability of exploration funds, the Company sourced drilling equipment to be mobilized to Bonanza and La Libertad.
Subsequent to quarter's end, RNC announced that it began a reverse circulation drill program on the recently identified bulk tonnage gold target at the Company's Bonanza property in northeastern Nicaragua. The Phase I drilling program, which is expected to total approximately 7,000 meters follows an earlier trenching program that revealed a large area of widespread mineralization that remains open along strike.
At La Libertad, RNC expects to drill around the existing mine site to identify reserves to replace production and, later in the year, to explore the newly acquired Santo Domingo concessions
Swiss Gold Sales - interesting article...
http://www.resourceinvestor.com/pebble.asp?relid=9719
Expect RNC to release 1Q05 earnings today. Here was their guidance per March 10 news release:
Outlook - 2005
For 2005, RNC has budgeted production of 100,000 ounces of gold at a cash operating cost of approximately $285 per ounce of gold sold.
For the first quarter ended March 31, 2005, RNC expects consolidated gold sales of approximately 16,000 ounces. Higher than expected dilution at Hemco and lower than anticipated equipment availability caused by a lack of working capital at La Libertad have resulted in a first quarter production shortfall. The Company anticipates these issues to be substantially resolved and expects to return to budgeted production in the second quarter of 2005.
Expecting some large jitney trades after this news release, whether RNC meets or exceeds guidance. Encouraging to see so few RNC shares being sold today in light of the HUI massacre. But just wait for those jitney trades tomorrow after 1Q05 earnings released and following the annual meeting @ 10AM tomorrow...
Treasurys rise after 10-year auction
Sale meets solid demand from domestic, foreign buyers
indirect @ 31.4%
By Leslie Wines, MarketWatch
Last Update: 1:54 PM ET May 12, 2005
NEW YORK (MarketWatch) -- Treasurys extended their rise, pushing yields a bit lower, Thursday after a well-received afternoon government auction of 10-year notes.
The price gains pushed the yield on the 10-year note down to 4.22% from 4.241% shortly before the auction. In late trade Wednesday, the yield stood at 4.20%.
The auction produced a bid-to-cover ratio - or bids offered to bids accepted - of 2.33, a median yield of 4.22%, with 31.4% of the bids offered by "indirect" bidders.
The category of "indirect" bidders includes foreign central banks. Action Economics on its website described participation by indirect bidders as "solid."
Strong participation by foreign central banks was cheered by the fixed-income market because of recent worries that these institutions would diversify away from Treasurys and into euro-denominated assets.
The sale of 10-year instruments wrapped up Treasury's three-day second-quarter refunding.
Respective Treasury sales on Tuesday and Wednesday of three-year and five-year maturities were well received and also appeared to attract large numbers of foreign bidders.
Early Thursday, Treasury prices briefly spiked down on news of stronger-than-expected April retail sales data, allowing the yield on the 10-year note to rise for a while to 4.24%.
The Commerce Department said retail sales climbed 1.4% in April, their best gain in seven months. Excluding autos, sales rose 1.1%.
Economists polled by MarketWatch on average were expecting a 0.8% rise and a 0.6% rise excluding autos.
The news pressured bonds prices because it seemed to undercut a theory, stemming from a weak initial first-quarter gross domestic product report, that economic growth has slowed. Slower growth would boost safe-haven interest in Treasurys.
But the meaning of the retail sales report was open to debate. "These data will doubtless be spun as evidence of the end of the soft patch, but they are not," said Ian Shepherdson, Chief U.S. Economist at High Frequency economics.
"Instead, they reflect the unwinding of the seasonal adjustment problems, related to the early Easter, that limited the gain in March sales. The March/April pattern this year is just about identical to that seen in 2002, when Easter last fell in March," Shepherdson said.
The reading came just hours after Wal-Mart Stores Inc. (WMT: news, chart, profile) , the world's biggest retailer, missed first-quarter earning expectations and warned of a weak second quarter.
The strong reading weighed against an unexpected rise in weekly jobless claims to their highest level since the week of April 2.
On Wednesday Treasury prices benefited from a plane scare in Washington that led to evacuations of the White House and Capitol building, and safe-haven interest due to worries about the stability of hedge funds.
Tim Woods article on Matthew Simmons
http://www.resourceinvestor.com/pebble.asp?relid=9692
Bonds off highs after 5-yr auction
34% Indirect
Hedge fund speculation still weighing on yields
By Leslie Wines
Last Update: 1:54 PM ET May 11, 2005
NEW YORK (MarketWatch) - Treasury prices softened slightly Wednesday afternoon, as investors lightened their positions as they readied for a government auction of 10-year bonds the following day.
In afternoon trade the yield on the 10-year bond was 4.19%, above an intraday low of 4.17% but below the day's high of 4.23%. The yield on the 30-year bond was off its highs at 4.532%.
"Most of the day is done," said Kim Rupert of Action Economics. "Prices have gone up a good deal and people are just getting out of positions ahead of the 10-year auction."
An afternoon auction of new five-year notes, the second of three tranches of the Treasury's second-quarter refunding, was well-received.
"It's a good auction," said Rupert, noting that the sale produced a bid-to-cover - or bids made to bids received - ratio of 2.47%, which is considered average.
In addition, a full 34% of the bids were from "indirect bidders," a category that includes foreign central banks.
The indication of foreign central bank buying was cheered because of worries in recent months that these institutions have been moving away from bonds in order to diversify their reserves into euro-denominated assets.
The auction produced a high yield of 3.89%.
Treasury prices made strong gains in morning trade, benefiting for the second day in a row from investor nervousness about hedge funds.
Investors Tuesday and Wednesday have eschewed equities and sought stable government investments, due to fears that hedge funds suffered heavy losses due to the deteriorating debt quality at General Motor (GM: news, chart, profile)
Safe-haven interest was intensified further Wednesday by jolting news that the U.S. Capitol and White House were evacuated for 11 minutes after a scare apparently caused by a small plane that violated air space rules.
Shortly after the opening Wednesday, Treasury prices briefly fell due to unexpected news that the U.S. trade deficit narrowed 9.2% in March to $55 billion.
The monthly decline was the biggest since December 2001 and contrasted with an average prediction for a widening to a record $61.2 billion of economists polled by MarketWatch.
The trade deficit news briefly sparked selling because it reignited concerns that first-quarter gross domestic product data would be revised higher to show a stronger growth rate.
Fixed-income investors fear that strong growth could convince the Federal Reserve to lift rates more aggressively than its current program of incremental, half-point hikes.
However, those concerns paled next to the hedge fund worries.
RNC Gold Eliminates 'Hedge Book'; Future Sales to be at Spot Prices
08:30 EDT Wednesday, May 11, 2005
TORONTO, ONTARIO--(CCNMatthews - May 11, 2005) -
RNC Gold Inc. (TSX:RNC) today announced that it has met all its obligations under a price protection program for its La Libertad mine. As a result all future production from both its producing mines, La Libertad and Bonanza, will be sold at spot prices.
"This is an extremely important milestone for RNC Gold as we have now removed the opportunity loss associated with selling our production well below gold spot prices," said J. Randy Martin, President & CEO, RNC Gold Inc. "At current gold prices, La Libertad will realize an additional US$90 per ounce of gold sold."
The original price option contracts were put into place in 2002 when RNC was a private corporation as a requirement of a lender. Under these contracts, RNC sold its La Libertad production at US$340 per ounce. RNC satisfied these contracts through a combination of delivering production and selective buying of gold ounces at market prices.
Upcoming Corporate Events
RNC Gold will hold its annual and special meeting of shareholders in Toronto on May 13, 2005 at 10:00 a.m. at the Toronto Board of Trade, 100 King St. W. The Company will also be exhibiting at the New York Gold Show during its May 23-24 run. Previously the Company has exhibited at the San Francisco Gold Show and the Prospectors and Developers Association of Canada show in Toronto
Short & Distort - Jitney Trading
*Ping-Ponging = Jitney (recall that I called TD Sec and Canaccord trades as ping-ponging, seems the proper term is Jitney. This is where we see large blocks of RNC shares being traded between Canaccord and TD Sec, or simple crosses within Canaccord or within TD Sec.
*My speculation is that TD Sec and Canaccord are the primary jitney houses/traders... We may also have Jones Gable participating with those CSH trades purchased from retail investors who panic at prices $.06 to $.10 above the last market price (CSH trades occured on 5/5, 5/4, and 4/1).
*The article below, slightly edited, primarily describes how jitney works on the upside pump and dump. It works just as well in reverse for what is termed "Short & Distort".
*For article below, use this definition for Insider, Insider = Investor with advanced knowledge of Canaccord PP and especially those investors who knew RNC was going to be re-priced lower from C$1.20 to C$1.00. I believe these investors, likely Canaccord clients/customers who participated in the PP, have shorted their RNC shares and kept their 1/2 warrants to hedge against the trade going against them. In 4 months, their RNC shares become non-restricted and they can use these shares to cover, in the meantime they have protection via the 1/2 warrants.
__________________________________
edited article found on the internet:
Do you ever wonder about these small cap stocks that post a tiny bit of volume and then just climb and climb? One minute the stock is trading for C$1.33 and with very little volume runs to C$2.50. Amazing? Not at all. It is the jitney game at work. This practice is SO pervasive in the small cap market that I thought you should know about it. Otherwise, you’ll get trapped in the jitney game and lose a bundle. There are many depths to it and variations on it.
Jitney is the game brokers and traders play among each other, especially in the western Canadian stock exchanges. But it is not limited to just Vancouver and Alberta. It is used throughout the entire small cap stock market. My first contact with this word was when I overheard a broker saying, “We can jitney that stock over to a few other brokers I know, at other houses, and that way no one will know who sold it.”
That is how the brokerage community and insiders often work. Hand in hand. There are even some brokerage firms, start-ups, which are known as “jitney houses.” Their principals and brokers are quite eager to run business through their houses and rack up commissions on buying and selling of stock. There are even certain brokers who fool their own houses and rack up enormous commissions by running their stock purchases and disposals, around in circles, via a series of offshore trading accounts, which they own. An enormous amount of volume can be created in this way, without anyone really understanding what is going on.
Far more brokers are involved in the jitneying process than you can imagine. It is quietly and secretly done amongst themselves. It is frequently done every day. One of the deceptions is that it creates an appearance that there is activity in the stock. Whenever you see a stock that has been trading very low volume, it means that no one is really buying and selling stock in this company, but that someone is trying to make it look like activity is afoot. It is only an illusion.
That illusion is created simply to suck you in. Just like hype and promotion, which create a whirlwind of trading volume and a price rise, is designed to suck you into the stock, the jitney game weaves its magic on a less dramatic and surreptitious level. The results are the same when the stock is going up. Please realize there is a difference between a stock that insiders buy and sell, on a small scale, as opposed to a stock that is being jitneyed about, from house to house, with gap-ups or down.
The gap-up, during the jitney process, can usually be accomplished with 20,000 to 50,000 shares traded every day. The unscrupulous insider just places buy orders, on an inactive or low volume stock, through various houses, paying more and more for his own stock with each new buy order. Very few, if any, sell orders come into the market. Now, this has to be done with the tacit cooperation of the professional traders or they would fight his buy orders and stamp out any potential upward movement.
As soon as the stock makes its “run” to a higher level, and real investors come into the market, what do you think the insider does? He sells what he just bought. If it is done very well, the insider will issue a news release, pumping up the stock to an even higher level. Then, he unloads his entire recent purchase into the strength of the trading volume. If he is very, very good, he jitneys his stock way up, does a massive promo push, and then dumps a huge load of his paper into the market. Watch the jitney game in operation sometime. Look back over some of the stocks you’ve bought—the ones that popped up a bit, just before a promo push. Darn if it wasn’t the jitney game being played by a master.
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You may want to review a search of the term Jitney on the TSX website, it sure brings up a lot of hits.
http://search.tsx.com/query.html?style=TsxEnglish&la=en&col=tsxen&qt=jitney
Also, most of the Brokerages/market makers list Jitney as a Service, use this link below and click on TD Sec or Canaccord name and TSX will list the brokerage service which includes Jitney Service.
http://www.tse.com/HttpController?GetPage=QuotesViewPage&DetailedView=DetailedPrices&Languag...
Appears to me that all of the large, likely Jitney trades are coming from brokearages that offer Jitney service, and very few that do not offer Jitney service.
foreigners still love those US Treasuries...
next we'll see how much of the 5 and 10 years they take...
Bonds get boost from 3-year auction
Rumors of distressed hedge funds bring further support
By Ciara Linnane, MarketWatch
Last Update: 1:29 PM ET May 10, 2005
NEW YORK (MarketWatch) - Treasury prices maintained solid gains Tuesday after a successful auction of $22 billion in 3-year notes.
Treasurys were also benefiting from safe-haven buying prompted by talk across trading rooms in Europe and New York that one or more large hedge funds is in trouble.
The benchmark 10-year note was last trading up 9/32 at 98 1/32. Its yield, used in setting mortgage and corporate borrowing rates, fell to 4.25% from $4.26% at Monday's close.
The 30-year bond was up 12/32 at 111 19/32, yielding 4.60%.
Among shorter-dated maturities, the 2-year note was up 3/32 at 99 27/32, yielding 3.71%. The 3-year note was up 3/32 at 98 30/32, yielding 3.78%.
With no economic data on tap, traders were focused on the auction, the first part of a $51 billion refunding planned for this week.
The high yield at the auction was 3.821%, with a price of 99
The auction attracted strong demand, with a bid-to-cover ratio of 2.38, up from an average of 2.01, and the best in six years.
Indirect bidders, such as foreign central banks, won 40.3% of the offering, about average for recent auctions and an indication that demand for U.S. assets is not wavering.
"This offering was solid, helped by the safety bid in Treasuries," said analysts at Action Economics.
Action Economics said its sources believe there is still plenty of cash on the sidelines in Asia looking for a home at the start of the new fiscal year.
"Asian and European investors are also reportedly attracted by the higher U.S. returns," they said.
The 3-year sale will be followed by 5-year and 10-year sales Wednesday and Thursday.
Traders will also play close attention to speeches by Federal Reserve officials, looking for their take on last week's surprisingly strong April jobs report.
RNC Gold Begins Bonanza Exploration Drilling
http://www.investorlook.com/adminv2/downloads/103/RNC%20May%2010-05%20Begins%20Drilling%20Bulk%20Ton...
June Gold expiration on May 25th, any comments...
RNC short position = 417,434
RNC short position increased 245,000 shares to 417,434 from 4/15/05 to 4/29/05
RNC Gold Inc...com RNC...417,374...172,374...245,000... 172,525
http://www.canada.com/national/nationalpost/financialpost/fpmarketdata/short_positions.html
Using TD Sec & Canaccord net sells as a proxy (i.e. sells in excess of buys), I believe short position has increased 133.7K shares since 4/29/05.
May be wrong, but I would be hesitant to buy the likely bounce from the 5/13/05 annual meeting. Believe that we will see large cross trades between Canaccord and TD Sec to keep RNC from rising and then see these 2 brokerages try to pound RNC at the closes following the AGM to discourage investors. That's exactly what I would do if I was short and trying to cover, and believe that is how the post AGM trading will pan out. However, if we see Octagon on the buy after the AGM, then maybe Chasm Lake has a another million dollars to invest and this would be positive.
I am more or less just ignoring all trades involving TD Sec and Canaccord, these two are just ping-ponging larger block trades between themselves at progressively lower prices.
If and when we see Canaccord as a large net buyer of RNC shares, then and only then will it be time to add to positions.
just my opinion...
Equicom Professional Investor Presentation - March 22, 05
http://webcast.newswire.ca/archive/rnc/rnc20050322.wma
Here are the slides that go with the presentation:
http://www.rncgold.com/downloads/March2005Presentation.pdf
link if audio wma link above does not work...
http://www.newswire.ca/en/webcast/viewEvent.cgi
Credit Suisse is doing your stealth buying today in RNG/RNO, buying in 100 share to 800 share increments...