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FWIW, I calculate 130M fully diluted shares using your assumptions, so your 121M shares is materially accurate.
RNC is likely exploring debt, convertible debenture, sale and leaseback of La Libertad/Panama plant and equipment assets, hedging under 1 year gold production, outright sale of Picachos to NWT at large discount, etc. Seems possible these alternatives could raise at least half the US$20M, much more if RNC hedges 1 year gold production.
Let's assume half raised via alternative financing, thus funding would be for US$10M. Using C$.44/US$.37 for PP financing with 1/2 warrant yields 43.5M new fully diluted shares (29M new shares and 14.5M new warrants after broker 7%discount). Adding 48.5M existing fully diluted shares (not including C$2.50 warrants) would yield 92M fully diluted shares. This seems achievable, but we will have to see...
Best case would be RNC raising US$15M via hedging/debt/asset sales, and RNC management exercising their 25% ($5M) via internal private placement without any warrants, thus only 14.5M additional fully diluted shares + 48.5M existing = 63M total fully diluted. Don't hold your breath expecting this...!!!
Thus we can expect fully diluted shares to be:
Worst case = 130M
Median case = 92M
Best case = 63M
EDV.to comparisons to bellweathers...
3 month
6 month
1 year
2 year
5 year
"Pay attention to the yield spread between 30 Year T-Bond and 3-month T-Bill. There has been a staggering change in the spread since June 2004 suggesting the Fed has been fighting inflationary pressures. If the yield ratio turns up and the real rate of interest remains negative, then gold should fly. Conversely, a sideways run on the ratio as real rates turn positive would likely be dangerous for gold and silver."
Weekly
Daily
ECRI FIG/September 2, 2005:
" ECRI's Future Inflation Gauge, which is designed to anticipate cyclical swings in the rate of inflation, rose to 121.1 in August from a upwardly revised 119.7 in July, the research group said. The index's annualized growth rate, which smooths out monthly fluctuations, climbed to 4.1 percent from an upwardly revised 2.3 percent. "The U.S. future inflation gauge is now at a five-year high, suggesting that cyclical inflation pressures in the U.S. are intensifying," said Lakshman Achuthan, managing director for the ECRI. "
Dundee crosses 1.25M shares MAE/MNG
10:52 1.500 750,000 +0.050 Dundee Dundee
10:42 1.500 500,000 +0.050 Dundee Dundee
"Pay attention to the yield spread between 30 Year T-Bond and 3-month T-Bill. There has been a staggering change in the spread since June 2004 suggesting the Fed has been fighting inflationary pressures. If the yield ratio turns up and the real rate of interest remains negative, then gold should fly. Conversely, a sideways run on the ratio as real rates turn positive would likely be dangerous for gold and silver."
weekly
daily
The black and the yellow
Sep 13th 2005
From The Economist Global Agenda
So much for black gold. What about the real thing, which fans have been expecting to take off for months, if not years, in tandem with it? After all, the last time oil was on such a ride (in the 1970s), gold tore right along with it, ending up at $850 an ounce in 1980.
Since the second world war, gold bugs say, the prices of oil and gold have followed each other about, give or take the odd lag. An ounce of gold has fetched just over 15 barrels of oil, on average, and whenever that ratio got seriously out of whack one price or the other quickly adjusted. But gold and oil have been drifting apart for at least four years. While oil has blasted up by 60% so far this year, gold has risen only fractionally. These days an ounce of gold, at just under $450, buys a mere seven barrels of oil. In other words, the purchasing power of gold has been badly eroded.
Gold is a strange substance. It is a commodity, an investment and a means of exchange, and its price reflects all those roles.
Like any commodity, it responds to the laws of supply and demand. New figures from the World Gold Council, which groups producers, show that demand for physical gold is growing strongly, up by 21% in tonnage terms during the first half of 2005 compared with the same period a year earlier. Supply, meanwhile, increased less quickly, by just 18%, thanks partly to slowing central-bank sales. Gold supplies are eminently manipulable, however, and if prices rise substantially, a lot more of the stuff will hit the market.
It is from its role as an investment and a means of exchange, though, that gold derives its real mystique. Sentiment is important: in a small market, a few big positions affect prices more than, for example, they could do in the oil market. And that sentiment depends, more than anything, on expectations about inflation and the value of the dollar.
When people believe that paper assets are worth something approaching their face value, they buy gold to wear but not to put in a safe
In the past, gold prices rose with oil prices because inflation did too, and gold was seen as a safe store of value. Yet investors have not really viewed inflation as a threat for a couple of years, continuing to buy shares and houses, for example, in preference to gold despite the huge run-up in crude prices. The notion that higher oil prices will tax growth rather than stoke inflation has gained, dare one say, currency.
That idea may itself be taxed by the inflation numbers coming out this week, however. Consumer prices in Britain rose by 2.4% year-on-year in August, the quickest rate of increase since the Bank of England began targeting inflation in 1997. Observers point out that the increased transport and energy costs which produced the hike are not yet being passed through to the final purchaser of goods and services—ie, business margins still have room to shrink. But with the pace of inflation likely to pick up further in September, this is presumably a short-term consolation. America’s consumer-price inflation figures are likely to show something similar later this week.
Just as inflation has, until now, lain low, and gold with it, America’s dollar has also been resisting arrest. Gold is after all a monetary metal, an alternative to the paper currency that replaced it at the heart of the world’s trading system, when times are tough. But they haven’t seemed tough so far. Despite America’s famous twin deficits, everyone else’s currency has been even less appealing, and big exporters such as China have had their own reasons for propping up the dollar. Now, as Katrina heaps billions on a national debt that is already close to $8 trillion, might that perception change? The time is surely not far off.
For at the end of the day, the price of gold reflects confidence, more than anything. When people are confident that their central banks will control inflation while permitting the economy to grow, when they believe that paper assets are worth something approaching their face value, they buy gold to wear but not to put in a safe. Alan Greenspan has achieved the remarkable feat of suspending disbelief in America’s gerrymandered finances for the past few years. On his departure, watch the gold price soar.
Tim Wood Chart on last page 11 is noteworthy:
http://www.streamload.com/timjwood/2005/DocumentDownloads/compilation.pdf
large 11MB pdf download
Gist of chart is this point, Fed likely to stop at 4% fed funds rate or possibly 3.75% yet US inflation rate is currently about 4.1% (using ECRI FIG). As perception increases that Fed likely to stop at or before 4%, then investors will realize still negative real rate (i.e. inflation rate greater than risk free Fed Funds rate), which will be beneficial to POG.
We get new US CPI (consumer price index) data on Thursday. This is forecast at .5% = 6% annualized and is currently running at 3.2% (Aug 04-July 05).
This water news does not impact GBN. This is water in existing mines that is a problem because the mines are so deep down in the earth:
"Swanepoel elaborates: “For the last man standing to pick up all the costs of 100 years of mining by another company is not sustainable."
GBN has no existing mines and Burnstone will be a very shallow mine compared to these deep mines, the deeper the mine the more water in the mine is a problem.
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GBN problem with water is there is not enough presently for production, enough for construction of mine, but not enough yet for commercial production. New water pipeline to be completed by 2008 by Govt S Africa to resolve this problem is my recollection. Search "water" on GBN board and this should bring up the relevant posts.
THANKS MUCH!!
RE: new purple uptrend...
as in that purple line was not there last week, but is this week!!
that's my definition of "new", I let you draw the squiggles, I just take a free look each week...
well, HL indicated at end of 3Q05 they would begin diamond drill implying they would reach veins by then..., results would then be expected in 4Q05.
"Meanwhile, the first underground diamond drill is expected to be mobilized in the third quarter of this year."
any opinion on MAE/MNG...?
weekly
From HL news release/2Q05 financials:
"United States - Total project advance on the decline at the Hollister Development Block gold exploration project, an earn-in to a joint venture with Great Basin Gold, stood at 2,200 feet at the end of July. Ground conditions have improved slightly, but continue to be soft and extremely clay-rich, requiring extensive shotcreting. Depending upon underground conditions, the decline should be completed in the second or third quarter of 2006. Meanwhile, the first underground diamond drill is expected to be mobilized in the third quarter of this year. Construction of facilities within the confines of the East Pit is essentially completed, despite the inclement spring weather in northern Nevada."
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Clay rich soil and inclement spring weather, give me a break...
In regard to your post, the bolded part above indicates drilling to prove up inferred to M&I should commence in 3rd quarter.
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From 10Q:
"Nevada Litigation – Hollister Development Project
In Nevada, Hecla and our wholly owned subsidiary, Hecla Ventures Corporation, filed a lawsuit in Elko County in April 2005, against our co-participants, Great Basin Gold Ltd. and Rodeo Creek Gold Inc., to resolve contractual disagreements involving our Earn-In Agreement (“Agreement”) dated August 2, 2002, for the Hollister Development Project located in northern Nevada. Under the Agreement, we can earn a fifty percent (50%) participating interest by completing the first stage of a two-stage exploration and development project with total estimated expenditures of $21.8 million and either completing stage two or funding the second stage by making a payment of $21.8 million less expenditures incurred during stage one. The lawsuit seeks a declaration of our rights that: 1) the operative program and budget is the 2004-05 Program and Budget rather than the initial program and budget prepared as part of the Agreement; 2) the term of the Agreement should be extended for at least six months because we were unable to access an area of the site owned by a third party that delayed commencement of ground activities for several months; and 3) all costs incurred and to be incurred under the 2004-05 Program and Budget reduce dollar-for-dollar the $21.8 million required to vest our participating interest in the project.
Although there can be no assurance as to the course of and outcome of this proceeding, we believe the lawsuit will not adversely affect progress on the project and an adverse ruling will not have a material adverse effect on our financial condition.
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...at the Hollister Development Block in Nevada. Total project advance on the decline stood at 2,200 feet at the end of July 2005 and is anticipated to be completed in the second or third quarter of next year."
glad I asked, how about some Don Coxe...
Don Coxe
Vancouver, BC
Merry Christmas?
Charts: Heating Oil, Natural Gas
Thank you all for tuning in to the call, which comes to you from Chicago. The charts that we faxed out were heating oil and natural gas and the question that we asked was “Merry Christmas?” We are not trying to open the Christmas shopping season early; we are trying to get you thinking about the question as to whether what’s been happening to heating oil and natural gas, and natural gas in particular will turn out to be the big stories coming out of Katrina.
I want to talk about what I see as the longer-term impact of Katrina as shown particularly in these commodities. And then we’ve got other things we’ve got to talk about. There’s so much going on, in particular we’ve got this epochal Japanese election on Sunday.
Let’s talk about the eleven dollars and thirty cent natural gas. Because this is so far above what people had been using as their numbers. And you gotta realize that most utilities who supply gas to consumers have cost pass-through. And you also gotta realize that for the large percentage – something north of 10% - of US homes who are heated with electricity, the utilities that they buy their electricity from these days have cost pass-through.
Just over half of US electricity comes from coal, but that in the case of the coal-fired generators, most of them are subject to some kind of rules from the EPA in the last fifteen years that they’re peaking operations - which is when demand surges in response to special conditions such as weather - that they they’re peaking must be done with natural gas-fired generators. That was one of the big things that benefited General Electric during the 1990’s was all of these gas-fired generators which were sold to all utilities, the coal and nuclear facilities, as peaking capacity. And then as utilities were building new plants, what you had was an emphasis on natgas.
So something north of fifty-one percent of US homes are heated with natgas and what we’re looking at here is a different kind of supply-side shock. Which is, that as winter comes, what you’re going to see is that, depending on the degree days, so we’re really at the mercy of the weather on this, what you could see is a huge hit to consumers discretionary budgets.
Up until now, everybody’s talked about the cost of gasoline. But if you put in heating oil, between heating oil on the one hand, which is tied pretty directly to oil, except as part of this crack spread which has widened out so dramatically since Katrina. And then if you put in natural gas and then you assume that the electrical utilities also will have pass-through if there’s a big boost in natural gas cost, we’re looking at something where for the northern tier at least, in the United States, what you’re going to have here is the potential for a big hit to consumer budgets.
To me, this is part of a much bigger story and one of the reasons why I’ve been so interested in the elections in Japan and Germany. Because I’ve been worried that…since 1996, you can say that the global economy has existed and grown primarily on the apparently insatiableness of American consumers to go deeper into debt to finance their lifestyle.
So out of that came such arrangements as the Japanese and Chinese arrangement – what I call The Great Symbiosis – to maintain their currency parities and their parities relative to the Dollar which has meant over a trillion dollars of Treasury purchases and kept the US yields low. Other than the ones set by the Fed.
But what this also did was it provided manufacturers around the world, a base for their operations and particularly in the Euro zone, it meant that for Germany – the number 3 economy - that although consumer spending and capex in Germany fell after the huge surge when Eastern German came in, that was made up to a considerable degree by the US consumer.
So, in order to make a longer range bullish forecast for the global economy and in particular for the commodities groups as to what will happen to commodities pricing through the rest of the decade, one of the things that I’ve sort of felt that I needed for this was some signs of life in the second and third biggest economies in the world.
Ideally, then, if the US consumer finally did get tapped out, then what we’d have in growth in consumer spending and capex in Japan and Germany. And that plus the fact that the emerging markets would be generally doing pretty well would be enough to sustain global economic growth. And that would be enough to sustain higher commodity prices for all the reasons we’ve talked about in the last four years…supply and demand.
The news that we’ve gotten on these two elections, in the case of Japan, the confirmation has been that Koizumi is still holding to his lead and it’s really impossible to overstate the importance of this election. As we’ve been telling you, this will be the first election since MacArthur left, where it’s being fought on real principles and where the candidate is stressing reform as the basis of the program instead of vague things or new bridges or new handouts or whatever.
The crux of this is the three trillion dollar Postal Services that that’s been a gigantic piggy-bank for Japanese municipalities and government at all levels including of course the national government. And what it’s done has meant that consumers have diverted savings into what they saw as the safety of the Postal System. Because they knew their banking system was in trouble. And the banking system then – faced with the fact that they had to pay higher rates – got into all sorts of bad practices, gradually, through the Seventies and the Eighties leading to the triple waterfall collapse of Japan.
Well, we’ve got confirmation in the last few weeks for the first time of an uptick in bank lending in Japan. And it depends how you calculate this but it looks like something like eight years of falling loans. And the idea that there’s actually an uptick there and they’ve taken down their bad loans dramatically, their balance sheets mean something, what we’ve got then is that, that plus the fact that real estate prices have finally stopped falling in Japan – we’ve had fourteen years of falling prices…now you may say “This is too early to make that call.”
Yes, it would be if the election result turned negative, because these straws in the wind wouldn’t be confirmed. But if Koizumi wins decisively on Sunday, then he will re-introduce the postal bill. And he’ll have other bits of legislation coming forward, because he’s made it clear that this is all about reform.
Now this is soooo important because we’ll be able to take Japan off the triple waterfall crash list. And that means it will be the shortest triple waterfall crash on record, only fifteen and a half years. It also means that it takes off, of the inverse correlation list, an asset class and says it goes into the loser class, relatively, which is US large-cap stocks.
Because for global managers with three quarters of US equities being Japanese and US, then as long as Japan was in a seemingly never-ending crash, it automatically diverted money into the US market. So it takes away that incentive. So this is big stuff. Something more is at stake here and it’s received very little publicity but I regard this as a Page Sixteen story in the Japanese election.
When Mr. Koizumi announced that he would not visit the Soldiers Shrine, the Yakisuni shrine, and he said this in the election, it was clear to me that this was in response to pressure from Beijing, that he used the election campaign, that was so highly personalized as a vehicle to say “Yes, Japan does recognize Chinese resentment about atrocities and we are not going to turn our back on them and we are not going to let the Chinese-Japanese relationship get torn apart by rage about what happened between 1933 and 1939.”
Now of course, when he did this during the election campaign, he was attacked by the militaristic right including people like Shintoishi Hara and people like that. So this was a ____ play. Because it’s one thing saying he’s not going to visit the shrine, but right in the middle of the election campaign to say he’s not going to do it…what he’s saying to the voters is “We have to admit, tacitly or otherwise, to what Japan did back in the Thirties and Forties and that it is important to us to have a long-term growth relationship with China. That’s the key to our growth.” All of that was the sub-text of what he did. And in Asia where they understand how signals are given this way, this was a momentous development.
Now it’s momentous also because the Chinese-Japanese currency parity arrangement which supports the Dollar, is crucial to the global financial system. In my view, that’s more important than anything that happens in Basel, more important than Federal Reserve policy. And so I really thought it was fabulously important that he said this during the election campaign, thereby reversing his policies. Because he had said flatly that this is an internal Japanese matter, it’s up to me to decide, I’m going to visit the shrine.
By reversing that, in the campaign, not waiting until it was over, what he’s done is given a signal to Beijing and I regard that as very reassuring for the economic outlook of the world going forward should he be re-elected resoundingly. Because he then will have had a vote of support from the voters where part of what was included in this was his choosing to admit some of the horrors of the Japanese past.
So you can see why I’m very keen about this election.
The German election, which when we talked last week was looking good, that we were going to have at least a tepidly reformist government in, headed by Angela Merkel, the news there is bad. They had a debate there in Germany and the polls show instead of a big lead for the CDU/CSU alliance, it’s narrowed in and they’re now talking about a grand coalition between the CDU/CSU and the Socialists. That condition did apply during the mid to late Sixties. It was broken when Willy Brandt chose to back out of the coalition and precipitate an election against the advice of a lot of cautious people in his own Socialist party.
He won that election and that set Germany on the road to center-left government. That was the first center-left government in Europe in a major economy. And that was one of the foundation stones of the European recovery thereafter. That they showed that the Socialists could be in fact an alternative government. This time around though, if we had a grand coalition, this would be a commitment to torpor and stasis going forward. In other words it would be a very bad outcome.
What changed the situation was that once again, just as Schroeder last time managed to win the election by playing the anti-US card on Iraq, he’d done it again, because he kept bringing up the fact that he kept Germany out of Iraq whereas Angela Merkel had supported the US in Iraq. And that was enough, apparently, to do it. Plus the fact that Angela Merkel is not a great TV performer, whereas Schroeder is a very practiced performer.
So, have to say that, yeah, it’s more important for the future of the world the Japanese election outcome but this is a big disappointment and it does suggest that hope for progress in the Euro zone has to be muted. Because Berlusconi in Italy is in very serious trouble, even the Bank of Italy is in serious trouble because of Fazio’s involvement in backing an Italian bank in a takeover situation. In other words, when you look at the big economies then you get over to France and although that’s the most vibrant of the big economies what you have there is a virtually impossible political situation at the top as between Chirac, Villepen and ___, so it was Germany that we needed to see that was going to be on the road to reform and as things stand now, a week Sunday, we’re not going to get that kind of outcome. Well, we take what we can get.
In the face of all this, what we do have is evidence that the energy costs are finally starting to bite in to economic forecasts. This morning the Wall Street Journal economic consensus scaled back their collective estimate of GDP growth in response to Katrina.
Let me say this about Katrina and high energy prices. It’s as if you had a lawsuit in which a fellow, a drunk driver was shown to have had one drink in a bar. And the bartender and the bar are sued because this fellow proceeded to kill people in a car accident thereafter, when it was established thereafter that he had had six drinks before he came into the bar.
And the bar’s defense would be “Well look, we didn’t see that he was drunk and we gave him that one drink. This guy was obviously right at the edge of collapse beforehand but we failed to notice that. He covered it up and so it’s unfair to blame us for the crash.” To say that Katrina is the kind of supply side shock that has caused high energy prices is just a way, I think, of letting Wall Street’s oil analysts off the hook for their years of dreadful forecasting.
And now what we see, paradoxically, is a new consensus has emerged of high oil prices. And high energy prices generally.
We held up publication of the Basic Points which would have come out at the first of this week. We held it up for two reasons, to see how the Katrina unfolded. As you know this is not my kind of story because it’s a Page One story and I’m uncomfortable trying to evaluate a Page One story because people who are watching television during the day when I’m doing other things are actually getting much better coverage of the story than I’m getting from the print media.
What we’ve done is we held up publication until next week, which will also allow us to give coverage of the Japanese election outcome.
But from what has unfolded to date, in Katrina and the energy prices, what’s clear is that it’s exposed the fragility of not just US refining capacity but it turns out to be US and European refining capacity. Didn’t know that before. I thought we had lots of excess refining capacity in Europe and it turns out that we don’t and I guess it’s the same sort of problem that governments have kept mandating new improvements for air pollution of refiners and that more and more marginal refiners have just given up the ghost rather than refurbishing them to meet the government’s clean air rules.
See, the way it works, both in the US and Europe, is that the government comes in with new clean air rules and when any refineries are shut down for any rehabilitation, that’s the point at which in order to re-open that they have to equip the refineries for the new rules. And these become more and more onerous and so what we’ve had is a sustained shrinkage of refineries. Now some of them get bought by bigger companies and small companies, conspicuously Valero, become big companies by buying up refineries as they become available. But we’re still stuck with this statistic that in the US there hasn’t been a new refinery built since ’76.
So, in Europe, where the rules have been more complex, what we find now is that they don’t have excess refining capacity either. Now as you know in recent weeks what we’ve been suggesting is the emphasis should be for energy parts of your portfolio, it should be on the pure play refiners. The move in Valero and Tesoro has really been spectacular. What it shows though, is that this is not just a short-term blip now. What we can say is that we’ll have oil and natural gas production back up in the Gulf within a few months at the most. But the problems of refinery capacity aren’t going to go away so soon. And indeed, with the continuing onrush of new clean air legislation from governments almost everywhere, what we’ve got is still a problem that it’s expensive to do your readjustments and you don’t expand your output by one barrel a day. It just allows you to play. And in the US it allows you to produce designer gasolines, somewhere between sixteen and twenty-one designer gasolines.
So, my conclusion from this is that our emphasis of moving away from emphasis in the United States on oil producers to gas producers and particularly then, moving out from the E&P part of it, continues. And of course the oil service companies because one thing about this is we’ve got…it will…eleven dollar natural gas is going to stimulate a huge amount of natgas drilling in the US and in Canada.
Doesn’t change our view that the number one choice in energy investing remains the Alberta oil sands stocks. They’ve done very well, not much of a move during all this back and filling related to Katrina, but we’re getting closer and closer to the day when the SEC hands down its decision about accounting for oil sands properties in Big Oil reserve life indices. And that may turn out to be the biggest energy story of the year, much bigger than Katrina.
My view still is that you should assume that the SEC is going to find in favor of the oil companies on this and what that will do is trigger a land rush buying by Big Oil of Alberta oil sands properties.
This week, a company based here in Vancouver that I’m very familiar with, Teck Cominco, announced a participation in an oil sands project. This is with a small company, UTS, and Petro-Canada. But the price that they paid for this, compared to what prices have been paid earlier this year shows that already Alberta oil sands properties are being big up sharply by strategic buyers. And when the SEC rule is announced, what I think is, it takes the gloves off. There’s going to be, I think, pretty formidable competition in bidding for these companies.
So, from the standpoint of Canadian retail investors, I simply say, don’t let this be like it was with deep gas, that these companies are bought out by companies for their reserve life indices problems cheaply.
Finally, the question of what’s happening in the bond market, we have a continuation of this pattern that even thought the news seems to be bond-unfriendly, namely that inflation numbers are popping up in terms of costs that are being passed through, what we still have is the Ten-Year note trading at 4.11. I’m really convinced the key there is the synthetic liquidity and I devoted a good section of the forthcoming Basic Points to explaining in greater detail how that process works.
Bank of Canada raised its rate this week by another quarter of a point and once again, the bank made it clear it’s the capacity utilization situation in Canada. A few years ago, David Dodge, the Governor was at a luncheon in Chicago and the question of how you set central bank policy came up and everybody else at the table except me was a prominent academic economist and they were citing various views and one of them said “Well, capacity utilization is something that Ben Bernanke thinks is important.” And the Governor just slammed his fist on the table and said “That’s it! That is the key. If you use that then you can set central bank policy and that’s the best way to see where inflationary pressures could develop.”
Now he’s never made any secret of that in his public appearances, too. He is not the Delphic oracular central bank governor like Alan Greenspan. And it’s clear that in Canada, what you’ve got is a different situation than in the US. Yes, in the US the Fed is in catch-up mode raising rates, but that’s because of vast monetary expansion whereas in Canada the monetary expansion was not as great. In each country I get asked “Well, what about the housing bubble in this?”
I’m looking out on the Port of Vancouver where vast amounts of construction are going on. It’s quite clear that this is a situation reminiscent of one that occurred just over a decade ago. Whether it will end as badly, I don’t know. But what is clear that what will stop it is not a huge pop in interest rates. Because we are going to have enough synthetic liquidity out there that we’re not going to have the kind of 1994 situation where central banks tightening together produce a collapse in the mortgage-backed market, leading to all sorts of problems elsewhere.
So, wrapping it up then, I think that the Katrina story is to a large degree now a story of human tragedy and a story of real problems in the political situation in the United States. It’s a bad news story for Bush and there’s going to be a lot of blame pointing. But as far as it being a true supply-side shock, the answer is no. What it does show is the US has no extra capacity in natural gas and no extra capacity in refining. Those problems will take a long time to work out.
Thanks for tuning in. We’ll talk to you next week and the call will be mid-week, because after that I’m going off for a business trip to Europe. So we’ll be able to update the Japanese election story at that time along with the other features. So we’ll talk to you once more before I leave for Europe, thanks for tuning in.
Which goes in line with my recollection of your comments, namely buy the over C$3 stocks and avoid those selling under C$3.
Now if you can only timely advise us when it's time to start buying those under C$3 stocks...!! and then hopefully after your timely advice, we will start seeing the FS Junior Gold Index start outperforming the XAU and HUI...
is that a new purple uptrend line...?
never mind, figured it out...!!
thanks for posting, will make some of my charting easier!
how are you getting that price relative to $Gold option to show up on the chart?!@!?
Louic, any komments...
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European Commission has just announced an agreement whereby English will be the official language of the European Union rather than German, which was the other possibility.
As part of the negotiations, the British Government conceded that English spelling had some room for improvement and has accepted a 5- year phase-in plan that would become known as "Euro-English".
In the first year, "s" will replace the soft "c". Sertainly, this will make the sivil servants jump with joy.
The hard "c" will be dropped in favour of "k". This should klear up konfusion, and keyboards kan have one less letter.
There will be growing publik enthusiasm in the sekond year when the troublesome "ph" will be replaced with "f". This will make words like fotograf 20% shorter.
In the 3rd year, publik akseptanse of the new spelling kan be expekted to reach the stage where more komplikated changes are possible.
Governments will enkourage the removal of double letters which have always ben a deterent to akurate speling.
Also, al wil agre that the horibl mes of the silent "e" in the languag is disgrasful and it should go away.
By the 4th yer people wil be reseptiv to steps such as replasing "th" with "z" and "w" with "v".
During ze fifz yer, ze unesesary "o" kan be dropd from vords kontaining "ou" and after ziz fifz yer, ve vil hav a reil sensi bl rite n styl.
Zer vil be no mor trubl or difikultis and evrivun vil find it ezi tu understand ech oza. Ze drem of a united urop vil finali kum tru.
Und efter ze fifz yer, ve vil al be speking German like zey vunted in ze forst plas.
If zis mad you smil, pleas pas on to oza pepl.
ok, now I understand...!!
as noted, I prefer to follow the exchange where the most volume occurs. in this case, WTZ average volume about 2.5x the WTC volume, thus I prefer the AMEX
that's interesting, you are following WTZ on the AMEX rather than WTC on TSE... thought you preferred to always follow on the Canadian exchange?
Updated Presentation-Sept 2005
http://www.rncgold.com/downloads/factSheet.pdf
Need to verify further, but my understanding is La Libertad mine contractor is operating 7 days per week. Thus, lets assume 90 days in quarter for now.
Thus, 2.25M total tonnes of ore, waste, and spent for quarter using end of Aug run rate vs. 1.7M total tonnes in 1Q04 (best quarter in RNC recent history). (25K per day * 90 days = 2.25M)
Thus, 315K total tonnes of ore to leach pad vs. 369K in 1Q04 (best quarter in RNC recent history, again using end of Aug run rate. (3,500 * 90 days=315K). Ore to leach pad was 256K in 2Q05.
This new contract miner for digging and hauling @ La Libertad is exceeding all my expectations... Results for 3Q05 will likely be unimpressive given poor July & Aug before contract miner got going in full gear. However, results for 4Q05 may well be best in RNC history in terms of ore delivered to leach pad if contract miner keeps up this pace. Remember, there is a 90 day on/off leach pad cycle, so actual gold production will take until 1Q06 for gold on leach pad to convert to actual gold production ounces.
Also, note that average grade @ La Libertad was about 1.75 for 2004, 1.39 for 1Q05 and 1.89 for 2Q05. Current grade per press release is 2.0 grams per tonne so this will impact gold production from leach pads favorably.
Data used from press release to support analysis above:
"By month's end, the contractor was moving, on average, 25,000 tonnes of ore, waste and spent ore per day which approximates the production target of 27,0000 tonnes of material per day...and by month's end approximately 3,500 tonnes of ore per day were being delivered to the leach pads... The grade of ore to the leach pads since August 13 has averaged approximately 2.0 grams per tonne."
We need to better understand the contract mining stats at La Libertad. This potentially could be the best news of all:
"By month's end, the contractor was moving, on average, 25,000 tonnes of ore, waste and spent ore per day which approximates the production target of 27,0000 tonnes of material per day...and by month's end approximately 3,500 tonnes of ore per day were being delivered to the leach pads."
How many work days in a quarter... Here are the Quarterly Stats:
RNC Des Des Des Des Des Des
La Libertad 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05
Ore Mined 368,729 332,985 270,159 302,058 268,706 256,141
Waste 892,795 1,064,032 625,420 655,236 741,578 749,297
Total Mined 1,261,524 1,397,017 895,579 957,294 1,010,284 1,005,438
Strip 2.42 3.20 2.32 2.17 2.76 2.93
Grade 1.77 1.7 1.63 1.9 1.39 1.89
Spent Ore 404,943 366,026 323,979 276,910 229,810
The total tonnes of material @ 25,000 tonnes per day appears a nice improvement from most recent quarters (25,000 * 64 assumed work days = 1.6M tonnes vs. 1.3M in 1Q and 1.2M in 2Q). The ore to the pads, however, appears low @ 3,500 tonnes per day (3500 * 64 assumed work days = 224K tonnes vs. 269K tonnes in 1Q and 256K in 2Q).
News Release-Well, thanks for posting, just finished reviewing this press release, it is very positive, IMO. Will have to review and reaccess, the only negative is the Canaccord financing of the San Andres deal, but this appears a great deal for $22.5M which includes the extinguishment of $5.5M debt. Completion of transaction scheduled for Nov 30 and subject to financing which is apparently being arranged by our good friends at Canaccord...
More later...
_____________________________
RNC to Acquire the San Andres Gold Mine
16:21 EDT Wednesday, September 07, 2005
TORONTO, ONTARIO--(CCNMatthews - Sept. 7, 2005) -
Not for release in the United States
RNC Gold Inc. (TSX:RNC) today announced the following developments:
i) Signed a letter of intent to acquire the producing San Andres gold mine;
ii) Successfully converted to contract mining at the La Libertad mine; and
iii) Peter Marrone has joined the Board of Directors
These developments are designed to reposition RNC as a significant gold producer in Latin America with operations in three countries and strengthen the corporate presence of the company.
"The planned acquisition of San Andres provides RNC with a mine that has a proven track record of production. San Andres will strengthen RNC's production base and position the Company for further growth," said Randy Martin, Chairman and CEO. "I am also pleased to announce that the preliminary results from the use of a contract miner at La Libertad are in line with our expectations and am delighted to welcome Peter Marrone to our Board of Directors".
In agreeing to join the board of directors of RNC, Peter Marrone stated the following: "RNC represents an excellent investment opportunity as it has begun to demonstrate that it can acquire new operations that show strong cash flow and improve existing operations. With a production profile that will immediately be at a level of 170,000 ounces per year once these acquisitions and transactions are completed increasing to 220,000 ounces per year, this is an undervalued company that should show strong returns to shareholders. In addition, there appears to be exceptional exploration potential that to date has not been a focus and will provide future growth."
All monetary amounts in this press release are in United States dollars.
The Repositioned RNC:
With these events, RNC will have the following profile:
i) Annual production of 170,000 ounces of gold from three mines;
ii) Production growing to 220,000 ounces of gold with the construction of Cerro Quema;
iii) Measured and Indicated resources (including proven and probable reserves) of 2.8 million ounces; and
iv) Exploration potential on a land position of more than 265,000 hectares around the existing mines.
Planned Acquisition of San Andres Mine:
Highlights of the planned San Andres acquisition include:
i) Purchase price of 100% of San Andres is approximately $22.5 million;
ii) Reliable asset that has more than five years of production history under management by RNC's principals;
iii) The San Andres production plan indicates increasing grades at a reduced strip ratio;
iv) The mine is in operation with all equipment in place requiring minimal future sustaining capital;
v) San Andres will continue to utilize the contract miner who has successfully operated at the mine over its mine life;
vi) Future five year mine plan has a significant potential to be extended; and
vii) Projected cash operating costs are estimated to be $262 per ounce.
A private Belize company, which owns 75% of the mine equity, has signed a letter of intent to sell its shares for $12.0 million plus a net smelter royalty ("NSR"). The NSR will be calculated as 1% on the first $20.0 million of annual revenues reducing to 0.5% on the remaining annual revenues. The cumulative maximum NSR will be $1.5 million. It was also agreed that the existing mine debts to a local Honduran bank of approximately $5.5 million would be extinguished. A company controlled by senior executives of RNC will sell the remaining 25% equity interest in the mine on the same basis, although these executives are willing to take stock rather than cash. The total acquisition cost has been estimated to be approximately $22.5 million.
The completion of the transaction is scheduled for November 30, 2005 but in no case later than December 20, 2005 and is subject to completion of final documentation, legal due diligence, regulatory approval and financing.
Should RNC be unable to arrange financing, on reasonable terms, the Company has agreed to pay a break-up fee of $0.5 million to the majority owners of San Andres.
Canaccord Capital Corporation is acting as financial advisor to RNC.
San Andres is an open pit, heap leach gold mine located close to the city of Santa Rosa de Copan, Honduras. Senior executives of RNC restarted the mine in August 2000 on behalf of the owners and have been responsible for operating the mine since restart. Over the past five and one half years, 16.5 million tonnes of ore have been placed on the leach pad at an average grade of 0.95 grams per tonne. Since restart, 402,750 ounces of gold have been extracted at an average recovery rate of 80% and an average operating cost of US$237 per ounce.
The historical production statistics are as follows:
----------------------------------------------------------------
Year Tonnes Tonnes Strip Grade Ounces Cash Cash
Ore Waste ratio (g/t) Sold Operating Operating
Crushed (000)s Costs Costs per
(000)s (000)s Ounce
----------------------------------------------------------------
2000 720 588 0.82 1.85 17,508 3,338 191
----------------------------------------------------------------
2001 2,289 1,698 0.74 1.75 105,775 16,035 152
----------------------------------------------------------------
2002 3,378 3,617 1.07 1.09 99,064 18,364 185
----------------------------------------------------------------
2003 2,892 4,642 1.61 0.63 52,188 16,952 325
----------------------------------------------------------------
2004 3,793 2,609 0.69 0.69 65,215 20,722 318
----------------------------------------------------------------
2005-est 3,477 3,627 1.04 0.70 63,000 19,900 316
----------------------------------------------------------------
16,549 16,781 1.01 0.95 402,750 95,311 237
----------------------------------------------------------------
The current mine plan envisions a further 16.8 million tonnes to be mined at an average grade of 0.89 grams per tonne with the strip ratio falling to 0.53 tonnes of waste per tonne of ore. Contract mining is employed at San Andres. Future operating costs are estimated to be $262 per ounce of gold.
The projected production statistics are as follows:
----------------------------------------------------------------
Year Tonnes Tonnes Strip Grade Ounces Cash Cash
Ore Waste ratio (g/t) to be Operating Operating
Crushed (000)s Sold Costs Costs per
(000)s (000)s Ounce
----------------------------------------------------------------
2006 3,380 2,820 0.83 1.22 93,500 20,000 214
----------------------------------------------------------------
2007 3,380 1,495 0.44 0.86 70,100 18,500 264
----------------------------------------------------------------
2008 3,390 546 0.16 0.82 67,000 17,200 257
----------------------------------------------------------------
2009 3,380 1,305 0.39 0.77 62,750 18,100 288
----------------------------------------------------------------
2010 3,194 2,710 0.85 0.80 61,600 19,600 318
----------------------------------------------------------------
2011 77 33 0.42 0.82 6,500 1,400 215
----------------------------------------------------------------
16,801 8,909 0.53 0.89 361,450 94,800 262
----------------------------------------------------------------
The information in this press release relating to San Andres is based on studies, reports and estimates which are, in RNC's opinion, relevant, reliable and the most recent available. However, these studies do not conform to current National Instrument 43 101 standards. A technical report in compliance with National Instrument 43 - 101 standards is currently being prepared and is scheduled to be completed in the near future.
San Andres has been in continuous operation since August 2000. No additional construction capital is necessary. Sustaining capital, principally for heap leach pad expansions, is estimated to be approximately US$5.5 million over the projected five and one half year mine life.
Exploration potential at San Andres is considered excellent. Mining operations are currently in the East Ledge pit with the move to the Twin Hills pit to occur at the end of 2006. The area between these two pits is currently being drilled with the expectation that additional ore can be added to the resource base. Additionally, the Cerro Cortes area which is adjacent to the existing mining area is targeted for an exploration program in the near future. There are also exploration targets close to the Twin Hills pit. San Andres recently purchased a RC drill to be dedicated to exploration drilling resulting in significantly reduced exploration costs. Future plans envision annual exploration programs of approximately 7,500 meters of drilling per year at an annual cost of approximately US$0.5 million per year.
La Libertad Contract Mining:
RNC has taken steps to improve operations at its existing La Libertad mine. The Company has elected to convert mining operations to a contractor as a cost efficient way to improve operations and to achieve production targets. The contractor selected by RNC is one of the largest and most experienced earth moving contractors in Central America.
The contract miner mobilized its equipment on August 13, 2005. By month's end, the contractor was moving, on average, 25,000 tonnes of ore, waste and spent ore per day which approximates the production target of 27,0000 tonnes of material per day. During the first two weeks of the ramp up to 5,000 tonnes of ore per day, the contractor moved approximately 2,400 tonnes per day and by month's end approximately 3,500 tonnes of ore per day were being delivered to the leach pads.
Recovery of gold from the leach pads is performing as expected with ultimate recoveries to be determined following the 90 day leach cycle. The grade of ore to the leach pads since August 13 has averaged approximately 2.0 grams per tonne.
Exploration:
The Company will control approximately 265,000 hectares of land around its four mine sites with the acquisition of San Andres. This is a highly prospective exploration package and RNC plans to pursue an extensive exploration program on these properties.
In addition to the San Andres exploration program, RNC plans to expand reserves and resources adjacent to the existing mines.
Additionally, the exploration programs will aggressively search for new mines within its land package with targets already identified in the La Libertad concessions at Santo Domingo as well as on the Hemco concessions.
Background of Peter Marrone:
After joining Yamana in July 2003 as President and Chief Executive Officer, Mr. Marrone has been instrumental in reorganizing the Company into a significant gold producer. Mr. Marrone has more than 20 years of business and capital market experience and has been on the boards of a number of public companies.
Mr. Marrone has been instrumental in building Yamana from a market capitalization of approximately $90 million when Yamana was formed in 2003 to approximately $650 million today. The Board of Directors expects RNC to benefit from Mr. Marrone's significant experience in building gold mining companies both as an operator and as a financial advisor.
About RNC Gold Inc.:
RNC Gold Inc. is a gold mining company focused on mines and projects in the Caribbean basin. From its current annual production base of 100,000 ounces of gold, RNC is positioned for growth through the acquisition of San Andres, construction of Cerro Quema, operational efficiencies and through exploration on property surrounding its present mines.The Company's main assets include the La Libertad and Bonanza mines in Nicaragua, and the Cerro Quema project under construction in Panama. The Company has signed a letter of intent to acquire the San Andres mine in Honduras. The Company has 40,569,021 common shares outstanding and on a fully diluted basis there are 64,047,736 securities outstanding.
Certain statements included herein, include those that express management's expectations or estimates of future performance, constitute "forward looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. Forward looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic, regulatory, competitive and geological uncertainties and contingencies. Such forward-looking statements involve known and unknown risks, uncertainties and other risk factors that may cause the actual financial results, performance, or achievements of RNC Gold to be materially different from estimated future results, performance, or achievements expressed or implied by those forward looking statements. These are discussed in greater detail in RNC Gold's Annual Information Form and other reports filed with Canadian provincial securities commissions at www.sedar.com. RNC Gold expressly disclaims any intention or obligation to update or revise any forward- looking statement whether as a result of new information, events or otherwise.
I am not adding, going to wait for end of tax loss selling in December...
Believe RNC a going concern at current POG. Worst case scenario would be POG under $385 which is likely their present cash cost. Should have time to work out their production problems which should allow cash cost under $300. RNC may need cash to fund San Andres acquisition, if this acquisition goes through. RNC likely has enough cash to finish Panama mine construction via internal cash flows if POG stays above $440. Total Panama capex is only $10M. Lots of unknowns here, these are my best estimates.
after tax selling season, MAYBE!!
Politics-Sandinista Dissidents Unite
By Tim Rogers
Tico Times Nicaragua Correspondent
trogers@ticotimes.net
GRANADA – While the United States struggles to manufacture a right-wing coalition of “democratic forces” to defeat Daniel Ortega and the Sandinista National Liberation Front (FSLN) in next year's presidential elections, a more cohesive coalition of democratic forces is already coming together on its own volition… only on the left wing.
Rallying behind the popular figure of Herty Lewites, the former Sandinista mayor of Managua (2001-2005), the Sandinista Renovation Movement (MRS) announced Sunday that it has split from the FSLN's electoral coalition to offer its candidacy to Lewites, who consistently polls as the favorite candidate in 2006.
SECOND FRONT: Presidential candidate Herty Lewites (right) and revolutionary hero Dora María Téllez hope Sandinista dissidents will unite under the tent of the Sandinista Renovation Movement (MRS).
Photo Courtesy of La Prensa
The MRS is a Sandinista splinter group that formed in 1995, but later joined the FSLN's National Convergence in 2001, in part because of the new Electoral Law that made it very difficult for them to run on their own (see separate story). The party has not run its own candidate for President since 1996, when former revolutionary Vice-President and MRS cofounder Sergio Ramírez flopped in the polls.
BUT times have changed; Ortega has lost two more elections, and now the Sandinista dissident party has decided to break once again from the FSLN to target the growing number of disenchanted Sandinista voters.
“The MRS is the party that represents the majority of the country, and we aspire to govern,” said party president and former revolutionary heroine Dora María Téllez during the party's 10th anniversary in May (NT, May 27).
Téllez, a revolutionary icon, intellectual leader, celebrated former Minister of Health and gay rights advocate, is considered a shortlist candidate for running mate (although she won't yet confirm or deny it). She is also, according to the U.S. government, a terrorist.
The Bush administration earlier this year revoked Téllez' visa to the United States on vague grounds that she was a terrorist, preventing her from teaching last semester at Harvard University, where she was invited to offer a course as guest professor from Latin America (NT, Feb. 25).
Téllez has instead spent her time reorganizing and reinvigorating the MRS, which is now prepared to make a serious go at the nation's highest office.
“The MRS aspires to develop its program from within the government and from various spaces of power, prioritizing the affirmation of our identity and the strengthening of our presence and political projection throughout the country,” said a party statement released Sunday.
THE offering of the MRS candidacy to Lewites gives the early frontrunner the option of two ballots on which to run.
On Aug. 14, the Christian Alternative (AC) Party also offered Lewites its candidacy.
Lewites has not yet said on which ticket he will run. He claims he is in the process of building a national coalition that could still involve several other minority parties, as well as the Sandinista bases.
The writing on the wall, however, seems to indicate that Lewites will most likely end up on the MRS ticket.
SINCE announcing his intentions to run for President, Lewites has always identified himself as a true Sandinista – the same claim made by the MRS, whose leadership is made up of many from the old party vanguard.
Secondly, Lewites' political movement, the Sandinista Rescue Movement, has the same initials as the MRS, making for a convenient transfer of identity. And some of the figures associated with Lewites' campaign – Father Ernesto Cardenal, for example – are already old members of the MRS party.
Plus, for a former Jew who converted to Catholicism, running on the ticket of a minority Evangelical party would seem to play to existing criticism that Lewites is an opportunist who has no qualms about changing horses at any point in the river.
For a variety of reasons, the ticket of the Sandinista dissidents seems a better fit for Lewites, even in his own words.
“We are going to unite all Sandinistas to rescue the country,” Lewites said Sunday, adding that many old leaders of the “Sandinista family” will be joining the alliance in the coming weeks.
LEWITES and the MRS realize they will have their work cut out for them to overcome the Sandinista-Liberal pacto's electoral machinery, including the highly politicized Supreme Electoral Commission (CSE) (NT, Aug. 19).
“We have no assurances that the CSE will not obey the biddings of the pacto,” Téllez told The Nica Times this week. “They will certainly try to inhibit Lewites by all means available, and even try to invalidate the participation of the MRS in the elections. What we need to do is mobilize public opinion in different social sectors to confront these maneuvers.”
The MRS' strategy is to launch – immediately – a massive organizational campaign throughout the interior of the country to sign up the 50,000 poll watchers required by the Electoral Law, firm up their candidates for every elected position up for vote, and muster support for what promises to be hard-fought presidential and national legislative elections.
The party's goal is also to win a majority of congressional seats, at least 60.
WHAT is not yet clear is how the United States will respond to Lewites running on the MRS ticket.
The Nica Times has learned from a high source at the U.S. Embassy that the United States considers Lewites a member of the country's so-called “democratic forces,” despite being a Sandinista who was once arrested and jailed in California for running guns.
However, U.S. diplomats would rather see an electoral alliance between right-wing politicians and Harvard graduates Eduardo Montealegre and José Antonio Alvarado – both of whom appear to be entertaining the idea.
It remains to be seen how the U.S. stance on Lewites might change now that he has been offered the candidacy of a party that the United States considers is run by a terrorist.
The Embassy didn't answer The Nica Times' request for comment by press time this week.
Gavekal article, March 22, 2005 but is of interest given $68 oil
http://gavekal.com/documents/AnOilInducedLiquidityCrisis.pdf
Nymex declares force majeure
Natural gas deliveries halted, unprecedented for Nymex
By Lisa Sanders, MarketWatch
Last Update: 12:20 PM ET Aug. 29, 2005
NEW YORK (MarketWatch) - Deliveries of natural gas for August have been halted for an indeterminate amount of time under a force majeure declaration by the New York Mercantile Exchange Monday.
Force majeure, which take effect in times of natural disasters, came into play before Hurricane Katrina began to roar through Louisiana, suspending contractual obligations and regular business operations. In preparation for the storm, Sabine Pipeline, which operates the Henry Hub facility in Louisiana, on Sunday closed delivery in and out of the site until further notice.
Henry Hub is the pricing point for natural gas futures contracts traded on the Nymex. It connects with nine interstate and four intrastate pipelines.
The September contracts for natural gas expire Monday, and the last delivery day was scheduled for Wednesday.
On the Nymex, September natural gas leaped 17.8%, or $1.738, to $11.53 per million British thermal units. October natural gas, which becomes the front month contract at Monday's close, rose 16.8%, or $1.644, to $11.45. See Futures Movers.
"A shutdown to Henry Hub is a crisis situation for the markets," said Agbeli Ameko, managing partner at First Enercast Financial. "Thus, as futures expire, there will be no facility for gas delivery. This is an unpreceedented situation that has never happened in the history of the NYMEX futures contracts."
Ameko did pointed out that all Nymex contracts are secured, for example, by the clearing firm.
"These higher prices are a reflection of the long term impact Katrina could have on the energy markets with respect to supplies for the upcoming winter," Ameko said.
He pointed out that while natural gas storage is now in excess of the 5-year average of around 200 billion cubic feet, it will most likely decline completely by the end of the injection season. First Enercast had previously predicted the surplus at 94 billion cubic feet at the end of the injection season.
"Katrina is on track to reduce this surplus to a similar deficit heading into the winter season," he said.
Lisa Sanders is a reporter for MarketWatch in New York.
a Canadian scandal...
http://www.thisistrue.com/tennis.html
Katrina
The Geopolitics of Katrina
A Category 5 hurricane, the most severe type measured, Katrina has been reported heading directly toward the city of New Orleans. This would be a human catastrophe, since New Orleans sits in a bowl below sea level. However, Katrina is not only moving on New Orleans. It also is moving on the Port of Southern Louisiana. Were it to strike directly and furiously, Katrina would not only take a massive human toll, but also an enormous geopolitical one.
The Port of Southern Louisiana is the fifth-largest port in the world in terms of tonnage, and the largest port in the United States. The only global ports larger are Singapore, Rotterdam, Shanghai and Hong Kong. It is bigger than Houston, Chiba and Nagoya, Antwerp and New York/New Jersey. It is a key link in U.S. imports and exports and critical to the global economy.
The Port of Southern Louisiana stretches up and down the Mississippi River for about 50 miles, running north and south of New Orleans from St. James to St. Charles Parish. It is the key port for the export of grains to the rest of the world -- corn, soybeans, wheat and animal feed. Midwestern farmers and global consumers depend on those exports. The United States imports crude oil, petrochemicals, steel, fertilizers and ores through the port. Fifteen percent of all U.S. exports by value go through the port. Nearly half of the exports go to Europe.
The Port of Southern Louisiana is a river port. It depends on the navigability of the Mississippi River. The Mississippi is notorious for changing its course, and in southern Louisiana -- indeed along much of its length -- levees both protect the land from its water and maintain its course and navigability. Dredging and other maintenance are constant and necessary to maintain its navigability. It is fragile.
If New Orleans is hit, the Port of Southern Louisiana, by definition, also will be hit. No one can predict the precise course of the storm or its consequences. However, if we speculate on worse-case scenarios the following consequences jump out:
The port might become in whole or part unusable if levees burst. If the damage to the river and port facilities could not be repaired within 30 days when the U.S. harvests are at their peak, the effect on global agricultural prices could be substantial.
There is a large refinery at Belle Chasse. It is the only refinery that is seriously threatened by the storm, but if it were to be inundated, 250,000 barrels per day would go off line. Moreover, the threat of environmental danger would be substantial.
About 2 percent of world crude production and roughly 25 percent of U.S.-produced crude comes from the Gulf of Mexico and already is affected by Katrina. Platforms in the path of Katrina have been evacuated but others continue pumping. If this follows normal patterns, most production will be back on line within hours or days. However, if a Category 5 hurricane (of which there have only been three others in history) has a different effect, the damage could be longer lasting. Depending on the effect on the Port of Southern Louisiana, the ability to ship could be affected.
A narrow, two-lane highway that handles approximately 10,000 vehicles a day, is used for transport of cargo and petroleum products and provides port access for thousands of employees is threatened with closure. A closure of as long as two weeks could rapidly push gasoline prices higher.
At a time when oil prices are in the mid-60-dollar range and starting to hurt, the hurricane has an obvious effect. However, it must be borne in mind that the Mississippi remains a key American shipping route, particularly for the export and import of a variety of primary commodities from grain to oil, as well as steel and rubber. Andrew Jackson fought hard to keep the British from taking New Orleans because he knew it was the main artery for U.S. trade with the world. He was right and its role has not changed since then.
This is not a prediction. We do not know the path of the storm and we cannot predict its effects. It is a warning that if a Category 5 hurricane hits the Port of Southern Louisiana and causes the damage that is merely at the outer reach of the probable, the effect on the global system will be substantial.
Nicaragua is mired in messy politics
Backstabbing and revenge. Shady backroom deals and a judicial system rife with cronyism. Welcome to the world of modern politics in Nicaragua.
BY FRANCES ROBLES
frobles@herald.com
MANAGUA - Nicaraguan lawmakers appoint a new Supreme Court -- and several of the justices' U.S. visas are yanked. A former leftist mayor of Managua announces a bid for the presidency -- and he's suddenly under investigation for criminal wrongdoing.
President Enrique Bolaños beefs up security around his predecessor, Arnoldo Alemán -- serving a 20-year sentence at his home -- and hours later a free-trade pact with the United States that Bolaños backs stalls in congress.
Welcome to the latest installment of Nicaragua's political telenovela, replete with tales of backstabbing and revenge, underhanded deals both in backrooms and front rooms and mounting evidence of a compromised judicial system.
Since Bolaños went after Alemán on corruption charges two years ago, the former president has been in and out of confinement seven times, fathered two kids and spent five months in the hospital for a simply hand surgery. All the while he has kept the National Assembly, the presidency and the judiciary hostage to a single issue: him.
In a coalition bizarre even by Nicaragua's odd political history standards, Alemán has sometimes received help from the leftist Sandinista Front, the target of the conservative Alemán's wrath when he was in power from 1997 to 2001.
POWER STRUGGLE
''Right now, the Sandinistas have a gun pointed to my husband's head and to the president's head as well,'' said Alemán's wife, María Fernanda Flores, a former Jackson High School history teacher. ``They decide who goes to jail and who doesn't.''
Alemán, 59, was convicted of looting state coffers of $100 million by a judicial system largely controlled by the Sandinistas, Marxist revolutionaries who toppled the Anastasio Somoza dictatorship in 1979 only to institute one of their own. They were voted out of power in 1990.
Holding the power to decide where Alemán serves his 20-year sentence, the Sandinista party and its leader Daniel Ortega have formed an alliance with Alemán's Liberal Constitutionalist party, dubbed ''the pact,'' to attack and weaken Bolaños. While thousands of Nicaraguans hold rallies to protest the pact, the parties defend it as the only way to get things done.
The Sandinistas and the Liberals now control the Supreme Court, the National Assembly, the elections council, the comptroller's office and the Human Rights ombudsman's office.
''They are trying to install a dictatorship,'' said Minister of Government Julio Vega. `` They can do it in 2007 [when the next president is inaugurated], not while this president is in power.''
POLITICAL DRAMA
Among the recent power plays:
• The National Assembly passed constitutional reforms that took important public works agencies away from the president. Bolaños ignored the reforms on technical grounds, and so now Nicaragua has two telecommunications agencies.
• The Assembly appointed a new Supreme Court packed with friends of Alemán and Ortega. Shortly afterward, several of their U.S. visas were yanked.
• Earlier this month the Assembly began impeachment proceedings against Bolaños. The next day, he beefed up security at Alemán's ranch -- where the former president is serving his sentence -- restricting his movements and jacking up the number of guards from eight to 30. Hours later, Bolaños' bid for CAFTA, the free trade pact between the United States, five Central American nations and the Dominican Republic, stalled in the legislature.
• When former Managua Mayor Herty Lewites announced an interest in becoming the Sandinistas' presidential candidate he was thrown out of the party and targetted for a criminal investigation.
Secretary of State Condoleeza Rice has called the antics ''a legislative dictatorship.'' Interim U.S. Ambassador Oliver Garza is said to be trying to help Bolaños and the Liberals mend fences and prevent Ortega from winning the presidential election in November 2006.
Ortega has lost all three presidential ballots since 1990.
''Garza is trying to do everything he can so Sandinistas won't win the next election, which is not his role,'' said Edwin Castro, a Sandinista assemblyman. ``If anybody doesn't listen to Washington, he gets his visa revoked.''
REVENGE ON HIS MIND
Bolaños took over the presidency in 2002, after serving as Alemán's vice president. The former businessman and anti-Sandinista crusader campaigned on a platform against corruption, but no one expected Alemán's hand-picked successor to start his rule by going after his former boss and fellow Liberal Party member.
Liberal Party legislators loyal to Alemán broke away from Bolaños and made deals with the Sandinistas instead. They defend the pact as routine deals struck between political parties.
Although Alemán was eventually convicted, Sandinista judges controlling the case broadened the investigation to include allegations of election fraud by Bolaños, three of his ministers and three vice ministers.
''People in glass houses do not throw stones. Bolaños tried to use the political system to his advantage, and now all of Nicaragua is paying the price,'' said René Herrera,'' a top Liberal assemblyman.
thanks, much appreciated...
safe to add to EDV.to here...?
yesterday's large volume was from a GMP 2.4M cross.
short position only 10,000
http://www.canada.com/national/nationalpost/financialpost/fpmarketdata/short_positions.html
RNC Gold Inc com RNC 10,000 36,274 -26,274
RNC will likely next suffer from year end tax selling, further keeping lid on the stock price...
Politics-Nicaragua faces vote turmoil
Civic group seeks to take back control from the party bosses.
By Doreen Hemlock
Business Writer
August 21, 2005
MANAGUA, Nicaragua · The turning point came for biology professor Maria Gabriela Berrios when college students told her they were studying hard, so they could leave Nicaragua, land a good job somewhere else and never come back.
Born into a generation when students dreamed and fought for a better future for their country, Berrios, 37, seethed that today's young people could be so disaffected. Though never active in politics before, late last year she joined a new civic group, Movement for Nicaragua, which has mobilized tens of thousands of people in unprecedented marches.
The movement's aim: to take back Nicaragua from an alliance of right- and left-wing party bosses holding the nation "hostage" and to bring the rule of law and morality to the country's young democracy, now just 15 years old.
"I see us as permanent conscientious objectors, watchdogs for clean government," Berrios said from the movement's headquarters as she helped organize the group's third major street march, set for next weekend. "We're a wake-up call to politicians."
In a nation where the past three decades have seen a revolution topple a dictator, Washington stoke a "contra" war against a socialist regime and war-weary residents in 1990 vote in multiparty democracy, it may seem odd that a civic movement for clean government would make headlines.
But as in Ukraine, Venezuela and other nations with weak democracies, voters in this Central American country are seeking new ways to express their discontent when traditional parties are seen as corrupt, discredited and unresponsive to their needs.
"Say `party politics' to my students, and it's almost like saying `delinquent,'" Berrios said.
At the root of Nicaragua's current discontent is a "pact" of convenience between two formerly rival kingpins: Daniel Ortega, the president during the 1980s who still controls the leftist Sandinista party, and Arnoldo Aleman, the president in the late 1990s who pulls the strings in the pro-market Liberal Party. Both have a solid core of followers, partly for the lavish favors they've dished out, but are generally scorned as corrupt.
Ortega and Aleman sealed their pact under Aleman's rule, so their two parties could run the legislature and gut the power of smaller parties. But the alliance later grew to include divvying up judgeships and other top government posts.
The public came to despise the pact after it repeatedly sabotaged the current president, Enrique Bolaños, elected in 2001. The handpicked successor to Aleman, Bolaños once in office turned on his former mentor and accused him of corruption. Courts found Aleman guilty and sentenced him to 20 years. Aleman is serving the time from his private ranch, claiming heath problems impede him from jail.
Even so, the two kingpins -- or caudillos, as they're known in Spanish -- keep pulling the strings, violating checks and balances in government and blocking Bolaños' bills and nominations. The president has become so hamstrung that he's mobilized the Organization of American States to mediate -- so far, to no avail.
Volunteers in the Movement for Nicaragua -- including many young, urban professionals -- say they feel their citizen rights have been stomped on. They're especially angry because neither Ortega's Sandinistas nor Aleman's Liberals will accept primaries for presidential candidates for next year's election. Instead, the caudillos have ousted challengers from their parties.
"We've had a dictatorship of the right and of the left, and today, those who want to keep power, both left and right, are reverting to the vicious cycle of dictatorship," bemoaned Klaus Stadhagen, 35, an engineer who returned to help rebuild his homeland after living 15 years in Costa Rica during the war and its aftermath.
The resentment against the pact seems to pop up everywhere in Managua, from the blue-and-white Nicaraguan flags flown from cars as an "anti-pact" symbol to the latest political T-shirts sold at markets that read, "Down with the Dictatorship of the Caudillos."
Public opinion polls show at least 80 percent against the pact, and similar numbers willing to defend democracy.
Those distressed include such younger voters as José David Aguirre, 27, who sells paintings, pottery and other crafts at a Managua market. "Next election, I'm voting for someone new," Aguirre said.
Yet civic leaders as well as frontrunners for the presidential elections, including a banker who lived in Miami during his country's socialist years, worry that the pacto could spoil the voting process, too.
Herty Lewites, 66, the moderate Sandinista and former mayor of Managua who derides Ortega as an obstructionist, said he has asked the European Union and other donors to withhold aid to Nicaragua, if the pact stacks the election rules and taints the vote.
"The only alternative we have against the pact is a mass movement in Nicaragua, plus solidarity from the international community," Lewites said, describing the pact's squeeze play "as the worst political crisis since 1990."
Eduardo Montealegre, 50, the respected banker who has served as foreign minister and finance minister in recent Liberal governments but was pushed aside by Aleman, takes the long view. He recognizes it will take years, if not decades, to build a solid democracy in a country that remains the second-poorest in the Americas after Haiti.
"As long as our average education level is third-grade, we'll tend to have these problems, where caudillos play a strong role in politics," said Montealegre, a Harvard Business School graduate who lived in Miami in the 1980s. "The way to overcome this long-term is invest in education."
Amid the wrangling, some elders are so disenchanted they look nostalgically at the days of the right-wing Somoza dictatorship, when Nicaragua's economy was at its strongest -- before revolution and war set back Nicaragua's economy by decades, so that business only now is regaining 1970s levels.
"Under Somoza, that's when we ate best. Things were cheap," said Carmen Flores, 60, who sells homemade sweets at a Managua market. "It seems we never get ahead."
Flores recalled under leftist Sandinista rule in the 1980s, food was scarce and rationed. Markets were limited and Sandinista mobs or turbas heckled vendors. While business has improved since, she singles out Ortega for keeping a lid on even faster progress by such crafty moves as the pacto.
"I've seen U.S. presidents come and go," Flores said. "But Daniel won't get out of the way."
Still, those in the Movement for Nicaragua refuse to cower and instead mobilize for a more democratic future -- for their students, for their children and for their nation.
"We hope we can bring back a little bit of confidence that a better government is possible," said biology professor Berrios. "And we don't have to be in a political party to make a difference. We can demand accountability, because we vote."
Doreen Hemlock can be reached at dhemlock@sun-sentinel.com