Our latest Investing Matters Podcast episode with QuotedData's Edward Marten has just been released. Listen here.
I was in the "Last Chance Saloon" the other night, and CEY was not there. But it was packed out, and the beer was good
One of the groups I did see drinking hard were Team USA. It looks like the Ponzi scheme they run, has just leveraged up another record!
Most games of chicken do not have trillion-dollar stakes. But such a spectacle is common in America when Republicans in Congress face off with a Democratic president over the debt ceiling. This legal limit on the amount of debt held by the Treasury is periodically raised (whenever they want and there has been a fair amount of want)—but never by enough to avoid a repeated stalemate. Without a bipartisan political deal to raise the ceiling America would be in uncharted and dangerous territory, bumbling into pointless default (recall they defaulted in 1970, but of course they called it something else!!!. recall in 1971 when the United States unilaterally terminated convertibility of the US dollar to gold, effectively ending the Bretton Woods system..it was a convertability problem of a barbaric relic, LOL
On January 19th Janet Yellen, the treasury secretary, announced that the country had hit its maximum debt (of $31.381trn) and that she had begun taking “extraordinary measures”—accounting tricks such as deferring pension investments to conserve cash. These measures, which have become routine (!!??), buy several months before the calamity actually arrives, called the “X-date”. The last close call, in 2011 when Barack Obama was president and Joe Biden was vice-president, was resolved with only days to spare, spooking stockmarkets and leading one ratings agency to downgrade the federal government’s credit.
Republicans must repudiate their use of the debt ceiling as a negotiating tactic, and congressional Democrats and the Biden administration must abandon their refusal to negotiate. The American people would welcome these steps as a rare sign of common sense from their leaders.
Common Sense is not common these days! Especially in politics, anywhere!
regards
The Gnome
Intrigued about the Met story you refer to Cowichan.
Do you know that Met testing is done on between 200-400 kgms of "representative ore". There is a fair bit to it, and plenty of room for errors, as has been noted by several studies (the industry tends to bury the bad results but sometimes bankruptcy is a bit difficult to bury). Some reading that is fairly reasonable in describing the process
https://www.ausimm.com/globalassets/insights-and-resources/minerals-processing-toolbox/anderson0503.pdf
Key is to have competent person sign off, and this should be personS, plural. It needs competent senior geologist AND metallurgist. One without the other increases probability of poor design, long lead time in commissioning, plant under-performancem high AISC..and project failure. What has impressed me about Horgan is his constant referral to Geology, and its important role (I am not a Geologist, but know a bit) in exploration, resource estimation and metalurgy. You do not hear this 3 bagger very often.
In McCarthy (2003) in a study of where things went wrong in feasibility studies showed that 27% of the issues arose in the metallurgical testwork, scale up or process plant equipment design. Of these issues the key areas where things went wrong included:
>Metallurgical domains within the orebody not understood
>Testing done on unrepresentative composites
>Failure to identify process contaminants
>Inability to handle ore types as per mining schedule
>Process water chemistry differs with lab
Plenty of very poor form by the industry! I am quite happy to build on solid foundations and what I hear and read is looking solid, even if it does take a little longer than armchair critcs and analysts think. Both will be the first to criticise when things go wrong, as they should but lets assume they are doing a good job, being fastidious. Investing in a $x00m plant and equipment is not to be rushed into.
A report from global consulting group McKinsey, "Optimizing mining feasibility studies: The $100 billion opportunity", has found that more than four out of five (80% !) mining projects came in OVER budget with over half recording an average budget overrun of 49% (!!!) – and this was just for those projects that reached production phase.
“Scope of work must be “is it feasible?” and not “make it feasible”.
There are plenty of clowns out there, wearing suits talking with arms waving..no feet on the ground so to speak. Happy in CEY
the Gnome
Thanks Siko
I think the new policy in CEY mngt is to be measured and err on the conservative side, which sits well with me. I think they have probably been very measured and restrained around the Sukhari mine site, whilst there was some legal risk (why would you put excess capital at risk). Now this has been removed then I think we will see a lot of new developments happen, and some of the satellite ore poisitions will be worked and known more.
I think their position in West Africa is solid. The mineralisation is on scale and grade. The fact that it takes a bit longer, is really more a function of thats the way it is in West Africa, and managing risk. I would far rather they build a solid foundation than rush in due tot he whims of some of the "arm chair CEO's" one hears and see's floating around.
Happy to stay invested, there are a lot of gold companies that are on my avoid list at the moment.
best
the gnome
Thanks Siko!
The response from Horgan will be the real catalyst for SP movement. If I was Horgan, I would have tempered my investment plans on the 160km2 permit. Now with all lights green, what is the new plan? I am all ears and eyes. Is this breakout time?
the gnome
Thanks Spoon...
The Banks are being careful with their messaging for obvious reasons. Here is the next joke bouncing down the road...
Treasury Secretary Janet Yellen called on Congress to raise the debt ceiling as soon as possible, warning that the government could become unable to pay its bills after early June ! What a surprise!!!
In a formal letter sent to party leaders in Congress, Ms. Yellen said the government would hit the roughly $31.4 trillion borrowing limit on Jan. 19, when the Treasury Department will begin implementing so-called extraordinary measures to manage the government’s cash flow.
“While Treasury is not currently able to provide an estimate of how long extraordinary measures will enable us to continue to pay the government’s obligations, it is unlikely that cash and extraordinary measures will be exhausted before early June,” Ms. Yellen wrote to Congressional leaders.
“The president and the country will not stand for anyone saying, ‘unless I can cut Medicare, Social Security, Medicaid, or other programs seniors and middle-class and working families count on, I will cost tens of millions of Americans their jobs and retirement savings’,” White House spokesman Andrew Bates said Friday.
“The thing that makes me most concerned is the timing,” said Mark Zandi, the chief economist at Moody’s Analytics. “This is all going to come down to later this year…when most economists think recession risks are going to be their greatest.”
Its all fairly obvious...but we wont talk about it in polite company
best
the Gnome
The biggest U.S. banks are preparing for a recession but aren’t feeling one yet.
They pointed to rising interest rates as the reason for the likely economic slowdown, though their quarterly earnings are only starting to reflect that. The four largest commercial banks collectively stowed away $2.8 billion in the final three months of 2022 to cover potential loan losses. As investors p****d the first batch of bank earnings, U.S. stocks climbed into positive territory, with the S&P 500 gaining 0.4%, the Nasdaq Composite up 0.7% and the Dow Jones Industrial Average adding 0.3%.
What about the economists..?
Laugh a minute with the predictions. Really a bit of gamesmanship as in reality no one really has a clue.
Look at suppl/demand and you dont go to far wrong. Supply side in terms of new discoveries is an all time low, and going down. Nothing will stop this trend
best
the gnome
Interesting new discovery by Endeavour, in the vicinity of Doropo. Always thought the area has huge potential and is underexplored.
https://www.endeavourmining.com/media/news/endeavour-makes-major-greenfield-discovery-cote-divoire-maiden-1.1moz-indicated-and-1.9moz
Suggests more synergy between Endeavour and Centain...
best
The Gnome
Having been involved with Nyakafuru and surrounds, I will rpedict the exploration upside is very limited...probably why Resolute would not hang onto it,...they certainly had a good crack at trying to find more gold ...
good luck
I am not that baffled.
I think CEY has been undervalued, for reasons we have discussed ad nauseum, over prpmotion and essentially for underperformance,
Now there is another story emering, and it is tending tobe understaing and consitent performance with an emerging potential for outperformance.
The reserve / resource positioning is excellent. I am waiting to see how many of the Doropo Inf ounces convert to M and I resources and to reserve ounces. Gut feeling there classification is on the conservative side. Met seems v straight forward. Gut feeling there are more Resources to be found. Great posiiton to be in.
ABC is the dark horse, but at 2.2 M ozs, this is ore than interesting. Early stage. Great macro address, and clearly there is a large gold system operating.
The AISC cost rise is a strong function of energy costs (which will go down), and they are positoning themselves very well with the Solar Farm. Look forward to the $20m annual saving here. My bet is the energy costs will go down, as the Ukraine - Russia conflict ends, and sanity returns. So they can double down on energy. I think the approaches that CEY is making onlocal labour, local mngt is excellent. The overall approach of CEY gives me confidence in their management and their ability to control/manage cost...impressive in these times.
I like the way the underground resources are building, and a 10 year mine life is very doable, and again conservative. I will not be surprised to see a 20 year mine life, but drilling it out up front now is not that smart use of capital. I think the ounces will be found, but lets do this when we need these ounces to be firmed up.
The social license to operate in Egypt is very strong, the employment of local staff, the upskilling programs, the royalty payments etc are very significant...I would imagine CEY's presence and policies in Egypt are more popular than the governments, LOL. CEY delivers, and is delivering sustainably, and it now looks like on a generational scale.
Happy to sit this out, no surprised the SP of CEY is rising, wuality cash producunginvetsments are few in these times.
If anyone loves conistsent big hitting in cricket, you will enjoy this link. I was glad I was not a bowler or fieldsman on either side!!!
https://www.youtube.com/watch?v=RQEeDeUwZLo
best
the Gnome
(If anyone can bat, can they please come to Sydeny and give the South Africans a hand!?)
Some of the facts
The national USA debt ($31.33 T) is the total amount of outstanding borrowing by the U.S. Federal Government accumulated over the nation's history... (most of it inthe last 10 or so years!!!)
INTRAGOVERNMENT DEBT
Intragovernmental holdings totaled more than $6.82 trillion in October 2022.
Why would the government owe money to itself? Because some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need. These agencies then invest in U.S. Treasurys rather than stick this cash under a giant mattress!
Social Security trusts, including the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, held $2.75 trillion in Treasurys as of August 2022. The next largest agency was the Military Retirement Fund at $1.18 trillion.
PUBLIC OWNED DEBT
The public holds over $24.29 trillion of the national debt.1 Foreign governments hold a large portion of the public debt, while the rest is owned by U.S. banks and investors, the Federal Reserve, state and local governments, mutual funds, pensions funds, insurance companies, and holders of savings bonds.
The Treasury breaks down who holds how much of the public debt in a quarterly Treasury bulletin. Foreign and international investors held over $7.6 trillion, according to its September 2022 bulletin, which included data through March 2022. State and local governments held $1.45 trillion and mutual funds had $3.26 trillion.
The national debt held by the public is not only in Treasury bills, notes, and bonds. It's also in Treasury Inflation-Protected Securities and special state and local government series securities.
RECAP. So in 1971 the US Govt defaulted on the exchange of gold for US$, because they had spent more than they earnt. The euphemistic way of explaining this, was that the strength of a countries currency was directly related to the stength of its economy...and of course this meant the US$ was a paramount in the world currencies, as the US Economy was the strongest...a MOST EXORBITANT PRIVILEGE #2 for the good ol USA. BUT IN REALITY THE THE US DEFAULTED ON ITS DEBT AND CURRENCY OBLIGATIONS BY CHANGING THE RULES AND USING LOVELY LANGUAGE...
And what happens when the US Govt finds out it cannot pay for all of the military niceties, or its social obligations ... it just prints more money and on the show goes...
Poor old Bernie Madoff went to jail for this sort of caper?
Good luck with your fiats, dont get caught holding them ... you know which way their value is going, and that is down, down down.
GO GOLD
best
the Gnome
Well Prince Harry's new book was outed in Spain (thank goodness it was not the French!? could be another war, LOL) and lots of other frivolities designed to enlighten us, happening.
I like the way Ray Dalio composites data and his views (not all), and for those interested in history of debt, and the lessons learned (he presents a good lot of graphics and info which allows one to draw their own conclusions)
https://www.bridgewater.com/big-debt-crises/principles-for-navigating-big-debt-crises-by-ray-dalio.pdf
and for those who like a more condensed version in video form
https://www.youtube.com/watch?v=xguam0TKMw8
Free useful facts and information, what is the world coming to!!!
We do have to talk about Harry though?
best
the gnome
Well we are in interesting times
1. The USA is printing another trillion or 2 us$, and no one seems to care? BUthe chickens will come home to roost
2. The world is now out of love with Crypto
3. The Central Banks have yet again shown their ineptness
4. Political leaders are shown to be not up to the job, most have never had a job.
5. Uncertainty is now the order of the day
6. There are more disparate opinions than you can poke a stick at
The old reliable keeps shining and smiling at us, and I am happy to be in CEY
good luck to us all
The Gold Gnome
Perhaps I am missing something. To go into Egypt and set yourself up as a Mining Services Contractor, you would need to have a "contract in hand". To have a contract in hand in a competitive bid process is interesting when one has no experience in the country, but does have an inkling that there are lots of speed humps...
This could be problematical if you do not know the "Egyptian system", and lets just pick a case in point...or 2...
1. employing local people (for every expat I think you have to employ 9 local people - who have next to no skills in mining services when there has not been a mining industry in Egypt?). Just how is this factored into the work flow and management structure, the bid price, the project risk analysis etc...
2. getting equipment into and out of the countries. Knowing it is a problem is not solving the problem. How do you factor this into your bid price as it represents a potential significant risk
and so on and so forth. Working in Egypt, is a very Egyptian affair, and the Mining Industry really does not exist, apart from Centamin.
So to get a new Mining Services contractor into the country, one would have to work with the contractor, and try and tie up as much alignment as possible, knowing the alignment will not be perfect.
The risk must be dealt with somehow.
What have I missed...I have tried to be brief
regards
The Gnome
Pardey is now heading up Predictive Discovery since Jan 4 2022, and they are only down 33% in that time period.
Others of course are worse.
I our focus shold be fair and square on the future. Hold the board and mngt accountable, loud and clear. 24/7
good luck to us all...
the gnome
Thanks Dasut
This is what I implied, somewhat vaguely, in a previous post
When you start UP, you need to START UP very quickly, and the bankers look for risks which they can leverage off of'
Thanks Dasut
This is what I implied, somewhat vaguely, in a previous post
When you start UP, you need to START UP very quickly, and the bankers look for risks which they can leverage off of'
Thanks Mr T.
There are steadily more and more "partnerships" between drilling companies and exploration and mining companies. Be interesting to know how (and when?) the drill companies decide on which company to drill for equity in, and which not, and what the nature of the partnership is (do they get free options, etc?). It would not be open slather, as most Junior exploration companies are financially and/or intellecutally near bankrupt.
thanks
the Gnome
( and good to see you back Mr T!)