Showing posts with label South America. Show all posts
Showing posts with label South America. Show all posts

Thursday, November 20, 2014

Pachamama Alliance is Clueless About Sustainable Development

I attended the Pachamama Alliance annual luncheon today in San Francisco at a friend's invitation.  The Fort Mason Festival Pavilion was filled with well-dressed do-gooders determined to feel great about keeping poor people in poverty.  I am about to prove that they think too much of themselves.

Several things about this organization make me wonder what its donors are thinking, or if they can think at all.  Pachamama's financial statement for 2013 shows that it spends 12% of its budget on fundraising and 7% on general administration.  That 19% is a high figure just for overhead.  Charity Navigator gives them a high rating for accountability with a moderately high financial score, which surprises me given that large overhead.   Pachamama does not participate in Guidestar's non-profit rating scheme, which makes its effectiveness more difficult to ascertain.

Indigenous Amazonians were on parade at this luncheon, playing pan flutes and dispensing blessings in an incomprehensible language.  The organizers played several videos about the alliance's work.  These were slickly produced mashups devoid of narrative structure or accountable details.  No one in the audience seemed to mind.  They were too enthralled with the "human petting zoo" of the visiting indigenous people to realize they were being manipulated.  This organization proudly introduced some kind of online training course designed to do . . . something or other, like raise even more awareness than they've already raised.  All of this raising awareness is of course designed to raise money.

Even a teenager got into the act, bragging to the audience about her monthly donations to Pachamama (apparently from her parents' money, since she mentioned no income stream of her own).  I marvel at the indulgence of affluent Bay Area parents, encouraging their children to be irresponsible with a generous sponsor's money.

I ignored the maudlin spectacle and tried very hard not to applaud the banal statements from non-thinkers on the podium.  I gave in to brief applause a couple of times because bad habits are hard to break.  I am results-oriented and I needed to see Pachamama's results.  Those results are mind-numbingly bad.  Pachamama has lobbied the Ecuadorian government to stop an oil company from exploring in two blocks of the rainforest.  Never mind that this development would bring millions of dollars to the region and lift indigenous Amazonians out of poverty.

The founders bragged that they they were developing eco-tourist programs as an alternative to petroleum production.  It's easy to do the math with their program details.  One dingbat volunteer claimed that they charge about $4500 for one eco-tourist ticket, taking ten people per trip, with about ten trips scheduled per year.  That's about $450K in gross revenue per year, compared to the millions the local tribes could earn if those oil blocks are open to foreign direct investment.  Pachamama's intransigence keeps their erstwhile clients impoverished.

Pachamama's promoters claimed with pride that they built an airstrip to facilitate these eco-tours, supposedly mitigating the deforestation that paving a road through the Amazon rainforest would have required.  They failed to calculate that moving human passengers by air uses far more petroleum and produces far more air pollution than moving them by bus on a road.  This nearsightedness is lost on social justice warriors.  I must have been the only attendee to grok the irony of eco-tourism that accelerates the local consumption of petroleum.

Ecuador already subscribes to the United Nations Reducing Emissions from Deforestation and forest Degradation (REDD) program for developing countries.  It does not need a bunch of Bay Area do-gooders complicating its search for sustainable development in the Amazon rainforest.  The Ecuadorian government shut down Pachamama's operations in its country last December precisely because it was so disruptive.  The bleeding hearts in the Festival Pavilion were getting teary-eyed at their inability to keep low-income people locked into prehistoric lifestyles.

Multinational energy companies know they are under scrutiny for their environmental practices, which is why they spend lots of money to get the projects right.  The obvious solution to sustainable development in the Amazon basin is to allow energy supermajors the ability to manage their onshore production blocks like timber REITs, giving shareholders a stake in the forest's sustainability.  Anti-development nuts won't like it because they could no longer gawk at poor Amazonians during eco-tours.

I will not attend any more of these stupid events, despite the enticement of free food and hot babes.  The free lunch of greens and sweet potato cakes was a vegan's dream.  I barely noticed it going down and I spent the rest of the afternoon longing for glorious meat protein.  The dessert tables afterwards were full of cookies and brownies that were definitely not from a rainforest.  Those natives don't know what they're missing by spurning development for boutique eco-tourism.  The young babes in attendance caught my eye because I can't ignore tight skirts and shapely legs.  My objection is that those hot body parts were tied to non-functioning minds.  One gal held up two potted plants in front of her well-rounded mammaries and asked me, "Aren't these beautiful?"  She meant the plants, but I focused on her more important natural goods.

I consider Pachamama Alliance to be an exemplar of the Bay Area's lamest natural impulse.  Dimwitted busybodies with more money than they deserve elevate feeling over thinking.  The other pressure groups present at the luncheon shared the same cognitive flaw.  Citizens Climate Lobby demands a halt to the economic development and energy use that makes their outreach possible.  The "anti-corporate personhood" movement failed to recognize that a wealthy elite has directed America's institutions since the Founders put pen to parchment.  The attendees themselves arrived at this event mostly in private automobiles burning hydrocarbons!  I did more to conserve energy use than any of them when I took the SF Muni bus to Fort Mason.  I have once again demonstrated my intellecutal and moral superiority over the Bay Area's non-thinking elite.  The world needs more Alfidi Capital and less Pachamama Alliance.  

Monday, August 04, 2014

Financial Sarcasm Roundup for 08/04/14

There is sarcasm . . . and then there is SARCASM.  There's more of the latter on this blog than the former.

Portugal's central bank pulled Banco Espirito Santo out of the fire by sticking its bad assets in a separate entity.  I don't think they got the memo from US and UK regulators that shareholder cramdowns don't need a good bank / bad bank split as long as the back office processes keep working.  The Portuguese plan is okay if it prevents any further troika bailouts.  Consider this a test case for a rescue that doesn't spook depositors as much as the Cyprus bank crisis.

The Federal Reserve is having serious difficulty finding an exit from its stimulus policy.  The public focus on interest rate targeting is the Fed's deliberate misdirection.  The real source of trouble is the Fed's bloated balance sheet.  Chair Yellen can't unwind those asset-backed holdings without forcing up short-term rates, crashing the demand for bonds, and freaking out non-US central banks.  No one wants to face the nightmare scenario of a Fed bankruptcy, but the current policy's non-exit flirts with such an outcome.

Argentina is in default on its sovereign debt, and ISDA ruled that credit default swap owners can trigger their contracts.  This is a preview of what awaits US Treasury CDS holders given the Fed's problem in my paragraph immediately above.  The smart hedge funds that purchased CDS on Treasuries with record-low credit spreads will make out quite handsomely.  The dumb ones still fixated on interest rate arbitrage are picking up nickels in front of a steamroller, with one shoelace already under the roller.  Hedge funds that bought Argentinian CDS are about to find out if they got luckier than the funds that sued for larger bond settlements.

These news items bring back memories of my days as a financial advisor, reminding me of why I don't perform that function anymore.  I prospected some real idiots who thought they could dictate market returns to me before selecting investment products.  That mentality isn't limited to individual retail investors.  People running big funds and central banks think that way too, as the articles above illustrate.  These people are going to get their big fat rear ends handed to them in the next US market crash.  

Monday, July 28, 2014

Financial Sarcasm Roundup for 07/28/14

Death and taxes are certainties in life, according to folk wisdom.  Sarcasm should be an additional certainty.

Argentina moves closer to default by refusing to compromise with its holdout bondholders.  I saw this one coming.  Go read my previous Financial Sarcasm Roundups if you can't handle the truth or are too dumb to remember what I've been saying for weeks.  I note with interest the possibility that Argentinian soybean farmers may hoard their crops.  Hard assets like agricultural produce make sense in a high-inflation economy that world markets have isolated.

The IMF is letting us all know that there is no cause for alarm.  That's nice to know.  It's also nice to know that Chair Yellen acknowledged several equity market bubbles and is helping other regulators put exit gates on bond funds.  People should know these things but they prefer to remain ignorant.  Trusting some untrustworthy financial officials is going to get a lot of people hurt.

Bank of America hypothesizes that China is buying Treasuries through a European clearing firm in Belgium.  That would explain the mystery surge in Belgium's Treasury holdings that market observers noted earlier this year.  It's obvious that large holders of Treasuries will have a huge problem on their hands regardless of where they clear their trades.  They won't be able to find buyers to take large volumes in a hurry.  The Fed's bond fund gates for US investors are a message to foreign central banks.  Message received, loud and clear.

I'm pressed for time today because some Silicon Valley techies invited me to a reception down in Menlo Park.  I need to be on the road in a few minutes.  I will seek out sarcasm there but I don't expect to find much I can use, as these things tend towards proprietary discussions of business models.  I hope Models In Tech are on the scene; now those are some models I'd really like to discuss.  

Thursday, September 05, 2013

Americas Petrogas Plays For Shale In Argentina

I'm all about energy today.  Americas Petrogas (BOE.V / APEOF) wants to pull oil and gas out of shale formations in Argentina.  I believe they have a very competent and experienced management team.  I like the fact that they have deep-pocketed JV partners.  I like the fact that they've discovered light sweet crude deposits, which are easier to refine.  I like that maps of their project areas show good coverage by existing pipelines.

One concern I have is that this is in Argentina.  That country is #102 (out of 174) on Transparency International's Corruption Perceptions Index and #160 (out of 177) on the Heritage Foundation's Index of Economic Freedom.  The political risk for any foreign investment in Argentina is enormous.

The company had just under C$26M in cash on hand as of June 30, 2013 according to their quarterly statement. Their net income has swung from a loss to a positive in about one year.  I'm less concerned with burn rate for a company at this stage provided their revenue is growing and their operating costs remain stable.

I'm adding Americas Petrogas to my watch list.  It deserves a more serious look once I can calculate its intrinsic value based on their proven (P90) and probable (P50) reserves.

Full disclosure:  No position in Americas Petrogas at this time.  

Tuesday, February 26, 2013

International PBX Ventures (PBX.V) in Chile

There's more to Chile than Salvador Allende and Augusto Pinochet.  The country has a few mining concessions for prospectors to explore.  International PBX Ventures (PBX.V / IPBXF) is one such explorer.  Let's see what they have to offer the market.

The CEO is not a geologist and has a lot of experience unrelated to operating a junior mining company.  He's also CEO of another company called Relief Gold,  which seems to have a website offering no real info.  I usually stay away from companies whose executives divide their time between running several different companies.  The rest of the team is pretty lean on early-stage mining experience.

They have one active project in Chile, primarily for copper.  The MII grades for Cu are below world averages for new discoveries.  It's still a low concentration even after adjusting for the presence of secondary minerals.  I'm not impressed.  They also have a 100% owned subsidiary called Chilean Metals, with some properties in the early stages of sampling and surveying.  That's too early to interest me.

The price history of this stock on Yahoo Finance shows that it's been a penny stock since 1997.  It trades at a whopping six cents right now.  Shareholders who have invested in this company at any time have seen their stake pretty much destroyed by now.  That's why I'm not an investor.

Full disclosure:  No position in International PBX Ventures at this time.  

Wednesday, October 31, 2012

Panoro Minerals Explores Peru

There's minerals, and then there's Panoro Minerals (TSXV:  PML).  Okay, maybe I should be more sanguine about junior miners but I needed an opener.

Right now their 43-101 shows only inferred resources of 0.23g/t gold and 2.84 g/t silver at their Cotabambas project.  Those are relatively low grades for precious metals compared to many junior peers, so maybe an updated 43-101 with 2P estimates will show more promise.  The CEO isn't a geologist but has long experience in mining.

I always check a startup's burn rate.  Their Q3 2012 financial statement from June 30, 2012 shows CAN$17.9M in cash on hand thanks to a successful private placement this past March.  The same statement shows a quarterly loss of over $630K, so their cash horde should last until October 2014 given present spending.  They will of course have to prepare for production at some point, which will accelerate their burn rate.

They have yet to decide on what style of development is feasible for each project; for example, their Antilla project has small amounts of bauxite that would make heap leaching feasible.  It's good that all of their projects are within the reach of unpaved local roads, but not so good that their most active projects are 30km away from power lines.  Figure step-down transformers and line extensions into that capex budget for the feasibility study.

The belt they're exploring is known mainly for copper.  I await further notice of their feasibility estimates, along with news of just what they plan to do with their gold properties.

Full disclosure:  No position in Panoro Minerals at this time.

Monday, December 26, 2011

Argentex Mining Corp. (AGXMF) Bringing Pinguino Property To Maturity

There's more to Argentina than gauchos and Peronists.  There's metal down there and Argentex Mining Corporation (AGXMF) says it found some.  Argentex is drilling at a number of prospective properties in Santa Cruz Province, Argentina.  The company's property at Pinguino looks particularly intriguing.  The ore grades appear decent, with a 43-101 report estimating fairly low grades of gold but decent grades of silver and indium.

The Pinguino property is smack dab in the middle of an active mining sector but that does not guarantee it can become a viable mine.  The nearest road leading to Pico Truncado and a port for export appears to be about 50 km away, based on eyeballing the company's map.

The IFC's equity investment in October 2010 is a huge vote of confidence in the company but the warrants attached to their equity, if ever exercised, will dilute existing shareholders by about 14%.  The consolation for investors is that the share price will have to rise by 245% in five years before that C$1.14 exercise price is triggered.  Getting the price to the level requires management's commitment to make Pinguino a viable producer.  I do not know at this time whether Pinguino has the logistics trifecta - water, power, roads - to make this possible.

Argentex's burn rate of approximately $602K/month means its cash of $1.9M (as of April 30) would have lasted until the end of August 2011.  The problem is that they still had liabilities of $1.87M; netting that against the short term investments of $3.2M would have left them them with a reserve of $1.4M.  At their present burn rate they were perilously close to running out of cash at the end of last summer.  They're obviously still operating as of the present date thanks to a recent bought deal that netted them C$10M in cash at a valuation far higher than what the IFC obtained.  That is a very encouraging sign for a junior resource company; if the company was having operating problems or sitting on poor properties, subsequent investors would demand lower prices for investments.

Argentex lives to fight another day.  If they use that C$10M wisely, it will last 16 months and they will have the opportunity to show later investors that they can commit capex to logistics infrastructure at Pinguino.

Full disclosure: No position in AGXMF at this time.  

Friday, November 25, 2011

Constitution Mining (CMIN) Is Now Goldsands Development (GSDC)

Oh boy, here's another one.  I've been sitting on a teaser brochure from Scott Smith's Swiss Confidential (where's his website?) urging me to go long Constitution Mining (CMIN).  That company is now known as Goldsands Development Company (GSDC).  Prepare yourselves.  Here it comes. 

Yahoo Finance only gives us three years of financial statements.  Readers are welcome to read the company's SEC filings if they wish to go back farther.  Three years of data is all I need to see for this one.  Three years of progressively worse net losses.  Three years of progressively declining retained earnings.  Three years of negative free cash flow.  The CEO, Dr. Michael Stocker, is not a geologist and has never worked in mining.  The stock is at $0.04 today.

It's funny how companies with no financial success can change names.  It's also funny how newsletter touters can disappear. 

Full disclosure:  No position in CMIN or GSDC, ever.

Monday, April 25, 2011

Latin American Minerals Goes Gold Digging

Latin American Minerals is a long-shot exploratory gold play.  It's drilling for gold and other minerals in fairly unexplored areas in Paraguay and Argentina that bear geological similarities to producing properties elsewhere.  Several of their top execs have exploratory experience, which is of course nice to have in an exploration-focused company. 

Photos of the company's Paso Yobai site look interesting from an exploration standpoint, but profitable extraction is of course another story.  Visible gold mineralization at the surface implies heap leaching will meet with success, provided local environmental considerations are amenable. 

The hard part to review here is the paucity of financial data.  A company that's been active since 2003 should have some financial results as well as geological results.  Searching Yahoo Finance and Reuters reveals no financial data or even analyst coverage.  Shareholders can only hope that LAM.V shows enough exploratory promise to interest a major producer someday. 

Full disclosure:  No position in LAT.V at this time.