Buyers returning

lse:cnr

#1

I thought that we might see buyers coming back in next week but it looks like we already have interest returning.

Again, it comes down to how you see the situation. Will it delay the granting of permits or expedite them? My sense is that the Nicaraguan people want to see concrete actions rather than talk so I err on the latter proposition. Still, you can never really tell. It wouldn’t be the first time that politicians have been caught in that ‘deer in headlights’ moment (i.e. paralysis for fear of doing something wrong).

Nothing likely this week but I suspect that the permit window will reopen a week from now.

ddd


#2

As originally expected, it looks like writing off this week was the right call. Buying has been too weak to allay the drip, drip of small sells. I’m not really seeing anything new but the somewhat delayed reporting by the FT and other mainstream news organisations is probably not helping.

Clamber through the doomsday rhetoric and it does look like there are some positives on the Nicaraguan front.

From what I can see:

  • Ortega has conceded on early elections.
  • Catholic Church has apparently been asked to mediate.
  • Ortega has ordered dozens of the 200 protesters who were arrested during the clashes to be released, and lifted broadcasting curbs his government imposed on independent media.

https://www.afp.com/en/news/826/nicaragua-looks-talks-soothe-unrest-doc-14d09k3

Government corruption has been alleged but it’s really about social conditions and jobs. I just hope that we end up with a programme to promote mining.

ddd


#3

When you look at B2Gold, that is exposed to Nicaragua, they are up 5% on the week so this has certainly not impacted into the other main players in Nicaragua who are up and processing gold, although they have a spread of mines elsewhere.

Sadly for Mark Child, who in my view has blown the last few years wasting time on submitting permit plans that were not going to fly, and only recently submitted one that looks to tick all the right boxes he now finds himself caught up in potential permit delay.

i was not expecting permits to be released before June but the question is of course how the current situation will potentially impact that or not.

Certainly for the government to find the funds to keep the pension reforms as they are they are going to need to plug the gap so you should think the government might look through the order book and try and bring forward some potential tax raising projects as they are going to need it.

Certainly the people in Nicaragua are also going to want to raise income so in some way the government and people of Nicaragua will probably agree that neither of them want to pay for the pensions themselves so looking to foreign inward investment and projects to bring in some cash should come to the fore.

The $120m injection needed to get this processing plant up and then the 10s of millions in taxes they would get when Mark gets his 100k baseline gold operation moving is most definitely one of the clearest ways Nicaragua can move forward. Therefore i think projects of this kind will get more focus so Ortega can go to his people and show how he can deliver and that the people do not need to pay any more.

However the next 2-3 weeks of wrangling and reconciliation will decide how quickly that might come but it looks the landscape of the uprising is also looking at a peaceful exit as there has been little real violence over the last week.

Certainly the price of Condor is at very low levels, almost 20p of the current price is the value of the built up tax losses but sitting on billions of gold is not quite the same as having a permit to dig it up. while i think this stock will be volatile i am still inclined to think come end of June this could have been a very good time to have topped up.


#4

I checked for news this morning and it does look like things are starting to settle down. They seemed to have agreed to establish a ‘Truth Commission’ to investigate the casualties of the unrest last week, which I read as progress.

B2B Gold is of course producing in El Limon and La Libertad. I doubt if either side want to stop the tax dollars coming in so I wouldn’t have expected anything more than a ‘flash-in-the-pan’ move for B2B. It’s also producing outside of Nicaragua as well which would dampen any moves. Still, it’s good to see that shareholders there don’t see the politics having much of an effect.

I think you are right on the permit decision being pushed back a few weeks though. Prior to the unrest I would have said the window on granting had already opened up, although now I’m guessing June rather than May. We’ll see. It could be that all stops are pulled to get the Nicaraguan economy moving. The relaxation of those pension reforms are not going to pay for themselves.

Looks like a few dip buyers are coming in. If it keeps up we could see it back over 50p in the next couple of weeks.

ddd