Dec 11 2009
Pinetree and Copper Mesa Mining Corporation’s Latest Bullish Report
If the quote: -You can never underestimate the intelligence of the American Public- is true, then it is even more true to hold that You can never overestimate the idiocy of the Canadian investment firms.
Yeah, I’m thinking of Pinetree’s latest latest brilliant move to take over Copper Mesa.
Who are these guys anyway, and why would they want to throw away more money into the bottomless pit that is Copper Mesa? (Pinetree had invested several millions from squeaky-clean Canadians in the past in this shipwreck)
HERE IS A MINING COMPANY WITH NO CONCESSIONS, heavily in debt, facing a multi-million dollar lawsuit in Canada, hated by local communities, and without any future whatsoever. I wonder how many of Pinetree’s investors have an inkling of what the hell their investment firm is up to.
I guess we could say that Pinetree is the proud owner of Copper Mesa’s Flotsam (see my previous blog for details) But wait, there just HAS to be much more behind this idiotic move than meets the eye. Is it back-scratching time for the Ol’ boys?
Anyway, back to the company’s second quarter Fantasy Report (they’ve yet to publish their 3rd quarter fiction on their web site, but it’s available at sedar.com and it’s equally enGrossing)….. I have to admit that I always look forward to reading the company’s financial and Management, Discussion and Analysis reports. It’s highly entertaining. The information used here is based on their 2nd quarter financial and Management Discussion and Analysis reports posted on their web site.
The company, according to the reports:
– Had $ 1500 in the bank and owes almost millions of dollars in debt as of June 30th
– Cannot prove their mining titles in Junin are valid, but affirms it wants to develop its “properties” in Ecuador, implying and denying it still owns the JUNIN and Chaucha mining concessions (IN DEC 2009 CODELCO REPORTED THAT IT HAD BEEN DRILLING IN CHAUCHA FOR MONTHS AND THAT IT DID NOT FIND ENOUGH COPPER TO SATISFY THEIR NEEDS.
See:
http://www.vistazo.com/ea/pais/?eImpresa=1014&id=2938
Another google result on a prestigious magazine from August of 2009
http://www.americaeconomia.com/321753-Codelco-explora-yacimiento-de-cobre-en-Ecuador.note.aspx
You do not need to be fluent in Spanish to get get that the Chaucha concession has been explored by Codelco (you can also translated them using the google translation tool)
Just what is up for grabs?
In spite of what Copper Mesa claims in page one of the latest Management’s Discussion and Analysis for the three months ending March 31, 2009, the company no longer has concessions in the Intag area. It lost its most “valuable” concessions- including the Junín mining concession, and Chaucha. The Junin concessions Copper Mesa permanently lost in November 2008 and January 2009. These concessions are in the hands of the government and, according to the new mining law, can only be exploited by a national mining company.
The company list as one of its most important assets the properties in the Junin area. However, Copper Mesa does not have nearly as many legal land titles in the Junin mining site as they claim, ever since the government took away 17 of them away after discovering illegal procedures in their transactions (an additional 15 properties are being looked at for irregularities).
They are certainly not buying a viable company. Copper Mesa’s stocks have lost more than 98% of their value in the last few years (and the slide continues). They are also quite a bit in debt- to the tune of more than three million dollars, and in debt with a community development organization, renters and employees.
The Junin mining site, to list just some of the insurmountable obstacles faced by any mining company idiotic enough to want to resume this project,:
1) Is located in primary cloud forests harboring dozens of endangered species of mammals and birds (including Jaguars, Brown-faced Spider Monkeys, and Spectacled Bears)
2) Has several pre-Incan archeological sites within its boundaries
3) Its “inferred” mineral deposit is several times larger than what was inferred by Bishimetals in the 1990’s after year of exploration.
4) Has aroused unparalleled local government and community opposition
5) Sits wholly within a newly created Municipal 18,000 hectare protected area
6) Since the passing of the new mining law, the concession can only be exploited by the national government.
(For a complete list of obstacles, see the blog, Nineteen Obstacles to Mining Development in the Intag Region of Ecuador
Whoever buys this outfits, also buys a company that has experienced very grave problems with communities and government officials, and has lost around 30 million dollars without anything to show. Certainly the company never drilled within the infamous Junin mining concessions.
What is up for grabs is a legacy of irresponsible administration (not to say lunatic), human rights abuses, violent conflicts, plus a major lawsuit in Canadian courts against the company and the Toronto Stock Exchange. It’s a business bogged down by a huge debt, ridiculously high office rent, astonishingly high wages (especially considering the lack of results), no real assets on the ground, and very negative perception by all involved in this business in Ecuador.
Chaucha and Telimbela. Is Chaucha a real asset? Even if it were, it is very likely no longer in the company’s hands. This mining concession was not picked up by any mining companies for about 10 years after a Mitsubishi Subsidiary finished exploring the site. If it was worth anything, someone would have snapped it up long before Copper Mesa. Antofagasta, a Chilean mining company, pulled out of a partnership with Copper Mesa to develop this site after seeing the poor results of a few months of exploration.
Telimbela is an interesting case in what could be seen as insider trading. The Telimbela concession legally belongs to Ecuagold, which at the time of the exploration deal, was headed by one of Copper Mesa’s ex directors.
In short, the company is selling a business that has, not only no future, but no mining concessions in its name of any worth in Ecuador- with zero chance of ever getting the concessions back- an unsavory local reputation, and the rejection of the local communities where it has worked, plus a multi-million dollar lawsuit against it in Canadian courts.
What a deal!
– Confirms the loss of its Zonia and Emerald Isle mining projects in Arizona to a debtor for 1.7 million bucks. The report didn’t dare specify how many millions it lost in the deal, but there was a transfer of more than 30 million shares of CMMC as part of the deal
http://www.coppermesacorp.com/_resources/news/ACX0808AcquisitonofSGVcloses.pdf
– Suffered 31 million dollars in losses to date
– Failed, again, to mention the loss of 17 properties within the Junin mining concessions, and to notify investors that a new protected area was created right over the mining site.
– Did not mention the multi-million dollar lawsuit presented in Canada against Copper Mesa Mining Corporation plus two of its directors, and the Toronto Stock Exchange (see http://www.ramirezversuscoppermesa.com/)
To start, they lost their US mining interest to the investor who lent them 1.7 million back in 2008 to get them out of financial straits. This is what the company said in their corrected news release, released October 2nd:
Copper Mesa Mining Corporation (“Copper Mesa” or the “Company”) (TSX:CUX) today announced the transfer of Redstone Resources’ properties to the lender of a bridge loan facility, negotiated on September 10, 2008. This transfer is the result of a non-payment by the Company in June 2009. http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7473301
Redstone controlled the Emerald Isle and Zonia mines in Arizona. The previous release had said the company had sold Redstone. STREEEETCH.
Interesting about the correction… Could it be that maybe someone in the BC Securities Commission is finally checking to see what the company is saying? If so, it may be because on September 11th, the company was put on a de-listing track by the TSX.
http://www.tmx.com/en/news_events/news_releases/9-11-2009_TSX-ReviewCUX.html
So, ONWARDS in the stretching department. In the latest release (Oct 3) correcting the earlier release about the so-called sale of Redstone Resources, the company asserts the following:
The Company will continue to focus its efforts on the advancement and/or sale of its properties in Ecuador.
http://www.stockhouse.com/News/CanadianReleasesDetail.aspx?n=7473301
This is rich! Advancement and/or sale of what? If by properties they mean their concessions, they are misleading investors big time. The company definitely lost the Junin mining “properties” to the government in November 2008. You can only develop or sell what you own, not what you hope to own, or imagine you own (see the Losing the Junin Concessions section).
Whopperville. Here’s what the company says on its latest Management,Discussion & Aanlysis report
Also included as part of the 2009 Law was a stipulation, Article 24, that the government had the right to revert to the State any mineral concession on which it had previously conducted any exploration or exploitation. In late April, the MMP issued an internal request for a review and list of any concessions to which Article 24 might apply. On the subsequent list as prepared by the technical group within the MMP were the Junin, Chaucha and Telimbela properties. Although the Company has received no notification from the government that it intends to revert any of the properties under this Article of the 2009 Law, this has nevertheless served to cast a cloud of doubt over the Company’s tenure of title to these properties. In fact, essentially every mineral concession has had some prior exploration done on it by the government in Ecuador and is therefore subject to such potential reversion (emphasis mine).
The concessions are not “subject” to such potential reversion- the concessions were reverted back to the state almost a year ago. Here’s additional news to any investor concerned about what is left of their diminishing investment with CMMC and in uncovering lies – The government of Ecuador has carried out exploration on a very few mining concessions in the country and not in “every mineral concession” as the report claims. This is one of the biggest lies yet. Unfortunately for CMMC, the government did invest in exploration in the JUNIN mining concessions (Golden 1, Golden 2), plus Chaucha and Telimbela in the south of the country.
LOSS OF THE JUNIN PROPERTIES. The MD&A report states the following
In November 2008, the Company received notices from the Ecuadorian Regional Director of Mines again nullifying the Company’s title to the Junin concessions on the basis that the Company did not file an environment impact study for drilling. Management believes that there are several irregularities in this notice and again they intend to vigorously defend their rights and will take appropriate action to contest this nullification in the Ecuadorian legal system. (See “Measurement uncertainty of the Junin property interest”.)
A bit further down the report, the CMMC goes on to assert that:
The Company has been unable to receive confirmation of title to its Junin concessions for the year ended December 31,2008 and 2007.
Scrolling down the report a little bit more you can find this gem:
If the Company is determined to not hold title to the Junin concessions, the impact on the Company would be material.
So, you might wonder, how can the company maintain that its mining concessions were nullified in
one page, then go on to imply, on a different page, that company may yet have title to the land, then say that intends to develop or sell a property when it doesn’t own anything? Unless, that is, they are thinking of developing a Kentucky Fried Chicken in one of their properties in rural Imbabura (average population density in Intag is about 10 persons per square kilometer). They’ll have a hell of a time selling enough greasy chickens to stay in business. Oh, they better not build it on one of the 17 properties that were reverted back to the state in 2008.
Another mini gem: even though the company lost its concessions in Junin, the company still has the “mining property” as an asset in their balance sheets (to the tune of millions).
The fact is that in 2008 the National Assembly issued the famous Mining Mandate that reverted thousands of mining concessions back to the state, particularly those having no active exploration at the time of the proclamation. This included Copper Mesa’s Junin mining concessions. Just in case you are wondering, the National Assembly’s mandate is above all laws in the country. Further, the mandate included several other provisions meant to restrict or prohibit mining, and it does not allow compensation for the loss of concessions. One of the reasons the National Assembly took this measure was to try to curb the speculation with concessions, and the violent conflicts the presence of mining companies had generated in the countryside (including Copper Mesa’s). Since Copper Mesa had been unable to start exploration in Junin (Golden 1 and Golden 2) due to widespread opposition when the National Assembly issued the Mandate, the company lost the Junin mining concessions. It’s that simple.
Miscellaneous Bullish.
The company still reports this piece:
The Junin project hosts an inferred mineral resource of 982 million tonnes grading 0.89% copper, 0.04% molybdenum and 1.9 glt of silver, or 1.21 % copper equivalent at a 0.4% economic copper cut-off grade (see Micon’s Junin Report).
If you’ve read some of my previous blogs you’d know that Micon International, the company responsible for coming up with those impressive resources at Junin later publicly admitted they could not confirm the data due to, among other things, termite damage to the core samples (no, I am not making this up). In fact, after years of exploration, the Japanese only inferred the possible existence of 318 million tons at only %0.7 copper (total 2.2 million tons of copper). This is almost four times less than what Micon’s over optimistic estimate, which cannot even be verified.
So much for even inferring the Junin site has so much copper. What is truly amazing to me is how Canadian regulatory entities allow the company to continue to report such garbage and in the process help investors lose billions every year. But what am I saying, this is Canada we are talking about, speculator heaven.
So, to recap, as of October 2009 is: Copper Mesa lost their concessions in Ecuador,, it is millions in debt (but did have $ 1500 in cash at the end of June); it also lost their US mining projects,, in September TSX placed it in the delisting track; has all kinds of financial commitments to fulfill (including 1.17 million termination benefits for two officers and an employee; has over $ 100,000.00 in future rent commitments, and so on and forth (the very latest is that the TSX just denied the company’s request to postpone the upcoming shareholder meeting)
Fire Sale…. AND, I found this at the end of the Interim Financial Statement:
Sale of Excel! Resources Corporation
In August 2009, the board of directors approved the sale of 100% of the shares of Excell Resources Corporation to an officer of the Company for $50,000, the deemed fair value as of the date of sale..
Fifty thousand dollars for a company on which there is preciously little information about on the Web, except that it may be an employment agency based in Salt Lake City.
And, lastly, Copper Mesa, apparently has sold, or is about to sell, their land in and around the Junin mining concession to a third party that is telling the locals they are interested in agriculture (we have been unable to confirm if the land has been sold, leased, or rented). Needless to say, very few people are swallowing that lie. The company supposedly buying the land has no connection with agriculture projects whatsoever (it’s called Druoet Schwarz), with interest in WATER (the company was found in 2008 and one of the partners is an ex army colonel) What everyone is worried about is that the presence of this company will spark yet another round of confrontations and divisions. At least three of the employees of this company are ex- Copper Mesa Corporation.
I could go on, but why? You get the point. But do the Canadian regulators get it?
sources: Management’s Discussion and Analysis For the six months ended June 30,
INTERIM CONSOLIDATED FINANCIAL STATEMENTS -UNAUDITED
JUNE 30, 2009
http://www.coppermesacorp.com/_resources/unaudited_financials/2009_2Q_Unaudited_Interim_Financials_MDA.pdf
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