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Dennis Boyko

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  • What's Behind Rubicon Minerals' 43-101 Amendment and Share Price Reaction? [View article]
    A letter to Christy Clark the new Premier of British Columbia


    Subject: What's to prevent unscrupulous mining analysts from gaming the B.C. Securities Commission and the mining industry generally?

    March 10/11

    Dear Premier Clark,

    I've been scrolling through the B.C. Securities Commission (BCSC) excellent three-year service plan and note with interest that professional fees actually declined this year when a number of enforcement actions completed. Well done!

    I note, too, that investor education continues to be a priority at the commission, so I have asked it for some guidance regarding the obligations of mining analysts and their reports to investors, namely, how to interpret/evaluate a newsletter or report by an analyst from an influential source, such as a bank or brokerage outlet, when the newsletter or report calls into question information provided by a mining firm in a National Instrument (NI) 43-101 Technical Report? How much discretion do mining analysts have to challenge information provided in a (NI) 43-101, a framework of very strict rules and definitions miners are obliged to follow? Why, I wonder, are analysts immune from these or any similar restrictions when their comments concern the same information - when they are, in fact, selling a derivative of that very same mine?

    These questions are especially troubling considering that the analyst's opinion is not available to all investors equally and that it will almost certainly influence stock price, especially in these days of algorithmic or black-box trading, which now accounts for the bulk of all trading.

    How does an investor distinguish legitimate, well-reasoned criticism from a deliberate attempt to influence the market for personal gain? I hope as an investor that I am relying on something stronger than the analyst's personal/professional integrity to resist what must be a powerful temptation, and we all know what Oscar Wilde had to say about temptation: 'The only way to get rid of a temptation is to yield to it.' Tut-tut.

    Frankly, I wonder if the financial elite isn't exploiting the gap between the reporting obligations of miners and analysts to create uncertainty, effectively gaming the BCSC by compelling its attention and review process ultimately for personal gain.

    I'm concerned in particular with Rubicon Minerals' Valentine's Day announcement that its (NI) 43-101 on the Phoenix project had somehow been called into question by the commission. Alas, a subsequent query I made to BCSC proved fruitless. Yahoo stock boards referred to two reports - one by Andrew Kaip, a geologist/analyst with BMO and another by Toll Cross Securities - both of which challenged Rubicon resource estimates using, in my view, highly questionable reasoning. Could either of these have compelled a BCSC review, I wondered? What do similar BCSC Decisions and Orders reveal? My conclusions are troubling.

    Of the 111 BCSC Decisions and Orders I reviewed first in February and again March 10/11 following a search of the terms "43-101", almost half (44%) concerned failure to file a technical report or another required document. Rubicon has never been cited for any such omission. Another 13.5% involved OTCBB companies, mostly pink sheets that have never filed documents at SEDAR. No application to Rubicon. Almost a third (31.5%) were routine inquiries, most often applications to be excused from having to provide a certain routine document. Again, no application to Rubicon. Only 10.8% - 12 actual cases - examined in any detail the contents of a particular technical report. A summary of each decision is provided at I also note that in each case, the source of BCSC's concern is clearly stated.

    There is nothing at all on point with the Rubicon inquiry - not one decision or order - so there was no way at all for investors to anticipate this challenge, which was nevertheless sufficient to drive the stock price down by 20% and in a rising gold market!

    Certainly no one would question the expertise and authority of Rubicon's report author, Peter George, a geologist with 40 years of experience, much of it in gold mines in the same mining district as the Phoenix project, the subject of the report. He was responsible for the Bruce Channel Exploration Target Potential for Gold Eagle Mines Ltd., a report which prompted Goldcorp's purchase of Gold Eagle for more than C$1 billion. A fortieri, Goldcorp recently allocated an estimated $420 million to develop the Bruce Channel deposit with a planned fourth quarter 2014 production start date. The development includes construction of a five-kilometre tunnel to connect the bottom portion of the Bruce Channel deposit with the Campbell Mine in Red Lake, Ont., a mine less than 10 km from the Rubicon deposit.

    For a variety of no doubt sound reasons, Rubicon has declined to expand on the Feb. 14th announcement but, in the meantime, small investors are hemorrhaging. Are you satisfied, as I am not, that the commission is indeed acting appropriately and clearly within the scope of its authority in the case of Rubicon and not on a tip-off by one or more members of the financial elite deliberately creating uncertainty in an effort to manipulate stock price for personal gain?

    While I am aware and indeed supportive of B.C.'s recent initiatives with the federal government to develop our mining industry as well as various federal and provincial mandates to streamline Canadian securities regulation post-global financial crisis, I can't help worrying about the increased opportunities for market manipulation such initiatives create - especially in view of the gaps in reporting obligations between miners (legally-enforceable technical reports) and analysts (fuzzily-worded code of professional ethics and IROC regulations - mere guidelines). How easy it would be for an unscrupulous analyst to create a scandal on par with Bre-X by publishing competing resource estimates with no comparable reporting requirements.

    I would be most grateful for any assurance you can give me that the current regulatory system is working as intended and that it's fully adequate to the task for which it was created.

    Thank-you for your kind attention.
    Mar 10 08:58 PM | Likes Like |Link to Comment
  • 16 Billion-Dollar Gold Explorers [View article]
    I think Paramount had a great run in 2010. But based on the last close, Paramount looks to be fairly valued IMO

    When I started this blog, which updates daily with closing market prices, Paramount was significantly under valued. I think Paramount has to define more resources to earn more valuation from the market. And Paramount has the potential to do this. But I wouldn't view them as undervalued today.
    Mar 3 02:03 PM | Likes Like |Link to Comment
  • 16 Billion-Dollar Gold Explorers [View article]
    I agree with you that Rubicon is probably the most undervalued.

    When you look at say Rubicon and Osisko on an ore value basis and use Agnico-Eagle as a control, the valuation unbalance between Rubicon and Osisko really stands out. I have a chart of the last closing prices showing Average Ore Value per tonne versus Market Capitalization per ounce of Gold Equivalent in my blog

    If you subscribe to the theory that the work of mining for gold comes down to extracting, crushing and processing tonnes of ore then at least to a first order approximation, the work to process a tonne of ore is going to be largely independent of the gold content. So, high grade ore such as Rubicon's F2 should be worth much more than the relatively low grade Osisko ore. Even after you adjust for the fact that Osisko is funded into production, Rubicon is still seriously mis-priced.

    Osisko on the other hand, is roughly correctly priced relative to Agnico-Eagle once you adjust for average ore value.

    For Rubicon, as CEO Adamson said in an interview earlier this year, "I think there is potential for this to be a serious producer in Red Lake. There is some serious upside in this stock. "
    Mar 3 10:12 AM | Likes Like |Link to Comment
  • What's Behind Rubicon Minerals' 43-101 Amendment and Share Price Reaction? [View article]
    You are quite right. Rubicon holds 40% of the Red Lake camp. Much of the ideal geological faults for Campbell/RedLake/F2 type deposits run through Rubicon properties and you are right these properties are pretty much unexplored.

    Also, the Alaska and Nevada properties are probably worth something north of $1 per share, probably significantly more given the recent Fronteer sale.
    Feb 23 10:50 AM | 2 Likes Like |Link to Comment
  • What's Behind Rubicon Minerals' 43-101 Amendment and Share Price Reaction? [View article]
    Thx Ed.

    Please do visit again.
    Feb 23 01:37 AM | Likes Like |Link to Comment
  • What's Behind Rubicon Minerals' 43-101 Amendment and Share Price Reaction? [View article]
    Excellent work!! has been in a maelstrom/mail storm since Rubicon's Valentine's Day press release announcing that it expects to file an amended NI 43-101 technical report containing Phoenix Gold Project mineral resource and geological potential estimates for the F2 Gold System. A pal at Yahoo put it most succinctly when he asked, "What the hell is up with that?" Just so. An inquiry for particulars at the B.C. Securities Commission proved fruitless. "Ask Rubicon," was the reply, "It's the company's look-out to keep investors informed." Ho hum!

    In a Feb. 19/11 e-mail, Marc Bouchard, Chairman of Toll Cross, said I quote: "I can assure you, as Toll Cross's Chief Compliance Officer that we did not file any complaints with anyone regarding Rubicon." Interestingly, Toll Cross provided a link at its Web site Feb. 22/11 to an in-house report dated Feb. 20/11 in which, "Toll Cross Securities discontinues coverage of Rubicon Minerals." Oh, yes, and by Feb. 21/11, Toll Cross was no longer listed among the analysts covering the company at Rubicon's Web site.

    Excerpts from various communiques by analysts allegedly quoting the Toll Cross report of Nov. 30/10 reveal a full-on challenge by Toll Cross of Rubicon's estimates and the very methodologies used to derive them. Is it possible, we wondered? Could a mere research analyst - could any investor, for that matter - with limited access to lab results and other crucial geological data and expertise, somehow call into question and even compel a review of a special report prepared by a qualified expert according to a very strict set of rules? How easy or difficult would this be? We're all familiar now with the NI 43-101 framework, but what are the rules, if any, governing information provided by investor analysts/advisers about those same mines?

    In the next few days, we'll examine some of the hearsay visitors have shared of the mysterious Toll Cross report and compare it with the standards for research and information set out at the informative, responsive (same day e-mails!) Investment Industry Regulatory Organization of Canada (IROC) - those same standards and rules that are, coincidentally, under review by that organization.
    Feb 22 08:19 PM | 6 Likes Like |Link to Comment
  • Smaller Explorers vs. Major Miners [View article]
    Goldcorp has a very interesting play developing on their home turf at Red Lake Ontario. Rubicon is starting to bulk sample their F2 Gold system that mirrors the structures of the Campbell / Red Lake mines. There is a strong parallel between the Red Lake High Grade Zone at the 34 level and the F2 305m level. The bulk samples are likely to come in at a grade on the order of 1 oz per ton.

    There are some differences of opinion on Rubicon. AK at BMO has suggested the Rubicon results are tainted because the drill grades weren't capped and that a recent 11.0m high grade intercept was drilled on strike. The uncertainty created by the bank analysts translates into opportunity for investors welling to do a bit extra research. For example, using uncapped drill grades is standard practice in the Red Lake camp because of the large nugget effect (bulk samples can grade 100% to 200% higher than drill results based on actuals). Also the 11.0m hole in question intercepts the F2 zone at an angle of roughly 80 degrees so it was hardly on strike and rather represents a good estimate of true width.

    Red Lake is in Ontario, Canada, a safe mining location. The F2 deposit has extensive infrastructure so start-up CapEx is going to be modest, probably less than 200M. The grades are out of this world relative to peers

    Rubicon is going to be big news in 2011 as the bulk samples become known and deeper drill results come in and in 2012 when production is expected to start.
    Dec 23 11:19 AM | 3 Likes Like |Link to Comment
  • Gold Is Overvalued: Fundamentals Say 'Bubble' [View article]
    Rubicon (RBY) is in a class of its own and belongs on any gold miner list. They will be mining by the end of 2012. I have done a detailed valuation of RBY relative to other gold miners and believe RBY continues to be mis-priced by the market
    Dec 15 09:34 AM | 7 Likes Like |Link to Comment
  • How to Play Growing Chinese Gold Demand [View article]
    Great article.

    I have certainly seen Chinese officials walking the exhibitor isles at recent Vancouver Gold shows learning about junior gold stocks. I believe that there is a small chance that China might well jump on Rubicon (RBY, RMX.TO) to grab up to 40% of the Red Lake gold camp, the high grade gold capital of the world. Red Lake is the Rockefeller center of gold locations. I do not know of an equivalent undeveloped deposit to Rubicon's F2 Gold system -- 13.1M to 16.3M ounces of gold Exploration Potential with a grade higher than 20 g/t. The other Rubicon lands are target rich in Red Lake and largely unexplored.

    Canada would have to let the Chinese take over Rubicon since it can't make a strategic argument like it might for uranium or potash.
    Dec 8 10:14 AM | 2 Likes Like |Link to Comment
  • Rubicon Minerals' Tipping Point [View article]
    Looks like the Seeking Alpha software badly mangled the 2nd last paragraph of my last post, perhaps to remove the link to my June 2010 for fee report -- my model in that report would have generated a resource count in the range of the 13 to 16M oz exploration potential prepared by Peter George.

    The rock star bank analysts are rating Rubicon anywhere from an under perform with no price target (BMO) up to a $10 price target (TD).
    Dec 8 09:46 AM | Likes Like |Link to Comment
  • Rubicon Minerals' Tipping Point [View article]
    The valuation of $311 is based on just the Inferred resource and does not include anything for the Exploration Potential. Also, at 20.1 g/t the value in production, based on an extrapolation of Agnico-Eagle's valuation adjusting for grade difference is closer to $700 per ounce. To get the full valuation, I also adjust for mine development costs and like factors.

    Although this is the first time I am including an exploration potential, I believe that F2 deposit is a special case since F2 is within 10km of the Red Lake / Campbell mines which has produced more than 20M ounces over more than 50 years. The rock chemistry of F2 and the Goldcorp 20M ounce producer are very similar. The outlines of the known deposit are very similar. The deposit controlling ultramalfic rock is very similar. Red Lake is a high grade capital of the world. F2 is going to be the next Red Lake mine. That is clear it you step back and look.

    So I have based the valuation on 10.0M ounces (a 250% premium over the 4M Inferred ounces).

    The bank analysts are all screaming caution and discounting the Inferred ounces and discounting the Exploration Potential. Normally, I would also discount Inferred ounces, perhaps as high as 50% depending on the deposit location and other factors. However, this is Red Lake. F2 is a special case. I am willing to think out of the box to value F2. The bank analysts do not appear to have any incentive to think out of the box so they stay with their tried and true safe valuation strategies (discount inferred resources, ignore exploration potential, etc.). But they (and me included) have never had the chance to value an F2 equivalent -- there just hasn't been a 20 g/t multi-million ounce deposit, with an in situ x-cut and 168,000m of outstanding drill results, open at depth and open on strike. So the bank analyst rock star words of caution are not based on any physical experience. I believe they are just risk adverse.

    So I have read everything I could written by Peter George who has 40+ years experience working on F2 like deposits and am basing my models on clues left by Peter George. It is interesting to note that my original for fee report on Rubicon
    BMO) to maybe a $10 price target, I believe Rubicon continues to have upside surprise opportunities. The bulk sample (results in Q1) plus continued exploration drill results (likely some from below the 1500m level) have surprise potential. The start of ore stock piling in Q3 2011 will also gather much attention in the industry. It is all good. But the ride will be volatile as we are seeing this week.

    2011 should be an outstanding year for Rubicon.
    Dec 8 09:37 AM | Likes Like |Link to Comment
  • Rubicon Minerals' Tipping Point [View article]
    I have some target prices and time frames for Rubicon stock price at

    The projections are based on closing market prices and are updated after the close of trading each day.
    Dec 7 03:30 PM | 1 Like Like |Link to Comment
  • Rubicon Minerals' Tipping Point [View article]
    Taking a profit on calls is always a good move. The buyers of out of the money call options are supposed to lose money. I love it when the buyers will big time.

    Well done!!!!
    Dec 1 09:24 AM | Likes Like |Link to Comment
  • Rubicon Minerals' Tipping Point [View article]
    At the May 2010 AGM Mr Adamson indicated that he expected the CapEx to be less than $250M. Therefore the issue of 1B in CapEx is not an issue.

    In fact the startup CapEx is probably closer to $150M since the shaft is already there, the hoist is in place and options on upgrades are secured, tailing pond is licensed with 25 years capacity, road to the site are excellent, work infrastructure is available in the near by town, etc.

    You need to do the math on what it means to be mining 20 g/t gold. For example, if they upgrade the hoist to 2000 t/d, then assume 300 days operation a year means they will be extracting about 380,000 oz of gold a year.

    It is the high grade aspect of Rubicon's F2 Gold system that is so attractive. I do not know of a similar undeveloped high grade deposit left in the world. If you do please tell me about as I am very interested in learning more.

    Rubicon's tipping point is by no means finished as a result of a one day rise. Rather, I expect an even bigger pop when the January bulk samples are released. Having looked that the VG photos from the Nov 18th tour, I fully expect the bulk sample to easily exceed 20 g/t.
    Dec 1 09:20 AM | 1 Like Like |Link to Comment
  • Rubicon Minerals' Tipping Point [View article]
    You might want to read the Rubicon press release on November 29th.

    IMO the Rubicon resource and exploration potential are the drivers behind this move because the analysts community were making their valuations of Rubicon on the basis of wrong information. The new data from November 29th has triggered a "tipping point" in the valuation of Rubicon as the market adjusts to the new information.
    Nov 30 09:26 AM | 1 Like Like |Link to Comment