Argentina's Abject Stupidity
I’d guess few of my readers remember that 100 years ago, Argentina produced the 9th highest GDP on earth. It had great wealth from agriculture and similar mining potential to that of neighbor Chile. Now the country stumbles from one economic crisis to another caused by a century of stupidity in government.
Very few people, including gold bugs, actually understand the nature of a gold standard and why it’s a good idea. You don’t even need gold for a gold standard. All a gold standard does is inject discipline into a monetary system. And discipline, of course, is just what the doctor ordered for the world in general and Argentina in particular.
The latest stupidity announced two days ago calls for an agreement between the largest supermarket retailers to freeze all prices for two months. These retailers control 70% of the market place. They are thrilled to put on price controls because they know it will put their smaller competition out of business and clear the shelves of all goods.
It’s hard to figure what the dumbest things are that Argentina has done with their economy. It could be currency controls established back in November of 2012 or it could be filing criminal charges and fines against private sector economists for accurate reporting of the inflation rate in Argentina. It may have been nationalization of their largest energy company back in April of 2012. In any case, Argentina is attempting to micro manage inflation and it won’t work now any more than it did in the past.
With the head of the Argentina Central Bank by the name of Mercedes Marcó del Pont is quoted as saying, “It is totally false to say that printing more money generates inflation,” you know you have a real problem.
The chaos produces both great danger and great opportunity at the same time. I just returned from a quick visit to some high potential copper/gold porphyry projects in San Juan province in Argentina.
There is an Australian listed company doing business in Argentina named Argentina Mining. They have a number of interesting projects in Argentina that came to the attention of a Canadian junior named New Destiny. Argentina Mining has raised and spent about $15 million in Argentina.
To even a larger degree than in Canada, it’s simply impossible to raise money in Australia right now. New Destiny was able to pick up 100% interest in a project named Tres Amigos for a cash payment of $50,000 and 1.5 million shares of NED with a work commitment of $480,000 within 12 months and payments to the landowners of $150,000 spread over four years. There is a NPR of 10% capped at $2 million and an underlying 1.5% NSR to Argentina Mining.
In addition, there is a very interesting copper/gold porphyry project named Cerro Blanco located nearby. NED is paying Argentina Mining $300,000 in cash and 12.5% of the fully diluted shares to finance the exercise of the option in addition to a $2 million work commitment over a three-year period. NED is getting a 60% option on Cerro Blanco. There has been a small drill program done at Cerro Blanco. Results included 102 meters of .18% copper and .06 g/t Au and 108 meters of .2% copper and .08 g/t Au.
Argentina Mining conducted an IP survey over the main target area that revealed a yet unexplored high chargeability zone measuring 900 meters by 1500 meters. The top of the anomaly is about 250 meters below the surface and has been interpreted to be a sulfide rich zone typical of copper rich gold porphyries. A very speculative estimate of what could be there was that of 400 mt to 1 billion tons of .3% copper and .13-g/t gold.
Given the dismal state of the junior market today and the abysmal government micromanaging inflation in Argentina, it would appear at first glance to be the act of a mad man to invest in Argentina at present. But investors should remember, all things change. Hard to believe as it may be, Argentina actually has moments of sanity in-between the fits of utter madness. Porphyries take a lot of time to prove up and Argentina is at the end of their rope.
In addition, Argentina Mining lacks the ability to raise money and I think NED will end up with a lot more of the project at a low cost. With a price of $.07 and only 17 million shares outstanding, NED has a current market cap of $1.2 million. They really don’t have anywhere to go but up.
New Destiny is an advertiser and we are biased. I have participated in a PP a year ago at $.15 and again in the PP at $.05. Please do your own due diligence.
New Destiny Mining