Tis rigor and not law

Lessons from the Almaden Minerals (AMM.to) (AAU) permitting failure (from IKN605)

This weekend’s edition of The IKN Weekly was a holiday edition and not its normal length, but we still got some work done. For example, this:

Lessons from the Almaden Minerals (AMM.to) (AAU) permitting failure

Last week and after much delay, Almaden Minerals (AMM.to) (AAU) announced (7) it had “…received notification (the “notification”) from the Mexican federal permitting authority, Secretaría de Medio Ambiente y Recursos Naturales (“SEMARNAT”) that the Company’s initial environmental permit application (“MIA”) in respect of the Ixtaca project has not received approval.” The market reaction to what amounts to the loss of the company’s flagship project is seen in this ten day chart:

This major permit failure had long been predicted by this desk, but that didn’t need a massive amount of insight as in all honesty, a working knowledge of the Spanish language has always been enough to understand the true nature of AMM and why to avoid the company. For an example we offer Gustávo Álvarez, who covers mining at Mexico’s respected regional daily ‘El Sol de Hermosillo’ in a weekly column. He’s also recommended for Spanish speakers looking for a balanced view of Mexico’s sector from a pro-mining viewpoint (he’s a VP Corp Comms by trade), as he comes with a broad knowledge of Mexico’s mining scene and it shows in his op-ed this week on Semarnat’s permit denial for its Ixtaca gold mine project in Puebla (8). Today you have translations of how it started and how it finished, here’s the top paragraph

Semarnat has recently published another permit denial to construct and operate a mine. This time it was Minera Gorrión owned by Almaden Minerals, with its long-aged Ixtaca project in Puebla. This resolution confirms two things: One; denying permits to the mining sector is a State policy, and Two; the directors of mining companies, principally those located outside the country, still do not understand that social capital is the only way to open paths of negotiation in order to operate in times of a populist government and electorate.

In his note Señor Álvarez then elaborates on those main points, that although the government of Mexico and its permitting track and structure leave much to be desire in many respects, the company has also failed in its CSR and deserves plenty of blame. That’s something you wouldn’t believe by reading the AMM NR last week, which announced the permit denial then went about explaining why it was a bad decision, thereby showing the company was still living in its own fantasy world. It probably added to last week’s drop as well, but rather than pulling a chart apart we return to the translated words of Gustávo Álvarez, who wrapped up his note this way and I particularly liked the final line, a question directed in context of the op-ed to AMM management:

“If Almaden had 300 supporters in the towns of its project, they would already have mobilized its delegation to Semarnat in Puebla, as visibility is necessary in times of governments as media-driven as the one we now have. Which means that as long as companies don’t have social arguments and the backing of public perception, they won’t be able to fight negatives from authorities. If you’ve played the same game for 20 years and it’s beaten you, how about changing the way you play the game?”

That’s exactly right. As much as Mexico and its spaghetti mess of politically charged bureaucracy can impede a company, AMM is also a case study in how not to run a CSR campaign in the country. While on the subject, its corporate strategy of sophistry toward its shareholders would be fine case study for the next generation mining’s marketers and promoters. Just the latest in Q3 this year when it used paid-for channels to make a minor ruling related to its permitting process sound as though it was winning its permitting battle. Nothing of the sort as we now know, but the pumping shows in the spikes in the chart, below. The Poliquins are responsible for a series of CSR blow-ups over the Mexico map, including the CSR messes they handed to third parties at Caballo Blanco and Morelos, as well as their own failures at Almadex (that they managed to get sponsored away from their own pockets) but last week, with Almaden, they were finally served with a plate of their own food.

Glad to have kept a few of you away from this company. May it remain so.


    This is an excellent blog post. It cuts to the heart of the issue at AMM and it provides plenty of supporting evidence. It even provides an excellent resource for information on the Mexican mining scene. What more could you ask for! Nada. This is Otto at his best.


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