"Otto" On Petaqilla and Me on Judicial Security in Panama

Wednesday, December 10 2008 @ 09:07 PM UTC

Contributed by: Don Winner

By DON WINNER for Panama-Guide.com - It's simply amazing the lengths some people will go. Some blogger going by the tag of "Otto" who refuses to use his real name or identify himself has decided to attack both me and the Petaquilla gold mining project in Panama. He claims they are lying about their intentions to start production in the month of December. The primary reason (he says) is that there are some 40 additional line items the company will have to comply with as part of the recently issued Environmental Impact Study issued by ANAM before they can begin production. But this guy represents a dangerous mix of being able to sound smart, just so long as no one checks out what he's saying. I took ten seconds to check just one of his claims and found him to be full of crap. (more)

Propping The Price? Today "Otto" alleged Petaquilla CEO Richard Fifer has been attempting to "prop up your own stock price by buying every single bid on any given day." He went on to say "note that of the eight trades completed in PTQ.to on Monday 8th December, eight (i.e. all) of them had a certain Richard Fifer as the buyer." The writer (whoever he is) is correct in that Richard Fifer purchased 53,500 shares on 8 December 2008 through eight transactions on the Toronto Stock Exchange. But, "Otto" incorrectly represented these purchases to reflect "every single bid on any given day." In fact, on 8 December 2008 there were a total of 81,700 shares of Petaquilla (PTQ) traded on the Toronto Stock Exchange (TSX), or 28,200 more than purchased by Richard Fifer.

Insider Trading: The purchases of Petaquilla stock by Richard Fifer were reported publicly as part of the rules and regulations regarding Insider Trading. This is done to allow everyone to know what the company officials are doing with regards to purchases or sales of company stock as a means of oversight and control, and obviously there was no attempt to disguise or hide these purchases. What's the big secret there, "Otto"?

Why Buy Your Own Stock: "Otto" alleges Fifer wanted to "prop up" the price of the stock by purchasing 53,500 shares. But ask yourself, might there be some other reason why Petaquilla CEO Richard Fifer might want to scoop up a bunch of PTQ on the Toronto Stock Exchange now? Remember, they were recently granted an Environmental Impact Study by the Panamanian National Environmental Authority (ANAM) and they have been saying for months that they plan to begin production in December 2009. If they actually do produce their first ounce of gold and issue that press release, then you can most certainly expect the price of the stock to go up substantially. And allow me to say that's just my observation, for what it's worth.

I Own 100 Shares of PTQMF: By way of disclosure, I purchased just 100 shares of PTQMF at about .85 cents a share a long time ago. So, my initial $85 dollar investment in the company is now worth about $41 bucks the last time I checked. Clearly, my intention is to manipulate the price of the stock in order to dominate the world.

Why I Follow Petaquilla: I have been watching this Petaquilla operation for a long time mainly for one reason and one reason only - their mine represents a significant foreign direct investment potentially worth billions of dollars to the GDP of Panama that could create hundreds of direct and thousands of indirect jobs for the country. Panama has vast untapped mineral resources and for the first time companies like Petaquilla are willing to fight through the difficulties to potentially make the mine productive and bring those resources to fruition. A large, successful, and profitable operating gold mine in Panama would be an overall "plus" for the national economy, assuming, of course, that it's done in an environmentally responsible manner with proper oversight, and if environmental damage mitigation protocols are established and followed.

Petaquilla Has Not Paid Me A Dime: Also for the record and by way of disclosure, the Petaquilla company has never paid me a single red cent in any way, shape or form. I watch what they do carefully, read the news about what they are doing, form my own opinions, and then write about them. To be clear I do want to see these kinds of operations succeed, for the overall long-term good of the country. That's my opinion and why I follow developments related to the Petaquilla operation specifically and other mining operations in general. I don't "pump" Petaquilla, and even if I did, if you take investment advice from me you need to have your head examined. Following Warren Buffet around would be smart. Following me around would amount to investor suicide.

What If "Otto" is Right? Maybe this illusive and shadowy "Otto" character is right when he claims Petaquilla is flat-out lying when they say they will start production this month. One thing is certain - Petaquilla has been saying for years they will be starting production any time now. Who knows? I certainly do not, especially considering the legal and judicial environment in the Republic of Panama with regards to judicial security and the application of environmental law. One thing is certain - building and operating an open-pit gold mine in an area that was virgin rain forest is expensive, difficult, and creates significant environmental challenges. In short, it's "ugly" and there are many opportunities for accidents, spills, neglect, and mismanagement that could potentially result in long term and irreversible environmental damages.

The 40 Line Items in the EIA: According to "Otto" there are 40 additional line items in the Environmental Impact Study issued to Petaquilla that would prevent them from starting operations. Is he right? I don't know. The 40 line item thing is real, and maybe those details will actually prevent Petaquilla from starting production. Or maybe, they can both comply with the requirements of the EIA and also start production. Quite simply, I don't know. In fact, I don't think "Otto" does either, but he's not about to let that get in the way of a good rant.

Enter The Panamanian Supreme Court: Just last week the Panamanian Supreme Court overturned (struck down or annulled) the Environmental Impact Study (EIA) issued by Panama's National Environmental Authority (ANAM) for Phase II of the Red Frog Beach project in Bocas del Toro. Although Red Frog spent more than $400,000 to have the 700-page EIA produced, and the Director of the ANAM told me personally the document was the "best prepared and most comprehensive EIA that had ever been presented" to her organization, the Supreme Court decided to in effect cut the "balls" off of the ANAM. Apparently the Arnulfista branch of the Supreme Court led by Winston Spadafora is making political hay through environmental issues. The "charge" against projects like Red Frog and Petaquilla is being led by Winston Spadafora's sister Alida Spadafora, who is the Executive Director of the "Asociación Nacional para la Conservación de la Naturaleza" (ANCON) (National Association for the Conservation of Nature). Check their website - the EIA for Petaquilla is squarely in their sights so it probably won't be long before the Supreme Court strikes that one down as well. Applaud the decision against Red Frog and you're applauding Winston Spadafora. Good luck with that.

What's Left of Judicial Security? This same Supreme Court also struck down an ARI resolution granting Herman Bern a concession to operate the Playa Bonita Hotel in Veracruz, but have you seen anyone moving out of there? Of course not - they are continuing to operate like normal and apparently everyone has basically blown off that Supreme Court decision. Has anything else happened in that case that I've missed? I don't think so. In Panama it's very hard if not impossible for large businesses to operate in this legal and judicial environment, because all it takes is one corrupt official to decide against you one way of the other, and you're screwed. If Petaquilla can't become a reality (granted, with all of its warts and flaws), then what can?

The Bad Old Days: The Panamanian Supreme Court should turn on CNN every once in awhile and realize that the global economy is headed for the proverbial melting pot - and that all Panamanians should fight for every dollar of Foreign Direct Investment they can find. Memories are short, I guess. Maybe another dose of the "crisis" we suffered through under Mireya Moscoso will remind everyone of what it's like. Back then we didn't have 11% growth in the GDP (2007) but rather a contraction of the economy. Unemployment was at 15% or higher and underemployment was worse. This issue of Judicial Security will become more critical for the Republic of Panama as we move deeper into this global financial morass.

Oh Yeah, "Otto" Whatever. The only thing worse than taking investment advice from me would me listening to some anonymous knucklehead who refuses to identify himself. He's smart enough to be able to make himself sound intelligent and well informed, but you would obviously be wise to double-check whatever he claims because he's clearly driving some kind of an agenda. But, you get to make that call...

Copyright 2008 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.

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