IMF DELAYS FUND DECISION ON BOTSWANA BECAUSE OF $277 MILLION RUSSIAN CONTRACT DEFAULT

By John Helmer, Moscow

The International Monetary Fund (IMF) is delaying a decision on Botswana by the Fund’s executive board and shareholders as IMF staff are discreetly encouraging the Botswana Government to reject a breach of contract claim by Norilsk Nickel.

The leading Russian mining company, and the world’s largest nickel producer, is suing in London, Botswana and South Africa after the Botswana government put its state mine holding BCL into bankruptcy last October,  halting payment of $277.2 million which Botswana, BCL Investments (BCLI) and the BCL Ltd. holding company  agreed to pay since their first contract of sale and purchase was signed with the Russians in 2014. The Norilsk Nickel default claim is one of the largest liabilities facing the Botswana state budget. The default is also casting a shadow over future foreign investment in the country, and the government’s credit rating for foreign loans.

An IMF team was in Gaborone, the Botswana capital, in May for a fact-finding mission and consultation with government officials, the first the IMF has held in the country since December 2015.  The IMF requested and received briefings on the Norilsk Nickel case from government officials and also from the provisional liquidator, Nigel Dixon-Warren of the KPMG accounting firm. He was appointed last October by the Gaborone High Court to supervise liquidation, sale of assets, and debt recovery from the bankrupt BCL group of companies. 

On June 15, the court ordered a six-month extension of time for negotiations — BCL went into final windup, while BCLI and Tati Nickel were kept in provisional liquidation for the dealmakers.  According to a courtroom source, the extra time is for the government “to determine whether we can deal with those companies at the shareholding and creditor compromise level”. In short, for Dixon-Warren to strike a price for the nickel and copper reserves and mining assets which BCL owns in order to satisfy BCL’s creditors and cover BCL’s liabilities.

Anne-Marie Gulde-Wolf, who supervises Botswana at IMF headquarters in Washington,   said after the IMF staff returned from Gaborone on May 16, that she was planning to finalize the Botswana report and submit it to the board for decisions planned for June. Gulde-Wolf was asked what the IMF was doing in the dispute between Botswana and Russia. “I have asked the mission chief for Botswana, Mr. Enrique Gelbard to look into the matter,” she replied. “He will be in touch should there be anything we can share. “

Asked to clarify why no report was submitted to the IMF board during last month and no decisions voted on IMF policy towards Botswana, Gulde-Wolf, Gelbard, and the IMF spokesman for Africa,  Lucie Mboto Fouda, now refuse to say.

In Moscow, a source close to Norilsk Nickel said the company “has welcomed a statement by the Botswana government that it plans to resolve the issue with Norilsk Nickel. We look forward to the arrangements the government intends to make.” To date, the IMF had made no contact with the company either in Gaborone in May, or since then. (more…)

AT BOTSWANA BARBEQUE NORILSK NICKEL GETS BURNED — $277 MILLION DEFAULT, EMIRATI FAKING, BOTSWANA GOVERNMENT DECEIT FACE THE COURTS

By John Helmer, Moscow

Last year the government of Botswana decided to halt a 2-year old, multimillion dollar contract for its state mining company to purchase a nickel mine from Norilsk Nickel, Russia’s largest mining company. The government also decided to put its state nickel mining company into bankruptcy to protect against court claims from Norilsk Nickel. At the same time, the Botswanans tried arranging a buyout of their mining company by a penniless investment group in the United Arab Emirates.

A document, drafted on March 13 and circulating since then among Botswana Government officials, reveals details of the buyout and confirms that the Norilsk Nickel deal was negotiated in bad faith by the Botswanans without the money to pay for it.  The Botswanan Government then sought secret help from the South African Government to block the deal. 

This sequence of events, decided behind closed doors,   have so far cost Norilsk Nickel a contract worth $277.2 million, and the conviction that the Botswana Government cannot be trusted to honour either its obligations to foreign investors, or its promises of employment and prosperity to its own people. Mining sources in Gaborone, the Botswana capital, say it’s a case of politicians inexperienced in business “doing something either so clumsily they are culpably incompetent, or so cleverly they are corrupt. Either way the Norilsk Nickel case is a tragedy for the country.”

The deal was the last exit from Africa by the Russian company, convinced that Botswana is a much higher risk than has been admitted until now in reports of the International Monetary Fund, the World Bank, and Transparency International.  As for the smoking-gun letter, Sadique Kebonang, the Botswana mining minister to whom it was addressed, says: “I am unaware of it. I will look for it since you have brought it to my attention.” He declined “to respond to matters that are before court and are subject to the sub judice rule.” (more…)

THE PLATINUM OPEC — IS A GOOD SOUTH AFRICAN IDEA DEAD, OR A DEAD RUSSIAN IDEA GOOD?

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By John Helmer, Moscow

There has long been a fear on the Russian side that South Africa will sell as much platinum and palladium as it can mine, threatening the market price of both metals, and leaving Russia holding very large, very secret stocks of dwindling value. From the Russian point of view, that’s not a unilateral sacrifice Russia should accept; nor a unilateral advantage South Africa should be allowed to take.

Together, Russia and South Africa (SA) produce almost 90% of the world’s platinum supply (5.7 million ounces); 80% of the palladium supply (6.4 million oz). So there has been a natural inclination for the principal producers – Norilsk Nickel in Russia; Anglo Platinum, Impala, Lonmin and Northam in South Africa – to test the scope for price-supportive cooperation in the market, instead of price-damaging competition. The Russian and South African governments have naturally inclined in the same direction.
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EVRAZ SELLS LOSS-MAKING SOUTH AFRICAN HIGHVELD STEEL, BUT THE PRICE IS CAUSING SPECULATION, MAKE THAT SUSPICION

By John Helmer, Moscow

If 85% of something was worth $320 million on March 27, then full value would be about $377 million. And if that something is identified as Highveld Steel & Vanadium Ltd. — a major South African producer of flat steel products and vanadium with which to harden steel — then how come that two days before, on March 25, the thing was valued on the Johannesburg Stock Exchange at just $140 million?

That Russians should want to sell at a 269% premium is plain. But if the evidence on the South African buyer’s side seems to defy commercial sense, two obvious questions follow — who in South Africa would agree to pay over the top for the asset, and why? The answer to the first adds mystery to the second – noone appears to know who the South African buyer really is.
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FANTASY IN WHITE – POLYMETAL DREAMS OF THE MOTHER LODE, AND OLEG KISELEV MAKES A BLAST FROM THE PAST

By John Helmer, Moscow

When precious metal geologists kiss their wives good night, and go to sleep, they dream of pushing upstream from river-borne, alluvial or placer deposits of platinum, to strike the mother lode. In geological theory, this is the El Dorado of the platinum business – a bedrock of high-grade platinum ore, not too far underground, easy and cheap to excavate, in much larger volumes than can be extracted from panning or dredging downstream, where millions of years of erosion have washed the metal in grains or tiny nuggets. Unlike their wives or gold, geologists prefer platinum because its value is relatively stable.

This year, for example, look at the moving line and compare the volatility of the gold price (left chart) compared with platinum’s (right):
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IS THAT RUSSIAN RISK MONEY WAVING GOODBYE, OR GOING SHORT ON COMMODITIES?

By John Helmer, Moscow

In The Long Good-Bye, private detective Philip Marlowe says of the snob column in the newspapers, “I don’t read them often, only when I run out of things I dislike.” Some people feel that way about the weekly report from Emerging Portfolio Fund Research(EPFR). That is the Boston outfit which tracks the flow of investor funds into and out of emerging market destinations in the aggregate (GEM, EMEA), and in particular countries.

The bad news, out today in EPFR’s bulletin and Uralsib Bank’s weekly analysis, is that outflow of investor cash in Russian stocks and funds hit a record this week of $298 million. This was a big turnaround from the previous week’s positive inflow; though it makes just a small dent in the total flow inward to Russia since January 1 of $3.5 billion.
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HOLDING HANDS IN THE DARK — DERIPASKA’S BEST LIBYAN FRIEND ALSO HELPED WITH THE NORILSK NICKEL ATTACK

By John Helmer, Moscow

Oleg Deripaska (right), the chief executive of United Company Rusal, not only persuaded Muammar Qaddafi and his son, Saif al-Qaddafi (left), to invest in Rusal shares to support the company’s listing in Hong Kong last year. It now appears the Libyans also bought a stake in Norilsk Nickel to assist Deripaska in his hostile takeover bid against Norilsk Nickel, which is controlled by Vladimir Potanin and the Russian government.
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NOONE WILL BUY THE POOR OLIGARCH’S FLOWERS — USMANOV MAKES IT OFFICIAL: HE CAN’T SELL METALLOINVEST SHARES ON THE OPEN MARKET

By John Helmer, Moscow

Indirectly but without ambiguity, Alisher Usmanov acknowledged for the first time on Tuesday, in a Moscow newspaper he owns, that he has failed to sell shares in his principal asset, the Metalloinvest iron-ore mining and steelmaking group, to anyone. His recourse, he also made clear, is to hold hands with Oleg Deripaska in a combined effort to compel Norilsk Nickel and its controlling shareholders, the Kremlin and Vladimir Potanin, to buy him out, and exchange Metalloinvest shares for Norilsk Nickel shares – at a premium valuation noone has agreed to give Usmanov in his years of trying.
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RUSAL POT GOES TO LONDON COURT TO CALL THE NORNICK KETTLE BLACK – BRITISH JUDGE DISMISSES RUSAL APPLICATION

By John Helmer, Moscow

It is now one week since Rusal obliged Norilsk Nickel to call an extraordinary meeting of shareholders for a fresh round of voting on the Norilsk Nickel board . This is the third such vote; the first was at the regular annual shareholders meeting of Norilsk Nickel on June 28, last year; the second followed on October 21. There will be a fourth when the Norilsk Nickel shareholders return for their annual general meeting in another 12 weeks.
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WHEN ROGUES FALL OUT – WHAT PUTIN AND SECHIN ARE DOING TO END THE FIGHT AT NORILSK, AND THE $4 BILLION REASON WHY THEY ARE TAKING THEIR TIME

By John Helmer, Moscow

Suppose, just suppose that Vladimir Putin, Prime Minister of Russia (image far left), and Igor Sechin, the Deputy Prime Minister in charge of resource concessions (image far right), were stakeholders somehow of United Company Rusal, the state aluminium champion. And suppose, just suppose they decided that the hostile takeover strategy of Rusal CEO, Oleg Deripaska (second left), against Norilsk Nickel, state nickel, copper and platinum champion, has gone too far, and is now depressing both companies’ share values. Accordingly, just suppose they have invited Deripaska, along with the controlling stakeholders of Norilsk Nickel, Vladimir Potanin (second right) and CEO Vladimir Strzhalkovsky, to come up with enough fresh cash to suit everyone, and enable Norilsk Nickel to buy back the 25% stake Deripaska purchased from Mikhail Prokhorov in better times, three years ago, for roughly $14.5 billion. And suppose, just suppose Deripaska has been in to chat with Putin and Sechin, and between them they have come up with a price Potanin and Strzhalkovsky say they can’t afford.
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THE CHAMBER OF SECRETS – HARRY POTTER IS THE ONLY FOREIGNER ALLOWED TO LOOK INSIDE (BUT THAT’S KIDSTUFF)

By John Helmer, Moscow

Deep inside the Russian government there is a chamber of secrets where officials have gathered just eight times since April 29, 2008, the day when then-President Vladimir Putin signed the law that created the chamber. The law was entitled “On Procedures for Foreign Investments in Business Entities of Strategic Importance for National Defence and State Security”; for short, Law № 57-FZ. The chamber is called the Government Commission for Control of Foreign Investment in the Russian Federation, the Control Commission for short (aka the Government Commission).
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DERIPASKA LOSES: TAKE THE EYE OUT OF THE CYCLOPS, AND WHAT HAVE YOU GOT? A BIG, BLIND, BLUNDERING LIABILITY

By John Helmer in Moscow

Today the news comes to you from Homer, with Odysseus doing the talking: “We came to the land of the Kyklopes race, arrogant lawless beings who leave their livelihoods to the deathless gods and never use their own hands to sow or plough; yet with no sowing and no ploughing, the crops all grow for them–wheat and barley and grapes that yield wine from ample clusters, swelled by the showers of Zeus. They have no assemblies to debate in, they have no ancestral ordinances; they live in arching caves on the tops of high hills, and the head of each family heeds no other, but makes his own ordinances for wife and children.” The countryside is empty of men, because the Kyklopes (Cyclops) eat them.
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DERIPASKA LOSES ANOTHER ONE ON THE WAY TO THE NORILSK NICKEL SHAREHOLDER VOTE – THE UK HIGH COURT DISMISSES HIS CLAIMS, ORDERS END TO DELAYING TACTICS, SETS TRIAL TIMETABLE

By John Helmer in Moscow

With just a week to go before Oleg Deripaska asks Norilsk Nickel’s international shareholders to vote in favour of his hostile takeover of the company, the UK High Court has ordered an end to Deripaska’s tactics towards former patron and partner, Michael Cherney (Chernoy); dismissed more of Deripaska’s claims about his opponent; and fixed the timetable for Deripaska to face trial on charges of fraud, deceit, and breach of trust.
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EVRAZ KEEPS ITS TAR BABY — CANCELS SALE OF US VANADIUM UNIT STRATCOR

By John Helmer in Moscow

The Russian steelmaking group Evraz announced today that it has cancelled the sale of its Connecticut-based vanadium producer, Strategic Minerals Corporation (Stratcor). Without giving a reason, the announcement says the company “notes the recent publications regarding the possible sale of…Stratcor…Following a comprehensive analysis of Evraz’s strategic options in relation to its US vanadium subsidiary Stratcor, Evraz has terminated negotiations regarding the possible divestment.”
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EVRAZ TO SELL US VANADIUM PRODUCER STRATCOR — BUT THIS BABY MAY NOT BE GOING OUT WITH THE BATHWATER – THE RUBBER DUCK STAYS SILENT ON WHO GAINS, WHO LOSES IN THE DEAL

By John Helmer in Moscow

Evraz, the most heavily indebted of Russian steelmakers, is signaling that it is about to sell a US subsidiary producing the valuable steel alloy ingredient, vanadium. But the signs are that there is no intention on the part of the controlling shareholders of Evraz – Roman Abramovich, Eugene Shvidler, and Alexander Abramov – to toss the vanadium baby out with the bathwater. The idea apparently is to take the company off the Evraz books, making the profit and loss accounts look better for banks and share markets, but keeping control of the vanadium by selling the company to a shareholder – for the time being.
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PUTIN VISITS NORILSK NICKEL, HANDS OUT WARNINGS – DERIPASKA GETS A PUTDOWN

By John Helmer in Moscow

Oleg Deripaska is preparing a series of presentations to institutional investors next week in Boston and New York, chaperoned by one of his largest creditor banks, BNP Paribas. Rarely has so unconvincing a lamb been led to market by so well-known a wolf; or such an odd couple asked to be believed for the sincerity of their hand-holding.

The prospectus released by United Company Rusal to the Hong Kong Stock Exchange on December 31 reveals that BNP Paribas’s affiliated banks are owed more than $415 million by Rusal; no other international bank appears to be owed a larger sum by Rusal than that.
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‘HUFF, PUFF, AND I’LL BLOW YOUR HOUSE DOWN’ – MORDASHOV TRIES THREATENING SHAREHOLDERS OF HIGH RIVER GOLD WITH DELISTING

By John Helmer in Moscow

Loose Canadian stock listing rules, a compliant exchange regulator, and rubber-stamp directors have made it easy for a Russian raider to attack minority shareholders of High River Gold (HRG:TX), and threaten them with dilution and delisting, unless they give in to a low-ball buyout offer. That is what minority shareholders of High River Gold are this week charging against the majority shareholder, Alexei Mordashov, and his Moscow-based Severstal Resources group. But because at least some of the institutional minority stakeholders are powerful Russians – maybe as powerful as Mordashov — the outcome of the tussle over HRG may be decided in Moscow, not Toronto.

So far, Mordashov has instructed his appointees Nikolai Zelensky, the chief executive of HRG, Alexei Khudyakov, the HRG board chairman, and Alexander Grubman, a newly appointed chief executive at Severstal Resources, to apply maximum pressure on the minorities to accept a buyout offer of 22 Canadian cents per HRG share. Mordashov has started with an estimated 57%; the minorities with 43%. The offer started on May 22 at 18 cents, and was raised to 22 cents on June 9. The deadline for acceptances is July 31. Two weeks later HRG issues its first-half financial results. The deadline for the purported review of delisting by the Toronto Stock Exchange is August 18.
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MORDASHOV CAN RELAX — HIGH RIVER GOLD SHAREHOLDERS COMBINE TO REJECT BUYOUT OFFER, PROPOSE TO SIT BACK AND GET RICH

By John Helmer in Moscow

The buyout offer for minority shareholdings in Toronto-listed High River Gold (HRG:TSX) now looks double-doomed. A combination of minority shareholders has now formed that is numerically strong enough to prevent the Russian Severstal group, owned by Alexei Mordashov, from suceeding in his 22-cent offer for the 42.7% of shares he doesn’t already control. And Mordashov himself, and his Severstal group, appear to be under strict bank loan covenants to preclude any new deal worth $150 million, and thus in no position to raise their bid high enough, or borrow more money, to make the buyout possible.

HRG will hold its annual general shareholder meeting on June 30 in Toronto. Although the buyout bidding has been the dominating topic of shareholder talk for weeks — Mordashov raised his offer from 18 Canadian cents to 22 cents on June 9 — no action on that issue is expected. In the meantime, there have been threats of litigation against Severstal and the HRG management, while the Ontario Securities Commission is considering a shareholder complaint filed on April 24.

An HRG board deadline for a delisting review has been fixed for August 17. If Mordashov’s buyout offer of 22 cents fails by then, there will no delisting top speak of.
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THE RUSSIAN BEAR-HUG SQUEEZES VALUE OUT OF HIGH RIVER GOLD, BUT NOT FOR MINORITY SHAREHOLDERS

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By John Helmer in Moscow

You don’t have to be a child with an especially good memory to remember this one, which is pre-Mother Goose:

Jack Sprat could eat no fat.
His wife could eat no lean.
And so between them both, you see,
They licked the platter clean.

What four hundred years of nurses, mothers, and cooks have done to twist the meaning shouldn’t obscure the original moral of the tale – when it comes to appetite, rapacity will usually clear the plate ahead of modesty.

What attorneys for a Canadian shareholder in High River Gold (HRG:CN) have told stock market regulators in Vancouver and Toronto recently is that, when it comes to the management of the company and its share price by its Russian owner, Alexei Mordashov, there’s something decidedly unbalanced about the way HRG has been handled since Mordashov’s takeover of last November.

HRG is a Toronto-listed junior with four operating gold mines in Russia and Burkina Faso, and two mine projects in development. It has currently attributable production of about 300,000 ounces per annum, and is cashflow positive. Attributable gold reserves were estimated in February by Dan Hrushewsky, HRG’s investment relations director, at 2.2 million oz, with silver reserves at 5.2 million oz. A subsequent release from the company on March 17 reported a MICON expert audit of gold reserves at the Zun-Holba and Irokinda mines (Buryat region of southeastern Siberia). Altogether, counting the Bissa gold project in Burkino Faso and the Prognoz silver project (Sakha region of fareastern Siberia), and converting silver reserves into gold equivalent, HRG’s gold equivalent reserves and resources, on the Canadian NI 43-101 basis, add up to 6.1 million oz.
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FIRST THE COLLAPSE OF RUSSIAN GOLDMINER VALUE, THEN THE RISE OF CHINA GOLD, AND FINALLY THE SOUTH AFRICAN REVENGE

prokhorovgold

By John Helmer in Moscow

In the world of mining, it can be much more profitable to leave the gold in the ground, and take out the cash from booming share or equity value. According to Oleg Mitvol, the mine regulator for the Russian Ministry of Natural Resources until last month, Russian goldminers are guilty of investing in only one kind of digging — on the stock exchanges, where share prices are driven by gold reserves in the ground.

The paradox of Russian gold equity value starts with this: in terms of gold reserves, Russia ranks second in the world, trailing only South Africa. However, in terms of gold production, Russia is currently lagging in sixth or seventh place – behind China, South Africa, Australia, the US, Peru, and sometimes Indonesia.

For stock market hustlers, this discrepancy is treated as a positive – a disproportionately low production level relative to the resource base, suggests significant upside or growth potential. If a global or emerging market investment strategy recommends the gold sector for all the reasons that make the precious metal attractive in current conditions, then this anomaly, the reserve potential factor, should recommend Russian goldmining stocks for buying.

That is, unless investors suspect that Russian reserve potential is a mirage, a pig in a poke, or worse, a fake — that there’s a relatively high Russian risk that the local miners will delay the capital expenditure required to bring their new projects into production, and fill out their reserve totals by moving paper, instead of shovels.

Just how far and how fast gold equity values can move can be seen in China, where two of the leading goldminers listed on the stock exchanges are Zijin Mining Group, with a current market capitalization equivalent to $3 billion; and Zhongjin Gold Corporation, worth roughly the same.

In market value, they are less than half the value of Polyus Gold, Russia’s leading goldminer, whose market capitalization is currently about $8 billion. But each of the Chinese miners is substantially larger than the value of the second largest Russian goldminer, Polymetal, currently at $2 billion; or the next two Russian goldminers, Peter Hambro Mining and Highland Gold, at $1.7 billion and $241 million, respectively. Even allowing for Peter Hambro’s recent capital gain from absorbing its Aricom non-gold affiliate, the two Chinese goldminers are one and a half times the value of the three Russians.
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NOW YOU SEE MY GOLD ASSETS, NOW YOU DON’T – MIKHAIL PROKHOROV AND POLYUS GOLD ARE TARGET OF FIRST-EVER FSA ACTION

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By John Helmer in Moscow

For the first time since Russian goldminer listings began on the London Stock Exchange more than a decade ago, Russian shareholders have taken a major Russian goldminer to the UK regulator, alleging asset stripping and share value dilution, along with the charge that no justice is possible in the Russian courts. At the heart of the complaint filing is the sale of shares at what is alleged to have been ten times less than their fair value, and the valuation of gold reserves transferred at many muliples below book. The gold in question includes part of the most celebrated vein of unmined gold in Russia – the fabled Sukhoi Log deposit, in the southeastern Siberian region of Irkutsk.

A Moscow-based holding, Westway Alliance Corporation, with an 8% shareholding in the Irkutsk region goldminer Lenzoloto (“Lena [River] Gold”), filed its claim with the Financial Services Authority (FSA) on January 29.

The corporate targets identified in the complaint are the AIM-listed Polyus Gold (PLZL:RU, PLZL:LI), its management, and controlling shareholder, Mikhail Prokhorov. The FSA told Westway in March that an investigation has commenced. However, the FSA declines to respond publicly to questions about the case. The agency also warns complainants that its charter allows it to dispose of a complaint without informing anyone, unless the outcome is a disciplinary action posted on the FSA’s website. In 2007, the FSA says it issued just one disciplinary order or enforcement notice; in 2008, there were 8; and in 2009 so far, 2.

Westway told Minesite that between 2003 and 2006, Polyus took over the gold-producing and exploration assets of Lenzoloto at one price; then devalued them for transfer to Polyus; raised their value to achieve a significantly greater capital value for Polyus; and thereby deprived Westway as a minority shareholder in Lenzoloto of the substantial difference in value. Calculated on the basis of under-valued or reserves allegedly lost to Lenzoloto, Westway’s claim targets an amount estimated at $526 million; of that, its 8% stake should represent a claim to about $42 million.

In 2007, when Westway filed its initial claim in the Irkutsk regional arbitration court, the case was dismissed on a technicality. This was that, at the time of filing, and in the court papers, Westway failed to provide proof that it was the owner of Lenzoloto shares, although at the time the record of title indicated a nominee shareholder.
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GOLD PRICE ANOMALY — HIGH RIVER GOLD IS THE LITTLE ENGINE THAT COULD

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By John Helmer in Moscow

In 1930, at the start of the Great Depression, a story was published in the US with the purpose of convincing children that if they worked hard, they would be rewarded. That idea being none too original, it turns out that the tale of the small anthropomorphic locomotive, who pulls a heavy line of freight-wagons over a mountain-top, was cribbed from a publication a quarter of a century before.

If your mother read it aloud to you as a youngster, you’ll remember the best parts. The first was at the shunting yard when the bigger locomotives refuse the job, and the little one chants: “I think I can. I think I can. I think can.” With tantalizing tension as he slows on the up-grade, he manages the feat, and then celebrates as he runs downhill: “I thought I could. I thought I could. I thought I could.”

High River Gold (HRG:CN) is the Toronto-listed junior who’s lived to tell this tale. Only the children in the market don’t appear to have heard it, yet.

With four operating gold mines in Russia and Burkina Faso, tw and two mine projects in development, HRG has currently attributable production of about 300,000 ounces per annum, and is cashflow positive. Attributable gold reserves were estimated in February by Dan Hrushewsky, HRG’s investment relations director, at 2.2 million oz, with silver reserves at 5.2 million oz. A subsequent release from the company on March 17 reported a MICON expert audit of gold reserves at the Zun-Holba and Irokinda mines (Buryat region of southeastern Siberia). Altogether, counting the Bissa gold project in Burkino Faso and the Prognoz silver project (Sakha region of fareastern Siberia), and converting silver reserves into gold equivalent, HRG’s gold equivalent reserves and resources, on the Canadian NI 43-101 basis, add up to 6.1 million oz.

A recent international investment bank valuation of HRG estimates it at almost $770 million. The current market capitalization, however, is C$112 million (US$91 million). This compares with Russian peer Polyus Gold (PLZL:LI) at $9.1 billion; Polymetal (PMTL:LI), $2.2 billion; Peter Hambro Mining (POG:LI), $686 million; and Highland Gold (HGM:LI), $203 million.
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THE SHIP COMES IN FOR NORILSK NICKEL

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By John Helmer in Moscow

Moscow has been having much the same week for the past four months – everyone down at the pier tossing streamers, and waving goodbye, as the flagship investment funds toot their horns and pull away, to sail swiftly over the horizon.

It’s cold comfort to the flag-wavers of the Moscow mining and metals sector that the flow of funds into and out of comparable emerging markets – China, India, Brazil, Africa, other Latin America — has now begun to sail in the same direction as the Russian trend. Back in October, the weekly fund flow charts showed the withdrawal of capital from Russian energy and hard-rock resource companies was less dramatic than the flow of funds out of other emerging markets. But then from mid-December to mid-February, China, India and Brazil became a positive destination for investment again. With the exception of just a couple of weeks in February, when a pickup in the Russian RTS stock market attracted a modest inflow of cash, the Russian trend has been continuing loss of capital – and a concomitant drop in the RTS aggregate index of almost 20% over the past three months.

In percentage terms, the Russian equity market has said goodbye to more money than the markets of China, India or Brazil. The $330 million of accumulated net outflow from Russian funds since the first week of November compares with $210 million from Indian funds. Brazil has accumulated a net inflow over the period of $306 million; China has received a net inflow of $30 million.

The course of the bigger Russian golds looks like an exception. Polymetal (PMTL:LI, PMTL:RU), the St.Petersburg-based silver specialist that is no longer owned by frontman Suleiman Kerimov, is up 168% in the three-month period. Polyus Gold (PLZL:RU), still being carved up in the fight between shareholders Vladimir Potanin and Mikhail Prokhorov, is up 118%. Internationally listed juniors, with producing Russian gold assets, have turned on a mixed show. Peter Hambro Mining (POG:LN) is up 150%; Highland Gold (HGM:LN) is down 14%; Zoloto Resources (ZR:CN), down 25%; High River Gold (HRG:CN), almost flat. Virtually all the explorers who lack production, like Silver Bear Resources (SBR:CN), are down, or at best flat. The gold internationals with Russian mine production or capital exposure have also been mixed. Kinross (KGC:US), with a significant share of its global growth supplied from the Kupol mine in Chukotka, is gaining equity value. Barrick’s (ABX:US) minority stake in Highland Gold is too small to make a market difference.
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POLYUS GOLD AND KINROSS — IVANOV PASSES THE BUCK

By John Helmer in Moscow

Premature ejaculation is not usually an event which gentlemen call a public meeting to disclose. At least, not unless they are selling a cure.

The announcement this week in Moscow by Tye Burt and Yevgeny Ivanov, chief executives of Kinross Gold (KGC:US) and Polyus Gold (PLZL:RU), that they have signed a preliminary undertaking to think of doing a feasibility study in eighteen months’ time of the Nezhdaninskoye goldmine in Russia’s fareast is puzzling for its circumlocution, and its lack of specificity. According to the Polyus Gold announcement, the two companies “have concluded Memorandum of understanding on the possible joint development of Nezhdaninskoye hard-rock gold deposit located in the Sakha Republic (Yakutia)….within the time frame of 18 months the companies are planning to jointly prepare a Feasibility Study for the industrial development of the Nezhdaninskoye deposit.” Thereafter, another pair of conditionals — “upon completion of the Feasibility Study and, if warranted by its results, the parties will review the possibility to enter into a joint venture agreement for developing the Nezhdaninskoye deposit.”

Kinross has so far omitted to refer to Nezhdaninskoye, and Burt is not usually so coy. What is more, he already knows at least as much about Nezhdaninskoye as Ivanov. For this is one of the most carefully studied and valued gold deposits in Russia. First discovered in the Soviet period, and mined from 1975, it was thoroughly appraised in the early 1990s by David Deuchar, then technical director for Anglo American. The company decided the technical problems of the deposit raised costs above Anglo’s threshold of profitability, at the gold price prevailing at the time.

The mining rights subsequently went to Celtic Resources in its Irish phase. Then taken over by the West Australian Kevin Foo, all the detail the market might want for the deposit was issued in London, when Celtic was listed on the Alternative Investment Market (AIM). Although mining had been mothballed, and Celtic produced no gold for sale from the mine, Nezhdaninskoye performed as Celtic’s principal value- driver in the stock market, representing about 90% of its asset inventory. According to Celtic’s pre-feasibility studies and JORC count, Nezhhdaninskoye held 14 million oz of gold, with a prospective production rate of 450,000 oz per annum.
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FUTURE FOR RUSSIAN GOLDMINER STILL UNCERTAIN

By John Helmer in Moscow

Polyus Gold waits for the green light – or is it red?

Glenn Gould, the world’s greatest pianist, and a notorious automobile driver, once admitted: “It’s true that I’ve driven through a number of red lights on occasion. But on the other hand, I’ve stopped at a lot of green ones but never gotten the credit for it.”

Mikhail Prokhorov, the Russian oligarch who controls Polyus Gold, Russia’s most valuable gold miner (ticker PLZL:RU), may not be getting all the credit he deserves. It is understandable, therefore, that through spokesmen at his Moscow holding, Onexim, and indirectly through the media, he has been publicising a number of cash demonstrations in a marketplace stripped of most of its liquidity.

There is, for example, the $500 million he paid in September, plus another $500 million or so in pledged capital, for Renaissance Capital, a Moscow investment house that strenuously denies it holds toxic obligations, or operating losses it cannot cover.

There is also €496 million for the most expensive house ever sold in France. According to sources in the Nice area and Onexim, as well as French press reports, during the summer Prokhorov sent his representatives to inspect the villa at Villefranche-sur-Mer; negotiated the price; and paid a non-refundable €50 million deposit. No trace of such a payment has been reported in France, nor notarial evidence of the deal. Onexim said Prokhorov had not bought the house in France – as of mid-August.
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RUSSIAN GOLD CLIMBS OUT OF THE BUNKER

By John Helmer in Moscow

Analysts at Moscow’s Renaissance Capital reckon Russian asset values are priced below bargain basement.

A typo in the lead cannot take the glister off Renaissance Capital’s fresh report on Russian gold buying opportunities.

The report, by analysts Rob Edwards and Andrey Krupnik, is entitled “CIS Gold and Silver: A Golden Opportunity”. The lead paragraph says: “We believe gold is well poisoned [sic] to make further gains in the near term. This is somewhat dependent on movements in the dollar, which has reversed its bull run against the world’s major currencies.”

RenCap analyzes just three of the Russian gold producers – Polyus Gold (PLZL:RU), which is currently trading at $25, 60% down over the past three months; Polymetal (PMTL:RU) at $5, down 40%; and Highland Gold (HGM) at 76 cents, down 75%. Peter Hambro Mining (POG:LN), which is London listed, is down 41%, and currently at 741 pence.
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RED HAS TURNED YELLOW – THE GREEK AND CYPRIOT COMMUNISTS ARE FLYING A DIFFERENT FLAG IN THE UKRAINE WAR



By John Helmer, Moscow
  @bears_with

The Ukraine war is splitting the communist parties of Europe between those taking the US side, and those on the Russian side.

In an unusual public criticism of the Greek Communist Party (KKE) and of smaller communist parties in Europe which have endorsed the Greek criticism of Russia for waging an “imperialist” war against the Ukraine, the Russian Communist Party (KPRF) has responded this week with a 3,300-word declaration:  “The military conflict in Ukraine,” the party said, “cannot be described as an imperialist war, as our comrades would argue. It is essentially a national liberation war of the people of Donbass. From Russia’s point of view it is a struggle against an external threat to national security and against Fascism.”

By contrast, the Russian communists have not bothered to send advice, or air public criticism of the Cypriot communists and their party, the Progressive Party of Working People (AKEL). On March 2, AKEL issued a communiqué “condemn[ing] Russia’s invasion of Ukraine and calls for an immediate ceasefire and the withdrawal of the Russian troops from Ukrainian territories….[and] stresses that the Russian Federation’s action in recognising the Donetsk and Luhansk regions constitutes a violation of the principle of the territorial integrity of states.”

 To the KPRF in Moscow the Cypriots are below contempt; the Greeks are a fraction above it.

A Greek-Cypriot veteran of Cypriot politics and unaffiliated academic explains: “The Cypriot communists do not allow themselves to suffer for what they profess to believe. Actually, they are a misnomer. They are the American party of the left in Cyprus, just as [President Nikos] Anastasiades is the American party of the right.” As for the Greek left, Alexis Tsipras of Syriza – with 85 seats of the Greek parliament’s 300, the leading party of the opposition – the KKE (with 15 seats), and Yanis Varoufakis of MeRA25 (9 seats), the source adds: “The communists are irrelevant in Europe and in the US, except in the very narrow context of Greek party politics.”

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IF IT SMELLS ALLURING, IT’S RUSSIAN – IN WARTIME L’ORÉAL (FRANCE) AND ESTÉE LAUDER (US) MAKE A BAD SMELL



By John Helmer, Moscow
  @bears_with

The war plan of the US and the European allies is destroying the Russian market for traditional French perfumes, the profits of the French and American conglomerates which own the best-known brands, the bonuses of their managers, and the dividends of their shareholders. The odour  of these losses is too strong for artificial fresheners.

Givaudan, the Swiss-based world leader in production and supply of fragrances, oils and other beauty product ingredients, has long regarded the Russian market as potentially its largest in Europe; it is one of the fastest growing contributors to Givaudan’s profit worldwide. In the recovery from the pandemic of Givaudan’s Fragrance and Beauty division – it accounts for almost half the company’s total sales — the group reported “excellent double-digit growth in 2021, demonstrating strong consumer demand for these product categories.”    Until this year, Givaudan reveals in its latest financial report, the growth rate for Russian demand was double-digit – much faster than the  6.3% sales growth in Europe overall; faster growth than in Germany, Belgium and Spain.    

Between February 2014, when the coup in Kiev started the US war against Russia, and last December, when the Russian non-aggression treaties with the US and NATO were rejected,   Givaudan’s share price jumped three and a half times – from 1,380 Swiss francs to 4,792 francs; from a company with a market capitalisation of 12.7 billion francs ($12.7 billion) to a value of 44.2 billion francs ($44.2 billion). Since the fighting began in eastern Ukraine this year until now, Givaudan has lost 24% of that value – that’s $10 billion.  

The largest of Givaudan’s shareholders is Bill Gates. With his 14%, plus the 10% controlled by Black Rock of New York and MFS of Boston, the US has effective control over the company.

Now, according to the US war sanctions, trade with Russia and the required payment systems have been closed down, alongside the bans on the importation of the leading European perfumes. So in place of the French perfumers, instead of Givaudan, the Russian industry is reorganizing for its future growth with its own perfume brands manufactured from raw materials produced in Crimea and other regions, or supplied by India and China. Givaudan, L’Oréal (Lancome, Yves Saint Laurent), Kering (Balenciaga, Gucci), LVMH (Dior, Guerlain, Givenchy), Chanel, Estée Lauder, Clarins – they have all cut off their noses to spite the Russian face.

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THE WAR AGAINST FOOD – WHO IS TO BLAME



By Nikolai Storozhenko, introduced and translated by John Helmer, Moscow
  @bears_with

This week President Joseph Biden stopped at an Illinois farm to say he’s going to help the  Ukraine ship 20 million tonnes of wheat and corn out of storage into export, thereby relieving  grain shortages in the international markets and lowering bread prices around the world.  Biden was trying to play a hand in which his cards have already been clipped. By Biden.  

The first Washington-Kiev war plan for eastern Ukraine has already lost about 40% of the Ukrainian wheat fields, 50% of the barley, and all of the grain export ports. Their second war plan to hold the western region defence lines with mobile armour, tanks, and artillery  now risks the loss of the corn and rapeseed crop as well as the export route for trucks to Romania and Moldova. What will be saved in western Ukraine will be unable to grow enough to feed its own people. They will be forced to import US wheat, as well as US guns and the money to pay for both.

Biden told his audience that on the Delaware farms he used to represent in the US Senate “there are more chickens than there are Americans.”  Blaming the Russians is the other card Biden has left.  

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EXILE



By John Helmer, Moscow
  @bears_with

The problem with living in exile is the meaning of the word. If you’re in exile, you mean you are forever looking backwards, in geography as well as in time. You’re not only out of place; you’re out of time — yesterday’s man.

Ovid, the Roman poet who was sent into exile from Rome by Caesar Augustus, for offences neither Augustus nor Ovid revealed, never stopped looking back to Rome. His exile, as Ovid described it, was “a barbarous coast, inured to rapine/stalked ever by bloodshed, murder, war.” In such a place or state, he said, “writing a poem you can read to no one is like dancing in the dark.”

The word itself, exsilium in Roman law, was the sentence of loss of citizenship as an alternative to loss of life, capital punishment. It meant being compelled to live outside Rome at a location decided by the emperor. The penalty took several degrees of isolation and severity. In Ovid’s case, he was ordered by Augustus to be shipped to the northeastern limit of the Roman empire,  the Black Sea town called Tomis; it is now Constanta, Romania. Ovid’s last books, Tristia (“Sorrows”) and Epistulae ex Ponto (“Black Sea Letters”), were written from this exile, which began when he was 50 years old, in 8 AD, and ended when he died in Tomis nine years year later, in 17 AD.  

In my case I’ve been driven into exile more than once. The current one is lasting the longest. This is the one from Moscow, which began with my expulsion by the Foreign Ministry on September 28, 2010.  The official sentence is Article 27(1) of the law No. 114-FZ — “necessary for the purposes of defence capability or security of the state, or public order, or protection of health of the population.” The reason, a foreign ministry official told an immigration service official when they didn’t know they were being overheard, was: “Helmer writes bad things about Russia.”

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IN THE FOG OF WAR THERE’S THE GUTERRES CERTAINTY AND THE CADIEU CERTAINTY – GORILLA RADIO SEES THROUGH THE COVER-UP



By John Helmer, Moscow
  @bears_with

Antonio Guterres is the Secretary-General of the United Nations (UN), who attempted last month  to arrange the escape from Russian capture of Ukrainian soldiers and NATO commanders,  knowing they had committed war crimes. He was asked to explain; he refuses.   

Trevor Cadieu is a Canadian lieutenant-general who was appointed the chief of staff and head of the Canadian Armed Forces last August; was stopped in September; retired from the Army this past April, and went to the Ukraine, where he is in hiding. From whom he is hiding – Canadians or Russians – where he is hiding, and what he will say to explain are questions Cadieu isn’t answering, yet.

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DID UN SECRETARY-GENERAL GUTERRES COMMIT A WAR CRIME AT AZOVSTAL?

By John Helmer, Moscow
  @bears_with

Antonio Guterres, the United Nations Secretary-General, is refusing this week to answer questions on the role he played in the recent attempt by US, British, Canadian and other foreign combatants to escape the bunkers under the Azovstal plant, using the human shield of civilians trying to evacuate.

In Guterres’s meeting with President Vladimir Putin at the Kremlin on April 26 (lead image), Putin warned Guterres he had been “misled” in his efforts. “The simplest thing”, Putin told Guterres in the recorded part of their meeting, “for military personnel or members of the nationalist battalions is to release the civilians. It is a crime to keep civilians, if there are any there, as human shields.”  

This war crime has been recognized since 1977 by the UN in Protocol 1 of the Geneva Convention.  In US law for US soldiers and state officials, planning to employ or actually using human shields is a war crime to be prosecuted under 10 US Code Section 950t.  

Instead, Guterres ignored the Kremlin warning and the war crime law, and authorized UN officials, together with Red Cross officials,  to conceal what Guterres himself knew of the foreign military group trying to escape. Overnight from New York, Guterres has refused to say what he knew of the military escape operation, and what he had done to distinguish, or conceal the differences between the civilians and combatants in the evacuation plan over the weekend of April 30-May 1.May.

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THE LAST DITCH IS POLAND – RUSSIA’S PHASE-3 PLAN FOR WESTERN UKRAINE



By Vlad Shlepchenko, introduced & translated by John Helmer, Moscow
  @bears_with

The more western politicians announce pledges of fresh weapons for the Ukraine, the more Russian military analysts explain what options their official sources are considering to destroy the arms before they reach the eastern front, and to neutralize Poland’s role as the NATO  hub for resupply and reinforcement of the last-ditch holdout of western Ukraine.

“I would like to note,” Defense Minister Sergei Shoigu, repeated yesterday, “that any transport of the North Atlantic Alliance that arrived on the territory of the country with weapons or material means for the needs of the Ukrainian armed forces is considered by us as a legitimate target for destruction”.  He means the Ukraine border is the red line.

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THE MATLIN PLOT, THE BROWDER PLOT AND THE NEW YORK TIMES PLOT



By Lucy Komisar,  New York*
  @bears_with

Here’s a story the New York Times has just missed.

US politicians and media pundits are promoting the targeting of “enablers” of Russian oligarchs who stash their money in offshore accounts. A Times article of March 11   highlighted Michael Matlin, CEO of Concord Management as such an “enabler.” But the newspaper missed serious corruption Matlin was involved in. Maybe that’s because Matlin cheated Russia, and also because the Matlin story exposes the William Browder/Sergei Magnitsky hoax aimed at Russia.

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YELLOW COAL, THE FUEL MADE OUT OF RACE HATRED — MAY DAY MESSAGE FROM SIGIZMUND KRZHIZHANOVSKY, 1939



By John Helmer, Moscow
  @bears_with

In 1939 a little known writer in Moscow named Sigizmund Khrzhizhanovsky published his idea that the Americans, then the Germans would convert human hatred into a new source of energy powering everything which had been dependent until then on coal, gas, and oil.

Called yellow coal, this invention originated with Professor Leker at Harvard University. It was applied, first to running municipal trams, then to army weapons, and finally to cheap electrification of everything from domestic homes and office buildings to factory production lines. In Russian leker means a quack doctor.

The Harvard professor’s idea was to concentrate the neuro-muscular energy people produce when they hate each other.  Generated as bile (yellow), accumulated and concentrated into kinetic spite in machines called myeloabsorberators, Krzhizhanovsky called this globalization process the bilification of society.

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IS CAESARISM THE PROBLEM, THE SOLUTION, A FANCY DRESS COSTUME, OR A PROPAGANDA CARTOON?



By John Helmer, Moscow
  @bears_with

In imperial history there is nothing new in cases of dementia in rulers attracting homicidal psychopaths to replace them.  It’s as natural as honey attracts bees.

When US President Woodrow Wilson was incapacitated by a stroke on October 19, 1919, he was partially paralysed and blinded, and was no longer able to feed himself, sign his name, or speak normally; he was not demented.

While his wife and the Navy officer  who was his personal physician concealed his condition, there is no evidence that either Edith Wilson or Admiral Cary Grayson were themselves clinical cases of disability, delusion,  or derangement. They were simply liars driven by the ambition to hold on to the power of the president’s office and deceive everyone who got in their way.  

The White House is always full of people like that. The 25th Amendment to the US Constitution is meant to put a damper on their homicidal tendencies.

What is unusual, probably exceptional in the current case of President Joseph Biden, not to mention the history of the United States,  is the extent of the president’s personal incapacitation; combined with the clinical evidence of psychopathology in his Secretary of State Antony Blinken;  and the delusional condition of the rivals to replace Biden, including Donald Trump and Hillary Clinton.

Like Rome during the first century AD, Washington is now in the ailing emperor-homicidal legionary phase.  But give it another century or two, and the madness, bloodshed, and lies of the characters of the moment won’t matter quite as much as their images on display in the museums of their successors craving legitimacy, or of successor powers celebrating their superiority.  

Exactly this has happened to the original Caesars, as a new book by Mary Beard, a Cambridge University professor of classics, explains. The biggest point of her book, she says, is “dynastic succession” – not only of the original Romans but of those modern rulers who acquired the Roman portraits in marble and later copies in paint, and the copies of those copies, with the idea of communicating “the idea of the direct transfer of power from ancient Romans to Franks and on to later German rulers.”

In the case she narrates of the most famous English owner of a series of the “Twelve Caesars”, King Charles I — instigator of the civil war of 1642-51 and the loser of both the war and his head – the display of his Caesars was intended to demonstrate the king’s self-serving “missing link” between his one-man rule and the ancient Romans who murdered their way to rule, and then apotheosized into immortal gods in what they hoped would be a natural death on a comfortable bed.

With the American and Russian successions due to take place in Washington and Moscow in two years’ time, Beard’s “Twelve Caesars, Images of Power from the Ancient World to the Modern”,  is just the ticket from now to then.

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