“HI, MY NAME’S GOLDCO…”
Not many gold company executives realise that investors will only reward companies that actually add value on a per share basis. I classify them into three broad groups:
conference) – these are the ones who pursue growth “at any cost” and have little, if any regard or understanding of their cost of capital, hurdle rates and returns to shareholders.
share prices will appreciate if they grow the size of the business irrespective of the returns it generates. For me, they are the problem that pervades the industry and are firmly in the denial phase.
You can identify them by the ones that take gross exception to any suggestion that they don’t pay enough attention to return. Or cannot come up with the figures to support their claims of value
of our companies takes our market cap to $xxbn and will get us a re-rating”. problem, are going to the group meetings and find relief from talking about gold companies entering this camp.
A gold company CEO recently remarked during his presentation at the Denver Gold Conference in September 2012 that the industry’s new-found obsession with maximising value to shareholders and paying dividends was “like a new-found religion”…. “a Jerry Maguire moment”.
Although several of them are talking the talk, unfortunately not many of them