“HI, MY NAME’S GOLDCO…”

Finweek English Edition - - INSIGHT: LOCAL -

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

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