“…The elephant in the room is that the devaluation of mining companies cannot be explained by the commodity price, instead it is dictated by the self-inflicted mistakes of a commodity boom, and the irresponsible management of these assets.”
“…The elephant in the room is that most of these mining companies believe that the commodity boom will continue to bail out their lackadaisical management and operations.”
“…The elephant in the room is that mining companies, in the past, maximised returns for an ever-rising gold price; optimising project resources for scale rather than payback and returns.”
“…The elephant in the room is that the mining industry has made so many mistakes… in the geological modelling… in community relations… in environmental planning… in capital markets… in communicating with investors and…in overpromising and promoting their business.”
“…The elephant in the room is that the mining industry has lost the trust of the most serious investors, causing an exodus of capital that will not return quickly.”
We often complain that there seems to be a continuous exodus of investors out of mining. We lay the blame for this on a number of things: mining is a risky business and investors just do not get us; the boom and bust cycles make it difficult for these investors to stay around; and the common and ever present excuse, it is all because of the commodity price. Maybe it is time that we recognised that as an industry we have lost the trust of investors because of the failures of our recent past in returning value to shareholders. Maybe what these absent investors are asking for, is the opportunity to make real investments that have a potential to deliver long term returns and not just over-hyped stock plays.
Our guest today is Jonathan Goodman, President and CEO of Dundee Corporation, a company with a long and successful pedigree of investing in the mining and resources industry. He joins us to talk about how as an industry we need to start addressing some of these “elephants in the room”.
