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Mark Bristow, the chief executive of African miner Randgold Resources Ltd., has been an outspoken critic of his gold industry peers for years. He blames them, with lots of justification, for wasting the best gold bull market ever by not generating any real value per share. He said the value of the industry’s impairments is worth a lot more than its combined market cap today.
He believes the problem was short-term thinking, which caused companies to spend recklessly and load on debt at the top of the gold market around the misguided assumption that prices would go up forever.
“If you invest at the very top and try to survive at the bottom, you won’t create much value for shareholders,” Bristow said in a breakfast presentation to bankers, analysts and media on Wednesday.
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But he explained the issue of short termism isn’t limited to the businesses themselves. He criticized the financial sector for firing a lot of mining analysts when the commodity boom ended. A modest recovery is now underway in gold, but buy-side investors exploring the sector cash less analyst research to dig through compared to what they did not too long ago.
“This is when we want analysts,” Bristow said.
Randgold was mostly of the solid performers within the gold industry throughout the downturn. Bristow’s presentation focused on the company’s solid operating performance and exploration upside in West Africa and also the Democratic Republic of Congo (DRC). He noted the company has operated smoothly despite a coup in Mali, civil war in Ivory Coast and instability within the DRC.
“We’ve experienced some hectic situations,” he acknowledged.
