EPISODE 37
The Elephant in the Room with Jonathan Goodman
Duration - 49 mins
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...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; mistakes in the geological modelling, mistakes in community relations, mistakes in environmental planning, mistakes in capital markets, mistakes in communicating with investors and mistakes 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.
For a while, we have been complaining that there seems to be a continuous exodus of investors out of mining. We have laid 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 we as an industry 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 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” before we are likely to see a sustained return of capital to our industry.
...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; mistakes in the geological modelling, mistakes in community relations, mistakes in environmental planning, mistakes in capital markets, mistakes in communicating with investors and mistakes 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.
For a while, we have been complaining that there seems to be a continuous exodus of investors out of mining. We have laid 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 we as an industry 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 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” before we are likely to see a sustained return of capital to our industry.
