Hedge fund Paulson & Co calls for joint shareholder action vs gold miners

International Tower Hill Mines

26/09/2017 19:31

By Nicole Mordant 
    Sept 26 (Reuters) - New York-based Paulson & Co, led by 
longtime gold bull John Paulson, called on Tuesday for the 
world's biggest investors in  gold-mining stocks to form a 
coalition to tackle miners' "dreadful" performance as it 
launched a blistering attack on the industry's track record. 
    Speaking at the Denver Gold Forum, the industry's top annual 
event, Paulson & Co partner Marcelo Kim said the hedge fund was 
looking for fellow founding members for a body to speak out on 
issues including high executive pay, cozy board appointments and 
value-destroying mergers and acquisitions. 
    Such a group "finally gives gold investors a real voice", 
Kim said. 
    The "council" would focus solely on the gold sector, issuing 
vote recommendations to shareholders on issues including company 
takeovers and CEO pay, Kim said.  
    Average total shareholder returns from gold mining 
investments, including world No.1 producer Barrick Gold Corp 
 ABX.TO , are a negative 65 percent since 2010 over a period 
when the chief executives of 13 of the largest companies have 
cumulatively received $550 million in pay, Kim said.  
    In that time, the gold price rose by 20 percent and the 
price of oil, a major input cost for gold miners, fell by 28 
percent, he said. Since 2010, the industry has written off $85 
billion due to overpaying for acquisitions and massive cost 
overruns on mine builds, he said. 
    Canadian Kinross Gold  K.TO  wrote off nearly the entire 
$7.1 billion it paid for acquiring Red Back Mining in 2010. In 
2013, Barrick halted the development of its Pascua-Lama project 
in South America after spending $5 billion.  
    Shareholders have no one to blame but themselves for rubber 
stamping mergers, CEO pay packages and board appointments, Kim 
said, adding that there was little industry engagement with 
company boards or activism.  
    Shareholders "behave like sheep being led to slaughter," he 
said.  
    Instead shareholders must demand accountability from 
companies, insist that company pay, especially for CEOs, be 
aligned with shareholder returns and boot out poorly performing 
CEOs and boards.  
    Boards must also have more shareholder representation, he 
said, adding that Paulson had recently secured board positions 
at Midas Gold Corp  MAX.TO  and International Tower Hill Mines 
Ltd  ITH.TO , two recent Paulson investments. 
 
 (Reporting by Nicole Mordant in Vancouver; Editing by Cynthia 
Osterman) 
 ((nicole.mordant@thomsonreuters.com; +1-778-374-3854; Reuters 
Messaging: nicole.mordant.thomsonreuters.com@reuters.net)) 
 
Keywords: MINING GOLD/PAULSON