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Canada’s big gold miners are under siege in the markets, their shares tumbling even as bullion rides high, and they’re vowing to fight back.
“I’m a shareholder and my family is a shareholder, and we’re determined to change that around,” Tye Burt, chief executive officer of Kinross Gold Corp., declared Wednesday, referring to the company’s languishing stock price.
Mr. Burt and others in the industry are lamenting the gap between the value of gold stocks and the price of bullion, which is holding near-record highs after a surge that is almost a decade old now.
Kinross shares are down 60 per cent in the past eight months. Barrick Gold Corp. (ABX-T37.650.942.56%), the world’s biggest producer, has seen its stock sink 34 per cent since September, while smaller rivals such as Yamana Gold Inc. (YRI-T13.750.332.46%) and Iamgold Corp. (IMG-T10.80-0.07-0.64%) have suffered declines of 27 per cent and 55 per cent respectively from their 52-week highs.
“We recognize that the past period has been trying for our shareholders,” Mr. Burt said. “And we recognize that progress never happens fast enough for investors – it doesn’t for management either.”
Shares of Canadian gold producers are so beaten down that most would argue they’re cheap to buy, but investors looking for exposure to the gold price are having trouble seeing equity as the best route to take.
“There is nothing more frustrating than being right on the general theme, but actually not making any money for investors,” said Adrian Day, who runs a boutique asset management firm under his own name.
Gold company executives know it too, from giants such as Barrick and No. 2 producer Goldcorp Inc. (G-T35.601.203.49%) to their mid-tier peers.
After reporting first-quarter earnings, Goldcorp chief executive officer Chuck Jeannes said the market was no longer rewarding performance as it used to.
“Clearly, over the last two years or so, the market has not been willing to pay for the increased cash flow and earnings that we’ve generated based on rising gold prices,” he said.
Barrick made statements similar to Mr. Burt’s at its annual general meeting last week, assuring shareholders that eventually the market would begin to value a production pipeline that will add significantly to cash flow in coming years.
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