Gold mining’s ‘Occupy’ moment – by Geoff Candy ( – December11, 2012)

Dissatisfaction with mining company performance is causing major institutional shareholders in mining equities to question the running of the companies in which they are invested and in some cases to demand changes in management direction – and personnel.

GRONINGEN (MINEWEB) – While the protesters that formed the heart of the Occupy movement in the US (and throughout the rest of the world) would most likely struggle to see any similarity between themselves and the fund managers and investors that buy and sell gold mining and exploration companies, one can’t help but notice a few parallels between the two.

Indeed, listening to the increasingly strident criticism of mining company management by the likes of BlackRock, Hallgarten & Co and US Global to name but three, it is not hard to imagine them siding with the 99% who want to see more of the money; disappointed as they are in the return they have so far received on their investment.

These investors feel disappointed in the management of the companies in which they have invested because they have, in many instances, failed to capitalise on the record rise in many commodity prices and, in particular gold prices and, as a result, like the Occupy protesters, have begun to make their dissatisfaction felt, albeit in a slightly more orderly fashion.

Like with the Arab Spring, there was a feeling within the Occupy movement that collective action could change entrenched systems. And, while one can argue, quite rightly, that the movement changed very little in concrete terms, what it did do was clearly demonstrate how dissatisfied with the current system many, many people are.

In the same way, the increasing level of investor activism being aimed at gold stocks, is indicative of not only dissatisfaction but, more importantly, a decision to try, like the invaders of Zucotti Park, to take back ownership of what they believe is theirs.

For the Occupy protestors, it was the political system that they felt had been broken, for shareholders it is the companies they have funded to little avail over the past few years.

The difference between the two is that while the Occupy movement was only able to harness the power of the human microphone, the shareholders at work, can let their wallets do the talking – and these are wallets with the ability to shout.

Indeed, one analyst spoken to by Mineweb said the level of value destruction and the opportunity cost of the poor decision making seen in the sector, should see these managers sued, not just fired.

But, as he said, it becomes difficult to sue these managers because it is very difficult to sue the person individually and, by suing the company, you are, as a shareholder, merely suing yourself.

But, the increasingly loud calls for better cash management and, importantly, dividends begs the question – apart from the legal fees attached, how much difference is there, really, between a class action law suit damages payout and a special dividend?

Speaking to Mineweb on the sidelines of the London Mines and Money conference, Strategic Advisor to SNL Metals Economics Group, Michael Chender, agrees that the industry has gone through a sea change, attitudinally.
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