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Barely four months into his job, AuRico Gold Inc. chief executive officer Scott Perry has had one message to investors: It’s time to get boring. Odd as that may sound, especially from a youthful CEO such as Mr. Perry, it echoes the new mantra of a gold industry that is recovering from a massive shareholder exodus that slashed values at companies large and small.
It is still more understandable given AuRico’s checkered past performances as Gammon Gold Inc. – it changed its name in June – and a stock market that is punishing gold producers who pursue growth for growth’s sake, and at the expense of shareholder value.
“The big thing I keep talking about with shareholders is we just want a portfolio that is deemed reliable, stable, consistent,” Mr. Perry said in an interview last week from offices in downtown Toronto. “So, if I was to speak crudely, it’s ‘let’s just get boring.”
AuRico’s stock price has oscillated like a yo-yo over the past four years, from lows of $2.95 a share in November, 2008, to highs of nearly $14 a share in August, 2011. These days, its shares are trading in the $7 to $8 range (they closed Dec. 24 at $7.67 a share), stabilizing after the company embarked on a radical redesign over the past year or so, from changing its name to stripping itself of underperforming assets.
The company’s experience has been reflected across the sector, as major gold companies have also suffered the impact of investor fatigue in recent years, and this year started taking measures to woo capital back to the sector.
Barrick Gold Corp. and Kinross Gold Corp., two of Canada’s largest gold companies, went so far over the summer as to axe their chief executive officers, pledging at the same time to slash costs and shelve production plans for marginal assets.
AuRico has begun to reap the benefits of its own radical steps. Starting out the year with six mines, today the company has two. From forecasts just a year ago for production of 730,000 ounces of gold a year by 2013, the company is now looking at potential output of 240,000 ounces from one mine in northern Ontario and another in northern Mexico.
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