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David Garofalo has a graph that should appall any precious metals aficionado.
It shows how nine major gold producers’ share prices have fared over the past decade. Only one of those stocks – that of Agnico Eagle Mines Ltd. – actually achieved a lasting gain during the 10-year period.
All the other big global gold miners in the graph saw their share prices decline between 2005 and 2015. The sweeping, near-universal losses for investors in the sector – despite a gold price that shot upward over the time span – offer evidence of a massive case of value destruction.
Mr. Garofalo, who became chief executive officer at Goldcorp Inc. on Feb. 29, is clear that he doesn’t intend to let that sad history repeat itself, at least not on his watch.
Goldcorp shocked investors last month by declaring a $4.2-billion (U.S.) loss for 2015, as well as a dividend cut and radical reduction in production guidance. The loss, announced just days before Mr. Garofalo moved into the top job, included a massive $4.9-billion writedown that stemmed from newly conservative assumptions for the long-term price of gold.
The news hammered Goldcorp’s share price, but Mr. Garofalo, who had been working closely with retiring CEO Chuck Jeannes in the two months before the earnings announcement, makes no apologies for the grimmer outlook he helped install or for the dividend cut.
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