Paulson Is Right: Gold Producers Must Fix Their Bad M&A Habits – by Danielle Bochove, David Stringer and Susanne Barton (Bloomberg News – February 28, 2018)

Billionaire hedge-fund manager John Paulson is right to press top gold producers to avoid repeating their bad deal-making habits as prices press higher after notching up their biggest annual gain since 2010, according to Australia’s second-largest supplier.

“I have a lot of empathy for what Paulson has been saying,” Evolution Mining Ltd. Executive Chairman Jake Klein said in an interview. “They’ve highlighted a number of very important and valid points about the industry’s behavior.”

Paulson & Co., which calculates mistimed deals led to $85 billion of gold writedowns so far this decade, is organizing a Shareholders’ Gold Council — a collection of institutional investors who remain wary on the sector’s record on deals, executive pay and board appointments.

Producers need to prove they can be “profitable, dividend-paying, sustainable companies,” Klein said at the annual BMO mining conference in Florida. “That’s still a bridge I think we need to cross as an industry.”

Evolution, which has cut deals for acquisitions since 2015 with larger competitors including Barrick Gold Corp. and Glencore Plc, has focused more recently on reducing the size of its portfolio by selling mines.

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