Mark Bristow, the chief executive of African miner Randgold Resources Ltd., has been an outspoken critic of his gold industry peers for years. He blames them, with plenty of justification, for wasting the best gold bull market ever by not generating any real value per share. He said the value of the industry’s impairments is worth more than its combined market cap today.
He believes the problem was short-term thinking, which caused companies to spend recklessly and load up on debt at the top of the gold market on the misguided assumption that prices would go up forever.
“If you invest at the top and try to survive at the bottom, you won’t create much value for shareholders,” Bristow said in a breakfast presentation to bankers, analysts and media on Wednesday.
But he said the problem of short termism isn’t limited to the companies themselves. He criticized the financial sector for firing so many mining analysts once the commodity boom ended. A modest recovery is now underway in gold, but buy-side investors looking at the sector have much less analyst research to sift through than they did a few years ago.
“This is when we need analysts,” Bristow said.
Randgold was one of the few solid performers in the gold industry throughout the downturn. Bristow’s presentation focused on the company’s solid operating performance and exploration upside in West Africa and the Democratic Republic of Congo (DRC). He noted the company has operated smoothly despite a coup in Mali, civil war in Ivory Coast and instability in the DRC.
“We’ve been through some hectic situations,” he acknowledged.