No, both of you wrong as always. Denver’s deal done quietly and results will be seen a few months down the road.
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DENVER (MINEWEB) -
This year’s Denver Gold Forum did, in the event, see a small turn-down in attendance, according to Denver Gold Group Executive Director, Tim Wood. Wood told Mineweb that numbers declined from around 1,260 last year to around 1,050 this but this could yet be considered a strong result in the light of a 20% plus decline in the gold price since last year’s record attendance.
But what should be considered interesting to the followers of gold and gold stocks is that this encompassed a steeper fall in sell-side attendance – i.e. from the mining companies seeking investment themselves, partly countered by an upturn in buy-side attendees – funds, banks, private equity etc. which suggests the investment community is now beginning to look seriously at picking up ‘bargains’ at the decimated stock price levels seen across the board in the gold mining sector.And the Denver Gold Forum is perhaps the ideal event for this kind of bottom fishing activity. The key for the potential investor is to look for companies which can survive if the worst for the industry occurs and the gold price slips further – or bumps along the bottom for some time ahead.
This is because the Gold Forum organisers themselves only allow the crème de la crème of the industry to participate and present their case to the assembled audience. While the Gold Forum has relaxed its criteria over the years to allow participation by the junior sector, it still applies a cutoff to the companies it does invite and these are thus in their entirety those which will have the best chance of survival in an extended gold price downturn. In short the Gold Forum has already done some initial filtering thus almost providing a short list (albeit a fairly long one) of the better gold mining prospects for investment out there.
This is not to say all those junior companies participating are certain survivors of an extended downturn, nor that those who do not meet the Gold Forum’s criteria are doomed – far from it, but it does provide some kind of cutoff. Indeed the Gold Forum publishes its criteria on its website under www.denvergold.org/membership for those readers who may be interested in seeing what parameters are applied.
It also only allows audience entrance to the forum for invitees, which again restricts entry to those who meet attendance criteria and are deemed to be people who the Gold Forum member companies may be interested in talking to – mainly buy-side representatives from the aforementioned funds, banks and serious private equity. This is a win-win for all sides. Companies attending are looking for serious investment and are not besieged with hundreds of people who they may consider timewasters. There are no exhibit booths to maintain. This is all about networking and one-to-one meetings and the organisers go to great pains to facilitate this.
And this time, according to Wood, the one-to-one meetings have been at an unprecedented level – 61% up on last year per individual - and that is the only for the meetings they can quantify through those set up through the organiser’s official channels and doesn’t take into account ad hoc meetings of which there will also have been plenty. These meetings are not only between gold companies and potential sources of finance, but also inter-company ones. Wood thinks that there will be considerable M&A activity in the sector over the next few months, and many of the meetings in Denver will have set the ball rolling on this.
Indeed, in talking to the CEOs and senior executives of a number of mining and exploration companies attending the event, all, without exception, felt this year’s Gold Forum had indeed been extremely valuable for them and well worth attending.
While nowadays small and mid tier miners, developers and explorers perhaps dominate in numbers the Gold Forum also attracts the gold mining majors and there were presentations from the CEOs of Barrick, Newmont, Goldcorp, AngloGold, Newcrest, Kinross, Yamana, Agnico Eagle, Gold Fields, Sibanye, Harmony, Randgold, Polyus Gold etc as well as from many of the bigger mid-tier players adding substantial weight to the event. It is indeed one of the premier gold mining events of the year, a position it has held since its inception, although it is much larger now than initially when selection criteria for both presenters and audience were even higher.
There were some interesting themes running through the meeting. For the majors they were virtually all implementing capital and operations cost controls, cutting out tiers of management, divesting currently unprofitable mines, better managing grades etc. in an attempt to allay the problems which had built up through perhaps profligate expenditures when their major shareholding institutions were pushing them for growth at almost any cost. Now the focus is on profits, even if this may even, in some cases, mean reducing overall gold output at least in the short term.
For the mid tier and junior gold producers and developers it was all about de-risking, replanning and optimisation of existing assets while for the explorers it was very much about controlling expenditures, cutting burn rates and positioning themselves for the years ahead.
Overall the next few years should see a meaner and more efficient industry emerging , and perhaps a smaller one in terms of numbers of companies through attrition and M&A. There’s nothing like a serious downturn for focussing the mind – and perhaps this is thus an excellent time for buy-side predators to make their moves.
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