Miner Details (March 30, 1992)

Shareholders, like voters, are in a prickly mood, a sign no doubt of these tougher times. Downwardly mobile investors are no longer hesitant to criticize sweetheart deals, writedowns, management entrenchment schemes and risky acquisitions, albeit with the benefit of hindsight in most cases. And even the analysts that loved every share certificate they saw in the booming 1980s are taking potshots at mining companies, with only a few stellar performers escaping the brickbats.

Welcome to the 1990s, where as far as we can gather, shareholders want “their” companies to get back to basics, have less show and more substance, be lean without being environmentally mean, pay more attention to the bottom line and pay dividends. It’s also important, we hear, for gold companies to have savvy management “that knows the difference between ounces of gold and profitable ounces of gold.”

Shareholders are also criticizing some majors’ mine-finding performance relative to sums spent on exploration, and being so bold as to give unsolicited advice on how this performance can be improved. One disgruntled investor suggested majors dismantle their large-staffed, multimillion-dollar exploration bureaucracies and set up a number of autonomous prospecting syndicates in the areas to be explored.

These would be lean-and-mean prospecting machines answering to one boss, with no middle management, no slide shows, and no organizational ladders to climb. The geologist-prospectors would spend about 24 days out of every month in the field, “because if they find something they get a small piece of it.” The investor went on to suggest that the cash leftover from abandoning the “acquisition-of-whatever-at-any-cost syndrome” and the trendy exploration programs could be used to pay dividends. We’ve heard some tough advice for juniors too, particularly those having a hard time sobering up from the artificial high of the flow-through-fuelled boom. The advice is well-meaning, mostly from industry veterans, and usually some variation of the back-to-the-bush message: “you can’t find mines on Howe Street (or Bay Street).”

Only thing is, I’d feel a whole lot less hypocritical passing my observations along if I were writing this from atop some glacier in the Yukon, instead of an office in sunny, springtime Vancouver.