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Dividends best defense against gold ETF, Kirkland Lake Gold CEO says
By Thomas Biesheuvel and Tim Barwell
Wednesday, April 18, 2012
Gold miners should pay more in dividends if they are to compete with exchange-traded funds as two years of record buyouts eroded shareholder value, Kirkland Lake Gold Inc. (KGI) Chief Executive Officer Brian Hinchcliffe said.
Precious metal producers spent a record $53 billion on deals in 2010 and a further $43 billion last year as all-time high gold prices spurred deals. That led to writedowns that are an admission of overpaying when cash could have been returned in dividends to lure investors from increasingly popular ETFs, Hinchcliffe said.
"The generalist investor is not going to be attracted to an industry that is not judiciously allocating capital, whether it's in the context of making acquisitions or in the context of dedicating capex," Hinchcliffe said. "ETFs are a major competing alternative for investment. I-m talking about a 5 percent to an 8 percent dividend policy -- that is the best defense against the ETF."
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Golden Phoenix Discusses Royalty Mining Growth Strategy
on '21st Century Business' on Fox Business Network
Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project.
"21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast.
To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here:
The 16 members of the benchmark Arca Gold BUGS Index will pay an average dividend yield of 1.5 percent this year. That compares with an average dividend yield of 4.2 percent by companies in the STOXX Europe 600 index, according to data compiled by Bloomberg.
Gold stocks are trading at the cheapest levels in at least nine years as profits reached record levels on near-record bullion prices. The NYSE Arca Gold BUGS Index (HUI), which includes Barrick Gold Corp., Newmont Mining Corp., and AngloGold Ashanti Ltd., ended last week at 14.7 times profit, the lowest since at least November 2002 and below a five-year average of 36 times as gold stocks fell 5.2 percent in the first quarter.
Holdings of the metal through ETFs have more than tripled in the last five years and reached a record 2,410.2 metric tons on March 13, valued at about $140.3 billion, according to data compiled by Bloomberg.
"The first quarter was a seminal time in the gold industry because of the number of write-offs and the number of admissions from companies that they had overpaid," Hinchcliffe said. "There will be a bit of reticence about going out and buying stuff in the wake of the major write-offs that the gold industry has seen."
Newmont Mining Corp., the largest U.S. gold producer, took a $1.61 billion writedown on its Hope Bay mine in Canada in February after putting the project on hold. The company gained control of the mine as part of its C$1.5 billion acquisition of Miramar Mining Corp. in 2007.
Kinross Gold Corp. recorded a $2.49 billion goodwill writedown on its Tasiast mine in Mauritania. Agnico-Eagle Mines Ltd. posted a fourth-quarter loss on Feb. 15 after taking a writedown on its Meadowbank project in northern Canada.
Hinchcliffe said Kirkland Lake Gold plans to introduce a dividend policy in 12 to 15 months after deciding on the level. The company mines for the precious metal in Ontario, Canada. It forecast output of 100,000 ounces to 105,000 ounces for this fiscal year and is targeting annual production of 250,000 ounces to 300,000 ounces in 2014, according to a March 13 statement.
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