Finding the Next Generation Gold Company

11 dicembre 2014

Durata video 5:32

"Gold companies must create value in order to be successful, and there are several ways that a gold company does this. The most effective way is through discovery."

Video Transcript

Finding the Next Generation Gold Company

TOM BUTCHER: Hello and welcome to Van Eck Outlook. I'm Tom Butcher, your host. I have with me today Joe Foster, Portfolio Manager of Van Eck Global's active gold strategies and the firm's Senior Gold Analyst. Joe is an acknowledged authority on gold, having spent more than ten years in geology and mining with some of that time spent as a gold geologist in Nevada. Our focus today will be on finding the next-generation gold company.

Joe, welcome. Could you please give us a little background on what is involved in selecting a next-generation gold company

JOE FOSTER: Like many companies, gold companies must create value in order to be successful, and there are several ways that a gold company does this. First, they can create value through discovery, which is finding a gold deposit in an area where nobody has looked before: a brand new discovery. The second way is obtaining what we call a "company-maker" property, which perhaps has some sort of legacy; maybe there was mining there in the past or it’s a property that was never developed because of social, geopolitical, or technical issues. The company can come in with new ideas and develop that property successfully. If it's big enough and robust enough, that can be a company-maker for the company. The third way a gold company can create value is through a merger of equals, in which several companies merge together to create a larger company — one with production, access to capital markets, and the ability to move its projects forward. The fourth way is through acquisitions. There are hundreds of exploration companies scattered all over the world looking for gold deposits. A few of those have the skill and the luck to be successful, and they become acquisition targets for the larger producing companies.

BUTCHER: Which manner of creating value do you think is the most effective and why?

FOSTER: The most effective way is through discovery. This is finding a deposit where nobody has looked before. There are no acquisition costs associated with discovery. In a new area there is always the potential for finding more discoveries in that same area because it has probably been underexplored. Additionally, companies come in with new geological ideas and thus have the potential to make more discoveries as they develop the property.

BUTCHER: Which is the most common?

FOSTER: The most common is via acquisitions. Discoveries are very hard to make. They're very far and few between. However, there is a steady stream of acquisition targets: companies that have been successful at finding gold deposits but that lack access to capital. Furthermore, they might not be big enough or robust enough to develop those properties on their own; they require assistance and they become acquisition targets. Hopefully, the acquiring company doesn't spend too much on the acquisition and is able to create value by developing the property and mining those ounces successfully.

BUTCHER: Joe, thank you very much. With Joe's views on acquisitions, we come to the end of this edition of Van Eck Outlook. Should you wish to read Joe's monthly commentary on the gold market, please visit the Van Eck website.

Important Disclosure

This video does not constitute an offer to sell or solicitation to buy any security.

VanEck’s opinions stated in this video may deviate from opinions presented by other VanEck departments or companies. Information and opinions in this video are based on VanEck’s analysis. Any forecasts and projections contained in the video appear from the named sources. All opinions in this video are, regardless of source, given in good faith, and may only be valid as of the stated date of this video and are subject to change without notice in subsequent versions of the video. Any projections, market outlooks or estimates in this material are forward-looking statements and are based upon certain assumptions that are solely the opinion of VanEck. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur.

No investment advice

The video is intended only to provide general and preliminary information to investors and shall not be construed as the basis for any investment decision. This video has been prepared by VanEck as general information for private use of investors to whom the video has been distributed, but it is not intended as a personal recommendation of particular financial instruments or strategies and thus it does not provide individually tailored investment advice, and does not take into account the individual investor’s financial situation, existing holdings or liabilities, investment knowledge and experience, investment objective and horizon or risk profile and preferences. The investor must particularly ensure the suitability of an investment as regards his/her financial and fiscal situation and investment objectives. The investor bears the risk of losses in connection with an investment.

Before acting on any information in this publication or report, it is recommendable to consult one’s financial advisor.

Forecasts, estimates, and certain information contained herein are based upon proprietary research and the information contained in this material is not intended to be, nor should it be construed or used as investment, tax or legal advice, any recommendation, or an offer to sell, or a solicitation of any offer to buy, an interest in any security. References to specific securities and their issuers or sectors are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities or gain exposure to such sectors.

Each investor shall make his/her own appraisal of the tax and other financial merits of his/her investment.

Sources

This video may be based on or contain information, such as opinions, recommendations, estimates, price targets and valuations which emanate from: VanEck portfolio managers, analysts or representatives, publicly available information, information from other units or Companies of VanEck, or other named sources.

To the extent this video is based on or contain information emerging from other sources (“Other Sources”) than VanEck (“External Information”), VanEck has deemed the Other Sources to be reliable but neither the VanEck companies, others associated or affiliated with said companies nor any other person, do guarantee the accuracy, adequacy or completeness of the External Information.

Limitation of liability

VanEck and its associated and affiliated companies assume no liability as regards to any investment, divestment or retention decision taken by the investor on the basis of this video. In no event will VanEck or other associated and affiliated companies be liable for direct, indirect or incidental, special or consequential damages resulting from the information in this publication or report.

Risk information

The risk of investing in certain financial instruments, is generally high, as their market value is exposed to a lot of different factors such as the operational and financial conditions of the relevant company, growth prospects, change in interest rates, the economic and political environment, foreign exchange rates, shifts in market sentiments etc. Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in rates of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. Past performance is not a guide to future performance. Estimates of future performance are based on assumptions that may not be realized. When investing in individual shares, the investor may lose all or part of the investments.

Conflicts of interest

VanEck, its affiliates or staff of VanEck companies, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives) of any company mentioned in this video.

To limit possible conflicts of interest and counter the abuse of inside knowledge, the representatives, portfolio managers and analysts of VanEck are subject to internal rules on sound ethical conduct, the management of inside information, handling of unpublished research material, contact with other units of VanEck and personal account dealing. The internal rules have been prepared in accordance with applicable legislation and relevant industry standards. The object of the internal rules is for example to ensure that no analyst will abuse or cause others to abuse confidential information. This video has been prepared following the VanEck Conflict of Interest Policy.

Distribution restriction

This video is not intended for, and must not be distributed to private customers.

Index Descriptions

All indices named in the video are unmanaged indices and include the reinvestment of all dividends, but do not reflect the payment of transaction costs, advisory fees or expenses that are associated with an investment in the Fund. An index’s performance is not illustrative of the Fund’s performance. Indices are not securities in which investments can be made.