Corporate: Recent Mining Company Writedowns

By: Ian Campbell | Tue, Feb 26, 2013
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I was asked yesterday, based on my business valuation consulting background, for my views on mining company writedowns following recent announcements by:

The questions asked of me were;

I have read 'journalist write-ups' of each of the four referenced transactions (see article links). I have not analyzed any of the referenced transactions either before or after they closed. Subject to those caveats, my overview observations are:

Question: What do these writedowns mean to the mining industry?

The things the referenced writedowns ought to (and I will be surprised if they don't) increasingly focus Mining Companies (and more particularly their Boards of Directors and Management) on include:

Mining Company Directors and Management are 'people also', who learn, respond and adapt like everyone else. So, of course, the writedowns that have been taken (and perhaps will be taken from here) broadly ought to attract their attention, and ought to cause them to reflect and focus on them when making their own business decisions going forward.

Do (or perhaps better said, should) these sorts of announcements worry investors?

The things the referenced writedowns ought to increasingly focus investors on include:

Are all writedowns created equal, or are some more worrisome than others?

My answer to this is quite straight-forward:

Final Observations:

Topical References: Barrick's overpriced Equinox acquisition comes back to bite in US$4.2B writedown, from The Financial Post, Peter Kovan, February 14, 2013 - reading time 4 minutes. Also see:

 


 

Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at icampbell@srddi.com.
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