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
Business Transition Simplified

Through his www.BusinessTransitionSimplified.com website and his Business Transition & Valuation Review newsletter Ian R. Campbell shares his perspectives on business transition, business valuation and world economic and financial markets influences on those two topics. A recognized business valuation and transition authority, he founded Toronto based Campbell Valuation Partners Limited (1976). He currently is working to bring his business valuation and transition experience to both business owners and their advisors in our new economic, business and financial markets normal.

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