Paul Walker, CEO, GFMS
Send this article to a friend
Print this page

» DRDGOLD gains as Mintails struggles
» Reality check for Uranium One
» Uranium One shuts the Dominion mine
» African Diamonds sparkles on AK6 go-ahead
» Bust up at Mintails sinks the share price

If you want to share this article, simply sign into one of these sites and select your network. It’s that easy Click here to find out more about how to use this button

2008 Hot Air awards
Brendan Ryan
Posted: Mon, 29 Dec 2008

[miningmx.com] -- A NUMBER of mining executives shot their mouths off during 2008 – only to see their predictions blown away by subsequent events.

A very few got it right but, for those in the upper quartile of the “big mouth” curve, you have to wonder what they were thinking because they clearly did not have their brains in gear at the time they started talking.

The following is a far from comprehensive sample of who said what over the course of the last 12 months.

Let’s start with those who got it right. Top of my list is Paul Walker, CEO of precious metals research consultancy GFMS, who in April sounded a strong note of caution over the platinum price.

Platinum at that time had pulled back to about $1,800/ounce after peaking around $2,300 in March. Walker reckoned platinum could get back to about $2,400/oz and the price subsequently recovered to about $2,200/oz during May.

But he cautioned that high platinum prices were not sustainable because of their impact on demand and said: “It seems probable that 2008 will be the tipping point when fabrication demand finally suffers a material decline.”

Walker did have good company. JP Morgan analysts Steve Shepherd and Allan Cooke, as well as Credit Suisse Standard Securities analyst David Davis, had also turned negative on platinum’s prospects around then.

But Walker has also proved himself to be on the money in a longer-term forecast on gold.

Back in September 2007 he made a bet with then Gold Fields CEO Ian Cockerill that gold would not get through $1,200/oz by the end of 2008.

With two-and-a-half trading days to go and gold around $880/oz, I would say Walker is home and dry.

My favourite among the “what were they thinking” category has to be Lonmin chairman John Craven.

When I put it to him early in September that CEO Brad Mills was a major part of the problem at Lonmin, his somewhat pompous reply was that “I can assure you - and I speak on behalf of the entire Lonmin board - that we fully support Brad and his management team”.

Mills abruptly, and with immediate effect, “stepped down by mutual consent” on September 29 which, roughly translated from the politically correct corporate-speak, means he got booted out.

I see he’s about to join the board of Norilsk Nickel so hopefully his treatment at the hands of the Lonmin board should have prepared him for the complexities of dealing with a Russian company.

When it comes to getting it dead wrong, for whatever reason, look no further than Mintails chairman Bryan Frost.

Click Here to subscribe to our daily newsletter
In July, he described as “rubbish” market speculation that Mintails did not have enough funds to meet the costs of bringing the Ergo joint venture with DRDGold into production.

Mintails shares were suspended from mid-September to mid-December as the company desperately searched for financing to complete the project. It finally got the money from DRDGold but at the cost of agreeing to forego any earnings from Ergo for the first 12 years of operations.

Let’s not forget former Uranium One CEO Neal Froneman and his successor Jean Nortier, both of whom maintained that there was nothing seriously wrong with the Dominion mine up until the bitter end.

On October 13 - after Uranium One’s share price had inexplicably tanked yet again during the course of the previous week - Nortier told Miningmx.com: “I don't think Dominion has anything to do with our share price performance.”

The announcement on the closure of Dominion was made on October 22.

African Diamonds chairman John Teeling made the closely-knit diamond business sit bolt upright in July when he launched an all-out attack on De Beers over their proposal to stall development of the AK6 mine in Botswana.

On July 30 he said: “The AK6 mine should be developed immediately. We can develop the mine cheaper than De Beers, operate at a cost lower than De Beers will and obtain revenue significantly greater than that estimated by De Beers.”

But De Beers won out in the end, proving the former “cartel” still had teeth. The final agreement was that the start of production from AK6 would be delayed to April 2011 from end-2009, and that the diamonds would be sold through De Beers’ marketing channels.

Teeling’s assessment of the final outcome was that “we believe the agreed terms are equitable to all parties”.

Finally, take a bow Anglo American CEO Cynthia Carroll, Rio Tinto CEO Tom Albanese and BHP Billiton CEO Marius Kloppers.

All three believed during the first half of the year that the booming Chinese economy would somehow escape the fallout from the economic slowdown in the major Western nations.

Well it did, until just after the Beijing Olympics, when the economic roof fell in, so to speak, which brings us up to date.