Throw open locked-up properties
We are now in the process of what we might call “The Great Unwind”. The period of the revived gold price after the 2008 Crash led to three “good” years in which miners and prospectors and parties all the way up and down the mining food chain carved out Joint Ventures, Earn Ins, options and all sorts of other relationships. Many of these relationships could do with a good audit these days as it would appear from our work looking through reportings and comparing them to company websites and presentations that the state of many of these past relationships is either not good or now non-existent.
This is manifest in two types of statuses, either:
- The company has the asset on its website or filings but the relationship with the underlying owner has either expired or is unfulfilled (work commitments not met)
- The company has an asset which for “image reasons” it does not talk about or show in its website or presentations but it is in good standing
This creates an interesting question. If companies have effectively abandoned these assets or the transactions underlying them are in default, but still have them on the books at some residual value, then they are effectively deceiving the market (and maybe themselves).
One wonders then how much greater the value-destruction in the sector would be if these properties were properly removed from the books of their current holders.
In some respects a resolution of this situation is desirable if the mining industry is to move on. Throwing open many locked-up properties would throw the onus for renewals back onto underlying prospectors who neither have the ability to do the work nor the inclination to make renewal payments. A wholesale return of properties to the government would clear the deck for whenever the next mining upturn eventually arrives.
Creative commons image by Chris Cole