Doing DD: Kitco Interview With Frank GiustraA month ago, Kitco interviewed Frank Giustra. It's a nice one to start you DD about him and his strategy.
Single assets don't work, buy and build (17 minutes)
Here are the important excerpts:
Our style of business and my personal track record has been based upon building multi-assets mining companies. I think that single asset mining companies will continue to be orphaned, they're no interest to institutional investors, so most of our work is M&A work: look for opportunities, start something that is smallish and build it using what we call the "buy and build strategy" which is building mines and acquiring projects and mines.
I think this sector is in dire need of consolidation, you have way way too many small developers single asset companies that are getting absolutely no investor interest, they're spending most of their money on G&A so if you think about "if you consolidated the industry, all that money that is currently going to G&A could be put on the ground. So in the Fiore Group we are actively playing a major role in the consolidation of the junior development sector.
About the markets regarding the actual gold price around 2500$:
"I would have expected by now, seeing gold breaking the old high, making a decisive move into new territory, that the (gold junior market) sector will pick up bu it hasn't, and I've never seen a market where there's such a disparity between the gold price and the mining equities. And I've been doing this since 1978. This is a very strange market, investors have completely disapear for this sector. Banks cannot find investors, we needed to be involved ourselves with our own money, our friends, our family, our associates, almost all the deal I have done in the last 12 months, we've had to place the bulk of it because the bankers can't find the investors, it's really a very difficult market. I think it will change because always, in any industry, when the profitability proposal gets interresting enough, like having companies producing gold at $1300 when gold is at $2500, that idea will reach to investors as sentiments always change. I believe that a higher gold price and consolidation process will turn that sentiment around.
Mr Giustra has been involved with Gold Corp, Endeavor mining ($7.8B MC), Equinox Gold ($3.4 B MC). This guy looks serious! Continuing my DD... but wow, I'm pretty impressed!