Loading ...Mining companies have to aggressively rebuild their gold reserves with M&A – Ian Telfer
(Kitco News) – Mining companies need to aggressively grow their reserves through mergers and acquisitions if they want to attract new investors, according to mining legend Ian Telfer.
In the last few years, the mining sector has seen a significant improvement in margins as higher prices and solid production has driven cash flow to record levels. However, Telfer said that many producers are making a mistake trying to attract investors with share buybacks and increased dividends. He added that this is not a sustainable trend for the sector.
“I don’t know any investor who buys a gold stock for the dividend,” he said. “The only people that buy gold shares are people who think the price of gold is going higher.”
Instead of buying back shares, Telfer said that mining companies should be using their growing stockpile to look for acquisition targets. He added that in the current environment, the only way a company is going to grow is through aggressive M&A activity.