Randgold Slips on Investor Reaction to Inane Report

PUBLISHED: 05 Feb 2014 @ 02:10 | Comments (0) | More info about Lou Gutheil

After closing yesterday at its highest point since 20 November 2013 Randgold’s share price (LSE:RRS) has slipped by 111.00 pence , a drop of 2.49% from yesterday’s close of 4456, during the first half of the day. Frankly, this is absurd.

It would appear that the drawback was initiated by an inane reporter’s description of CEO Mark Bristow’s address before the annual Mining Indaba in Capetown, South Africa. Unfortunately, that reporter – whoever he may be – began his story with,

“Growing uncertainty about the regulatory environments and tax regimes in Africa’s mining jurisdictions is discouraging international investment in these countries’ mining industries, Randgold Resources chief executive Mark Bristow said today.”

Frankly, I initially wanted to blame the decline on uneasy investors, but, being the keenly astute (and humble) writer that I am, I realized that the response was generated by the incompetent reporting of one unknown individual who started his story with two ill-conceived – intentional or not – words: “Growing uncertainty ...” Using those two words, he set the context for his story and the tone for the day for Randgold on the London Exchange. Those two words set the table for a negative response, regardless of what followed.

The real gist of Bristow’s address was that “Randgold’s own experience has shown that, despite the stresses on both sides, mutually beneficial partnerships between governments and miners are still possible.”

The story would have been more accurately reported in that context. Here is the highly respected CEO of a company that has developed and followed a superior strategy for success in a difficult industry, continent, and economy. His message was that, instead of being paralyzed by anxiety, it is possible, as he has demonstrated by example, to succeed despite the circumstances. He was pointing out that the problems that the mining sector faces are not insurmountable. Although he was telling the conference that the obstacles the industry faces are really opportunities, the writer failed to clearly convey that message, to the point that he single-handedly transformed opportunity into an obstacle.

Did you realize that one person, making one statement, could have that much influence on the entire market? And we don’t even know who that person is. Whoever she is (50% chance), she ought to be ashamed.

Bristow was not decrying the obstacles. He was declaring the opportunities.

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