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Gold chiefs at odds over lag in shares

NEWCREST and BlackRock - the world's biggest mining fund manager and Newcrest's biggest shareholder - will have to agree to disagree on the reasons why gold stocks have lagged the surge in gold prices.

NEWCREST and BlackRock - the world's biggest mining fund manager and Newcrest's biggest shareholder - will have to agree to disagree on the reasons why gold stocks have lagged the surge in gold prices.

The BlackRock managing director, Evy Hambro, said this week that the disconnect between gold's rise and gold share prices reflected meanness by the companies when it came to their dividend payout ratios.

The Newcrest managing director, Greg Robinson, has different ideas.

Speaking after the group's annual meeting in Melbourne yesterday, Mr Robinson agreed there was a disconnect of as much as 15 to 20 per cent across global gold stocks.

But rather than blaming dividend yields, Mr Robinson pointed to more structural issues at play.

"Short-term money, when it is attracted to gold, goes in to physical [gold] and exchange-traded fund markets," he said.

"But I think that when you are looking at the medium to longer term, you find that stocks will reflect longer-term [gold] prices.

"If prices hold and people are forecasting higher prices, you will see the stocks recalibrating in price." Mr Robinson defended Newcrest's dividend record. For the June year, Newcrest paid a 30? a share ordinary dividend and a 20? a share "special" dividend. The total doubled last year's total of 25? a share.

"We are at the higher end of dividend payments by gold companies," Mr Robinson said.

"We are roughly at a 1.5 per cent yield with that normal and special dividend that we paid - and that would be among the top in the gold industry."

But he acknowledged that all shareholders investing in resources stocks were looking for better dividends. "I think Evy is just illustrating that," Mr Robinson said.

Newcrest does not forecast gold price moves but Mr Robinson said he was "positive on the gold price in the medium term".

"I think that we are looking at a very strong environment for gold for a considerable future," he said.

The highlight of the annual meeting was Newcrest securing one of the highest "yes" votes (96 per cent) in the reporting season for the adoption of its remuneration report, despite the Australian Shareholders Association calling for a protest vote.


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