MARKETS

Klein defends Australia's bad rep

INCREASED resource nationalism and civil unrest in some African and Asian countries put sovereign...

Kristie Batten
Klein defends Australia's bad rep

“We think political risk has been mispriced,” Klein told the first day of the Denver Gold Forum.

“There have been several cases where investors have really been blindsided by massive capital loss as a result of their tenure for the asset being threatened.

“From an Australian perspective you could start with Indonesia and you could go further afield and the countries are numerous.”

However, he acknowledged Australia’s public relations problem.

“We think that Australia has done its best possible job in portraying itself in the worst possible light from an investor perspective,” Klein said.

“We’ve done a magnificent job in demonstrating why investors shouldn’t regard Australia as a premier mining destination – which they used to.”

Klein pointed to statistics that around 75% of projects in Australia were over budget or late.

“So I guess if you put that in context we would argue you’re entering an inflection period in the gold industry which we haven’t seen before and we would have a stab in saying there is going to be a new normal,” he said.

“That new normal, we believe, is that political risk is going to be better priced.”

Klein said that would lead to a re-rating for Australia.

“It is a better destination than is perceived,” he said.

He highlighted that while Australia was the second largest gold producer in the world, many of the delegates were relatively underweight in terms of their exposure to Australia.

“The Australian gold sector is somewhat sad,” Klein said.

While the Australian dollar was weak between 1998 and 2002, the best assets in Australia were absorbed by the majors, leaving a gap in the mid-tier space, according to Klein.

That gap is one Evolution is filling.

“Evolution was created for the time which is unfolding in front of us,” Klein said.

He said the company would avoid “courageous M&A” for now, as it wasn’t something the market was rewarding.

Instead, Evolution will focus on organic growth with an exploration budget of $A28 million for the 2013 financial year.

Shares in Evolution gained 2.2% to $A1.73.

This article first appeared in ILN's sister publication MiningNews.net.

TOPICS:

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

A growing series of reports, each focused on a key discussion point for the mining sector, brought to you by the Mining Monthly Intelligence team.

editions

ESG Mining Company Index: Benchmarking the Future of Sustainable Mining

The ESG Mining Company Index report provides an in-depth evaluation of ESG performance of 61 of the world's largest mining companies. Using a robust framework, it assesses each company across 9 meticulously weighted indicators within 6 essential pillars.

editions

Mining Magazine Intelligence Exploration Report 2024 (feat. Opaxe data)

A comprehensive review of exploration trends and technologies, highlighting the best intercepts and discoveries and the latest initial resource estimates.

editions

Mining Magazine Intelligence Future Fleets Report 2024

The report paints a picture of the equipment landscape and includes detailed profiles of mines that are employing these fleets

editions

Mining Magazine Intelligence Digitalisation Report 2023

An in-depth review of operations that use digitalisation technology to drive improvements across all areas of mining production