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Paulson's gold investor group urges deals, costs purge

Published 2019-09-12, 11:14 a/m
Updated 2019-09-12, 11:21 a/m
© Reuters.  Paulson's gold investor group urges deals, costs purge

By Jeff Lewis

Sept 12 (Reuters) - Gold bull John Paulson's investor coalition on Thursday urged the world's largest gold miners to immediately cut what it called excessive governance and administrative (G&A) costs and said smaller rivals should pursue no-premium mergers to boost shareholder returns.

Concerns over global growth and trade uncertainties have pushed gold prices to multi-year highs, stoking expectations of deals among miners and reviving anxieties over cost control. This month, gold XAU= climbed to its highest level since 2013 hitting $1,503.04 per ounce Thursday. miners including Polymetal POLYP.L , Kinross Gold Corp K.TO and Newmont Goldcorp Corp NEM.N spend nearly two times more on G&A than non-gold producing rivals, Paulson's Shareholders Gold Council said in a report.

Among mid-tier producers, Golden Star Resources GSC.TO , Jaguar Mining JAG.TO , Petropavlovsk POG.L , Dundee Precious Metals DPM.TO and Eldorado Gold Corp ELD.TO have the highest spending levels.

The investor group urged the smaller gold miners to seek nil-premium mergers to eliminate duplication and lower costs.

"If the gold producers brought down their G&A levels closer to other mining peers, then $13 billion of value could be unlocked for shareholders," the report said.

The coalition was launched last fall by Paulson's U.S. hedge fund Paulson & Co. It includes Adrian Day Asset Management, Apogee Global Advisors, AMG Fondsverwaltung AG, Delbrook Capital, Equinox Partners LP, Equity Management Associates, John Hathaway, Kopernik Global Investors, Livermore Partners, La Mancha and Sun Valley Gold.

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