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Detour Gold ( The Problem with John Paulson and Marcelo Kim

A modern mining family

We note that Paulson & Co has set up a new website to support its dissident shareholder campaign against Detour Gold ( and forward the case for its proxy slate of directors. That's fair enough of course, the guy has decided to make his move on the under-performing DGC and now that the whole "Barrick gonna buy cos Paulson and Thornton are tight" thing has been blown out the water, he's going to need to do something.

Which got me thinking about the whole charade again. I mean, Paulson does have a point about the inept, self-serving management at DGC which has done nothing for its shareholders while lining their own pockets with hard cash (that they rarely use to buy their own shares, precious little skin in their own game). However, just because one side is bad it doesn't automatically make the other side good and cheering on John Paulson/Marcelo Kim against Michael Kenyon/Alex Morrison (or vice versa)  in this one is like choosing sides in the 1990s Bosnian War.

And when it comes to John Paulson and Marcelo Kim, the problem isn't that DGC's management are typical mining mediocrity. The problem is that John Paulson and Marcelo Kim are abysmal mining stock investors. They plough their money into DGC? Fine, live with it, bad call. But even worse, these are the people who decided to own 32% of International Tower Hill ( (THM), which is an absolute dog. Even worse, not only do they still own all that but they go around holding it up as an example of their investment model and prowess!  People, ITH at Livengood isn't just a dog, it's a howling Saint Bernard Great Dane mongrel. This is the project that claims to have "9m ounces of reserves at U$1,250/oz gold" but its own PFS tells you that it would take 22.1 years of its 23 year mine life for capital payback! This is the project that will give an IRR of 8.6%...if gold moves up to U$1,625/oz! And this is the company which has...Marcelo Kim as chair.

This isn't the first time I've run on this, but the advent of the new dissident website got me on it again and the bottom line is that you cannot get past the fact that you simply do not want to put the keys of Detour Lake into the hands of a pair who think Livengood is viable project. It's one thing to screw up on a $100m dog (that's worth precisely C$100m less than that number, its fake market cap held up by the dumbo block holders), quite another to barge in on a C$2Bn operating mine and further destroy its value with the same mindset. By all means find a better alternative for DGC than the auto-pilot stuffed suits now running the thing, but not one led by a pisspoor gold stock picker and his mini-me along for the ride. Two wrongs do not make a right.