John Paulson is joined by 15 investors in council to oversee gold miners

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By Danielle Bochove
Bloomberg News
September 21, 2018

https://www.bloomberg.com/news/articles/2018-09-21/paulson-joined-by-15-...

After almost a year of behind-the-scenes work, billionaire hedge-fund manager John Paulson has formed a coalition with 15 other founding members aimed at curbing years of what his hedge fund has called value destruction in the gold sector.

John Hathaway -- who is a general partner at Tocqueville Asset Management LP -- and activist fund Livermore Partners are among those who have agreed to join the group, according to an emailed statement from the newly formed Shareholders' Gold Council. The idea for the group was first floated by Paulson & Co. during the Denver Gold Forum last September.

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"Since last year, the gold price has crept lower and shareholder returns have been poor," Marcelo Kim, a partner at Paulson, said in a separate email. "Interest in the sector has continued to languish, and you have seen capital leave the space and notable fund closures."

Gold was trading around $1,300 an ounce, about $90 higher than current spot prices, when Paulson announced plans to unite big institutional gold investors around common issues.

Since then, there has been no noticeable improvement in behavior, said Kim, who delivered a blistering presentation to investors at the 2017 Denver Gold Forum. He had cited almost a decade of mismanagement by gold miners and called for institutional investors to exert more influence on issues like executive pay, board appointments and merger activity. The sector had incurred $85 billion of write-offs since 2010, he said at the time, while continuing to reward executives.

The Shareholders' Gold Council will be headed by Christian Godin, a former senior vice president at Montrusco Bolton Investments. Launching it took longer than expected because of compliance issues and housekeeping challenges dealing with 16 institutions and back-office teams, Godin said by email.

The group intends to ensure the management and boards of mining companies are aligned with shareholder interests, he said. The group will meet periodically to address a number of issues and will be funded by members.

Sprott Inc. is not named on the list, which includes four anonymous members. Rick Rule, chief executive officer of the Sprott U.S. Holdings Inc. unit, had previously said he would recommend Sprott join the group.

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