0 This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on various assumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this material are unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees and expenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to other than the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc. INC. & CO. PAULSON Gold Equities: Myths, Dreams and Reality Marcelo Kim Partner CONFIDENTIAL Denver Gold Forum Colorado Springs, CO September 26, 2017
Transcript
0
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
INC.& CO.
PAULSON Gold Equities: Myths, Dreams and Reality
Marcelo KimPartner
CONFIDENTIAL
Denver Gold Forum
Colorado Springs, COSeptember 26, 2017
1
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
LEGAL DISCLAIMER
This document does not constitute an offer to sell or a solicitation of an offer to buy any securities, and may not be relied upon in connectionwith any offer or sale of securities. This document should be read in conjunction with, and is qualified in its entirety by, informationappearing in the Confidential Private Offering Memorandum (and a Limited Partnership Agreement for domestic partnerships), which shouldbe carefully reviewed prior to investing. Certain statements included herein may constitute forward-looking statements, including, but notlimited to, those identified by the expressions “expect”, “intend”, “will” and similar expressions to the extent they relate to the investmentvehicles discussed herein. The forward-looking statements are not historical facts but reflect Paulson & Co’s current expectations regardingfuture results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results orevents to differ materially from current expectations. Although Paulson & Co believes that the assumptions inherent in the forward-lookingstatements are reasonable, forward-looking statements are not guarantees of future performance and, accordingly, readers are cautioned notto place undue reliance on such statements due to the inherent uncertainty therein. Paulson & Co undertakes no obligation to update publiclyor otherwise revise any forward-looking statement or information whether as a result of new information, future events or other such factorswhich affect this information, except as required by law.
An investment in a hedge fund is speculative and involves a high degree of risk, which each investor must carefully consider. An investor inhedge funds could lose all or a substantial amount of his or her investment. Returns generated from an investment in a hedge fund may notadequately compensate investors for the business and financial risks assumed. While hedge funds are subject to market risks common to othertypes of investments, including market volatility, hedge funds employ certain trading techniques, such as the use of leveraging and otherspeculative investment practices that may increase the risk of investment loss. Products may involve above-average risk. Risks associated withhedge fund investments include, but are not limited to, the fact that hedge funds can be highly illiquid; they are not required to provideperiodic pricing or valuation information to investors; they may involve complex tax structures and delays in distributing important taxinformation; they are not subject to the same regulatory requirements as mutual funds; they often charge higher fees and the high fees mayoffset the funds’ trading profits; they may have a limited operating history; they can have performance that is volatile; they may have a fundmanager who has total trading authority over the fund and the use of a single adviser applying generally similar trading programs couldmean a lack of diversification, and consequentially, higher risk; they may not have a secondary market for an investor’s interest in the fundand none may be expected to develop; they may have restrictions on transferring interests in the fund; and may effect a substantial portion oftheir trades on foreign exchanges.
All material is compiled from sources believed to be reliable, but accuracy cannot be guaranteed.
This material may not be distributed to other than the intended recipients. Unauthorized reproduction or distribution of all or any of thismaterial is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
2
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
0
20
40
60
80
100
120
140
160
180
200
12/31/2009
7/20/2010
2/6/2011
8/26/2011
3/14/2012
10/1/2012
4/20/2013
11/7/2013
5/27/2014
12/14/2014
7/3/2015
1/20/2016
8/8/2016
2/25/2017
9/14/2017
Source: Paulson & Co., Bloomberg as of September 20, 2017
GOLD EQUITIES HAVE SEVERELY UNDERPERFORMED GOLD PRICE
Performance Since 2010
Gold: 20%
(Ind
ex =
100
)
GDX: -45%GDXJ: -58%
3
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Bloomberg as of September 20, 2017
INPUT COSTS HAVE MOVED IN COMPANIES’ FAVOR
Gold, FX and Oil Prices Since 2010
FX is a basket of CAD, AUD and ZAR vs. USD
0
20
40
60
80
100
120
140
160
180
200
12/31/2009
7/20/2010
2/6/2011
8/26/2011
3/14/2012
10/1/2012
4/20/2013
11/7/2013
5/27/2014
12/14/2014
7/3/2015
1/20/2016
8/8/2016
2/25/2017
9/14/2017
Gold: 20%
(Ind
ex =
100
)
FX: -16%
Oil: -28%
4
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø Analysis of 13 Largest Publicly Listed Gold Companies Shows Total Shareholder Returns Have Been Dreadful
Ø Economic Returns Have Been Value Destructive
Ø So What To Do?
Source: Paulson & Co.
THE SOBERING REALITY OF GOLD EQUITIES
5
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Bloomberg as of September 20, 2017 (Gold Fields return includes spin-off of Sibanye)
AVERAGE TOTAL SHAREHOLDER RETURNS HAVE LAGGED BY 65%
Total Return Since 2010
-83-75 -74 -72
-63-56 -53
-46 -45-40
-9-2
20 20
35
-100
-80
-60
-40
-20
0
20
40
60
Eldo
rado
Ang
loG
old
Kin
ross
Yam
ana
Gol
dcor
p
Iam
gold
Barr
ick
Gol
d Fi
elds
GD
X
New
cres
t
New
mon
t
Agn
ico
Gol
d
Poly
met
al
Rand
gold
6
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Bloomberg as of September 6, 2017 (Gold Fields return includes spin-off of Sibanye)
DESPITE DESTROYING $85 BILLION IN VALUE
$195.6
$220.4
$134.8
$32.6
$-4.4$-85.6
$9.5$-12.8
0
50
100
150
200
250
Starting EV12/31/2009
EquityIssued
Net DebtRaised
DividendsPaid
Spin-Off
EndingCapitalization
ValueLoss
CurrentEV
8
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø Industry Return on Capital Has Been Lower than Cost Of Capital
Ø Cumulative Impairments Since 2010 Have Totaled $85 Billion
Ø Analysis of M&A Suggests Serial Value Destruction
Ø Return On Invested Capital Has Been Inadequate
Source: Paulson & Co.
WHERE HAS THE $85 BILLION GONE?
9
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co.
INDUSTRY SPENDS MORE THAN IT EARNS DESPITE FLAT PRODUCTION
Industry Cash Flow Statement(2010-2016)
CF From Operations ($ bn) $109
CF from Investing ($bn) -$134
CF from Financing ($ bn) $25
Change in Cash -$1
Change in Production +2%
10
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Company Filings as of December 31, 2016
INDUSTRY INVESTS IN GOOD & BAD PROJECTS
2010
2011
201220132014
2015 2016
0
50,000
100,000
150,000
200,000
250,000
-6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0%
Inve
sted
Cap
ital (
$m)
Return on Capital - Cost of Capital
11
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Company Filings as of December 31, 2016
RANDGOLD INVESTS ONLY IN HIGH RETURN PROJECTS & HAS HIGHEST TOTAL SHAREHOLDER RETURN
2010
2011
2012
2013
2014
2015 2016
0
500
1,000
1,500
2,000
2,500
3,000
3,500
-5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
Inve
sted
Cap
ital (
$m)
Return on Capital - Cost of Capital
12
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø 20% IRR
Ø $1,000/oz Gold Price
Source: Paulson & Co., Randgold
RANDGOLD’S CONSISTENT AND SIMPLE STRATEGY
13
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Company Filings as of December 31, 2016
ELDORADO INVESTS IN NEGATIVE RETURN PROJECTS & HAS LOWEST SHAREHOLDER RETURN
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., BMO, Bloomberg, Company Filings
ELDORADO: HISTORY OF CHRONIC, POOR M&A
Deal Year Purchase Price ($m)
Cum Cash Flow ($m)
Disposal ($m)
Net Value Outflow
($m)Status
Sino Gold 2009 -$1,421 $599 $796 -$26 Sold
Brazauro 2010 -$75 -$58 - -$133 Pending
Andean 2010 -$3,200 - - - Outbid
European Goldfields 2011 -$2,256 -$928 - -$3,184 Construction/
Arbitration
Glory Resources 2013 -$32 -$4 - -$36 Pending
Integra 2016 -$336 - - -$336 Pre-Feasibility
TOTAL (excl. Andean) -$4,120 -$391 $796 -$3,715
15
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Company Filings as of December 31, 2016
Cumulative Writedowns Since 2010($ Millions)
0
5,000
10,000
15,000
20,000
25,000
30,000
Ran
dgol
d
Poly
met
al
Gol
d Fi
elds
Iam
gold
Agn
ico
Eldo
rado
Ang
loG
old
Yam
ana
New
mon
t
New
cres
t
Gol
dcor
p
Kin
ross
Barr
ick
$85 BIILLION ON COLLECTIVE WRITEDOWNS AS A RESULT OF POOR INVESTMENT
16
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., BMO Capital Markets
8 LARGEST M&A DEALS: $36 BILLION PAID AND STILL CASH FLOW NEGATIVE
Years Since Acquisition: 7.2 6.2 6.9 3.2 6.8 5.5 6.4 7.8
(8,440) (7,802)(9,156)
(2,608)(4,522)
(3,484)(2,277)
(26)
-12,000
-10,000
-8,000
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
Lihi
r Gol
d / N
ewcr
est
Equi
nox
/ Bar
rick
Red
Back
/ Ki
nros
s
Osis
ko /
Agn
ico
& Y
aman
a
And
ean
Res
ourc
es /
Gol
dcor
p
Euro
pean
Gol
dfie
lds /
Eld
orad
o
Fron
teer
Gol
d / N
ewm
ont
Sino
Gol
d / E
ldor
ado
Transaction Value FCF Net Capital Outflow
17
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., BMO Capital Markets
80% OF TRANSACTION VALUE OF 8 LARGEST M&A DEALS HAS BEEN IMPAIRED
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
Lihi
r Gol
d / N
ewcr
est
Equi
nox
/ Bar
rick
Red
Back
/ Ki
nros
s
Osis
ko /
Agn
ico
& Y
aman
a
And
ean
Res
ourc
es /
Gol
dcor
p
Euro
pean
Gol
dfie
lds /
Eld
orad
o
Fron
teer
Gol
d / N
ewm
ont
Sino
Gol
d / E
ldor
ado
Transaction Value Impairment
18
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Source: Paulson & Co., Company Filings
RETURN ON CAPITAL SHOCKINGLY LOW
0.7% 1.1% 1.2% 1.2% 1.4% 1.7% 2.2% 2.3% 2.9%
4.6% 5.1%
7.4%
10.5%
22.6%
0%
5%
10%
15%
20%
25%
Iam
gold
Eldo
rado
Kin
ross
Yam
ana
Gol
dcor
p
Barr
ick
Agn
ico
New
cres
t
Ave
rage
Ang
loG
old
Gol
d Fi
elds
New
mon
t
Ran
dgol
d
Poly
met
al
Return on Capital(2010-2016)
19
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø Shareholders Have No One To Blame But Themselves
Ø Investors Rubber Stamp Mergers, CEO Pay Packages, Board Appointments
Ø Behave Like Sheep Being Led To Slaughter
Ø Little To No Engagement With Boards
Ø No Activism
Source: Paulson & Co.
WHOSE FAULT IS IT?
20
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
The definition of insanity is doing the same thing over and over again and expecting a different result.
-Albert Einstein
The secret of change is to focus all your energy not on fighting the old, but on building the new.
-Socrates
SOMETHING HAS TO CHANGE
21
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø Consistent Underperformance & Value Destruction Will Result in Either:
§ Activist Shareholders Entering§ Continued Frustration for Equity
Shareholders
Source: Paulson & Co.
OUTLOOK
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This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø CEOs Take Massive Pay Irrespective of Investor Returns
Ø Boards Are Stacked With CEO Appointees & Cronies
Ø CEOs And Boards Own Little Or No Stock
Ø Reload on Options Even As Stock Declines
Ø CEOs And Boards Get Rich While Shareholders Lose Money
Source: Paulson & Co.
INVESTORS HAVE BEEN TAKEN FOR A RIDE
23
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø Investors Must Take The Bull By The Horns
Ø Need To Demand Accountability
Ø Company Pay, Especially CEO’s, Should Be Aligned With Shareholder Returns
Ø Poorly Performing CEOs and Boards Should Be Booted
Ø Boards Must Have More Shareholder Representation
Source: Paulson & Co.
RULES OF THE GAME MUST CHANGE
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This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø Our Recent Investments Have Involved Buying Stakes In Companies and Getting Board Representation with Investor Rights Agreements:
§ Midas Gold § International Tower Hill
Source: Paulson & Co.
PAULSON STRATEGY
25
This material has been obtained from sources believed to be reliable but its accuracy cannot be guaranteed. This information is presented for illustrative purposes only and may represent Paulson’s views based on variousassumptions that may not occur or differ in the future. There is no guarantee that securities and exposure levels presented herein would be held in the funds in the future. Benchmarks used for comparison throughout this materialare unmanaged and effected by factors that may differ from those effecting Paulson portfolio, therefore, cannot be solely relied upon as an accurate measure of comparison. Performance results described herein are net of fees andexpenses for the periods indicated. Past performance does not necessarily indicate future returns and may differ depending upon the actual date of investment. This material is confidential and may not be distributed to otherthan the intended recipient. Unauthorized reproduction or distribution of all or any of this material is strictly prohibited. Copyright 2017 Paulson & Co. Inc.
Ø Coalition Formed By Gold Investors, Similar to ISS
Ø Council Composed Of Broad Base of Significant Gold Shareholders
Ø Make Recommendations On Board Appointments, Pay Packages, AGM Matters, Extraordinary Meetings
