Gold Miners - The Australian

"Gold miners have tended to increase investment during periods of high margins. Ore grades have declined as miners are digging in ever more costly and often politically risky areas, while their actual production growth has consistently tended to fall short of guidance.

Meanwhile, the four miners in question paid out $6 billion in dividends over the decade, equivalent to just 13 per cent of cash flow. But putting $47.5 billion of cash flow against $68.5 billion of capex, acquisitions and dividends adds up to a big funding gap. Little wonder then that their collective share count jumped a whopping 117 per cent over the decade, with all that this implies for shareholder dilution.

So here you have a sector that doesn't offer the best way to gain exposure to the commodity it produces, outspends its cash flow, and pays a pittance to shareholders.

All this should leave investors questioning not so much what gold-mining stocks say about the gold price - more why it is worth owning such stocks at all."

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