New beginnings for Genesis

Raleigh Finlayson, the newly minted Genesis Minerals chief executive, broke from deeply engrained industry practices to address a Resources Rising Stars audience in Perth last week.Numerous ‘From the Capital' columns have lamented the dull uniformity in the way executives present junior miners to investors. Strangely, an industry noted for risk taking, entrepreneurial zeal and having to constantly fight for a limited pool of savings has clung grittily to a standardised presentation blueprint.The mundane sameness of the companies is especially evident at the growing number of conferences in which dozens jostle to excite investor interest with essentially the same ritualised approach. The record shows no discernible impact on investment outcomes from these conferences, with a material chance that returns are lower than average for participants after the event.Despite abundant evidence of a failing model, company executives appear determined to avoid discussing what most investors agree is the single most important distinguishing feature of a company, namely, its people.Certainly, lip service to management skill is plentiful. Inevitably, directors and senior executives are characterised as "highly experienced". But, most often, there is nothing more substantial imparted about the potential contributions of the corporate leadership. Listeners may be invited to glean, "at their leisure", what they can from potted biographies. Sometimes, in introducing a board member, a chief executive will say something like "many of you will know Bill". Occasionally, some reference will be made to the accumulated number of professional years among members of a board to help emphasise their eminence, with a tagline like "150 years total mine development experience".At other times, recognition of the professional qualifications within a board, such as two geologists, a mining engineer, a lawyer and an accountant, is deemed sufficient.Very rarely, in the mining space, are directors and senior management specifically highlighted for the future roles they will play in the achievement of company objectives. In stark contrast to the miners' approach, personnel usually loom large in investment presentations on behalf of early stage biotech companies trying to tap the same pool of savings. Skills are portrayed as central to future research, discovery and development opportunities. Roles impacting outcomes are well defined.The most important investment question - why will this venture succeed? - is inevitably unaddressed without clear references to how the people involved will make a difference.With those thoughts in mind, I listened intently to Finlayson over lunch last Thursday. For 20 minutes or so, he spoke almost solely about himself: where he was born, wel-known mining figures to whom he was related, his upbringing, his school days, his career choices, the people who influenced him along the way, his professional attainments and, more recently, his pursuit of academic excellence at Harvard Business School.The confluence of these events have led Finlayson to Genesis Minerals which he bought into in September last year having pulled together a A$21 million funding package to recapitalise the company on a promise of the top job after completing his stint at Harvard.Avid readers can investigate Finlayson's background in more detail, at their leisure, as the saying goes. The unedited presentation should also be available on YouTube for those interested.No doubt, Finlayson has been unusually successful in his executive roles at Saracen Mineral Holdings and, after its acquisition, at Northern Star Resources. No doubt, too, his semi-celebrity status permitted him unusual leeway in framing the content of his address last week.Despite the absence of detail or credible investment metrics, the audience reaction seemed abundantly positive. People welcomed the chance to understand more clearly how Finlayson intended to manage his next corporate endeavours, his philosophical approach and how he had framed his objectives. The novelty value of an insight into the lineage of an investment seemed to strike a chord.In fact, the Resources Rising Stars show and tell was the trailer for a more comprehensive strategic plan laid out earlier this week.Without saying how, Finlayson has foreshadowed a drive to sustainable gold production of at least 300,000 ounces a year and, with that, superior total shareholder returns. As discussed in last week's ‘From the Capital' column, the largest producers do attract outsized investor interest with disproportionate returns for size.Whether or not large gold production volumes are a sound use of capital, the likes of Evolution Mining and Northern Star have counted on the return for size working in their favour as they tap international investors with an appetite for gold but, more importantly, an overriding hunger for size in their investment portfolios.Similarly, Genesis will have to use its present two million ounce gold resource as a stepping stone through a combination of discovery and asset acquisitions to achieve its goal. A conveniently favourable gold price will help, as it did in the earliest days of the Northern Star ascent. Operating skills will be vital, too, as Finlayson's emphasis on people and culture recognises. As will discovery. But that will not be enough.The ultimate success of the strategy will largely depend on Finlayson being able to captivate audiences, a role in which he obviously fancies himself. Success will depend on his ability over the next five years to sweet-talk some into selling sound assets cheaply while others are cajoled into risking big licks of capital to help conjure investments big enough to meet their portfolio needs.*John Robertson is a director of EIM Capital Managers, an Australia-based funds-management group. He has worked as a policy economist, business strategist and investment-market professional for nearly 30 years, after starting his career as a federal treasury economist in Canberra, Australia

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