Bill Beament’s appointment from Managing Director to Executive Chairman of Northern Star Resources (ASX:NST) in November 2016 was a defining moment for him. It brought criticism from proxy advisers and retail shareholders who believe that executive chairpersons should hold no executive role with the company. The Board of NST threw caution to the wind when they decided to appoint Beament with the Executive Chairman role.
Beament’s credibility as NST’s Executive Chairman is questioned
Over the course of his career as NST’s Executive Chairman, has Bill Beament display good leadership qualities and made sound decisions? Has he built good relationships with his joint venture partners?
NST’s Executive Chairman capitalises on his youth. At his 40s, Beament recognises underground mining as a “younger person’s game” and uses his youth and that of his workers to his advantage. But is his youth enough for him to hold his position and lead an organisation? Is he credible and ethically-suitable for the role? Beament’s reputation may not be as good as gold. Important points to take note are:
- Over the past few years, Beament has inside sold down over 70% of his holdings from NST. His excessive insider sell-downs send a negative message to investors about the real value of NST’s share price.
- There are allegations going around the rumour mill about Beament’s improper activities, including meeting some ‘colourful’ associates in Bogota’s dark corners to avoid exposure as they plan their ‘new ventures’.
- He has violated the Kalgoorlie ‘honour amongst peers’, a code of conduct for miners. His joint venture partners, Tribune Resources (TBR) and Rand Mining (RND), tagged him as ‘opportunistic’ when Beament’s NST offered to buy TBR and RND’s cumulative 49% stake in the East Kundana Joint Venture (EKJV). Beament undervalues his joint partners, by appointing Northern Star Mining Services (NSMS) as mining contractor for EKJV and self-performing services without prior approval from TBR and RND.
- Beament has been misleading investors by claiming that NST’s Pogo will have a turnaround after its negative results in the March quarter. According to NST’s FY2019 annual report, the gold miner’s profit decreased 20% from the prior year due to Pogo’s increasing costs.
- Bill Beament’s production strategies and lack of efficiency unsettle market observers and investors. Negative cash flows and expenditure trends rise continued because of Pogo under Beament’s leadership.
- Kalgoorlie Super Pit is one to watch. Newmont are a savvy gold miner who are not in the game of exiting long-term profitable mines. Beament has a goal to drive NST’s production. With the high ASIC at Pogo and 50% increasing costs at the nearby EKJV Northern Star may be on an ego path that puts quantity ahead of quality. Lucky for NST the gold price is at an all-time high. If this turns NST could head toward negative teritory.
Beament: NST’s liability
The crux of the matter is that Beament may be more of a liability than an asset to NST based on the given key points. Mr Beament should live up to Mahatma Gandhi’s famous catchphrase, “For things to change, first I must change”. He should initiate the change and step out of NST before more investors decide to dump their shares from the gold miner.