Canada’s CFOs Honour Agnico’s Garofalo

Canada’s financial community came out in force to a black-tie gala in Toronto during the fifteenth trading week of the year to bestow Agnico-Eagle Mines’ David Garofalo with the title “Canada’s CFO of the Year” for 2009.

• Now in its seventh year, the award is presented by Financial Executive International Canada, PricewaterhouseCoopers and the Caldwell Partners.

It’s quite a coup for Garofalo, 43, as the award typically goes to the chief financial officers of much larger and more mainstream companies, such as banking and insurance groups.

In accepting his award, Garofalo heaped praise on his coworkers in English and French, and said that, until getting this award, he viewed the CFO as being the “invisible hand within a business” or “like a hockey referee — you only get noticed when you screw up.”

He commented that, in the last couple of years especially, “being a CFO means taking care of the basics, the blocking-and-tacking stuff, like ‘do we have enough money to run the business’ and ‘are we dealing with creditworthy counterparties?'”

Garofalo noted that the award also has “meaning to the immigrant class in Canada that has been so important to the success of this country.” One of the first in his family to attend university, the Toronto native reflected on his own roots as a first-generation Canadian whose parents escaped to Canada from war-torn Italy before being able to finish their schooling. Happily, both parents were able to attend the ceremonies.

As Agnico’s CFO since 1999, Garofalo is clearly doing something right: earlier this year, he also scooped up the award for “best investor relations by a CFO in a small to large-cap company” at the IR Magazine Canada Awards 2009.

• Junior gold explorers don’t often make the pages of the venerable Barron’s magazine, but an exception was Vito Rancanelli’s April 13 feature “All That Glitters Is Not Gold” about Jim Sinclair’s Tanzanian Royalty Exploration. The negative article, which chopped a buck, or about 25%, off Tanzanian’s share price, pondered the junior’s sky-high valuation, as well as Sinclair’s continual selling of much of the private placements he’d made in the company. The article makes some good points in highlighting the company’s unusual financing techniques, but it’s old news for most shareholders that the company is built upon three foundations: lots of prospective, under-drilled ground in Tanzania; a near-religious faith in gold; and Sinclair’s charisma as a gold market commentator.

The Barron’s writer can’t quite bring himself to acknowledge that this crazy business of mineral exploration is fuelled by long-shot odds offered up by the most unusual kinds of entrepreneurs, and that a single great hole drilled tomorrow can make an overvaluation disappear overnight.

• There was more pain for workers in Ontario’s Sudbury basin, as Vale Inco announced that, in response to low nickel prices, it would shut down its mining, smelting and refining operations there for eight weeks beginning June 1, as well as its Port Colborne refinery in the Niagara Peninsula. This comes right after a previously announced three-week maintenance shutdown.

The closure immediately became a federal political issue, as Vale had made certain promises to the Canadian government when it bought Inco in 2006 with respect to keeping jobs in Canada.

While we welcome the visible involvement of federal Industry Minister Tony Clement, it’s hard to see much changing in Vale’s current approach, given the situation: there was a steep fall in nickel prices over the past year; Vale Inco already enjoyed very strong growth in its first year, so it’s pulling back from a historic peak; and these are extended unpaid vacations rather than large, permanent job reductions.

The only safe thing to predict is that the honeymoon is over between Vale Inco’s workers and managers, and we may see the return of strikes in the Sudbury basin in the coming quarters.

• At presstime, Teck had negotiated some much needed new breathing room with respect to its US$5.8-billion bridge loan and US$4-billion senior-term loan. Lenders will now: defer US$4.4 billion of payments previously scheduled in 2009; extend the maturity date of US$3.5 billion of the bridge loan to Oct. 30, 2011 from Oct. 29, 2009; and reschedule about US$3.3 billion of amortization payments under the term loan, with half of that rescheduled amount payable in quarterly instalments during 2012.

Send your Letters-to-the-Editor and other op-ed submissions to the Editor at: tnm@northernminer.com, fax: (416) 510-5137, or 12 Concorde Pl., Suite 800, Toronto, ON M3C 4J2.