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TWST: Let’s begin by taking a look at how the gold stocks have performed over the past 12 months. Why have they been under such pressure?

Mr. Flores: I think there are a couple of reasons. Obviously the decline or lack of action in the gold price has been the major determinant of the poor performance. We started out the year at a higher level, and since then the gold price has eroded and so have the stock prices. But I think in addition to that there is an issue of sentiment, where we began the year on a high note following the Washington Agreement, and people felt that the outlook for gold was brighter. When this turned out not to be, a lot of the expectation surrounding the share prices collapsed. I think by the time we got around to the summer and it was clear that gold was not going to have a good year, people really gave up hope and the stocks came crashing down.

TWST: May we just have a word about some of the disappointments or disasters — take your pick — particularly Ashanti Gold (NYSE:ASL) and Cambior, Inc. (AMEX:CBJ). What is happening there now?

Mr. Flores: I can see that a year after their respective hedge crises, both of these stocks are still struggling as companies and also working to regain investor interest. If you look at the Cambior situation, they had an opportunity earlier this year to be acquired by AUR Resources (TSE:AUR.TO). They chose to turn that opportunity down. I thought the AUR offer was quite fair; it was just over $2 Canadian for Cambior shares. Management convinced their shareholders that they could create more value by managing the turnaround on their own rather than selling out to AUR. Cambior shares are somewhere around C$0.57 today, and they have traded as low as C$0.38. They have had to sell assets in order to survive. They sold those assets at prices well below what they had indicated they would be receiving for those assets. So I think it is fair to say that a year on, Cambior has continued to destroy their shareholders’ wealth.

TWST: What is your final word to investors who are considering gold stocks in 2001, especially if the market slows and other alternatives, other sectors of the market look less desirable than they might have done at the beginning of the year?

Mr. Flores: My final message would be to not look at the gold sector with as much of a jaundiced eye as, perhaps, investors have in the past couple of years. First, the shares have come way down from where they were. Second, gold prices seem to have stabilized. Third, some of the areas or sectors of the market that people thought were so attractive and could go on growing indefinitely are absolutely not going to grow indefinitely. So on a relative basis, gold may not be that bad a place to be in an environment where the economy is likely to slow and where there is potential for a weaker dollar. So that is the number one message. The second message is to focus only on those companies that are generating, or have the potential to generate, adequate returns on invested capital. Investors should try to forget for a moment the story and things like production growth and cash costs. It’s time to focus more on some of the traditional methods of equity valuation that are used for other industries, which for a long time we tended to ignore in the gold market.