Confirming the Lassonde Curve through life cycle analysis and its effect on share price: A case study of three ASX listed gold companies

This paper aims to validate the Lassonde Curve which is a widely discussed hypothesis within the mining and finance industries directly linking the life cycle of a resource company to it's share price and subsequent company value. The exploration, discovery, feasibility, financing, construction and production activities that occur in sequence are known to drive company share price, however there is limited research or academic literature on the topic. This paper provides the results of case study investigations using three ASX listed gold companies to confirm that share price varies based on the activity being conducted. The results show that the company defining activities outlined by Lassonde influence share price, however the activities are not required to occur in series or in set time frames. Activity timeframes can be compressed, elongated or bypassed resulting in a sequence of events that is unique to each company. It can be concluded that multiple pathways exist for share price value once the production phase commences, as production is either successful and cash flow steadily increases or production problems drive the share price lower. The findings illustrate that the discovery and production phase of the activity cycle drive share prices higher, while exploration, post feasibility and pre finance periods produce stages of share price decline or stability. In summary, Lassonde's hypothesis is valid and visible for the three ASX listed gold companies analysed, although activities can be combined or bypassed to decrease the time of the overall cycle.