Mining Markets


The Super Seven

The seven dynamos we feature here have some of the brightest minds in the mining business. They are very different men but each is driven, opportunistic, well educated, well-connected, passionate, ove...

The seven dynamos we feature here have some of the brightest minds in the mining business. They are very different men but each is driven, opportunistic, well educated, well-connected, passionate, overtly competitive and, in most cases, workaholic. And, while few would admit it, luck has played a role in their success.

Cumulatively, they have made themselves and their investors billions.

Robert Friedland

Robert Friedland is a legend. If you don’t believe us, go ahead and ask him yourself.

But, seriously, he is. Born in Chicago to a Germanborn architect, he found his way into an industry always in need of promoters, and Friedland may just be the best one this industry has ever seen.

His unparalleled gift for promotion once had nickel heavyweights Inco and Falconbridge outbidding and out-shouting each other for the right to own the robust Voisey’s Bay nickel deposit in Labrador. When the dust finally settled, Inco paid $4.3 billion (about $160 per share on a pre-split basis) for Diamond Fields Resources and a nickel deposit that Inco would later take a $1-billion writedown on before it developed the asset in 2005. It’s said Friedland himself pocketed more than $500 million in the deal.

But before that, in 1992, he led the discovery and subsequent sale of Fairbanks Gold’s Fort Knox gold deposit in Alaska to Amax Gold for US$152 million. Fort Knox is now owned by Kinross Gold (K-T), and has produced roughly 4 million oz. gold since 1996.

In the early 1990s, as chairman of Galactic Resources, Friedland became derisively known as “Toxic Bob” for a cyanide spill at the Summitville gold mine in the San Juan mountains of Colorado. But before the problems set in, Friedland had Galactic investors making as much as 10 times their money.

Then there was Vengold (Venezuela Gold), run by Ian Telfer, but that story did not turn out so well when Vengold’s concessions in Venezuela’s Kilometer 88 district proved barren.

In 2006, The Northern Miner named Friedland the “Mining Person of the Year” for his efforts with Ivanhoe Mines (IVN-T).

Ivanhoe’s core asset is the 12-km-long system of copper- gold deposits discovered at the Oyu Tolgoi project in southern Mongolia. Ivanhoe Mines and Rio Tinto (RTP-N) formed a partnership in 2006 to develop Oyu Tolgoi. Rio Tinto paid US$303 million for an initial 9.9% stake in Ivanhoe, which Rio Tinto may increase to up to 46.6% through a total investment of US$2.3 billion inside five years.

Farther west in southern Mongolia, Ivanhoe’s major coal discoveries at the Ovoot Tolgoi project were transferred in 2007 to SouthGobi Energy Resources (SGQ-V).Friedland memorably dubs the deposits the “beluga caviar of coal.”

As co-chairman and controlling shareholder of private firm Ivanhoe Nickel & Platinum (Ivanplats), Friedland is involved with several mining projects, including the Kamoa copper project, west of Kolwezi, in the Democratic Republic of the Congo’s Katanga province.

Friedland jumped into the headlines again in early May when he became chairman of Potash One (KCL-T), a Vancouver-based junior that hopes to build Saskatchewan’s first potash mine in almost 40 years.

Potash mines are expensive, however, and it’s thought that Potash One will need $1 billion to put its Legacy project into production.

Potash One plans to mine Legacy using “solution mining,” a process by which water is poured into the deposit and the potash is then separated from the rock. A conventional, shaft-driven underground potash mine can cost more than $3 billion.

Friedland was previously involved with Potash North Resource before it was bought by Potash One earlier this year.

Biggest success:

Coaxing $4.3 billion out of Inco for the Voisey’s Bay nickel deposit without first securing a development deal with the Newfoundland government.

Current Boards:

Ivanhoe Capital (Private): Chairman

Ivanhoe Energy (IE-T):Chairman, president and CEO

Ivanhoe Mines (IVN-T):Chairman

Ivanplats (Private):Co-chairman

Potash One (KCL-T):Chairman

Andr Gaumond

Andr Gaumond is the president and CEO of Qubec City-based Virginia Mines (VGQ-T) and maybe the nicest guy on the list.

A geological engineer with a master’s degree in geological economics, Gaumond has worked as a geologist for several organizations, including Noranda, Quebec government firm SOQUEM, and for the Quebec government itself.

In the late 1980s, he worked at Pemberton Securities and later Midland Walwyn as a mining analyst. In 1990, he joined Corpomin Management as a technical and financial adviser, where he held a few senior management positions in different mining exploration companies.

Gaumond reorganized Virginia Gold Mines in 1992 and became president of the company. It was in this capacity that he led his exploration team to the James Bay lowlands of northeastern Quebec.

It was there that Gaumond and his team discovered the lonore gold deposit that led to the US$420 million acquisition of Virginia Gold Mines by Goldcorp (G-T) in 2005.

It proved to be quite a deal for the junior. Despite lucrative overtures from Goldcorp, not one person left Virginia to work for the major. And in April of this year, the current version of Virginia starting receiving $100,000 per month from Goldcorp based on a sliding-scale royalty agreement built into the sale.

Analyst Eric Lemieux with Desjardins Securities has crunched the numbers and says the royalty is worth at least $65 million and could be worth as much as $175 million.

Virginia still has a list of properties in the James Bay lowlands, chief among them the Coulon base metals project. Expect to see a resource estimate on Coulon by the end of the year.

Virginia also signed an exploration agreement with MacDonald Mines Exploration (BMK-V) whereby the junior has the option to acquire a 50% interest in Virginia’s Assinica property in exchange for $2.5 million in exploration work to be carried out during the next four years. Virginia also gets $130,000 cash and remains the operator. Assinica consists of one block of 79 claims totalling 4,073 hectares. Gaumond received the title of Quebec Entrepreneur of the Year in 2005 for his achievements regarding the lonore project, and was named “Mining Person of the Year” by The Northern Miner.

In 2006, the Prospectors and Developers Association of Canada presented him with the Canadian Prospector of the Year Award.

Gaumond is on the PDAC board and is a member of several professional associations, among them the Quebec Order of Engineers.

Biggest Success:

Selling a gold deposit without a feasibility study to Goldcorp for almost half a billion dollars.

Current Boards:

Detour Gold (DGC-T):Director

Virginia Mines (VGQ-T): President, CEO and director

Michael Kenyon

Michael Kenyon may never be mistaken for being the nicest man in the mining business, but it’s quite certain he is one of the shrewdest.

While it’s difficult not to mention him in the same breath as Roman Shklanka, his long-time business partner and associate, Kenyon has experienced too much success to attribute it exclusively to good fortune, good circumstances or good friends.

Kenyon was a founding director of Sutton Resources and president and CEO of the African explorer from 1983 until Barrick Gold (ABX-T) bought the junior and its considerable Bulyanhulu gold project for a princely $525 million in 1999. Sure, it was ex-Placer Dome man Shklanka who sold Kenyon on Bulyanhulu after Placer had kicked the tires, but it was Kenyon’s company and cash that made possible the eventual deal with the Tanzanian government.

What is often left out of that story is that Barrick also acquired Sutton’s Kabanga nickel property in Tanzania in the Sutton takeover. Barrick still owns half of Kabanga [the other half belongs to Xstrata (XTA-L)] and its presence in the deal helped Sutton fetch the price it did.

Free agents once again, Kenyon and Shklanka looked for a new project before settling on the Ona-Puma nickel- laterite project in Brazil, then owned by Inco. After negotiating a deal to acquire the project, Canico boosted total resources, which, by early 2005, stood at 113 million tonnes grading 1.95% nickel.

Canico was later bought by Vale (VALE-N) [formerly CVRD] in 2005 at for a whopping $940 million.

Kenyon was on a roll but still had some magic left for his followers, and this time the deal would not involve Shklanka.

In 2007, Kenyon, a founding director of Cumberland Resources, helped negotiate a takeover by Agnico-Eagle Mines (AEM-T) for $725 million. Cumberland’s main asset was the Meadowbank gold project in Nunavut, which contained mineral reserves of 2.9 million oz. of gold at the time of the acquisition.

Kenyon is a seasoned mining executive, with a masters of science degree in geology from the University of Alberta, but he, too, has seen failure.

Earlier this year after years of trying to bring the Tulsequah polymetallic mine back into production in British Columbia, Redcorp Ventures (RDV-T) pulled the plug in the middle of a feasibility study due to escalating costs. A few days later, Kenyon, then the company’s president and CEO, announced he was stepping aside after 26 years with the company.

These days, Kenyon is a director of Detour Gold (DGC-T), which boasts Canada’s largest undeveloped gold deposit.

Biggest success:

Getting Agnico-Eagle Mines to pay $725 million for a relatively small gold deposit that was once considered too remote to mine.

Current Boards:

Andagan Resource: President, CEO, director

Detour Gold (DGC-T):Director

Troon Ventures (TVN-V):Director

Robert McEwen

Robert McEwen is chairman and CEO of US Gold (UXG-T) and Lexam Explorations (LEX-V) but he is better known as the founder and former chairman and CEO of Goldcorp (G-T), still among the world’s lowest cost 1-million-plus-ounce gold producers.

The Goldcorp story is the stuff of legend.

Robert’s father, Donald McEwen, ran a small securities firm, McEwen Easson, which specialized in mining companies. Robert spent most of his early years in the family business leaving only for an MBA and a stint at a brokerage firm. He eventually bought a majority stake in the family firm in the early 1980s. Through a holding company known as Goldcorp, a company started by his father to hold shares in gold-mining companies and gold bullion, McEwen bought Dickenson Mines and its Dickenson (Red Lake) gold mine. Thought to be almost depleted, McEwen believed there was still much undiscovered gold on the property because it was next door to the powerhouse Campbell Lake gold mine.

Restructuring the company, McEwen replaced the Dickenson Mines board and made himself CEO. McEwen then transformed Goldcorp into an operating company to clear up the financials and gain access to Goldcorp’s capital.

In 1995, McEwen spent $10 million on exploration drilling at the site. Six weeks later, the head of exploration returned with nine drill samples averaging 30 times the gold grade the company was mining at the time.

But before any new veins could be exploited, the mine was shuttered. Its unionized workers walked off the job in June 1996 and the strike lasted 46 months and included a death threat that was mailed to McEwen’s office. (McEwen would publish it in the Red Lake newspaper and offer a reward but no one was ever arrested.)

McEwen effectively broke the union in the spring of 2000, after building a new processing plant and rechristening the mine as “Red Lake.”

In a bold move later that year, Goldcorp posted its geological data on the Internet and gave away US$575,000 in cash to geologists who determined the best strategy to find Red Lake’s next 6 million oz. gold, beyond what the company had found.

In 2001, the mine started producing gold at US$59 per ounce, one of the lowest production costs in the world.

For his efforts, McEwen was named The Northern Miner’s “Mining Man of the Year” in 2002.

Goldcorp remained McEwen’s pride until he stepped aside as CEO in a friendly merger with Ian Telfer’s Wheaton River Minerals. In that deal Telfer was named CEO and McEwen became chairman. McEwen later vacated the chairman role, too, when merger talks started with Glamis Gold.

Since 1993, when McEwen started restructuring Goldcorp, its market cap went from US$50 million to more than $8 billion when he left the company in 2005.

McEwen has been chairman and CEO of US Gold since July 2005, when McEwen became the company’s largest shareholder. During his reign, US Gold’s land position in Nevada’s Cortez Trend has grown from to 282 sq. km from 58.

The Cortez Trend is part of the Battle Mountain- Eureka gold belt that includes Barrick Gold’s (ABX-T) Cortez mine (35 million oz. gold) to the north and the Ruby Hill mine (4 million oz. gold) to the south. US Gold’s properties on the Cortez Trend sit 16 km south of Barrick’s Cortez Hills mine, now under construction. Recent discoveries in the Cortez Trend indicate that it could rival the famous Carlin Trend, which is located about 50 km northeast and hosts upwards of 180 million oz. gold.

McEwen owns a 14% stake in MacDonald Mines Exploration (BMK-V) and 37.4% of Minera Andes (MAI-T), 49% owner of the San Jose silver-gold mine in Argentina.

Through his company, McEwen Capital, he holds stakes in a number of junior mining companies including Noront Resources (NOT-V), Everton Resources (EVR-V), Golden Valley Mines (GZZ-V) and Rubicon Minerals (RMX-T).

McEwen donated $20 million to establish the McEwen Centre for Regenerative Medicine at the Toronto General Hospital and another $2.5 million to Schulich School of Business. In June 2007, McEwen was presented with the Order of Canada.

He earned a bachelor of arts degree from the University of Western Ontario, and an MBA from York University in Toronto.

McEwen is a throwback to an era when self-made mining men almost single-handedly built junior companies into mining powerhouses. Sure, he’s not always on the right track, but who is? More often than not following McEwen’s money will make you money.

Biggest success:

Turning a seemingly depleted gold mine with low margins and a dysfunctional work force into the world’s richest gold mine that has made Goldcorp into Canada’s second largest mining company by market cap.

Current Boards:

Lexam Explorations (LEX-V): Chairman

Minera Andes (MAI-T): Chairman (and named two board members after he made a $40 million investment)

Rubicon Minerals (RMX-T): Strategic Advisor

US Gold (UXG-T): Chairman and CEO

Roman Shklanka

Roman Shklanka has helped create mineral wealth on several continents, especially Africa.

He’s a bit of a prodigy and this was in full view when he entered the University of Saskatchewan at the age of 15 and earned a bachelor of arts degree in 1951, followed by a bachelor of commerce degree in 1953.

A summer job with the Saskatchewan Department of Mineral Resources introduced him to geology, and by 1956, he had earned a master’s degree in that discipline. He went on to Stanford University and obtained his doctorate in geology in 1963, specializing in petrology and ore deposits.

His first field experience came with the Ontario Department of Mines, but he left for the private sector and management position with Placer Development, where he was in charge of several exploration programs in eastern Canada.

In 1978, he was transferred to Australia and spent about three years searching for new projects. During this period, he helped secure the Porgera and Misima deposits in Papua New Guinea, which are now significant gold mines.

After returning to Canada and settling into Placer’s Vancouver office, Shklanka was promoted in 1985 to general manager of exploration and in 1987 to vice-president of foreign exploration when Placer merged with Dome Mines to form Placer Dome.

Under his guidance, Placer Dome acquired the Omai and Bulyanhulu gold projects in Guyana and Tanzania, respectively, and the Granny Smith and Osborne mines in Australia.

Following some differences of opinion and sensing an opportunity, Shklanka left Placer Dome in 1990 and merged his company with Michael Kenyon’s Sutton Resources, which successfully negotiated with the Tanzanian government to acquire Bulyanhulu after Placer Dome had walked away from the project.

Subsequent drilling and underground development attracted Barrick Gold (ABX-T), and the major purchased Sutton for $525 million in 1999. In fact, Shklanka served as a consultant to Barrick from April 1999 until March 2002.

In 2003, Shklanka teamed with Kenyon again as chairman of Canico Resources, which secured and advanced the Ona Puma nickel-laterite deposit in Brazil. This project also caught the eye of Vale (VALE-N) [formerly CVRD] and the major bought Canico for $940 million in 2005.

As a founder and chairman of Polaris Minerals (PLS-T), Shklanka steered the B. C. aggregate miner to producer status in 2007. The company continues to serve domestic and international markets but has been battered by the recent economic slump.

Shklanka won AME BC’s Colin Spence Award for global mineral exploration and the PDAC presented Kenyon and Shklanka with the Viola R. MacMillan Developer’s Award in 2006.

Biggest success:

With so many under his belt it’s difficult to list just one but it is likely turning the Bulyanhulu gold property in Tanzania into $525 million. That deal got the ball rolling.

Current Boards:

Andagan Resource (Private): Chairman and director

Copper Mountain Mining (CUM-T): Advisor

International Barytex Resources (IBX-V): Chairman and Director

Keegan Resources (KGN-T): Advisor

Kobex Resources (KBX-V): Chairman

Polaris Minerals (PLS-T): Chairman, director

Eric Sprott

Sprott started his securities career as a research analyst with Merrill Lynch Canada after graduating with a bachelor of commerce from Carleton University in 1965. Even then he was seen as gifted, with his graduating class voting Sprott “the most likely to succeed.”

Sprott has more than 35 years in the investment business. After earning his designation as a chartered accountant, Sprott founded Sprott Securities in 1981.

In 2000, the investment management division of Sprott Securities, now known as Cormark Securities, was spun-off to form a separate entity called Sprott Asset Management. Consequently, SAM was founded with a track record of managing assets through Sprott Managed Accounts since 1981 and the Sprott Canadian Equity Fund since 1997.

Sprott then sold Sprott Securities to its employees in 2002.

Last year Sprott became a billionaire when he took Sprott Inc. (SII-T) public (see story on page 14).

One of the largest and most profitable aspects of the Sprott empire is its funds. There are the Sprott Hedge Funds (one and two), Sprott Bull/Bear RSP Fund, Sprott Offshore Funds (one and two), Sprott Capital Funds (one and two), Sprott Canadian Equity Fund, Sprott Energy Fund, Sprott Managed Accounts, Sprott Gold and Precious Minerals Fund, and the Sprott Gold Bullion Fund.

In December 2004, the Canadian Investment Awards presented the Sprott Hedge Fund the Opportunistic Strategy Hedge Fund Award.

Two years later, the Sprott Offshore Fund won the 2006 MarHedge Annual Performance Award in the Canada-based Manager category.

In October 2006, Sprott received the 2006 Ernst & Young Entrepreneur of the Year Award (Financial Services) and the 2006 Ernst & Young Entrepreneur of the Year for Ontario.

In December 2007, Eric was named Fund Manager of the Year by Investment Executive, a magazine for Canadian financial advisors.

In October 2008, the Sprott Offshore Fund won the award for the Best Long/Short Hedge Fund globally by HFM Week, a publication for the hedge fund industry.

Sprott has been expecting the credit crunch and housing slump in the U. S. since the start of the Millennium, when he predicted that the huge U. S. trade and budget deficits would ultimately undermine the U. S. greenback.

Biggest success:

Launching Sprott Securities and continually leveraging that success into a multi-billion dollar empire.

Current Boards:

Sprott Asset Management (Subsidiary of Sprott Inc.): Chairman, CEO

Sprott Inc. (SII-T):CEO

Sprott Molybdenum Participation Corp. (MLY-T): Chairman, President, CEO

Sprott Resource (SCP-T): Chairman

Ian Telfer

Ian Telfer is not just rich, he’s wealthy. And most of that wealth came from his dealings during his more than 20 years in the mining business.

Telfer was president of TVX Gold from 1983 to 1993 and president and CEO of Vengold from 1993 to 2000. He was also an officer with Lihir Gold (LGG-V).

Telfer has an uncanny ability to raise large sums of money. In fact, he’s raised more than $1 billion for various mining companies.

Telfer turned Wheaton River, a languishing junior with an exhausted gold mine and $20 million in the bank, into a company that in 2003-04 more than tripled production to reach 600,000 oz. gold, while raising US$450 million and making six major acquisitions along the way.

In February 2003, Wheaton carried out the largest gold equity financing in the history of the TSX (at the time) to buy a 25% interest in the Bajo de la Alumbrera copper-gold property in Argentina and a 100% interest in the Peak gold mine in Australia.

In April 2005 — after fending off a hostile bid Coeur d’Alene Mines (CDE-N) by spinning Wheaton River’s silver assets into Silver Wheaton — Wheaton River teamed with Goldcorp, with Telfer taking over from Robert McEwen as CEO. And, in 2005, Goldcorp, with Telfer at the helm, bought Virginia Gold Mines and its 3-million-oz. lonore gold property in Quebec’s James Bay lowlands.

But not everything Telfer has touched has turned into gold.

His experience helming Vengold was less than stellar. When waning gold prices failed to rescue Vengold from its ongoing pursuit of mining properties during the 1990s, Telfer had to sell off most of the company’s assets to pay off debt. In 1999, Telfer together with Jim Tobin, a former vice-president of Canadian telecommunications giant BCE, turned Vengold into Itemus, an Internet incubator company largely financed with cash left from sales of mining properties.

Inside two years, following a series of hi-tech buys at the top of the market, and the subsequent popping of the information technology bubble, Itemus declared bankruptcy.

Despite the setback, Telfer is as well connected as anyone in mining, with ties to Endeavour Financial’s Frank Giustra (former president and chairman of Yorkton Securities), Eugene McBurney of Griffiths Mc-Burney and Partners (now GMP Securities), who both helped Telfer raise money for Wheaton River. And Pierre Lassonde, the former head of Newmont Mining (NMC-T), once served as an advisor to Wheaton.

Telfer is a chartered accountant and has a masters of business administration from the University of Ottawa.

Biggest success:

Turning Wheaton River from a junior with little direction ultimately into an executive position with the Goldcorp, Canada’s second largest mining company by market capitalization.

Current Boards:

New Gold (NGD-T):Director

Goldcorp (G-T):Chairman

Uranium One (UUU-T):Chairman

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