Kirsti: Lawrence, you have put a lot of time and effort into putting together this very informative piece about the Golden Triangle, yet you barely mention your own companies. Why are you doing this?
Lawrence: When I was writing the newsletter [Resource Opportunities], I really enjoyed informing and educating the public about the mining industry; in the newsletter as well as at presentations at conferences all over the world. Look, everybody knows about the Golden Triangle but nobody really knows about the Golden Triangle. Even executives of the companies that are deeply involved there don’t fully understand the significance of this region. The $3 billion investment by Newcrest is a signal of huge changes getting underway. So, it’s like the newsletter: I’m presenting what I see as a fascinating story which explains the context of some incredible investment opportunities.
Kirsti: Can you give us a quick overview of your background?
Lawrence: I’ve seen the mining industry from all sides. After a geology degree and business training, I went to work with one of the majors as an analyst in their head office. Then, I was part of the management team of a mid-tier resource company and then spent several years managing exploration companies before I began the newsletter. Based on the success of the newsletter, I was recruited to become president of a US-based investment advisory whose clients wanted to get into the mining industry. After a few years, I left that to get back to what I really love doing, which is the treasure hunt of mineral exploration.
Kirsti: What is it about the Golden Triangle that you find so appealing?
Lawrence: Every facet of my career in the mining industry involved traveling around the world looking at mines and exploration projects. I have had boots on the ground on literally hundreds of projects and seen a multiple of that on paper. I’ve looked at holes in the ground on six continents, in more than 40 countries. After looking all over the world, I have never seen or heard of any region with such an intensity of mineralization. There are mining regions with more ounces or pounds, for example the Abitibi region in Ontario and Quebec but spread over vastly larger areas.
In some ways, the geology of the Golden Triangle is very similar to the rest of the Pacific Ring of Fire, which includes the western US, Mexico, Chile, Papua New Guinea and lots of points in between. But, there are unique twists in the Golden Triangle. I would love to talk about the geology, which maybe we can do another time. For now, I will summarize by saying that there are specific, tangible geological reasons for the exceptional intensity of mineralization in that region. Dusty touches on that in an article in this issue.
Kirsti: I’m sure there are some people who would love the geological discussion, but I suspect that most people would much rather hear about how they can make money from this unique geology.
Lawrence: Absolutely! The short version is that there has been a massive amount of exploration in that region going back more than a century. For most of that time, the area was very difficult to access. It required spectacular results to justify building a mine. Eskay is one example of that. The average grade over the life of that mine was 45 grams per tonne gold and 2200 g/t silver. To put that into perspective, the average grade of a gold mine is less than one g/t. A good silver mine has 300 g/t. Eskay had spectacular grades of gold AND silver. Barrick bought the legendary Homestake Mining Company to get their hands on the Eskay deposit after Homestake bought it from a junior. Since then, hundreds of companies have sent geologists all over the region, looking for the next Eskay or something equivalent.
Along the way, they found some great results… but not the spectacular results they were looking for at that time.
Those great results are worth a fresh look because the Golden Triangle has changed a lot since that earlier work was done, particularly in terms of access and infrastructure. Now, there are roads all through the region. There’s a deep-water port. There is cheap hydropower. There are mines in operation.
Rick van Nieuwenhuyse took a fresh look at the results generated by two majors at Galore. His company at that time – NovaGold – bought the Galore project from the majors for $20 million. After a couple of years of work, Teck partnered with NovaGold and spent a half billion dollars to earn a 50% interest. NovaGold then sold their remaining 50% to Newmont for $275 million cash.
Another person who created value by taking a fresh look at an old project was Bob Quartermain. Bob had some new ideas about one of the exploration projects held by Silver Standard (now SSR Mining). Bob set up a little company called Pretium in 2010 and bought the Brucejack project from Silver Standard. They explored it and built a mine. Newcrest just bought Pretium for C$3.4 billion. That takeover by a major represents an incredibly important turning point for the Golden Triangle. Two years ago, Newcrest dipped their toes in the water when they bought a stake in the Red Chris mine. After getting to know the region, they are clearly liking what they see.
I believe that there will be many further success stories coming out of the Triangle. I want people to be aware of the incredible opportunities and get a chance to participate in this exciting region. There are a range of projects, from early-stage exploration to a mine under development and everything in between. Investors should take a look and find something that fits your risk profile. I believe the tide will rise throughout the region in the coming months. More importantly, companies that deliver results will be richly rewarded by investors who will be watching carefully for the next big success story.