BECOMING AN ENTREPRENEUR Mineral exploration is high risk but can provide a high


reward and return to investor groups. The value curve can be divided into three discrete activities which can affect a company’s share price. The main activities are: discover, build and mine. The biggest share price appreciation occurs when a junior mining company makes a new bona-fide mineral discovery.


Ironically, the value curve peaks and then begins


to decline when the company announces a positive feasibility with a new mine to be built. The value decreases because investors know the company will need to raise capital and/ or acquire debt to build the mine (Fig.1). The value curve begins to appreciate again but at a lower rate once the mine is operational, generating cash flow and thus having lower risk. The investor demographics change significantly as the project is de-risked and becomes a mine.


geologists and mine managers have the biggest impact in cre- ating value for a company; however, you still need the other professions to achieve your goals.


After all, you still need


lawyers, accountants, directors and consultants - pick wisely. For Company B, we used a well-known Nevada legal group


and incorporated a wholly owned US subsidiary to hold our projects in Nevada. Claims in the US can only be held by US citizens or entities. The first project, which became our qualify- ing project for the Initial Public Offering (IPO), was acquired from an Oregon based group who acquired it from Newmont. The principal of the group claimed he was the owner of the apple orchard that Steve Jobs would visit. As many of you already know, the mining industry is full of interesting and sometimes eccentric people – that is one of the aspects that make it so interesting.


A major factor in the success of your own new business is


the strength of your commitment. You may have the title of President, Chief Executive Officer or Chairman of the Board, but you still may need to go to the field to collect soil and rock samples, map, sit on a drill rig, complete your own reports and expense report, and stay in budget. You are basically an army of one who has to do the janitorial duties when required.


I have never worked as hard as I have at a junior mining company. There is no fall back if you go over budget and run out of money. I’ve been there, and it’s not fun. One time I had $10,000 in the bank and still hadn’t paid all the drill invoices not to mention payroll at the end of the month. It was a scramble, but with my team, we were able to raise money, pay the bills and release some good drill results which then allowed us to raise more money for a second round of drilling. I was fortunate to work with vendors and drilling contractors who allowed me to make payments on my outstanding invoices. Relationships are key, and I paid them every penny.


Figure 1 - Value curve I decided to get involved with two groups, and we formed


two private companies with the intention of going public on the Toronto Stock Exchange. Company A had the mandate of exploration in Chile and Argentina, and Company B had the mandate of operating in Nevada. I also formed a private engineering company that would work on projects and assist other clients. Since AIPG is a USA publication, I’ll focus on starting a Company B. For the record, Company A was sold in 2009, and Company B was sold in 2018.


That September, I bought a great new product called an


iPhone and ditched my Blackberry! When asked why I bought an iPhone, I replied because I can. Starting your own business can be liberating!


Envisioning the Future


All companies start with a vision, dream or idea. Richard Branson, of Virgin fame, said, ”If people aren’t laughing at your dreams, you’re not dreaming big enough”. It takes as much effort to start a small company as it does a big company so think BIG. My current company is looking for the next 50-million ounce gold deposit (at US$1,200 per ounce gold price, that’s a lot of value). As a wise exploration manager once told me, “You won’t find what you are not looking for!”


butes of any mining or exploration company – people, place and project, in that order.


To start, you need to know the three most important attri- The order is important because


if you have the right people, you will find the right place and the right projects.


In any organization, people are the key.


Back in my days with Placer Dome, the HR department com- missioned a study on what positions create the most value in a mining company. I’m happy to report that the study showed


www.aipg.org There is only you and your ability to speak to investors and


raise capital when needed or warranted. You, and only you, set the tone of the company as well as the company’s drive and its ultimate success or failure. There is no going over to the water cooler and bitching about the boss because he/she is you!


“


My current company is looking for the next 50-million ounce gold deposit (at US$1,200 per ounce gold price, that’s a lot of value). As a wise exploration manager once told me, “You won’t find what you are not looking for!”


I’ve witnessed several groups coming out from a larger cor-


poration and starting a new junior. There is an adjustment period where you either understand you are responsible for everything and move or become paralyzed because you are responsible for everything. I like to use the advice of Teddy Roosevelt, who said, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing”.


You’ll find as your company moves through its programs


that many decisions are required to keep it on track, on bud- get and moving toward its objectives. As we liked to say at Company B, “I don’t need it perfect, I need it Tuesday”.


Jul.Aug.Sep 2019 • TPG 53


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