Sparton’s Lee Barker wrestles the Chinese Dragon

An old fashion, Russian-built biplane takes off in a photo on the wall behind Lee Barker’s desk in his downtown Toronto office.

It’s not unusual for chief executives to post pictures of interests on their wall. But Barker’s reveals more about the man than one might expect. Barker bought the plane while working in the Ukraine and flew it himself from Siberia to New York with only a pit stop on sea-ice off the coast of Greenland.

It’s the type of adventure that’s led co-workers to call him a cross between Indiana Jones and MacGyver.

“I have penchant for adventure," Barker, 60, says. "And also if something breaks, I’ll fix it before I buy something else to replace it."

That hands-on approach has been on full display at his exploration company’s — Sparton Resources‘s (SRI-V)– property in China’s Yunnan province.

Whether it’s working on planes, tractors, or bulldozers, Barker knows how to roll up his sleeves and get dirty.

“You’ve got to do a little of everything if you try to run these companies on a shoestring budget,” Barker says.

The hard work may be nearing a payoff at Spartan’s Luxi project.

On Nov. 23, the company announced it had signed a letter of intent with China’s largest gold producer and refiner, Zhao Jin Gold Group (ZJ). ZJ has 60 days to do its due diligence after which time it can acquire a 50% stake in the property.

ZJ’s interest comes in anticipation of its initial public offering on the Hong Kong stock exchange. The company, like many large companies in China, is state-controlled. But that’s about to change. Barker says the move to public company is prompting ZJ to gussy itself up for the Street by acquiring an exploration company.

ZJ currently has 13 mines in operation and produces roughly 300,000 oz. gold per year, but has no viable exploration projects. Barker say ZJ approached him with the offer after scouring some 35 other exploration projects in China.

“It’s rather historical,” Barker says of the proposed agreement, “No other Chinese company has tried to take a stake in a foreign company. It always happens the other way around.”

But the deal likely wouldn’t have progressed to its current state if Barker couldn’t hold up under the bottle. It’s tradition within the Chinese business world to have a dinner where prospective partners drink until their "true selves" come out.

"It’s a little bit of a game," Barker says. "If you do it every day it wears you down, but if you do it once a week it’s not so bad."

With ZJ, the head director of the company showed up half way through the dinner. Barker knew him to not be much of a talker, but after a toast the director confessed to Barker that this was the fifth dinner he’d been to on the night.

"I had to put back five or six shots with him, then I had to arm wrestle him," Barker says, "because now the guy’s getting quite vivacious."

After beating Barker with his right hand and losing to him with his left, the director set off for his sixth dinner engagement.

Diavik

While Sparton has Barker focused on gold exploration now, it hasn’t always been so.

In fact his name is intimately tied to one of Canada’s great diamond finds. Diavik.

"In your career if your part of something like that which the odds are that you won’t be it’s quiet rewarding," Barker understates. "Your part o something big."

It was Barker who coined the name Diavik combining Diamond with West Viking, a company he was president of at the time.

Barker was also vice president of Platinova at the time, and those two companies along with what is now Aber Diamond (ABZ-T) combined to stake the area that would become Diavik. Not that it was that simple. At the time two of the three companies had no money to stake what Barker knew to be prospective land.

"West Viking had $150,000 left so I said lets go staking with that money," Barker says. "We went around the BHP Billiton (BHP-N, BLT-L) claim and that’s where the discovery was made."

Once the project was established Barker didn’t stay for long. He left Aber in 1993 it had merged with West Viking shortly after the discovery to join SouthernEra Diamond‘s (SDM-T).

Troubles in Angola

From the tundra of the Northwest Territories, to the jungles of Angola. Barker became head of SouthernEra’s Angolan operations in 1996.

Still in the throws of rebel uprisings the country tested not only his managerial mettle, but also his outlook on life.

“If you took the time to understand the aspirations of local groups you had to deal with, and didn’t get in their way — if you met with them, let them co-exist with you — you could carry on," Barker says. "But if you took an attitude that you would steam-roll over them, eventually you could get bitten.”

Barker becomes silent for a moment, as if a ghost passes before his eyes.

“There are other issues that happened, but they are best left unsaid. It was a dangerous time.”

Two of Barkers co-workers were killed during his time in Angola.

While such an experience would turn some against a culture, it only strengthened Barker’s belief in understanding as the way towards long-term business success in a tumultuous place.

“That’s the problem with international politics today — certain countries and certain people try to impose what they think is their altruistic values on places that are totally different," Barker says. "They won’t accept the fact that not everybody should be the same in this world, or has to be.”

His theory is being tested in modern day China as well. Running an efficient and effective company in the socialist country can be trying. But Barker has no doubt business can be made profitable there provided one does their homework.

He offers the following tips for executives thinking about venturing into the republic:

Firstly, find a property that has real opportunity. Have someone who understands how the host country interprets data, and look at the property yourself.

Secondly, complete an assessment of your partner. Try to see if they are interested in the short-term money, or if they really have a long-term belief in the project.

And thirdly, assess the environment of the local area. If a lot of other people are already mining it, it will be hard to move them out.

Beyond those three golden rules, Barker cautions that socialist countries have more bureaucracy, necessitating continual check-ups on all transactions as they move through the chain of command. As items get passed along, they often turn into something else entirely.

Barker says establishing rapport built on trust is the surest way to keep things moving as originally intended. However, trust can be elusive when you’re dealing in an environment that fosters short-term gain.

“The Chinese have a great penchant for being very friendly and making deals and then saying, ‘oh, we didn’t mean that,'” Barker says.

“With countries that come out of controlled economic systems, people have a short-term outlook on self-economic enhancement. It’s a ‘get as much as you can, as quick as you can’ attitude. That’s the psychology of a lot of these places. You have to work through that,” Barker says.

He explains such attitudes often lead to local partners and government officials pushing to get friends and relatives hired into positions not necessary for operations.

“You’ve got to be tough with them. You’ve got to be results-oriented, not make-works oriented.”

Still, he thinks now that China is part of the World Trade Organization (WTO), it’s only a matter of time before transparency becomes a way of doing business instead of just an ideal.

Currently, Barker says, there’s a tension between the government in Beijing, which is pushing for greater international standards, and local bureaucrats still hooked on the old, more sordid way of doing business.

Until the new way washes down from Beijing into all corners of the vast country — Barker estimates it will take close
to 10 years — it will be left up to a few cavalier souls to get business done in a fair way.

There is, however, an upside to being an outspoken and determined individual like Barker in a region run by bureaucrats: bureaucrats often fold. Especially when they are hungry for investment dollars.

“Like we say in the West,” he quips. “The guy that’s got the gold makes the rules.”