EXPLORATION ’94 — Promoters a unique breed of people

Promoters are a unique breed of people who share a common ability to create and share a vision. Some of them can do it with an almost evangelical fervor.

The undisputed star in Vancouver is Murray Pezim, affectionately known as “the Pez.” Pezim has been around for decades in the promotion of junior mining companies, but his most spectacular success was Corona Corp., which discovered the giant Hemlo gold field in Ontario.

Pezim swings from being Howe Street’s darling to abruptly falling from grace. In the fall of 1989, one of his companies made a promising gold discovery in the Eskay Creek area of northern British Columbia. The VSE was humming; at the same time, Pezim and his associates were selling their shares. Only a few months after being chosen promoter of the year, Pezim was facing lawsuits over the transactions.

Pezim is active in about 50 companies on the VSE, but he doesn’t confine his affairs to gold. He’s ploughed money into everything from ice cream and greeting cards to football and boxing fights.

Robert Friedland is another quintessential promoter. Dubbed both a “genius” and a “space cadet” by his peers, Friedland’s career was launched when he floated Galactic Resources on the VSE for 50 cents per share in 1982. Galactic did not have any of the essential ingredients for a successful mining company. It lacked property, capital and proven management, but Friedland was able to take it to production. Raising more than $250 million for Galactic, mostly from European institutions, he went on an acquisition spree and the share price soared to $18 in 1987 before dropping to almost $3 by mid-1989.

Friedland has an unusual background for someone in his industry. Born into a prominent Boston family, he graduated from a small college in Oregon, where he was friends with Steve Jobs, founder of the Apple Computer empire. Friedland spent seven years in India, immersed in Eastern philosophy. He traded commodities in Switzerland before he went on to deal in timber tracts in Oregon in the early 1980s.

After arriving in Vancouver in 1981 without a cent in his pocket, Friedland spent a year watching the market and promoters before he launched Galactic. He then bought a mountain at Summitville, Colo., and a 49% interest in a mine in South Carolina. He has purchased properties in Nevada and signed agreements with both the Philippines and China to explore and develop deposits.

In Quebec, a new generation of mining entrepreneur-promoters has emerged in the past five years. This is because of the exploration money made available to the industry, from provisions that allow Quebec taxpayers to reduce their taxes by investing in mining companies exploring in Quebec. The best known is Pierre Gauthier of St. Genevieve Resources.

St. Genevieve controls Louvem which has a share of the copper-zinc Louvicourt discovery. (Editor’s note: Louvem’s stake in Louvicourt was later spun off into Novicourt.) Louvicourt, near Val d’Or, could be the most important base metal discovery since Ontario’s Kidd Creek in the 1960s.

An investor should ignore the eccentricities of the individual promoter and look for honesty. Avoid anyone involved in bankruptcy proceedings, justice department filings, fraud charges, tax evasions or any other legal problem. Look carefully at the promoter’s track record. Success attracts success, especially in the mining industry, and any prospector who finds something interesting will go immediately to the most successful promoter he can. Indeed, the best plays are often in companies where a combination of strong promotional and excellent technical skills is at the helm.

Once you have all the information you can find on the promoter, find out about his vision. Try to distinguish between reality and fantasy. Ask what the promoter intends to do with your money. You want to see it spent in the ground and not on corporate offices, salaries, perks, excessive brokerage commissions or the promoter’s past mistakes and debts. The people behind the promotion should take their chances along with the investors and reap their returns from appreciation of the shares.

You don’t have to be a geologist to evaluate the play. Orebodies are flukes of nature and there is no way to tell where and when someone will discover one. But, remember the old mining cliche: The best place to look for an orebody is right beside an existing one. The geological conditions that produced one orebody are likely to be favorable to the formation of others. Think of the Carlin Trend in Nevada. Thirty years ago only one deposit was known, ten years later there were four known deposits, today there are more than 21 known deposits with gold reserves of more than 60 million oz. However, the cliche doesn’t hold true at Hemlo, so far. It is still early in the history of gold mining in the area and even though millions of dollars have been spent on exploration in the surrounding area, Hemlo still doesn’t have a cousin-mine.

— From Pierre Lassonde’s “The Gold Book.”