Greystar’s Felder sees better way for juniors

In the early part of the decade, Greystar Resources (GSL-T, GSL-L) was learning what it took to achieve success in one of the most hostile business environments in the world.

In 2001, just six years after Greystar began its Angostura gold and silver exploration project in the green mountains of Colombia’s Santander province, the country’s 40-year, drug-fuelled civil war flared up again, making landmines and kidnappings part of everyday life.

“We had some tough times,” says Frederick Felder, Greystar’s executive vice-president. “It wasn’t always evident that it was going to get better.”

At least 35,000 Colombians have been killed during the war, with nearly three million others displaced.

But out of the turmoil came the necessity of developing good relations with the community, which led Greystar to become a global leader among exploration juniors on social initiatives.

Felder is largely credited as the man who pushed community issues to the forefront of the company’s agenda, in the process, laying the foundation for Greystar’s current enviable position.

Greystar’s Angostura project — composed of 12 wholly owned licences — has an indicated resource of 148 million tonnes averaging 1.22 grams gold per tonne (for 5.8 million oz.) and 5.17 grams silver per tonne. Inferred resources stand at roughly 123 million tonnes grading 1.13 grams gold per tonne and 5.42 grams per tonne silver.

Along with the growing resource has come growing market capitalization. At the time of the explosion of unrest in Colombia, in early 2001, Greystar shares were trading just below $1.00. Currently, they are at around $8.65 apiece.

Building Greystar into a market success story involved a widening of the traditionally narrow focus of explorers on increasing resources to examining how the operations fit into the surrounding area.

“We were shut down for almost four years because of security issues, and in that time, we had to find a new way of getting going again,” Felder says. “We realized what we did in the past was not appropriate — it was short term. It was what people usually do — little things here, little things there — but nothing that really had a positive impact.”

So how does a company distinguish between a social program that will work and one that won’t? In part, by the philosophy that guides it.

After being asked to attend meetings with the UN-sponsored Corporate Development Agency (CDA), Felder gained a new perspective on the matter.

“The idea that the attitude the company has towards the community creates the attitude the community then has for the company, made me think a lot,” Felder says. “If a company feels negative about the community then that will reflect itself back and the community will respond in the same way.”

As an outgrowth of that principle, Felder says companies should act with greater humility when they go into foreign lands.

“There’s a lot of arrogance in our business . . . But the communities hate you if you’re arrogant,” he says. “It’s their land and their country and you’ve got to show respect.”

Connected to such humility, for Felder, is a realization that social programs must be intimately tied to bodies outside of the company if they are to succeed. Greystar works with the Catholic Church, non-governmental organizations (NGOs), community groups and government agencies to ensure its programs have traction in the community.

“You have to have alliances wherever possible,” he says. “So even if you don’t succeed in exploration, someone else can carry it on. That way, whatever you’ve done will have actual benefit instead of being a drop in the water and then you’re gone.”

One trap that mining executives often fall into is blindly accepting the longstanding and mutual antagonism between the mining industry and NGOs.

“We all have to work together and understand each other a bit more,” Felder offers. “Maybe some NGOs have been too influenced by extreme groups . . . Some have become almost anti-everything. But we have to work it out.”

Felder recounts a meeting at the Canadian embassy in Colombia as an example of the results a change in attitude can bring. A rival mining company was firing off unfounded accusations against Greystar. To everyone’s surprise, a left-wing NGO came to Greystar’s defence.

“The guys at the embassy were just flabbergasted,” Felder says.

But what if a company finds itself under attack by an NGO? Felder says rather than fighting back, a wiser approach is to let the NGO attack and open up a dialogue. When the NGO realizes the company can accept its viewpoint, the organization will generally back off.

“If you start being aggressive toward them, they get their backs up and things aren’t going to work out,” he says.

To Felder’s amazement there are still those in the industry who argue in favour of a war mentality with NGOs.

At the 2005 Mineral Exploration Roundup in Vancouver, a keynote speaker — and a well-known member of the financing end of the industry — argued vehemently for the industry to unite and fight NGOs at every turn.

“Bill Mercer and I both shook our heads.” Felder recalls. Mercer is director of geology and geochemistry at Falconbridge (FAL.LV-T, FAL-N).

“You don’t fight people, you work with people,” Felder says.

On the advice of Mercer, Felder agreed to offer his contrasting thoughts at the March 2005 Prospectors and Developers Association of Canada’s (PDAC) convention in Toronto. But, perhaps tellingly, Felder says his speech was poorly attended.

“The mining sector hasn’t had a really good overall policy (on social issues),” Felder says. “There is very short-term thinking — that’s unfortunate.”

He adds: “Even at the exploration stage, you have to be socially responsible. It has to start at the beginning — not just down the road.”

Greystar’s management — although now fully behind Felder — was initially reluctant to adopt such a proactive approach to social issues.

In those earlier days, Felder was spending as much as one-third of his time addressing such issues. Currently, he has several social advisors on staff at Angostura.

“I get very annoyed when people say, ‘you can’t afford to do that,'” he says. “I say you can’t afford not to do it, because if you don’t do it, you’re not going to have a project.”

When and if a company does adopt a more socially sensitive, outward-looking approach, Felder says it shouldn’t expect outside organizations to greet it with open arms.

Certain mining companies have done significant damage to the industry’s image over the years, a reality Felder says he faced in his early days in Colombia.

“My first lunch meeting with the bishop in Bucaramanga wasn’t good. The guy said straight up, ‘look, I hate mining companies,'” Felder says. “And then we started working with him . . . They really like what we’re doing, and now they have a positive attitude towards us.”

But winning the bishop’s favour wasn’t an overnight process: it was the gradual result of a process of consultation and contributing to social programs in good faith.

Even with the community on board, there were more hurdles to clear. Auditing running initiatives is as important as setting them up, Felder says. Community issues and attitudes are constantly changing, and Felder believes it’s the company’s responsibility to ensure initiatives remain relevant. Greystar and other companies have learned the importance of auditing the hard way.

Greystar once pumped money into a rural dental clinic — a well-intentioned program that fell flat on its face when the fully built and equipped clinic was left unstaffed by government or local groups. For Felder, its failure is a grave reminder of what can happen when a company pushes ahead on its own.

“We made mistakes, and we’ll continue making them. This is not a static process,” he says. “You have to realize that even if you have something that looks good now, it might change
in six months time.”

That attitude has helped Greystar win a solid reputation and the PDAC’s E3 Environmental Excellence award for 2006, which recognizes accomplishment in environmental protection or the development of good community relationships.

The PDAC pointed to Greystar’s partnerships with local groups to equip a maternity ward in California (a community close to Angostura), set up an awareness program on family violence, and a program to fund school fees.

Other programs highlighted by the PDAC awards committee include: a kindergarten health and nutrition project; children’s workshops; programs for the elderly; food, sanitary and health care packages; and community and sporting events.

“By carefully and wisely instituting its social policies,” a PDAC release says, “Greystar is demonstrating that an exploration project can bring substantial benefits to local inhabitants and that exploration and mining activities and local communities can peacefully co-exist.”

But in talking with Felder, it is clear that what excites him more than any accolades the company might receive for social responsibility is the re-emergence of Colombia from its recent bloody past.

More Colombians are returning home, and as more regions in the country become secure, and initiatives such as the disarmament of paramilitary groups gain more ground, Felder’s optimism grows.

“There is a buying into the process. Before, that wasn’t happening. That’s the most important step,” he says. “I’m happy for the country, they deserve it.”

And Greystar’s part in that process? While Felder’s humility prevents him from making any lofty claims, the merits of one of his more simple directives aptly sums up the company’s role, as he sees it.

“When your mine is finished, people should be better off than before you started,” he says. “If they’re worse off, then you haven’t done things right.”