Apex’s Buchanan heads list of PDAC award winners

Awards ceremonies are a time to shower praise on the worthy, those deemed to be worthy, and those who helped them along the way. This year’s edition of the annual Prospectors and Developers Association of Canada (PDAC) awards, held during the recent convention in Toronto, had a little of everything.

The Thayer Lindsley International Discovery Award was presented to Apex Silver Mines’ (SIL-X) chief consulting geologist, Larry Buchanan, for discovering the San Cristobal silver-zinc deposit in Bolivia.

The story of San Cristobal started in 1994, when Buchanan was hired as a consultant by Apex founder Thomas Kaplan to examine known silver-producing regions — with particular emphasis on Peru, Mexico and Bolivia.

He found good prospects in Bolivia, but nothing world-class. A Bolivian geologist recommended a visit to the San Cristobal district, which had a small silver mine. A review of the area showed little promise, but as the team prepared to leave, their vehicle broke down, forcing them to stay a little longer. That’s when Buchanan was told of a centuries-old legend in which locals claimed that the god El Tio had placed a huge silver deposit under their town, destined to be discovered in the year 2000. It was 1995 — close enough.

Buchanan and his crew hiked into the mountains and discovered a large caldera, and small colonial-era workings. After examining an old adit and some ratty geological reports found “more by good luck than sound geological management,” as presenter Ed Thompson said with a wink, Buchanan saw that the geological sequence was indeed mineralized. He drove 13 hours to the nearest phone and urged that the entire district be staked. By June 1996, Apex had secured the district and begun drilling. All but one of 117 holes returned ore-grade values. San Cristobal is now host to the second-largest silver resource in the world and production is slated to begin in the third quarter of 2007.

“I just found out that Ed (Thompson) and I have known each other for 38 years, but he managed to keep his hair,” said Buchanan upon accepting the award. Buchanan heaped praise on fellow geologist Jon Gelvin. “He was critical,” said Buchanan, “critical in many ways.” Buchanan also recognized Bolivian geologist Carlos Murillo, whose knowledge of the San Cristobal district proved vital.

The Bill Dennis Prospector of the Year Award went to the team from Virginia Gold Mines: Andr Gaumond, Paul Archer, Alain Cayer, and Jean-Francois Ouellette.

Virginia president Andr Gaumond says he has dreamt of finding buried treasure since he was a child. What set him apart from other treasure-seeking geologists was his willingness to learn every aspect of the mining and exploration business before striking out on his own. He was a mining analyst for three years and worked for a senior company for another three before launching Virginia in 1992. He assembled a team of talented geologists, including Paul Archer, vice-president of exploration, who joined Virginia in 1996. Technical manager Jean-Francois Ouellette signed on in 1994, followed by project geologist Alain Cayer in 2002.

In June 2001, prospecting in the Opinaca Reservoir area revealed new gold-copper-silver showings that led to the discovery of a boulder assaying 22.9 grams gold per tonne. Subsequent fieldwork revealed more boulders and mineralization of the same type in outcrops, with grab samples returning values of up to 29 grams gold. The Roberto zone, found in the summer of 2004, returned values of up to 80 grams. Drilling campaigns confirmed the high-grade, consistent nature of the Roberto zone through initial assays. A staking rush followed. The “Hemlo-type” signature of the new discovery, combined with its multimillion-ounce potential, attracted industry and investor attention.

In early December 2005, Goldcorp (G-T, GG-N) came to the table with a US$420-million takeover offer that gave Virginia shareholders a 29% premium to the share price at the time, along with shares in a new exploration entity to be managed by Gaumond and his team. The new company will hold Virginia’s remaining exploration properties.

“What a change for a geologist to be surrounded by black ties rather than black flies,” said Gaumond, who credited his 30-member field crew for the lonore discovery. He also took time to honour the wives of the men on his exploration team.

Said Gaumond: “You’ve always supported us in tough times, and God knows there have been tough times.” Before leaving the stage, he added that his “treasure hunt” was not over.

Ian Telfer, chief executive officer of Goldcorp, was presented with the PDAC’s Special Achievement Award, mostly for his ability to raise vast sums of money for mining companies. In fact, over two decades, he raised more than US$2.5 billion. He also helped companies grow through timely mergers and acquisitions, including a deal between junior Wheaton River and Goldcorp whereby the latter swallowed the former, with Telfer becoming CEO of Goldcorp and former CEO Robert McEwen becoming chairman before leaving for the same post with U.S. Gold (USGL-O).

Telfer, seated at the head table, took the microphone clothed in an all-black Versace suit augmented with a gold tie.

“Robert McEwen couldn’t be here tonight, but he sends his tie,” Telfer said.

The Viola R. MacMillan Developer’s Award went to Roman Shklanka and Michael Kenyon; the pair co-founded two junior companies that acquired, developed, and financed mining projects subsequently sold to majors for a total of $1.46 billion. The first company was Sutton Resources, which advanced the Bulyanhulu gold project in Tanzania to final feasibility. The second was Canico Resource, which brought the Ona-Puma nickel deposit in Brazil to the same stage.

The paths of Shklanka and Kenyon rarely crossed until an accidental meeting brought them together in 1990. Kenyon had Sutton Resources and was looking for international opportunities. After leaving Placer Dome, Shklanka had lined up a gold property in Guyana, and the Kabanga nickel project in Tanzania, but needed capital to advance them. He joined Sutton, which subsequently acquired both projects. After Placer dropped Bulyanhulu in 1992, the partners negotiated for two years to secure the gold project from the government of Tanzania. Sutton then outlined a multimillion-ounce deposit at Bulyanhulu, completed a bankable feasibility, and arranged bank financing before being acquired in 1999 by Barrick Gold (ABX-T, ABX-N) for $525 million. Bulyanhulu is now a producing mine with reserves of more than 10 million oz.

Free agents once again, Kenyon and Shklanka looked for a new project before settling on the Ona-Puma nickel-laterite project in Brazil, then owned by Inco (N-T, N-N). After negotiating a deal to acquire the project, Canico boosted total resources, which, by early 2005, stood at 113 million tonnes of 1.95% nickel. The company completed a bankable feasibility study and secured debt financing for a mine slated to produce 57,000 tonnes of nickel per year. This time, Brazil’s largest mining company, Companhia Vale do Rio Doce (CVRD), stepped in to acquire Canico through a $940-million takeover bid late last year.

“It’s a little strange getting a developers’ award without developing anything,” Kenyon said.

The final award, the E3 Environmental Excellence in Exploration Award, found a home with Greystar Resources (GSL-T, GYSLF-O), a junior that has outlined a multimillion-ounce gold-silver deposit at its Angostura project in northeastern Colombia.

The early days of Angostura were marred by political and social turmoil, and the project was stalled several times in the late 1990s by events beyond the company’s control. A newly elected government committed to restoring order and a subsequent peace in the region allowed the company to resume work in 2003.

On the technical front, more than US$36 million was spent to
outline an indicated resource of 148 million tonnes containing 5.8 million oz. gold and 25 million oz. silver. The company’s exploration activities are conducted under environmental guidelines monitored by agencies responsible for the region.

Three villages exist within 10 km of the site. To win the trust of local citizens, Greystar stated that it was not a substitute for the state. Instead, it worked through the communities to find partners or funding for programs that would serve their most important needs. One such example was a rural dental and medical clinic established with help from the Canadian government.

More recently, the company helped equip a maternity ward and set up an awareness program on family violence. Another program was established to help fund school fees.

“Everything we are doing, we are doing with other people,” said Frederick Felder, Greystar’s executive vice-president, at the podium. “The only way we are going to be successful is if we have local people participating in the project.”

The PDAC chose to present the Distinguished Service Award to two of its own: David Comba, the PDAC’s former director of regulatory affairs, and long-time helper and past-president William Mercer.

Among his other accomplishments, Comba, in the latter part of the 1990s, helped convince the government to introduce the Investment Tax Credit for Exploration or “super” flow-through mechanism that helped many companies survive and create the prosperity in evidence today.

Over the years, Mercer served the PDAC as director, president, past-president, and chair of various committees, including the Governance and Mary-Claire Ward Geoscience Award selection committees, the recently constituted Health and Safety Committee, and the Awards, Executive, Communications, Convention, E3 and International Committees.

PDAC executive director and presenter Tony Andrews said that Mercer steered the association with “wisdom and intelligence, supported by a daunting technical prowess.”

Mercer was part of the committee that selected Tony Barresi as this year’s winner of the Mary-Claire Ward Geoscience Award. Barresi was presented with a cheque for $3,000 at the beginning of the ceremony. Of note, Sabina Silver (SBB-V, SBBFF-O) announced during the convention that it had hired Barresi to work on its Del Norte gold-silver project in northern B.C.

— With files from Vivian Danielson.