ODDS’N’SODS — A tale of two companies

There is no single way to build a successful mining company, as two giants on the Canadian scene affirm.

In 1923, prospector Ed Horne undertook to work his way east from Kirkland Lake, Ont., and discover what he could in the province of Quebec. What he found was a rusty shear zone near the shore of Osisko Lake, and he staked claims over it.

To finance the drilling, he and his grubstakers decided to form a company and acquire the claims, for which purpose they approached a law office in North Bay, Ont. The assignment was given to a junior in the firm, J.Y. Murdoch, who volunteered to serve as president of the new company, Noranda Mines Limited (“Noranda” being short for Northern Canada).

Several engineers examined the property and turned it down. One of them, Charlie Hershmen, offered the following explanation: “I looked at it for Consolidated Goldfields of London, but turned it down — and I was right. How could an honest engineer spend his company’s money on a rusty shear zone deep in the Quebec backwoods?”

As so often happens in mining exploration, the sensible, conservative conclusion proved to be the wrong one.

Murdoch raised his drilling money, and one of the early holes cut more than 100 ft. of excellent-grade copper-gold mineralization. The company was on its way.

Soon (too soon, most would say), Murdoch pushed the company into building a smelter, then a refinery, and a wire and cable subsidiary. Then it was gold mines in Ontario, another major copper mine and smelter in the Gaspe region of Quebec, the Geco mine in northwestern Ontario, a major holding in Brunswick Mining & Smelting, forest products and natural gas in British Columbia, and, most recently, an ownership interest in the Falconbridge enterprise. Noranda has evolved into a great Canadian industrial complex. Many years ago, The Financial Post selected the 15 top business executives in Canada, and each subsequent issue, over 15 weeks, contained a long interview with one of them.

Murdoch was the only executive selected from the mining industry, and one of the questions put to him was: “Mr. Murdoch, you are the president of Noranda and many of its subsidiaries, a director of the Royal Bank and other major corporations, chairman of the board of trustees of Sick Children’s Hospital, and so on. How can one wear so many hats and still perform effectively?” Replied Murdoch: “It is really quite simple. A person in my position needs to have only one talent — the ability to pass the buck to the right person.” Turning our attention westwards, the Flin Flon deposit in northern Manitoba was discovered by Tom Creighton and partners in 1916. It was of a magnitude comparable to that of the Horne orebody, although copper-zinc, not gold, was the mineralization exploited.

The property was brought into production by Hudson Bay Mining in 1931, financed largely by the Whitney interests and Newmont of New York. The staff did a superb job of discovering and developing other mines in its general area, but the company policy was to regard the enterprise as a cash cow to serve the shareholders, rather than as a base for expansion into other areas.

Ultimately, the Whitney interest was bought by Anglo American of South Africa, and in the late 1960s and 1970s the company embarked on a major expansion into other areas of natural resources.

New management in the 1980s was not attracted to these moves and divested almost all of them. HudBay has reverted to its original role as an extremely competent mine operator based in northern Manitoba.

These two companies, starting from similar roots, have followed different (but, in their own ways, equally effective) paths.

They are an excellent example of how companies reflect the personality and ability of their chief executive officers.

— Philip Eckman resides in Paradise Valley, Ariz.