Profile ALL THE RIAGHT MOVES

Toronto’s fashionable Yorkville district is the last place you would expect to find a down-to-earth mining man. The chic ambience and elegant designer boutiques seem more geared towards the leggy, aspiring models who parade along the area’s spotless sidewalks than the rudimentary demands of modern gold mining. But if Robert Smith suffers from culture shock because of such unlikely surroundings, he doesn’t show it. Seated behind a huge mahogany desk in an air-conditioned office on the second floor of American Barrick Resources’ Yorkville-based headquarters, he appears very much at home.

With a flask of fresh coffee and an ever-ready pack of Benson and Hedges Ultra Milds within arm’s reach, the 56-year-old president of one of Canada’s most talked about mining companies is philosophical about the upscale working environment.

“It’s OK if you are in the brassiere business,” Smith remarked wryly, as he poured himself his umpteenth cup of coffee of the morning and lit yet another cigarette. While admitting that working in the midst of a bunch of modern art galleries was a “great shock” and took “some getting used to,” he has little time to worry about a Hazelton Lanes head office that bears the personal stamp of Barrick’s flamboyant chairman, Peter Munk.

Driven by the kind of exploration successes most mining companies only dream about, Smith spends at least three days out of every week en route to staunchly un-chic places like Elko, Nev., and Tooele, Utah, where Barrick’s will unearth almost 300,000 oz of gold next year. Friends and colleagues say the hec tic pace may kill him, but Smith is relishing his role as the operations man in a company that has the uncanny knack of buying the right properties at the right time. By combining Munk’s formidable financial capabilities and Smith’s mining smarts, Barrick has been able to bring seven gold mines under its wing. They include the huge Goldstrike property in Nevada, where 15 million oz of in situ gold reserves were recently announced.

“You can’t sit on your ass in Toronto when you are running mines in Utah and Nevada,” explains Smith in the matter-of-fact tone of a man who has seen all that mining has to offer.

With his ruddy complexion and close-cropped hair, Smith looks like a man who has spent almost his entire life in the mining industry. As a native of Haileybury, Ont., he was literally born to be a miner. He had an uncle who was mine manager at the O’Brien gold mine at Cadillac, Que. Another uncle worked for N. A. Timmins Exploration in Timmins, Ont. His father worked as an accountant for a company called Camiskaming Construction and an older brother, George, entered the business after obtaining a law degree.

“Mining was the only thing I knew much about,” said Smith who had already worked as a stoper at both the O’Brien operation and at Denison Mines’ Elliot Lake, Ont., uranium mine before moving south to study engineering at the University of Toronto.

Classmates remember him as an unassuming kind of fellow with a wry sense of humor and a good eye for a promising mining stock. Engineering consultant Glen Bird, who lived with Smith in one of the university’s fraternity houses, suspects that his former schoolmate paid for at least one year of schooling via the proceeds of his stock market investments. “Bob had a lot of quiet confidence and his investments seemed to pay off,” said Bird. He was also prone to playing the odd practical joke on his Capa Sigma fraternity brothers. During a small get- together in his room, Smith spilled some of the contents of a bottle of Crown Royal into one of his moccasins. But rather than waste good whiskey, he emptied the moccasin into a glass and offered the soiled liquor to an unsuspecting visitor.

The highlight of that period was the three weeks at the end of the year, recalls Ross Lawrence, who is a geological consultant with Toronto-based Watts, Griffis & McOuat. That was when the civil, mining and the geological engineering students got together in Minden, Ont., for the annual surveying camp.

According to Lawrence, students who slept in rows of dormitory bunk beds would be awoken every morning by the snap of a Zyppo lighter as Bob Smith lit his first cigarette of the day.

After graduating in 1956 with a Bachelor of Applied Science in mining engineering, Smith was hired by Denison Mines as a shift boss in training. He was later transferred back to head office, where he helped to assess what the company felt were construction cost overruns at Denison’s uranium operation. But, finding the work dull, he left in 1958.

“I didn’t want to spend my whole life pushing a calculator,” said Smith, who took a job as a research engineer with Iron Ore Co. of Canada in Schefferville, Que. There, he was eventually appointed director of research and supervised the activities of about 20 engineers and technicians. In 1964, he was hired by Canadian Bechtel to work as as an engineering supervisor in the company’s Montreal office. Bechtel sent him to do design and feasibility work at the Kiena mine in Ireland before he was lured away just a year later by his brother George.

As president of United Siscoe Mines, George Smith was associated with Consolidated Morrison Explorations’ president, Art Stollery. Having made his mark as one of the men who staked the original Denison mine, Stollery h eld a controlling stake with Robert Fasken in both United Siscoe and Camflo Mines. Smith was hired as Stollery’s assistant at a time when Siscoe was running a silver operation in Gowganda, Ont. The Camflo mine, at Malartic, Que., was just in the start-up phase and as the group’s activities increased, Smith became Cam flo’s vice-president of operations.

According to former Camflo mine manager Brian Meikle, Smith’s value to the Camflo operation was his ability to work with and motivate people. “Bob is a real people person and he possesses an exceptional memory,” said Meikle, who is now Barrick’s vice- president of development.

Together they devised a bonus scheme that is credited for keeping the unions out of one of North America’s cheapest gold operations. Tied to Camflo’s annual profits, it gave every employee with more than one year’s service a generous Christmas bonus to take home to his or her family. In 1978, for example, when Cam flo’s operating costs were $93.52 per oz, employees received $600. “Everyone has a goal in life and if you want it badly enough, you strive to achieve it,” explains Smith. He has since made the bonus scheme an integral part of Barrick’s operating policy.

To motivate his employees and create a family atmosphere at Barrick’s seven gold mines, the company has created a university scholarship fund, which contributes up to $5,000 to the tuition fees of the children of mining personnel. “We are a non-union company and we work very hard at keeping it non-union,” he said.

But a motivational approach to gold mining couldn’t save the company when an unfortunate foray into the coal business crippled Camflo financially. In 1974, Camflo acquired a 49% interest in La Luz Mines, the assets of which included a couple of Ohio coal mines operated by Gilbert Fuel and Core Trucking Co. “We got in at the top of the market when oil prices seemed to be headed toward $40 per barrel,” Smith recalls. But what looked like the start of a renewed demand for coal-powered electricity turned out to be a flash in the pan, and Camflo eventually wrote off its $25-million investment. “We were neophytes in the coal business and we got severely whipped,” said Smith. The costly mistake dealt a crippling blow to Camflo, which found itself $80 million in debt at a time when interest rates were running as high as 20%.

At that point, the Camflo mine wasn’t generating enough cash to service the debts and the Royal Bank became extremely nervous about the company’s ability to repay. In 1983, the company was given two choices: It could either find a merger partner or be taken over by the Royal Bank. However, Camflo wasn’t a very attractive proposition and there weren’t a lot of suitors around. Brinco Ltd. and Placer Developments had both taken a look before an oil and gas explorer called Barrick Resources made its initial approach. Through a holding company called Horsham Securities, Barrick was controlled by an imaginative financier named Peter Munk. While he had already dabbled in the stereo and hotel businesses, Munk had looked into his crystal ball and decided that he wanted to develop a large made-in-North America gold producer.

In Camflo, he saw the opportunity to acquire some good assets and the proven track record of Smith, Fasken, Meikle and Meredyth Holt. In addition to the company’s $80-million debt load, Munk would be picking up interests in two low-cost gold producers (the Camflo and Pinson mine in Nevada) and a promising exploration play in the Harker/Holloway Twp. area of northern Ontario.

But after the spectacular failure of Munk’s Clairtone Sound Corp., he was still regarded with some suspicion by the Toronto investment community, and the Camflo executives were apprehensive about getting involved. “I don’t think either side knew what they were getting into or where they were going, but Camflo had to do something,” Smith said. “Otherwise, the bank would have taken us over.” Despite initial reservations on both sides, the merger was consummated in July, 1984, and it has turned out to be what mining observers call a marriage made in heaven.

The initial arrangement was that Barrick, as a survivor company, would be calling the shots while relying on the Camflo team of Meredith Holt, Brian Meikle and Allan Hill for help and guidence. “We went into this with the attitude that we had to succeed at all costs,” said Smith, who was named vice-president, operations.

By selling off its Ohio coal assets for $33 million and dealing a Camflo mine royalty to Gold Co. of America, the new company wiped out the $80-million debt within a year. It also acquired the Mercur gold mine from Getty Oil Co. for $31 million cash and a $9-million production payment. Currently the subject of an ownership dispute involving Barrick and Utah- based Gold Standard Inc., Mercur had operated with an oversized workforce since opening in 1983. It was acquired only after Smith had developed sufficient confidence in the reserve figures. Since the operation was for sale, it had been operated by what Smith called a lot of tire-kickers, who were distracted by the fact that the mine was on the auction block. “Finding the best way to operate the mine was about the last thing on their minds,” Smith said.

With the Mercur in the bag (it produced 93,836 oz in 1985), the Barrick mining team felt they were well on the way to becoming a major producer. “We have never looked back since then,” he said. After operating costs at Mercur were cut by more than $100(us) per oz, Barrick director Joe Rotman informed the company that it could acquire a 50% interest in a small open-pit gold producer in the Carlin, Nev., gold belt. Rotman was also president of Pancana Minerals, which operated the Goldstrike mine in a joint venture with a subsidiary of Minneapolis-based S. J. Groves called Western States Minerals. Since 1979, Goldstrike had produced about 40,000 oz gold per year from a low-grade surface oxide deposit. But in 1986, S. J. Groves had decided to sell its interest and the Barrick team was invited to take a look. In late 1986, proven and probable reserves stood at 12 million tons grading 0.05 oz gold per ton — enough, Smith felt, to return the buyers’ seed money if exploration turned out to be unsuccessful.

While the Carlin trend has supported a number of low-grade oxide mines since the first disseminated gold deposit was discovered in 1963, none of the resident mining companies, which included Newmont Mining, had begun to search for the sulphide deposits thought to exist deep below surface.

A favorable deep formation indicated to our geologists that the chances of leakage (of higher-grade sulphides) from deep below surface were good, said Smith. So as other potential buyers like Echo Bay Mines backed down, Barrick aquired a 50% interest in the Western States joint venture for $42.8 million. When Barrick wrapped up the other 50% by agreeing to a share exchange deal with Pancana Minerals, Smith was accused by Echo Bay of paying too much for the property.

But no one is saying that now. After pulling a 630-ft intersection grading 0.3 oz gold per ton at a depth of over 1,000 ft, the company has outlined a huge sulphide deposit that promises to make Barrick the first Canadian gold company to top the one-million- ounce mark in annual production, with output coming solely from North America. The company expects to reach that landmark in 1991.

As he contemplates his good fortune from Barrick’s Yorkville office, Smith credits Munk’s foresight and financial smarts for turning Barrick into a potential tier-one gold producer. But others see it differently. They say the interplay between Smith’s conservative nature versus Munk’s ag gressive business style is the secret of Barrick’s growth-through-acquisitions strategy. “Bob is extremely conservative by nature, but he gets pushed by the non-mining side of the Barrick group into looking at different ways of handling a project,” said a former Barrick insider. “For example, if Bob advises them to drill 100 holes before sinking a shaft, they will ask him if the holes are really necessary. Usually a compromise is reached,” said the insider, who preferred to remain anonymous. “Munk is the first to admit that he knows nothing about mining, so he focuses on asset management while relying on Bob’s judgment with regard to new projects.”

However, friends say the rapid success that Barrick has enjoyed, compounded by the death of Smith’s son in an accident at the Denison mine, has made the Barrick president a driven man. “To escape from the memories, he has thrown himself into his work,” said a former Barrick colleague. “He smokes too many cigarettes, drinks too much coffee, and flies back and forth at an incredible pace.”

However, Smith is quick to downplay any suggestion that he may be overdoing it. “When people say I’m working too hard, I think back to the Camflo days when we spent three years sticking our fingers in the dike, knowing that the water was rising up around us. Basically, it’s a fun business and we’re building something.”

If Yorkville seems a little too sophisticated for a born miner like Robert Smith, his colleagues can hardly blame him for being the last one to complain.