At the recent Precious Metals Summit in Beaver Creek, Colorado, Robert (Bob) Quartermain, the chairman and CEO of Pretium Resources, moderated a discussion with his long-time friends Tom Kaplan, chairman of the Electrum Group, a private precious metals company based in New York, and Ross Beaty, the founder and chairman of Pan American Silver (TSX: PAA; NASDAQ: PAAS). Kaplan, Beaty and Quartermain have been friends and comrades for decades, not only sharing a passion for silver, initially, and later gold, but a variety of philanthropic interests as well. All three sit on the board of Panthera, an organization that Kaplan and his wife Daphne created in 2006 that is dedicated to preserving wildcats and their critical role in the world’s ecosystems.
Panthera’s biologists, law enforcement experts and wildcat advocates develop strategies to protect cheetahs, jaguars, leopards, lions, pumas, snow leopards and tigers, and their landscapes.
In addition, Beaty and his wife Trisha have set up the Sitka Foundation, which supports land and ocean conservation, scientific research on nature and the environment, education on the importance of a healthy environment, and public policy on ways to preserve and protect the planet.
In an exclusive interview with The Northern Miner, Kaplan and Beaty picked up where Quartermain left off, in a freewheeling, lighthearted discussion about the pair’s similarities and passions, and the people they admire.
The Northern Miner: Ross Beaty mentioned during the keynote presentation a few minutes ago that “size really matters,” and described how he spent three years of his life in the late 1980s trying to permit a 50,000 oz. deposit in California. He said by the time he got the permit, the gold price had collapsed and the deposit was uneconomic. He described the experience as being “like root canal surgery without the anesthetic.”
Thomas Kaplan: It takes as much time, if not longer, to develop a small asset as it does a big one. It’s one of the reasons why we only go for really big assets, because the small ones don’t make a difference … especially if you ever want to sell one to a major. They need something that moves the needle. And investors tend to be a little bit complacent about that. They get easily seduced — rather than just saying, “Look, I want to focus on the category killer assets.” So when it comes to silver in Argentina, for example, Pan American Silver’s Navidad project would be the Holy Grail. Everything else is a rounding error. It’s editorial. A project like Navidad is all you need for a whole company, quite frankly.
Ross Beaty: Right.
TNM: And it’s so hard to find those kinds of assets.
RB: Very hard to find. They’re like needles in a haystack.
TK: That’s why we love them.
RB: Yeah.
TNM: Most of the low-hanging fruit is gone.
RB: Well, you know, Bob Quartermain just got one, it was just hanging there, seven or eight years ago. Right? Bingo, the world’s highest-grade gold deposit. That’s just staggeringly phenomenal … that’s a pretty big thing!
TK: You know, Ross, I think you’ve been spending too much time with me. I mean you are ‘out-superlative-ing’ me.
RB: Tom, the difference between you and me, to be honest, is that you are credible. I’m merely incredible. It’s just that simple.
TNM: One of you made the comment that you are like twins.
RB: I did.
TK: We can complete each other’s sentences.
RB: Like peas in a pod.
TK: We discovered each other because of Bob Quartermain.
TNM: What would you say are the similarities and differences between the two of you?
TK: I would put it down to one thing. We have the same values.
RB: And the difference would be that Tom is — did you ever read Zen and the Art of Motorcycle Maintenance? I would say Tom has more of the artistic gene and I have more of the kind of operator gene, where nuts and bolts are more important to me, perhaps, than the big picture — the vision. Like I just want to get down and get things done. I’m probably more hands-on than Tom is.
TK: No question.
TNM: Yes, but Tom, you go out in the field. You look at the rocks.
TK: I do.
RB: In his Guccis! But I revel in it. I’ve been doing it all my life.
TNM: Yes. Ross, you’ve been collecting rocks since you were five years old and you’re a geologist.
RB: That’s the difference — a historian and a rock banger.
TK: I’m a voyeur and he’s a practitioner. I like to go out and see the things in the field. I like looking at the rocks. I always go out and congratulate a team if they’ve made a discovery. It means a lot to them when, no matter where they are, I show up. I enjoy that. But it’s different showing up and actually telling someone what to do, like Ross can do. I know what I don’t know. And there’s no ego involved in being able to say that.
RB: That is one of your great strengths, actually. But that is also a great strength about Robert Friedland — who I respect a great deal, as well — in that he hasn’t spent years at university learning geology or mining. He relies on what really smart people tell him. And he’s been extremely effective.
TK: I’m flattered by the comparison.
RB: It really is a good comparison. And there are a handful of others like that. Lukas Lundin is another great entrepreneur we both have enormous respect for. He’s got other skills, I would say, that are different from both of us. He has an ability to concentrate and focus, and be so good with people, as opposed to being a numbers person, or a detail-oriented person. Somehow he doesn’t get bogged down in the weeds, and that allows him to focus on scale, and on people and on growth. He runs on gut feelings. Acceptance of any risk on the planet.
That’s what good entrepreneurs are. They’re people who are impatient. Who are looking at the big picture without getting too bogged down, who accept failure quickly, and just always move on and remain positive. I think we all share that.
Bob Quartermain is a little bit different than us, I would say. Bob, you’re not really that textbook entrepreneur. I always see Bob as having the conservatism from his maritime background — it’s in your blood to be rather cautious, and rather formal, but at the same time you are a terrific entrepreneur in many other respects. You find something big and you run with it.
TNM: You also have to have courage. Knowing when to buy and sell. And make decisions against the grain.
RB: It’s all about risk acceptance.
TNM: You both talk about luck a lot, about being lucky, but you still have to have that instinct. Can you talk about that instinct, or sixth-sense, if you will.
TK: Look, the odds of being able to take a property from a prospect through to a mine — I’ve seen the estimates vary from 1,000 to 10,000 to one against it happening. When it happens multiple times, if you’re not accepting — more than accepting, embracing — “La Fortuna,” then I think you’re dead, they just haven’t buried you. You really have to be able to stand back and just sometimes laugh, and laugh when it comes right. And if you get it wrong, because you haven’t done the work on the front end, then you deserve it. But when you get it right is when you really have to understand how fragile is luck and the relative unimportance, I find, of talent. Because we’ve seen it before: you can be right geologically, make a big discovery and then you can’t unlock it metallurgically, which has got to be God’s way of being spiteful. That must be horrific.
RB: It’s really hard for me to put my finger on it. I just feel that I’m a lucky individual. I don’t know whether it is because I was a cow in my last life and I came back as a lucky human in this life, and maybe I’ll be a guru in my next life or maybe a dog, I don’t know. I’ve never been able to explain why I’m so bloody lucky. That is not something that anybody can take for granted. So multiple discoveries, multiple successful companies, multiple crazy investments that turned into ridiculous gains. I don’t know. Maybe part of it is skill, you have to roll the dice and buy the lottery ticket, but I’ve known a lot of other people who are smarter than I am, and they just don’t have the luck of finding the mine and then capitalizing on the discovery. They spend all their life grinding away and just never get that luck. So I can’t put a finger on it.
TK: I can’t either. On my first foray into mining we discovered San Cristobal. It was Larry Buchanan’s first trip to Bolivia! On his first reconnaissance trip to Bolivia, he discovered one of the great silver deposits.
And then, after that, with respect to our energy company, Leor, I’d never been in energy before. I was feeling lucky. People say “why did you go into energy?” I had a macro thesis on oil and gas. But then, to choose to express that through exploration in Texas? It’s not as if people haven’t been in Texas before looking for oil.
After finding that, you can’t possibly take yourself seriously. You just have to say you’re the luckiest son of a bitch you’ve ever met. I know I’ve been. And Ross feels the same way about himself. It’s a strong common denominator, and both of us identify with that.
It also informs very much those values about giving back and about focusing so much time and energy into an underappreciated area of philanthropy. We love nature. We’re completely focused on the environment. It’s my major passion. If somebody were to say to me, ‘you have to stop business, but you can continue on with the conservation,’ I would say “well, that’s a no-brainer.” Tomorrow. No problem. But the other way around? Not happening. My life would become meaningless, other than my family. I think the best thing that I’ve given to my family is the power of example … about what the luck and what the wealth need to be translated into.
This is something my kids get. They understand me. They understand what moves me. And that’s all-important. Because, as Ross said, you can’t take it with you. Death shrouds don’t have pockets. It’s all about the legacy that you leave to your children. And then a few generations hence, we’ll be forgotten anyway, which is fine, it’s the way it is.
But we want to make an impact now. And we’re impatient and we’re as entrepreneurial about our conservation activities as we are in building businesses. Ross would say exactly the same thing. It’s an unusual constellation. The fact that there was a time when we were the three hotshots in silver, and that we’re now together in philanthropy, is great. And I have no doubt that it’s going to lead to other things that we’re going to do together.
RB: We’ll be the three hotshots in gold, too, if I can find something as nice as what you and Bob already have.
TK: As in philanthropy, as in gold. We find we’re interested or involved in the same things.
On the mining side, I found myself really interested in Poland. Unbeknownst to me, Ross was in Poland. I didn’t know about that. I was in Poland trying to acquire land and he was already acquiring land. He’s operating stealthily and properly. It’s the way I’m doing it. And then I found out Ross is in Poland. And I said, “That’s fabulous! I’m in great company.” My attitude was, if he’s successful, that’s good for us.
This used to be an incredibly psychotic industry in terms of the way people would compete against each other.
Now I see it all the time in wildlife conservation. I call it the shrinking-pie psychosis: if one person gets an investor it must be to someone else’s detriment. I remember in silver, we had George Soros and Ross had Bill Gates, which was all very, very cool. And it was all cool for me because my attitude was, if Bill Gates invested in silver, that’s a good thing. Soros investing in silver was also a validation for Ross’s silver thesis, which was a validation for Pan American, which was also a good thing.
So our attitude was that someone else’s success is not a negative. It’s a positive. It shows it can be done.
That’s why whenever someone has great success — whenever Robert Friedland would find something, for example — I’d cheer him on. I remember someone asking me “so what do you think about Robert Friedland?” And I said, “I think about Bob the same way Voltaire thought about God: ‘If God didn’t exist, one would have to create him.’” Because he’s good for the industry.
RB: Yes, he is.
TK: He’s good for the industry. Successes are good, whoever makes them. It’s great to see.
RB: It’s all true. It’s so rare, and making people money through that success is all good.
TNM: Who are your other role models? Tom I know for you one of them is Ted Turner, who has done a lot in the conservation field.
TK: We both share Doug and Chris Tompkins. They were the founders of Patagonia Sportswear, North Face and L’Esprit, and basically ended up doing something that was of historic proportions in acquiring land in Chile and Argentina, and setting it aside for national parks. It was epic.
RB: Doug and Kris deserve the Nobel Prize. There’s a recent article in The New Yorker on another of my heroes, Yvon Chouinard, which included Doug and his whole story. It was a really good article.
TK: And it’s interesting because the Tompkins acted as references for both of us. They said to me there was this great Canadian guy, and I said “I know, I’ve known him for 20 years and we’re going to talk about wildlife conservation next week.”
And yes, Ted Turner is another role model for me. His laser focus on imperiled species conservation, and putting his money where his mouth is, is fantastic. I have great affection for him.
RB: In the mining industry, Lukas Lundin, he’s the guy I think is a brilliant entrepreneur and a great philanthropist, as well. He chooses to spend his money on helping Africans, and you can’t fault that. People like Bob Quartermain of course. I respect Bob enormously for what he’s done. Another person I respect a lot who never seems to get any coverage is Richard Warke. He is the brains behind Ventana, Augusta, Arizona Mining and Newcastle Gold — all huge winners. He’s so low profile, but he is a great entrepreneur in his own right. There’s actually a small handful, but it’s a handful that I really do admire and respect.
TK: For me it’s Ross and Bob, and I have huge regard for Mark Bristow.
RB: Yes he’s a good guy.
TK: But also I saw him in the trenches with someone who was beleaguered, and he was the only one who acted honorably and ethically.
RB: Don Lindsay, CEO of Teck. He’s another guy I think is a king.
TNM: What’s also great about Randgold’s Mark Bristow is that he isn’t afraid to criticize the industry and what it’s done wrong.
TK: I’m not a shareholder with them, but sometimes we have discussions about jurisdictional risk, and I’m just calling it the way I see it. To me, there’s that common denominator in Ross, Bob Quartermain and Mark Bristow.
I’d also add someone who’s really the reason why I am the chairman of a public company, because it’s been a long time since I wanted that role. It’s Greg Lang who runs NovaGold. He just makes it all so enjoyable. He’s a class act — smart, with integrity, incredible skill and he just makes it really easy. And that’s why I do it, because people like that help me enjoy it. I usually don’t.
The common denominator is that these people care for their shareholders. And they’ll do whatever it takes to spread the message. I am a big believer that, wearing down shoe leather and keeping faith with your shareholders, particularly when times are tough, is extremely important. These are guys who have paid their dues over decades. They’ll travel anywhere because they believe it’s the right thing to do. That’s Ross. He has an incredibly loyal shareholder base. He’s been with them in the trenches. These are the common denominators that I like to see. Not people who run away but people who run into the cannon fire. They’re rare. Bristow does it. Bob does it. Greg does it. And Ross does it. They’re very rare.
RB: It didn’t help the Grenadiers, they all died.
TK: I think a noble death beats the alternatives.
RB: I’ve been in a few of those Valleys of Death in the mining business. They’re called bear markets. Not many come out alive.
TK: I remember the first scene from Little Big Man and Dustin Hoffman playing an Indian — an unusual casting choice — and he looks up and says: “Today is a good day to die.”
RB: And then do you know what happened? He went up to die and it started raining. And then he rolled up his bag, and he said: “Today is not the day the great flint comes singing into my heart.” [Spoiler alert] Meanwhile the village he’s just left is being ransacked by General Custer. That was a great movie. I use that quote all the time, Tom. And by the way, when it comes my time to croak, that’s exactly how I want to go. I want to go out into the woods and put my blanket on the ground and say adios to a fun ride.
TK: That’s what my wife fears I’m going to do. Like an old predator, I will just want to go roll up somewhere and be left alone, and not be a burden on anybody.
TNM: That’s probably a good place to end this conversation.
TK: But we talk about it so cheerfully!
Great article. I enjoyed reading it immensely!