EDITORIAL The clash of Titans

From the mucker to the mine manager, from the shift boss to the chief executive officer, there are probably more dynamic individuals in the mining business than any other. The industry is in the business of developing Canada’s natural resources, but one of its greatest resources is the people involved. Those characteristics come into sharpest relief when the corporate standard bearer — be he president, chairman, CEO or all three — does battle on behalf of his company. There could be hundreds of millions of dollars on the line, but in the end it is remarkable how often individual personalities can make or break a deal.

For shareholders, it can be somewhat worrisome to think the fate of their investment rests with one person’s ability to make the best deal possible. One might be tempted to wish that the human element be removed from such matters, that when it comes to money it is all objective analysis. The truth is, however, that the human element, the subjective feeling that can guide the CEO at critical times, is often what serves shareholders best.

When Falconbridge was up for sale in 1989 and bids came from both Amax Inc. and Noranda Ltd., the strategic jockeying between Falconbridge and Noranda was reduced in the eyes of many to the rivalry between the CEOs, Bill James at Falconbridge and Alf Powis at Noranda.

That the two worked in the same office tower and often met — and held top-level discussions — in the elevator only added to the gossip. The question was which man would win, as if the future of two billion-dollar companies were secondary.

The differences between Bill James, a one-of-the-boys kind of guy, and Alf Powis, shrewd and steady, were clear enough that many industry observers felt they knew how those meetings went, even if they didn’t know the exact words. It seemed easy to reduce that very complex commercial transaction to a contest between two worthy adversaries.

In retrospect, everyone seemed to have come out of that particular deal a winner, but that’s not always the case. One of the most famous battles in mining lore was the legal marathon between International Corona Resources and LAC Minerals in which LAC lost ownership of Canada’s largest gold mine.

That dispute was often portrayed as a battle between mining promoter Murray Pezim who headed up the Corona side and LAC’s president and CEO, Peter Allen. Unlike the James-Powis confrontation, however, Allen never allowed himself to be drawn into such public displays. Partly for that reason — and also because the case was so legally complex — the dispute never quite came off as a clash of titans. Nevertheless, throughout that 8-year argument, many observers felt that the animosity between the two key players precluded a more amicable settlement.

In today’s fight for control of northwestern British Columbia’s Eskay Creek gold property, it is tempting to personalize the contest as one between Murray Pezim, now chairman of Prime Resources, and Ned Goodman, chairman of Corona. Brash, bombastic Pezim holds some key pieces while cool, calculating Goodman is trying to complete the puzzle.

These two have well-publicized business ties akin to a love- hate relationship that goes back to the days of the Hemlo discovery almost a decade ago. Goodman and Pezim teamed up on the winning side in the Hemlo legal battle, but their relationship has been stormy throughout. Speculating on how these two do business behind closed doors is a favorite pastime among market watchers.

Placer Dome is in the Eskay Creek game too, and how either Pezim or Goodman deals with soft-spoken Placer Dome Chairman Fraser Fell, a man who shuns the spotlight as he leads his very blue-chip mining company, is hard to imagine.

The legal wrangling between Aur Resources and La Societe Miniere Louvem over ownership of the Louvicourt polymetallic discovery is another case in point. They may not be as well known yet as Bill James, Alf Powis, Peter Allen, Murray Pezim, Ned Goodman or Fraser Fell, but the two protagonists in this dispute will likely be heard from a great deal in the future.

Leading Aur into battle is professorial James Gill, someone it would be difficult to describe as flamboyant but who nonetheless is learning to like the high life. On the Louvem side, ex-stockbroker Pierre Gauthier is a francophone mover and shaker, a salesman who could probably sell sand to the Arabs.

These individuals hold the fortunes of thousands of shareholders in their hands, but is there any reason to believe that they are not susceptible to the same human frailties as other mortals? Might not they try to “get back” at someone who beat them at an earlier deal or “return the favor” for someone else, perhaps to the detriment of shareholders? Might they not make a decision because they didn’t like the feel of someone’s handshake, because the other party in a deal couldn’t look them straight in the eye or for some other purely subjective reason?

One quality you might expect in an executive running a company, be it large or small, is the ability to put those personal feelings aside and look objectively at various options. Yet at the same time, particularly in this business, it is the very antithesis of objectivity that is the deciding factor. Some call it a “gut feeling” some call it “intuition,” but time and again, people walk away from deals because “it just didn’t feel right” while others act on the basis of a handshake because of a “hunch.”

In the final analysis, that ability of a Murray Pezim or a Bill James to “sense” what move to make and to act accordingly is what shareholders put their trust in. He who hesitates is lost; he who can afford to study each opportunity objectively may well enjoy a steady income but will lose out on the potential for capital gain.

Individuals who can act decisively, take the calculated risk and seize an opportunity are the ones who maintain the vitality of this business and make it so interesting.