Editorial: Iamgold’s Letwin tells of hard lessons learned in keynote at PMF

Iamgold president and CEO Stephen Letwin speaking at the Northern Miner's Progressive Mine Forum in Toronto in October 2017. Credit: The Northern Miner livecast screenshot.Iamgold president and CEO Stephen Letwin speaking at The Northern Miner's Progressive Mine Forum in Toronto in October 2017. Credit: The Northern Miner livecast screenshot.

A careful implementation of innovative technology and management techniques is key to thriving in the mining industry in the decades to come. That was the message from many speakers, panelists and delegates at the inaugural Progressive Mine Forum presented by The Northern Miner on Oct. 23 in Toronto.

The forum sponsors included IBM, PearTree Securities, PwC Canada, Rio Tinto, Hard-Line, Major Drilling, Hatch and MacLean Engineering.

The event location itself represented the ideals of the day: the carefully restored Art Moderne-style Carlu concert hall and banquet facility, which was one of North America’s premiere concert and party venues from its opening in 1931 through the 1960s. It lay shuttered and almost forgotten by the public from 1976 until its grand reopening with modern amenities in 2003.

Iamgold president and CEO Stephen Letwin kicked off the day with an impassioned, personal speech that underscored the hard business lessons to embrace innovation and fight off complacency.

He recalled a searing moment at age 26 in the oilpatch in Calgary, when he witnessed the “Elon Musk-like” wunderkind Jack Gallagher at age 65 weeping uncontrollably in his boardroom after losing a company he’d spent 33 years building from a one-man operation into one of Canada’s largest companies.

This “superhuman being,” Letwin said, had “fallen in love with his own equity” and let his company take on far too much debt, ultimately leaving it unable to withstand a downturn in oil prices, high interest rates and technical changes in the industry that affected costs.

“The lesson there is: you can never forget about basic economics, you can never forget about your cost structure, and you can never, ever forget about what innovation and the change in technology can do to your business,” Letwin said. “It’s happening today, it happened a hundred years ago, and it’s going to continue every day, every month, every year, forever. As human beings, it’s easy to forget that.”

But Letwin admitted he succumbed to his own version of complacency in his first couple of years in the gold business starting at Iamgold in 2010, as the miner’s stock price had risen from US$3 in 2008 to more than US$23.50 in 2011. “I felt like Mick Jagger,” he joked.

He recalled how at analyst meetings in that era, “I wasn’t asked one question about cost structure, technology or where you were drilling. It was all about ounces, ounces, ounces. ‘Tell me how many ounces you’re going to add.’

“The ghost of Jack Gallagher should have been in the room with me, saying, ‘Steve, it’s time you change, because what these guys are driving you to is exactly what they drove me to: failure.’ And that’s exactly where I was headed.”

The subsequent tumble in gold prices and Iamgold’s share price below US$1.50 over the next four years was as bracing for Letwin as the rise had been heady. It was a “horrifying experience, we could have almost lost the company.”

He said several things saved the company. “I woke up, slapped myself across the face and said: ‘What the hell are you doing?’ We sold some assets, kept the balance sheet strong, reduced our debt and brought people like Tony Moreau — a 33-year-old guy with lots of good ideas around technology and innovation — into the company. We changed the whole company from being focused on long-cycle to a short-cycle balance, which brought cash flow in sooner, brought our cost structure down, and at the same time improved our balance sheet.”

Letwin recalled attending the Denver Gold Forum during the worst years: “People who had bought Iamgold shares would walk by and look at the ground. They didn’t want to look at me. Loser. The worst thing you can do in life is lose somebody’s money. They are unforgiving. Unforgiving. Remember that.”


Full transcript: Iamgold CEO Letwin on cost control, innovation and gold’s bright future

In the days and weeks ahead, keep an eye out for our full coverage of the Progressive Mine Forum, in print, online and on our weekly podcast.


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