Aiming to be the Uber of mining Abitibi Royalti

Aiming to be the Uber of mining
Abitibi Royalties CEO Ian Ball is aiming to transfer Uber’s successful business model to the rough world of mining

Ian Ball, 34, of gold mining investment firm Abitibi Royalties, wants to take the Uber business model and apply it to mining.

Rene Johnston/The Toronto Star

Ian Ball, 34, of gold mining investment firm Abitibi Royalties, wants to take the Uber business model and apply it to mining.
By: Lisa Wright Business Reporter, Published on Fri Dec 25 2015

At 31, Ian Ball became one of the youngest mining company presidents on Bay Street.

But he didn’t just work at any old metals exploration company in the rugged, aging industry. It was McEwen Mining, which operates in four countries, has 1,700 employees and owns a market cap approaching $1 billion. His boss was none other than legendary gold mining magnate Rob McEwen, who famously turned Red Lake in Northern Ontario into a massively successful, well, gold mine.

Still, the go-getter had been there about 10 years and was itching to spread his wings, despite being the protégé of one of the most recognized people in the business.

A year after being promoted to the top spot, Ball decided to make a critical phone call.

“I basically called up the CEO of Abitibi Royalties (Glenn Mullan) and told him I wanted to replace him,” jokes Ball, who in reality put the thought much more politely.

Somehow, his persistence worked.

“In hindsight, it was a bit of a bold move. To his credit, he liked the idea and how (we) could continue to grow the company.”

Today, at 34, Ball has that CEO job and a seat on the board, with Mullan as board chairman, and he’s busily implementing the innovative ideas that got him there.

Last summer, under Ball’s leadership, Abitibi launched “The Royalty Search”, an online platform where struggling exploration companies and prospectors can submit a property for consideration to have their annual staking costs or property taxes paid for in exchange for a royalty. Abitibi pledges to get back with to miners with an answer within 48 hours.

Since launching last summer, 65 projects have been submitted and eight transactions have been closed. Abitibi seeks properties that are near existing mines, with good geology and signs of mineralization from previous exploration.

In most of the deals, Abitibi is also entitled to 15 per cent of any proceeds should the property be sold — a unique twist for a royalty company.

Knowing very well that mining industry works slowly as it moves from discovery to excavation, Ball insists the sector needs to refine its business model — particularly in the current metals market downturn.

“Look at Uber and Airbnb,” he says. “They both support market valuations equal or larger than the world’s largest gold miners, but don’t own anything. No cars, no hotel rooms. At their heart, they are royalty companies getting a percentage of a sale. How do you bring that to mining? How do you approach the industry from a different angle?”

Ball figures that his company’s approach with the royalty search helps junior miners survive the ongoing bear market, and gives them a leg up on much bigger, established competitors in the same game, including Franco Nevada, Royal Gold and Osisko, all of which have billions more to spend than Abitibi.

“I have very clear goals for myself,” says the Bowmanville, Ont., native. “One was to run a gold company, but when I left McEwen Mining I set out to build the best gold company in the world,” he says quite seriously.

“That might seem like a boastful statement, but when measured by share price and performance, I don’t think it is inconceivable considering the foundation we have at Abitibi Royalties. And I wanted to do something on my own, starting small in order to show people that nothing was given,” says Ball.

Veteran mining analyst John Ing remembers when a keen and fresh-faced Ball began working with McEwen at Goldcorp in his early 20s.

“Robbie likes to hire young people who are unconstrained in their thinking about the mining business, and Ian was certainly one of them,” recalls Ing of Maison Placements Canada Inc.

“He’s a great learner and a great listener and had the chance to be very hands-on” at mine sites under McEwen, says Ing.

“At Abitibi, Ian has been able to do a number of deals, and this is the best time to do a deal,” in a down market when prices are low, explains Ing.

When he started at Abitibi in 2014, Ball’s former mentor McEwen quickly agreed to invest $2 million for a 9 per cent stake in Abitibi Royalties, showing his continued support for Ball.

The first few months at the helm of Abitibi were anything but smooth, though. The firm was low on funds and fighting a lawsuit against three heavyweight miners — Osisko, Agnico-Eagle and Yamana — over the company’s main asset, a piece of a new discovery at the Canadian Malartic mine in Quebec called Odyssey North.

The lawsuit was eventually settled in favour of Abitibi Royalties, which received $35 million in Agnico Eagle and Yamana shares and a 3 per cent royalty on the North Odyssey discovery in addition to royalties on other parts of Canadian Malartic which will become a mine down the road.

“The question becomes how do you build the best gold company when you’re a fraction of the size of the industry leaders,” Ball says.

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