$YGTFF $YGT.V Q&A with Gerald Panneton, CEO of Gold Terra
https://businessedgemedia.ca/node/127
Today I am joined by Gerald Panneton, a long-time mineral and resources executive. I saw you were listed as retired CEO, but that’s obviously changed. What brought you back into the corner office?
GP: Well, it’s not the first time I’ve retired and come back. I guess it must be the love of the business itself, being in the resource sector, creating value with the drill bit. Being able to pick up undervalued properties. I’ve done it a few times and keep coming back because I love doing it.
RD: You have an incredible success story with Detour, raising $2.6 billion in capital and selling the company for $4.9 billion in 2018. What were the secrets to your success there? Can you tell us about your personal journey with the company?
GP: Actually, I wasn’t there when the company was sold. The value creation was done by the time we put the mine into production in 2013. The biggest achievement was recognizing the potential, and outlining 30 Moz of gold of which 16 Moz went into the Feasibility Study, raising $2.6 billion and building the largest gold mine in Canada in less than six years, from IPO to gold pour.
I think it’s important to have a vision where most people don’t. When Detour Lake was shut down in 1998 at a gold price of appx $250, I saw its potential. I made a deal with Pelangio Mines I in 2006, and the IPO closed the transaction in January 2007 where we acquired 100% of Detour Lake. My vision was a low-grade open pit, and we were able to deliver. We found a lot of answers to support building the mine.
RD: Going back to raising money, is that something you enjoy or is it just a requirement of the job?
GP: When you have a project, you have an idea and you know you can create value. It's very addictive. If you believe in your story, and your vision, if you believe in what you're going to be discovering, you just need the money to demonstrate that. For me, raising money was natural - the project was there, the valuation was there, and the market was there too. The market was definitely there at that time, and now to get to production in six years is pretty much unheard of.
RD: Can you just explain how it happened within six years?
GP: Well, first of all, the six years include two years of construction, 26 months. So you could say that we raised a lot of the money in four or five years, and we had the feasibility study completed in 2010 to sustain demonstrating the valuation - and, raising the money to build a mine, which costs (1.5 Billion CDN$) one and a half billion to build back in 2011, 2012. I think one of the biggest aspects that I was able to negotiate after purchasing the exploration right from Pelangio Mines I was negotiating with Goldcorp to acquire the mining lease and the surface right of the Detour mine.
The project was a brownfield project – that’s where you can save on the length of time between developing a greenfield project, a brand-new project, in the middle of a new place, where you have to redo all the permitting. So, buying the Detour Lake mine, a brownfield project, allowed us to not skip environmental impact assessment, but facilitate. The fact that we already had the surface rights - it was already disturbed, and we just had to justify it the new Mine Plan and environmental impact of the open pit scenario.
RD: For the lay people reading today, including me, can you just give me a quick description of the difference between a brownfield play and a greenfield?
GP: In mining, we differentiate a brownfield project from a greenfield project from a project that used to already exist, was shut down, was already disturbed as there was a mine there before. So already disturbance and an impact has happened before. We call them Brownfield because they're, not in a pristine environment, like in the middle of nowhere. For example, if you make a discovery in British Columbia, in a beautiful environment, it's not brownfield, it's greenfield. So the difference between a brownfield and a greenfield is an area that has already been disturbed that should be considered an industrial site because there was a mine there before.
RD: You were with Barrick Gold for a dozen years or so, can you tell me the difference between working with a mining mammoth like Barrick and a junior, such as Gold Terra, where you are now?
GP: Two different worlds! When you work in a company like Barrick, I had the same leader for 12 years - Alex Davidson. We were producing 8 million ounces of gold a year and we wanted to grow more. So, working for a company like Barrick, with plenty of money supply to buy property or drill property, it was not difficult to raise money. After the acquisition of Pangea Goldfields (2000), we added ounces and built two mines back then, Tulawaka and Buzwagki in Tanzania.
So that's maybe the biggest difference between a Detour Lake, Newcastle Gold, or another company like Gold Terra, which in a difficult market it's very difficult to raise money. If you're at Barrick or you're with Newmont, with any company that has cash flow, it's much easier because you do have revenues. A junior company’s value is almost at nothing, but has a tremendous potential if you make a discovery.
RD: And so that brings us to Gold Terra, operating in the Yellowknife region. Can you tell me a little bit about the prospects and why you joined this group?
GP: Five years ago in spring 2019, I was invited to look at the Yellowknife camp and the work done by Joe Campbell, David Suda and others under the name of TerraX Minerals, which was the owner.
We changed the name to Gold Terra because I wanted to have a more focus story. We're there to find gold. It's a gold camp. We're in Yellowknife. So, my first interaction was the due diligence and presentation in their office in Ottawa, they showed me what Yellowknife was all about and why they were there the first time when they came in in 2013. It's a camp that had been completely forgotten. The Con mine was shut down in 2003 when Gold was 340$ US per ounce. You've got a city of 20,000 people. You’ve got an Archean greenstone belt similar to Timmins, Val d'Or, Kirkland Lake, Red Lake, Hemlo. Very, very similar to other Greenstone Belts in Canada where most of the gold deposits have been found.
I'm not sure exactly, but I think if I was looking at gold production from Archean Greenstone Belts in Canada, you would probably reach 200 million ounces of gold produced over the years. So this is a good place to find gold. And like one of our CEOs at Barrick used to say: “it's much easier to find gold where there's a gold mine”.
RD: How would you say the technology has grown in the in the time that you've been operating in the industry? And is that a big advantage going into a brownfield project?
GP: Think about technology in the 1930s, or in the 20th century, early 20th century, when those camps were put together it was too expensive to drill. It was cheaper to sink vertical shaft into an zone or a quartz vein where you found the gold at surface, than to drill it in today's world. Drilling has progressed tremendously over the last 50, 60 years. The use of geochemistry, geophysic, the use of pathfinders, and the use of all the technology we can use has advanced.
The periodic table is your tool for understanding the chemistry of gold deposit. And with those different elements, it's either easy to recover gold or difficult, right? So, yes, technology is always at the front end of making mining easier, whatever is the method of processing or in the method of mining.
RD: I can hear the passion about geology in your voice. Is it fair to say you've always had rocks on the brain, and not for brains -- but on the brain?
GP: You have to look at rocks like an open book. The rock is telling you a story, right? So when we look at rock, it's because we try to learn and understand what the rock is telling us. Whether it's a sedimentary rock or a volcanic rock, and when you look at a camp like Yellowknife, you want to find and you want to understand. For me, it was like being able to read the whole story of Yellowknife. When you have a gold deposit, it's there for a reason. So, where's the next one? And sometimes it's just extending at depth. Sometime it's a corridor, like the Campbell Shear which straddles the camp for more than 70 km long.
When you look at a gold camp, like Yellowknife or Timmins, or Val d'Or, or Kirkland Lake, or Red Lake, there's a story there. And there is a footprint for the gold deposit.
Now, is that footprint completely exhausted, or you can repeat it? And that's when the science of geology, the vision of threedimensional deposits, and the understanding of structural geology allows you to put the puzzle back and say: I need to drill there. You look at the potential of those zones and you can see it - it's open. It just needs to be drilled. The potential can be two, three, five, 10 million ounces.
RD: The stock is trading very low. Looking at you, as the CEO, and the story that I'm hearing, I wonder: what does it take to have the investors understand what the opportunity is here?
GP: The drilling program is part of it, but the question is if the market just very skeptical right now? And if so, how do you overcome that? And how can we reverse this? I think a very big hole in our deep drilling program that we aim to start in January after just completing the financing that we did this fall could change everything. Sometimes only one hole is enough to recreate that momentum.
RD: What’s the timeline for that first drilling?
GP: We’re aiming to start drilling again in January. We completed our master hole. Looking at our target number one, which is the Con Mine, we're in the process of delineating enough ounces to sustain and support purchasing the mine from Newmont.
Newmont’s goal is to sell the mine to us; our goal is to find enough ounces to support buying the mine. We're not going to buy a mine if there's not enough ounces, right? Because the mine comes with a lot of infrastructure, but also with some liability. And the offset and the reasoning to purchase the mine is: how many ounces do you need to find?
We came up with 1.5 million ounces. My target is to find 1.5 to 2 million ounces at 8 to 12 grams of gold, and have enough gold to sustain redeveloping a mine. If we don't find enough gold on this property, we're just going to walk away. We have a huge prospect. We control a thousand kilometers of the Campbell Shear.
We have a lot of ground to cover, but currently we're focusing on the Con Mine program. So far we've delineated about one third (540,000 ounces) of that 1.5million ounces near surface. We have more work to do in that segment that could bring the resource to maybe 750,000 to 800,000 ounces at eight to 10 grams.
What we want to do is demonstrate that there's another million ounces. And if those million ounces come up, we would be able to have enough ounces to support purchasing the mine. But the moment you purchase in the mine, you have a mining lease, which include $150 to $200 million USD of infrastructure.
RD: Now about Yellowknife, can you help me picture what it's like? Is it a pretty rugged terrain where you're operating?
GP: In “Picture 1” (Page 12), you can see the mine that was shut down. You can see the infrastructure that are still left there. You can see the footprint of the of the old mine. We have road access ditches, powerline, warehouses, water treatment plant, settling pond.
We have a place where we're going to put the tailings again. We have all the road, the ditches, everything is built. We don't have any work to do there, it's amazing that the saving is probably six months and over a hundred million dollars of work. You can also see the town in the background where 20,000 people live. They have a good, well-paying jobs. You know, Yellowknife is a mining town. After the gold mines were shut down, they developed a lot of diamond mines in the Northwest Territories. And the base for those diamond mines was Yellowknife. So, there's a lot of mining expertise in the town of Yellowknife, ready to start a new one.
RD: Switching gears a little bit, what would you say is the greatest lesson you've learned in your career? And what is your biggest regret in your career?
GP: My greatest lesson has been to never give up. And for the second question - I don't think I have any regrets. There are things that I would do maybe differently. I've learned a few lessons the hard way. The end of Detour Gold in 2013 was very bitter for me. It was a very sad moment after building the company from scratch from a one-person company to having more than 800 people creating value. There's always regrets. But you have to learn from them and not repeat your mistake of the past.
RD: I read that you've learned to be a little more careful with trusting people. Is that fair to say?
GP: I think trust is something that you can earn. Trust is an important thing. If you look at the mining engineers on my team, there are two I've known for more than 30 years. That's important, for sure.
RD: And in terms of retirement, is there a target for that? Have you set an age that you will retire, or is it an open book?
GP: For me, I always have to keep that option open. I've retired before, after Detour, and it took me three years to come back. I think it's important to keep your options open. I love helping. This is for me, moment where I can do so much. I can still give a lot to this industry.
If we had more money supply, I would definitely love to mentor somebody to become a good CEO. I think it's a fascinating job. Canada is a resource country with plenty. And this is the value we have. I hope that we're going to be able to grow and get better at mining resources in the future and protecting the environment. We can do both of those things as far as I am concerned. Obviously, there's been a lot of criticism from the government in Canada in terms of being part partner with industry.
RD: Do you relish the opportunity to create value for shareholders, or how do you deal with that pressure?
GP: That doesn't bother me because when you do resource exploration the end-goal is about creating value from A to Z - it's a process. And through that process of discovery and going all the way to production, there's exit points for the investors. Depending on the risk, some of the people love to come in early, make five baggers or 10 baggers and get out before it gets built. And then a new set of investors comes because they love the feasibility study and the conservatives that you put in the project when it goes into production.
So for me, I own 3 percent of the company as of today. My average cost is 20 cents plus. I've put more than 2.3 million in the company. And, as you know, the stock is 6 cents. I'm losing a lot of money, but I believe in the story. I believe we can get through and that the project is amazing.
RD: When you're not working, what are you doing? What are your hobbies?
GP: I have many hobbies, so the list is long. I love the calm of being at the cottage. I enjoy walking on trails. Exploring new trails or walking the same trails every day. I'm a tree hugger. I love trees. For me, nature is where I rest the best. I’m also an avid skier and car racer.
RD: So you definitely have an edge! So you like speed, but sometimes it takes a few years to build a great company, right?
GP: Don’t give up – if you believe in something, you have to keep coming.
https://businessedgemedia.ca/node/127
Today I am joined by Gerald Panneton, a long-time mineral and resources executive. I saw you were listed as retired CEO, but that’s obviously changed. What brought you back into the corner office?
GP: Well, it’s not the first time I’ve retired and come back. I guess it must be the love of the business itself, being in the resource sector, creating value with the drill bit. Being able to pick up undervalued properties. I’ve done it a few times and keep coming back because I love doing it.
RD: You have an incredible success story with Detour, raising $2.6 billion in capital and selling the company for $4.9 billion in 2018. What were the secrets to your success there? Can you tell us about your personal journey with the company?
GP: Actually, I wasn’t there when the company was sold. The value creation was done by the time we put the mine into production in 2013. The biggest achievement was recognizing the potential, and outlining 30 Moz of gold of which 16 Moz went into the Feasibility Study, raising $2.6 billion and building the largest gold mine in Canada in less than six years, from IPO to gold pour.
I think it’s important to have a vision where most people don’t. When Detour Lake was shut down in 1998 at a gold price of appx $250, I saw its potential. I made a deal with Pelangio Mines I in 2006, and the IPO closed the transaction in January 2007 where we acquired 100% of Detour Lake. My vision was a low-grade open pit, and we were able to deliver. We found a lot of answers to support building the mine.
RD: Going back to raising money, is that something you enjoy or is it just a requirement of the job?
GP: When you have a project, you have an idea and you know you can create value. It's very addictive. If you believe in your story, and your vision, if you believe in what you're going to be discovering, you just need the money to demonstrate that. For me, raising money was natural - the project was there, the valuation was there, and the market was there too. The market was definitely there at that time, and now to get to production in six years is pretty much unheard of.
RD: Can you just explain how it happened within six years?
GP: Well, first of all, the six years include two years of construction, 26 months. So you could say that we raised a lot of the money in four or five years, and we had the feasibility study completed in 2010 to sustain demonstrating the valuation - and, raising the money to build a mine, which costs (1.5 Billion CDN$) one and a half billion to build back in 2011, 2012. I think one of the biggest aspects that I was able to negotiate after purchasing the exploration right from Pelangio Mines I was negotiating with Goldcorp to acquire the mining lease and the surface right of the Detour mine.
The project was a brownfield project – that’s where you can save on the length of time between developing a greenfield project, a brand-new project, in the middle of a new place, where you have to redo all the permitting. So, buying the Detour Lake mine, a brownfield project, allowed us to not skip environmental impact assessment, but facilitate. The fact that we already had the surface rights - it was already disturbed, and we just had to justify it the new Mine Plan and environmental impact of the open pit scenario.
RD: For the lay people reading today, including me, can you just give me a quick description of the difference between a brownfield play and a greenfield?
GP: In mining, we differentiate a brownfield project from a greenfield project from a project that used to already exist, was shut down, was already disturbed as there was a mine there before. So already disturbance and an impact has happened before. We call them Brownfield because they're, not in a pristine environment, like in the middle of nowhere. For example, if you make a discovery in British Columbia, in a beautiful environment, it's not brownfield, it's greenfield. So the difference between a brownfield and a greenfield is an area that has already been disturbed that should be considered an industrial site because there was a mine there before.
RD: You were with Barrick Gold for a dozen years or so, can you tell me the difference between working with a mining mammoth like Barrick and a junior, such as Gold Terra, where you are now?
GP: Two different worlds! When you work in a company like Barrick, I had the same leader for 12 years - Alex Davidson. We were producing 8 million ounces of gold a year and we wanted to grow more. So, working for a company like Barrick, with plenty of money supply to buy property or drill property, it was not difficult to raise money. After the acquisition of Pangea Goldfields (2000), we added ounces and built two mines back then, Tulawaka and Buzwagki in Tanzania.
So that's maybe the biggest difference between a Detour Lake, Newcastle Gold, or another company like Gold Terra, which in a difficult market it's very difficult to raise money. If you're at Barrick or you're with Newmont, with any company that has cash flow, it's much easier because you do have revenues. A junior company’s value is almost at nothing, but has a tremendous potential if you make a discovery.
RD: And so that brings us to Gold Terra, operating in the Yellowknife region. Can you tell me a little bit about the prospects and why you joined this group?
GP: Five years ago in spring 2019, I was invited to look at the Yellowknife camp and the work done by Joe Campbell, David Suda and others under the name of TerraX Minerals, which was the owner.
We changed the name to Gold Terra because I wanted to have a more focus story. We're there to find gold. It's a gold camp. We're in Yellowknife. So, my first interaction was the due diligence and presentation in their office in Ottawa, they showed me what Yellowknife was all about and why they were there the first time when they came in in 2013. It's a camp that had been completely forgotten. The Con mine was shut down in 2003 when Gold was 340$ US per ounce. You've got a city of 20,000 people. You’ve got an Archean greenstone belt similar to Timmins, Val d'Or, Kirkland Lake, Red Lake, Hemlo. Very, very similar to other Greenstone Belts in Canada where most of the gold deposits have been found.
I'm not sure exactly, but I think if I was looking at gold production from Archean Greenstone Belts in Canada, you would probably reach 200 million ounces of gold produced over the years. So this is a good place to find gold. And like one of our CEOs at Barrick used to say: “it's much easier to find gold where there's a gold mine”.
RD: How would you say the technology has grown in the in the time that you've been operating in the industry? And is that a big advantage going into a brownfield project?
GP: Think about technology in the 1930s, or in the 20th century, early 20th century, when those camps were put together it was too expensive to drill. It was cheaper to sink vertical shaft into an zone or a quartz vein where you found the gold at surface, than to drill it in today's world. Drilling has progressed tremendously over the last 50, 60 years. The use of geochemistry, geophysic, the use of pathfinders, and the use of all the technology we can use has advanced.
The periodic table is your tool for understanding the chemistry of gold deposit. And with those different elements, it's either easy to recover gold or difficult, right? So, yes, technology is always at the front end of making mining easier, whatever is the method of processing or in the method of mining.
RD: I can hear the passion about geology in your voice. Is it fair to say you've always had rocks on the brain, and not for brains -- but on the brain?
GP: You have to look at rocks like an open book. The rock is telling you a story, right? So when we look at rock, it's because we try to learn and understand what the rock is telling us. Whether it's a sedimentary rock or a volcanic rock, and when you look at a camp like Yellowknife, you want to find and you want to understand. For me, it was like being able to read the whole story of Yellowknife. When you have a gold deposit, it's there for a reason. So, where's the next one? And sometimes it's just extending at depth. Sometime it's a corridor, like the Campbell Shear which straddles the camp for more than 70 km long.
When you look at a gold camp, like Yellowknife or Timmins, or Val d'Or, or Kirkland Lake, or Red Lake, there's a story there. And there is a footprint for the gold deposit.
Now, is that footprint completely exhausted, or you can repeat it? And that's when the science of geology, the vision of threedimensional deposits, and the understanding of structural geology allows you to put the puzzle back and say: I need to drill there. You look at the potential of those zones and you can see it - it's open. It just needs to be drilled. The potential can be two, three, five, 10 million ounces.
RD: The stock is trading very low. Looking at you, as the CEO, and the story that I'm hearing, I wonder: what does it take to have the investors understand what the opportunity is here?
GP: The drilling program is part of it, but the question is if the market just very skeptical right now? And if so, how do you overcome that? And how can we reverse this? I think a very big hole in our deep drilling program that we aim to start in January after just completing the financing that we did this fall could change everything. Sometimes only one hole is enough to recreate that momentum.
RD: What’s the timeline for that first drilling?
GP: We’re aiming to start drilling again in January. We completed our master hole. Looking at our target number one, which is the Con Mine, we're in the process of delineating enough ounces to sustain and support purchasing the mine from Newmont.
Newmont’s goal is to sell the mine to us; our goal is to find enough ounces to support buying the mine. We're not going to buy a mine if there's not enough ounces, right? Because the mine comes with a lot of infrastructure, but also with some liability. And the offset and the reasoning to purchase the mine is: how many ounces do you need to find?
We came up with 1.5 million ounces. My target is to find 1.5 to 2 million ounces at 8 to 12 grams of gold, and have enough gold to sustain redeveloping a mine. If we don't find enough gold on this property, we're just going to walk away. We have a huge prospect. We control a thousand kilometers of the Campbell Shear.
We have a lot of ground to cover, but currently we're focusing on the Con Mine program. So far we've delineated about one third (540,000 ounces) of that 1.5million ounces near surface. We have more work to do in that segment that could bring the resource to maybe 750,000 to 800,000 ounces at eight to 10 grams.
What we want to do is demonstrate that there's another million ounces. And if those million ounces come up, we would be able to have enough ounces to support purchasing the mine. But the moment you purchase in the mine, you have a mining lease, which include $150 to $200 million USD of infrastructure.
RD: Now about Yellowknife, can you help me picture what it's like? Is it a pretty rugged terrain where you're operating?
GP: In “Picture 1” (Page 12), you can see the mine that was shut down. You can see the infrastructure that are still left there. You can see the footprint of the of the old mine. We have road access ditches, powerline, warehouses, water treatment plant, settling pond.
We have a place where we're going to put the tailings again. We have all the road, the ditches, everything is built. We don't have any work to do there, it's amazing that the saving is probably six months and over a hundred million dollars of work. You can also see the town in the background where 20,000 people live. They have a good, well-paying jobs. You know, Yellowknife is a mining town. After the gold mines were shut down, they developed a lot of diamond mines in the Northwest Territories. And the base for those diamond mines was Yellowknife. So, there's a lot of mining expertise in the town of Yellowknife, ready to start a new one.
RD: Switching gears a little bit, what would you say is the greatest lesson you've learned in your career? And what is your biggest regret in your career?
GP: My greatest lesson has been to never give up. And for the second question - I don't think I have any regrets. There are things that I would do maybe differently. I've learned a few lessons the hard way. The end of Detour Gold in 2013 was very bitter for me. It was a very sad moment after building the company from scratch from a one-person company to having more than 800 people creating value. There's always regrets. But you have to learn from them and not repeat your mistake of the past.
RD: I read that you've learned to be a little more careful with trusting people. Is that fair to say?
GP: I think trust is something that you can earn. Trust is an important thing. If you look at the mining engineers on my team, there are two I've known for more than 30 years. That's important, for sure.
RD: And in terms of retirement, is there a target for that? Have you set an age that you will retire, or is it an open book?
GP: For me, I always have to keep that option open. I've retired before, after Detour, and it took me three years to come back. I think it's important to keep your options open. I love helping. This is for me, moment where I can do so much. I can still give a lot to this industry.
If we had more money supply, I would definitely love to mentor somebody to become a good CEO. I think it's a fascinating job. Canada is a resource country with plenty. And this is the value we have. I hope that we're going to be able to grow and get better at mining resources in the future and protecting the environment. We can do both of those things as far as I am concerned. Obviously, there's been a lot of criticism from the government in Canada in terms of being part partner with industry.
RD: Do you relish the opportunity to create value for shareholders, or how do you deal with that pressure?
GP: That doesn't bother me because when you do resource exploration the end-goal is about creating value from A to Z - it's a process. And through that process of discovery and going all the way to production, there's exit points for the investors. Depending on the risk, some of the people love to come in early, make five baggers or 10 baggers and get out before it gets built. And then a new set of investors comes because they love the feasibility study and the conservatives that you put in the project when it goes into production.
So for me, I own 3 percent of the company as of today. My average cost is 20 cents plus. I've put more than 2.3 million in the company. And, as you know, the stock is 6 cents. I'm losing a lot of money, but I believe in the story. I believe we can get through and that the project is amazing.
RD: When you're not working, what are you doing? What are your hobbies?
GP: I have many hobbies, so the list is long. I love the calm of being at the cottage. I enjoy walking on trails. Exploring new trails or walking the same trails every day. I'm a tree hugger. I love trees. For me, nature is where I rest the best. I’m also an avid skier and car racer.
RD: So you definitely have an edge! So you like speed, but sometimes it takes a few years to build a great company, right?
GP: Don’t give up – if you believe in something, you have to keep coming.
