Since 1915, the Northern Miner weekly newspaper has chronicled Canada’s globally significant mining sector.
In an industry where the brightest geologists often go unrewarded with even one major discovery, the development of a gold mine is considered an achievement not to be taken lightly. So when a junior resource company like Canamax Resources (TSE) succeeds in bringing four new gold mines into production within two years, observers could be forgiven for thinking that it has found a way to circumvent the usual obstacles which stand in the way of ambitious exploration companies.
John Hansuld would probably laugh at the suggestion that he has an “in” with Lady Luck. The 57-year-old Canamax President and Chief Executive Officer has spent too many years in the business to credit his overnight success to mere luck.
While he is undoubtedly the driving force behind Canamax, there are other reasons why The Northern Miner has named John Hansuld as Mining Man of the Year for 1988. He has made a significant contribution to the industry as an active director of the Prospectors and Developers Association of Canada and the Mining Association of Canada. Hansuld was also instrumental in helping to establish the flow- through financing mechanism that carried the industry through some lean years.
In 1987, Hansuld said Canamax would open a mine a year for the next five years. So far, he’s been right on target despite a variety of setbacks which include taking an $8 million write down at the troubled Ketza River mine. Canamax’s 50% interest in Ketza River is being sold to Belmoral Mines for $5.5 million.
Admittedly, he had the experience of parent Amax Inc. behind him. Amax is the major U.S. mining company that created Canamax when it agreed to set its Canadian exploration arm adrift in 1983. It still owns 47% of Canamax. Amax also endowed its offspring company with a portfolio of 91 exploration properties and some proficient personnel to work with.
But Hansuld’s colleagues say it was his mine finding smarts and business savvy that has put Canamax in a position to extract 100,000 oz gold from four mines next year.
Known throughout the industry as one of the men who introduced flow-through share financing to Canada’s junior resource sector, Hansuld must take some of the credit for a tax driven financing scheme which has given Canamax and many other exploration companies the funding to go out and find new gold mines.
And there are few merging producing mining companies so clearly identified with a single individual.
“If it wasn’t for Hansuld, there would be no Canamax,” said Nuinsco Resources (TSE) President Doug Hume who has worked with Hansuld on the Prospectors and Developers Association of Canada board of directors.
“He provided a lot of ideas for the company and put the details together,” said Walter Sellmer, Canamax’s former vice-president of explorations in western Canada. Direct approach
Known for his direct approach in dealing with both colleagues and exploration, Hansuld has never been one to delegate nor has he much time for the formalities that go along with the business side of mining. A retirement function for director John Sullivan offers a good insight into Hansuld’s style. During a meeting to discuss the progress of a Canamax project, Sullivan apparently informed the gathering that if they didn’t vote to go ahead with the next stage of development, they would be guilty of throwing away the money they had spent already.
Later at the retirement ceremony, Hansuld reminded Sullivan of his words by presenting him with his advice enscribed on a plaque.
The president of one of Canamax’s joint-venture partners says Hansuld can be impatient and difficult to work for if his people stray off track. But when it comes to the business of minerals and mine finding, no one can argue with his record.
After graduating with a BSc from McMaster University, the Port Arthur, Ont., native elected to take a masters degree in geochemistry at the University of British Columbia.
Then, while Hansuld was with Brinco Ltd.’s exploration arm in Newfoundland, he was offered a National Research Council scholarship to study the geochemistry of ore formation at McGill University in Montreal.
With a doctorate in hand he was hired by Amax in 1961 to work as a staff geochemist and later manager of exploration research at the company’s Denver offices. In 1967 he was sent north to Toronto to work as Amax’s regional exploration manager for eastern Canada and by 1978 he was vice-president of Amax Exploration.
A number of Hansuld’s colleagues say the subject of a spinoff exploration company made and based in Canada was a pet project of his which was often discussed during flights into the Yukon and at Amax’s Toronto offices.
But permission wasn’t granted until a metals slump during the early 1980s left Amax, one of the world’s leading molybdenum producers, unable to support its Canadian exploration arm in the style to which it had become accustomed. At that point Hansuld not only had a concept in mind, he thought he had found a way to finance the new spinoff company.
Having managed his late father’s stock portfolio while studying at university and dabbled in things like multiple unit residential buildings, he knew a thing or two about the world of tax shelters.
Intrigued by a flow-through offering by Numac Oil and Gas, he approached a number of brokerage houses including Richardson Greenshields which eventually underwrote Canada’s first major flow- through financing — a $29- million deal comprising flow- through and ordinary shares. But the deal never went through.
“We are the only company other than Ford to sell out an entire issue and then have to pull it,” Hansuld told a group of 300 first- and second- year brokers recently.
But if Canamax failed to get off the ground at the first attempt, it found its feet very quickly.
Less than four years after the company was formed, its first gold mine — the Bell Creek project at Timmins, Ont. — was in production. Commercial operations at Bell Creek, where Canamax is now the sole owner, got under way in January, 1987. Next came the Ketza River joint venture at Ross River, Y.T., a joint venture with Pacific Trans-Ocean Resources, which poured its first gold bar in April, 1988.
Two months later, Canamax started custom milling ore from the small Matheson project near Kirkland Lake, Ont. The wrappings were taken off mine number four when gold was poured from the Kremzar project near Wawa, Ont., in late September. Kremzar is now in the tune-up stage with full production expected to be reached in a few weeks.
Although the new operations will churn out 50,000 oz gold in 1988, Hansuld is finding, as most successful explorers do, that new mines don’t necessarily run like feasibility studies say they should. Cost overruns and a serious reserve miscalculation at the Ketza River mine put Canamax’s partner on the brink of bankruptcy before Belmoral stepped in. As the new owner, Belmoral is now under pressure to prove up more reserves to keep the mine going longer than the 2 years that current reserves will support.
At the Matheson mine, which hasn’t yet reached the stage of commercial production, the company is attempting to access a high grade lower shoot which could make the project a year-round gold producer.
But industry sources say Hansuld has been able to attract a capable operator in the shape of Jim Smith, who spent 12 years as manager of Noranda Inc.’s Goldstream copper mine and that the company will eventually realize its potential.
With the emphasis turning to promising Lochalsh and Goudreau properties near Kremzar, few expect Hansuld to rest on his laurels. Instead they say he will take the same direct approach to turning his emerging company into a mid-sized gold producer with a strong balance sheet.