204 (04.11.18)


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CONTENTS

Fizz-Pop-Bang: Inside the World Gold Council

How the world’s largest gold companies clubbed together to open-up India and China: “we did a lot of lobbying”

$2bn Standoff for Centerra Gold

In snowy Kyrgyzstan, a cold, silent standoff has taken hold at one of the world's most valuable gold mines

20 Critical Trade Routes

At an airport in Africa, $130m of gold bars are bagged-up in plastic and stuffed in the hold of an Air France flight to Paris


Pizza in Mayfair and gold from California to the Royal Mint

GREG SMITH

Equinox: Two Gold Mines & Counting

“The travelling kills you; it’s high stress.”

Vancouver-based Equinox Gold made a firm pitch for deal-of-the-year this week, buying the Mesquite gold mine in California off embattled rival New Gold for $158m in cash; the mine churned out over $200m of gold last year and was valued at $368m on New Gold's books. Equinox is led by chairman Ross Beaty (known as “the broken slot machine” for doing so many successful deals) and CEO Christian Milau (known for turning around assets in West Africa), but managing the New Gold transaction was president Greg Smith, an up-and-coming dealmaker who has been pushing up through Vancouver's mining scene by rapidly closing deals. Having trained as an accountant, KPMG's mining practice “sold me on the adventure of flying around the world”, Smith says, and he was soon running copper-gold explorer JDL. Several deals later and seven companies have been folded into what is now Equinox Gold, which is on the cusp of having two mines in production and a market cap of half a billion dollars. Along the way, over dinner in a steakhouse with six pals one evening he co-founded YMP, an association for youngsters in the industry that has expanded into six cities. Working with Vancouver's biggest names, from Ross Beaty and Richard Warke to Sandstorm founder Nolan Watson, Smith seems to have a knack for getting people into one room. “My wife calls it deal-mode; I can't see anything else except getting it done.” Has there ever been a time when the parachute didn't open? “It's hard to convey just how tough mining can be sometimes. The travelling kills you, there's always some calamity, it's high stress, so we almost never get a chance to celebrate.” But more deals are in the pipe: “Ross and the team want to build a major gold company,” says Smith, 42. “That's the path we're on.”


KLAUS ECKHOF

Flipping Assets to Randgold in the D.R.C.

Where did Randgold’s assets come from?

Barrick Gold has spent a decade divesting assets outside the Americas to get its management onto one timezone. It spun-off its African operations in 2010 and sold four Australian gold mines after prices tanked in 2013. But head office is now reversing all that by going into some of Africa's toughest regions, scooping-up Randgold for $6bn in a deal to be voted on by investors this week. So where did the assets underlying Randgold come from? Its two biggest mines are the Loulo complex in Mali and Kibali in the D.R.C., near the border with South Sudan. Accounting for a quarter of Randgold's output and a third of its gold reserves, Kibali was uncovered by geologist Klaus Eckhof, one of Africa's sharpest fixers. Known for pinstripes, bared teeth and a twitchy moustache, Eckhof launched his career juggling gold assets in Australia, landing in the Congo in 2000. He founded Moto Goldmines, putting together concessions and a 12-million ounce resource before flipping the asset to Randgold for $488m after six years. “Where in the world can you do that?” Eckhof told Metals News. “It's one of the easiest places in the world to work.” Running what he describes as a “small tent” operation, Eckhof relies on a network of expat geologists and makes doing business look so frictionless that one righthand man setup on his own, only to find himself sitting outside a minister's office for 18 months. Eckhof instead spends much of the time in Monaco and hasn’t lost his touch. One lithium company he got behind in the D.R.C. went through the roof last year on news of a $400m discovery. Even drill-rig contractors were buying-up stock, until news emerged that Eckhof, who was then chairman, had sold half his shares. “Everyone has personal financial needs,” he told a prying journalist.


CEDRIC MIDDLETON

Highs & Lows of a Gold Mining Broker

“Indochine was with the administrators already by then.”

Mining broker Cedric Middleton first got into the resources game after bumping into one of London's best-known bankers in a nightclub in Verbier (“He was a larger than life fellow”). But even in a bull market, life can be tough in gold, Middleton grumbles over lunch in his favourite pizzeria. He has witnessed a few mining mishaps over his career, including Indochine in Papua New Guinea. Gold was crashing, a fundraising fell through and the project manager died a week after securing a landowner deal. “Indochine was with the administrators already by then,” Middleton says ruefully. But he's also made plenty of clients money, restructuring the convertible debt at Gran Colombia Gold and piling investors into Central Rand: “A fellow called Harry Mason turned up in London looking for some money backed by a very famous Australian prospector, a man by the name of Mark Creasy, Australia's most famous discoverer of gold deposits, and he had a notion that the main reef under the city of Johannesburg still had 30 million ounces of gold left in it. I took them in to see BlackRock and when I was in the cab home I get the fund manager on the phone saying 'Cedders, we'll take the lot.'” This was 2005, the gold price was running and the company's fundraisings quickly spiralled from A$15m to £250m ($325m). “Then some heavy-hitting management wanted to come onboard, some names that escape me. Unfortunately the company has never really, the old-timers took all the gold out, so the original thesis that was backed up by two university professors... chilli oil?” Any tips when it comes to commodities? “Probably uranium, for a long-term play. It's coming from a very low base.”