205 (29.11.18)


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CONTENTS

“Munch”: Banks Eye $230bn of Mining Deals

Lifting ideas from the fast food industry, bankers have a plan that could eat $230bn of mining assets for breakfast

24 Hours in China

A daily snapshot of how life has changed in the 20 years since China was invited to join the World Trade Organisation

20 Critical Trade Routes

Used in cars exhausts and hydrogen fuel cells, platinum production is shifting to South Africa’s Limpopo province, but there is only one smelter


Ecuador, Richard Williams, Barrick’s gold (Joshua Kellogg, Barrick)

CHRISTIAN KARGL-SIMARD

Mapping Ecuador’s Gold-Copper Riches

Helicopters funded by the mining industry are buzzing over Ecuador’s jungle

Helicopters funded by the mining industry are tackling low clouds, stormy weather and frequent equipment failure in the quest to make the next big copper discovery. Flying low over Ecuador’s jungle, companies from Brisbane to Toronto, including Adventus, SolGold and Fortescue, are all crisscrossing the airways, spending millions of dollars on surveys aimed at uncovering billions of dollars of metal. “We'll see new discoveries next year,” says Christian Kargl-Simard, chief executive of copper explorer Adventus, which is flying choppers over its licenses in the country. “In Ecuador you can still walk in valleys and find mineralised outcrop that nobody's ever walked on. That's the opportunity.” Having recently made a large discovery in Brazil, London-based Anglo American has also joined the hunt, budgeting $57m for a joint-venture and funding its own surveys, looking for promising targets. Adventus, which has a joint-venture with local player Fredy Salazar, one of Ecuador's most prolific explorers, has already started drilling its Curipamba project, hitting 10 per cent copper equivalent over 20 metres, pulling in backers including streaming group Wheaton Precious. “We're now surrounded by Anglo American, Codelco and SolGold,” Kargl-Simard says. “The district is pretty special.” Having been off-limits for the mining industry for many years, investors are now piling into Ecuador, betting that the world's richest copper orebodies in Chile and Peru extend north along the Andes. After a $1bn investment by Canada’s Lundin Gold, the government has softened its tax code and in the rush since, the world's largest mining companies, including BHP, Newcrest and Hancock Prospecting have committed another $600m. “I think you'll see these major investments bear fruit,” says Kargl-Simard, who is 34. A former metallurgical engineer, he worked for 10 years in banking in Toronto, advising on royalty deals, listing Adventus last February. Less than two years in and he has an office with a ping pong table above the Toronto Stock Exchange, $11m in cash in the company and 100 people on the ground in Ecuador. Having listed at 50 cents, shares in Adventus have almost doubled. “The rocks talk,” Kargl-Simard says. “Rocks are the most important part of the business and Ecuador is one of the last frontiers in mining.” Within 18 months, the country will have it first two mines in production. “Then you can truly say Ecuador's a mining country.”


RICHARD WILLIAMS

Back to the Barracks

“Barrick has a vision. But three years ago we were going bust.”

Less than a month into Barrick Gold's $18bn merger with Randgold and some of Barrick's key staff are leaving, as Randgold's CEO Mark Bristow takes control of the combined group. First to dive out of the aeroplane was Richard Williams, a level-headed former colonel in Britain's Special Air Service, who first joined Barrick in 2014 as chief of staff, with no mining experience. To investors he was best known for jumping in and out of helicopters on Barrick's blog, but at mines he worked to implement a zero-failure mindset and was quickly promoted to chief operating officer. “Barrick has a vision. It has an important vision. But three years ago we were going bust. We had $15bn of debt, we'd been on a 14-year gold up-run and our margins didn't get any bigger on the way up,” he told an IT hakathon organised by Barrick in 2017. “We have remarkable orebodies. What we have at Cortez and Goldstrike is a 100-year future, if we can innovate it. It's a 30-year future if we just mine like we're doing now.” Williams was charged by chairman John Thornton with making Barrick profitable at prices of $800 an ounce, a seemingly impossible task, but his most pressing file was settling an unresolved $190bn tax dispute in Tanzania, and after nearly a year of negotiations, Williams has now left, Barrick told Bloomberg by text message. His replacement is Willem Jacobs, one of Bristow's key insiders, who knows his way round Kinshasa and can claim the credit for the smooth-running of Randgold's giant Kibali gold mine in the DRC. “It is very hard for big companies to do what we have done here.”