WHO’S WHO » GOLD
Output is at an all-time high, exploration spending is at its highest level since records began and the gold price in Aussie dollars has never looked better
Beament has taken Northern Star from 1 cent to A$11.74. “I just love mining. I just loved it from day one. Things change on a daily basis”
Michael Nossal bought the Las Bambas copper mine for China for $7bn and now he is looking for further a, eyeing low-grade assets with scale
Unique in gold for only buying assets at market lows, and then buying aggressively, business schools in the future will use Bill Beament as a case study.
Paying workers per tonne produced, he built an underground contracting business in Perth, ASX-listed Northern Star, which bought the Paulsens gold mine in Australia. Beament squeezed costs, upped output, drilled-out the mine life and was soon paying dividends. “We don't get tied down in long pre-shift meetings,” he says. “There's no rocket-science behind it.”
When gold tanked in 2013, cash flow at Barrick and Newmont went into reverse and both companies put their Australian assets up for sale. Beament was the only bidder, lifting Northern Star's output sixfold in three months. With 20m ounces of gold in the ground, he has now pushed the company to the point that it is “mining to margin”, flexing deposits with the dollar and the gold price, producing 900,000 ounces per annum at margins of 50 per cent, spewing-out cash flow like a conveyer belt. “That's the beauty of underground, selective, high-grade mining. It's not like an open-pit where you're stuck in a big shelf. We can adjust our fleets very quickly.”
Beament has also made his first foray outside Western Australia, paying $260m for the Pogo gold mine in Alaska. With cash and zero debt, shares have gone from 1 cent to A$13.30 and the market cap is A$8.5bn ($6bn). Which metrics does Beament rely on? Exploration spending versus deal costs per ounce. “We are adding mineable ounces with a $500 to $600 an ounce margin for $30 to $50 an ounce spend,” he has told The Sydney Morning Herald. “That return on capital is stunning.”
“I get more kicks out of our daily reports
coming in and seeing how many metres we’ve developed, how many tonnes we’ve broken, how much gold we’ve poured and all that sort of stuff. That to me is more enjoyable than looking at share price.”
Still only 43, Beament has a feel for assets that rivals lack. “I just love mining,” he has told the Diggers & Dealers jamboree in Kalgoorlie. “Things change on a daily basis. You dig stuff up, you blow stuff up and you get a final product. If you deliver operationally, everything else looks after itself.” He also has a sharper, cash-focused mindset, using over-subscribed book builds to bolster cash-funded deals. Northern Star is “a business first and a mining company second”, he reminds investors. “The real test of any company’s performance is what happens to its bank account.”
Even on overhead per ounce, half the level of peers, Beament beats the industry on every metric. “It never stops.”
Banks putting deals to Melbourne-based Newcrest walk past the CEO’s office. They also bypass the chairman (who is waiting to retire) and go straight to Mike Nossal. From Rothschilds to Macquarie, Russia to Mozambique, Nossal is well-connected, acting as an in-house banker for acquisitive metal groups: for $7bn he bought Glencore's Las Bambas mine for China's MMG. To shift Newcrest's emphasis away from Papua New Guinea he has pumped over $1bn into deals in Canada, Ecuador and the US. Its Cadia gold mine is currently the biggest in Australia; it might soon be the smallest in Newcrest's portfolio.
Coffee in Sydney, lunch in Rome, then a week in Hawaii. Jet-setter Jake Klein leads Evolution Mining. Having started as an auditor at Macquarie he became CEO of Sino Gold, building a pipeline of projects in China, bulking-up its market cap to $2.2bn. Behind his languid demeanour, Klein is fiercely competitive: anything Northern Star's Bill Beament bids for, Klein bids for first. At Evolution, he has bought the Cowal mine off Barrick Gold and Ernest Henry off Glencore. There is a “vacuum of capital” in the mining industry, he tells The Sydney Morning Herald; consolidating assets is the best way to be “globally relevant.”
Sitting in the deepest chair in the darkest backroom of the gold industry of Australia in a loud blazer jacket, few have more clout than James Askew. Raising capital, finding deals, fixing-up troubled assets, Askew has put his heft behind two of Australia's most outward-looking companies, Evolution Mining and OceanaGold, which Askew joined as chairman 12 years ago, pushing the company into the Philippines and New Zealand. Now 70, “Jim” continues to take on unpalatable boardroom roles. Out in the bush, even the thorniest of problems can be buried by deals negotiated in Melbourne and Sydney.