The new president and CEO of Sabina Gold & Silver Corp. talks about a major project for B.C.'s economy and the myriad challenges of working in mining.
Rob Pease helped usher in B.C.’s first new mine in over a decade: the Mount Milligan gold-copper project now under construction northwest of Prince George. He scooped up the site in 2006 during the breakup of Placer Dome – where he’d worked for the majority of his 30-year career – and founded Terrane Metals Corp. to develop the property. He sold Terrane for $700 million in 2010 and quickly became an adviser for Richfield Ventures Corp. That sold for $500 million in June. It’s no wonder mining watchers are dying to know what he’ll accomplish at Sabina, where he took the reins as president and CEO last November.
For those who may not be mining aficionados, how big a deal is Mount Milligan for the B.C. economy?
This is going to be a major mine that’s going to be there for a long time. It has a predicted 23-year mine life, and we all know that mines tend to be around a bit longer than feasibility studies predict. I had the opportunity to tour the construction site in October, and there were 560 people in the construction camp, all making pretty good salaries. And roughly 10 per cent of those are First Nations. There’s another 125, give or take a few, working in engineering in offices in Vancouver. So here’s pushing 700 full-time jobs, right now.
Take me back to 2006. Your old employer Placer Dome is being broken up between Barrick and Goldcorp, but no one seems all that interested in Mount Milligan. What’s going through your mind?
At Placer Dome, Mount Milligan had been under my wing. I could see that this was a pretty good project. I was excited about it. All the Canadian assets were going to Goldcorp, and Goldcorp wasn’t overly excited about Mount Milligan; it wasn’t a good strategic fit for them. So the discussion turned to, “I’m going to be out of work here anyway pretty quickly, so why don’t we see what I can put together?”
How long did that negotiation take?
About a month to get the negotiations done.
You’ve spent many years with this property. Were you ever tempted to say, “Forget selling; I want to develop this mine all the way to the end”?
Yeah, we would have liked to. If we could have come up with a way to finance the project, we would have looked at that very hard. But our analysis was that it was going to be very difficult for Terrane to raise those funds. So I can take the shareholders down that long and torturous route trying to do that. But when you can transact the company at a significant premium with a group that’s fully financed to develop the project, I have to do what makes sense for the shareholders.
Is it your dream to take one of these projects all the way to the end?
Oh yeah. Then you’re into a different realm. The prize is the cash flow. At contemporary copper and gold prices that’s $700 million or $800 million in cash flow a year.
After closing a big deal like the Terrane sale, people might expect you to take a couple of years off, maybe travel the world. But you went right back to work again. Why?
Well, I was thinking about taking it a bit easier, but the asset they had at Richfield was too good to turn down. Of course, after Richfield sold it becomes a little embarrassing. Here I am with two fairly significant company transactions within a year. So the phone’s just ringing and lots of people are putting opportunities in front of me. I’m generally saying, “No, I need to take a breath here.”
What attracted you to Sabina?
I’m on a few boards, but people keep coming to me with ideas and I finally decided that I’ve got to go back to work. I have a tremendous amount of respect for the Sabina management team; they’re the kind of folk you want to work with. They’ve had a lot of exploration success on their projects in Nunavut, and they’re at this stage where they have to transition from an exploration organization into also a development organization. I’ve lived through a lot of development projects, and I think I’m a very good fit for what they needed.
There are so many challenges in mining: the geology, the negotiations with First Nations, the environmental assessments, not to mention investors and financial markets. What’s the hardest part of the job?
That’s what I call the three legs of the stool: the technical work, the permitting and permissions and the financing. They all have to line up. To call one more difficult than another, I’d say the permitting is where there’s less certainty. You can have a good project but it can seem to get stuck in a never-ending loop of permitting. It can be very frustrating.
But you do also find it rewarding. With Mount Milligan, so many people from Prince George and the region, either when they bump into me or send me emails, tell me they’re so happy the mine’s going forward and there’s jobs being created. I remember my first time going up there and how depressed that part of the world was. It was in a terrible, terrible state. Forestry was down and those communities were in pretty tough shape. To see the mine actually happening and under construction, it’s hugely rewarding.