 | Bio |
A firm confidence in ultimate success is one of the attributes of any serially successful individual-in any field of business and especially in mineral exploration.
In his long career, Ron Parratt has led the discovery of three large deposits, and today he believes he can do it again.
Ron grooved with geology before he had facial hair. He's told us that it gave him a sense of connection. It was always fascinating and fun. He gave chemical engineering a go at his alma mater, Purdue University, but found that it lacked excitement, so he decided to follow his heart. Ron completed his undergrad and grad degrees at Purdue in his beloved fields of geochemistry and economic geology. Following his passion turned out to be the right move. Since then, he has quarterbacked the discovery of more than 20 million ounces of gold in Nevada.
Before sitting down for our interview with Ron, we asked him what qualities were needed most for a successful explorer. He responded that an explorer should be field-oriented, be able to see the obvious and be opportunistic. He should have simple ideas and the stomach to test them.
Ron began formulating a method of exploration while in the employ of Southern Pacific Land Company (SPL). He was drawn to SPL by the incalculable opportunities he saw in the company's millions of acres of Nevada land, and in 1978 he began his employment with SPL by opening their exploration office in Reno. The company's business model at the time was to lease its properties out for exploration and retain a royalty interest in any deposits that were found. Ron saw this strategy as low risk but low return and sold SPL on a more active, moderate-risk/higher-return approach. Stop leasing, start joint venturing and explore the company's precious metals prospects.
Within 3 years, SPL's Reno office attracted the attention of Santa Fe Mining, another railroad-dominated conglomerate. Santa Fe had large acreage in New Mexico and Arizona and was looking to expand into Nevada. By 1983 the two companies had parallel business units exploring in earnest throughout the state. It didn't take them long to notice that they were a good corporate match, and the companies merged.
Santa Fe had broader interests and greater resources to challenge the young and ambitious geologist, whom they named northwest office manager for the merged company. Encouraged by Santa Fe's president and let loose with a significantly larger exploration budget, Ron built and managed a fifteen-strong band of geos and admin staff to achieve previously unimagined growth. Over 12 years, they discovered Rabbit Creek (10 million ounces), Lone Tree (5 million ounces) and Trenton Canyon gold deposits (1 million ounces) and completed a strategic JV with U.S. Borax that became the Trinity Silver deposit (10 million ounces Ag).
Ron wasn't done. His swan song for Santa Fe was to shepherd the deposits at the Twin Creeks, Mule Canyon and Valmy from resource to reserve.
By the time Ron decided to move on, Santa Fe's NW office had found over 15 million ounces of gold reserves, moving Santa Fe into the top tier of North American gold mining companies. In 1993 Ron was invited to manage the consolidation of the U.S. exploration staffs of Gold Fields Mining Corp and Santa Fe, following the completion of the Hansen PLC/Santa Fe Asset Exchange. This consolidation led to the Twin Creeks mine, brought the Mesquite deposit to Santa Fe's portfolio and added the resources needed to bring the company public. A few years later, Ron joined the Executive Due Diligence team that evaluated the Homestake and Newmont offers to acquire Santa Fe via merger in 1996 and 1997. Newmont prevailed in the merger, but Homestake lured Ron away from Newmont, appointing him exploration manager for their North American interests. During his near 5-year stint with Homestake, already one of the world's largest gold producers, Ron led Homestake's participation, via joint venture, in the acquisition and substantial expansion of the Gold Hill gold deposit (2 million ounces) 5 miles north of the Round Mountain gold mine.
As you will often find in the careers of successful executives, Ron decided it was time for a mid-career sabbatical. After the completion of the 4th merger of his career-the Barrick/ Homestake deal-he decided to take some time off to ponder the meaning of life. It didn't take him long-two months to be exact-to realize that he missed the cosmic easter egg hunt that is mineral exploration.
We asked Ron what he looked for in a business partner. His answer: the person with the greatest ability and the most passion for what he does. Enter Richard Bedell, a Homestake colleague widely respected in the industry. Ron and Richard formed a private company in May of 2002, ultimately organizing a second private interest, AuEx Inc., in January of 2003. Two and one half years later, AuEx went public.
Still a start-up and barely four months old as a public vehicle, AuEx Ventures announced its first discovery on the company's Pequop project at the Long Canyon target. When you consider that most geologists work and retire without a single deposit to their name, it is a testament to Ron's skill at managing exploration that he hit pay dirt once again and so quickly. Today, after years of lending his considerable intellectual capital to majors, Ron's talents are unleashed in a small public company, AuEx Ventures (XAU). So far, the market has been confirming what we already knew, that Ron Parratt is one of the rare breed who make finding economic deposits look positively easy. At the end of its first day of trading on June 30, 2005, the stock closed at US$0.50. On the day of Ron's official Explorers' League induction, January 24, 2005, AuEx closed at US$1.30, a gain of 160% in just over 6 months. Our Casey Investment Alert subscribers will remember that after the close of market on October 25, 2005, the day AuEx announced its drill results on Long Canyon, we put out the first official buy recommendation made by anyone on the company. AuEx' market closed that day at US $0.52 and those subscribers that acted on our recommendation... well, they're still smiling.
Given Ron Parratt's long track record of success, we expect that the best is still ahead for AuEx investors-including members of the Explorers' League. It's still very early in the game. Over the years, many senior people in the mining industry have put their faith in Ron's remarkable abilities, and their trust has been repaid handsomely. The same should prove true for AuEx shareholders.
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| Interview |
XL: You've had quite a career, most of it with the big mining houses. How does it feel to be running your own exploration company for a change?
Ron: Initially, out of the box, it was a little scary, a little different, but as time goes on it's more and more fun, and I'm looking forward to more..
as a little scary, a little different, but as time goes on it's more and more fun, and I'm looking forward to more..
XL: Many in the junior exploration field are fond of trash-talking the big companies, the rub being they are inept at exploration and often let great projects go fallow amid internal politics and shifts in management strategy. What would you say to that?
Ron: I think it's true that smaller companies are inherently more efficient with the dollars they have. Having worked with large companies a long time, I think it's pretty clearly the case. They are quite effective, however, in district projects when they acquire several deposits and work on them quite hard. I think they do a great job at that, and I think that's their strength. But perhaps early-stage exploration is something they don't do as well
XL: In preparing for this interview, we learned that you became interested in geology at a young age. How young, and what got you started? Did you live in an area with interesting geology?
Ron: I was in high school, probably a freshman or a sophomore, when I had a class in earth sciences. I was fascinated by fossils, rocks, archaeology... all those kinds of things. The area I grew up in-the Midwest-wasn't rich in good rock exposures, but that didn't seem to matter. I just found it to be a very intriguing kind of thing.
XL: Right after graduating from Purdue, you went to work for Southern Pacific, setting up their Reno office. How old were you?
Ron: After graduating from Purdue I went to work for an industrial minerals company exploring for different commodities-things like phosphate rocks, sodium carbonate, borates, things like that. I left that company after 7 years and went to work with Southern Pacific in San Francisco when I was 29. After 2 years I was promoted and moved to Reno to open an exploration office... at that point I was 31.
XL: What attracted you to Nevada?
Ron: Well, first and foremost, it was a great place to explore for metals. The company had a giant land base in that area-gold was booming-and Nevada was a great place to explore for gold. I saw it as the land of opportunity.
XL: Tell us about your first discovery. How did it come about?
Ron: I think the first discovery of merit-I was involved in a few small things along the way-would have been the Rabbit Creek deposit. That came about, I think, from recognizing an opportunity in the Southern Pacific land position. As I have mentioned, they had a large land base. After the Chimney Creek discovery, we looked at that land base and identified a parcel a couple of miles away that appeared to be potentially prospective.
We did what work we could-aerial photography-trying to identify structural controls that might be identifiable at Chimney Creek that could be projected into the area where we owned property. In fact, we did see some things that were quite interesting... that was what guided our initial drilling. We started to drill, had some encouragement-mostly anomalous geochemistry-but it was after persisting that we had some pretty interesting drill holes. That would have been in the fall, I believe, of 1987.
It was really quite an exciting thing because we were a fledgling gold company trying to establish ourselves in Nevada in those years, and we had an awful lot of interest in our company and also in the parent company. We were owned by Santa Fe Southern Pacific at that point, and during one visit by Dick Zitting (then president of the company) when he and I were standing on the rim of the pit as the pre-strip was underway - excavating through 400+ feet of barren material to reach the ore deposit-Dick looked at the hole and looked over at me and he said "Ron, I sure hope you're right... because at this point we can't move the hole!"
The company would have expended somewhere between 15 to 20 million dollars on the pre-stripping of the pit at that point, the expenditure having been made on the basis of a lot of drilling. When we started exploring on the Rabbit Creek property, we had no outcrop, so we based our ideas on air photo interpretation and some lineaments that we were able to identify, as I mentioned earlier. We drilled initially based on those ideas, proceeding blindly through alluvial material. It was the extensive drill data we had developed and our geologic modeling to define the mineralization that allowed the company to commit to the dollars to dig the big hole.
XL: What was your opinion on the potential size of the deposit at that point?
Ron: We knew we had well in excess of 2 million ounces defined. There were just over six hundred thousand ounces of relatively high-grade oxide ore that was the target of the pit we were digging and another 1.5 million ounces of defined sulphide material. We certainly thought there would be still more.
XL: How much gold has been found and mined out of this deposit?
Ron: I don't exactly know. I left Newmont in May of 1997, so there's been now plus 8 years of mining. They've produced at least a half million to 700,000 ounces a year since then, so it would have to be something approaching 7 or 8 million ounces that have been put into bars. They have, I'm sure, a few million ounces of reserves left. What you mine, of course, are reserve ounces, and those tons are processed. You don't recover all of the gold-you'll recover between 87% to 90% of it... in other words, if you mine 10 million ounces of reserves, you may end up recovering 8 or 9 million ounces in bars. I'm sure that by now that there have been in excess of 10 million in reserve ounces identified from that property...what is left I can't be sure.
Once you get into a big system like that, it takes on a life of its own. A lot of drilling gets done. Carlin-type systems are very good in that regard-they are not commonly just one small occurrence. They commonly occur almost in families... where you find one deposit, you might find another, and that is exactly what happened at Rabbit Creek-after we found the first deposit, we found others.
XL: How long after you opened the Reno office did that discovery happen?
Ron: Oh, I had been in Reno about 7 years when that discovery was made. Just as an aside here... the Trinity Silver property came about through a joint venture that I had been involved with earlier, and there had been earlier small projects that were nowhere near as significant as the Rabbit Creek deposit that I was involved with early on...two properties that became mines and the Trinity Silver deposit, which became a mine for US Borax. Those were all fairly small deposits relative to Rabbit Creek.
XL: Altogether, how many economic deposits have you been involved with?
Ron: Well... there were the four I just outlined and Lone Tree-that came along a little bit later-Trenton Canyon... hopefully a new mine at Gold Hill for Barrick and Kinross... and let's see what happens at Pequop... we'll just have to wait and see!
XL: Adding up to over 20 million ounces, is that right?
Ron: I'm sure that if you inventoried all the ounces that were drill delineated, you could probably reach that number. I'm not sure how many of those were economic ounces-certainly in the 15-million-ounce range, especially between Twin Creeks and Lone Tree.
XL: Pretty Impressive. Of all the deposits, which one are you proudest of?
Ron: Oh gosh...That's really hard to say... I think the one that was the most fun was Lone Tree. It was a lot of fun to do... it was over with pretty quick because we had the geology figured out fairly early, and it allowed us to go in and conduct the delineation drilling and the condemnation drilling really all at one time. We were confident that it was economic. The company supported us to really run with it and get everything done quickly. It was fun!
XL: Sounds like it... How do you do it? Clearly, you understand Nevada geology. Is that the key? Or are there certain formations that you particularly look for with that geology?
Ron: Well, certainly understanding or at least having some knowledge about the geology is important. I think that whenever you start to explore a property, you need to have an idea in mind... something that you're looking for... and the drilling you do is really to test that idea. Most commonly you are wrong. It is a very humbling business, but every once in a while you are right. And sometimes you are only right with regard to the geology, and there may not be any gold. Sometimes, and very rarely, you get lucky on both counts, as we did at Lone Tree and Rabbit Creek.
Certain formations, geologic formations, are of interest. Some have been found to regularly host gold mineralization-finding a target that can host that mineralization-well, that's a leg up. You have to be creative with your ideas... come up with ideas and not be bashful about tabling ideas for consideration and then, as we did in those days, have the support of a company that believes in providing money for drilling and testing those ideas.
XL: Which brings us to your latest discovery, Long Canyon. Tell us what attracted you to that project? When did you pick it up?
Ron: I first became aware of the property in 2000 when Pittston Nevada Gold Company approached us about having a look at it-they were going out of business-and they were looking for a joint venture partner. Their exploration manager had worked for me at Santa Fe for many years, and I had found him to be a bright guy. He rated it a very attractive property. He described it to me, and I liked what he was saying, so I went up to take a look at it. I was still at Homestake at that point in 2000, and the price of gold wasn't very encouraging.
Homestake's budget was not too strong, and it was difficult to put together a deal, and so I passed on it... but I didn't forget it! A couple of years later, after I left Homestake (after the Barrick acquisition), I found Pittston Nevada's one remaining person in Reno and I approached him. Richard Bedell and I had just started a company together-he liked our story-and we ended up working out a share deal whereby we basically bought Pittston Nevada Gold Company for shares in what would become a public company down the road... principally just to get that asset.
XL: Let's talk about the discovery holes... What did the mineralization look like?
Ron: Long Canyon was just an outstanding target based on surface evaluation, soils, geochemistry, rock chip sampling, a very large anomaly with values that any explorationist would get excited about. And the geologists at Pittston were excited at that point. They drilled 7 holes in testing the anomaly in 2000 and surprisingly, they didn't find a whole lot. They were pretty disappointed with the results-they had one hole with an interesting intercept, but it wasn't a barn burner by any means. So it didn't cause enough excitement to get more money from management before they were all laid off. When we revisited the property a couple of years ago and had a look at the area where the anomaly was located, it appeared to me and Richard that there was something else going on. We developed an idea that was consistent with the observations we made in the field and with the drill results from Pittston's work. We came up with a different idea that we used to target our holes-basically drilled in a different direction. Many of the holes encountered much better mineralization than the earlier Pittston holes-quite high grade, oxide, Carlin-style mineralization with really nice numbers. Good... reddish... oxidized... limestone.
XL: Pretty exciting, and certainly suggestive you might be on to a significant system. In fact, some people think you may have found a new district. How is it possible that this area had been overlooked by explorers until you came along?
Ron: Remember this mineralization was found in 1994, which, in a sense, was a little bit late in what was the latest exploration boom. It was done by a private company that came to Nevada with ideas-they did very good work, they found the mineralization. They were private, and because they were private they really didn't talk about it too much, so it didn't become widely known... and as well, there was a land exchange agreement pending during that time, on some of the adjacent property, and they didn't want to advertise their success and attract competition to the area.
XL: Is Nevada pretty well explored?
Ron: I think there still is ample opportunity in Nevada. Certainly, it's been well explored. There have been several phases of active exploration in Nevada from the mid- to late 1800s, during the Depression and after World War II, but I think it's important to recognize that Nevada is presently in the middle of the largest boom in gold mining in the state's history... ever-even after a century plus of exploration in Nevada. Even after all this activity and a century of exploration, more gold is being produced in Nevada today, by far, than at any other time in its history. I think that speaks pretty well of the endowment and of the opportunities that are still here in front of us.
XL: AuEx is your first public company. You have a partner, Richard Bedell. Is it his first public company as well? Tell us about him, how do you divide the responsibilities?
Ron: It is the first public company for both of us. Pulling the company together was really a team effort right from the start. When we decided to do this, we decided together. And when we finally got to the point of naming a president, Richard was gracious... I was named president, and he was named vice president-but it's really been a team effort. I think we share quite well in the responsibilities. Importantly, we have complementary skill sets-I am longer in experience in Nevada than Richard by a little bit, but he has high-end technical skills that I can't even think of matching-working with remote sensing imagery, spatial modeling, ore deposit vectoring-all things that I hope as time goes on will continue to give us a bit of an edge over similarly sized companies.
XL: It would seem obvious that, having made a discovery right out of the box, you'll be focusing on it for awhile. But does your business model envision a more diversified portfolio of projects? Are you contemplating any joint ventures, or are you trying to go it alone on Long Canyon?
Ron: With regards to Long Canyon, we'll do what makes most sense for our shareholders. Exploration is a risky business-I think the joint venture business model is the appropriate one. Assuming that we can come up with the right agreement, we'll probably do that. I don't want to bet the company on any one project. I want a broad portfolio of properties in front of us with other people involved as our partners helping to carry the costs. I know that many times what you think is the best project turns out to be the biggest disappointment, and sometimes the one that doesn't look quite so good gives you the greatest joy. So you just need to have a broad portfolio, if you will, of exploration plays in front of you... much as you would investing in junior companies. You wouldn't want to bet the farm on a single junior company. You are going to want to invest in maybe a dozen-and we want to do the same thing with gold projects.
XL: Some Explorers' League members may be familiar with the story, but soon after you announced the discovery, a title dispute arose. While I know that things are still being resolved, and so you'll be hesitant to comment on the specifics, as I understand that you had made a comprehensive title search and had received assurances that there were no title issues.
Ron: That is correct. We ourselves reviewed Pittston's land records and interviewed the former Land person with Pittston. We looked at the BLM records, but obviously we are not title lawyers, so we did not rely just on our own work. We hired a title attorney in Reno who did more work for us. He prepared a title report, and quite simply-as it can happen-he missed a reservation in a particular deed that indicated that minerals had been severed on that parcel of interest... he just missed it.
XL: It is interesting to note that, even though the title dispute covers some of the discovery holes that got everyone's attention, your stock didn't get clobbered. Why is that, do you think?
Ron: The fact is that of the seven holes we drilled, the two best were on Pittston's property. However, when you look at our geologic data-soil chemistry, rock chip samples-there still is a large part of this anomaly, if you will, that is on our ground and that has not yet been tested. I think we've really worked hard to try to convey to analysts and to our investors that they shouldn't get overly concerned at this point, because we still see a lot of upside on the balance of our property... there is very good exploration upside still, and of course we do hope that we are able to put a deal together to keep the property unified as well. I think the fact that our stock didn't go down indicates that people believe our story and are going to work with us.
XL: How would you term the progress you are making on resolving things?
Ron: Well, I think that we are making good progress. Discussions are going very amicably-the people we are dealing with are well known to Richard and me, and the management of the company are people we've had dealings with in the past... not that that guarantees anything, but they are reasonable people. If we can arrive at terms that are fair for our shareholders and the terms of a deal that makes sense for our company, then we'll certainly consider doing it.
XL: Do you have to solve the title issue to move forward with Long Canyon? What are your plans for the property?
Ron: We certainly do not. We have good support for independent action-there is still a lot of opportunity on our ground. We plan to go ahead with further drilling in early summer-we have permitting under way-and whether or not we have an agreement with New West, we plan to get exploration on our property going. We think good drill data on our property will only enhance our overall position.
XL: Do you plan spending the rest of your career in Nevada, or will other areas of the world get your attention?
Ron: Nevada's been very good to me. I've been lucky to be in the right place with the right company at the right time. I've been very, very fortunate in that regard. I have worked in other parts of the world over the last 20 years. There are other areas that I think have excellent opportunities as well... deposit types that are similar to Nevada that are suitable for exploration... political systems that are reasonably supportive that could allow new opportunities to develop. So we do plan to identify those and work in those countries, but still following our business plan using our skills to identify excellent opportunities, acquire them and see if we can bring in a partner... following the same JV business approach.
XL: Can you give our readers a sneak preview of the countries you have in mind?
Ron: Southern Latin America... Chile and Argentina are two in particular that I like. I have worked in most countries in South America. Brazil's not too bad-southern Brazil. But we can't bite off the whole continent-we're not active all over the U.S. nor in Canada. I think we want to pick our venues fairly carefully. Richard previously worked on projects in Chile and Argentina when we were at Homestake. He has worked outside of the U.S. quite a bit-Africa, Canada and Latin America as well.
XL: At what point do you see AuEx making a move into these areas? What would the timing depend on?
Ron: It likely will be late this fall. It's the middle of the field season down there now... The fall will be starting there in another couple of months, and we won't really be able to get down there now. But once we complete a financing-giving us an adequate treasury to support the activity-we probably will make some plans to go down during the fall and begin assessing the opportunities.
XL: Ron, thank you for joining the Explorers' League. We wish you and your shareholders further success.
Ron: Thank you very much. I hope we continue to have good luck this field season.
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