When Robert A. Quartermain joined Silver Standard as its president, in 1985, its market capitalization was only C$1.5 million. Today, the company’s market cap is literally about a thousand times higher. Not a bad achievement for someone who came from a small town in New Brunswick and started his career with a summer job at the very bottom of his field. That was back in 1976, when Bob helped as an extra hand, cooking food, maintaining motors and boats, drafting, carrying and categorizing rock samples, and even digging latrines.
After completing his Bachelor of Science in geology from the University of New Brunswick, he worked for US Steel and AMAX in mapping and exploration programs. While with them, Bob explored for uranium and gold in Canada’s Northwest Territories (NWT), for uranium in Quebec and Ontario, and for base metals in the Yukon and Maritime provinces.
A feeling that he had to study more to advance his career prompted him to return to school for a Master in Science in mineral exploration from Queen’s University.
In 1981, Bob joined Teck (which later became Teck Cominco) as an assistant mine geologist at the Lamaque gold mine in Quebec, an underground operation. During his last two years at Teck, Bob was the project geologist in-charge of the Hemlo drill program.
In 1985, Bob was appointed president of Silver Standard Resources (T.SSO), which was then a subsidiary of Teck. Unlike many explorers who’ve built company after company, Bob has stayed with SSO for 21 years, building up one company larger than a dozen average mining juniors. Today, SSO has a large cash position (almost C$300 million, not to mention liquid securities and 2 million ounces of silver bullion), no debt, and controls the largest silver resources of any publicly traded silver company in the world.
The morning we interviewed Bob was one of better days in his career: SSO had just announced a 116% increase in its resources at the Pitarrilla project—with La Pitarrilla already being a world-class deposit—and to top it off, an the company also released super-high-grade drill results from the same project. The share price had gone up by more than 7% by the time we met Bob late that morning, adding more than $100 million to SSO’s market capitalization, and it didn’t stop there.
Interview
XL: To start off, please tell us a little bit about your personal background. How did you get interested in rocks? Were you the kind of kid who collected them, or is it something that hit you at university?
RQ: Good question. When I was a kid growing up in New Brunswick, we’d often go down and visit the islands—Grand Manan island, Campobello Island. And there, of course, you have the highest tides. As a result of that, the rocks on the beaches get naturally polished…
XL: Why “of course”? Is there a particular issue with tides there?
XL: Why “of course”? Is there a particular issue with tides there?
RQ: Yes, the highest tides in the world.
XL: Really?
RQ: Yes, the Bay of Fundy has the highest tides in the world. The tide can surge up to 50 feet. So, the beaches get well washed with these tides, flushing in and out, twice a day… and you get really polished rocks. I remember that as a kid I would go and pick such rocks up, and I had a collection of them.
When I graduated from high-school, I decided to go into computer science, because it was an emerging science back in 1972-73. I also took geology as an elective science course. In my third year, although I was enjoying computer science, I was finding it a bit challenging as I am not the best at electronics, which forms the basis for computer science. But I was doing great at my geology courses. One nice thing about geology is that students would go on field trips. We would go out, examine outcrops and bash rocks. Afterwards, we would go have a beer at the pub and discuss the rocks. I hadn’t any drinking experience at that time, so not only did I learn geology, I also acquired a taste for beer.
So one day, in my third year, I was sitting in front of the computer screen, being frustrated and thinking, “Why am I doing this? I really enjoy geology… I was a boy scout… I like camping...” So I went over and switched my major. I had to increase my load, of course, to finish all my required courses on time in my fourth year.
That spring—of ‘76—I applied for a job with the Geological Survey of Canada. I got a reply saying: “Yes, we have a camp in Baker Lake in the Northwest Territories, if you’d like to work there.” I had never traveled far out of New Brunswick, so I went and got a map and saw—wow!—I am going to go way across the country, north of the Arctic Circle, to work at this bush camp for the summer!
And since then, the adventure that is geology continues… as it has right up to today, with the announcement of an exciting new drill hole [at Pitarrilla in Mexico]. It’s an adventure I’ve greatly enjoyed.
XL: That’s a great story. So, we saw the Geological Survey of Canada on your resume—was that just while you were at school, or did you go and work for them after graduating?
RQ: No, that was just that one year. We worked north of Baker Lake… small camp… there were five of us. There were three juniors, who were also students, and two seniors. People talk about “starting at the bottom.” Well, that’s just what I did in the Northwest Territories… I was in charge of the garbage pit and the human waste pit.
XL: Oh, joy!
RQ: And because we were in permafrost… that meant the pits kept melting. I had to keep digging them deeper. So when you talk about shoveling the proverbial ****, that is how I started my career in geology.
XL: Rags to riches, no exaggeration.
RQ: Right. But it was a great time. We’d go on 20 km hikes everyday, collect rocks, and bring them back to map [Bob is referring to the pinpointing of rock sample locations on maps, so that significant assays and other technical information can be followed up upon later, starting at the right place]. We were in an area where there were, you know, grizzly bears around. At that time, there were still Eskimos going out on seal-hunting parties. They spoke no English, so they would come in, have coffee or tea, cookies. They would converse among themselves, then finally one would make a sound and a smile, and off they’d go.
It was a great first experience, working for the Geological Survey. And then after I graduated in 1977, I went to work for Essex Minerals, which was a subsidiary of U.S. Steel Corp. Because I had Northwest Territories experience, they sent me right back up there the next year. I worked in the Dubawnt area. We were looking for uranium, where everyone is now, 20 years later…
XL: Is there anything you saw up there you remember liking that some of the current companies are working on now?
RQ: Not specifically. I know there are companies working up there, but I’m not sure of the specific areas where they are working. I have seen press releases related to properties I remember working on. I think there are opportunities up there, as shown by the diamond discoveries. I never walked over the diamond grounds, but I certainly flew over them, before Chuck Fipke came through in the mid-‘80s. The Northwest Territories are certainly an underexplored area with a lot of mineral opportunities to be discovered.
XL: Any particularly important experiences with Essex?
RQ: I gained a lot of important experience with Essex Minerals. I worked with them in the Territories, in the Yukon in a place called Howards Pass, which was where I learned to recite “The Spell of the Yukon” [a poem by Robert W. Service]. I also worked in New Brunswick and Nova Scotia, explored the Bathurst Camp for massive sulfides, and in Timmins.
By 1979, I was managing my own camp, at both Rumble Lake and Dubawnt Lake. We had to fly all our materials in with Hercules aircraft, then offload them to twin Otters on floats, which was certainly a logistical exercise. Once you got camp established, you had to do all the geological work. And we were in an area of caribou migration, so part way through the summer, we had to take the entire camp and fly it 200 kilometers south. We basically built two camps, one to the south at Dubawnt Lake and the other up north at Rumble Lake. When the caribou started their migration, we’d fly everyone down south out of the way.
XL: Because they didn’t want the animals to see you—no sign of people?
RQ: No sign of people at all. But the caribou didn’t seem to mind. Sometimes they’d migrate early and they’d come right through camp. And the caribou would come in a mass of thousands, leaving a bit of an “aroma” when they had left … but it was a truly incredible sight, watching those large herds of caribou migrate.
That part of geology and that part of my career was a great adventure. But at that time, I also decided I wanted to advance my education. I felt I needed to get a master’s degree in order to go further within a mining organization. I returned to Queens University in Kingston, Ontario, and did my master’s from ‘79 through ‘81.
XL: You’ve done so much in your career. Can you go over some of the highlights for us?
RQ: Sure. After graduating, I decided I wanted to work for a Canadian company and chose Teck, because it was run by the Keevils, who were both good explorationists but also shrewd business individuals. Dr. Keevil, as you know, was a professor at the University of Toronto. Teck gave me a job and I started out working underground. I got some experience at the Lamaque gold mine in Quebec. A year later Teck asked me if I wanted to go to a place called Hemlo in northern Ontario and help out with that project. I went up there and spent three years, basically, managing drilling off the David Bell Mine, part of the Hemlo gold deposit [22 million ounces of gold].
It was there, managing that project, that I got to be known at Teck’s head office. Teck was the major shareholder of a company called Silver Standard—they owned about 32% of it. Alex Ritchie, who was the president of Silver Standard at that time, was retiring. They came to me and said: “You have done a good job at Hemlo. Would you like to come to Vancouver and run Silver Standard?”
At that time, I had never met a lawyer… never met an accountant… never read a balance sheet… didn’t own a suit… But I thought: “My choices are North Bay… or Vancouver.” So I chose Vancouver and moved out here.
The company at that time had two employees, a debt of $225,000 and a market capitalization of around $1.5 million. By being disciplined and focusing on quality exploration, we have been able to turn that into where, today, we’ve got 20 employees and a $1 billion company.
XL: Sorry, back up to Hemlo for a moment. Nature provided what it provided, but the drill program was a success. How much of that was your contribution? Did you pick drill holes?
RQ: Once the deposit at Hemlo had been discovered—the inklings of it—it was a matter of teamwork. We assisted head office in choosing the drill targets. We had several drill rigs there, including two oil-well drill rigs. We drilled deep: in one place 5,000 to 6,000 feet below surface and at another we drilled 8,400 feet from surface. We were using very new technology at the time.
XL: Why the deep drilling?
RQ: Because the down-dip extension of the Hemlo body was believed to extend off the Goliath, Golden Sceptre, Corona properties onto the Interlake and Arctic Red properties to the north. In order to get down to the projected mineralized horizon, you had to drill that deep.
XL: So, was it right, the model?
RQ: The model was right. We did intersect gold mineralization and the productive horizon at depth, but it was much thinner and uneconomic. The crux of the ore body is on the Golden Sceptre, Goliath, Lac and Corona properties.
So, I was a part of the team that chose where to drill holes and when to shut them down. The deposit is quite consistent, so once we got onto drilling it, it was easier to follow along strike and down dip. You have to be able to think in three dimensions and know where to put the holes. Geometrically, it provided a lot of the clues as to where to go next.
I would say what’s been more challenging and where I feel more technical pride is in what we have done here as a group in drilling off our Pitarrilla project in Mexico.
XL: Okay, very good. Let’s talk about Silver Standard and the related companies.
RQ: Silver Standard has been around since 1946. Teck started acquiring shares in Silver Standard in 1969 and eventually worked their position to 32%. That’s when they asked me to come and manage the company.
So, once I started managing Silver Standard effectively, Teck started asking me to manage more of their smaller companies. At one point, I was president of Silver Standard, Mutual Resources, Lord River Gold Mines, Western Copper Holdings [which eventually was renamed Western Silver], Greater Temagami Mines, Goldteck Mines and Golden Knight Resources.
Then we started packaging these companies and merging or selling them. Mutual Resources merged with Golden Knight, which merged with Repadre, which merged with IAMGOLD. Lord River Gold Mines merged with Peruvian Gold Mines, which is now a part the of Quest group. Western Copper became Western Silver and is now part of Glamis/Goldcorp. Now I’m focused entirely on Silver Standard, with a few other smaller companies we manage in this office. Silver Standard’s market cap and activity level demand my singularity of focus.
XL: Is there still a lot of connection with Teck? How much do they own?
RQ: No. Teck sold all of its position years ago, at a lower share price. I know many of the people there, having worked for the organization for many years. I think very highly of Teck Cominco, but there is no connection other than on a personal level.
XL: Walk us through the recent Silver Standard story.
RQ: From 1985 through to 1992, we were doing exploration work, trying to find our niche like all the other junior mining companies. We had a lot of technical successes but weren’t able to discover a project to turn into a real producing opportunity.
During that time period, as a company we went to some very interesting places. I worked in Haiti… I went down there to consult with the United Nations on a project called Grand Bois/Morne Bossa. Eventually, we teamed up with Ross Beaty [Explorers’ League Honoree <>] at Equinox Resources and we were in Haiti for a few years. That was an interesting time. It is the only place where I have witnessed a number of coups, including machine gun fire at close range [sighs]… not to mention other interesting events.
XL: Ever lose any crew?
RQ: No. It was just me traveling there. It was hard to get traction, due to the fact that once you negotiated a deal, there would be another coup and a new group to deal with. And here it is, 20-some odd years later, and those projects are still sitting there undeveloped. Which is unfortunate…
XL: … for the people there.
RQ: Yes. That’s true. We also explored in Russia. Back in 1989, before most other companies, I went on a tour to the Kamchatka Peninsula and looked at the Amythesta gold deposit, and several others that other companies are now working on. We were among the first individuals since the Second World War to visit the gulags up at Magadan, Paladin and Anadyr. Gorbachev was still in power, it was still very much a communist country… certainly different than it is today…
XL: Wait. When you say “gulag,” you really mean gulag? As in, there were still prisoners there?
RQ: Some of these communities were established as gulags after World War II, like Magadan. And now of course, it has expanded into a sizeable city. When you go there, you notice there is quite a mix of individuals. That’s because the Russians shipped prisoners with a wide variety of ethnic backgrounds to Magadan to work as [slave laborers] in mining placer gold deposits in the region for the benefit of the state.
We eventually took on a project in the Magadan region and advanced it through the latter half of the ‘90s. Unfortunately, we found that we couldn’t deal with our Russian partners and pulled out. We lost some money on it and have decided not to go back.
I digress. So, back in the early ‘90s, Silver Standard was trying to find its exploration niche. A conversation became the catalyst. And that conversation was with Rick Rule, who had an idea that came from Jim Blanchard. I was at the Las Vegas Gold Show in 1992. I was walking out a doorway and Rick was heading the other way. And he said: “You know, with the imbalance in the silver market [there has been an imbalance in the silver market since 1989, when supply started falling short of demand]… I was talking with Jim Blanchard, and we were wondering if we raised you a couple of million dollars, would you go and acquire silver projects only—because no one else is doing it?”
XL: So, wait. Silver Standard’s land bank model came from Rick?
RQ: Yes. The silver land bank model came from Rick and Jim. I can’t take credit for that. Initial investors were people like Rick, Jim and of course Doug Casey. We issued three million shares at 78 cents, I believe, and raised two million dollars. At that time, we had about three million shares outstanding, so the market cap of the company was about four million dollars in total. The plan was to acquire silver assets that were uneconomic at four to five dollars per ounce silver, but that would become economical at seven to eight dollars per ounce silver.
At that time, Ross Beaty was a director on the board of Silver Standard. He’d also noticed the same characteristics of the silver market and decided to go and look for silver as well. It was obvious that was a conflict of interest, so Ross left our board and continued his silver activities with Pan American Silver (T.PAA). Initially, we tried to acquire the same projects in Mexico, but he was looking at producing opportunities whereas our strategy was to acquire non-producing opportunities.
The first objective we had was to acquire 500 million ounces of silver in the ground, and of course we did that. Rick, as you would know, doesn’t like exploration, but at some point I told him: “Buying silver projects is getting more expensive. We need to go and explore for them.” And I think the results of the drilling that we announced today…
XL: We haven’t seen today’s press release yet.
RQ: The press release today was very exciting, and very gratifying for the company. The company’s stock was up about 7% before we started this interview.
XL: That’s quite something for a company this size.
RQ: Yes. We completed a resource calculation on our Pitarrilla project last year, using about 13,000 meters of diamond drilling, and 20,000 meters of reverse circ. That gave us 130 million ounces of inferred and 67 million ounces of indicated resources. With today’s announcement, we have increased that to 426 million ounces in all categories. We currently have measured resources of 105 million, indicated resources of 129 million, and inferred of about 192 million ounces of silver.
XL: Where does that put the whole company… you’re up to 1.3 or 1.4 billion?
RQ: Yes, a little over 1.3 billion ounces in all categories. But we also had a very exciting drill intersection. We’ve been drilling off the Breccia Ridge zone. Near surface, we have good silver mineralization, and as we drilled to depth, we started getting more base metals, which is classic for this type of Mexican deposit. In hole 152, we hit 51.5 feet [~16 meters] of almost 50 ounces of silver, and 6.0% lead, 6.9% percent zinc, and about 5.6% copper. Within that, there were two very high-grade zones. One zone was 12 feet wide and ran 76 ounces of silver, 14% copper, and over 10% combined lead and zinc. The other intersection ran 14 feet, with 87 ounces of silver, 30% combined lead/zinc and about 4% copper. The overall intersection this occurred in was about 535 feet thick, averaging 6.7 ounces of silver per ton.
XL: Congratulations.
RQ: Thank you. That’s an example of the great opportunities in exploration. When you take a concept, stay disciplined—for many years through the late ‘90s, being in the silver space was not a great place to be—good things can happen. At some point, the silver price had to get back to reflecting the real cost to mine it. Our attitude was that we wouldn’t take silver out of the ground and dilute our shareholders by mining at a loss. We decided to wait until such time that it made sense. And now of course we are seeing that time. We’re developing our Pirquitas project… and also we’re also enjoying great exploration successes.
XL: So, can you address the production issue? Are you going to sell things off? As you sold Manantial Espejo to Ross at Pan American… Or are you going to become a producer?
RQ: We intend to become a producer. We’ve always been focused on delivering accretive shareholder value. We have been able to do that through exploration, once it got too expensive to buy projects. If you look at silver producers, they trade at two to three times net asset value [NAV]. We trade at perhaps one time NAV—we trade as a call option.
One way for us to unlock additional shareholder value is to go into profitable production. So we are developing larger assets, like the Pirquitas project in Argentina, and moving it towards production. At some point, we can and want to be the “silver standard” in the business. The way to do this is to get a few of our larger projects into production.
In the case of Manantial Espejo, it is a small project for two parties. It was only going to produce 2 million ounces of silver to our account. Pirquitas, in the first couple of years of operation, will produce over 10 million ounces of silver annually. We think that makes it a better project for us to advance for our shareholders. Why are we also focusing on Pitarrilla? Because of its size. We are going to continue to drill off our silver assets and add value.
In cases where we may find more gold or base metals, we’ll try to monetize those. We are doing that right now with a gold property in northwest British Columbia. There are good gold indications at surface and I think it’s better for us to spend a couple of million dollars drilling it, outlining a resource and then selling it.
XL: Is this in Silver Standard?
RQ: Yes. It’s the Snowfield property.
XL: So, speaking of gold, what’s up with Canplats? [Canplats, V.CPQ, is Silver Standard’s sister company focused on gold.]
RQ: Canplats needs a good drill hole. We have lots of good projects in the company, like Yerbabuena and Rodeo. We’ve got a management group that has been able to demonstrate staying power and exploration discipline. We want to use our technical abilities to come up with a solid target that will translate into something of value in terms of mineralization.
But we know that good deposits are few and far between, so it’s a matter of continuing to drill. Sometimes you get good results, and that breathes life to a project. People get enthused, and this enables you to continue to work on it. But if you don’t get positive results, you’ve got to look for something else. It’s the business risk. Historically, if you look at Silver Standard, its share price has been up and down, although we’re certainly on an up-tick right now. In Canplats, it’s the same way. So the focus is to continue to advance the projects and see if there is something that will keep the market interested.
XL: So, also on the gold front, how involved are you in IAMGOLD?
RQ: I am a director of IAMGOLD. We have a lot of topnotch mining executives on the board, largely based in Toronto. My contribution at IAMGOLD is as one of the few technical people—certainly geologists—on the board.
XL: Were you involved in picking Quimsacocha?
RQ: No, that is something that IAMGOLD’s geology team discovered. My main contribution, I guess, is having recognized the potential of the Tarkwa gold orebody in Ghana early on, which became part of Mutual Resources in 1992, eventually making its way into IAMGOLD through mergers. Because of my familiarity with the project, I’ve continued to go on.
XL: Okay, back to Silver Standard, and speaking of technical work, are you still involved in picking drill targets, or do you let the field team do that while you’re up here in Vancouver running the business?
RQ: I spend a lot of time on shareholder relations and one has to manage the company. Between financial statements, Sarbanes-Oxley and regulatory matters, it’s a lot of work.
But when the guys get an intersection down in a project that’s of interest, they may take a photograph and fire it right up to me, and I’ll go and look at the map and see where it’s at. I am always dealing with Kenneth McNaughton, our VP Exploration. I have worked with Ken for over 16 years. We know each other’s technical abilities very well. He knows what our broad mandate is. But in the case of this Pitarrilla drill hole, I looked at where it was plotted and we talked about where we were going to drill the next holes around it. We discussed specific locations. At my core, I am an exploration geologist. I started my job sitting on drills, drilling holes and understanding how mineralization occurs. We have been able to put a good geology group together here, including Ken and Ron Burk, our chief geoscientist. Ron and I worked together at Hemlo. He was a student there and I hired him here at Silver Standard because I knew of his technical and practical experience. The three of us have known each other for a long time and can sit down and discuss geology. So I do get to see the drill targets and sign off on them.
At the San Francisco Gold Show in 2002, I bumped into Perry Durning, whom I have known for many years. Perry is an excellent prospecting geologist with experience in Mexico. I said, “Perry, I’d like to grubstake you [and Bud Hillemeyer] and have you go down to Mexico and look for a bulk silver project for us.” I asked him how much he needed and he said: “We would like $20,000 every two months, and we’ll go down and prospect. We’ll give you ideas, and we will stake them if you like them.” About two months after that, I remember being in early at work… often the fax machine will have overnight assay results and I’d go and check them, because assay results are what it’s about [chuckles]. So, I went to the fax machine and there were some assay results of four to five ounces of silver per ton. I asked Ken where it was from and he said it was from our prospecting venture in central Mexico. And I said, “Well, what about it?” And he said we would send the guys back to do more work. And they did some trenching and the trench values came back at about five ounces a ton. It was open ground, so we staked it. That is how we got Pitarrilla. A $40,000 investment is turning into a world-class deposit.
XL: There has been a bit more money between there and now, but still…
RQ: Well, yes, we’ve now spent millions of dollars in order to explore it. But it all comes from being an exploration geologist. If you want to get out there, you have to hire good-quality people who understand an area, and they have to walk the ground, take their rock hammers and sample. That is one thing that Bud and Perry do. They take their tents, their Coleman stoves and food, and they camp. That’s how you make discoveries.
XL: You must have been heavily into the due diligence process when Silver Standard was in its acquisition phase.
RQ: Totally. Every property up until the last few projects, I’ve personally visited before we acquired it. You want to see what the geology looks like: “Here is the drilling that has been done before. What’s the potential for something economic here?”
A case in point would be Western Copper Holdings which was dividended to Silver Standard shareholders in 1985 and which we managed until a few years ago. We got into Mexico in the early ‘90s. We actually optioned a property that became the San Nicolas project which was on the smaller side. Ken liked it and prospected the area, finding some malachite mineralization on surface some kilometers away. And he said: “You know, there could be a substantial deposit here.” Afterwards, management of Western Copper went to a new group, but Teck drilled what became the San Nicolas massive sulphide deposit. Mineable reserves there are about 65 million tonnes with an average grade of 1.3% copper, 2.0% zinc, 0.53 grams of gold per ton and 32.1 grams of silver per ton.
XL: So, as a geologist, what would you say are your greatest technical accomplishments?
RQ: The problem with being a humble maritimer is that there is no “I” in “team.” You are always working with groups of people, whether it’s the field geologists or people here in this office. We have certainly had some great successes with projects like Pitarrilla… and with the San Luis project that Esperanza Silver (V.EPZ) has. That concept came about when I sat down with Bill Pincus and said: “Bill, lets get together and prospect in Peru, looking for bulk tonnage silver projects.” Other people—
XL: That was your idea? Where did you know Bill from?
RQ: When we bought the Pirquitas project in Argentina after Sunshine went bankrupt, Bill was the last Sunshine employee managing it. I got to know Bill through the process of doing due diligence and realized he was a topnotch geologist. So you know, Rick Rule was talking about—
XL: [Laughter]
RQ: Rick! [laughs] As you know, Rick is everywhere in this business. Rick was talking about a shell he had... The idea was to create the Silver Standard story again, but having a smaller silver company that did more grassroots exploration while we continued to do our acquisitions. So, I put Bill and Rick together and they created Esperanza Silver.
Back to Silver Standard’s partnership with Esperanza; we were not active in Peru, had no experience there, but Bill knows Peru very well. So, I said, “Bill, let’s go and do in Peru what we did in Mexico with Pitarrilla.” And that resulted in the San Luis project. We are about to drill that and it could be a very significant silver-gold project.
XL: So, talk to us about the future a little bit. What’s next for Bob Quartermain?
RQ: Well… I just turned 50, so I have some shelf life left, I hope.
XL: You are actually a young guy in this business.
RQ: [chuckles] I want to continue to grow Silver Standard. It is the largest aspect of my personal asset base. It’s also the thing I like to come here every day and work at. I want to grow Silver Standard into a premier silver-producing company—and with these silver prices, I think that is achievable. We hope to start that with our Pirquitas project, and we could have it up and running in 2008.
After that… well, we have a project portfolio for a very long-life company, one that will continue creating value for shareholders long after I’ve disappeared from here. You have to have that kind of commitment. Often, when metal prices fall off, what do mining companies do? They cut exploration. Even when it was tough, what did we do? We still explored and reviewed new projects—and that got us to where we are now. If you can’t acquire and merge like the larger companies are doing, you have to have that commitment to grassroots exploration. That is how you find mines, mines this expanding global society needs.
You know, over the last 20 years, with low metal prices, we weren’t graduating exploration geologists… which impacts the ability to find new mines. I just went back to my alma mater and made a donation to help invigorate the geology department. When I graduated, there were 13 to 14 kids in my class. In the mid-‘90s, there were two or three.
XL: You sense that’s turning around?
RQ: It’s my sense that it’s turning around. People have to realize that mining impacts everyday life. Whether it’s your pen or your computer, modern life requires metals. Some metals are recycled, but a lot are not. We need to discover new sources. We have to be better at mining. I think the industry is showing more environmental responsibility; we’re trying to do things better than we have done in the past.
A few years ago, I was visiting my niece. She was asking what I did. And I said: “Well, I am in the exploration business.” She asked what that means. I said, “I go out and discover mines.” And she said: “Oh, my teacher tells me that that is a bad thing.” So I answered, “Well, you see the car in the yard? You see the cutlery you eat with? These come from mining. We need mines for our everyday life.”
What I try to do as a geologist—and I love the environment—is to explore the best way that we can. And I think that’s where the industry is going. People are starting to look at mining as something that doesn’t have to have the negative stigma that it has had historically. And to the extent I can help change that by contributing…
XL: That’s very interesting, Bob. You are telling us that part of your personal satisfaction in what you do… is… a contribution to human well-being? Aren’t you supposed to be an evil raper of the earth? Or is it just PR? It sounds as if you really care—you want to make a contribution.
RQ: It’s true. I want us to do our work but have as benign an impact as we can. Look at our projects, like Bowdens in Australia. It’s a low-sulfide system, so when you mine it, it won’t have a large acid mine drainage. If you look at the Shafter project, it’s in limestone, a natural buffer. The water in the mine right now is drinkable. The Diablillos project is another low-sulfide system.
In looking at projects for Silver Standard, I also was looking at the long term. What’s the long-term environmental liability of this project? That often doesn’t show up on the balance sheets for some time, but it will. Reclamation costs can be very onerous. So we avoided projects that had old tailings on them—which can be problematic—or had significant acid mine drainage. So, looking out for the environment also meant that we were looking out for the long-term interests of our shareholders. And that’s not just Bob Quartermain, that’s where the industry is headed…
XL: There are also some slippery characters in our field. How do you deal with an industry where A) you have to deal with other people, some of whom may not have quite the integrity that you do, and B) where people are going to assume the worst of your motives?
RQ: Well, for one thing, you end up choosing partners that you want to be involved with.
XL: So you know Bill Pincus very well and you like him...
RQ: I know Bill Pincus very well.
XL: You like Ken Cai too then? [Silver Standard also has a strategic alliance with Minco Silver, which is run by Dr. Ken Cai and is focused on silver exploration in China.]
RQ: Yes, I like Ken Cai. With Minco Silver, it’s a little different. We are not as involved on a day-to-day basis. Ken Cai came out of Queens University, which I also attended. He worked with Brian McKenzie, who was a professor of mineral economics when I was there. We felt that investment in China, indirectly, through Ken and Minco Silver, was the way to go.
Back to Silver Standard going forward, you know, you always want to return to “Best Practices.” Nowadays, when you’re looking at financing projects, you have to be looking at the broader social license aspects. They are a fact of life. So, when you’re going to have an impact in someone’s community, you do want to do it in a positive way. Much the same way as you would want anyone else to behave if they were going to have an impact on your own community.
I think it goes back to being brought up as a small-town, Maritime boy who was taught good manners, told to be polite and to respect others. I try to carry that out in my business and in the standards under which we operate at Silver Standard.
XL: Bob, is there anything else you want say?
RQ: To Doug’s readers who are shareholders in the company, I’d like to say that we, as a management group (some of whom have worked together for over 20 years now) have been able to take Silver Standard from a few-million-dollar company to where it is worth over a billion and a half dollars today, consistently creating shareholder value along the way. And we, like all our shareholders, have bought our shares in the open market… or by exercise of stock options at market prices. We’re in a very interesting transition time of going from an exploration company to a mining company. Yet at the same time, I want to continue to add additional value for the shareholders through exploration.
I am committed to doing that for the foreseeable future. It all goes back to that idea Rick Rule, Jim Blanchard and, in fact, Doug Casey, had 12 to 13 years ago. We have delivered on that and we as a management group will continue to deliver on it and make this company the silver standard in the business.
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