XL: Welcome to the Explorers' League.
Ron: Well, thank you very much.
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...
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's new company, Renaissance Gold Inc., began trading on the TSX-Venture on November 10 under the symbol REN, shares of which we acquired when Fronteer Gold (T.FRG) bought AuEx. Ron's team has 24 exploration projects in Nevada, Utah, Argentina, and Spain. And they've hit the ground running, signing Newmont (NEM) to work on their Wildcat gold exploration property in Utah, and Rose Gold (a subsidiary of Navaho Gold in Brisbane, Australia) on the Rose Mine silver/gold exploration property in Nevada. And partner Golden Dory Resources (V.GDR) has started drilling at the Reef project in Nevada.
AuEx Ventures (T.XAU) received a buyout proposal from Fronteer Gold (TSX & NYSE: FRG) which, if approved, will give XAU shareholders a 50% premium to the stock's average price in August, plus $0.66 in cash, and half a share in a new exploration company headed by Explorers' League honoree Ron Parratt… a true sweetheart deal.
We talked to Ron about the motivation behind the arrangement, the status of the deal, and his plans with the new company…
Jeff Clark: First, Ron, congratulations on the plan of arrangement with Fronteer.
Ron Parratt: Thanks a lot, Jeff. It's an exciting deal for us. We're all quite pleased with it, and are looking forward to getting it done and moving on.
The hits keep coming at Long Canyon for AuEx Ventures (T.XAU): one hole intersected 9.2 g/t gold over 44.1 meters, including 13.9 g/t over 24.8 meters. Other hits include 5.9 g/t gold over 41.7 meters, and 7.7 g/t gold over 20.2 meters, with the latter hole ending in mineralization. All intercepts continue to be classic, oxidized (cheaper to process) Carlin-style oxidized gold mineralization. Three core and two reverse circulation rigs continue drilling the northeast section of the deposit.
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.