Explorers' League, Vol. IV; No. 7 - Troon Ventures Reborn

Published: December 27, 2008

Troon Ventures, Reborn

Last month, Troon Ventures (V.TVN) announced the election of three newly appointed directors for the company. While this may sound like business as usual, we soon realized the team assembled was no ordinary group. Along with the five directors reelected, this group, which includes XL-er Catherine McLeod-Seltzer, joins the founders and key players of Canico, Sherwood Copper, Arequipa, and Eurozinc. In line with one of the key mottos of XL, TVN is focusing on the people first.

To get a feel for where the company is going, as well as a discussion on diamonds and gold, we had a tag-team interview with both Catherine and her brother, Bruce McLeod, who was the catalyst behind bringing these successful players together. [Ed. Note: Bruce has an impressive track record of his own, and is knocking on the door to qualifying for XL. He’s CEO of Tenajon Resources, chairman of Sherwood Copper, VP of International Northair Mines, a founder of Stornoway Diamonds, and sits on the boards of Full Metal Minerals and Reunion Gold.]

XL: Congratulations on the new directorship, Catherine. So, is this the McLeod version of All in the Family?

Catherine McLeod-Seltzer: We have always been a very close-knit family with a passion for this industry, so whenever we get a chance to work together, we grab it! Actually, Troon is doing exactly what the Explorers’ League is doing; we follow the best people and taking advantage of the good list of people we’ve worked successfully with over the years. In this case, Bruce is the catalyst of bringing the group together. Troon is a shell company that’s been around since 1935.

XL: The company started that long ago?

Bruce McLeod: Yes. As many of your readers will know, our father was in the business. He outlived all his partners, which meant that by the time he retired, he had a basket of companies he inherited from them. Troon was the last one he had that I was an executive of that was still looking for an opportunity. The idea came that maybe we should focus on the people first, and the asset second. So what we put together was a group of people who are, essentially, friends, but more importantly have a shared philosophy, which is why we connected so well over the years in previous deals and discoveries. We know that your average exploration play – grassroots to first drill hole to resource – is becoming increasingly difficult to finance. And unfortunately in the last six months, it seems like even when you’re successful, the market doesn’t pay much attention to it. So what we’ve done is put together a group of people that have fantastic deal flow. We’re a shell company that doesn’t have a recognized flagship property yet. So, the sole goal at this point is to find and acquire a large development stage project.

XL: I did see two properties listed on the webpage.

Bruce: Those assets, while interesting, are not going to be the focus of the company going forward. They do warrant additional exploration, but you don’t bring a team like this together for a couple of grassroots gold assets in Ontario. We brought this team together to look for something much larger.

And it seems that the market is really paying attention to two types of deposits right now: world class, or very high grade. Both of those are expensive deposits to acquire, so what we attempted to do was put together a team that has the best chance of successfully financing that kind of acquisition once that kind of target is found.

XL: How did this team, the Northair Group, get started?

Catherine: The Northair Group was established by my father in 1966; it’s an umbrella management company, perhaps similar to the Namdo Group with the Lundins, that can share some of the higher costs for the services that are needed by a public company.

Bruce: The whole idea is that in order to get an edge today, it’s best to rely on your own people, and to have that depth of people in your own organization. It’s expensive to have that depth with a single property. So the Northair Group is really an affiliation of companies, much like Hunter-Dickinson, that can share the back office expenses – legal, accounting, etc.

XL: This group has been successful before.

Bruce: Yes, it has. Some of those include the Minto mine at Sherwood, which was the fourth mine that the Northair Group has put into production. And Stornoway Diamonds was born out of two Northair Group companies coming together and then adding the best diamond exploration and development team in the business. So yes, the Northair Group has certainly stood the test of time and has had many previous successes.

XL: Bruce, we hope to someday include you in the Explorers’ League.

Bruce: That would be wonderful.

Catherine: He’s really a rare beast in today’s world; he’s a mining engineer by education, but he started in the industry working underground. So he’s a guy who’s had the hands-on experience of building mines and putting them into production. There are very few executives in the mining industry who have that kind of depth, especially one with that kind of experience who is still in his early forties!

Bruce: I’m president and CEO of Troon at this time, but I fully anticipate that once an acquisition is made, I won’t be. I think what we’re looking for is whatever country or commodity we happen to acquire, we want someone who has absolute excellence in those areas.

Catherine: This is really a deal incubator for some of the most successful people in the mining business.

XL: Anything in the pipeline you can tell us about yet?

Bruce: We always have things in the pipeline, but we’re not close to any deals yet. But with the deal-flow this group has, we have a wide range of opportunities in a variety of commodities right now, with the only common link that they’re either world class or high grade.

XL: So it could be a base metal?

Bruce: It could be. The wonderful thing about having a company like Troon is that your slate is clean. Once you have an established company that has an established commodity in an established country, investors expect more of the same – the same country risk, the same commodity, etc., so it can be valued. So, we’re starting with a clean slate and can look at a variety of opportunities.

XL: Catherine, I saw the recent press release with Stornoway.

Catherine: Yes, today we confirmed that four new Qilalugac kimberlites are diamondiferous. This property now hosts 17 kimberlite pipes, including the 14-hectare Q1-4 bodies. What’s interesting is the size of these pipes; it’s one of the largest found in the eastern Arctic. It certainly has potential for a bulk diamond deposit.

XL: Diamonds seem out of favor right now. Why is that?

Catherine: Well, for starters, the latest real success in Canada was back in the mid-‘90s. It’s also a difficult industry; there were a lot of people who slipped along the way. Then you have the exploration, which is expensive. And you’re talking about the Arctic, so it’s seasonal. On top of that, diamonds are difficult to value – they don’t trade every day on a commodity exchange, so people can’t really watch it.

Bruce: I’ll say, though, that they have had some incredible price increases in especially the larger, high-quality stones. There was a 20% wholesale increase in quality gems in the two-carat and larger sizes just in the last month.

Catherine: And although the West has been affected by the recession, Asia has been buying diamonds, the Arabs have been buying diamonds – and in fact that’s where we’ve seen the huge increases in the 5+ carat quality stones, from the oil money. But I think the biggest issue has been that there hasn’t been a huge success in Canadian diamonds in over a decade. And the news flow timeline is many times longer than it takes to get a gold or copper assay, so there’s a boredom factor. But the margins are huge.

Bruce: It’s one of the most lucrative legal industries on the planet. The rates of return are truly incredible.

XL: Is there perhaps a contrarian opportunity here?

Bruce: If you take a look at this supercycle we’re in, diamonds started it out. If you look at where the first dollars went in 2001, it was diamonds. What’s happened lately is they have gone so out of favor. It’s been a tough sector recently to be in, for well over a year. So I think that the contrarians should be looking for opportunities in that sector.

XL: Is there a supply issue with diamonds?

Catherine: Yes, because a lot of the big diamond deposits have been in production for a hundred years and they’re approaching the end of their life. Certainly in South Africa with the power and labor issues. But there’s no big new discoveries to take their place. Rapaport and WWW, the two groups that follow the diamond industry, are predicting a supply/demand gap. So yes, it’s been tough, but we’ve been here before – we remember the late ‘90s for gold – so you just keep moving forward. Stornoway, for instance, is delayed on its pre-feasibility study, but that’s par for the course in the industry right now. But we’re just about to complete it and I believe we’ll show that the Renard deposits will be Quebec’s next diamond mines. We have very good quality stones there. We have a very coarse diamond distribution, which means the diamonds are very large.

XL: What about gold? It’s recently cooled off, and as you pointed out, only a couple things excite the market right now. Does this change your mind about gold at all?

Bruce: You have to look and see where there’s financial certainty right now. There’s not a lot! And gold does best in high inflationary periods and in times of financial uncertainty, so I think we can answer that question pretty easily. Now whether it goes to $1,500 or $2,500, I don’t know, but you don’t have to look very far to see what the cost increases have been for all the producers – the majors are struggling to keep their balance of economic resources on the books, and growing them has certainly become very difficult. So your cost of production is going up while your resource base is generally going down, and that bodes well for gold from a supply/demand standpoint. If you look at some of the emerging markets in India and China, gold truly is a measure of wealth, and they don’t have the comfort with the banking system like we do here in North America.

XL: M&A [Merger and Acquisition] activity is on the increase.

Bruce: I think the majors will be looking at us, but the other thing you’ve seen quite a bit of is M&A activity between the juniors, from junior to junior. And it’s been very successful. If you take a number of single-asset property companies and put two or three of them together, the market has been paying for diversity and for size, and for market cap. So I think you’re going to see M&A activity from a number of areas and not just the majors purchasing the juniors.

XL: Thanks for the update, and we’ll be looking for news of Troon’s first purchase.

Catherine: You are welcome, Jeff, and I think given the track record of everyone involved, it will be a tremendous deal.

XL: Before we let you go, Bruce, we need a funny story about Catherine.

Bruce: Well, many people know Catherine as an “overnight success,” as her first foray into the public markets, Arequipa Resources, was so successful... but I know things were not really that easy in the early days. Her first Christmas as CEO of the company, Arequipa was having trouble making payroll and so for Christmas we all got home-made cookies from her, and at that time in her life she wasn’t that keen a cook – she used her oven to store books! I’ll leave it to your readers’ imagination as to how good those cookies were!

IN THE NEWS

Click on the link to read the full press release.

Robert A. Quartermain

The Camino Rojo project in Mexico continues growing for Canplats Resources (V.CPQ). Results include 292.00 meters averaging 1.16 grams gold per tonne, 11.65 grams silver per tonne, 0.07% lead, and 0.40% zinc including 93.00 meters averaging 2.05 grams gold per tonne, 20.57 grams silver per tonne, 0.13% lead, and 0.84% zinc. Also, CPQ was just named to the 2008 TSX Venture 50, a list of the top 10 companies in each of five major industry sectors.

Ross Beaty

Pan American Silver (Nasdaq: PAAS; T. PAA) reported that proven and probable silver reserves at Pirquitas have increased by 43% to 195.1 million ounces. In addition, tin reserves increased by 41% to 159.2 million lbs, and zinc reserves by 32% to 548.5 million lbs. Based on the increased reserves, the Pirquitas mine life has been extended to 14.5 years, an increase of 4.5 years from the November 2007 reserve update.

Robert Dickinson/Ronald W. Thiessen

Farallon Resources (T.FAN) hit 32.9 meters grading 11.55% zinc, 1.71% copper and 2.95 g/t gold on their G-9 deposit at the Campo Morado project in Mexico.

Detour Gold (T.DGC) reported wide gold intersections from the Calcite Zone of its Detour Lake project in northern Ontario, Canada, including 2.10 g/t over 76.0 meters and 2.26 g/t over 69.0 meters; and 1.85 g/t over 113.5 meters and 1.37 g/t over 71 meters.

Catherine McLeod-Seltzer

Bear Creek Mining (V.BCM) announced further expansion of their Santa Ana silver deposit. A number of high-grade intercepts were found, including 152 meters of 65.9 g/t Ag, including 42 meters of 79.5 g/t Ag, and 4 meters of 816 g/t Ag.

As Catherine mentions above, Stornoway Diamonds (T.SWY) confirmed four new kimberlites are diamondiferous on their 1.04-million-acre Qilalugaq project, north of Repulse Bay in Nunavut. The property hosts a total of 17 kimberlites, including the 14 ha coalescing Q1-4 bodies, currently the largest known kimberlite in the eastern Arctic and the subject of a previous large-scale sampling program by BHP Billiton Diamonds.

Ron Netolitzky

Skeena Resources (V.SKE) reported their advanced Malpica copper-gold-molybdenum project successfully expanded to the southeast with good grade mineralization starting at surface, and provided in-fill verification.

Brett Resources (V.BBR) reported an expansion of the A Zone mineralization along strike at their Hammond Reef Property near Atikokan, Ontario, which included 55.5 meters grading 1.49 g/t Au, 49.5 meters of 1.44 g/t Au and 40.5 meters grading 2.42 g/t Au, including 12 meters of 6.08 g/t Au.

Lukas Lundin

Yet another high-grade gold discovery was made by Red Back Mining (T.RBI) at its Chirano gold mine in Ghana (see press release for specific results). Drilling continues at depth, and an in-fill program is scheduled.

Arnold Armstrong

Arnold “Arnie” Armstrong is a man whose reputation precedes him. He has been a market-mover in the resource sector since the 1960s. He orchestrated the rise of Pyramid Mines, which discovered the massive lead-zinc deposit at Pine Point in the Northwest Territories of Canada in 1965. Pyramid was so widely held that the discovery set off a major flood of investment into the entire resource sector, and started a claim-rush that had every piece of land from Pine Point down to the U.S. border staked.

Ross Beaty

Ross J. Beaty was once described as a "broken slot machine" for his remarkable consistency at making shareholders rich. In 1994, he founded Pan American Silver Corp. (PAA.T, PAAS.NASDAQ), one of the world's leading primary silver producers and currently serves as Chairman. In 2002, Mr. Beaty founded Lumina Copper Corp., a copper development company, and also serves as its Chairman.

Jorge Patricio Jones

Like many great stories, Jorge Patricio Jones' career in mining began with an unexpected turn of events. After studying water resources geology in his hometown of La Plata, Argentina, Jorge Patricio graduated to find the only job available was in hard rock mining in the gold and platinum fields of South Africa. He took the position, and his experiences with Union Corporation and Impala Platinum there gave him a case of mining fever. He's now been in the field for over 35 years.

Dr. Sergey V. Kurzin

Dr. Sergey V. Kurzin, a Russian-born nuclear power research engineer who moved to the United Kingdom in 1990, has played a key role in acquiring and developing several important mining assets in the former Soviet Union. These include Julietta, a high-grade gold deposit in Magadan, Russia, with Bema Gold; Kupol, a high-grade epithermal gold deposit in Chukotka, Russia, also with Bema Gold; and the Varvarinskoye copper and gold skarn deposit in Kazakhstan with European Minerals Corporation. He also played a key role in establishing UrAsia Energy, a uranium producer with mining operations in the Republic of Kazakhstan.

David Lowell

David Lowell may not be the last word on the world's largest copper deposits. But he's certainly the first.

In 1970, David co-authored a scientific report outlining the Lowell-Guilbert model of porphyry ore deposits – massive bodies of once-molten rock that host staggering amounts of copper, gold, silver and other metals. This groundbreaking bit of geological detective work revolutionized the way that exploration geologists search for porphyries. Thirty years later, these ideas are still compulsory learning for geology students.

Lukas Lundin

When Lukas Lundin was ten years old, his father – resource industry legend and X-Leaguer, Adolph Lundin – sat him and his brother down and asked, "Who's going to be the mining engineer and who's going to be the petroleum engineer?" Thus were planted the seeds of his long and storied career of developing oil, uranium, gold, copper and even iodine, in Africa, the Middle East, South America, Russia and Mongolia.

Adolf Lundin

Editors Note: Adolf Lundin passed from among us in September 2006:

Operating from his offices in Geneva, Switzerland, Adolf H. Lundin heads an internationally recognized group of natural resource companies with exploration and development projects worldwide. The twelve companies operated by the Lundin Group are actively engaged in the exploration for and development/production of oil and gas, gold, copper, cobalt, zinc, diamonds, uranium, iodine, sodium sulphate and potassium nitrate.

Catherine McLeod-Seltzer

Catherine McLeod-Seltzer, a recognized leader in the minerals industry, is the Chairman of Pacific Rim Mining, Bear Creek Mining, and Stornoway Diamonds.

After spending the early years of her career working in mining Corporate Finance, both in North America and internationally, Catherine went on to co-found Arequipa Resources in 1993 with renowned mine finder J. David Lowell. Three years later, having discovered the Pierina gold deposit in Peru, Arequipa was taken over by Barrick for $1.1 billion, one of the most lucrative mining industry buyouts in the last decade. In 2003, Catherine and David joined forces once again to form Peru Copper Inc. to acquire the Toromocho Copper deposit. Three years after taking Peru Copper public, it was acquired by Chinalco for $840 million.

Ron Netolitzky

His propensity for success in the face of the most daunting conditions became apparent almost immediately after his graduation from the Masters geology program at the University of Calgary in 1967. At that time, the mining industry was mired in one of its cyclical lows, and Ron came out of school to find that companies weren't exactly beating down his door with job offers.

Ron Parratt

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.

Duane Poliquin

Over a period of forty-two years, Duane progressed from field work in isolated parts of Canada to project initiation and management, to investment analysis and decision making, to management of public companies and the discovery of several mines, resulting in profits for long-term shareholders and associates.

John Prochnau

John Prochnau's quiet demeanor belies the fact that he may be one of the most successful resource project finders alive today. How successful? During the 1990s, while managing Brancote Holdings, he assembled a global portfolio of more than fifty exploration to development stage mineral properties in the U.S., Canada, Ireland, Australia, South America and South Asia, all 100 percent financed by industry partners as part of a low-risk, commercial strategy, prior to the breakthrough Esquel gold discovery in Argentina.

Robert A. Quartermain

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.

Simon Ridgway

Simon T. Ridgway is President and Director of Radius Gold, Inc. Unlike the heads of many junior exploration companies, Ridgway is not only known for making deals that profit his shareholders, but for actually getting out in the field with his team of prospectors and making grassroots discoveries.

Robert Dickinson & Ronald W. Thiessen

Robert Dickinson is the Chairman and co-founder of Hunter Dickinson Inc., a Canadian corporation, which since 1985 has grown to become one of the largest and most successful mine development groups in North America.

Roman Shklanka, PHD

Dr. Roman Shklanka may be the least-known of Vancouver's great explorers. This may be because he is soft-spoken and doesn't seem interested in self-promotion. Even when discussing his involvement in some of the world's greatest gold finds in recent history, his manner is calm and almost emotionless-he lets the facts speak for themselves. Who is Roman Shklanka?

Uracan Resources (URC-TSXV) is preparing its initial resource calculation on its 100% owned Double S deposit in Quebec, only a few miles from the St. Lawrence Seaway. The company has drilled over 30,000 metres and discovered multiple uranium zones at surface. This open pit deposit is open along strike and down dip. Drilling goes on year round. Logistics are excellent, with a provincial highway and power line running through the property. Quebec was named the top mining jurisdiction in the world in February 2008 by the independent research group The Fraser Institute. Management, from the former Bema Gold, have financed and put several open pit mining deposits into production. The board includes people from Endeavour Financial, and Chairman/CEO Gregg Sedun is a successful venture capitalist, being a founding director of both Diamond Fields Resources, bought out by Inco for $4.3 billion in 1996 for its Voisey Bay nickel deposit, and Adastra Mining, bought out by First Quantum Minerals in 2006 for its copper deposit in Africa. Open pit uranium mines have provided stellar shareholder returns, such as Rio Tinto's Rossing Mine (in production for 30 years) and Uramin's Trekoppje deposit, bought by uranium giant Areva in 2007 for $2.5 billion. For more information on Uracan Resources, email info@uracan.ca or call 866-591-0825

Article Title	Source	Last Comment Date
Explorers' League, Vol. V; No. 5 - Ron Thiessen 0 comments	Explorers' League	June 23, 2009
Explorers' League, Vol. V; No. 3 - Company Updates 0 comments	Explorers' League	April 21, 2009
Explorers' League, Vol. IV; No. 3 - Ron Parrat 0 comments	Explorers' League	March 25, 2009
Explorers' League, Vol. IV; No. 4 - Robert Quartermain 0 comments	Explorers' League	March 25, 2009
Explorers' League, Vol. V; No. 2 - Roman Shklanka 0 comments	Explorers' League	February 05, 2009

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Explorers' League, Vol. IV; No. 7 - Troon Ventures Reborn

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