At the same moment Goldcorp Inc. (TSX:G) chairman Ian Telfer is sitting down for a profile interview, the company’s CEO, Chuck Jeannes, is down the hall in a boardroom on a year-end earnings call.
Jeannes has the tougher job this morning: his company is being forced to write down $2.3 billion on its brand-new Cerro Negro mine in Argentina. Even the world’s largest gold-mining company is not immune to a bear market and low gold prices.
But Telfer has seen this movie before, and it was a lot worse.
In the late 1990s, his company, Vengold, which owned a stake in the Lihir gold mine in Papua New Guinea, had gone public at a time when gold prices were headed down to US$250 per ounce. Its shares were in the toilet and the company owed $100 million.
“All the employees left,” Telfer said. “So I was in the office by myself and the loans were all due on December 31, 1999, and there was no solution in sight.”
He called a broker in Australia and told him that, if the company’s shares ever regained their value, to sell them all. As luck would have it, gold spiked momentarily, after the world’s central banks publicly disclosed how much gold they were going to sell, which caused brief excitement in the markets.
“One day, at 6 o’clock in the morning on September 29 , I get a call from Australia, and this guy says, ‘Have you seen what happened to the price of gold last night? It’s up $50.’”
Telfer had the broker sell all the company’s shares, and then paid off its debts.
“If you look at a 15-year gold price chart, the gold price goes like this,” he said, gesturing a nosedive. “There’s a little hiccup, then it goes down for two more years. I caught the hiccup. The only shares you could buy in volume – because it happened so fast – were ours.”
Telfer now had a shell of a company and $30 million in cash. He decided to get out of mining altogether and leaped into the technology space, starting a tech incubator called Itemus Inc.
The company’s stock rose from just a few cents to $3 per share, and then it all evaporated in the dot-com crash. Itemus went bankrupt in 2001.
“That was my tech experience,” Telfer said.
Apart from that brief foray into technology, Telfer has spent most of his career in mining.
Born in England, Telfer was just two when his family moved to Canada. He grew up in Toronto and went to the University of Toronto, where he earned a degree in political science.
He worked at what he calls “nondescript jobs” for about five years before deciding he needed “to reboot.” He decided to get an MBA.
“I applied to all the MBA schools, got turned down by them all. And then [the University of Ottawa] called at the last minute and said, ‘We have a spot,’ and that changed my life. That’s why I love Ottawa U. If they hadn’t called me, who knows what I’d be doing now, because that kick-started everything.”
So grateful was he to his alma mater that, after he made his fortune in mining, he donated $25 million to the university to found the Telfer School of Management.
After earning an MBA, he also got his certified accountant credentials, and landed a job with Hudson Bay Mining before moving on to TVX Gold, which later merged with Kinross Gold Corp. (TSX:K).
Being a global industry, mining is not a bad choice for someone who has a passion for travelling and experiencing other cultures. The job took him to Brazil, where he lived for five years and learned to speak Portuguese.
It was while he was in South America that he became CEO of Vengold. Later, after his brief foray into the tech space, he was drawn back to gold mining by Frank Giustra, the Vancouver financier best known for founding Lions Gate Entertainment Corp. but whose roots were also in financing mining deals.
Telfer gives full credit to Giustra for having the perspicacity to predict that gold was about to go on a massive bull run. It was also Giustra who identified the right company to buy into: Wheaton River.
Vancouver has no lack of mining-executive talent, but Giustra said he approached Telfer to head up Wheaton River because he thought he had the right combination of talents for the job.
“He’s a very rare combination of someone who is both a deal-maker and a manager,” Giustra said. “It’s really rare in this industry to find. There are a lot of great deal-makers that don’t have the skill set to run a large company, and there are a lot of great managers that don’t get the deal done.”
Telfer and Giustra used their connections to raise the capital to buy into the company. In 2001, Telfer became Wheaton River’s CEO. It had six employees, no operations and $5 million cash.
From those humble beginnings, through a series of mergers and hostile takeovers, Telfer built the company into what it is today – a gold-mining giant with a market cap of $19 billion, nine operating mines and 19,000 employees.
In 2005, Wheaton River merged with Goldcorp, and Telfer became Goldcorp’s new CEO. In 2006, Goldcorp merged with Glamis Gold, and Telfer assumed the chairman’s role.
As proud as Telfer is of Goldcorp, it was a spinoff – Silver Wheaton Corp. (TSX:SLW), the silver-streaming company – that he feels was one of his crowning accomplishments, because it was so innovative.
Mining companies tend to focus on a single resource – copper or gold. But many mineral deposits have a mix of metals, including silver. The idea behind Silver Wheaton was that it would buy the silver from other companies whose primary focus was gold or copper.
“In the mining industry, a lot of the mining people think Silver Wheaton was more impressive than building Goldcorp,” Telfer said. “[With] Silver Wheaton, we did something that no one had ever done before.”
Telfer’s accomplishment recently earned him a spot in the Canadian Mining Hall of Fame. Such a distinction often comes at the end of one’s career. At 69, Telfer is lean and fit (he hits the gym four times a week and plays golf) and has no plans to retire.
His job as Goldcorp’s chairman allows him to be part of the company’s big decisions but still gives him and his wife, Nancy Burke, the time and flexibility to travel the world.
“We’re going to Nairobi tonight,” he said, towards the end of the interview. “Then we’re going to the Maldives. That’s a country I’ve never been to. And we’ll be in Qatar, so I’m going to get to count that one. So that’s going to take me up to 99.
“I’ve said to people, in my next life, if I can’t come back as Mick Jagger, I want to come back as the chairman of Goldcorp. It’s the second-best job in the world.”