Imperials Metals (TSX:III) has been a mainstay of B.C.’s mining sector for years, and it’s not going anywhere any time soon. With two operating mines and a host of highly prospective mineral projects, including Red Chris, the Vancouver-based company remains convinced that exploration and development in its own backyard creates big returns for shareholders. Chairman Pierre Lebel recently sat down with Business in Vancouver to talk about why his company remains focused on B.C., Canada’s controversial environmental permitting process and why he thinks copper is a good bet for investors.
That’s where our experience and expertise is. We’re talking about 800 or 900 mining companies [that are based locally], and most of those companies have a different focus, a different business plan. They have very, very strong skills in the identification and early to mid exploration of projects. But then their objective is always to find a major to come along and buy them out.
Imperial Metals has a different view of life. We see ourselves primarily as mine developers and mine operators. That’s a totally different skill set. That means everything we say, we need to live. You tend to approach life differently when you actually have to dig the hole and mine the stuff.
We are not a company that seeks public financings. Every time you issue shares you dilute your existing shareholders. We’ve had a share price that’s doubled in the last year, but if you look at it over five years it’s many, many times what it was five years ago.
So if you’re a shareholder what would you rather do? Would you rather your share price quadrupled or the company’s asset base quadrupled and your share [price] stayed the same? If I’m issuing shares equal to the value I’m creating then the market cap is getting bigger and bigger, but on a per-share basis, it’s staying the same. That’s not a good look.
The question in part turns on the [Northwest Transmission Line]. The power line needs to be put there. Right now, [Red Chris] has federal and provincial environmental certificates, it’s in the operating permit stage, so we’ve been seeking operating permits to start work on the ground. As soon as the line is there, we can be ready to plug in.
Permitting. I think permitting today is 90% of the effort and 10% of the cost. The actual build section is 90% of the cost and 10% of the effort. We know how to do these things, and know how to do them well. Most any major project is going to involve the federal government at one stage or another, and we saw this with Red Chris.
The province is responsible for the environment, and the federal government is responsible for fish and navigable waters, and it’s usually on one of those two you get caught up with federal involvement. The question is, are you going to have two almost discrete reviews on the same project? Are you going to force the federal government to do comprehensive project reviews when the province is already doing that?
It’s very difficult to tell what time it is if you have two watches, but if you have one watch and it’s a good one, you’ll always know what time it is. If you need to have two “yes” [answers] it becomes very difficult.
Somehow we need to harmonize those processes and do them the way any kind of normal person would do a garden or a house renovation: study carefully, do your homework, figure out the best value, the best contractor and make a call. You don’t go and ask two different contractors for their ideas and expect that they’re going to come to the same conclusion.
There are two parts to the answer. The first part is the technical answer, which is of course we can harmonize these things. We can have a process whereby we’re all on the same page in terms of what our objectives are and what we want to achieve.
But I think the far more important question is, how come people don’t trust their responsible authorities? We’re paying tax money, we hire people in our resource ministries who are highly qualified and have genuine feelings about the environment and what they’re regulating. How come we’re not trusting these folks?
How come we always need to have another body over top of it and then another top over that? When do you stop having people with different watches to tell you the time of day?
I think you need to go with a good solid plan and live with it. Of course project proponents want to get to a “yes,” but do people on the environmental side want to get to a “yes” in the best possible way or do they basically want to get to “no" any way that you can? I think you have to examine your motives.
I would never have predicted this price a year ago or two years ago. I think we’re looking at a period of very, very strong metal prices because of the permitting question, which we just talked about.
All the [low-hanging] fruit has been picked, and now were into [projects] that are more difficult. Populations are expanding everywhere, and that means they’re expanding into areas that before were considered remote.
There’s a very strong impact on aboriginal peoples worldwide. These things make the development of deposits increasingly difficult and expensive. Essentially, if you want copper it’s going to be expensive to get it. That’s going to keep the prices up.
Vancouver
CEO: Brian Kynoch
Employees: 504
Market cap: $771.9m
P/E ratio: 59.60
EPS: $0.39
Sources: Stockwatch, TSX, globe investor