Even though his company’s revenue skyrocketed 78,467% between 2006 and 2010, topping Business in Vancouver’s top 100 fastest-growing companies in B.C. list, Darren Pylot isn’t the type of guy to tout his own success.
In fact, the 44-year-old no-nonsense executive told BIV his success in the mining business is based on having a good team to back him up and not falling in love with his own rocks.
“A lot of people say you’ve got to be a geologist or a mining person to run a mining company. That can run two ways,” said Pylot, president and CEO of Vancouver-based Capstone Mining (TSX:CS).
“If you’re really passionate about geology you may stay with something much longer than you should because you fall in love with the rocks.
“Whereas for me a rock is a rock, and if a rock makes money it’s a good rock and if it doesn’t it’s not.”
That bottom-line approach has allowed Pylot to transform what was little more than an exploration company in 2003 into a billion-dollar copper producer with mines in Mexico and the Yukon.
All the while, Pylot has successfully navigated the risky world of junior mining companies, dodging hostile takeovers, dealing with financial crises and transitioning a company from exploration into production.
How does he do it?
He focuses on the dollars and cents, always with an eye to the payoff for shareholders.
“I don’t mind falling in love with money because that means there’s a lot of money in the bank and the company is developing,” said Pylot.
And there’s no question that Capstone has developed.
In addition to putting two mines into production in the last five years, the company has also generated positive net earnings and cash flow.
As of June 30, the company had $506.6 million in cash on hand.
On top of that, in April, Pylot successfully partnered with state-owned Korea Resources Corp. (KORES) in a $725 million deal to buy Far West Mining and add the highly prospective Santo Domingo copper project in Chile to its production pipeline.
In spite of his relative success over a short time, Pylot’s background has little in common with the mining industry.
The Vancouver executive said he was born in Kelowna and raised in Revelstoke, describing his home town as an almost Norman Rockwell-esque place of neighbourhood friends and long summer days spent outdoors.
In the mid-1980s, Pylot decided he wanted to venture out of his backyard and moved to Vancouver, where he attended Simon Fraser University.
While there, he studied business and soon went on to work for PwC.
Shortly thereafter, he got a job with a local mining company as a controller.
“That’s where I got a really good view of what happens in the mining business and how mining companies were financed,” he explained.
Pylot soon struck a deal with the company to spin some of its early-stage gold assets in Brazil into a separate company that he would lead.
In the mid-1990s he ventured into South America in search of the precious metal, but his efforts turned up little.
Then, the massive Bre-X gold scandal rocked the Canadian mining industry, scaring investors away from any company associated with the yellow metal.
“Especially in Canada and in Vancouver … you could imagine it completely took the confidence away,” he said. “Even if you had the best project in the world, post-Bre-X it wasn’t going anywhere.”
Pylot put his company on care and maintenance and sat on the board of various technology companies while he waited for the dust to settle.
Then, early last decade, he re-formed his company and took it into Mexico in search of gold and silver.
At the time the company was called Capstone Gold and had optioned a past-producing silver-lead-zinc mine with the intention to restart it.
But exploratory drilling found copper instead of precious metal, so the company changed its commodity focus and worked on getting the mine, Cozamin, into production.
The company was able to put Cozamin back into production for $30 million.
In 2008, Pylot led a “merger of equals” between his company and Sherwood Copper, bringing Sherwood’s high-grade copper-gold Minto mine in the Yukon into the Capstone fold.
Marcus Chalk, managing director, mining, at Scotia Capital in Vancouver, advised Capstone on several of its corporate transactions. He said Pylot is a leader with a strong vision for his company.
“He’s been very patient and very systematic in going after projects,” said Chalk.
Bob Wooder, a senior partner with Blakes in Vancouver, who has provided Capstone with legal counsel, said one of Pylot’s strengths is his ability to build a strong corporate team and empower it.
“The advantage to that approach is he gets talented people who want to work for the company, because they feel they have input,” said Wooder.
When it came to pulling together the $725 million deal to buy Far West, Pylot said he and his team waited until they found the right partner in KORES, ensuring the most value for shareholders.
The partnership would see KORES buy a 30% stake in Santo Domingo for $210 million and arrange financing to build the project.
KORES has also agreed to buy half of all the copper and iron that Santo Domingo will one day produce.
“That is all of the money Capstone needs to fund their equity portion from now until production of Santo Domingo, so we’ve self-financed the operation bringing KORES in,” said Pylot. “I feel good about that because we’ve taken away all the risk.”•
