Since 1915, the Northern Miner weekly newspaper has chronicled Canada’s globally significant mining sector.
The past year has been a dismal one for the Canadian mining industry. Metal prices have remained soft even for gold. Earnings generally are going to down. And so are dividends.
But not for Agnico-Eagle Mines, a company that is fast developing into one of this country’s top ranking gold producers. Its grade, output and earnings are away up and costs way down. And there are dramatic ore developments taking place on its Telbel property. Too, it has just raised its dividend payout.
Behind this success story is an ex-mine promoter turned a top mining executive – Paul Penna, our Mining Man of the Year.
It’s always difficult to single out particular individual from an industry as broad and diversified as mining, for different people have different criteria. But in this case we feel would have come up with the same choice either on the basis of the company’s performance or that or that of the man himself. Both make Cinderella stories.
Paul Penna IS Agnico, for he has almost single handedly built it into a highly efficient gold and silver producer.
What has unquestionably turned out be his smartest move was the purchase of the adjoining Telbel Mines’ property from Noranda for Agnico back in 1971 when the mine was closed, in debt and on the verge of bankruptcy. So was Penna himself. Indeed he had his house second-mortgaged to the hilt to buy Telbel. But what a buy!
Just now coming into full production, this new is fast changing the whole Agnico picture. After pushing an exploration heading into the Telbel ground from the adjoining Eagle mine that found excellent ore extending across the common boundary the company, using its own crews, has put down a big new production shaft from surface to an initial depth of 4,000 ft. (hoist good for 6,000 ft.). This was accomplished at a cost of $9.5 million – well under budget and far below any contractor would have done it for.
Commissioned into service in the 3rd quarter of 1985, it has permitted the company to embark on it’s biggest-ever development program. Drifting east is now underway simultaneously on seven levels in Telbel ground, all of which are in excellent ore.
Most advanced is the 2,550- ft. horizon. And it’s something of an eye opener. For the face, now 1,800 ft. east of the shaft, is currently in the best ore seen to date – 20 ft. wide and grading better than 0.40 oz gold per ton. Including the previously development portion from the Eagle mine, this extends the main ore zone for a remarkable strike length of 6,900 ft. And it’s still wide open.
In fact there is almost 4,000 ft. of virgin ground ahead to the east boundary. And then another 10 miles of ground held by the Amico-Cominco joint venture. And to the west, the Agnico-Cominco joint venture has tied up another large swath of ground extending almost to the Golden Hope-Casa Berardi discovery that is causing so much excitement these days. Indeed the Agnico-Telbel ore, which is in sulphides, appears to be a close geological cousin and the eastern anchor to that now active Casa Berardi belt.
“We will be mining on this Telbel ground well into the next century” Mr. Penna told the Northern Miner in an interview some months ago. “It’s worth over a half a billion dollars today — and you can quote me on that,” he said.
Silver, too
Penna’s great faith and persistence is paying off at Colbalt, too, where he is rewriting the story of that famous 70-year old silver camp. Shunned by the majors, he has certainly kept that town alive these past 25 years. And ore-wise today it, too, has never looked better. It is making good money despite the low price of the white metal.
His midas touch has spread to Gowganda, too, where he has successfully revived the Castle mine which is now the backbone of the silver division. Grade here is averaging 50 oz. per ton. His purchase of the Colbat Refinery several years ago for 2.1 million cash has proved another boon, paying for itself in less than a year. Management is now confident that it can maintain a million-ounce-plus silver output for years to come. The year just closing will see 1.5 million ounces turned out.
Penna the Man
Paul Penna has come up the hard way, dropping out of school at 14 to become golf caddy. Serious, sincere and deeply religious, he is still a very humble man despite his successes. He drives to work in a 1979 Chevy Caprice with 150,000 miles on its odometer. Not in any pinstriped suit, he goes into a small but comfortable head office head suite on the 16th floor of Toronto’s Simpson Tower where there is a total staff of five – no vice presidents ( there are 12 v-p’s at Kid Creek Mines for example).
He runs a no-frills operation with a small but highly dedicated team of experts. He abhors debt and has built up quite reputation for paying company bills the day they are submitted. (With some $30 million in net liquid assets, this is really no problem). He doesn’t belong to any of the posh downtown business clubs. His lunch, taken in the office, is a liquid one (non alcoholic), sipping soup from an Agnico mug inscribed “THE GOLDEN RULE”: Whoever has the Gold makes the Rules.
Despite being an ex-stock promoter, Paul Penna can be counted on to tell both the good and bad news with complete honesty, The Northern Miner has found over the years. His word can be trusted.
Recognizing his gold mining expertise, Penna sits on the 16-member NOCOMI committee (the national advisory committee to the federal government on mining) for a second 2-year term representing the industry’s gold mining interests.
He makes a point of visiting his various mining operations once a month, where he knows most employees on a first-name basis. And he has over 20,000 share holders in Agnico alone. They love him. Many are from the U.S. and flock to his annual meeting year after year. Here, too, he is on a first name basis. Indeed they phone him day and night – and are never given the brush-off.
People oriented, he gives much credit for the company’s growth to Wencel Hubachek, his consulting geologist with whom he has worked closely for the past 17 years. They make a great team.
With its mill rate being expanded 50% to 1,800 tons per day, gold production is up 78 % in the past quarter from that of a year ago, grade pointing higher and costs lower, and cash flow from operations already running 200% ahead of the previous year despite low metal prices – is it any wonder that Agnico is today the most frequently recommended gold mine by North America gold analysts?
“We have our own Hemlo to develop” says Paul Penna with a smile on his face. And just maybe he is right.