Bullish as ever on gold, Rob McEwen foresees a tough road ahead for mining explorationists and mining developers, who fail to take into account the needs of a non-mining investment community.
RENO – As gold bugs get discouraged in the wake of year-end sell offs, über precious metals mining entrepreneur Rob McEwen still is firmly bullish on gold in the long run and stands pat on his $5,000 per ounce gold price prediction.
In a talk to the Geological Society of Nevada Wednesday in Reno, McEwen urged the audience to “step out of line once in a while” and constantly question fundamental assumptions about geology and discoveries.
During his address, McEwen recalled his own struggles with his senior geologists and the mining analysts who assumed that Goldcorp’s 50-year-old mine in Red Lake, Ontario, was played out. The former mutual fund manager had no mining expertise, but had emerged as Goldcorp’s majority owner.
“I found an industry with a lot of inertia, it didn’t want to change,” McEwen told the GSN audience. Nevertheless, at the same time, he believed the mining industry had the potential to offer considerable excitement.
Unfortunately, as the years passed, the company’s geologists have been unable to accurately estimate the value and exact location of more gold on the property. McEwen decided to end a MIT conference and listened to a story of the development of Linux. He learned how Linus Torvals and a volunteer brigade of software developers had assembled the computer operating system over the Internet.
Torvalds revealed his code to the world, allowing thousands of anonymous programmers to make their own contributions.
McEwen decided to apply the principle by Goldcorp’s data on the Internet with geologists all over the world, a controversial strategy in a mining industry notorious for its secrecy. In March 2000, McEwen launched the Goldcorp Challenge, publishing 400 megabytes worth of the 55,000-acre Red Lake property data on Goldcorp’s website.
Two-hundred and forty-thousand people visited the website. Of those, 1,400 persons from 43 countries downloaded the Red Lake data. A total of $575,000 in prize money was awarded. The winning submission came from Australia. None of those who participated in the challenge had ever actually been on the property.
The contestants identified 100 targets on the Red Lake property, 50% of which had not been previously identified by Goldcorp geologists. Over 80% of the new targets yielded gold as millions of ounces have been and are still being found on the property.
“We set off a gold rush in the district” by sharing real time information on the Internet, McEwen told the GSN audience.
As authors of the book “Wikinomics: How Mass Collaboration Changes Everything,” Don Tapscott and Anthony Williams, noted McEwen had transformed a lumbering exploration process “into a modern distributed gold discovery engine that harnessed some of the most talented minds in the field.”
In his GSN talk, McEwen noted that BHP and the country of Brazil both used the Goldcorp mass collaboration model as the basis for their own mass collaborations.
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