May 2013

King of the mountain

Copper Mountain CEO and recent hall of fame inductee Jim O’Rourke on his life in mining

By Eavan Moore

Getting his start at Placer Development in 1962, engineer Jim O’Rourke went on to help build a string of successful mines, including many of the best-known operations in his native British Columbia. As president of Princeton Mining Corporation, O’Rourke led the development of the Cassiar underground block cave mine, purchased and operated by the Similco Mine, and formed an early Japanese partnership to finance the Huckleberry copper project. O’Rourke tried retirement for a while but was unable to resist the pull of old friends and an industry he finds as rewarding socially as professionally. His latest endeavour, the Copper Mountain Mining Corporation, started production in the summer of 2011. In recognition of his considerable accomplishments and overall contribution to Canada, he was recently inducted into the Canadian Mining Hall of Fame.

CIM: You have focused on starting up and reviving mines. What interests you about this work, and mining in general?

O’Rourke: I find it exciting. Things happen extremely quickly, and there are lots of decisions to be made in a short period of time. It’s just a very exciting time in the mining business. You get to meet a lot of people from a lot of different disciplines and communities.

Whether you are in exploration, development or whatever, you’re completely reliant on people, including all your suppliers. You have to build relationships. And to build relationships, I think you have to be honest. And I think you have to understand that everyone involved has to benefit, whether it be the community, aboriginal groups, suppliers, or in our case, our partner, Mitsubishi Materials Corporation.

CIM: You are a pioneer of partnerships with companies in the Pacific Rim. What do you think the influx of investors from China, Korea and Japan means to projects in Canada?

O’Rourke: I think it’s a great opportunity for Canadian companies – particularly the more junior companies – that potentially have a good project but need financing and can partner up with somebody who is willing to help. I think it’s a win-win situation. Now more than ever, companies have been seeking alternative means of funding and, in many cases, have been successful. These sources include looking oversees for strategic partnerships.

CIM: Junior companies all have high ambitions for their given deposits. What is the key to dreaming big yet staying realistic about the resource you have?

O’Rourke: If you are a junior company with one project and you have good geologists, it’s going to depend on what they’re seeing in the drill results. You may have results with only a sniff of mineralization, but if the rock types and everything indicate it’s part of a major porphyry system, you may have to keep moving forward. But it’s going to be a decision based on the geological interpretation.

CIM: As a CEO, how do you balance between taking risks, making long-term investments into your company and playing it safe so that you have a quarterly or an annual profit to show your investors?

O’Rourke: I believe that if you’re running a company, you have an obligation to clearly specify your objectives – where you see the company going in the future – and provide a clear picture of the current focus. If you’re stepping out and taking a lot of risky leaps for potentially high gains, you’re going to attract a different group of investors.

In terms of our own company, Copper Mountain, our first priorities were to put the mine into production on schedule and on budget, which we did, and then to bring it up to its design capacity, which we’re in the process of doing. Unfortunately, we have hit some stumbling blocks there, but we believe it’s well in hand now. We’ve said that we want to demonstrate profitability and then look for accretive opportunities that will add value to the company.

CIM: Why is Copper Mountain considering a secondary crusher now, with the current dour economic conditions at play?

O’Rourke: The tests and all the technical data to date indicate that, with a secondary crusher, we would be assured of more steady operations, less fluctuation in ore variability from different areas of the mine and, as a consequence, better performance in the flotation area and other parts of the plant. The addition of the secondary crusher would allow increased throughput at a cost of up to $40 million. The investment has a very fast payback of less than a year. If we do decide to proceed with the secondary crusher, it would be paid out of internal cash flow from the operation.

CIM: Are there any circumstances in which poor economic conditions are actually to your advantage?

O’Rourke: I’ve experienced that in the past, where even major companies are shedding producers that aren’t as profitable as others. They don’t see them adding a lot of value to their company, and as a consequence they may be willing to part with them at a reasonable price. In our case, we are currently a one-mine company with positive cash flow. We’re always looking at projects or at properties that would add value to our company. And from that point of view, there is an advantage for us in a market downturn.

CIM: What do you consider your biggest success?

O’Rourke: My biggest success would be pulling together strong teams of people that can work safely and in an atmosphere that they really enjoy. I look at a lot of people in our team as good friends.

CIM: And your biggest challenge?

O’Rourke: Probably the biggest challenge has been reliance on government decisions. They can make or break things, depending on what their philosophy is, as governments change from one to the other. A classic example would be Venezuela, where the government changed and they basically confiscated projects. I think you see that in a number of places.

CIM: Do you think that same dynamic holds in British Columbia?

O’Rourke: I’m not sure right now. It did in the 1970s. We had a change in government and they implemented a super-royalty for mineral projects, and it was very damaging. As a result, it took a decade for B.C. to regain its credibility as a mining-friendly jurisdiction. I know of one mine in particular, where the royalty was 130 per cent of the profit. So government has a tremendous influence on our business.

CIM: How long do you plan to stay on at Copper Mountain? You could have retired by now.

O’Rourke: I have no idea. I guess until somebody wants to kick me out!

I did retire once. After I retired, I ran into people who I’d worked with, who were very competent, and I was willing to invest with them. I ended up more involved than planned originally, but if you enjoy it, then it’s much like a hobby. And I guess that’s the way I feel about mining. It’s a great industry, there are great people, and it’s very sociable and enjoyable. From my point of view, I have a lot of fun doing what I do every day.

Canadian Mining Hall of Famers 2013

by Peter Braul

From left: Pierre Lassonde, Gerald Grandey, Chuck Fipke and Jim O’Rourke were inducted into the Hall of Fame this year | Courtesy of Keith Houghton Photography Ltd.

Saint-Hyacinthe, Quebec, native Pierre Lassonde’s career has been one of the great mining successes in Canadian history. Educated in both engineering and business, he started Franco- Nevada Corporation with Seymour Schulich in 1982, and brought the company to its $1.2-billion IPO in 2008 – at the time the largest the Toronto Stock Exchange had ever seen. Besides his business wisdom, Lassonde is equally worthy of praise for his philanthropic endeavours. He has injected tens of millions of dollars into mining-related university programs in Canada and the United States. He is the namesake of York University’s Lassonde School of Engineering, the University of Toronto’s Lassonde Institute of Mining and the University of Utah’s Pierre Lassonde Entrepreneur Centre, and he has been awarded the Order of Canada.

Gerald Grandey, who retired from his job as CEO of Cameco in 2011, led the company from difficult times in the early 2000s to a market capitalization of $9.6 billion. A lawyer by training, he got his start opposing nuclear power plants in the Great Lakes region. Since then, he has been involved with some of the world’s most significant nuclear policy initiatives, including the Highly Enriched Uranium Agreement that was aimed at disarming Russian nuclear weapons and fuelling nuclear power plants in the West with the salvaged uranium. Under his leadership, Cameco became Canada’s top employer of Aboriginal Peoples, while also growing to five mining operations worldwide. Grandey currently serves on the boards of many organizations and is chairman emeritus of the World Nuclear Association.

The father of diamond mining in Canada, Chuck Fipke’s tenacity led him to the discovery of the kimberlite cluster that became the Ekati mine. The Ekati discovery was the culmination of years of Fipke’s research – starting with his education in geology and evolving with his use of heavy mineral geochemistry as a tool for exploration. He opened CF Mineral Research in 1977, further advancing his expertise in the subject, and with Dia Met Minerals, brought it to bear in the Northwest Territories – where he made his famous find. And, in order to help others make use of the tools he developed, he published the world’s first guide to diamond exploration using indicator mineral geochemistry. He also founded the Charles Fipke Centre for Innovative Research at UBC Okanagan and is currently the chair of Metalex Ventures.

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