Ryan Beedie is showing only moderate symptoms after being bitten by the gold bug.
Typically, those affected are first consumed by the thrill of discovery, then wholly assume the belief system of the precious metal as a safe-haven investment and, in the final stages, transform into Goldcorp (TSX:G) founder Rob McEwen predicting future gold prices of $5,000 an ounce.
There is no vaccine.
The president of Beedie Development Group has so far remained in the early, manageable stages of the gold-bug progression. This year, Beedie has officially partnered with friend and Atlantic Gold Corp. (TSX-V:AGB) chairman and CEO Steven Dean to restart gold mining in Nova Scotia. The company is in the midst of an initial $137 million build of mining facilities at its flagship Moose River Consolidated project, located approximately 100 kilometres northeast of Halifax.
Beedie assumed his first director’s seat on a publicly traded company’s board in May after acquiring an approximately 25% equity stake in Atlantic over a two-year period.
Beedie labels his involvement “a no-brainer.”
“This is a great opportunity over a relatively short time horizon. What I think has scared the market away from a lot of these stocks has been a number of factors, including capital costs, that Steven has done a great job of effectively de-risking,” said Beedie.
Dean, former president of Teck Resources (TSX:TCK), has been part of the management teams of several successful mining startups, including Australia’s Normandy Mining and PacMin Mining. Under Dean’s leadership, Atlantic consolidated the lands comprising the company’s flagship property and neighbouring projects feeding its future pipeline, signed a fixed-cost construction contract with global engineering company Ausenco, baked in future revenue by hedging a portion of gold sales within view of historical highs, and secured a $160 million equity and debt package that fully funded construction without bloating the share registry.
Last month, the Vancouver-headquartered company took the first draw ($20 million) of its $115 million project loan facility.
“I think when [Steven and I] first sort of discussed this opportunity, my mind was already really open to it because I thought this whole [gold] sector had been oversold,” said Beedie. “I looked at it almost like a real estate deal: a steady stream of cash flow coming forward and construction costs being relatively fixed.”
Dean takes a pragmatic approach to mining that emphasizes the business fundamentals of risk management, capital discipline and execution. He sees ready parallels between Beedie’s world of commercial real estate development and mine construction, especially in the headwinds of trying to get project financing before the recent upturn in the gold sector.
“There are a number of analogies in developing a gold mine versus developing an industrial property, including capital costs management and locking in revenue,” said Dean. “Ryan does bring a lot to the table. Ryan carefully uses senior debt financing in developing his projects, and we’ve done same thing here [to minimize shareholder dilution].”
Beedie has been interested in the gold space for a decade. Through his personal investment arm, Beedie Investments Ltd., he has made several passive investments, including in climbers such as True Gold Mining (acquired by Endeavour Mining Corp. – TSX:EDV) and B2Gold Corp. (TSX:BTO).
However, Beedie said he has no designs on being a bigger gold bug and taking on more board roles in the sector. His relationship with Dean goes back more than 15 years. Beedie credits Dean with getting him into the Young Presidents’ Organization, which was “transformational and had a massive impact on my life.”
Dean said the two of them have talked about working together over the years. Atlantic has been the catalyst, said Beedie.
“I have huge confidence in Steven, his ability, his passion in the business,” said Beedie. “So much relates to that relationship of trust and friendship. It’s a big driver behind this. So I don’t see getting involved in a similar way in another company in the short term.”
Atlantic’s mine is expected to be commissioned late next year.•