Ian Telfer Built a $21B Gold Major in 5 Years from $17M

Mining Legend Ian Telfer on the Rise of Wheaton River/Goldcorp, Birth of Silver Wheaton, and Lessons from Four Decades in Mining

TIMESTAMPS

Slow Starter 00:24
Intro to Mining 1:24
Lessons from Mining Giants 2:53
Wheaton River’s Origin 4:08
Goldcorp Merger 5:57
Royce Ambush 10:08
McEwen Fallout 11:48
Managing 25,000 14:49
$22Billion ‘Epiphany’ 16:50
What it Takes 19:11
M&A Strategy 20:06
ARIS Mining (NYSE:ARMN) 22:41
Ian’s Hero 25:28
Hit the Bid 27:07
Uranium Luck 28:11
Maintaining Optimism 29:08
Flow State 30:19

After setbacks in the ‘90s, Ian Telfer sold his house to afford his kids’ tuition.

As long as they kept up appearances, no one would know he was struggling, Ian says.

His dot com venture had failed, just as his search for gold in Venezuela did. But at 55, Telfer made a historic comeback in the mining industry. Through daring acquisitions and belief in rising gold prices, he created the world's largest gold producer. He also came up with what became the most valuable royalty & streaming company.

‘For that five or six years, someone would present an opportunity and I just knew it was the right thing for us. I just knew. I could feel it.’

The Rise of Wheaton River Minerals

In early 2001, investor Frank Giustra believed gold prices, then ~$260 per ounce, were poised to run.

To profit, Giustra wanted to build a new gold company. He’d helped finance Telfer’s earlier mining ventures, respected him, and wanted to work together.

Out of a job, Telfer seized the opportunity. The two men identified a small public company with an exhausted gold mine called Wheaton River Minerals (WRM).

WRM, then worth just $17 million, agreed to let Telfer take over as CEO with Frank’s backing. They arranged a $5 million investment into WRM.

After scouring the gold market for opportunities, WRM bought 3 Mexican mines producing 191K gold equivalent ounces at cash costs of $198 per ounce in 2002.

It was an ambitious first deal for WRM. Luckily, gold started moving, and WRM tapped equity markets to finance the purchase price ($75M cash + ~20M WRM shares).

The next year, WRM transformed into Canada’s 8th largest gold miner and pulled off a record setting financing. WRM grabbed a 25% stake in the massive Alumbrera gold-copper mine in Argentina, and 100% of the Peak gold mine in Australia, from Rio Tinto, for $214 million. The deal brought WRM’s annual production to 458.5K gold ounces at $124 per ounce cash costs.

In early 2004, WRM bought the Amapari mine in Brazil for $105 million.

Next, a merger with Iamgold moved forward, but WRM moved from hunter to hunted. Couer d’Alene bid $2.65 billion for WRM, while another company bid for Iamgold. In a fierce few months, Iamgold’s shareholders rejected the WRM merger, and WRM was able to fend off Couer d’Alene.

While all this drama was unfolding, Telfer believed WRM’s silver production wasn’t getting fair value. He came up with the entirely new concept of metals streaming. WRM sold its silver production to a new company, 80% owned by WRM, called Silver Wheaton, which took off like a lightning rod. Now Wheaton Precious Metals, it’s the most valuable royalty & streaming company, worth $22 billion.

Goldcorp Merger

In 2004, Toronto’s Goldcorp owned Canada’s largest gold mine in Red Lake, Ontario.

For years, other miners coveted Goldcorp, but CEO Rob McEwen rebuffed advances.

In October, Telfer invited McEwen to a WRM presentation in Toronto. McEwen immediately saw potential in WRM, and Telfer as a capable leader.

A friendly merger was announced in December. The combined debt-free company was set to produce 1.1 million ounces in 2005 at the world’s lowest costs.

However, Reno’s Glamis Gold interrupted the deal with their own hostile $3.28 billion bid for Goldcorp, trumping WRM’s $2.58 billion offer.

McEwen still believed the WRM combination was better for Goldcorp. “This is going to be the biggest sales pitch of our life,” he told Telfer.

The duo called on every major shareholder for support. After showing up unannounced at Royce Funds, a 11% Goldcorp holder, the Royce executive ‘tore a strip off’ Telfer and McEwen. Despite getting off to a rough start, Telfer and McEwen eventually persuaded Royce to support the deal.

Against all odds, a Feb ‘05 Goldcorp shareholder vote approved the WRM merger. The Goldcorp name stuck, and Telfer replaced McEwen as CEO. The combined company was now worth over $5 billion and poised for growth. Gold, then $415 per ounce, was on the cusp of a dramatic rise.

Goldcorp bought more mines in Canada and Mexico. By 2006, it produced over 2 million ounces. That August, Goldcorp turned around and bid $8.6 billion for Glamis.

Just 5 years after Telfer took WRM over, Goldcorp was now worth $21.3 billion. The $5 million 2001 investment Telfer and Giustra arranged had grown by ~40X. Goldcorp reached a $40 billion market cap by 2012, excluding Silver Wheaton.

Telfer retired as CEO after the Glamis deal, retaining the chairmanship until 2019. Then, Newmont acquired Goldcorp, and moved its head offices to Colorado. Telfer regrets not fighting harder to keep Goldcorp in Canada.

Now Telfer is chairman of ARIS Mining (NYSE:ARMN), an emerging gold producer that’s reminiscent of early WRM. ARIS is my largest mining investment.

Neil Woodyer, an early WRM director, leads ARIS, which owns several substantial mines & development projects in Latin America. Frank Giustra is a 8% shareholder.

Telfer has been a generous mentor and philanthropist. He’s donated $30 million to the University of Ottawa, home of the Telfer School of Business, and another $7 million to the University of Toronto. The Jay Telfer Forum, named for Ian’s brother, is a new high-tech musical performance centre under construction at U of T.

Knowing Ian Telfer is a privilege. His humility is remarkable. He faced financial troubles at 55 but later achieved success with self-awareness and gratitude. Telfer credits luck and timing, openly discusses his failures, and focuses on helping others succeed.

Telfer joined the Canadian Mining Hall of Fame in 2015, cementing his mining legacy.

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Tommy Humphreys owns securities in ARIS Mining. Nothing in this communication is intended to be investment advice. Ian Telfer interview taped June 2022 in Vancouver. All facts to be verified by the reader. Always do your own due diligence.