Pilot continues to fly high
Nov 1, 2014
My favorite producer, as it were, in the mining business is Mark O’Dea. I don’t mean producer as in actual mining, I mean producer as in Hollywood, the guy who puts everything together. In the mining business between the various juniors there are all sorts of management techniques.
Investors see Chairmen and Presidents, COOs and CEOs and in fact have little idea of who really runs the show. In the case of one Vancouver junior, their secretary was actually running the company but no one outside the company had any idea. She had worked there for 30 years through half a dozen rollbacks and had picked up so many shares that when the CEO wanted to do one thing and the COO wanted to do another and the Chairman wanted something else, she voted and told them what to do. No one except the principals had any clue.
Every company has a Chairman and a President and a CEO and a COO and a Board of Directors. Their roles vary and in my view, in 98% of the juniors in Canada, the Directors are about as useful as teats on a boar hog. They have a fancy title, collect absurd pay for doing little or nothing and rarely have even a tiny clue as to where the company has been or is going.
One group of companies bucks the trend: the companies associated with Oxygen Capital Corporation run by Mark O’Dea.
In 2000, Rob McEwen of Goldcorp had an interesting idea for promoting Goldcorp. He would hold a contest where anyone could access his database on the Red Lake project and suggest where the next 5 million ounces of gold would be found. A team from Australia won first place in the competition and a young 33-year-old PhD geologist from Newfoundland took 2nd place. That Newfie geologist is probably the smartest guy in the mining business. Of course, the 2nd place winner was Mark O’Dea.
I’ve had a bone to pick with both McEwen and Mark O’Dea for 14 years. I entered the contest suggesting Goldcorp simply sell gold specimens on the web to add value. You might not think much of the idea but three months after the contest ended, McEwen thought enough of it to do it without so much as a “thanks, Bob” in my direction. So Mark really should at least split the 2nd place prize of $75,000. Plus interest.
All joking aside, Mark O’Dea has added more value to more companies than anyone else in mining in the last 15 years. He took Fronteer from a good idea in 2001, raised $370 million during times when money flowed and sold the company for $2.3 billion in early 2011. In addition, Fronteer investors got one share of Pilot Gold (PLG-T) with their $14 cash per share. Pilot Gold got all the projects Newmont didn’t want and literally started life running.
I wrote about Pilot Gold in 2013 after visiting Kinsley Mountain. It’s one thing for companies to raise money when capital is flowing in every direction and yet another when every lemming is asking directions to the nearest cliff. Mark O’Dea has continued his magic in finding funds to explore even when times are impossible.
But I think what Mark O’Dea really does best and this is one of those things almost impossible to measure, he tries to hire people smarter than himself and then he hands them the reins. He manages by not managing. I’ve only seen this a few times. Most companies are run by people who insist on hiring people dumber than they are and that can be really difficult because there are a lot of dumbos running mining companies.
Pilot announced interesting results last week at their TV Tower project in Turkey. The latest drilling program showed .8 g/t Au equivalent over 357.7 meters. It’s the 5th gold system on the project discovered in the last five years. Pilot Gold is the operator on the project and owns 40% while Teck owns the remaining 60%. Pilot can increase their interest to 60% for funding exploration of $21 million. By the end of 2014, the company anticipates completing the earn in.
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My favorite Pilot project is at Kinsley Mountain that I first visited a dozen years ago. Pilot took over the project a couple of years back and began a major drill program in 2013. “The Rock Whisperer” Moira Smith had a new theory of just what package of rocks the gold would be found in and results to date indicate that her theory of a new Long Canyon Trend is probably accurate.
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Interestingly enough the northern part of the Kinsley Mountain range has never been drilled. The geochemical indications as the map above shows are actually stronger than were the signals at Long Canyon. As soon as Pilot has received the Plan of Operation, they will begin drilling. The BLM has indicated it has been mailed.
The last dozen years has given everyone in mining the opportunity to succeed or to fail. The team with the greatest pattern of success belongs to Oxygen Capital Corporation. Under Mark O’Dea’s umbrella, you have Pilot Gold in Nevada and Turkey, True Gold with two operations in Burkina Faso and Pure Gold with operations in Red Lake, Ontario.
The race is not always to the swiftest, nor the battle to the brave. But that is the way to bet.
I am very biased about Pilot Gold due to the quality of their projects and the depth of their management both technically and operationally. Pilot is not an advertiser but I like them a lot. I don’t own shares in Pilot. Do your own due diligence.
Pilot Gold Inc
PLG-T $.77 (Oct 31, 2014)
PLGTF OTCQX 107.2 million shares
Pilot Gold website