New Conquest Minerals executive chairman, Jake Klein. IN AN industry where many are perhaps better at talking about what they are going to do than actually doing it, new Conquest Minerals executive chairman Jake Klein is surprisingly self-effacing given his track record with his previous company, Sino Gold.
Klein was officially made the executive chairman of gold and silver hopeful Conquest last week and his first hope for his official appointment is to have his own office once again after spending the past few months working from home in Sydney.
Klein is also on the board of rare earths hopeful Lynas Corporation and, since late last year, goldminer OceanaGold, and is the president of the New South Wales branch of the Australia China Business Council. He also runs his own consultancy, DAK Corporation, which was initially engaged by Conquest to help develop a strategy for dealing with the Mt Carlton project before Klein moved into the executive chairman?s role.
When HighGrade suggested it was quite a coup for Conquest to snare such an experienced mining leader as its chairman, Klein laughed and suggested that might not be an opinion shared by some of the people he has worked with previously.
Nevertheless, several ex-Sino employees and management have followed Klein to Conquest in the wake of the Sino-Eldorado Gold tie-up including former Sino directors Nicholas Curtis and James Askew and senior management including Ross Jenkins, Aaron Colleran and Charles Wang.
Klein was reluctant to talk too much about what he will do for the company, preferring to cast the whole endeavour as a team effort and speaking about the ?we? of Conquest rather than his own plans for the small exploration company. And so far, Klein said there had been no adjustment pains in moving from a large and successful gold mining company to a smaller organisation.
?It?s great,? he said. ?I?m really enjoying moving back to the entrepreneurial end of the spectrum. It?s wonderful being in an organisation which is developing its policies, its culture and its people.?
Klein said when he left Sino he reflected his next career move could either be to an established company with existing operations and a pre-existing culture, or a smaller ?blank canvas? where he would have the opportunity to grow something new.
It seems he is looking for the same sort of opportunity he had at Sino, which he helped grow from a junior explorer to a 200,000oz-plus gold producer from two mines in China with a market capitalisation approaching $A2 billion. Of course the Sino story ended with its friendly acquisition by Canadian company Eldorado Gold. While no-one begrudges a happy marriage, the buy-out did leave a gap in Australian gold stocks ? Eldorado has an Australian listing but in terms of home grown gold stocks, beneath Newcrest the next biggest producer is now OceanaGold producing just over 200,000oz, while in terms of market capitalisation, explorer Andean Resources fills the hole in the mid-tier with a market value of almost $A1.6 billion.
This gap is just ripe to be filled, and Conquest?s $A58 million in cash and its Mt Carlton project could be a starting point.
Klein points to the template of Normandy Mining and the example set by the formidable Robert de Crespigny as a model he would like to emulate.
?There?s an opportunity to build another Normandy,? he said. ?Robert de Crespigny did a great job of aggregating quite a complicated set of assets and building it into one of Australia?s great gold companies.
?You?d have to say that?s aspirational ? there is no laid out plan to do that. But I?d be very disappointed if [in a year from now] Conquest was still here with just one asset under its belt.?
Klein, who originally hails from South Africa, spent much of the past 15 years or so in China, or focused on China, with Sino Gold since 2000 and before that with Sino Mining and Macquarie Bank. His time in China left Klein with a good grasp of how to do business in the country as well as a deep respect and admiration for Chinese culture and people.
?For me it was almost life changing because it was such a remarkable journey. The richness of the Chinese culture was one of the things which attracted me to it and to keep going there for 15 years,? he said.
Klein is already capitalising on his skills and knowledge in Chinese relations at Conquest as the company attempts to develop the Mt Carlton project. Unusually, for a precious metals project, Conquest is looking for the sort of Chinese offtake deal more commonly associated with base metals projects, and the company has already identified 14 potential partners in China. The search for an offtake partner comes from the somewhat unique nature of the Mt Carlton deposit. It has a resource of 27.6 million tonnes containing 1.5 million ounces of gold, 40Moz silver and 75,000t of copper and Conquest?s test work on bulk samples from the project suggests it could produce a ?mixed? concentrate, rich in enargite and pyrite, grading 46gpt gold, 346gpt silver, and 6.2% copper.
The concentrate would be sold to one of the 14 potential offtake partners directly, which should help lower the project?s capital costs.
Former Sino deputy general manager Charles Wang, who has ?extensive experience? in concentrate marketing, has been charged with helping secure the offtake partner. The potential partners are also being assessed for their capacity to provide financial backing for the project.
Mt Carlton has a current capital cost estimate of $A138 million ? 48% higher than originally envisioned in a prefeasibility study ? and one of Klein and his team?s major tasks will be figuring out how to bring these costs down.
Klein said one key area where his experience at Sino should help Conquest was in equipment procurement.
?I can assure you that the quality of the procurement process improved dramatically with every one of those mines being built [in China],? he said. ?We have now dealt with suppliers, [and] we?ve worked with people who?ve provided reliable low-cost equipment. If we can source some of that material for Conquest, we would have learned a huge number of lessons and leapfrogged the problems which people who go into China for the first time face.?
The other key attribute Klein has already brought to Conquest is his long-running relationship with South African gold major Gold Fields.
?I?ve had a remarkably successful relationship with Gold Fields, particularly Tommy McKeith, who runs their global exploration efforts,? he said. ?Gold Fields was the largest shareholder in Sino and they are the largest shareholder in Conquest. And that relationship made Sino a better company, and I hope that relationship will make Conquest a better company.?
Conquest?s relationship with Gold Fields became frayed earlier this year over a joint venture agreement covering the Mt Carlton project. The JV was dissolved ?amicably? with Klein?s help, leaving Conquest with full control of the project area, although Conquest has agreed to pay an increased net smelter royalty to Gold Fields of 2.5%, rather than 1.8%.
Klein said the other two major areas of focus for Conquest in the immediate future would be refining the production side, and exploration. The company has committed $A3 million further exploration. And then, beyond the organic growth, Klein is already thinking about how to grow Conquest further through corporate activity and mergers and acquisitions.
While the company has no firm plans at present, Klein said he wanted to create a portfolio of assets to gain traction in the market. From his perspective, this would involve having at least three assets strong stabled with Conquest and growing the company?s share price so it has a market capitalisation of at least $A300 million.
At this level, Conquest will be better placed to tap international capital markets and just maybe become the next Australian mining success story.
Lets hope so .
Dewy
CQT Price at posting:
34.5¢ Sentiment: LT Buy Disclosure: Held
