Goldcorp founder a study in contrasts

Oct. 20, 2006. 07:27 AM
LISA WRIGHT
BUSINESS REPORTER

Speaking at the annual Denver gold conference last month, Ian Telfer, Goldcorp Inc.'s chief executive , began with a knock-knock joke that was really just a jab at his former business partner and Toronto bullion mogul Rob McEwen.

"Knock-knock," said Telfer. The audience at the huge industry event played along: "Who's there?"

"Rob."

"Rob who?"

"How soon they forget," quipped Telfer.

But he might want to work on his material. Instead of fading away as some expected when the Goldcorp founder and former chief executive left the company last year, golden boy and marketing whiz McEwen is back on the radar again with philanthropic pursuits, exploration in Nevada and a bitter battle with the Vancouver miner's current management that hits a Toronto courtroom today.

McEwen is seeking an order from the Ontario Superior Court of Justice to force a vote of Goldcorp shareholders on the company's friendly bid to take over Reno-based Glamis Gold Ltd. to create one of the world's biggest gold miners. He remains the largest individual investor with 1.5 per cent of the firm he ran for nearly 20 years and is now its most vocal dissident shareholder.

The takeover will erode earnings and weaken the low-cost gold producer, he argues. Telfer contends the company's executive team is acting in the best interests of Goldcorp shareholders and that McEwen is just out for himself because he's personally lost $55 million since the share price sank 26 per cent after the bid was launched in August.

Whether the Goldcorp drama is personal or just business, it's trademark McEwen, who is never one to shy away from a scrap. It's not exactly something you expect from a charming, soft-spoken guy who wears braces and gold silk ties and hams it up in marketing campaigns perched atop stacks of gold bars.

"I go for the jugular," admits McEwen, 56, while working the phones as usual at a desk that looks like a shiny wooden picnic table in the open-concept, three-level office of junior explorer U.S. Gold Corp.

His wide work space is actually a drafting board, which is true to form for someone who grew up with dreams of becoming an architect until he contracted a serious case of gold fever as a young man. The modern, exposed-brick office near Adelaide and Jarvis St. is quite the departure from the historic building's original use as the much more stuffy Bank of Upper Canada in the early 19th century.

It's a contrast that's not, by all accounts, unlike the man himself.
Those who know McEwen describe someone who is a study in contrasts: mild-mannered yet confrontational, a big thinker who often goes with his gut and a smooth talker with an edge who is both reserved but also quite outspoken and passionate in his convictions.

"He was the smoothest schmoozer in the class," recalls a former student who went to the Schulich School of Business at York University where McEwen got his MBA.

"You knew if he didn't go into politics, he would make it in the corporate world. He's always been quite low-key but it turns out he has some sharp edges, which is surprising. He doesn't back away from anything," adds the classmate who did not wish to be named.

Analyst John Ing of Maison Placements Canada agrees. "Rob is a very tenacious individual so one should ever underestimate the man."

Workers at Goldcorp's Red Lake mine in Northern Ontario found that out when they went on strike in June 1996. The bitter feud lasted nearly four years and was the longest strike in Canadian mining history, resulting in an unprecedented decertification of the union local of the United Steelworkers of America.

Three years into the strike McEwen feared for his family's safety to the point that he installed bullet-proof windows in his home after receiving a death threat.

"You want blood. We'll give you blood," said the anonymous letter. McEwen responded by offering a $35,000 reward for information leading to an arrest, although no suspects ever surfaced.

The strike was a defining moment in his career that cemented the notion that you don't mess with McEwen, a lesson he intends to impress upon Telfer. Just 20 months ago, the two were all smiles and handshakes while hoisting Moet & Chandon when Goldcorp merged with Telfer's Wheaton River Minerals Ltd., a deal that thwarted a hostile takeover of Goldcorp by Glamis.

Times have certainly changed but McEwen remains bullish on bullion. This time around he believes the yellow brick road leads to Nevada where he's spending $30 million over the next two years exploring several properties sandwiched by the operations of giants Barrick Gold Corp. and Newmont Mining Corp.
He equates his fascination with gold to "playing with lightning. You get struck once by lightning and you wonder if it can happen again."

"But this is the speculative end of the market. I happen to like it because of the price leverage, that you can get in low and, if you're right, you can multiply your investment many times," says McEwen, who says his slogan continues to be "gold is money."

While he stops short of calling himself the ultimate gold bug, he does believe the precious metal could scale its old 1980 peak of $850 (U.S.) an ounce in 2008.

"There's no doubt Rob has consistently taken the strategy of exploration and he's doing it again," says analyst Barry Allan of Research Capital Corp.

"He's a believer in Nevada and he's put his money where his mouth is. It's risk-taking but that's what he does: high risk, high return," he adds.