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Amid a long industry slump, this career miner sees light at the end of the tunnel

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Tuesday, November 13, 2018 – Page B1

Sean Roosen's motto is "SUDS." It stands for "shut up and drill, stupid!"

The mining executive says it's a message his industry needs to embrace as it battles through another slump.

Environmental protectionism has gone too far, mining permits need to be more easily obtained and there's too much interference from non-governmental organizations (NGOs), which he says "do nothing" for the economy.

The loud, burly career miner is no slick Bay Street executive. He calls himself a "hillbilly."

But mining people listen to him.

Mr. Roosen heads up one of a handful of Canadian mining royalty companies, but he's best known as part of a trio who founded, developed and built Canadian Malartic, Canada's biggest gold mine.

In the process he pioneered a new method of mining that revolutionized the notoriously slow-to-innovate industry.

Over the past few years, he's also emerged as an outspoken advocate for the Canadian mining industry.

Earlier this year, sporting a bold windowpane-check suit, Mr. Roosen delivered a state of the union keynote address at the Prospectors & Developers Association of Canada conference, the world's biggest mining conference, that was half rant and half call to action.

While he acknowledged the many deep-rooted problems the industry faces, including difficulty raising capital, waning interest from investors and the massive flight of capital out of mining and into marijuana stocks, he also pleaded with the remaining investors to stick it out.

"The only advantage we have as Canadians is our resource base and our territory," he said.

"We need to use it, we need to drill early, drill often and build mines."

Mr. Roosen grew up in Muskoka in Ontario's cottage country, but he wanted a bigger life. While working as a labourer on a swank vacation property in Muskoka in high school, he had a eureka moment.

"[The owners] are in there having beers and I'm out here shovelling gravel. How did they play the game so differently?" he wondered.

Turns out they were miners.

Not long after, he enrolled at the Haileybury School of Mines in Northern Ontario to study mining engineering technology.

To pay for tuition, he took an underground mining job in Timmins. After graduating, he worked winters as a drill foreman in James Bay and summers in Baffin Island. The money was good, but it was tough physical work.

"You're in the bush, living in tent camps, 12-hour days, shifts outside, minus 50."

After a decade he was done and decided to "go off on an adventure." He took a job with an exploration company in West Africa on the border of Ivory Coast and Liberia.

"It was a classic prospecting play - go find a red dot and drill it," he says. His timing wasn't the best. He rolled into the country in 1987 as the First Liberian Civil War was breaking out, with the militia of then-guerrilla leader Charles Taylor running wild.

Over the next 13 years, he worked in some 22 West African countries, lived through a number of coups, experienced employee kidnappings and had his equipment stolen on multiple occasions.

"Not everyone in West Africa plays nice," he says. "Somebody decides to rob your camp, there's no 911."

One of his specialties was venturing into old colonial mining camps, in countries such as Burkina Faso, Niger and Mali. While the British and French had dug out the high grade ore, he often found that there was significant quantities of low-grade ore that could still be mined economically.

Back from Africa, he connected with fellow geologist John Burzynski. "We met up and we said, 'Nobody's been doing [low-grade mining] in Canada in the old mining camps,' " Mr.

Burzynski said. "'There's got to be a lot of low-grade material that's been left.' " In 2003, they founded Osisko Mining alongside Bob Wares, another geologist. The trio began looking around for earlystage, low-grade Canadian gold projects to acquire. If costs could be driven low enough, a low-grade deposit could be profitable thanks in part to economies of scale from the 240tonne mining trucks and 500-tonne shovels that were now ubiquitous in Canada's oil sands.

One site the team zeroed in on was Malartic, a depressed mining town in northwestern Quebec, once home to a highgrade underground gold mine that had shut down in the 1960s.

"The Tim Hortons had actually gone bankrupt, and you could buy a house in Malartic for $45,000," Mr. Roosen said.

The men pored over reams of geological data from Malartic, some of the data going back 70 years. Soon they were convinced that there was a massive deposit of low grade material that it could mine economically - if the operation was big enough. In the fall of 2005, Osisko announced Malartic contained 4.3 million ounces of gold. Initially, there was great skepticism among investors. It would have to be mined by building a massive open pit - a rarity in Canada at the time.

The deposit was also located right on the edge of town with some houses sitting on it, quite literally. The trio went door to door with "a six pack of beers and a box of frozen burgers" and asked hundreds of families if they'd be willing to relocate to make way for a gold mine that could potentially resurrect the town. The other great hurdle was money. Osisko needed a billion dollars build the mine and infrastructure, and relocate residents, and the time frame was late 2008 - in the middle of the worst financial crisis since the Great Depression.

Mr Roosen says he remembers a shareholder telling him: "God himself doesn't have a billion dollars right now. He's not going to give it to that dumb miner."

But in early 2009, a window opened. Osisko managed to raise $650-million in a bought financing deal, bringing in marquee investors such as Eric Sprott. The company raised much of the remainder through a debt deal with pension funds Caisse de dépôt et placement du Québec, the Canada Pension Plan Investment Board and Fonds de Solidarité FTQ.

Osisko ended up building the mine ahead of schedule, in a tight 19-month window, physically moving 140 homes, building another 100 new houses and a number of other city buildings, including a primary school and a seniors' long-term care facility. In 2011, Canadian Malartic went into production and over the next few years became the biggest mine in the country.

Majors took notice. In 2014, Goldcorp came in with a hostile $2.6-billion offer, worth $5.95 a share - a bid Mr. Roosen characterized as "chintzy." Then Agnico Eagle Mines Ltd. and Yamana Gold Inc. surfaced, combining as a white knight.

"A lot of lawyers got paid a lot of money to pull the feathers off of each other," Mr. Roosen said. "We ended up in a right good donnybrook dust-up. Just the kind of bar fight a guy from Northern Ontario likes."

Ultimately, Yamana and Agnico won out over Goldcorp, paying $3.9-billion for Osisko. While Mr. Roosen had lost his "baby," he'd extracted a huge premium for shareholders. As part of the deal, a new royalty company, Osisko Gold Royalties, was spun off with a 5-per-cent royalty on Malartic as its flagship asset.

"If you think of what he got done, in the time it took, it was a really amazing accomplishment, based on original thinking," said Rick Rule, CEO of Sprott U.S. Holdings Inc.

As meteoric as Mr. Roosen's rise with Malartic was, the past few years running his royalty company have been a lot tougher. In 2017, Osisko Gold Royalties paid $1.1-billion to buy a large royalty portfolio from New York private-equity company Orion Mine Finance Group, an event that initially caused a big bump in Osisko's stock. But the tide has come in, revealing some cracks. Among the mines Osisko gained exposure to was Brucejack, a Pretium Resources Inc. property that has had production difficulties after experiencing geological problems. Osisko also had to take a writedown earlier in the year on Goldcorp's Éléonore mine in Quebec, one of its earlier royalties.

Mr. Rule's Sprott is a shareholder of the royalty company and believes that in the long term, as he did with Malartic, Mr.Roosen will get it right, but things will likely be bumpy along the way.

"He's extremely aggressive but unlike a lot of guys he's a good thinker," Mr. Rule said.

"He's easy to underestimate because he's so casual. He shows up sort of dishevelled, but he's sharp as a tack. He's an amazing worker. He's good technically. He hires well and he instills a lot of loyalty from the people who work for him."

And the people who party with him. "The after-dinner or PDAC experience with Sean Roosen can be lethal," Mr. Rule said. "His late-night drinking sessions with the boys are legendary. I'm good for about half of it or I'm crippled."

Mr. Roosen could have easily retired after selling Malartic.

He's 55 years old, has a nice house in Montreal and now owns his own vacation property in Muskoka. But retirement isn't remotely on the horizon for one of the great characters in Canadian mining.

"I'm not going anywhere," he says, saying that he's not interested in traditional pastimes. "I really don't like golf much.

Unless we can bring shotguns."

Associated Graphic

'The only advantage we have as Canadians is our resource base and our territory,' says Osisko CEO Sean Roosen. 'We need to use it, we need to drill early, drill often and build mines.'


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