Resource World Magazine

A P R I L / M A Y 2 0 1 9 www.resourceworld.com 15 RESOURCE WORLD: What is your background? JOHN McCLUSKEY: I grew up in Vancouver and attended Langara College and Simon Fraser University where I stud- ied history and literature. I had no interest in mining or geology at the time, although my father came from four generations of coal miners in Scotland and probably would have spent his years in the coal mines too if World War II hadn't inter - vened. He met my mother near the end of the war and afterward they married and immigrated to Canada. I started in the gold mining industry in the early 80s by pure chance. There was a recession in British Columbia at the time and I had just come back from travelling after studies and needed to find work. Fortunately, I was introduced to Chester Millar who was in the early stages of start - ing Glamis Gold. He hired me as assistant to the president – a vague title but an amazing opportunity to see how a mining company was built from the ground floor. It was the perfect training ground for an entrepreneur. The Picacho gold mine in southeast California was just starting at that time. It might have produced 8,000 ounces of gold the first year. We had three or four people in head office – a really lean operation. RW: Chester Millar was a pioneer in heap leach technology so that must have been interesting. JM: What was so interesting was the absolute simplicity of the heap leach pro- cess. That was the beauty of it. It was low capital cost and it worked well for low grade oxide ore. I think Picacho – the first heap leach mine that Chester Millar put into produc - tion for Glamis – was started with a small 5,000-ton heap and bootstrapped from there. I joined not long after we built a 50,000-ton heap which is very small but it generated enough production and cash flow to advance the expansion of the mine. Kevin McArthur was Chief Geologist at Picacho in those days and eventually he became Mine Manager. We were all in our twenties and we were fortunate to work for a visionary such as Millar. He was more than an engineer and entrepreneur. He took a great deal of interest in doing things in new ways. That's how he successfully built Glamis and hardly ever issued shares. By the time that mine really got going, Glamis shares took off from $2 or so when I first joined and it ran to about $30 a share. That was pretty impressive to me! It all came to a screeching halt after the October 1987 stock market crash. When the market crashed, it really hit the min - ing sector hard but Glamis had already established itself and continued to grow over the decades into a multi-billion dollar company. RW: When and how did you get the idea to create a producing mining company? JM: The idea occurred to me in the 1990s. I was involved in three junior exploration companies that I helped to found, one of which was Alamos. Another was Grayd Resource Corp. which I was running as CEO. The third was a company called Inca Pacific. It was a merry-go-round to raise enough money to keep those proj - ects funded with commodity prices going up and down. When prices cycled down, it became almost impossible to raise money and it occurred to me that life would be easier if we could conduct exploration from funding generated through cash flows. That was the germ of the idea. When Chester Millar and I got together in 1994 with the idea of creating a new company to pursue opportunities in Mexico where they changed the laws and made it attractive to invest, we said, "Why don't we try to build another Glamis?" By the time we went public in 1996, it was just in time for another downturn that stayed through to 2003. But by 2001, it was getting to the end of the market bot - tom and I suggested to Chester that we should acquire something and put it into production. The project I had in mind was Mulatos in Mexico. It took roughly two years to acquire control of Mulatos. By 2003, we had done it and I was appointed CEO. We started to drive it forward from there. RW: It appears your business strategy is not grassroots exploration but to acquire advanced exploration projects – is that correct? J M: Yes and no. When we were con- ducting M&A, particularly over the last five years, it didn't make much sense for a company of our size to spend time fiddling around acquiring grassroots exploration targets when what we really needed was advanced resources that we could turn into producing mines, but that doesn't mean we don't do grassroots exploration. We go into areas where there are broader opportunities. Mulatos, for exam - ple, is a high sulfidation system – the sixth largest in the world. When we acquired it, there were roughly 1.5 million NI 43-101 qualified ounces but plenty of explora- tion potential to make things bigger. We ultimately doubled the size of the resource within the Mulatos pit and we went on to make a number of grassroots discoveries ALAMOS GOLD 2019 PRODUCTION GUIDANCE Young-Davidson 180-190,000 oz Mulatos 150-160,000 oz Island Gold 135-145,000 oz El Chanate 15-25,000 oz ❝WHEN WE WERE CONDUCTING M&A, PARTICULARLY OVER THE LAST FIVE YEARS, IT DIDN'T MAKE MUCH SENSE FOR A COMPANY OF OUR SIZE TO SPEND TIME FIDDLING AROUND ACQUIRING GRASSROOTS EXPLORATION TARGETS WHEN WHAT WE REALLY NEEDED WAS ADVANCED RESOURCES THAT WE COULD TURN INTO PRODUCING MINES, BUT THAT DOESN'T MEAN WE DON'T DO GRASSROOTS EXPLORATION. ❞

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