Virginia Mines

The first moverVirginia Mines once had areas of northern Quebec practically to itself. Today, itÔÇÖs a different landscape, but president Andr├® Gaumond tells Keith Regan that thanks to being first and doing it right, the company has a bright future. When Virginia Mines began as a junior explorer searching for gold and base metal deposits in the James Bay area of Quebec some 15 years ago, the area had seen little exploration and was considered a remote, hard-to-reach outpost. In the years since, the Quebec government has spent billions on roads, bridges, telecommunications infrastructure and hydroelectric dams, making the area far more easily accessible. That investment has turned the region into a far more desirable area for mining, with a supportive, pro-mining government and some of the lowest electric power costs in North America. In short, Virginia Mines president Andr├® Gaumond says, the area is now ÔÇ£one of the most promising places on the planet to explore and develop mines.ÔÇØ Not surprisingly, other firms now recognize the same opportunity, but Gaumond doesnÔÇÖt worry about the competition. ÔÇ£We believe the first-mover gets most of the value,ÔÇØ he says. Virginia Mines also has a massive land ownership stake in the area, with more than 7,000 square kilometers of land under its direct control, including several historic volcanic belts. Today, Virginia remains the most active explorers in the James Bay region with numerous strategic partnerships with other mining concerns. From the start, Virginia Mines set out to follow a five-pronged strategy; staying focused on the opportunities in Quebec, developing an outstanding exploration team that in turn helped attract partners who are willing to share risk and capital expense, diversifying with a portfolio that is two-thirds gold and one-third base metal and to assure a long-term presence through wise financial management and thoughtful community engagement.Indeed, Virginia Mines didnÔÇÖt just arrive first. It also took a careful and deliberate approach in dealing with the areaÔÇÖs First Nation residents, many of whom still hunt and trap on the land. The companyÔÇÖs approach is often cited as a model for other mining concerns to follow in dealing with native peoples, Gaumond notes, and involves keeping all members of the native communitiesÔÇöfrom the chiefs to the owners of the trap lines that cross land that may be exploredÔÇöinformed and involved. Virginia Mines also hires from the native population when possible. The result of its efforts over the past 15 years is a promising portfolio with near- and long-term upside potential. Gaumond notes that Virginia Mines has $50 million in cash reservesÔÇöan unusually high amount for a mining concernÔÇörepresenting about $2 for every outstanding share of its stock, and no outstanding debt. Starting in early 2009, it will begin to receive royalty payments from the sale of its El├®onore property to Goldcorp worth $100,000 per month, revenue it will gain without additional expense. The company also holds three smaller ground deposits of gold around the El├®onore Mine, deposits that may be valuable to Goldcorp, which intends to build a milling operation in the area. Those deposits have been estimated to be worth around $1 per share. Meanwhile, Gaumond believes the most exciting prospect for Virginia Mines is the development of a zinc/copper deposit where it has three drills working around-the-clock as part of a significant investment aimed at bringing production up to speed quickly. ÔÇ£We will generate and create shareholder value there for some time to come,ÔÇØ he says. ÔÇ£That is just the beginning.ÔÇØOne of VirginiaÔÇÖs best assets remains its exploration team. ÔÇ£Right at the beginning one of our goals very simply was to have the best exploration team in Quebec,ÔÇØ Gaumond says. By attracting the best geologists initially, it has been easier to continue to attract top talent since. ÔÇ£When you start building with superstars, itÔÇÖs easy to attract others. The fact that our geologists have won all the major awards in their field and are part of a winning team that is making money and making news, it makes for a lot of passion among our employees.ÔÇØ The company also has strategic alliances with two area universities that supply not only faculty talent but also access to graduating students in the geology field. In addition to its solid portfolio and strong balance sheet, Virginia Mines also values its reputation highly. Drillers and other contractors in the mining business have come to recognize the firm will be around through good times and bad, says Gaumond, something thatÔÇÖs not always true in the up-and-down world of mining, where market fluctuations can change the competitive landscape overnight. ÔÇ£There were some bad years when we were practically the only company giving contracts,ÔÇØ notes Gaumond. ÔÇ£The drillers all have us at the top of their list as a result of that experience.ÔÇØ Employees have recognized that as well and been loyal in returnÔÇöeven though Virginia sold its major gold find, none of the geologists involved with the project left with the asset. Gaumond also believes that being open, honest and transparent with all of its constituents is key to remaining a trusted and reliable exploration firm. It regularly publishes results of its mining efforts, even when the news isnÔÇÖt as good as it hopes. It aggressively keeps the first nation communities where it explores informed of its specific plans for working in the field and keeps the investment community abreast of all its moves. ÔÇ£It takes years to develop a reputation and it only takes ten minutes to destroy it,ÔÇØ Gaumond says. ÔÇ£We have worked hard to build a very good reputation in every aspect of our businessÔÇöfinancially, with our shareholders, with the mining community and companies themselves, with the first nation peoples and the government. We are quite proud of that reputation and weÔÇÖre going to work just as hard to keep it.ÔÇØ  Normal 0 false false false EN-US X-NONE X-NONE MicrosoftInternetExplorer4 /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} *┬á┬á┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á┬á┬á *   ┬áFirst published November 2007