Norman B. Keevil: A lifetime of achievement at Teck

In 1979 The Northern Miner named Norman B. Keevil its Mining Man of the Year, citing the impressive string of mine constructions he presided over in the 1970s. Since winning that award Dr. Keevil went on to ensure Teck was part of some of the biggest mining projects over the next 30 years, such as Hemlo, Voisey’s Bay and Antamina.

At the same time Dr. Keevil and his team were building Teck into one of the world’s largest producers of metallurgical coal. For this unparalleled track record and for his unchallenged reputation for honesty, fair dealing and supportiveness, on the occasion of its 100th anniversary, the Miner can find no person more deserving than Dr. Norman B. Keevil to be the recipient of its Lifetime Achievement Award.

In 1939, scientists Albert Einstein and Leo Szilard sent a letter to U.S. President Franklin Roosevelt after three German scientists in Berlin split the atom.

The experiment put the Nazis on a path to building the atomic bomb, and knowing this, Einstein and Szilard compelled Roosevelt to counterpunch — with the Manhattan Project.

The point man for the project was to be Harold Urey, the leading scientist on isotope separation. One of Urey’s first tasks was to assemble a team of leading scientists to help beat the Germans in the race for the atomic bomb.

No one knew much about uranium back then,” Teck Resources chairman Dr. Norman B. Keevil Jr. says. “But my father knew something, because he worked on radioactive dating.”

And so the Manhattan Project, which aimed to end a World War, would also shape Canadian mining history.

Urey asked a professor at the Massachusetts Institute of Technology, one Norman Keevil Sr., to join the Manhattan Project. Dr. Keevil agreed — until it became clear that being Canadian meant it would take a year to get security clearance. Rather than wait, Keevil turned down the offer and came back to Canada.

Norman Keevil Sr. was 38 years old when he returned to his homeland to teach at the University of Toronto, and his son, Norman B. Keevil, Jr., was just six months old.

The call of Temagami
Norman B. Keevil’s first exposure to geology came a decade later, while spending time with his father on the waters in and around Lake Temagami near North Bay, Ont.

The Keevil family had a cottage there, and canoe rides along 3,000 miles of shoreline — with its striking bays and wild islands — instilled in the family a deep respect for the land and excited a natural curiosity for the rocks that formed the landscape.

“We used to go down the west shore of Lake Temagami, mainly for a canoe ride, but if we saw a stream, we’d sample the sediments,” Dr. Keevil says. “Occasionally we’d get high amounts of copper, but as it turned out that had nothing to do with [what would become the Temagami mine], since we weren’t working in the area around Temagami Island itself.”

By the time the junior Keevil was 16, in 1954, Temagami Island would play host to the first key asset in the Keevil mining dynasty — the Temagami copper mine.

“The lore is that a large magnetic anomaly brought my father to Temagami,” Dr. Keevil says. “But I think it was just because it’s a really nice lake,” he adds with a hearty chuckle.

Whatever the case may be, the Temagami mine produced some of the highest-grade copper ore in the world, and turned out 80 million lb. copper, 230,028 oz. silver and 13,271 oz. gold.

“We didn’t even need a mill at first, since the deposit was grading 28% copper,” Dr. Keevil explains.

Almost an Academic
While Temagami was being proven up, Norman B. Keevil Jr. was a student at Lorne Park Secondary School. From there it was off to U of T to study geological engineering, from which he graduated in 1959.

Having decided to do his PhD in the States, the next step was to secure the funds to support his young family while completing his studies.

“I applied to Harvard, Berkeley, Stanford, Chicago and MIT … and I asked for work as a research or teaching assistant,” he explains with a smile. “Four of those schools offered $125 a month and Berkeley offered $150 a month, that’s why I went to Berkeley … It’s tempting to say I chose Berkeley because they have more Nobel Prize winners than any other university in the world, but that wasn’t it.”

The school also attracted some of the top minds in mining — one of whom was Stan Ward, considered by many to be the top geophysicist at the time. Ward would become mentor to Keevil.

But Ward wasn’t the only influence on the young Keevil’s mind. Part of his doctorate at Berkeley required him to go up to Merritt, B.C., to work for Placer Development, the predecessor to Placer Dome, for his thesis. So with his wife and three children, the Keevils shuffled between Berkeley and Merritt for three years — gaining valuable corporate insights as he did.

“I became really impressed with Placer Development,” he says. “It was, in my opinion then — and I have had no reason to change my opinion since — the best mining company in Canada. Maybe the world.”

Keevil gives much of the credit to the company’s former CEO John Simpson, and credits Simpson as a key inspiration on the corporate side of how to run a mining company. But despite Simpson’s influence, the pull of Utah was proving strong.

“At that time I was planning to teach geophysics at the University of Utah,” he says. “Stan Ward got me an offer to set up the department of geophysics, and I was all set to take it … I probably would have become a great skier.”

Another force, however, emanated from Toronto, and it would prove powerful enough to thwart Dr. Keevil’s academic aspirations.

“My father never pushed me to come back. But my mother called, and said: ‘You have got to come back because he wants you to come back,’” Dr. Keevil recalls. “I said, ‘Well, he hasn’t asked me.’ And she said: ‘He’s not going to ask you, but he needs you.’”

Dr. Keevil returned to Canada and to Teck in 1963 to serve as vice-president of exploration. He was just 25 years old.

On to Afton
Through the 1960s, Keevil’s corporate abilities shone through. His years at Placer taught him the importance of finding the right assets, and his years of study, along with his father’s ingenuity, gave him access to some of the best geophysical tools and people to help find them. At this age Keevil already had a handle on a mindset that would lead to the future Teck being heralded as ‘one of the great diversified mining companies.’

“The reason we’re diversified is because we’re prepared to be — we want to be. Not for diversification’s sake, but we want to be able to go and pick the best opportunities,” he explains. “If you want to be in nothing but gold, you’re going to have a very small number of opportunities to look at.”

This quality-driven, opportunistic mindset was on display in an early Teck acquisition that Dr. Keevil had a hand in executing.

The story begins with Chester Millar, who would go on to found Glamis Gold. Millar was a diamond driller in the late 1960s, but on days off would take his diamond drill beyond the highway near Kamloops and drill. He discovered the Afton deposit, which, as a mine, would define Dr. Keevil’s tenure at Teck.

“People thought it wasn’t economic because it was all native copper, not the chalcopyrite most Canadians were familiar with,” Keevil says. “The story in some parts of the business was that you can&r
squo;t mill native copper, ignoring that the first copper mines in North America were native copper. You can mill it.”

Dr. Keevil didn’t go out to find a copper deposit when he became aware of Afton, but he recognized its potential, along with his vice-president of mining Bob Hallbauer — whom Keevil had known in his days at Placer Development, and had managed to poach from the company.

Millar, however, rebuffed Keevil and Hallbauer’s overtures, saying he didn’t have the appetite to do the “ultimate” deal yet. Instead he advised the two to simply buy shares in the open market.

At the time Teck had a $30-million position in Mattagami Lake Mines. So Keevil and Hallbauer devised a strategy whereby they’d sell their non-controlling position in Mattagami and use the funds to gain a controlling position in Afton.

“I’ll never forget: Bob and I came back and tried to talk Dad into doing it,” Keevil says. “It was not an easy sell — he had just finally assembled all the outside shares in Mattagami, and Noranda had finally invited him on board. Before then he had no involvement at all. So he’s really happy about it, and then we come in and say: ‘We’ve got to sell it!’ It had all the earmarks of a non-starter.”

It took some convincing, but the senior Keevil finally bit the bullet. With that, Keevil Jr. and Hallbauer got to work, and in just three and a half days they bought 51% of the company — 45% of which was acquired in the open market.

“We went to see Chester again,” Keevil begins. “We said, ‘We have a fairly good position.’ He didn’t know it was us, but he knew something was up.”

While Afton would later bring in Placer as a tactic to dilute away Teck’s controlling position, Teck eventually bought Placer out, and in 1978, Afton went into production and became a key Teck asset.

Move to Vancouver
The Afton deal not only secured for Teck a solid copper asset, it also crystallized a growing feeling in the company’s executive suite that Vancouver would be the best place for Teck’s head office to be.

Moving out west also soothed things over on the social side for Keevil senior. “Dad was going through — well, he and I are both sort of serial monogamists — and he was going through one of his transition periods, and felt that getting out of town was a good idea.”

But the transition across the country came with its own unforeseen hiccups.

“In early 1972 we announced we might move, and we arranged a press conference. It was our first press conference, and it was almost our last,” Keevil recalls.

The conference was arranged through the same PR person that worked for the B.C. Premier William “Wacky” Bennett — who called an election soon after Teck announced it would move.

“We had never met Wacky before or after, but everyone assumed that since we had the same PR guy we were in cahoots with him, which was fine,” he says. “He had won six elections in a row, and he was a good guy, I suppose.”

Good guy or not, Wacky had a unique style, and he would often go into the interior of B.C. without tipping off the press — a habit that made his return to the capital a bigger event.

For reasons unknown to Dr. Keevil, their shared PR person announced that Bennett would be at Teck’s press conference, turning a humble affair into a press scrum, with 40 press members hollering for Bennett — who was nowhere to be found.

The situation overshadowed Teck’s announcement, and furthered the impression that Teck was connected to Bennett in some way. So when Bennett lost the election to Dave Barrett, things became complicated for the company.

“We were working on a coal property in B.C. at the time,” Keevil remembers. “And the first thing Barrett does is call Bob Hallbauer and me over, and says ‘I want your coal.’”

The government put a $20-million offer on the table for Teck’s Sukunka coal project in the province’s northeast — an offer that Keevil now sees as reasonable, due to the fact that Sukunka has yet to be put into production.

But at the time Teck had no interest in selling, and the government took strong-arm tactics to force Teck into a deal. The deal, however, ultimately fell through when the B.C. cabinet said it would drop its option and not buy it.

“Now it wasn’t an option, but that was OK — we hadn’t wanted to sell anyway,” he says. “And we got it back.”

Coal
Sukunka wouldn’t become a mine, but it kept Teck in the coal business, and just five years after the ordeal with the B.C. premier, Teck had another coal project in the northeast that would launch Teck into the coal space in a big way.

The Bullmoose project was discovered in 1977, and Keevil says it was clear early on that it had an open-pit coal mine on its hands.

Built between 1981 and 1983, Bullmoose and Teck’s later string of coal acquisitions marked a chapter in its corporate history that almost didn’t get off the ground, due to the onset of a recession and the resulting tight capital markets.

“If we hadn’t refinanced Bullmoose in the teeth of the recession gale, it would have been us that got executed, and not us that was doing the executing,” Keevil says, referring to Teck’s major financial restructuring and debt control just before the 1981 recession.

Teck pulled off the restructuring in large part because of its recent operational successes. The company came out of a string of winners after building Newfoundland Zinc in 1975, Niobec Niobium in 1976 and the Afton copper-gold mine and smelter in 1978. All were completed on time and on budget.

“We ended up building Bullmoose 15% under budget, which was a combination of a solid budget to start with, and the fact that the recession meant the trades were hungry for work,” Dr. Keevil says. “It was a great time to build if you could get it financed.”

By executing on Bullmoose the company could invest in the old Balmer mine, which became the Elkview mine. After Elkview the company took over Fording Canadian Coal Trust’s coal assets and put all the Canadian metallurgical coal mines together into one partnership.

“So aside from being a great investment,” Keevil says, “Bullmoose got us into coal, and now we’re the second biggest shipper of seaborne metallurgical coal in world … we’re second only to the BHP Billiton-Mitsubishi partnership in Australia.”

But the Teck story isn’t just about copper and coal. The company also helped build one of Canada’s great gold mines: the David Bell mine at Hemlo.

Hemlo was discovered in May 1981 by Murray Pezim’s International Corona Resources. Teck and Long Lac Minerals were quick to try to strike a deal with Pezim, but “Pez” wasn’t having any of it.

Fast forward to November. Markets were suffering from a recession that was as severe as the 2008 recession, and Pezim found himself in a selling mood.

“Murray being what Murray is — a self-admitted manic depressive who was on medication to control it — he would have his ups, blowing money right and left, and then raising it, and he would have his downs,” Keevil says. “On one of his down days he calls me up and says, ‘Norm, I’ve got to do a deal on Hemlo right now. So I said: ‘Would you like me to come over to your office? We were virtually across the street from him. He said, ‘No, I’ll come over to your office,’ and in five minutes we were done the deal.”

Pezim called Keevil almost first, which speaks to both his and Teck&
rsquo;s reputation for dealing fairly and squarely with companies — often giving Teck the first crack at emerging discoveries throughout its history.

The quickly agreed upon deal gave Teck 55% of Corona’s shares if Teck put the mine into production. But after coming to terms, Keevil tabled a plan to refine it a little more. He proposed that rather than have Teck acquire 55% of Corona, it could acquire 55% of the property, leaving Corona as an independent company and making the deal more tax efficient in the process.

“It was very smart at the time, but it didn’t work out,” Keevil says. “The reason it didn’t work out was that in the end Corona got taken over by other people, so we were no longer dealing with Murray. In hindsight if we would have had 55% of Corona, we would have had the whole thing, because we would have brought it all in at some point. I was probably a little too smart for my own good.”

Diamond Fields of Nickel
Teck had not been overly keen on nickel in the years leading into Robert Friedland’s Diamond Fields Resources’ discovery at Voisey’s Bay in Labrador, but the discovery was of such magnitude that it caught Keevil’s interest — although consummating a deal came only after Keevil offered some non-self-serving advice.

“Robert came to me more as a friend and asked: ‘What would you do if you were me?’ I said, ‘I’d keep on drilling, and not think of the ultimate deal just yet.’” Keevil recalls. “If he was prepared to do the ultimate deal I would have done it, but he wasn’t, so I thought I’d give him some good advice.”

Rather than push for the big deal, Keevil offered to take a 5–10% equity position in Diamond Fields, along with engineering and feasibility study assistance.

Once the two agreed in principle, it was passed on to their respective legal teams.

“The lawyers were negotiating the details and our lawyer came in and said: ‘Norm, we’ve got a problem.’ I figured, ‘Oh no, it’s all gone wrong.’ He says: ‘You have to tell me if it’s five or if it’s ten percent.’ So I said, “Well, better make it ten percent.”

That casual, almost off-the-cuff statement ended up netting Teck hundreds of millions of dollars.

Teck wound up paying $110 million for that 10% stake — a large amount at that time for a non-controlling interest in a discovery. But it didn’t feel like a capital crunch at the time, as it closed a bought deal to replace $100 million of that capital just a month after the investment.

“What that meant was that when we did sell our stake in Diamond Fields for $480 million 16 months later. It wasn’t less the $100 million, we suddenly had $480 million in cash that we didn’t have before … and that’s when we went on to Antamina,” he says.

Antamina
When Teck made its big move on Antamina, copper prices were low, the overall market was in the dumps owing to the Asian crisis, and the task of building a mine at the site was seen as a black hole for capital due to its high elevation. Put it all together, and you had a great buying opportunity, from Teck’s perspective.

Teck and Noranda bought Inmet Mining’s 50% stake in Antamina for $70 million in cash. The deal left Teck, Noranda and Inmet’s former partner at Antamina, Rio Algom, with a 33% stake each, and a combined commitment to spend $2.5 billion on the project. That stipulation had the market fretting not only about the 4,300-metre elevation, but also the financing of such a large amount.

It was a big bet to make during the Asian crisis, and one that Teck likely wouldn’t have made if it weren’t flush with cash from the Diamond Fields transaction.

“We had some experience by building the Quebrada Blanca mine in Chile at a similar elevation,” Keevil says. “And while that project did have cost overruns, the experience taught us what to do differently.”

The market stayed negative on Teck more than three years after the Antamina acquisition, but time has a way of showing the wisdom of once unfashionable decisions. The mine became one of Teck’s all-time best returns on a large investment, and Teck’s share price reflected Antamina’s contribution in the early part of the last decade.

“It was one of the best things we did, but we got crucified for it by the market at the time,” Dr. Keevil remembers. “It was three years in the penalty box. Even Tie Domi didn’t get that much.”

Words of Wisdom
Dr. Keevil sits in a privileged position, having steered Teck over many decades through the ups and downs of commodity cycles. For anyone looking to glean some of the wisdom he has earned over that time, Dr. Keevil offers the following:

“The ideal way to play the game — but it’s not easy to do — is to not be so enthusiastic at the top of the cycle that you blow everything, and then at the bottom to have the wherewithal to acquire things. Because obviously, that’s when we got Hemlo, and it’s when we got Antamina.”

For juniors — which Teck has a sterling reputation for supporting — Keevil offers a simple way to raise capital in the current spate of market turbulence.

“Give us a call,” he says with gentle laugh. “Send us your best and your finest orebodies.”

Sounds simple enough. But as Dr. Keevil has proven throughout his illustrious career, success lies in the ability to execute — and avoid being executed.

Source: The Northern Miner