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Christina McCarthy - Mining the capital markets

Geologist and mining specialist Christina McCarthy turned a market crash into a capital opportunity

by Graham Chandler on MaY 25, 2012 profiles

It sounds ironic but when Christina McCarthy lost her field geologist job in the 2008 market crash she quickly turned to that very market for her next career.

Now a Mining Specialist with Toronto’s Euro Pacific Canada, McCarthy was working with Blackstone Ventures at the time: in Norway and Sweden on VMS and nickel-copper deposits.

“I was working on different properties and had a great mentor,” she recalls. “But after about two years, the markets crashed,” and she found herself laid off.

It had been her first full-time position following graduation and just what she had been looking forward to as a budding field geologist.

Born and raised in Hamilton, Ontario, McCarthy remembers her earliest interest in the profession. “In high school they didn’t teach any type of geology courses so I wasn’t introduced to geology until I went to university,” she says. She started as a psychology major at Brock University, but when she got into Geology 101 she was hooked. “I immediately fell in love with geology which led to my degree and I became a geologist.”

The Scandinavia job after graduation was a great experience. She learned hands-on how to do advanced exploration of VMS, nickel-sulphide and IOCG deposits through core logging, detailed mapping, sampling, geophysics, data analysis and presentation. She was loving it. When the market foundered and she was laid off she went back to Toronto thinking, “what am I going to do now? I couldn’t picture doing anything other than geology.”

But her Type-A personality proved to be the solution. “I’m a communicator,” says McCarthy, “and I realized that I could still do what I loved - geology - in the capital markets.” But it was 2008 and no one on Bay Street was hiring. “So I went to an investor relations company that worked mainly with resources and worked for free for the first five months. I just wanted to learn the industry.” Shortly afterwards she caught the attention of the Equicom Group which recruited her for their resource team. “There were only two of us on the resource team - myself and my partner Joanna Longo, a veteran in the capital markets who became a great mentor to me,” she recalls. “We worked many late nights together, building the business, and eventually we thought: why not hang out our own shingle?”

The two of them went off and started their own investor relations company under the BayFront Capital umbrella called 'Terre Partners'. “We ran our business out of a coffee shop in downtown Toronto,” says McCarthy. “With our combination of capital markets experience and technical background, we had new clients and a successful business within a few months.” In addition to IR, they worked alongside the merchant bankers who raised the capital for resource companies. “My role was to look at exploration companies, going through a detailed check list of what made the company great, and great enough to introduce to our clients. When you’re asking investors for those million-dollar cheques, you have to find the best projects out there in a competitive market.”

That experience prepared her perfectly for her present position with Euro Pacific Canada. It’s often hands-on again, at field sites, all over the world. “I fly to Timmins, Mexico, Ethiopia, Bulgaria, wherever the project is, and look at it. I look at the potential and the prospectivity of the project, to determine if it’s something our clients would want to get involved in.” It’s a detailed look: favourable geology, jurisdiction, historical production, cross-sections, the drill core data, detailed maps, engineer and technical reports - everything that’s available.

The position is one of a mediator says McCarthy. “We introduce them to the investors who are going to give them the capital to advance their projects and ultimately get it to the mining stage.” So she sees the needs of both sides.

Today’s investors are sophisticated; they know what to ask. McCarthy uses the example of a prospective gold deposit. “Investors want to know the mineral grades, metallurgy, recovery and strip ratios. Is the deposit comprised of oxide material or is it a sulfide deposit?” she says. If it’s an oxide gold deposit they know it has the potential to be a heap-leach operation, whereas if it’s a sulfide or nickel deposit, smelting and refining may be involved - which may mean a higher capex. Similarly, if there is a high strip ratio and the grades are not high enough, the deposit may not be economic.   

“Questions will include: is this a good grade deposit, do you have a mining Major around you? A lot of investors want to know if there’s potential to have a big enough deposit that you might be taken over or be partnered with someone,” she says. Another investor concern is location. In a mining jurisdiction such as the Timmins - Kirkland Lake Gold Camp,which has exceptional infrastructure and favourable geology with over 150 million ounces of historic gold production, will be attractive. Government or political risk can’t be overlooked, either. And “they want to know about mining laws, permitting, geopolitical and environmental risks,” says McCarthy.

What else do investors need to know about exploration companies? “I would say there is a checklist,” she offers. First of all, “drilling is the truth serum. That’s the only thing that’s really going to tell investors what is there. But drill targets need to be backed up with the right geoscience.” She cites a small explorer in Southern Mexico’s Guerrero Gold Belt along the trend of a major’s mine. “They are doing all the right things first: mapping, soil samples, soil lines, grid lines and trenching. They’re taking all the steps to try and correlate the geophysics with soil samples and trenching; if they are coincident you have a drill target.” An experienced management and technical team are very important as “people buy management”.

McCarthy says many companies try and talk up potential when they don’t have all the necessary work to back it up. “A company that has done all that work, has the coincidental geophysics with soil sampling and trenching, has two check marks to define that drill target.” Investors need the comfort of knowing companies have a good target and are approaching it systematically so they know shareholders’ money won’t be wasted. “Because ultimately the goal is to prove up a reserve and build a multi-million ounce mine.”