Rob McEwen
Mining a rich online vein of knowledge at US Gold
Last week, Rob McEwen, the CEO of US Gold, took analysts around his latest venture. Banked by hills, the long, flat stretch of Nevada desert known as Tonkin Springs might not have looked like much. But anyone who knows McEwen's history also knows not to count him out when he says he smells gold.
McEwen went against conventional wisdom once before when he took over Canadian-based Goldcorp and then bought a mine that everyone said was just about tapped out. McEwen sank millions into new exploration at the Canadian mine, known as Red Lake, saying he planned on carving out a rich, new vein of ore.
His exploratory holes later proved gold was under the 55,000-acre patch. But nobody was sure exactly where to begin drilling or how long it would take to hit pay dirt. Initially stymied, McEwen did something unheard of in the mining industry. He posted the mine's geological data online and invited the world to help him solve the puzzle. The chosen finalists and semifinalists were promised a share of a $500,000-plus prize.
Shocker. Gold company executives, including some at Goldcorp, were horrified. "In the mining industry, the fundamental assumption is that you do not give away your geological information," says McEwen, adding that the proprietary mine data are seen as the second-most-valuable asset after a mine itself.
But McEwen did it anyway. "People had their minds parked on a shelf," he says, adding that the Goldcorp Challenge brought in dozens of detailed submissions from "online prospectors." Goldcorp then used many of them to drill. "And at the end of the day, [Red Lake] turned out to be the richest gold mine in the world," says McEwen.
Asked what he learned from the venture, McEwen said there were two lessons. First, "when you give, you receive more," he says. Second, steer clear of conventional wisdom. "You need to search for the fundamental unquestioned assumption in an industry and then question it," he says. "If you do that, you will shift your perspective and generate alternatives that people haven't thought about."
McEwen's Tonkin Springs venture will test those tenets. While many people have dug in the area, McEwen believes they just haven't dug deep enough. He sees "a great location and lots of potential." How does he plan to find a rich vein? He'll return to one of his signature innovations. "I'd like to try something akin to the Goldcorp Challenge," he says. Stay tuned.
This story appears in the September 25, 2006 print edition of U.S. News & World Report.