From Darren Pylot’s ninth-floor corner office, the lush roof of the Vancouver Convention Centre blends right in to the North Shore Mountains, providing a refreshingly natural outlook. When the 41-year-old Pylot first heard of the green-roof plan, he didn’t understand the purpose of the grassy pitch, but now that it has transformed his view, he can appreciate the vision of those architects.
People were similarly skeptical when he announced plans to merge his Capstone Mining Corp. with Sherwood Copper Corp. at the height of the economic meltdown in 2008. “When we did the merger with Sherwood, it was early September and the market was very much in favour of it,” Pylot recalls. “And then we got into mid-September when the world was coming to an end and both companies faced a lot of criticism about this type of deal in this type of an environment, when having debt could be perceived as a very risky thing.”
Confident in the company and its assets, he proceeded with the merger, and on Nov. 24, 2008, Sherwood was rolled into Capstone. The merged company now operates two base metal mines: Capstone’s original Cozamin copper mine in Mexico and Sherwood’s mine in Minto, Yukon. Pylot gave up his president title to Sherwood’s Stephen Quin (who is also the company’s COO) to become Capstone’s vice-chair and CEO. The merger meant twice as many staff, double the production and the addition of Sherwood’s exploratory Kutcho mine outside of Dease Lake in northern B.C.
By March 2009, the skeptics were hushed by the newly merged company’s first-quarter production: a record 25.1 million pounds of copper from its two properties, worth an estimated $30.7 million (based on the market price of $1.05 a pound). That puts the company on pace to reach its production estimate of 105 million pounds for the year. But its goal for the year doesn’t end with the production of these two mines; Pylot has his eye firmly set on growth.
In April 2009, the company raised more than $50 million in capital to pay down some of the acquired debt from Sherwood and to put it within striking distance of base metal properties hurt by the economy. As Pylot sees it, “We have the balance sheet and the cash flow, at these current prices, to grow when others can’t; we feel that we should have a leg up.”
And while he is aggressively looking for growth opportunities, the company has reached its current position of power by adopting a conservative hedge policy. Capstone forward sells about 20 per cent of its copper at a set rate to ensure that the operational costs of the mines are covered.
Despite Capstone’s impressive showing on the top of this year’s list of fastest-growing public companies, it’s the future that excites Pylot; he hopes to cash in on an underappreciated metal. “Gold and silver get all the glitter,” he explains, “whereas copper, boring copper, is used in everything: electronics, electric buses, power grids. It’s more of a standard of the economy because if the world is cranking, copper is going to be needed.”
