The Gold Report: Duane and Morgan, talking with you is a wonderful opportunity to introduce our readers to the prospect generator business model, which Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE) pioneered. Can you tell us how that came about?
Duane Poliquin: Early in my career as a geological engineer, I worked around the world for companies like Placer Development and Kaiser Steel. Along the way, I became a goldbug. In 1972, I quit my job and announced to my wife that I was going to start my own gold company. We found a nice prospect in Nevada, and two years later did an initial public offering (IPO) for what was called Westley Mines Ltd.
The markets were terrible then, so the first people I hit up for the IPO were family and friends. They bought up 40% of it and I was having a hard time selling the balance. Necessity being the mother of invention, I went to a major company that wanted to option the property. Instead of a down payment on the option, the company took part of the IPO financing. At that point, the brokers jumped in and cleaned up the rest of it.
After some drilling we got the property back, we drilled more holes on our own and optioned it out yet again. With more drilling, it became obvious that it would be a mine. The stock had moved from $0.40/share to as high as $7/share and shortly thereafter we were bought out. The company that acquired Westley, in turn, flipped it to Homestake Mining Co., which actually mined it. It was a win-win-win, and it became our model.
In those days, brokers were not interested in a company being run by a geologic engineer. They wanted to deal with a promoter. Well, I was my own promoter. I had generated prospects for my previous employers, so I figured I could generate new properties, get some payments from outsiders and keep some percentage to keep the doors open. That was the beginning of the prospector model. I did a deal on the prospect, kept an interest and the other company worked on the project.