This is a very long posting. I examine what we know, or can glean, from LeVier’s history and how that might inform us of what is currently happening. His tenure at Texas Rare Earths has no doubt had a critical influence on his current perspectives. I also examine the current delayed PEA below and provide some new information that Dwight sent me today.
Marc LeVier’s History
LeVier’s background is in metallurgy. 22 years at Newmont and was Senior Director of Metallurgical R&D. His only previous role as CEO was at Texas Rare Earths for 16 months. No doubt at Newmont he was in charge of larger budgets and projects. Marc was also past president of the Society for Mining, Metallurgy, and Exploration.
Troubled Tenure at Texas Rare Earths
There is not much you can glean from the web on what went on at TRE, but going through the SEC filings allows a picture to develop. Daniel Gorski was President and CEO of TRE from 2006-2011 when LeVier was hired as CEO. Gorski owns 20-30% of TRE. Gorski stayed on as Director and, if I remember correctly, as an executive as well for some time before resigning his executive position. Within ~4 months or so there was the AGM and LeVier received many fewer votes than anyone else on the company ballot. Given no alternatives, he was elected along with the rest of the slate of directors. It appears that Gorski withheld his shares from LeVier. Around this time, the independent directors initiated an investigation of claims Gorski had made during investor presentations, found them to be unsubstantiated by empirical data, and reported this to the SEC. The issues here were inflated resource estimates, as I recall. Gorski, as director, was pushing repeatedly for raw data from LeVier and was being rebuffed. It is clear that Gorski could not let go of the reins and was incessantly meddling.
Then the PEA came out and apparently Gorski went ballistic. TRE’s PEA involves a massive amount of capital and the IRR was not impressive. LeVier was pushing forward to refine the estimates and do a feasibility study which would have required raising capital and equity dilution for shareholders. Gorski, along with some partners who together controlled 40% of the stock, pushed for a shareholder’s meeting to replace the executives and directions and the independent directors all resigned, as did LeVier and the rest of management. Gorski returned as CEO and his plan has been to mothball everything and wait for a buyout. Good luck there. He is adamant about zero equity dilution. Read their corporate presentation
It is quite amateurish and basically argues against the PEA. Remember that PEAs are preliminary and have expected errors of +/-30% or so.
Gorski comes across as a nutcase. TRE is not going to get bought out by a major without substantial refinement of metallurgy, resource estimation, and cost estimates from a feasibility study. Even then it would be a long shot and just not going to happen in the present market.
This entire history may explain why Jim and Gary resigned as Directors. They were not “pushed” out, but rather may have left in order to have a clean shift in management. I imagine that LeVier would have been extremely reluctant to take over as CEO with the old guard hanging around as directors given what happened at TRE. What has happened at GWMG is simply good management transition. Note: similar to what happened at TRE, I expect we may see some of LeVier’s former Newmont colleagues join GWMG shortly.
Delayed PEA and LeVier’s Expertise.
Remember that LeVier’s forte and expertise is metallurgy. Thanks to Tallyup for posting the link to the book that LeVier helped edit. He did not write those chapters, which were from a conference sponsored by the SMME society LeVier was a past president of. Gary is a geologist and Jim’s background is finance. GWMG does not have anyone with expertise in practical metallurgy and starting up mines (Zhao seems more academic and is focused on the separation plant). LeVier fills this needed gap and his expertise is needed at this critical junction.
From page 12 of the book Tallyup linked to (http://books.google.ca/books?id=q1iiQUczjuQC&pg=PR1&lpg=PR1&dq=interviews+with+Marc+Levier&source=bl&ots=PqBwxyM6xN&sig=zj_OBGgWHFXkeFrhoWULg9YB_EY&hl=en&sa=X&ei=WjkLUcLeH_GCyAGliYGoDw&redir_esc=y)
If the use of some new, or leading edge, process, or new type of equipment, or anything else new is absolutely essential to the economic viability of the plant being designed, go ahead. If not, don’t.
From this fourth rule (bold in original text), solid phase extraction is off the table since it is not essential to the economic viability of the project.
The sixth rule (page 13)
You can have it fast.
You can have it cheap.
You can have it correct.
Pick any two.
LeVier is focusing on correct here and NOT fast. I have had confirmation from Dwight this morning (Australia time) that the “additional metallurgical testing” mentioned in the PEA delay release relates to the chloride plant, not separation. So LeVier is making absolutely sure that the flow process (grinding, milling, leaching, etc) is absolutely correct. Read pages 9-10 and the First Rule and the discussion that follows it. It emphasizes how important it is to lock the flow sheet down before doing plant design and to make sure that you examine and test different parts of the deposit, not just one sample, to make sure that your flow sheet works across the range of different types of ore (here that would be Monazite that has different percentages of REO in it). To provide one quote from this section of the book, the most common problem of poor startups and plant failures is “Pilot-scale testing was incomplete or may have been conducted on non-representative samples.”
I have come to the conclusions that LeVier is crossing ts and dotting is. Making sure everything is correct and accurate before proceeding. GWMG will not be moving towards a feasibility study after this. Flow sheets and plant design need to be accurate NOW. Will this slow us down? I think not. The separation plant is the weakest link and will be the last part completed unless we would be sending chloride to GQD for separation in China until the SX facility is complete.