What are your current plans and projects in Colombia?
KENNETH NIALL YOUNG Over the past five years, we have been looking at prospects and undertaking exploration. We are also coming to terms with the geology and working to understand the controls on emerald mineralization and the development of emerald deposits in Colombia. We are primarily an exploration and mining company, though one of our shareholders is a diamantaire and major jewelry manufacturer. The company's objective is to explore and ultimately mine minerals. The company has extensive expertise in exploration, mining and sales and marketing of colored gems. Today, we are focused on the top three colored stones: emeralds, rubies, and sapphires. We are only looking for the best, and the best emeralds in the world are found in Colombia.
CHRIS HARRIS Hexa Resources is an integrated emerald and colored stone business. It is different from many other businesses in this space in that we look to mine, buy, cut, and sell emeralds globally. We are in Colombia because it is the premium emerald location in the world. For 500 years, the emeralds from Colombia have been the best in the world. I want to build a suite of premium stones, which is why we are in Colombia. Our intention is to start with small acquisitions, build relationships with the right people, and then move into production. We want to build a sensible business that looks after its workers and benefits the community. This is extremely important for the company.
What is your approach to social responsibility and ethical mining?
KNY We seek to set up emerald mining here in a more commercial and sustainable way. At the minute, it is common for mining licenses to be held by 13-14 shareholders, which is difficult to deal with. Mines often work on a production-sharing basis, where the shareholders will split production, which is not the optimal way to do it. The contractors work on a production-sharing basis, and there is no incentive for them to put in a great deal of capital into the mine when they could be replaced at any time. We would like to develop sustainable operations with long-term plans so that people can have the assurance of ongoing employment. That will attract additional investment and much more stability. From a business perspective, we look to develop mines that are larger than they currently are, well planned, well maintained, well-funded and that will run for a long period of time.
CH Our approach is extremely informed by the fact that two core members of our team, including myself, worked at BHP Billiton for a decade. Social responsibility is a key aspect of how we approach the business. When we look at an area, we look at how we can help the community. We will invest more than the tax required into the community. We are interested in doing things that genuinely help the community rather than lip-service investments. We want get involved in investments like renewing brick factories and helping build businesses that bring more work to the community. We are interested in investing in things that can develop and build communities, so they are truly transformed. Due to the emphasis on mining in the communities we work, this could also include training people in mining and geology techniques. It could also include bringing in new agricultural skills.
What role do you expect the Colombian operations to play in your overall portfolio?
KNY We expect it to play a major part, certainly 50-60% of the portfolio, ultimately. Our goal is simple: to undertake grassroots exploration in areas where emeralds can be found and to discover new mines. Since 2010 we have been working to identify target areas and have undertaken huge data surveys and extensive analysis through remote sensing satellite work. We have had geologists on the ground for the last five to six years. We have done a great deal of preparation to get going here.
What potential does the colored gems market have to produce value for the Colombian economy?
CH This is a truly exciting market. The wholesale cut colored gemstones market is a USD8-billion market. Emeralds represent around USD2-2.5 billion of that market, making them a significant market. However, there are few major firms in the space. There are only about USD30 million worth of market cap in terms of the companies that serve this market. This is a huge opportunity. As a young company, we want to build a saleable business and develop a leading, responsible brand in the industry. We must market the stones right through to the end user.