TSX Venture 50 Spotlight: Northern Superior Resources
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CEO Tom Morris on Northern Superior’s Golden Survival
By Justin Yan
Tom Morris, Chief Executive Officer of Northern Superior Resources, accepts TSX Venture 50 award from John McCoach, President of TSX Venture Exchange.
When Tom Morris took over the top seat at Northern Superior Resources Inc. (TSXV:SUP) in September 2007, he quickly realized the company had to change its focus in order to survive. First founded as a diamond explorer, Northern Superior Resources, formerly known as Superior Diamonds, was at a crossroads. Markets were falling out of favour with junior diamond exploration companies, the Chief Executive Officer explains. The company had to make a choice.
At the time, few discoveries were being made by junior companies and the returns could not justify the high cost and risk of exploration, says Morris. “It's a long shot and although the pay off is good, I think the market just got jaded or fed up with supporting juniors in the diamond game,” he explains from his office in Sudbury, Ontario.
As the recent financial crisis unfolded, the diamond explorer turned its focus to the high prices of gold, a safe haven in times of economic turmoil. Northern Superior would make the switch to gold, insisted Morris. “We had a very large database of good gold opportunities that made the transition easier for us,” says the chief.
The company examined a number of gold opportunities before going ahead with the Ti-pa-haa-kaa-ning gold property – TPK for short – in northwestern Ontario. Within a short few years, TPK has become a successful flagship property, currently optioned to Rainy River Resources Ltd. (TSXV:RR).
From relative obscurity in the gold exploration space, Northern Superior grew into an industry favorite ranking second in this year's TSX Venture 50 listing in the mining category. Share price grew by 500 per cent from $0.14 in December 2009 to $0.84 at the end of 2010 while its market capitalization grew by 1,148 per cent to $129.2 million in that same period.
But success at TPK has not come easily for the company. The TPK project got off to a rough start beginning in 2008, notwithstanding the deteriorating market conditions for junior exploration companies across the board, says Morris.
Changing of the Guard
Originally a 50/50 joint venture with Lake Shore Gold Inc. (TSX:LSG), Northern Superior saw its partnership erode when Lake Shore made the change from exploration to mining, Morris says. As Lake Shore's business plan changed to focus on bringing the Timmins Mine into production, grassroots exploration activity was put on the backburner. Inevitably, this included the TPK project to Northern Superior's chagrin.
However unfortunate, Morris has no hard feelings. “I have a lot of respect for Anthony Makuch (Lake Shore Gold's Chief Executive) and his staff. They're a great group of people and have several tremendous projects in the Timmins area,” Morris stresses.
Though a difficult time for Northern Superior, Morris speaks of events with a tone of sympathy. “Their focus, their business plan changed. They had to,” he explains. “I know that Tony (Anthony Makuch) was under a lot of pressure to bring these mines into production and that's what he did. He's done an excellent job doing that,” he adds.
From 2008 to the end of 2009, the TPK project did not advance aggressively and the company turned its focus to its other properties. “At that time I realized that if we did not do something to force the issue with Lake Shore, to get the TPK project going again, we were going to be in a lot of trouble,” says Morris.
He forced the issue with Lake Shore by raising $3.2 million at the end of 2009 to move TPK forward. As the operator of the project, Lake Shore was forced to make a decision to go ahead with TPK or face its ownership being diluted down. The company struck a deal with Lake Shore to buy out its 50 per cent interest in TPK, acquiring 100 per cent ownership in the property in May 2010 in exchange for 25 million shares. “It did cost me a fair bit of shares but it was a good deal for them and it was good deal for us.”
Only Up From Here
When word spread, TPK became hot real estate. “No fewer than seven other junior exploration companies approached me about getting involved with the TPK property,” says Morris. In the end, Northern Superior chose Rainy River Resources and optioned a 51 per cent interest in the eastern third of the TPK project in September 2010. With a fresh injection of cash – $9.4 million over three years to be exact – Rainy River has initiated aggressive exploration plans to get the ball rolling again.
By December of that year, the company completed the first phase of diamond drilling. “It was very easy for me to go with Rainy River Resources. They have a tremendous success history, are well financed and very good with their marketing,” comments Morris.
Since signing on a new partner, Northern Superior has experienced a remarkable turn of events. With Rainy River on board, markets began paying attention to TPK. Share price rose throughout 2010 and soared after the company reported a significant high-grade intersection of 25.9 g/t gold over 13.5 metres in December 2010.
In a vote of confidence, Lake Shore Gold earlier this year acquired an additional 6.7 million common shares, further increasing its stake to 25.5 per cent.
With approximately $25 million in the bank, the company is poised to aggressively explore TPK and advance its other properties. The gold explorer recently signed two Letters of Agreement with the Community of Sachigo First Nation supporting exploration programs on both its Meston Lake and Rapson Bay gold properties. Work is currently underway.
“For the first time, we are in a position of strength now in terms of being able to dictate what we do with our exploration projects.”
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