One thing Bob Stan has learned since launching a career in the roller-coaster coal industry with Fording 25 years ago is to roll with the good times.

And, on this occasion, with prices for metallurgical coal on their own roll amid supply shortages, the chief executive of Grande Cache Coal Corp. is in particularly buoyant spirits as his upstart company enjoys the good times.

At the time of the interview, Calgary-based Grande Cache was on the verge of making its first export shipment to Asian markets of metallurgical coal from its refurbished mine in the Smoky River Valley near Grande Cache in west- central Alberta.

Stan, the 51-year-old Regina native who co-founded Grande Cache in 2000, isn’t alone in his exuberance over the prospects for the coal industry and coking coal in particular.

Mike Sturk, Business Edge
Bob Stan says coal companies have to maintain an excellent relationship with their customers.

It was Stan’s bullish outlook on the coal sector that helped convince him to pull up stakes in Vancouver in 1996 and jump ship from one of Canada’s largest mining companies, Teck Corp., where he was director of marketing.

Shareholders of Grande Cache have been in giddy spirits of late, driving up stock in Grande Cache (TSX:GCE) by 200 per cent in the seven months since the company hit the market with a $57.2-million initial public offering at $2.60.

1. Your career in the coal industry started with Fording in 1979 in the marketing department. What are your recollections from those days?

“In the early 1980s, there was a price spike in coal and that was my first exposure to the cyclical nature of the commodities industry. That was a big learning experience for me, seeing how volatile a market it was. In those days, almost all of the coal produced in Western Canada was exported to Japan.”

2. Who was your mentor in your early years in business?

“I worked for Bob Brady at both Fording and Westar Mining. From an overall business development point of view and the importance of success in dealing with people, I probably learned more from Bob than most of the other guys around. Jim Gardiner at Fording (currently president of the Fording Canadian Coal Trust) was also influential. He was one of the most dynamic mining individuals I’ve ever met in my life.”

3. What are the key lessons you learned in the coal industry prior to becoming CEO of Grande Cache in 2000?

“You have to maintain an excellent relationship with your customers at all times. Because of the cyclical nature of the business, you need to be able to place your product at a market- level price. The other thing I’ve learned is that, when the cycle turns, if you have your company in a highly leveraged position, you’re in trouble. When the commodity price goes down and you’ve got a substantial debt, it’s very, very difficult to weather the storm. In those situations, the companies with the strongest balance sheets and reasonable debt-to-equity structures are the ones that survive.”

4. What lured you back to the coal industry in 1997 after a stint as a director of marketing at Teck Corp.?

“I’d been in the coal business a long, long time and when Smoky River Coal (the company that would become Grande Cache coal) shut down in March of 2000, we were at what we now recognize as 30-year lows in coal prices. At that time, Smoky River owed quite a bit of money but we knew there was still a very good resource on that property and the infrastructure was in place. So, my partners and I recognized that if we could solve the debt problem, there was an excellent opportunity to move the project forward. And we were able to do that and it certainly has turned out to be an excellent opportunity.”

5. What has the transition been like to running a company, as you’ve done at Grande Cache?

“(Laughing) Well, people are a lot nicer to me now. When you’re in charge, all of a sudden you have to be much more concerned about the overall picture and the parts that make up the organization. I think the thing that has helped me the most is being able to recruit top-notch people with coal industry experience who are very capable individuals who can run their own areas very effectively. That has helped me a lot.”

6. How would you describe your management style?

“I find it very difficult to micro-manage people. I believe in hiring the best people you possibly can, giving them as much support and the appropriate tools they require, and monitoring their progress. As an overall manager, I believe in letting people do their jobs and giving them whatever help they need. I’m not a guy who is going to go in and know about everything that someone is doing. It’s funny because when this project got started four years ago, we only had two people and I knew everything that was happening. Well, I don’t know everything that’s happening anymore but I trust the people I have here (eight people now work in the office). You can’t take everything too seriously. We work hard around here, but we play hard too. I want folks around here to enjoy themselves. Nothin’ is so dramatic that we can’t take a step back and have a few laughs, at ourselves as well as at everything else that is going on. We’ve made our share of mistakes and, luckily, it hasn’t cost us a lot of money.”

7. Was taking Grande Cache public earlier this year an easy decision?

“We did it because we needed to raise capital to buy equipment and to fund the refurbishment to get the mine back in operation. The market for our kind of issue was very strong and it also gave all of our investors who’d been very patient a good opportunity.”

8. Where is the biggest potential market for your coal?

“Historically, this mine has done very, very well exporting to South Korea and Japan. I would say that we would continue to focus on those two market areas. The vast majority of coal exported from Canada, probably 90 to 95 per cent, goes into the steel industry worldwide, and all of our product will go to the steel industry. The steel industry today is booming and therefore there is a high demand for good quality, hard coking coal – generally what’s exported from the mines in Alberta and British Columbia.”

9. What’s the key to building relationships with customers in those countries?

“I’ve been travelling those parts of the world since the early 1980s. I’ve known the people at some of the companies in these countries (South Korea and Japan) for over 20 years, including the people at POSCO (one of the world’s largest steel companies, based in South Korea). It’s important to realize that there is no one style of negotiating that works 100 per cent of the time in every situation. So you’ve got to understand the cultural and business practices that are prevalent in different parts of the world and adapt your style accordingly.”

10. What’s your long-term outlook for the coal market?

“We’re seeing high demand now because of a dramatic increase in steel production in China and India, in particular. I see stability coming back into the coal market in the medium to long term. I think all the mines that are in production now in Western Canada and some of the ones that are being developed will in fact be economical going forward.”

11. How do you guard against the potential for a downturn that could shut your mine down again at some point?

“One of things we’ve focused on is getting a cost structure that would allow us to weather the downturns. We’re pretty confident that we can hunker down (in a downturn). We’re currently carrying no long-term debt and we intend to maintain that very attractive debt structure. We’re always concerned about the cyclical nature of our markets, but we think we’ve put in place a plan and financial structure that will allow us to weather those peaks and valleys.”

12. What’s your growth strategy for Grande Cache Coal?

“We’re going to be embarking on an exploration program to move more of our resource into the proven reserve category. As well, we’re looking at other opportunities for new coal mining ventures in Western Canada right now. We’re looking at anything that might be accretive to our current situation. We’ve got some cash and a very knowledgeable coal team so, if we see the right opportunity (for acquisition), we would definitely be interested in examining the potential.”

13. Is there a possibility you may eventually convert to an income trust model?

“Trusts have obviously been very beneficial for shareholders in a number of resource industries and we certainly have recognized the success of the Fording income trust. Once we have established and stabilized our cash flow to a more predictable kind of a basis, we’d look at all opportunities to increase shareholder value, and a trust is certainly one option we’d take a long, hard look at.”

14. What’s your vision for Grande Cache for 2010?

“I’d like to see our operation at (coal) production of about three million tonnes per year and I’d like to see us involved in at least one other major project by that time.”

15. What measures is Grande Cache taking to minimize the environmental impact from your development of the Smoky River project?

“Certainly, that’s a major part of any industrial development today and we work very closely with Alberta Environment on our operating approvals. We have full-time environmental folks working in Grande Cache and we have an environmental manager working on an environmental program for the property. We’ve posted about an $8-million reclamation security to cover the cost of rehabilitation and reclamation when we’re finished mining. We’ve got a monitoring program on the property for air, water, wildlife and vegetation. We’re doing whatever we can to be environmentally responsible and being a good corporate citizen as it relates to the environment in that area.”

16. How long do you see yourself remaining CEO?

“Well, shareholders and the board willing, I don’t plan on leaving for a while. I’m 51, so I’m not ready to go out to pasture just yet. The market for our commodity is doing very well right now, I’m working with some of the finest individuals I’ve had a chance to work with throughout my career, our customers have been very, very supportive of our project and the share price has done OK.

So, yeah, what’s not to like?”

17. How do you reflect on the way your career has evolved?

“Luck has a lot to do with things. I’m a firm believer that the harder you work, the luckier you get. I’m not a fatalist by any stretch of the imagination. I think you do, to a large extent, control your own destiny. When you get an opportunity, you’ve got to recognize it and take a chance now and then. By and large, I think Alberta is one of the most interesting places to work right now.”

18. What’s your philosophy of life?

“I think that you’ve got to like what you do. If you don’t like your job and you don’t like what you’re doing, boy, find something else to do, because you’re probably a pain in the ass to be around. I’ve worked for another mining company where there was a conflict with a supervisor who didn’t understand anything about our industry and didn’t share my views on very much. I also think that it’s important to establish a balance between work and your family and friends. You have to have strong support from your family and you have to recognize how important friendships are, especially as you move through middle age.”

19. Have you been able to strike a balance between work and leisure time?

“Well, getting the company started over the last three years has required a disproportionate amount of time, but now we’ve got a team of terrific people and I intend to give them the chance to manage things a little more so I can start taking a little more time off.”

20. What’s your life’s next great challenge?

“It’s to ensure that there is a strong succession plan for this company, so the company will continue to prosper long after I’m gone – and then finding a vineyard in the Okanagan Valley that needs some work.”

IN PROFILE: Bob Stan

* Title: President/CEO, Grande Cache Coal Corp.

* Born/raised/age: Regina/51.

* Education: Bachelor of commerce, University of Saskatchewan.

* Career: Stan joined Smoky River Coal as vice-president of business development in 1997 and was a co-founder of Grande Cache Coal Corp. in 2000.

Prior to that, he was director of marketing for Teck Corp. (1993-96). He has also worked for Weststar Mining (vice-president, Europe), Fording (marketing) and Gulf Canada (marketing).

* Role Model: Bob Brady.

* Passions: Golf, cooking, wine.

THE COMPANY: Grande Cache Coal Corp.

* Brass: Bob Stan, president/CEO; Thomas Pierce, chief financial officer.

* Profile: Grande Cache is the developer of a mining operation to produce metallurgical coal for the export market. Its coal leases cover 15,000 hectares in the Smoky River Valley at Grande Cache in west- central Alberta.

* Recent Guidance: Grande Cache estimates it will produce 600,000 tonnes of coal for the fiscal year ending March 31, 2005 and 1.9 million tonnes of coal for the fiscal year ending March, 2006.

* Initial Public Offering: In May, Grande Cache completed its IPO by raising $57.2 million at $2.60 per share.

* Recent Stock Price (TSX:GCE): $7.85.

* Website: www.gccoal.com

* HQ: 250, 703 6 Ave. S.W., Calgary, Alta., T2P OT9.

* Phone/Fax: 403-543-7070/ 543-7092.

(Gyle Konotopetz can be reached at gyle@businessedge.ca)