Klaus Zahnd is an entrepreneur who marches to the beat of his own drummer.

What else would one expect from a man who yodels in his spare time?

When all around him in Calgary’s downtown core are singing the praises of a booming oilpatch, Zahnd is yodelling about his company’s vast portfolio of mining prospects.

Zahnd, a product of Switzerland who cut his teeth in business with the Atco companies under Calgary tycoon Ron Southern, is chief executive of Western Warrior Resources, a junior mining exploration company that is prospecting for gold and base metals.

Mike Sturk, Business Edge
Western Warrior Resources CEO Klaus Zahnd believes in solid communication and not overselling his prospects.

Calgary may seem like an odd locale for a mining outfit, particularly after the scandal of Calgary-based Bre-X Minerals in the 1990s, but operating Western Warrior out of Cowtown suits a contrarian such as Zahnd just fine.

1. What was your boyhood dream?

“Growing up in Switzerland, I wanted to see the world and, in particular, the United States and Canada. Of course in Europe, there was a very strong interest in Indian and cowboy stories. As a young boy, I was reading many of these stories and creating my own images of what it would be like. So I’m living my boyhood dream. When you’re in Switzerland, it’s such a small country that it’s almost natural to look abroad because you’re really just living on a postmark or a post stamp, so to speak. My father was a wooden-carriage maker but, when that (mode of transportation) kind of passed, he became a mechanic. So I came from very humble beginnings.”

2. When did you come to Canada?

“It was in 1969 and I have stayed here ever since. Almost immediately, I got a job at Atco, working as a maintenance mechanic, and stayed for 19 years. I eventually became a shop foreman and then I ran a metals division. Later on, I was a project manager. After the Olympics (1988), Atco had become like a holding company and my career opportunities were getting more limited so I went on my own, becoming involved in the financial community. I formed a corporate finance boutique company (LK & Z Management Services, which later became VCI Vencorp Capital) in 1991. I started to finance small oil and gas and mining deals.”

3. When you arrived in Canada, did you see yourself as a future entrepreneur?

“When I came to Canada, the Canadian concept that you could do in essence what you want to do was not really that well (entrenched) in a person like myself. I’d had a nice career in Switzerland in weapons manufacturing with the federal government, but there my creativity was never really challenged. So, for me, there was a learning curve to be able to see how far you could move forward on your own with your initiatives and also be acceptable to others. What was really phenomenal was that the barrier you expected to be built up wasn’t there. I could think of probably a dozen instances where I went to my boss at Atco or to (Atco founder) Ron Southern and say, ‘Can I do this?’ Ron would say, ‘If you believe you can do it, go ahead and do it.’ It took me some time to be comfortable with that, but once I was and the door was opened, there was a gusher of creativity.”

4. What did you learn from Ron Southern?

“Probably the most important thing was loyalty and professionalism. I was fortunate enough to be called by Ron to join the board of Alberta Power in 1981. So I had an opportunity to work very closely with him and learn from the master, so to speak. He was very, very tough on work ethics. You needed to work extremely hard for Ron, but loyalty was the absolute key with him.”

5. How do you think your management style differs from Ron’s?

“It’s hard to judge, but I think in a modest way I can say that many of Ron’s ideals and approaches have rubbed off on me. I’m demanding. But I’m not only demanding with others, I’m demanding with myself.”

6. What drew you to the financial services business?

“The whole concept of entering that business was based upon the strength I felt I had on both sides of the world, with one foot in Canada and one foot in Europe. To this day, I’m still quite European but I think I have a North American approach to life. I felt that with my contacts in Europe I could build on some opportunities here. My product was listed companies in need of funding and I put them together with European sources of financing. With my background in Europe and Switzerland in particular, I was able to create quite a large network of institutions and wealthy individuals.”

7. What’s the key to success in venture capital financing?

“Trust. It’s not so much about having a better product. What’s important is that you’re consistently professional and consistently trustworthy. It’s a personal business. That’s why it’s difficult to sell a business like that because, once you’re out of the picture, they (the acquirer) don’t buy the company. They want you or they don’t want anybody. I still own that company (VCI VenCorp Capital) but my total focus is on Western Warrior Resources.”

8. Why did you join Western Warrior a year ago?

“I knew Allan Dolan (a major shareholder of Western Warrior) for a number of years and we chatted. Clearly, the company needed focus and someone who paid attention in a consistent way to creating value for shareholders. I had financed many junior companies so it wasn’t like this was foreign to me. I wasn’t a geologist, but I certainly knew what it took to create a corporate strategy that would focus on what you have in the ground, how that could be translated into something that is understood and how to raise money on these types of things. For me, it was kind of a challenge more than anything. It was like stepping out and saying, ‘Well, maybe it’s time you put your money where your mouth is,’ so to speak. That really struck a chord with me so I basically relinquished my role in the corporate finance business. I really enjoy it.”

9. So, based on the black mark left by Calgary-based gold exploration scam Bre-X Minerals, isn’t it a challenge running a mining company out of Calgary?

“I don’t think so. I have a number of friends who ask me why we’re not in Vancouver. But I enjoy being outside the circle because it gives me a clearer focus of what is actually real. Working out of Calgary, I can look at facts and realities as they present themselves and react accordingly.”

10. Did you invest in Bre-X?

“I did not. That was not because I had any premonition about their demise. They were a huge driver of the industry at the time, but I was involved in other companies raising money.

“Usually, when I raise money for somebody, that’s where I put my money. How else could I be looking in some investors’ eyes and saying, ‘Well buy this,’ if I didn’t own it myself?”

11. How challenging is it operating a mining company in Calgary with the stigma of Bre-X still in people’s minds?

“It’s still brought up in discussions. My reply is that when you look back historically, Bre-X probably made the industry much, much better, much more focused and more accountable to a large degree. It was probably something that needed to happen in order to put more professionalism to work in the industry. I believe that when you look at an exploration company such as ours that is minuscule but has some grounds, you always have to ask the question, ‘Do you have prospective ground or do you just have ground because, well, just to have it?’ You have to believe in the prospectivity of the ground and create the corporate strategy around that. It’s not the other way around. It’s not like, ‘Well, let’s become a company and tout ourselves all across the world and then let’s go out and, with the money that we’re getting, get some prospective ground.’ To a fault, probably, I’m the kind of guy who says, ‘Look, I can’t go out and tell investors something that isn’t real.’ So I need to have some work done on the properties that we have and, clearly, I believe that we have an extremely valuable portfolio. And the time will come where there will be a better understanding by investors of what that actually is and what the upsides are. That’s really how I operate.”

12. Which of your properties has the greatest potential?

“There is no question that the Manitoba property (at Eppler Lake) is the highest prospective property we have. It’s just over 60,000 hectares, which equates to 600 square kilometres. It has three main targets on it, one of them being, in size certainly, a world-class type of an occurrence on the nickel/copper/platinum/ palladium side. It’s totally unexplored, it’s 28 kilometres long, one kilometre wide and had six holes drilled in it by an exploration company in ’73. We’ve done an aeromagnetic survey over it and it absolutely begs a further type of analysis. On the same property, my geophysicist says he has never seen a magnetic signature like that, which is called an iron-hosted gold formation. It has an iron formation, but gold very often occurs at the same time in that same kind of a setting. We’ve identified 14 targets to drill from there. It’s very, very exciting. We also have 18 kimberlite-style or diamond magnetic occurrences which need to be looked at. I don’t want to leave you the impression that they’re diamond-bearing, but those are the first indicators of a magnetic signature that corresponds with a kimberlite type of ground condition. So we have one property that has, in size, potential world-class nickel/copper prospects, a gold possibility and we need to work more on the diamond side.”

13. What’s your strategy in developing this property?

“My philosophy is to work on the bottom curve of the exploration cycle. That means taking a property that your geological management has identified as prospective and then you go in and create that initial look-see which, in essence, can catapult the value of the property to a level where a joint-venture partner comes in and actually does the heavy lifting of drilling and so forth.

“So I can take a property like this and get it staked for $25,000. As long as we believe there is prospectivity in it, I can create value of several million dollars with it. And that, I think, is where we need to be focused. I think we’re pure explorers and I think that’s the value proposition for shareholders.”

14. Why do you think this property wasn’t previously developed?

“The magnetic occurrence was first identified by a magnetic flyover program that the province of Manitoba did in the early 1970s. But with Thompson, Man., being the nickel capital, a lot of the exploration dollars went into that immediate vicinity. Our property is almost up at the Nunavut border, 110 kilometres west of Churchill, and, being up in the northern reaches, nobody really looked at this area. But sometimes you need to think outside the box a little bit and just give it a shot.”

15. What are your plans for your company’s Cliff Gold Mine property in Alaska?

“There was a small drilling program done that basically showed the gold-bearing main structures continue along strike lines, but also that there were additional veins. But what was really disappointing for most investors is that not all the drill holes showed significant gold values, which is not unusual in a vein structure. Because it’s on the side of a very tall mountain, we needed to take a step back. I commissioned a study this summer to have the work program developed for us to move forward on that property. That work program will hopefully be approved by the board later on this fall for excavation of the project by early next year.”

16. What’s your outlook for the price of gold?

“My personal belief is that we will see a continuation of a fairly bullish gold market that will be directly related to a continued deterioration in the U.S. dollar which, to a large degree, has a lot to do with the high price of oil. Is it going to go to $800 (US per ounce)? I don’t think so. But I think we’ll see continuing appreciation into the $450 range. Maybe by next summer, we’ll see a price of $440 or $460, but we will have our setbacks. And we may well be down to $390 for a while.”

17. Are you also bullish on the outlook for base metals?

“I have no doubt that we’ll continue to see a strong demand for base metals like copper, nickel, platinum and palladium out of China, even though their growth rates may be coming down from 10 per cent to seven per cent. I think, with the bid from (China Minmetals) for Noranda, we are going to see some interest from the Chinese to start to get themselves some producers. And I think there is sufficient funding available to actually start to look at plays where they (Chinese) can get in and actually assist in the exploration, and then eventually the mining, of properties in Canada. I think that will be a very positive step for the mining industry in Canada. Our company will be impacted by that, regardless of whether we get a partner like that or not.”

18. What’s your long-term vision for Western Warrior?

“To make the company respectable – and that means having good ground, having success with the ground and have a stock price and shareholder communication which is the best there is. That means we communicate well and professionally. We have to set out what we can do without overselling ourselves. If there’s one lesson I learned from seeing what happened with Bre-X, it’s that you tell people the truth. And if the truth is that your property is no good, then you ought to tell the truth. And that’s absolutely the key. I will tell you the truth and, if you as an investor then want to split away from us, that’s the way it is. That’s the world. We’re in a high-risk business. Exploration is a high-risk business. So the least I can do is tell investors the truth about it. The share price is a reflection of how well we do our business, and we will do a better business every day.”

19. How long do you think you’ll continue as CEO?

“I have no limitations put on it. I will run the company as long as it makes sense. I’d love to continue with it. I absolutely love doing it.”

20. What’s your favourite escape from work?

“You may laugh at this but I’m part of a singing and yodelling group (Yodel Club Heimattreu) in Calgary.

We’ve dedicated ourselves to maintaining the Swiss folklore tradition. I’ve been a member now for 25 or 26 years. It’s a group of 16 guys and we have a great time.”

IN PROFILE: Klaus Zahnd
* Title: CEO, Western Warrior Resources.
* Born/raised/age: Goerlitz, Germany/Switzerland/61.
* Education: University of Calgary, management certificate program.
* Family: Wife Li.
* Career: After coming to Canada in 1969, Zahnd spent 19 years with Atco Ltd. in various roles, including shop foreman and project manager, before starting his own company in venture capital management, LK & Z Management Services (now known as VCI Vencorp Capital), in 1988. He was appointed CEO of Western Warrior a year ago.
* Passions: Hiking, biking, yodelling.

THE COMPANY: Western Warrior Resources
* Brass: Klaus Zahnd, CEO; David Thompson, chief financial officer; Michael Chute, exploration manager.
* Profile: Western Warrior is a junior mining exploration company with a vast array of properties in northern Manitoba, northwestern Ontario and at Valdez, Alaska, targeting minerals such as gold, nickel, copper, platinum and palladium. Key properties include the historic Cliff Gold Mine in Alaska and the Eppler Lake property in Manitoba, which is focused on base metals prospects.
* Key Stat: Western Warrior is the 100-per-cent owner of properties covering 72,300 hectares.
* Latest news: Western Warrior recently announced a private placement financing at 10 cents per share for total gross proceeds of $500,000.
* Recent Stock Price (TSXV:WWR): $0.125 (52-week range, $0.10-$0.42).
* Website: www.westernwarrior.ca
* Head Office: 707, 304 8 Ave. S.W., Calgary, T2P 1C2.
* Phone/Fax: 403-543-2585/543-2599.

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