As we chat with the president of Silver Standard Resources, silver investors are in the throes of one of their profound mood swings that has the silver price in a frightful freefall.

Yet Bob Quartermain’s frame of mind belies the silver charts that show a six-week crash from $8 US per ounce to under $6. The move from $6 to $8 earlier this year was also achieved at a break-neck pace.

On this day, even a sunny press release from Silver Standard Resources trumpeting a 40-per-cent increase in the company’s measured and indicated silver resources, to 403.6 million ounces, fails to lift the stock that, like the commodity, is in a nasty corrective phase.

Quartermain remains at an even keel despite the volatility of the silver market, and is quick to play on the positive aspects of the business that has consumed all of his working life.

Bayne Stanley photo, Business Edge
Exploration geologist Bob Quartermain, president of Silver Standard Resources, says silver is the ‘Cinderella metal getting dressed up for the ball.’

“We thought it was a good news release, but the sector was down again because of concerns of the U.S. dollar strengthening against the euro,” says Quartermain, seemingly unfazed. “We felt fairly positive about the news release we put out, but the market determined otherwise. Still, we had a good day compared to the other silver companies.”

Quartermain has spent 25 years in the mining industry, including the past 20 at the helm of Silver Standard, one of the world’s most aggressive silver exploration companies.

Perhaps Quartermain’s longevity in an industry conditioned to violent market swings would explain why, in his perspective, the glass is always half full.

1. What initially sparked your interest in geology?

“When I was taking geology as an elective course in university (University of New Brunswick), I found out that I had a bit of an aptitude for it. I enjoyed being outside, I enjoyed going on the fieldtrips during the course and enjoyed the aspect of prospecting and finding mineral occurrences. It wasn’t something that was in my family.”

2. How did you get your start in the mining industry?

“I worked with the Geological Survey of Canada north of Baker Lake (Northwest Territories) doing mapping and then I worked with Essex Minerals, a subsidiary of U.S. Steel Corp., looking for uranium and gold in the Territories. Then, I worked back in New Brunswick and Nova Scotia with Amax Minerals so I could be close to my father before he died. My father was a hemophiliac. When I completed my master’s (in mineral exploration) in 1981, I went to work for Teck Corp., which was the major shareholder in Silver Standard. Then, in 1984, Teck asked me if I’d like to run Silver Standard (he became CEO in 1985).”

3. At what point did Silver Standard begin to focus exclusively on silver exploration?

“It was about 1992. There were two reasons for that. One, silver was in a supply deficit starting in 1989, indicating there was more demand for the metal than there was mine supply or secondary supply. At the same time, we were approached by a few major shareholders who indicated that they would help finance the company if we would focus on silver. At the time, there were very few companies, if any, focusing on exploring silver.”

4. What have you learned about coping with the wild fluctuations of silver prices?

“I think the key word is discipline. You have to stay with your game plan. One has to look at the longer amplitude of the prices because they do equate to what is going on in the broader economy. I think it makes me, as an exploration geologist, much more attuned to world events. The broader global economy ultimately dictates what prices do by the requirement for consumption for material goods for those metals.”

5. What’s the key to surviving the cycles in the market?

“What you have to do is know when you’re in a cycle where global consumption is not as high and prices are off. You have to maintain your assets through that period and be ready for when prices move back up. You have to be able to consistently finance your business so that you don’t get undercapitalized in a downturn.”

6. How did your company position itself in recent years for the recent explosion in silver prices?

“Over a 10-year period until last fall, we acquired one of the largest in-ground silver resources of any publicly traded company. We have about 400 million ounces in measured and indicated resources in the company, and about another 420 to 430 million ounces of inferred resources from 15 projects throughout the world.”

7. What’s your company’s cash position?

“With the uptick in silver prices recently, we’ve also been able to do a financing to add about $40 million to our treasury. We’re currently sitting on about $50 million in cash. Over the last few months, we’ve also bought 1.95-million ounces of silver on the spot market because we think the price has further upside.”

8. How did you keep from getting whiplashed with the price crashing recently from the $8 US range to $5?

“It had moved up so aggressively from the $4.80 range in November. It’s unfortunate to see the price come all the way back to where it is, but there needed to be a correction. Of course, we’re seeing other (metals) commodity prices correct as well. I think if it was more of an isolated event for silver it might be a little more of a concern.”

9. What’s your outlook for the price of silver?

“If you’re going to bring in new green-fields projects where 50 per cent or more of the value is in silver, then you probably need silver prices to be in the $6 range plus or minus 50 cents in order for some of these properties to come on (to production) and be profitable. So I think in the long term we might see prices move to that range. The annual silver survey came out today and silver continues to be in a supply deficit.”

10. Where is the key demand right now for silver?

“The survey showed that the industrial applications of silver continue to increase with it being used in electronics, in bioscience and in superconductors. Fabrication demand in China has also increased and China has been driving some of the base-metal prices. We still take a bullish outlook on silver. Silver is the best electrical conductor out there, so it’s used in all those electrical connections you have for cellphones, computers and Palm Pilots. Silver is also used in water purification.”

11. Do you think silver doesn’t get enough respect compared to gold?

“I like to think of it as the Cinderella metal that is getting dressed up for the ball. Part of the reason for that is that the silver market is so much smaller than the gold market. If you look at the gold production last year, for example, it probably represents about $35 billion to $40 billion in value. If you look at silver, it’s probably about $4 billion.

“But we’re hoping she will be a Cinderella one of these days and continue to shine.”

12. How important is it to promote your company with road shows as you’ve done in the past?

“When the tech bubble burst (in 2000), there was a lot of concern from shareholders about corporate governance issues, so we started setting up meetings with shareholders in major centres. It took a lot of energy because I’d work all day and then set up the meeting myself at 7 o’clock but it was well worth it. I think you have to communicate with your shareholders to make sure there’s transparent communication and a development of trust.”

13. Which of your current exploration projects has the most exciting potential?

“I would say it’s the La Pitarilla property in Mexico. It’s one we found ourselves last year as a new grassroots discovery. We took a few hundreds of thousands of dollars and some veteran prospectors and sent them to Mexico. We’ve come up with about 50 million ounces of silver in all categories (measured, indicated and inferred resources). It’s a classic discovery. We’re up to about 100 drill holes on that property. It’s been very rewarding and exciting.”

14. What’s your vision for Silver Standard?

“We’d like to basically translate the silver resources which we have under the ground to being silver resources out of the ground and we’re going to need considerably higher silver prices to do that. We basically want to be the silver standard, so that when people think of silver, they think of Silver Standard.”

15. But you’ve got PanAmerican Silver (Canada’s highest-profile silver producer) standing in your way, don’t you?

“Well, Ross (Beaty, PanAmerican’s CEO) is the silver story and he’s a good friend of mine. So, knowing Ross, I know I have my work cut out for me.”

16. How long do you think it will be before the company reaches a production stage?

“Depending on silver prices, we’re probably looking at that being at least five years away. Finding and developing mines takes a very long-term view and a lot of patience.”

17. What management style has worked for you?

“I think it’s a style where there’s a good communication structure. We’ve got weekly reports coming in from all of our projects and we have a weekly meeting where all the senior staff discuss everything that’s going on. In this day and age, with the (more stringent) regulatory environment that we have, I think it’s necessary that all the managers understand everything that’s going on. That translates to the individuals who work in the fields. We give them a lot of latitude to make minor changes in a drill program as long as that data is communicated back to us. We’re very focused on delivering shareholder value, so we want to make sure we’re very good technically. The best way to achieve that is to get good lines of communication throughout the organization.”

18. Ideally, how long would you want to remain CEO of Silver Standard?

“I turn 50 in a year, so I’ve still got a number of good years left under my belt. I want to advance the company into production and deliver on a few of the goals I’ve set for myself and the company. So I’ll certainly be around for years yet to come to achieve those. After 25 years in the business, I’m certainly looking forward to at least another five years.”

19. Who has had the greatest influence on your career and life?

“My mother was a big influence. She brought me up to eat my vegetables and be polite. I’ve found that good manners wherever you travel the world are appreciated. My grandfather was an entrepreneur who gave me the Protestant work ethic, being the first one to work and the last one to leave. That doesn’t happen every day but many days it does.”

20. What would it take for you to lean back in your chair, put your feet on your desktop and say, ‘I’ve done it?’

“There are a few years to go before I can do that. I’d like to ultimately see us for shareholders’ purposes to translate this company from an exploration company into being able to actually produce the physical silver. Once we achieve that and reach profitability, then perhaps I can relax a little more. I might not put my feet up on my desk but on my bike more often.”

IN PROFILE: BOB QUARTERMAIN
* Title: President, Silver Standard Resources.
* Born/raised/age: St. Stephen, Que.; St. Stephen, Saint John; 49.
* Education: University of New Brunswick, bachelor of science; Queen’s University (Kingston, Ont.), master of science, mineral exploration.
* Career: Quartermain has been president of Silver Standard since 1985. Prior to that, he was an exploration geologist for Teck Corp., Amax and U.S. Steel. He is also a director with Iamgold Corp.
* Passions: Skiing, sailing, mountain biking, hiking, camping.

THE COMPANY: SILVER STAR RESOURCES
* Profile: Silver Standard is involved in the acquisition, exploration and development of silver mineral properties in several countries. Key projects are in the U.S. (Nevada), Mexico and Peru.
* Resource: The company has a total of 15 projects in development.
* Recent Stock Price (SSO-TSXV): $13.73 (52-week range, $6.26-$23). Interlisting: U.S. Nasdaq exchange (SSRO).
* Website: www.silver-standard.com
* Head Office: 999 West Hastings St., Suite 1180, Vancouver, V6C 2W2.
* Phone: 604-689-3847, toll free 888-338-0046.