The discovery of 3.8 million ounces of gold in the West African jungle has taken the story of a 252-year-old Jewellery Quarter business full circle. Graeme Brown speaks to the chief executive of Hummingbird Resources about a fortune waiting to happen.
Mining companies laughed at Dan Betts when he suggested looking for gold in Liberia – but five years later his company is sitting on 3.8 million ounces of the stuff.
The “hare-brained venture” in the jungle of West Africa, as Hummingbird Resources chief executive Mr Betts puts it, has resulted in a haul worth about $6 billion, or £3.7 billion – and this is the tip of the iceberg, he claims.
The discovery adds a new twist to the story of the Betts family, which has been trading gold bullion in the Jewellery Quarter since 1760 through Betts Metals.
The next step is getting it out of the ground – and it costs in the region of £200 million to build a mine of this scale – but Mr Betts said it was important to strike a balance between chasing revenue in the short term and ensuring the potential of the site is maximised.
“We have only explored about one per cent of our land holding,” he explained.
“The message we have given to the city and the world is we are in a totally new province and we have proven that there is gold, and so we would like to raise some money and continue exploring.
“That is still the message but now we have a potential mine on our hands too.
“During 2011 we discovered three million ounces of gold, which is the biggest discovery in Africa in years and we are saying this is just tip of the iceberg.”
Hummingbird Resources was founded by Mr Betts, a former management consultant, and his father, Stephen Betts, as a result of contacts they had in Liberia.
Stephen Betts, the latest in the family line at the helm of Betts Metals, had dealt with the Minister for Land and Mines in Liberia, and was offered some options on exploration licences covering about 7,000 sq km – about 173,000 acres – in eastern Liberia.
Dan Betts had planned to sell them to mining companies, but with Liberia emerging from a second civil war in 15 years there were few takers. He explained: “I intended to sell the options to mining companies – but they all laughed at us.
“They said the country had just come out of civil war and nobody knows if there is anything there.
“So we spend five years doing the hard work and putting the infrastructure in place to operate there and started sampling vast swathes of virgin jungle to find gold.”
He added: “At the start, when you are offering to pay for the right to search around in a jungle to find gold, they are more than happy with you.
“That costs about half a million dollars a year and then when you have to get an exploring licence and agree a mineral development agreement, which covers all of the tax treatment and things like that.
“Now we are looking to invest £200 million to create 1,000 jobs.”
At the end of a year that has seen more than three million ounces of gold discovered, Mr Betts is now starting the process of getting it out of the ground.
He said it would require a large-scale multi-pit – a minimum of two pits, but could be many more, which would all supply ore to a plant that will be built on site to process in the region of six and eight million tonnes a year.
In terms of the cost, Mr Betts admitted it was a case of “how long is a piece of string?” – but estimated between £185 million and £216 million. It will take about 18 months for pre-feasibility and feasibility studies to take place, before work can start to build the mine.
He said: “We have enough prospects to keep us going for 20 years but at some point you have to hold these ounces to account and prove they are real. Exploration is expensive – mining is where you make money.
“It is a balance of deciding when enough is enough. Now we have found 3.8 million ounces we have enough to build a mine so we are in the process of raising finance to start proving this through a series of feasability studies, before actually building the gold mine.
“And at the same time there are another x number of million ounces so we have to keep exploring.”
He added: “I have got no ambition whatsoever to get out.
“By skill, hard work or just blind luck we have found gold that will be recognised around the world and put Liberia on the map in terms of gold.
“I am going to build the mine by whatever means necessary.
“I don’t believe something of this size can be ignored by major mining companies forever but if we can raise the money then we can do it ourselves.”
Mr Betts said even without starting the process of mining he has enough funding in place to continue discovery work “all guns blazing” for 12 months.
He said he has several options in terms of funding – returning to shareholders, approaching mining companies or going to the institutions that specialise in development funding in developing markets.
“If we were to approach a mining company that could help with credibility or if we got somebody of the stature of say the African Development Bank on board it would help with any possible political issues,” he said.
Despite the fears of larger mining companies over Liberia, which was ravaged by civil war from 1989 to 1996 and then 1999 to 2003, Mr Betts said he had come across few political problems.
Political stability in Liberia has helped to provide a firm footing for work to take place after president Ellen Johnson Sirleaf was elected for a second term last year.
The wider problem is the lack of skills and education as a result the wars. Latest figures, from 2003, show Liberia has an unemployment rate of 85 per cent.
But Mr Betts said he had nothing but positive things to say about his experiences in West Africa, and he believed now was the time to invest.
“I have a different view about African political risk,” he said. “Most people say it is a disaster and we shouldn’t go anywhere near it but I would say that is why we should.
“They really need us now – the skills and investment and revenue – if they had got all of that then they wouldn’t need us. I have had nothing but positive experiences in Liberia.”
With education levels in the country impeded by years of civil war, Mr Betts admitted he had to rely on expats to carry out the major roles.
However, the firm sponsors 20 people a year to get a university education and Mr Betts said he was pleased that the business would help to create jobs for up to 1,000 Liberians.
Closer to home, Mr Betts admits he enjoys the novelty of a Jewellery Quarter business making waves in the global gold-mining sector.
He said: “From the Birmingham perspective I think it is awesome that a business has come out of the Jewellery Quarter and found gold itself.
"Exploration is a worldwide business and there are billions of dollars spent around the world exploring. The big centres are in Toronto, New York, London and Australia and little old Hummingbird has made one of the biggest finds in the world from the Jewellery Quarter – I think that is quite cool.
“Personally, it has been a monumental gamble,” he added.
“I have put five years of my life into a hare-brained venture, and it has been a 100 per cent gamble. I didn’t pay myself for the first three years.
“But I am very aware that I was very privileged to have a back-up plan and the family business hasn’t been put at risk.
“My dad and the family have invested hundreds of thousands of pounds and if it all went wrong it wouldn’t bring the house down but it does weigh heavily on my shoulders that friends and family have invested in my venture.”
?Next page: From Betts & Sons to Hummingbird Resources in 252 years. Eight generations in the metals business.
EIGHT GENERATIONS IN THE METAL BUSINESS
When the Betts family business was first founded in the Jewellery Quarter George II was on the throne, James Cook was yet to discover Australia and the American Declaration of Independence was 16 years away.
The business was founded in 1760 specialising in the smelting and refining of precious metals and went on to mirror the progress of the industrial revolution.
It was established as Betts and Sons by Alexander Betts, who hailed from Battle in Sussex, to set up a business recovering gold and silver ores from waste being produced in the Jewellery Quarter.
It came at a time of vast growth for the city, with the first cotton mill established in 1771, and, in 1791, noted author Arthur Young described Birmingham as “the first manufacturing town in the world”.
Alexander Betts died in 1781 and his son Edward carried on the business until 1817, passing it on to his sons John and William who oversaw a period of great growth until 1864.
During the mid-19th century the family became involved in exploration and trading overseas, notably Australia. Some family members emigrated to there and played a part in the first gold discoveries in New South Wales in 1851.
There are records of cores and concentrates being shipped from Australia to Birmingham to be smelted in the factory, which was then called John Betts and Sons.
In 1874 new incumbents Alfred and John Betts planned to expand the Charlotte Street premises by buying adjacent land for £2,050 – the equivalent of about £2.5 million today.
But, due to a corrupt lawyer, the deal never materialised and the brothers were left without the land or the money.
Subsequently, the Birmingham Assay Office was built on the site.
The early years of the 20th century proved difficult for the firm as soaring silver production sent values plummeting.
The company evolved to work with different industries, such as potteries and mirror-makers, as well as the photographic trade including carrying out refining work for Kodak for many years.
The Betts line might have died out in the Second World War, when John Francis Betts was reported missing in action, presumed dead. But he was later discovered in a hospital in Belgium with a bullet wound in his mouth – an inch higher and it would have been fatal.
However, he survived and passed the firm onto the eighth generation – current chairman Stephen Betts, whose Dan and Charles remain involved.