Rudy Gomez: How SA prospector bet life savings and found OZ Mineral’s Carrapateena mine deposit
RUDY Gomez, the prospector who found the huge Carrapateena deposit, bet his life savings on finding minerals in the desert — and won. This is the story of the man behind the extraordinary gamble.
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WHEN Rudy Gomez checked his mobile phone after a flight from Singapore in 2005 he was confronted by a long list of increasingly urgent messages. While he’d been cruising at 40,000ft the men he’d hired to drill two exploration holes in the far north of South Australia had found something that was about to change his life. Their message, when he finally read it, was simple. “Rudy, the rock has changed.”
For Gomez, they were the words he’d been waiting to hear since 1989 when he started a 17-year process of trying, over and over, to interest joint venture partners in a mining project he believed in. Some of the partners went bankrupt. There was a long drought in mining exploration. Then, on the cusp of the biggest mining boom Australia had seen in decades, two companies pulled out.
Gomez was left with nothing but a calculated hunch that he was on to something big.
But after all that time he was done waiting. Rather than give up, or try to convince yet another big company to back his vision, he decided to gamble everything and go it alone. Failure would have left the life-long inventor and innovator with nothing but the age pension, and perhaps also cost him his modest home.
Instead Rudy Gomez is now one of South Australia’s richest people, reaping more than $100 million from risking all on that calculated hunch. And he’s not finished. Now he’s determined to change the world.
Not your typical risk-taker
RUDY Gomez does not come across as a risk-taker. At 75, his solid 180cm frame barely stooped by the years, he speaks with measured enthusiasm about the technologies he is developing which he believes can transform power storage and even lead to a solution for global carbon dioxide emissions. It is not the feverish enthusiasm of the entrepreneur, desperate to sell his idea. It is more the quiet confidence of a man who has been working on these technologies for more than two decades, who believes they work - and who is waiting for patent protection before he offers them to the world. His modest Brompton workshop-come-laboratory contains a small water purification plant which he invented, and a pilot-sized chemical plant ticks away in one corner, turning coal into liquid fuels.
Since the late 1980s, Gomez has been working on these and other technologies, running a self-funded shoe-string research operation kept alive by his personal drive and the knowledge that technology commercialisation is a long game, especially in Australia, where backers such as banks are notoriously averse to taking risks. But his undoubted success - he has 43 patents to his name - had not translated into wealth. Then, in late 2004, Mt Isa Mines and Terramin Australia became the last in a long line of joint venture partners to pull out of his Carrapateena exploration project.
In geographical terms Carrapateena is pretty much in the middle of nowhere - 200km north of Port Augusta on the western shore of Lake Torrens. In geological terms it’s a different story. Miners exploring in the region refer to it as “elephant country” where massive deposits such as the Olympic Dam copper, gold and uranium mine 100km to the northwest can be found.
The Gawler Craton geological structure which houses Carrapateena and Olympic Dam is also home to the Prominent Hill copper and gold mine owned by OZ Minerals and the smaller Challenger gold mine. The rocks, laid down about 2.5 billion years ago, contain a wealth of resources, but they are usually trapped deep within the earth, giving even the largest companies pause when it comes to spending their exploration dollars there.
By the time his last two big partners pulled out, Gomez had had enough of waiting. The $160,000 he had amassed in superannuation wouldn’t last him long anyway, he reasoned. It was time for him to roll the dice, and not in an altogether figurative sense. Mining exploration is as much luck as it is hard work and expertise. His money was not enough, but Gomez was in luck. The State Government was offering grants for high-risk drilling - exactly sort of thing Gomez was looking at doing. He won a grant, and also asked a couple of friends for money, warning them that there was a high risk they would lose the $80,000 or so they kicked in.
There was a catch, however. In order to qualify for the grant, Gomez had to spend the money by late June. It was already April, and it was the middle of the biggest exploration boom Australia has seen in decades. Drilling rigs couldn’t be had for quids. Find nothing, and Gomez would lose all of his money. Find nothing, and fail to meet the June 26 deadline, and he would lose his money, and possibly his house.
SA lucky to have Gomez
SOUTH Australia was lucky not to lose Gomez to the US. The young Rodolfo grew up in Baguio City, the summer capital of the Philippines, lauded for its cool climes, where the country’s elite would retire during the warmer months. He was valedictorian at the elementary and high school stages of his education at the Holy Family Academy and went on to study at the University of the Philippines. At the time of his graduation, in the mid 1950s, most Filipinos looking to work or study overseas made a beeline for the US.
Gomez was employed by a US company and had applied for a place as a research assistant with the State University of Pennsylvania. At the same time the Australian Embassy asked him to apply to be a Colombo Plan scholar. “The Australian embassy moved faster so I accepted the Colombo Plan scholarship to study extractive metallurgy at the University of Adelaide, which was the best school of metallurgy at that time,” he says. Gomez started his studies in Adelaide in 1957, and went on to a masters degree, during which he designed a new process for lead smelting which could be applied at the Port Pirie smelter. While it was not taken up by the smelter owner, the process has since been used elsewhere.
After finishing his degree he returned to the Philippines, where he worked as a metallurgist for five years or so before moving into sales. He worked in several countries, building processing plants, then returned to Australia in 1982. He had married an Unley girl and wanted his children to go to proper schools, rather than being itinerant mining children.
One of the first things he tried to do was establish an oil refinery at Port Bonython on the Eyre Peninsula (ironically a similar plan has been floated in recent years by junior oil company Stuart Petroleum, which was taken over by Senex Energy last year). While the Whyalla Council supported the scheme, backed by a group of independent fuel retailers Southern Cross Refiners, the plan faced pressure from the oil majors and eventually failed. “The big companies were coming to the government one after the other telling them why the project would not work ... so they succeeded in stopping it,” Gomez says.
In 1989 Gomez thought that since he had been out of his profession for a while, it was time to go back. “I thought I’d better do something to catch up quickly. The way I thought I’d catch up is to develop new technologies to be not only equal to, but ahead of the game. At the same time, when I was looking for salt for the petrochemical plant, I came across all the exploration work which has been done on the Torrens area. I thought, ‘this is good’. So I started pegging claims, and one of them was the Carrapateena claim in 1989.”
Not deterred
AT the end of 2003 Gomez had two joint venture partners for his Carrapateena project. All was about to change, however. Swiss mining house Xstrata took over MIM, formerly Mt Isa Mines, and exploration outside of the core areas around the Queensland mining town was stopped. Adelaide company Terramin also pulled out. But Gomez was not deterred. The signs, in the form of magnetic and other non-drilling exploration, were good - and certainly enough to justify sinking a drill hole or two. “It was not likely that I’d get another big company interested in this,” he says. “They were all afraid of the deep drilling.”
It was a reasonable fear. SA has vast mineral wealth but much of it is likely to lie under about 500m of rock. Drilling that deep is expensive and the data signatures thrown up by valuable deposits such as copper are often mimicked by valueless minerals. Gomez’s first application for money under the State Government’s Plan for Accelerating Exploration was turned down. So he applied again. This time approval was given, for two holes instead of four. “But there was a condition that I must finish drilling by June 26 of 2005,” he says.
I put my money in and the only cash I can get hold of is my superannuation, $160,000
The deadline was incredibly tight, but that was only one of his problems. First there was the cash. The government’s $100,000 fell well short of the $340,000 for the drilling. He had to raise the rest. “I put my money in and the only cash I can get hold of is my superannuation, $160,000,” he says. “I thought, well, $160,000 is not going to do me much good. A couple of friends blindly put in $80,000, so I put in my budget.”
Then there was the issue of the drilling rig. At that time, they were in demand and extremely difficult to find. BHP was running 16 rigs at its Olympic Dam mine, OneSteel was exploring hard at its iron ore projects at Whyalla, and small mining companies were feverishly testing new claims. “Most of the drillers we talked to said maybe next year, and some didn’t even answer,” says Gomez.
Once again, he didn’t give up. Gomez had already visited the site and decided exactly where the two holes should be drilled. He doesn’t agree it was a gamble, because he’d done a lot of research. It could still go wrong though. “But in this world,” he says, “if you don’t take risks you don’t get the big rewards.” A small drilling company, Underdale Drilling, which specialised in putting down water bores, decided to take up the challenge. “I told him I would give him 2 per cent of the hole if he finished by June 26. He drilled the first hole, and he got stuck at 240m. So what he did, he brought his father out of retirement. His father knew the equipment best. They moved the rig to the second hole and drilled it to more than 600m, which was the target depth, and then they went back to the first hole. I was in Singapore at that time, and I came back on a Saturday afternoon, and there were urgent messages on my phone. It was from Gavin, the driller. ‘The rock has changed. I see sulphides. We must keep on drilling’.”
Gomez couldn’t make contact with his drillers, though. They had a satellite phone which was only switched on intermittently. Instead, Gomez left a message with the station owner on whose land they were drilling: “When Gavin comes back, tell him to keep on drilling for me. Tell him Rudy says keep on drilling.”
Keep drilling they did, and eventually the cores were delivered to Adelaide. One analyst who looked at the cores thought they looked like they contained pyrite - an abundant, low-value mineral. “I thought, ‘after all of this, pyrite?”’ says Gomez. He scooped up some rock chips which had fallen off the core samples. “I took them to a friend of mine who runs a mineral laboratory. He looked at it and said, ‘It does look like pyrite’.”
Gomez still wasn’t satisfied. He bought some acid and ammonia, returned to his lab, dissolved the chips in the acid and then added ammonia. “The whole thing went blue, a beautiful blue,” he says. “I said, ‘oh yeah’.”
Jackpot. It was copper - and lots of it. There was also gold, and the end of the drill hole was still in the minerals, meaning there was more to be found. The buzz began and companies were soon lining up to court Gomez.
He complains, with a glint in his eye, that wheeling the cores out time and time again to show them to potential investors was starting to get tiring. “They were really heavy,” he says, chuckling. He was still managing the process himself, even though the terms being considered were in the millions. His years of building processing plants had given him a good idea of the project’s potential. Eventually a team from Canadian company Teck Cominco, now called Teck, won the bidding war, after telling Gomez they weren’t leaving Adelaide without a deal. After spending millions more on exploration, including about 78km of drilling, Teck decided it did not want to develop the project itself and it was sold in March this year to Melbourne company OZ Minerals for $US250 million, plus another $US50 million when production of copper, gold, uranium or silver starts, and another $25 million if rare earths, iron or any other commodity begins.
Gomez’s share was 58 per cent, Teck 34 per cent, and minority shareholders 8 per cent. His friends, and the drilling company, have become multi-millionaires.
Gomez, in a monument to understatement, says they are very grateful. “I love them because they are very grateful people. They couldn’t do enough to express their gratitude.” And how did he celebrate his new riches? Gomez says he went out for a nice meal.
THE Carrapateena mine will be one of the largest in SA, costing $2 billion or more to build, employing many hundreds of people, with construction scheduled to start in 2015. It is a great legacy from one man’s vision, but Gomez has already moved on.
At 75, he knows he may not live to see some of his long-term projects fulfilled. But his new riches will allow him to develop his potentially revolutionary ideas without giving up the intellectual property, and therefore earnings, to other investors. He has bought his own drilling equipment and hopes this year to start another exploration program at Lake Gairdner, also in far north SA.
But perhaps his true passion is his inventions.
At the entrance to Gomez’s Brompton workshop there is a large vat of contaminated water. It is there for testing, to check whether the water purification plant he has built can clean it to the standards required by the customer. Gomez is a specialist in the use of electrolysis and microwaves for water purification, metal extraction and converting coal to liquid fuels.
But perhaps his most valuable technology, both environmentally and economically, is a liquid battery system which he believes can be used to store base -load power. Most batteries are inefficient and work best when they are kept close to fully charged. Gomez believes his process, which he is seeking to patent, avoids this problem. It would mean his batteries could be used to store wind or solar power for use at any time, on any scale. That would be revolutionary and would be a massive boost to renewable energy, by storing wind power for when the wind isn’t blowing and solar power at night. The battery technology, now in the final patenting process, is “the answer to clean energy”, Gomez believes.
He is also developing a simple chemical process to suck carbon dioxide out of the atmosphere and sequester it in a stable form in the sea. Another invention would take poor quality coal and turn it into liquid fuels, while producing much less carbon dioxide than current processes. This technology could be used to make Australia self-sufficient in terms of its fuel supply rather than being beholden to offshore oil producers and refiners.
Ironically, just like Carrapateena, he has had to go it alone with his technology projects. “The major companies were not interested as usual,” he says.
It has been a long road. Gomez has been working on his suite of technologies since 1989, when he also started with Carrapateena. The plan is to sell the first water purification plant imminently.
But because Australia is a small player on world terms, Gomez has his sights set on bigger things. The company has built a Chinese operation and will be setting up in the US also. His son, Phillip, a former Macquarie Bank executive and chemical engineer, has joined the business, albeit on a steep pay cut, and will be helping his father commercialise his various technologies.
A life of solid achievement
RUDY Gomez’s offices are relatively sparse, but the few decorations are notable for the tale they tell about a life of solid achievement. There is a poster of a mine in the Philippines, one of the many where Gomez came in to start up or optimise processing over the past few decades, and his Discovery of the Year Award, which will be joined by the Prospector Award from the Association of Mining and Exploration Companies.
Gomez’s plan to solve the world’s green energy problems and help reduce global carbon emissions sound just a little ambitious. But this is a man who almost single-handedly found what is currently the second biggest base metals deposit in the state, and one of the richest found in the nation in recent years.
These days, when Gomez says he has an idea, whether it be for a new exploration program or a new technology, people tend to listen.
This article was first published in SA Weekend in August, 2011