Jake Klein never planned to be involved in gold mining – but it’s where fate and ambition led him. 

Born and raised in South Africa, the Evolution Mining Executive Chairman refers to himself as “the accidental miner”, having started his professional career as an accountant in the early 90s. 

After graduating from the University of Cape Town, Mr Klein went on what was supposed to be a year-long backpacking trip, however, instead of returning home he made a permanent move to Sydney, landing a job in Macquarie Bank’s commodity division. 

During those early days at Macquarie, Mr Klein got his first real-life taste of the mining industry, though it wasn’t in Australia. 

A chance meeting with a visiting Chinese delegate saw Mr Klein offer to host the offucial during his stay, which in turn led to an offer to visit China. 

The young accountant got to see firsthand some of the big Chinese players in their infancy, touring a number of mines and smelters during his stay. 

Mr Klein saw immense potential in what was at the time a 100 per cent state-owned market. 

“Being young, naive and slightly crazy we thought that was a huge opportunity to try and chase down,” he told National Mining Chronicle. 

“We convinced ourselves, not knowing anything about China or mining, that we could build gold mines in remote parts of China.” 

Along with a couple of mates at Macquarie, Mr Klein did just that, forming Sino Gold in 1995 and listing the company on the ASX with a market capitalisation of $100 million. 

“China had just joined the World Trade Organization in 2001, so there was a window into the country at a time when it really wanted to reform its industries and was looking to support foreign investment into the gold sector,” he said. 

“We built Sino Gold into the largest foreign participant in the gold sector in China.” 

In 2009, Sino Gold was sold to Canada’s Eldorado Gold Corporation for $2 billion and Mr Klein moved on to his next chapter – in part thanks to another chance opportunity. 

Conquests and revolutions 

As Mr Klein puts it, he was walking down the street in Sydney when someone stopped to chat with him about a company that had just done a feasibility study on its Mt Carlton mine. 

While the Conquest Mining feasibility study deemed the Mt Carlton project to be uneconomic, Mr Klein saw potential, making a number of calls to contacts he had worked with at Sino and coming up with a plan to get the project off the ground – securing a life-of-mine contract to sell concentrate back to China. 

Looking to build up a successful mid-tier gold company, Mr Klein didn’t stop there. 

Merging Conquest with Catalpa Resources to form Evolution, he made ambitious deals to secure unloved assets from majors and breathed new life into the projects. 

Evolution acquired the Cracow and Mt Rawdon mines in 2011, the Mungari and Cowal mines in 2015 and bought a stake in Glencore’s Ernest Henry mine in 2016. 

With those combined holdings, Evolution produced 753,0001 ounces of gold with a mine cash flow of $771 million during FY2019. 

“We still believe a mid-tier company is where the best returns for shareholders are made in the gold sector,” Mr Klein said. 

“You’re not too big that you’re constantly trying to chase your tail by just replacing your own ounces, you’re able to fund your own growth and return your money to shareholders.” 

For Mr Klein, gold isn’t a scalable business like iron ore, and he believes six to eight assets is the magic number. 

“Show me a gold company that’s been able to scale up and develop more than that number of assets successfully and I’ll listen,” he said. 

“Gold assets aren’t very large, they are very dependent on the people on the ground being engaged, motivated and inspired, and I’m not convinced you can do that in a very large company.” 

Watching and waiting 

While the gold sector is always making headlines, the last 12 months have been a particularly interesting time for the industry, with significant activity from big players in the mergers and acquisitions (M&A) space. 

Two of the world’s biggest gold mining companies, Newcrest and Goldcorp, merged in April, while Randgold officially joined forces with Barrick Gold on the second day of the new year. 

Keeping a close eye on the fallout from these deals, Mr Klein said any mines left behind by the mergers could present an opportunity for Evolution. 

“A very good trade in this sector has been buying assets from majors,” he said. 

“Almost all of the mines that have come out of these big companies and investments have been good for the company acquiring it, whether that be Northern Star or ourselves.” 

While Mr Klein is in no rush to expand the Evolution portfolio, he said investors wanted to see growth when the gold price was in healthy nick. 

“We are a sector that tends to do more deals when the gold price is rising, when I think sometimes we should do more deals when the gold price is falling,” he said. 

“We have described ourselves as match-fit for M&A. We are looking at things, but where is the opportunity? Do you have the patience and resilience to wait for the right opportunity? 

“Our vision is to build a company that can prosper through the cycle.”