CAN YOU DIG IT? Clockwise from top left: John Gates at an entrance to Lincoln mine, 1,200 feet above sea level; Dave McCracken (at bottom left) mining in the silt of California's Salmon River; molten gold being poured at the Nolan Watson–backed Santa Elena Mine in Sonora, Mexico.
Gates handles everything from 3-D mine modeling to surveying, obtaining permits, and helping to manage the underground crew of contract miners. "You get paid good money to go down a hole," he says. Top mining engineers earn as much as $150,000 a year. And Gates' deal is sweetened with generous stock options. If he wanted to, he says, he could make a lot more. "It's all about what's important to you—the opportunity is out there for the taking," he says. "I have a buddy who graduated a year after me and is making nearly twice what I make. He has more toys than he can pack into his new Corvette. But he's mining out in the middle of nowhere in eastern Nevada. It all depends on how far from civilization you are willing to go to get the big money."
"Gold will be money when the dollar and the euro and the yuan and the ringgit are mere memories."—Richard Russell, the Dow Theory Letters
Nolan Watson, a fresh-faced 33-year-old from British Columbia, is willing to go anywhere in the world to make his fortune in gold. He's on the road nearly 150 days a year, traveling from the deserts of Nevada and New Mexico to the mountains of Peru. He manages the outposts from his office high in the sky in downtown Vancouver, where his two- and three-year-old companies, Sandstorm Metals & Energy Ltd. and Sandstorm Gold Ltd., respectively, have headquarters. Decorated in modern minimalist style—glass dividers, an open floor plan, and a natural-stone motif—the office looks like that of a high-end architecture firm, and Watson fits right in with his well-tailored suits (which, according to colleagues, he wears even on weekends). Watson is at the forefront of the mining business—he mastered an innovative, and high-risk, financial game known as "gold streaming," a way for Wall Street firms to invest in gold via buying stock in Sandstorm, which funds mining companies in exchange for an agreed-on percentage of all gold ever found in the mine at a fixed price. While it has the potential to generate billions, getting the metrics right is complex work, and partnering with the wrong mine company could cost Watson millions. "Why doesn't everyone do this? Because it takes really skilled, really knowledgeable people to be able to walk into these mines and correctly assess the opportunity there for the gold-streaming companies," says Craig West, a precious-metals analyst for GMP Securities in Toronto. "That is the key, and that's what companies like Sandstorm do really well." But the risk is part of the appeal. "It's a rush," Watson says. With so much at stake, the vetting process of potential mine partners is intense. "We just closed on a $75 million deal with a new mine. We look at about 300 mines a year, but we'll end up working with only two or three of them."
As a 21-year-old graduate of the University of British Columbia, Watson began working as a corporate financial adviser at Deloitte in Vancouver, then quickly parlayed that into a managerial job at a mining-company start-up, Silver Wheaton, also in Vancouver. The company took off, and in 2006, Watson became, at 26, the youngest CFO of any company listed on the New York Stock Exchange. During his four years at Silver Wheaton, he raised more than $1 billion to finance deals before deciding, at the height of the recession in 2008, to go solo and launch Sandstorm. Watson recalls waking up in a different city every day of the week for six straight weeks during the initial phase of capital raising, going from investor to investor, trying to persuade them to take a chance on his start-up. "Work ethic is everything. I said, 'We're not coming home until we have the money,'" he says. The unrelenting drive this required didn't come naturally, though. "When I was a kid, I gave up on things pretty quickly," he says. But he soon learned that success was more about a refusal to quit than any God-given talent. "That's when I went from being complacent to being hyper-focused on accomplishing audacious goals. Even in sports, I went from being a below-average player to captain of my hockey and basketball teams." Hundred-hour workweeks and nonstop travel can put a real damper on team sports. "Today it's more about the hotel gyms," he says.