The story of the man who built one of Australia’s greatest ever small-cap mining fortunes — and changed the course of history — should be an unforgotten legend of risk, adventure and unimaginable riches.
But today, practically nobody knows his name. Today’s Profit Watch will resurrect this amazing tale — and remind us of the potential profits that come from calculated punts and a healthy dose of vision.
There are few Australians who shaped the 20th century like William Knox D’Arcy. He turned Persia — known today as Iran — from a Middle Eastern backwater in the early 1900s into a strategic asset that, for a time, was unrivalled in the British Empire. How so? What a story it is…
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Near the Queensland coast, a few miles south of the tropic of Capricorn, boulders of black ironstone lay on a timbered hill.
For more than 20 years, men chipped fragments from these boulders or washed the surrounding soil without ever knowing that the world’s biggest gold deposit lay below.
They never found it. Then, one cold and rainy Sunday afternoon on 16 July, 1882, Ned Morgan struck it lucky. As Dr Jack — the onsite geologist — said at the time, ‘the ironstone contains gold of extraordinary finesse’.
Ned and his brothers filed their claim with the mining warden on 2 July, 1882. This gold would make a monumental fortune.
Not for the Morgan brothers…but for William Knox D’Arcy, a local solicitor and part-time cricket player.
In fact, D’Arcy had never before set foot on the mountain, much less picked up a shovel…still, he decided to take a punt…and invested a £500 stake in the Ironstone Mountain project.
And boy, did he get lucky.
It became one of the richest gold mines in Australian history, producing gold, silver and copper for the next 100 years.
Eventually that gave D’Arcy, in dividends and capital gain, a fortune equivalent to a landed British aristocrat. More so than the Morgan brothers, as it turned out…
Over the next two years, D’Arcy steadily upped his stake until eventually, using his early profits, he bought the Morgans out completely.
Shortly after his purchase, the company floated on the world’s stock exchanges. The shares were valued at £1 each. Soon, they traded as high as £27! By that point, D’Arcy owned 320,000 of them.
What began as a £500 punt was now worth at least £6,100,000…or close to a billion dollars. He quickly ditched Australia to become a figure of London and the Royal Court.
But fancy that…an obscure lawyer in a colonial backwater that ended up dining with the UK elite and living the luxurious life of a multimillionaire.
In fact, he was now one of the richest men in England, with his own private box at Epsom (the King had the only other private box). And all from a mad punt on an improbable gold find.
What’s even more extraordinary is that he pulled off a second, bigger, richer and more improbable strike…
A second epic fortune…for the same man!
D’Arcy was obviously a punter at heart. He later used his prodigious wealth to fund an expedition into Persia on the quest for the growing strategic resource of the world…oil.
D’Arcy employed and sent out who would prove to be his key man, a tenacious geologist and engineer called George Reynolds. Reynolds would labour away for five long years and find practically nothing.
The whole shebang would nearly send D’Arcy bankrupt. And yet it seemed a reasonable bet that there would be oil in Persia because it was known to seep to the surface.
But finding a commercial field in the raging heat of the desert with little to no infrastructure or water and hostile locals was another thing altogether. Persia had crushed many other hopeful schemes and enterprises before.
From Daniel Yergin’s Pulitzer Prize-winning book, The Prize: ‘It was not a reasonable business proposition.’
Even the estimate for expenditures was to be grossly understated. ‘At the outset, D’Arcy had been advised that it would cost ten thousand pounds to drill two wells. Within four years, he was to be out of pocket in excess of two hundred thousand pounds.’
That was an extraordinary amount of money for the time. Even more amazing, after all those fruitless years, D’Arcy’s team hit a major oil strike on the very last drill hole! The company that formed around this became…British Petroleum (BP).
I’m sure you’ve heard of it. I fill up at a station of theirs regularly. It’s amazing to think how it all relates back to a rich gold mine here in Australia.
Well, if you find this story intriguing or inspiring, you can tap into the spirit of William Knox D’Arcy as and go prospecting yourself…
Editor, Profit Watch