February 10, 2020

What’s mined is yours, Purdue

WEST LAFAYETTE, Ind. — A 1956 graduate of Purdue University has given the rights to a Canadian nickel mine, potentially worth millions of dollars, to the university’s business school.

Allyn Knoche (pronounced kuh-NOKE-ee) spent his career as a stockbroker and an investment advisor. In 2015, he made a $5 million loan to FPX Nickel, a Vancouver-based mining company. In return, Knoche received a 1% Net Smelter Return (NSR) for the mine, which is set to begin production in the next several years. Knoche has created a charitable remainder unitrust with the Purdue Research Foundation serving as trustee. The Krannert School of Management is a one-third income beneficiary, with his son and stepson each holding a one-third share. Krannert will receive those shares when each dies.

Based on the company’s estimates, the mine will be able to produce more than 90 million pounds of nickel every year for several decades. At current prices, the mine is believed to be capable of producing an annual income of $630 million. In that scenario, the NSR’s share would be $6.3 million per year, or $2.1 million annually for each beneficiary. All indications point to the trust generating a healthy income stream for Knoche’s family and the Krannert School for many years to come.

Knoche and his wife, Dr. Lucy Hernried, would like the money Krannert accrues from the NSR to go to four areas: scholarships, faculty positions, faculty research and facilities.

“Scholarships are important because you want to help out young people,” says Knoche, who has funded a scholarship in economics at the Krannert School since 2007. “We’d like it to fund chairs in finance and research about the roles of institutions versus individuals in the stock market. A lot of work could be done on how one influences the other.”

The Krannert School was not in existence when Knoche attended Purdue. But after starting as an engineering major and serving four years in the U.S. Navy, his career path changed when he returned to Purdue, switched to industrial economics and took a financial analysis class taught by Muzaffer ErSelcuk.

“We learned about the stock market, and I thought, ‘Boy, that’s my thing,’” says Knoche, who still actively invests at age 91.

Knoche borrowed $70 to move west after graduation. He developed an interest in mining stocks and became manager of Goodbody & Co. in Seattle before the company went bankrupt in the late 1960s. He then partnered with a friend to open an investment advisory company in Salt Lake City. Starting from scratch, the company managed accounts worth close to $1 billion in just over a decade.

Knoche retired from the company in 1985 at the age of 55. He continued to manage family funds and keep a keen eye on the stock market, particularly those associated with mines. He held a lot of stock in Cleveland-Cliffs, the largest iron ore mining company in the United States. When the economy downturned in 2008, Cleveland-Cliffs held the FPX Nickel mine in central British Columbia but was looking to sell it off.

“I called FPX and asked how much Cleveland-Cliffs wanted for the property. They said $5 million, and I said I would put up the money. They were a little skittish since no one else was willing to put up the money and they doubted my ability to do so. But it allowed FPX to regain 100 percent of the property. That’s when my interests came in,” Knoche says.

Knoche negotiated the NSR as part of the sale. He’s well aware that the value of nickel figures will increase in the future. About 70% of nickel is used in stainless steel, and it’s also used in batteries in electric vehicles. As demand for those vehicles grow, so will the market for nickel. Once production begins, the mine will be one of the top 10 nickel producers in the world.

Knoche and his wife live in Green Valley, Arizona. Knoche, a native of Tuscola, Illinois, admits that he’s never been back to Purdue since his graduation, and hasn’t even been back to the Midwest.

He may not have physically returned to West Lafayette, but Knoche’s impact will be felt on campus for generations.

“This is a game-changing gift that will benefit countless students and scholars,” says David Hummels, the Dr. Samuel R. Allen Dean of the Krannert School. “In addition to providing steady-state funding to important areas such as scholarships and faculty support, resources of this magnitude enable us to think bigger and imagine ways that we can transform our research and programs. The Krannert School will look back on this gift in the decades to come as one of the key moments in our history.

“We can’t thank Allyn and Lucy enough for their tremendous faith in Purdue and the Krannert School.”

So why has Knoche left such a generous gift to his alma mater, and to a business school that wasn’t even in existence when he was on campus in the 1940s and ’50s?

“Well, you can’t take it with you,” he says. “Because I took this course with Professor ErSelcuk, it interested me in stocks and got me going. And it seems you always favor where you graduate.”

Writer: Tim Newton, 765-496-7271, tnetwon@purdue.edu

Media contact: Joseph Paul, 765-494-9541, paul102@purdue.edu

Sources: Allyn Knoche

David Hummels, 765-494-4366, krannertdean@purdue.edu

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