Doyon acquires stake in mining company with state prospects
Doyon Ltd. has taken a direct stake in a mining company exploring for gold on its land in an area of Alaska that has seen a resurgence in interest from prospectors.
The Interior Alaska Native regional corporation invested $1.5 million in Tectonic Metals Inc., a Vancouver-based firm with claims to three Eastern Alaska gold prospects, according to a joint April 20 statement.
The deal makes Doyon the largest single shareholder in the Tectonic with a 22 percent ownership stake.
Tectonic is working two gold prospects, dubbed Seventymile and Northway, on Doyon lands near the Canadian border. Tectonic also holds the Tibbs prospect on state land about 20 miles east of the Pogo gold mine near Delta Junction.
All of the prospects are in the Tintina Gold Belt, which runs across much of Interior Alaska and into the Yukon Territory.
New technologies for conducting geophysical surveys and other analyses of prior drilling data have led a handful of companies exploring for large gold deposits to revisit the eastern Tintina region that historically has been an area worked by smaller placer mining operations.
Tectonic co-founder and CEO Tony Reda said the investment is unique in that it amounts to an “endorsement” in the company as a whole, not just in the prospects Tectonic is working on Doyon’s land.
While the Tibbs, Seventymile and Northway projects are each years from becoming an operating mine, Reda said in an interview that having a large backer like Doyon with the ability to potentially support development of a mine if one of the projects reaches that point is also a major selling point to other investors in the inherently high-risk junior mining industry.
“Having Doyon as a shareholder gives us the ability to walk into a fund’s office in New York or Toronto — Wall Street, (Toronto’s) Bay Street, Vancouver’s Howe Street, pick your street — but we get to walk in their and say this is who we are and we’re actually aligned with our Native partner and there’s not too many companies that can do that,” Reda said.
The $1.5 million investment netted Doyon approximately 10.4 million shares in Tectonic, according to the statement.
Tectonic was formed by Reda and other former leaders of Kaminak Gold Corp., which discovered and advanced the 5 million-ounce Coffee gold prospect between Beaver Creek and Dawson City in the Western Yukon before selling the project to the mining giant that is now Newmont Goldcorp for $520 million Canadian in 2016.
Doyon CEO Aaron Schutt said in an interview that the decision to invest in Tectonic started from internal conversations about how to encourage more economic development activity across the company’s vast land holdings. Doyon is the largest private landowner in Alaska with title to approximately 11.5 million acres. Alaska Native regional corporations such as Doyon also hold subsurface mineral rights lands owned by Native village corporations in their regions.
Doyon leaders liked how Kaminak Gold approached its work in the Yukon — in terms of both geology and community engagement — and that continued into Tectonics first couple summer work seasons in Alaska, Schutt said.
“It doesn’t show up in early in the economics of a mining project but it does later,” Schutt said of companies that are actively involved in the communities near their projects.
He added that Doyon leaders anecdotally heard positive things from First Nations officials in the Yukon about Kaminak.
Reda said Kaminak offered scholarships to area students and established a local hire program among other efforts to positively impact area residents while the company was working the Coffee project.
“It’s not just about finding a mine; it’s about doing it properly in a way that benefits everyone,” he said.
As for the prospects, Reda said the Seventymile property near Eagle is “drill ready” and the company had plans to do so this summer before the COVID-19 pandemic took over nearly every aspect of life. Those plans are on hold for now.
“Right now we’re thinking outside the box on how to make that a reality but at the same time we have to be very much compliant with the rules and regulations and obviously the safety of our employees and service providers is of the utmost importance,” he said.
Tectonic acquired the Seventymile property in 2018 did its own soil sampling and geophysical surveys along with analyzing historical drilling records from the area.
The company drilled the Tibbs prospect last year with promising results.
“We’re also champing at the bit to get out into the field there (at Tibbs) and flesh out the discovery and figure out just how big it is,” Reda said.
He also noted that by taking a direct stake in Tectonic, Doyon would reap a portion of any benefits Tectonic realizes from the Tibbs prospect even though it’s on state lands.
Alaska mining industry observers estimate companies spent roughly $150 million on exploration work in 2018 and 2019, up about $50 million from several years prior.
The land-use agreements for the Northway and Seventymile prospects are typically structured and the direct investment does not change them or give Tectonic preferential rights to other Doyon lands, according to Schutt, who said the regional corporation is also looking to do some early-stage mineral exploration on its lands itself this year.
“It’s not even drilling, just data review,” Schutt said, adding Doyon has gotten interest from other exploration companies of late, adding further to the revived interest in the Eastern Interior’s gold potential.
Doyon has previously explored for oil and gas on its lands with mixed results.
Elwood Brehmer can be reached at [email protected].