Doyon, Limited, one of Alaska’s largest Native regional corporations, has acquired a 22.3% ownership stake in Tectonic Metals Inc. Doyon’s $1,500,000 investment strengthens its existing partnership with the Canadian junior mining company.
Tectonic was founded by a seasoned team of creative geologists with a proven track record in the gold exploration space. “The majority of Tectonic’s founders were involved in Kaminak Gold Corporation, which made the Coffee gold discovery in the Yukon territory,” said Aaron M. Schutt, Doyon, Limited President and CEO, referring to the 5-million-ounce gold mine in Canada. “They worked quite well with First Nations groups in the area,” Schutt added.
The Fairbanks-based Alaska Native corporation, the largest private landholder in the state, holds 12.5 million acres in the eastern interior — about two thirds of which is designated for mineral exploration.
Inevitably, two years ago, Tectonic’s principals in Canada started looking across the border, and Doyon land was attractive. “Yukon and Alaska share a political border,” Tony Reda, President and CEO of Tectonic Metals Inc., told Native Business, “but that political border is by no means a geological border. The rock and terrain of Yukon carry through into Alaska and vice versa.”
In 2018, Doyon and Tectonic entered into initial agreements, covering all aspects of exploration, development, production and royalties, for two projects on Doyon land. The Northway project, extending 40 kilometers along the Alaska State Highway, is fertile with multiple styles of mineralization. The second project, Seventymile, is underlain by a 40-kilometer-long gold belt, situated on the Seventymile River, roughly 30 miles west of Eagle, “which is one of our villages,” Schutt said.
Over the course of those two years, Doyon took into account Tectonic’s dutiful approach to mining, combined with its consistent, cooperative engagement with local, Alaska Native communities. “We watched the geology and then we watched their interaction with our community members. …We were pleased on both fronts,” Schutt told Native Business.
When Doyon leadership began strategizing about ways to increase mineral exploration on its lands, the corporation decided on a direct investment in Tectonic. Those conversations started last year, and came to fruition in April 2020.
“It’s an endorsement of our company and the team,” Reda told Native Business of Doyon’s substantial investment. “It’s a significant ownership level. There has to be a huge degree of trust. You definitely have to make sure everyone’s aligned.”
While various junior mining companies have explored Doyon lands for some 20 years, most of the corporation’s investments are in operating companies in different industries. “For example, we do a lot of work on the Alaska North Slope in oil and gas. Then we have a large utility in Alaska and government work in construction, IT and a small tourism business,” among other activities, Schutt said.
Doyon has expended its own money on exploration programs in the past, running small programs “to try and advance property to a stage where another company might take it over.” But, ultimately, Doyon isn’t an exploration company. “We don’t have geologists on staff. We started thinking about other ways to get that done. Having a company already on your land is one way to do that,” said Schutt, referring to Tectonic.
Investing in Tectonic Metals was a pathway to explore more Doyon land for mineral potential — while partnering with expert geologists with a history of safe exploration and maintaining open communication with nearby Alaska Native and First Nations communities.
2 Key Benefits That a Native Corporation Brings to an Explorer Like Tectonic
Schutt, who started his career as a lawyer, mostly for Tribes, spoke to how ANCs differ from the reservation system as well as federal and state governments. ANCs were created through a “Congress[ional] experiment, and in certain ways, it’s worked out really well for those of us who grew up here, as the owners of our land. When a company like Tectonic comes and asks us to do an exploration program, we don’t have to ask anyone’s permission, except for our board of directors. And that makes us more efficient,” Schutt said.
“Because, in terms of permitting programs, working on Native Corporation land in Alaska can be slightly easier and less public than either federal or state. I say ‘less public’ in a positive way,” Schutt clarified. “It’s not like we’re trying to hide anything, but we also don’t have any specific reports that can become public in a short period of time, and (can be used) to the benefit of their competitors.”
2) Local Buy-In
Another benefit of partnering with an ANC “is that we know our people on our land,” Schutt said. “We try to make sure the local people support the project as well. And then, there are ways that they can provide services for that project, both during the exploration phase and development, if we ever get there. We have the buy-in of a local community and their input on the decision-making process.”
The relationship is a two-way street. Doyon and its more than 20,000 shareholders also reap the rewards of the partnership.
For instance, Tectonic is known for hiring local people — “including our shareholders from our communities,” Schutt said. “It’s not huge crews, but right now, when you’re talking about whole industries that are closed, any opportunity in this environment is a good one, and a big one, for our families and communities. We’re happy that our partnership with Tectonic helps create those stable jobs for our shareholders.”
Those kinds of jobs are pivotal — particularly as other industries are being wiped out, as is happening with oil and gas.
“On the contractor side, what you see is oil and gas producers demobilizing the entire fleet on the North Slope of Alaska,” Schutt told Native Business. “I think the last time we were down at this level of rigs working was 1998-1999.” That was driven by market conditions and the economic climate, not a pandemic or a global price war, Schutt noted.
“Oil and gas is a hugely volatile commodity and industry,” Schutt underscored. “It goes through ups and downs periodically. I’ve been at Doyon for about 15 years now, and this is the third major [economic] downturn.”
Suddenly, oil and gas exploration on Doyon lands has dropped from a heavy winter season to no activity at all. “That’s really hard on employees. Those are great jobs. And the difficulty here is you just don’t know how long these things last when driven by a health pandemic,” Schutt said.
Financial & Environmental Responsibility
Doyon followed through with its investment in Tectonic, despite a global economic recession, recognizing that “investment in a junior exploration company is a high-risk, high-reward scenario,” Schutt said. “We were very clear with our board. They have a lot of experience dealing with junior companies; those are mostly the companies that have explored Doyon land over the last 20 years. And we’ve seen a lot of them come and go.”
Naturally, Doyon hopes Tectonic is here to stay. “We have a million dollar balance sheet, and we invested a million and a half dollars in Tectonic. So that’s about the only high-risk, high-reward money we have out at Doyon right now. It’s .15% roughly, so that’s not a huge allocation to high-risk,” he clarified.
In regards to environmental stewardship, Doyon acknowledges that “mining is an extractive industry, and we understand that there are good actors and bad actors.”
Doyon performed its due diligence to vet Tectonic, closely examining the way Tectonic handled exploration in the Yukon, just across the border to the north. “That project had gone from exploration to feasibility under Kaminak Gold Corporation and Tony Reda’s executive leadership, so we had a direct track record to look at,” Schutt said. “And then we had two years of operations on our lands to look at to see how well they did in that regard.”
Reda said Tectonic adheres to a mandate to go “above and beyond” the strict regulations governing the mining industry. With an environmental biologist on-staff, Tectonic has consistently delivered on its promises.
As Reda put it: “If you’re a geologist, you love being in nature. You sometimes live in a tent in the middle of nowhere — so inherently you’re drawn to nature. We want to protect that. It starts with who you are as a person.”
Speaking of character, that came into play in Doyon’s commitment to purchase a majority stake in Tectonic — and in the midst of a global pandemic.
Schutt reflected on COVID-19’s disruption to Doyon through the lens of tourism to offer perspective. “Had you asked me last winter how Alaska’s tourism summer was looking for our business, I would have said, ‘It’s probably going to be our best summer ever.’ And now we’re wondering whether we’ll even open. It’s a challenging environment. We acknowledge that for sure,” said Schutt, adding that every day presents new questions and challenges.
Doyon’s deal with Tectonic had been on the table for months, and despite uncertainty across industries and the volatility of the world economy, Doyon chose to move forward. “We had a little discussion about whether it was still appropriate to close, and decided there were a couple reasons it was,” Schutt said. For one, Doyon anticipates a strong summer season. Schutt’s other reason rests on integrity. “Your word is your bond. We gave them our word we were going to close, before the COVID pandemic really set in. So that was important to me,” he said.
“I’ve done deals worth in excess of $10 million per handshake,” Schutt added. “And, fundamentally, if you can invest money in a downturn, and make progress with that money, that’s tremendous.” Mining is one industry Schutt thinks can have a future impact. “So we decided to close.”
Doyon’s investment provides critical capital amid the COVID-19 pandemic, which has put exploration by many junior mining companies in jeopardy.
For both parties, the $1.5 million deal represents the formation of a partnership built to last. The investment reflects not just a bode of trust in Tectonic’s responsible stewardship and potentiality in mining Doyon lands, but in the Tectonic’s future at large.
Schutt was explicit that Doyon’s investment supports all Tectonic endeavors — not exclusively Tectonic’s exploration on Doyon lands. “When we do a deal with a company, we’re really there to support them in their efforts,” Schutt told Native Business.
“While we were excited about their work on Doyon land, we were not encouraging or directing that they only work on Doyon lands,” said Schutt, acknowledging Tectonic is pursuing projects on state land in Alaska, and the company has other interests in the interior that don’t necessarily include Doyon land. “That’s one of the things that we’ve made very clear. Our investment is strategic, but it’s also, generally, an investment. We expect them to use the capital in the best ways they see fit.”