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Rusty-colored, crumbly rocks and dirt sporadically mixed with small chunks of white quartz freshly uncovered immediately caught the attention, and the geological interest, of Jeff Pontius, a long-time gold prospector currently working on Native land in Interior Alaska.
A small John Deere bulldozer, leased from the nearby community of Tanana, had just scraped a small area on the hillside free of vegetation. Soil sampling conducted the prior year, and by past prospectors, had identified a soil anomaly with gold mineralization and associated pathfinder elements.
But in preparatory dirt work to create a level drilling pad, the dozer uncovered what Pontius believes is a layer of gold mineralization in the buried rock.
"This is it-this is the zone we want," Pontius said, after inspecting some of the broken-up rocks with his fold-up magnifying loupe hanging on a cord from his neck, a typical "necklace" geologists wear during the field season.
Deciding to move the drill pad and planned core hole a few feet further up the slope, Pontius discussed the changes with the dozer operator. Okay with the extra work, dozer operator Dean Siebold joked with the geologist. "If I wanted to mess with you guys, I would have covered that white stuff back up," he said, laughing.
Making on-the-spot calls based on geologic information is nothing new to Pontius, who has nearly 30 years experience looking for gold deposits for mid-tier and major mining companies, most recently AngloGold Ashanti.
What is new for Pontius, for his new company Talon Gold Alaska Inc., and for a growing number of other mineral exploration and mining companies currently working in Alaska, are prospecting opportunities on lands owned by Alaska Natives.
Denver-based Talon Gold, a wholly owned subsidiary of publicly traded International Tower Hill Mines Ltd., announced in September 2006 that it optioned the West Tanana gold exploration property from Doyon Ltd., the Interior Alaska Native regional corporation. The parties signed a two-stage exploration option/mining lease agreement covering some 60,000 acres of Doyon land located about 25 miles west of Tanana, and about 10 miles north of the Yukon River.
The West Tanana property includes overgrown historical placer mine workings on Grant Creek, the camp base for the exploration crew of nine working on the property this summer. The five-year exploration agreement, which calls for certain annual payments to Doyon, as well as specified minimum financial investment in the exploration property by International Tower while setting aside a royalty for Doyon should the property ever produce gold, resembles a standard mining company deal.
"There are some special provisions that are unique to working with a Native group, but they are not onerous to us," said Pontius, who serves as president and CEO of International Tower and Talon Gold. "Otherwise, it's a general business transaction like we would do with any company."
Those provisions include a preference in the choice of contractors, a shareholder hire provision and a contribution to Doyon's natural resources scholarship fund, typically about $10,000 a year.
BENEFITS REACH BEYOND COMPANIES
Through a competitive process, that endowment provides a full-ride scholarship to a college junior-also a Doyon shareholder-who is working toward a degree in the oil and gas industry, or mining, or some other type of natural resource field, according to Norm Phillips, resource manager at Doyon.
"It's very important to us for companies to make a contribution to this fund," he said. "Hopefully, as the students progress, there will be opportunities to place them as interns on the project."
Doyon also hopes to place more shareholders on the project as it grows in size and workload, whether in camp logistics, on drilling crews or in contractor support roles. Examples of these types of employment opportunities evolving in such mineral exploration and development agreements between industry and Native corporations include the Donlin Creek project in Southwest Alaska, the Red Dog mine in Northwest Alaska and the Rock Creek gold mine being built near Nome.
But Doyon wants more than just work opportunities on its West Tanana property, or at the corporation's two other mineral exploration projects recently optioned to two separate junior exploration companies, and the 10 remaining mineral prospects that Phillips is charged with marketing to the mining and exploration industry.
"We want the exploration companies to put money into the ground to expand the resource of knowledge about it, to try to define and delineate a mineable ore body," Phillips said. "We're emphasizing bringing the properties into development ... we're not interested in running an exploration program in order to increase stock prices. Our interest is in finding a mine."
In 2007, Doyon shareholders received up to $9 per share, depending on their classification, from the regional corporation's natural resource sharing fund, according to Phillips. Under the 7(i) provision of the Alaska Native Claims Settlement Act, any of the 12 Alaska Native regional corporations that receive net revenue from development of subsurface or timber resources on their lands pay 70 percent into a fund that is shared among all corporations.
Last year, Doyon had no contributions to that fund, but received $5.3 million, according to the corporation's annual report. Fifty percent of those funds were distributed to Doyon shareholders early this year, a revenue-sharing system that spreads natural resource development proceeds throughout the Alaska Native community.
"We're looking for an opportunity to contribute to that funding for the Native people of Alaska," Phillips said.
To achieve that goal on its mineral properties, Doyon prepared to market its lands to industry, spending time and money acquiring, maintaining and, in recent years, converting data to computerized systems, Phillips said.
The Native corporation then looked for industry partners that already had other holdings in Alaska, Phillips said. "That spreads the risk and creates more opportunity for them to raise money," he said.
EXPERIENCE A MUST
In addition, Doyon looked for exploration companies staffed by experienced geologists with a successful track record, involved with a company touting a record of stock growth.
"We're not interested in a start-up company with multiple blocks of our land," Phillips said. "We're looking for a more experienced, mature junior company ... that will take it to the next stage and bring in a major mining company."
Working with an Alaska Native corporation offers exploration companies several advantages, Pontius noted, including assistance with finding local workers, access to a large land package and information gleaned from prior prospectors.
"We can pick up what we consider an entire district in these large land packages ... a district scale play," he said. "Doyon also has a good database, good tracking of records of what has happened on the land. You usually don't find that, even with major mining companies. There's a quality data bank on the property, and even if it's not been drilled like this one, that makes it easier to evaluate."
Doyon land managers are also hoping for positive results from the two other properties currently optioned to exploration companies in a similar type of financial agreement. Full Metal Minerals Corp. is exploring in the corporation's Fortymile holdings in eastern Interior Alaska and Freegold Ventures Ltd. optioned the Vinasale property located 16 miles south of McGrath in Central Alaska. Both companies are Vancouver-based junior exploration companies with a number of different properties in Alaska.
Full Metal's key prospects in the Fortymile include the LWM and the Fish targets, part of the 810,000-acre land package negotiated with Doyon. Past and current drilling has identified some high-grade zones of silver-zinc-lead mineralization, some with copper and gold showings.
According to a late June 2007 press release, Full Metal had completed six core drill holes at the LWM prospect, with five holes encountering significant intervals of massive sulphide mineralization. Three holes have been completed at the Fish target.
"Doyon marketed and presented the data in a well-organized format, which greatly aided our decision-making process to enter into an agreement with them," said Rob McLeod, vice president of Full Metal, which has agreements to explore on lands owned by two other regional corporations. "One of the key differences is the recognition of the traditional, subsistence and cultural factors that we must constantly factor in working on Native Lands. These factors supersede all other issues, including mineral potential," he said. "We have been impressed with the traditional, technical and logistical knowledge and organization of Alaska Native corporations regarding their lands; we have employed numerous Native shareholders and Native-owned companies, which has made our job a lot easier on the ground ... we have not seen any disadvantages to doing business with them."
Freegold signed its land option with Doyon in March 2007, and plans to conduct later this year some geological mapping, sampling and airborne geophysical surveys. Freegold also will be collecting new samples for further metallurgical testing, according to a company release.
"Land stability, security of tenure and better business relations between mining industry representatives and the Native community" have led to such Native/industry partnerships, said Curt Freeman, a Fairbanks-based consulting geologist who has worked with Freegold for nearly two decades. "If you can stake state lands, you are obviously in better shape than doing partnerships with anyone else, Native owners included.
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