Indigenous junior miner leaps into ownership in NWT

Two years ago, the Dene of the NWT boldly jumped into the dragon’s jaw and launched their own mining company.

The targets: significant polymetallic potential near Great Bear Lake, and diamonds near the Ekati and Snap Lake mines.

The vision: be more than a source of labour and supplier of services to other miners. They want to be their own stand-alone producer, among the first in Canada to pursue indigenous mine ownership.

Aerial photo of the mill and camp at Terra Silver Mine, abandoned near the south shore of Great Bear Lake since 1985. Photo courtesy of DEMCo. LP.

Wait a minute. Aren’t First Nations usually railing against resource development, the constant thorn in mining’s side? And in the face of NWT’s gnarly record as a high-risk mining environment with dwindling exploration and labyrinthine regulations, what is driving a home-grown indigenous company to do this in the first place?  “The main thing is people want to participate and take ownership. It’s coming from the simple statements that have been made at the Dene Nation assemblies for years,” says Darrell Beaulieu, the President and CEO of Denendeh Investments Incorporated (DII) and its latest venture, DEMCo Ltd.

“No one ever said we are against business or development. We said we want to be participants in development, meaningful participants.” To a considerable extent, that has indeed been the case in the NWT.

Darrell Beaulieu, CEO of DEMCo LP, and this year’s winner of the Skookum Jim Award from PDAC for outstanding achievement and contribution to mining by an aboriginal group or individual.

Beaulieu points to the prosperous partnerships among more than 60 NWT indigenous businesses and diamond giants De Beers, Dominion and Rio Tinto.

Between 1996 and 2011, $4.2 billion or 33 per cent of their northern spend was with indigenous companies and almost 9500 person years of employment were filled by indigenous workers in that period, about 25 per cent of the total labour quantum.

But he wanted to go beyond the jobs and service/supply deals, and take the ambitious jump to the equity level. The current slump in mining activity, and eroding values on existing properties, gave momentum to Beaulieu’s plan to create DEMCo in the spring of 2013.

“So the timing to pick up properties and/or junior mining companies is upon us,” said DII’s website at the time.

Noel Michel of Lutsel K’e takes a break during a prospecting trip near Great Bear Lake. Photo courtesy of DEMCo. LP.

It continued on a note of high optimism: “The silver lining to present and initiate a Denendeh exploration and mining company at this time may help create momentum for fundamental change in First Nation participation in resource development in the Northwest Territories and Canada.” The soft-spoken Beaulieu, 58, is an Akaitcho Dene born and raised in Yellowknife who has earned numerous accolades for his leadership. The most recent is the 2016 Skookum Jim Award from the Prospectors and Developers Association of Canada, acknowledging significant achievement and contribution to mining by an indigenous group or individual.

He’s is no stranger to indigenous and northern corporate governance. He’s a three-time Chief of the Yellowknives First Nation, and has held directorships with Northland Utilities, the NWT Business Development and Investment Corporation, and numerous industry associations.

And he’s no stranger to mining either, as one of his first jobs was with Noranda Exploration doing EM surveys, mapping, prospecting, claim staking and general exploration work.

Beaulieu has been an influential advocate for Dene investment through the parent group, Denendeh Investments Limited Partnership, an alliance of 27 First Nations communities across the NWT. It boasts a diverse portfolio including oil and gas drilling services, electric utilities, communications, real estate, and now exploration and eventually mining.

Optimistic Start

To get DEMCo set up, Beaulieu hired Yellowknife prospector Trevor Teed into the shop as exploration vice president. Teed brought with him a hunch he’d been plugging away at for almost two decades: the potential for a new discovery in the Camsell River region southeast of Great Bear Lake, directly under four historic silver producers that operated from the 1960s to 1985.

”I suggested to him that the potential for IOCG (iron oxidecopper- gold) is what attracted me to it, not silver,” says Teed.

“Darrell agreed, and despite the initial doubt of two of our three contract geologists, our initial thoughts have been proven and there is IOCG at Camsell River.” “First it was kind of a desktop job,” says Beaulieu. “The data was all over the place. We had to go to the United Sates, Alberta, BC, the Geoscience office here in Yellowknife, personal homes, and at site too. … it was amazing where all the data ended up after 30 years.” They resampled thousands of metres of decades-old core at site (that saved millions of exploration dollars). The results, first disclosed in late 2014, proved out their early optimism.

“Back in the 70s they were only looking for silver. We looked at the core and did some more prospecting, and we found that hey, there’s a lot of gold there. What’s more, after our first field season, was confirmation there’s a huge magnetic body there also. It looks like we have an IOCG deposit.” Beaulieu is too savvy to get excited at this point, but polymetalic IOCG deposits (Australia’s mammoth Olympic Dam is one) can be truly massive. The discovery of the zone, estimated roughly at some seven by 16 kilometres in size, was first announced in late 2014.

Teed says he had taken his hunch to other miners, but credits Beaulieu with the vision and the belief to carry it forward. His investigation so far has uncovered an extensive magnetic zone under the old silver digs.

“It is a significant event. I think that when the rest of Canada catches up to what we have, we’re going to see significant exploration again in the areas,” predicts Teed.

That significance is backed up by mapping and geophysical NWT Geological Survey over the past decade.

Geologist Scott Cairns, Manager of Bedrock Mapping and Mineral Deposits at the NTGS’s Yellowknife office, says the historic production of silver and uranium is indicative of larger polymetallic IOCG deposits in the Great Bear magmatic zone.

“They are definitely in a high mineral potential area there,” says Cairns, adding that DEMCo’s claims are at the north end of that zone, while Fortune Mineral’s NICO project, about 200km to the south, is on its southern edge.

Cairns says federal GSC geologists have recently completed a large study of alterations that can help identify IOCGs. “So there’s an enormous volume of work of geophysical characterisations, ways to track down where these potentially valuable deposits might be hidden,” he says.

DEMCo’s IOCG discovery has not sparked any new rush of interest in the region. But on a territory-wide basis, says Cairns, the number of inquiries, website and office visits to his library, and data bases, has been spiking in the past few months.

“I think what we’re seeing is that while it’s difficult to fund boots-on-the-ground exploration, companies are doing their homework right now and will be using that when conditions improve.”

In The Game

As of late December 2015, DEMCo was fully engaged in planning the 2016 field program, which Beaulieu hopes will include airborne geophysical work as well as more ground sampling.

They will spin off another subsidiary, Camsell River Minerals Ltd., to carry the project.

But, just like any other junior, the team will be out there looking for private cash during one of the metal market’s deepest and most prolonged slumps.

And predictably, that’s not the only hurdle. The claim block is within an overlapping boundary of both the Tlicho and Sahtu land claim regions.

The four old mines on the claim block are among dozens across the NWT deemed for rehabilitation by the federal government.

There is an existing airstrip, but land access would largely be on the historic Denison Ice Road from Behchoko, first opened in the 1960s, but dormant for 30 years.

Yet another layer is working with the NWT Government, as it gets used to managing the mines portfolio after its transfer from Ottawa to the NWT in April of 2013.

And, because DEMCo’s parent corporation is governed by an alliance of all NWT’s First Nations – and it’s their money that’s at risk – Beaulieu also has to satisfy a board that isn’t all that familiar with being on the investor side of the mining equation.

Was it a hard sell to get his board on side in the first place? No, says Beaulieu, pointing to DII’s investment of about $2 million in cash and time to date. “The hard sell is going to be finding the money to add value without diluting too much.” He says he’ll be walking the floors at the Vancouver Cordilleran Roundup and Toronto’s PDAC in 2016, promoting DEMCo.

The Camsell project is where DEMCo is now fully focused, but it is also invested in the NWT’s prolific diamond fields.

In the Lac de Gras region east of the Ekati diamond mine, the Fin claim block hosts known diamondiferous kimberlites, while the Jen block has six known geophysical targets that have not yet been drilled.

The Jaedenz block, sandwiched between the Gahcho Kue and Snap Lake mines, was explored and drilled by both De Beers and Winspear in the 1990s.

No work was done during the 2015 season, and the company has not yet announced whether it will commit anything this year.

An Indigenous Advantage?

Does being an Aboriginal-owned venture mean DEMCo will get a better reception from investors, or an easier ride through the North’s rocky regulatory regime?

“We haven’t really pushed it,” says Beaulieu. “We’re focussed on doing our own thing for now. It takes time to grasp and understand what is it you have? [We’re asking] the same type of questions that any junior asks, wearing the same boots, same gloves. We know it’s a high-risk business, but it’s a high reward too. Whoever is in there has really got to manage, and you’ve got to be able to sustain your own neck. In terms of the regulatory regime, that is an independent process, we respect it and expect to be treated like everyone else.”

In a February, 2015, interview with the business magazine Corporate Knights, he did allow that having the Dene communities at his own board table gives him a home-court advantage.

“I think community engagement is our competitive edge. And that edge is available because we are a Northern Dene-owned company. And we’re operating in a territory where indigenous people have a significant influence on our activity,” he said.

Don Bubar, as President and CEO of Avalon Rare Metals Inc., and in previous roles with the PDAC, is a passionate advocate for indigenous inclusion in Canada’s mining sector. He believes that future mineral exploration in northern Canada will be led by indigenous businesses.

“It is natural that this participation would progress from a passive one as a service provider to a more active one as an owner of a mineral development business with title to active projects. Darrell Beaulieu and DEMCo are providing the leadership for the Dene Nation in going down this path,” said Bubar in an email.

“Part of the challenge the industry faces is simply creating more public awareness of the importance of the industry to the northern economy, especially for aboriginal communities. Eco-activists have been successful in demonizing the industry in the North. DEMCo has a key role to play in changing the perception that mineral exploration and development creates only unwanted environmental impacts, without creating significant economic benefits for northerners.”