Gold producers are going nonprofit.
A new nonprofit society designed for and by Yukon mining companies is intended to boost the territory’s profile, but it has already raised fears it may only be used as a front to help boost the companies’ bottom line.
The Yukon Gold Mining Alliance is the brainchild of seven precious-metal companies who want to sell the territory’s mineral prospects on world markets.
It is going to be a new marketing tool for Yukon companies, which often have a hard time proving they’re legitimate exploration firms to analysts Outside.
“You can’t go to New York and talk about how great a company is when they don’t know what the Yukon is,” said Janet Lee, a spokesperson for the alliance and the vice-president of communications for Golden Predator.
The mining business can be a tactical guessing game at times, and there are plenty of sham players out there.
“(Analysts) don’t know how to distinguish between an established company with significant dollars spent in the Yukon, or if they’re using the Yukon name and fame to position themselves,” said Lee.
So the alliance will be a new exclusive club of the territory’s best and most professional companies.
“It’s a self-monitoring body,” said Lee. “The industry itself doesn’t want to be associated with companies that aren’t real.”
The club has some strict entry rules if you’re interested in joining.
A prospective company must have a 43-101 resource designation. A 43-101 recognizes a companies’ actual discoveries and can only be handed out by a independent geologist.
“It’s not your opinion, it’s solid proof,” said Lee.
If a company doesn’t have a 43-101, it has to have spent $2.5 million in drilling programs in five of the last seven years.
Golden Predator, Capstone Mining, Alexco Resources, Victoria Gold and Northern Freegold currently make up the alliance’s board.
Copper Ridge Exploration and Western Copper are the only other nonboard members.
The prospect of working together is an exciting break from the past, said Lee.
“Normally you get people undermining each other,” she said. “They’ll say, ‘Oh, don’t invest in that company, they’re snakes.’”
There aren’t any clear rules on how to prevent competition within the alliance.
It’s all about good faith.
“When the tide rises, we all float higher,” said Lee. “When I do well, we all do well.”
Although the alliance sounds like a lobby, it won’t be talking to politicians or governments to influence policy.
“No lobbying whatsoever,” said Lee. “There’s no place for a marketing group to lobby. That’s the business of a chamber of commerce or an industry association.
“We won’t be approaching anybody about issues, we’re strictly about marketing.”
The alliance will stick to providing information at mining events and meeting mining analysts who aren’t familiar with the Yukon.
“As soon as you get into lobbying, you stop doing the work of the association, which is marketing the Yukon and promoting it as a great place to do business,” said Lee.
The Yukon Chamber of Mines already serves as a mining lobby in the territory, and you won’t be able to solicit opinion from the alliance like you can from the chamber.
“We fully support the chamber of mines,” said Lee.
“That was discussed at the beginning: that there would be no crossing over of responsibility.”
The alliance’s chair, Scott Kent, is also the chamber of mines’ executive director.
The bulk of the alliance’s work will be meeting one-on-one with prospective investors.
“The companies will go out collectively,” said Lee.
“YGMA will also work together to make it more cost-effective to bring analysts, media and the investment community to the Yukon to view properties and the territory,” said Kent in an e-mail.
And that presents a problem for a nonprofit.
Registered societies aren’t allowed to make profit for themselves or their members.
The society registrar rejected the alliance’s first submission for registration because it sounded too much like they were seeking to make money through a nonprofit front.
“The purpose of the society is to promote, as a brand, awareness and capital market development of members of the society,” read the society’s first statement of purpose.
The registrar sent it back.
“They believe that members will benefit financially. So they have rejected the document,” wrote one of the alliance’s original members, Rodney Snow, in an e-mail attached to registration documents.
The alliance tweaked “members of the society” to say, instead, “qualified Yukon precious metal exploration, development and mining companies.”
The registration was accepted.
And while the alliance won’t directly line members’ pockets, the overall goal is to get investors to buy into the Yukon, and, ostensibly, the companies who make up the alliance.
The alliance doesn’t see it that way.
There is no causal link between wooing investors and a private placement that an exploration company may make in the future, said Lee.
“None of these companies are in this to promote their own company,” said Lee. “What it is, is about promoting the Yukon.”
“So, really it’s making a greater awareness of the Yukon,” said Lee. “There’s no way that puts dollars, in any way, in the hands of the members. It enhances understanding.”
“If you’re going and bringing analysts to the Yukon, you’re not controlling who is buying your stock because you’re just putting messages out there. And if you want to go out and buy stock, that money doesn’t go into anybody’s hands, it goes into the public market.”
But enhancing market value naturally creates a better investment environment.
“If the market value (of a company) was higher, if awareness was increased, (the company) would have to go out and raise money on the value of the company - but that doesn’t mean the (alliance) created that,” said Lee.
“The companies all do their own marketing activities in addition to this.”
And that’s the tough part of these industry-created clubs.
They walk a fine line between preserving a profit-free independence and creating better economic circumstances for the members.
There are plenty of other groups like the alliance, like the Denver Gold Group, said Lee.
Any money paid by a member to the alliance cannot return to the company, she said.
Contact James Munson at
jamesm@yukon-news.com