Yukon - Canada's Mining Future Part 1
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
|Yours truly, standing on top of the ridge at ATAC's Osiris Project|
In June, I had the pleasure of visiting the Yukon, Canada’s most westerly Territory and the land of the midnight sun. The point of my visit was to partake in the 2018 Yukon Property Tour, which, this year, brought together 3 large groups of investors, analysts and media to see a few of the Yukon’s most promising projects and to participate in a full-day investment conference.
The tour took me to 6 different projects in 4 days, giving me a great perspective of the Yukon’s mineral potential and the people who are exploring and developing within it. In all, I came away very impressed and believe that it's just a matter of when for most of the projects in terms of their development into Canada’s next mines.
Here's a look at the Yukon by the numbers and a few specific things that I, personally, look at when gauging the opportunity for investment within a jurisdiction.
Yukon – By the Numbers
Population – 38,630 (December 2017) –23% of the Yukon’s population is Aboriginal.
Capital City– Whitehorse (has an International Airport) – Population 29,962 or 78% of the Yukon's total population.
Demographics – 0 to 19 years of age: 8,217, 20 to 64 years of age: 25,627, 65+: 4,784 – This is a great distribution of demographics for a developing Territory.
Unemployment – 2.7% (May 2018) – This is a great statistic; essentially, those who are able and want a job can find employment. The issue may be, and this is a great issue to have, finding enough workers in what I see as a bright future for growth, especially in the mining industry.
Largest Cities by population, outside of Whitehorse – Dawson City: 2,200, Watson Lake: 1,441, Haines Junction: 911, Carmacks: 549
Real GDP – $2,345.3 million (2016)
GDP by Industry (in terms of NAICS - 2016) – Public administration: 23.1%, Real estate and rental and leasing: 14.2%, Mining, quarrying and oil and gas extraction: 12.8%, Health care and social assistance: 8.4%, Construction: 7.7%
Fraser Institute Ranking for Mining Investment Attractiveness 2018 – 13th in the world
NOTE: All statistics taken from the Government of the Yukon Statistics
Aboriginal Land Claims and Self-Government
11 of the Yukon’s 14 First Nations have comprehensive land claim (Final Agreements) and Self-Government Agreements. It was in 1993 that the template, the Umbrella Final Agreement (UFA), was signed and used toward the negotiation of individual land claim agreements.
Source: The Government of the Yukon
With the settling of their land claims, each First Nation has the power to control and direct their own affairs. Most importantly for the subject of this article, they have direct control over the exploration and development of the mineral projects on their property.
The following First Nations have settled their land claims and are now self-governing:
For most investors, First Nations involvement in mining projects is typically met with skepticism; given the history of some of the dealings around the world, this isn’t unfounded. However, each situation should be examined for its individual merits, as well as the history of the specific First Nations where the prospective investment may occur.
The Yukon’s First Nations are no different and, given the immediate history with mine development, such as Victoria Gold Corp.’s development of the Eagle Gold Project within the traditional territory of the Na-Cho Nyäk Dun First Nation, it would appear to me that mutual benefit from mining is the driving force behind the cooperation agreement.
Another great example of a mutually beneficial cooperation is the synergy that has been found between the Kluane First Nation and Nickel Creek Platinum. The Kluane First Nation provides many of the key non-technical services to the Nickel Shaw Project camp, such as a great cafeteria service, which I had the pleasure of trying!
Looking up at the Nickel Shaw Project Deposit
I think the bottom line is companies that begin their relationship early in the project’s life, work to maintain that relationship, and can prove that they are as concerned about the environment and the people who inhabit that environment will, ultimately, be successful in moving toward the end goal of developing an operating mine. When researching a company, these can be key things to look for and to ask about when interviewing management. Of course, nothing matches doing a site visit and seeing it first-hand.
Yukon’s Political Landscape
Currently, the Government of the Yukon is controlled by the Yukon Liberal Party, which is led by Premier Sandy Silver. Generally speaking, the Liberal Party’s business philosophy is typically thought to be somewhat in the middle of the left-leaning New Democratic Party (NDP) and the right-leaning Conservatives.
In November 2016, the Yukon Liberal Party defeated the Yukon Party (conservatives), which was in power for many of the terms dating back to 2000. With a very low unemployment level and 80% of the population located in Whitehorse, politics in the Yukon are somewhat unique. Much like the rest of the country, however, issues surrounding the environment – carbon tax, power generation and housing – price and availability seem to be hot topics in the land of the midnight sun.
From an investment perspective, I'm always most concerned with left-leaning government power. Although, NDP governments have been in power in the past, the conservatives have dominated the leadership of the Territory for much of the last 20 years. Given this fact, I believe that past will be prologue in terms of the Yukoners' general political philosophy, but it's always something that should be watched.
Yukon Mining Alliance
Uniquely, to my knowledge, many of the junior and major mining companies with projects in the Yukon have formed the Yukon Mining Alliance (YMA) with the Government of the Yukon and the Canadian Northern Economic Development Agency.
The YMA’s mandate is to,
“promote Yukon’s competitive advantages as a top mineral investment jurisdiction and its member companies and their Yukon-based project.” ~ YMA
In my opinion, this is a huge advantage of investing in companies with projects in the Yukon, because clearly the marketing and promotion of mining within the Territory’s borders is a major priority. Bottom line, narrative plays a big role in the success of junior mining companies, and with the added help of the YMA, Yukon-based companies have a distinct advantage working together to promote the Yukon mining jurisdiction narrative.
Personally, I have seen the YMA presence at a couple of the top mining conferences in Canada, such as PDAC and Cambridge’s Vancouver Resource Investment Conference (VRIC). The YMA is putting the Yukon on the map for interested resource investors, which, I believe, will pay off in spades as we move into the next leg of the bull market.
A look at the Yukon by the numbers and its politics is an integral part of the jurisdictional investigation - but not all of it. Stay tuned for Part 2 of the series, as I cover what are arguably the two most important facets of my analysis, the Yukon’s infrastructure and the mineral potential.
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Until next time,