Although Tectonic Metals (TSX-V:TECT) (OTCQB:TETOF) (FSE:T15B) launched their $3M private placement under challenging market conditions, their two largest institutional shareholders, well-known Crescat Capital and Alaska’s leading Native Regional Corporation, Doyon, increased their shareholdings in Tectonic to support what both believe to be a transformative year for Tectonic, with lots of new drilling and exploration. Their continued support (Crescat did a strategic investment during last year’s raise while Doyon participated in financings from 2020, 2021 and 2022) enabled Tectonic to close the first tranche of a projected C$3M private placement for proceeds of C$1.93M. This is quite an achievement in current volatile markets as record inflation, upcoming rate hikes and increasing shortages everywhere could cause stagflation and/or a recession. CEO Tony Reda acknowledged this fact, and was delighted with this first tranche:
“Current challenging market conditions in no way reflect or diminish the potentially game-changing, district-scale opportunities Tectonic’s projects offer. The reality is that the Tectonic team has never been more excited to get into the field and drill test some of the best targets the company has generated to date. As we close this first tranche of our financing, I want to express my gratitude for the continuing support of Crescat Capital and Doyon, Ltd., whose commitment and belief in our process and targets provide us with a solid exploration foundation to build upon. We are truly blessed to have great shareholders. As we launch our 2022 field season, we are primed and focused on our mission to find a mine.”
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Please note: the views, opinions, estimates, forecasts or predictions regarding Tectonic’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Tectonic or Tectonic’s management. Tectonic Metals has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.
The ongoing financing is a non-brokered private placement of up to 50M shares @ C$0.06, with a 2-year half warrant (exercise price C$0.10) for gross proceeds of up to C$3M. The warrants are subject to an acceleration clause, when the share trades at C$0.20 or higher during 20 consecutive trading days. Tectonic was originally looking to close this financing before May 16, 2022, but sharply deteriorating market conditions forced them to take a step back. When talking to CEO Reda, he indicated he considered himself fortunate to have raised almost C$2M but also realizes that the “smart money” adding to their positions or coming on board now recognizes the potential of Tectonic’s projects remains very substantial despite shares sitting at record lows. Right now this round is standing at about C$2.4M in total, and Reda still expects to get to the intended C$3M, which would be a strong vote of confidence for the company.
Largest shareholder Doyon announced their participation on May 24, 2022, and is a robust example of integrating native interests in exploration initiatives. Doyon was pleased to inject fresh capital again, as their CEO Aaron Schutt explained:
“2022 marks the 50th anniversary of the Alaska Native Claims Settlement Act and the formation of Doyon, Ltd. Since that day, our mission has been clear: continually enhance our position as a financially strong Native corporation in order to promote the economic and social well-being of our shareholders and future shareholders, to strengthen our Native way of life, and to protect and enhance our land and resources. Our investment in Tectonic is our mission in action. As Tectonic Metals’ single largest shareholder since 2020, Doyon recognizes that the Company shares our core values – values that today are embraced as “ESG” principles but which our people have adhered to for thousands of years. We welcome the opportunity to reinforce our support for Tectonic and are confident that their professional, diligent and respectful exploration process will prove successful.”
As a reminder, if the intended goal of C$3M will be reached, significant dilution will be part of it as well, taking the share count to 211.68M O/S and 298.69 F/D, but keep in mind 64% (partially diluted) of the shares is in strong hands, held by the Tectonic team, their strategic partners (Crescat and Alaska’s leading Native Regional Corp, Doyon) followed by other resource funds as Gold 2000, RCF and Mackenzie Investments. On the other hand, of these F/D shares about 30M warrants are expiring before the end of June 2022 which is soon.
The cash position is estimated at C$2M now after closing of the first tranche, as Tectonic has been deploying funds to execute this year’s exploration program, and hopefully another C$1M could be added soon. As the closing of a second tranche is expected in less than four weeks, exploration plans for the first drill program are scheduled to be announced prior to this second closing, with the first drill rig commencing action the first week of July .
As a reminder, Tectonic is targeting district-scale projects in safe jurisdictions, which have the potential to generate multi-million ounce deposits. In some senses, choosing a secure and predictable jurisdiction in which to operate has become the new ESG (Environmental, Social and Governance), as geopolitical uncertainty has focused investors’ attention on the potential for asymmetric negative shocks that can hit companies tremendously. Examples are new governments which are less mining-friendly, countries exposed to wars such as we are seeing in Ukraine now, or even expropriation such as are currently occurring in Mexico with lithium assets. Alaska is one of the most predictable, mining-friendly jursidictions globally and investors there can take comfort in the consistent and even application of the rule of law.
Tectonic’s fully owned flagship is the Tibbs project, covering 29,280 acres, 35km east of the 200koz Au per annum Pogo Mine. High-grade gold mineralization at Tibbs occurs in steeply dipping veins, crossing multiple lower grade low-angle veins similar to the Pogo Mine, which serves as an analogy.
The Tibbs property is close to existing infrastructure and an active mill, and has seen lots of exploration, ranging from soil sampling, airborne and land-based geophysical surveys, trenching to drilling. Drill highlights are 28.95m @ 6g/t Au, 5.3m @ 15.7g/t Au, 5.7m @ 19.1g/t Au, 1m @ 104.5g/t Au and 5.1m @ 12.45g/t Au. These are very substantial results, and the most impressive drill results were obtained at the Gray Lead area:
Phase II drilling already established a 1000m x 350m mineralized zone, where the majority of drill results returned grades over 5g/t Au, and within this high grade, steeply dipping veins with grades up to 127g/t Au. It is still early days, but if we would guesstimate a mineralized envelope of 1000x350x5m x2.75t/m3 density, this would result in 4.8Mt, and at an average grade of say 5g/t this could already result in a hypothetical 770koz Au. And keep in mind that this is only a small part of the entire project.
Tectonic’s second project is the Seventymile project, part of an underexplored, fully owned 40km long Greenstone belt, located 270km east of Fairbanks, Alaska. The property is only accessible by air (small aircraft, helicopter), and in the winter by a winter trail. Seventymile is an orogenic gold system (for example Abitibi, Kalgoorlie, Red Lake, Hope Bay, and Las Cristinas) with lode-style high-grade quartz mineralization occurring in shear zones and faults. Drilling highlights are 5.5 g/t Au over 15.0m, 1.1m @ 205.9g/t Au, 6.1m @ 2g/t Au, 19.8m @ 1.37g/t Au and 6.1m @ 4.38g/t Au.
The 100% owned Flat Gold project is Tectonic’s latest acquisition and is located 40km north of the 45Moz Au Donlin Gold project, jointly owned and operated by Barrick and Novagold, who are spending $60M at Donlin this year. As you probably know, Donlin is one of the largest undeveloped open-pit gold resources in the world (39Moz @ 2.24g/t Au) and Flat is located in the same mineral belt that produced this behemoth. According to management, Flat is a 92,000-acre district-scale intrusion-hosted gold system with multi-million-ounce potential in the heart of Alaska’s fourth most prolific placer mining district. Historic drilling from 1997 returned interesting highlights, like 24.7m @ 12.5g/t Au, 36.6m @ 1.36g/t Au and 31.7m @ 1.28g/t Au. The priority target, Chicken Mountain, hosts a robust 4km long gold-in-soil anomaly where drilling indicated gold mineralization over a kilometer and is the likely source of the majority of the historic 1.4Moz of placer gold mined in the area.
The currently raised budget will mostly be spent at Tibbs and Seventymile according to CEO Reda, so I’m curious what plans will be announced soon. Tectonic seems to be trading at rock bottom levels at the moment, is cashed up but on the other hand has huge exploration upside potential with their project portfolio, so I’m looking forward to what they can achieve this year.
Although sentiment isn’t positive in the stock markets, and junior mining in particular, Tectonic seems to enjoy the full support of the likes of Crescat Capital and Doyon, as both shareholders made strategic investments in the company, enabling Tectonic to commence drilling very soon. The former Kaminak team has big ambitions and is ready to go, and will announce the extent of their upcoming exploration programs within a few weeks, following the closing of the second tranche of the ongoing private placement. The current market cap of just C$8M is extremely low in my view, as only the management team could very well be worth more, let alone the three district scale projects with two of them already having pretty interesting drill results, and a new drilling season coming up soon.
I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.
The author is not a registered investment advisor, and currently has a position in this stock. Tectonic Metals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.tectonicmetals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.
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