An investor attending the Alaska Miners Association convention in Anchorage mentioned that he was listening intently to all the exploration talks because he was looking for the next Full Metal Minerals. In other words, a junior company that breaks out from the bottom of the stockpile, as it were, and builds a reputation for acquiring promising properties and working diligently on them. For Alaskans the rise of Vancouver-based Full Metal is doubly exciting, since all most all of the company's projects are located in the state.

Full Metal's president, Michael Williams, explained why his company chose Alaska in a speech at the convention Nov. 9. Full Metal went public in May 2004 on the Toronto stock exchange. "Once you are public, people will not keep investing in companies like ours without results. Results are paramount," Williams said. "We're actually competing with about 1,500 junior companies like ourselves in North America for both investors and capital, and in order to compete in this type of environment you need a compelling story, and you'd better have the wherewithal to be able to articulate it into the North American capital markets."

Building in Alaska

From the very start, Full Metal's strategy was to build the company through acquisitions in Alaska, Williams continued. "We're now to the point where we're arguably one of the largest stakeholders in Alaska after the Native, federal and state governments, something which we're very proud of," he said. Full Metal has raised a total of $15 million on the strength of its Alaska properties and has made two discoveries: last year on the 100 percent-owned Lucky Shot gold deposit north of Anchorage, and this year at the 100 percent-owned 40-Mile silver-lead-zinc project in eastern Alaska.

"At the time of going public we had a market capitalization of $7 million, with largely a retail shareholder base, to one now where we have a market capitalization of $70 million with a shareholder base that includes several of the most influential institutional investors in Canada and the United States," Williams said. Full Metal has become the proverbial canary in the coal mine for the junior mining industry, he added. "As we build, so does the junior mining industry here. ... We've been able to demonstrate geological success, it's allowed us to position Full Metal within the North American investment community as a truly made in Alaska story."

Exploring in frontier regions increases the odds of making a world-class discovery, according to Williams. "As far as political risk, the last time I checked, the president of the United States' name was not Chavez or Ortega, you guys have not heard of Napoleonic law, those things are critical for us," he said. "As for geological potential, Alaska's about one-and-a-half times the size of British Columbia, but it's only seen a fraction of the amount of exploration. So coming here was very eye-opening from that point of view."

Six events key

Six key events in Alaska have been instrumental in Full Metal's success, Williams said. The first was the perception that outgoing Gov. Frank Murkowski wanted mining in Alaska, which meant that Alaska is now viewed as a pro-mining state. The second was getting Pogo permitted. "You know, I think there was a line drawn in the sand surrounding Pogo," Williams said. "If the NGOs had their way, it would have been devastating to the mining industry, and I'm not sure if companies like Full Metal would be up here as aggressively as we were. If you can't permit, why should we explore?"

The third event is success in advancing two giant deposits, Northern Dynasty's Pebble and NovaGold's Donlin Creek.

The fourth is the falling value of the U.S. dollar.

The majority of money raised in mining is raised in Canada on the Toronto stock exchange, where 60 percent of the world's mining companies are listed, Williams pointed out.

"Previously, from a Canadian company's perspective, Alaska was thought to be expensive, both on a deal front and to operate in," he said.

"Now, you know, we're paying an additional 10 cents on the dollar rather than 40, and that does make a huge difference and it allows us to be competitive with other jurisdictions on our exploration dollars.

We have finite budgets that we have to work with, we have to make it count, we have to spend the money in the ground."

The fifth event was the settlement of Native land claims in Alaska. "In Canada I think we're a generation behind Alaska in relation to the Native land claims," Williams said. "Doing deals with Native corporations certainly is a key tenet of our business strategy and one that we hope to keep down the road." Williams' sixth point was that Alaska has high-quality people to work with, as good as in any jurisdiction in the world, he thinks, which is the most important reason why Full Metal is focused in Alaska.

Bringing in partners

Full Metal is proud to have introduced other exploration companies to the state as partners in joint ventures, including Metallica Resources on the Alaska Peninsula, Triex Minerals at the Boulder Creek uranium property on the Seward Peninsula and Andover Ventures at the Kamishak property, south of the Pebble deposit. Among its agreements with Native corporations, Full Metal announced in late October that it was partnering with Afognak Native Corp. to jointly explore the 22,647-acre Chickaloon coal lease area in Southcentral Alaska.

Based on geology and political environment, Nevada and Alaska are the two best places to explore in North America, Williams believes.

"As a sector, one area that I think as an industry we need to improve on is political involvement," he said.

"Investors do take notice when they see Alaska going from near the bottom of the Fraser Institute's comprehensive study on mining to number 13, people do follow that.

Even in the last several years I've seen a marked improvement since Full Metal has been here in the attitudes towards Alaska.

...

So make no mistake about it, Red Dog, Pogo, Pebble, Donlin have certainly helped, but I'd also give a lot of credit to the current administration and the legislators that shared Governor Murkowski's vision for the resource sector."

Taxes, environmental groups concerns

Miners need to get behind the men and women who champion their industry, Williams stressed. "Another storm cloud on the horizon is a potential mining tax," he said. "Alaskans live under the reality of a boom or bust economy, the mining industry is reintroducing themselves to Alaskans. Most residents have never even seen the impact of mining on the local economies. Alaska's got a young population demographic. It's critical, it's critical that the mining industry presents itself as a strong steward of the environment, advocates for local hire, and is a reliable neighbor in the community."

The mining industry must be prepared to present a united front to deal with the type of tax proposal that was defeated in the Nov. 7 election, Williams said. Alaskans voted on a ballot initiative that would have imposed a reserves tax on natural gas on the North Slope, which advocates argued would speed the development of a gas pipeline. The oil and gas industry funded a high-profile campaign against the tax, countering that it would tie up the state in years of litigation.

"Another area of concern for me in Alaska is the plethora of environmental groups that I see starting to hone in on the state," Williams said. "I want to make it clear: all environmental groups are not created equal. Groups that bring a local perspective and a voice to the table, ignore them at your peril. They not only have a right to have a say on how their areas are impacted, but I also think they can bring some critical ideas and insights that often can be incorporated into a project for the betterment of all stakeholders. I do take umbrage, however, with groups whose raison d'être is to stop mining in the world, no matter what the benefits are."

Timely permitting important

It is important for Alaska to demonstrate that a larger project such as Pebble or Donlin Creek can be permitted in a timely fashion, Williams thinks. "I see this tremendous fight developing over at Pebble that will, make no mistake about it, is going to reverberate throughout the industry one way or another," he said. "It's a fight that's now being waged on rhetoric, not on science. Some of the criticisms, in my opinion, are in danger of becoming a triumph of fiction over fact. If we're not careful ... the opponents of that project are going to propel it into the same level as the ANWR negotiations."

Williams is concerned that politicians could reluctantly sacrifice the Pebble project in order to achieve oil drilling in the Arctic National Wildlife Refuge, which would require a vote in Congress.

"After all, oil is a strategic resource, copper and gold are not," he said.

"I believe that development and protecting the environment are not mutually exclusive," Williams added.

"As an industry, once again, we must unite and not allow our process to be hijacked by special interest groups.

At the end of the day, the people, the potential and the prospects are why Full Metal is in Alaska.

As for the market, if we continue to meet with geological success, the market will take care of itself."