http://www.saskvalleynews.com/2015/03/beardysinksdeal/

Beardy’s inks deal with First Nations-owned NYSE brokerage firm

Beardy’s and Okemasis First Nation Chief Rick Gamble recently signed a partnership with NativeOne Financial Holdings

By Terry Pugh

The Chief of the Beardy’s and Okemasis First Nation near Duck Lake is confident a recently-signed agreement with NativeOne Financial Holdings of New York will lead to greater economic security for the band.

“This is uncharted territory, but I see it as a way for us to generate our own-source revenue by investing in resource development,” said Rick Gamble in an interview on Wednesday, March 4. “This represents an opportunity to make a real difference for future generations.”

Gamble signed a deal on behalf of the Beardy’s and Okemasis First Nation with NativeOne Financial Holdings (NOFH) on February 19. One of the subsidiary companies of NOFT, NativeOne Institutional Trading (NOIT), is a member of the New York Stock Exchange (NYSE). The company executes trades on the NYSE through the brokerage firm of Cuttone & Company, a long-standing member of the NYSE.

Beardy’s is one of two First Nations in Canada, and the first in Saskatchewan, to sign on with NativeOne Financial Holdings. The company has a number of subsidiary companies in the energy, insurance, and business development fields. Native One Financial Holdings is the only First Nations-owned firm licenced to trade on the NYSE. It was founded by Dennis Smith and Don Lyons of the Morongo Band of Mission Indians of California.

The other Canadian band to sign on with NativeOne is the Nibinamik First Nation in northern Ontario. The Nibinamik First Nation is one of several reserves in the “ring of fire” area rich in mineral resources about 400 kilometres northeast of Nipigon.

REVENUE GENERATION

Beardy’s invested $100,000 to purchase a single share of NativeOne Financial Holdings. Gamble is confident that investment will translate into ongoing revenue through two streams. The first is money earned from commissions on sales through the NYSE, and the second is through direct investment in corporations engaged in developing resources.

“The bottom line is we now have access to capital through the New York Stock Exchange,” said Gamble. “It’s estimated that $1.3 trillion dollars is traded every day on that exchange. This is where all the big companies go to get investment dollars for major projects; for oil and gas, for potash, for pipelines, and so on.

“If they can do that, why can’t we as First Nations do that as well? We can earn revenue from resource development by tapping into that investment capital in the same way these big companies do.”

Gamble said by becoming part-owners of NativeOne Financial, Beardy’s and Okemasis, along with Nibinamik, are now able to negotiate directly with resource companies for a share of the returns.

“We could say to the company, okay, we want to own 25 percent of this particular project,” explained Gamble. “The company could say, fine, it will cost you $250 million. Now we can go to the stock exchange and attract investors and raise that $250 million and buy shares in the resource company. This is a brand new option for us. It didn’t exist before.”

Gamble said resource companies are increasingly realizing they need to take into account the interests of First Nations, particularly when resource development occurs on traditional territory or First Nations-owned land acquired through Treaty Land Entitlement (TLE) purchases.

“The recent court ruling stating the Tsilhqot’in First Nation has title to 1,750 square kilometres of land in south central BC has tremendous implications for the whole country,” said Gamble.

The Supreme Court court ruled in July, 2014 that economic development on land where aboriginal title has never been extinguished can continue if it is in the public interest, but also indicated the consent of the First Nations should be sought.

Gamble said investing in resource development by purchasing shares in the companies not only ensures long-term returns, it also helps First Nations’ cash flow in the short-term.

“It’s different than simply going to government and asking for resource revenue-sharing,” said Gamble. “This is not resource revenue-sharing, this is resource revenue-generation.”

GAINING EQUITY STAKE

Gamble said taking an equity stake in resource development changes the relationship between First Nations, resource companies and government.

“We would much rather negotiate with a company and say, can we have equity and in return, get some of the resources out,” said Gamble. “To me, it’s a matter of principle. With resource revenue-sharing, they can offer you jobs, they can offer you a sum of money, which wouldn’t last. But if you’re an equity owner you can have all that plus other benefits.”

He said Beardy’s owns land near the proposed BHP Billiton potash mine near Jansen, so it offers a prime opportunity to negotiate with the worldwide mining giant.

“We have 10,000 acres in that area, but we’re totally surrounded by the land where BHP Billiton wants to mine,” said Gamble. “We’re in a position where we are going to start negotiating with BHP Billiton. We can’t mine our own potash because they’re surrounding us, and if they come within half a kilometre of our land, they have to start giving us royalties. So what we’re saying is, why don’t we just negotiate to have access to that potash instead of us waiting 25 to 30 years for you guys to come in and mine the potash and sell it. We need the money now as well as in the future. We’re trying to be as creative as we can. We have to look beyond simply royalties.”

Gamble said it remains to be seen how receptive resource companies will be to First Nations taking an equity stake in their operations, but he sees no practical reason for any objections.

“It’s straight business,” he said.

MANY YEARS IN MAKING

Gamble said the Beardy’s council first began looking at the idea of raising capital through the stock market about 15 years ago as a result of the interest shown by a number of American finance companies looking to invest in resource development. In 2001, Gamble first met Dennis Smith of NativeOne at an investment conference in Nevada. Over the ensuing years, Beardy’s council looked long and hard at the risks and benefits, and decided to proceed with the idea. In 2010, Gamble was a guest of NativeOne when that company achieved its seat on the NYSE.

“It’s really in the last five years that we’ve been able to work out all the details,” said Gamble. “We purchased our share in the company, and there are about a hundred more shares that are available for other First Nations bands to purchase. I’m hoping that other First Nations in Saskatchewan and Canada will get on board as well, because I see it as a great opportunity to gain a source of revenue for many generations to come.”

FUTURE REVENUES

Gamble said right now, the main “own-source revenue program” for the band is its TLE land. “There’s about $500,000,” he said. “But that will run out at some point, so we have to go where we have never gone before and look at other options.”

Beardy’s also owns a gas bar and convenience store in Duck Lake called Blackhawk’s Gas, Gamble noted the station inked a 10 year agreement with Esso to supply petroleum products on Monday, March 2. Councilor Jeremy Seeseequasis spearheaded that deal.

Gamble said funds are needed to deal with a number of infrastructure issues on the reserve, including repairs to roads and overcoming a shortage of good housing.

At the same time, he added, the band council is establishing an independent development corporation that will be arm’s length from the Chief and council.

“We’re trying to jump 50 years into the future, but at the same time we’re dealing with 140 years of the past,” said Gamble. “Our people are so conditioned to the way things are they’re sometimes reluctant to look at anything new or different.

“But things have to change,” he added. “We need legitimacy, transparency, accountability, capacity and continuity. Right now, every time a Chief and council is elected, they’re not bound by what the former Chief and council committed to. That’s why I’m insistent on getting this development corporation established so that all these business dealings will be transparent and accountable and at arms length from the politics at the council level.”

Gamble is also pushing for the adoption of a band constitution for Beardy’s and Okemasis.

“Right now our only constitution is moral persuasion,” he said. “We need a constitution that’s recognized by our community, as well as the provincial and federal governments, in order to give us legitimacy. Then we can negotiate a governance agreement that gives us legitimacy, capacity, accountability and continuity.”