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viewFirst Mining Gold Corp.

First Mining Gold has big aspirations and an attractive resource base as it develops one of the largest open pit deposits in Canada

Snapshot

The group has accumulated a large portfolio of assets covering 300,000 hectares in geopolitically safe regions of North America

First Majestic Silver Corp. -

Quick facts: First Mining Gold Corp.

Price: 0.46 CAD

TSX:FF
Market: TSX
Market Cap: $318.25 m
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  • Springpole project hosts 4.67mln indicated ounces of gold
  • Permitting and a pre-feasibility study is underway
  • Assets in highly mining -friendly locations
  • Experienced management with discovery background

What First Mining Gold Corp does:

First Mining Gold Corp (TSE: FF) (OTCQX: FFMGF) was created by chairman Keith Neumeyer, who founded mining majors First Majestic Silver Corp (TSE:FR) and co-founded copper-focused First Quantum Minerals Ltd (TSE:FM). First Mining Gold went public in April, 2015.

The company has accumulated a large portfolio of assets covering 300,000 hectares in geopolitically safe regions of North America, most of them in Ontario, Canada.

Its 13 projects range from grassroots exploration up to the Preliminary Economic Assessment (PEA) stage. The company already enjoys a large resource-base on which it can expand.

The firm's primary focus is the development and permitting of its Springpole gold project, a 41,943 hectare project near the prolific Red Lake area in Ontario, which is among the largest undeveloped open pit gold deposits in Canada. It is also advancing its Goldlund gold project in Ontario.

Its other 'Tier One' assets are Cameron and Pickle Crow, all in Ontario. It also has the Hope Brook gold project in Newfoundland, which comprises seven claims that cover 26,650 hectares.

The firm has a market cap of around C$196 million, no debt and about C$10.7 million of cash on hand. Its shares are 88% owned by retail investors, institutions have 7%, management has 3% and First Majestic Silver holds 2%.

How is it doing:

In late 2019,  First Mining Gold struck a deal with well-known engineering group Ausenco to complete a pre-feasibility study (PFS) for the Springpole project. It is expected that the report will be ready by the end of 2020.

Springpole hosts a higher confidence indicated resource of 4.67 million ounces of gold and 24.1 million ounces of silver, and already has significant infrastructure such as roads and power nearby.

A preliminary economic assessment (PEA) last year showed a pre-tax net present value (NPV) of C$1.23 billion and a 26% pre-tax internal rate of return (IRR). The mine life was pegged at 12 years with a 2.5-year pre-production period. Annual gold production in years two through to nine was put at 410,000 ounces of gold and 2.4 million ounces silver.

Over the life of the project, 3.9 million ounces of gold and 22 million ounces silver would be recovered, the PEA estimated. Initial capital costs were put at C$809 million, using an owner-operating mining scenario.

Meanwhile, in a significant deal, on June 3 this year, First Mining unveiled the proposed sale of its Goldlund gold project in Ontario to Treasury Metals (TSE:TML) (OTCQX:TRSMF).

The transaction sees the combination of Goldlund with Treasury Metals' Goliath project,  just 25 kilometres (km) away, creating a district-scale, multi-million ounce gold project poised towards construction. Notably, Treasury already has Federal environmental assessment approval to build a mine, mill and tailings facility at Goliath.

First Mining expects to receive 130 million in Treasury Metals shares, 35 million 3-year warrants with a strike price of C$0.50 per share, a 1.5% net smelter royalty (NSR) on Goldlund, and various milestone payments related to advancing the project. It will retain a 19.9% stake in Treasury, and be the largest shareholder, along with input into the governance of the project through board and technical committee representation.

Goldlund already has 809,200 ounces in the higher confidence indicated category and 876,954 ounces in inferred, while Goliath has 1.19 million ounces in the measured and indicated (M&I) categories and 222,000 ounces of gold in inferred.

Combined, the two projects will represent one of the largest undeveloped gold assets in Canada with a consolidated resource base of 2 million ounces of measured and indicated along with an additional 1.1 million in the inferred category. The land package covers a strike length of 65 km (around 32,000 hectares) and could host several gold deposits.

The agreement frees up First Mining to focus on the flagship Springpole gold asset, where a pre-feasibility study (PFS) and permitting is in process.

Inflection points:

  • Closing of the Goldlund deal
  • PFS for the Springpole project

What the broker says:

Following the Treasury Metals announcement, broker Roth Capital Partners repeated a 'Buy' rating on First Mining Gold shares with a C$1.10 price target.

"We view the transaction as a positive as management narrows its focus on Springpole, which we continue to view as First Mining's cornerstone asset," Roth analyst Jake Sekelsky said in a note.

"We expect significant synergies to be realized, particularly the ability to utilize a single mill as a central processing facility," he added.

"We have previously vocalized our belief that asset sales or combinations could unlock significant value from the company's portfolio. In short, we are supportive of the Goldund transaction and believe the structure allows First Mining shareholders to maintain exposure to the longer-term upside of the project."

What the boss says:

First Mining Gold chief executive Dan Wilton, speaking to Proactive at this year's PDAC conference in Toronto in March, painted an upbeat picture of the gold market and what may lie ahead for the group.

"One thing that's becoming very clear, large companies, producers, are generating record free cash flow and are having trouble replacing their reserves so that logically leads to what I think is going to be a pretty constructive market for people who are developing projects."

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on 26/8/20

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