First Mining Gold - Bullish Sentiment, Insiders Back Gold Projects Ahead of Critical Permit

• First Mining Gold is developing two large gold projects in Canada - the Springpole project in Ontario and the Duparquet project in Quebec.
• The recently released Preliminary Economic Assessment (PEA) for Duparquet shows potential for 200,000+ ounces of annual production, with a nearly $600 million NPV.
• First Mining believes existing mines are facing declining reserves and grades, creating a need for new development projects in a few years when the gold price potentially rises.
• The company recently raised $10 million from existing supportive shareholders to advance permitting and exploration while the market remains challenging.
• Management aims to have its two key projects "shovel-ready" to capitalize on an expected upswing in the development funding environment in 2024-2026.

About First Mining Gold

First Mining is a Canadian gold development company focused on advancing two major gold projects within the country. Its flagship Springpole Gold Project is located in northwestern Ontario, where the company has started a Feasibility Study and is going through the permitting process. Earlier in 2022, First Mining published a draft Environmental Impact Statement for Springpole as part of the approvals needed to move the project forward.

The company's other key asset is the Duparquet Project in Quebec, a past producing gold mine situated in the prolific Abitibi mining region. First Mining acquired this Preliminary Economic Assessment stage development opportunity in late 2020.

In addition to these two main projects, First Mining has interests in several other earlier stage Canadian gold properties. This includes the Cameron Gold Project in Ontario and partnerships on the Pickle Crow Gold Project and Hope Brook Gold Project. The company also holds a substantial equity position in Treasury Metals.

First Mining was founded in 2015 by Keith Neumeyer, a well-known mining entrepreneur who previously started First Majestic Silver Corp. The strategic focus is to advance and surface value from the portfolio of Canadian gold assets amassed by the First Mining team over the past several years.

Interview with Chief Executive Officer, Dan Wilton

Advancing Major Gold Projects Amidst Tough Markets

First Mining Gold is focused on advancing two large gold development projects within Canada during a prolonged downturn across the mining equity markets. The company’s flagship asset is the Springpole gold project located in northwestern Ontario, which boasts one of the largest undeveloped gold deposits in Canada. First Mining also owns the Duparquet gold project situated on the highly productive Duparquet Gold Belt in Quebec.

According to First Mining’s CEO Dan Wilton, while the gold price has held up well over $1,900 per ounce during recent market volatility, mining equities have lagged, with developers especially “unloved.” As Wilton stated, “We've seen the worst of inflation risk in the capital and you just have to look at a couple of projects that started being built after Covid - everyone points to Côté and Majino - these massive cost overruns...But if you look at Equinox Gold for example, it’s delivering a $1.2 billion project more or less on time and seems to be on budget.”

This view suggests inflationary pressures may be moderating from extremes, providing some optimism on capital cost overruns which have plagued the industry. Still, market skepticism toward developers continues. “Right now, no one has much appetite to fund these things, they're unloved in the markets,” said Wilton. “But sitting back has real costs - it can really impact your social license to develop a mine." Hence, First Mining has remained focused on advancing permitting and de-risking efforts.

Duparquet PEA Shows Strong Fundamentals

In September 2022, First Mining published an updated Preliminary Economic Assessment on its Duparquet gold project located in Quebec. The positive study outlined a 15,000 tonne per day underground mining operation with an initial 12-year mine life, producing on average 206,000 ounces of gold per year. This positions Duparquet among the largest undeveloped primary gold projects within Canada.

The Duparquet PEA generates an after-tax NPV (5% discount rate) of CAD $579 million and an after-tax IRR of 17.5% at a base case gold price assumption of $1,600 per oz. The initial capital cost estimate totals CAD $719 million. "It's an almost $600 million NPV, $700 million Canadian CapEx but when you look around the world for projects of that size and scale, you can't build anything that can produce 200,000 ounces a year for US$500 million,” stated Wilton on the study’s outcome.

While the economics seem robust, Wilton admits financing remains a roadblock without a rerating in the company’s shares. “For a $100 million market cap company you know we're not going out to raise $800 million of equity to build a project tomorrow – we don't need to raise that money tomorrow by the way.” Hence, First Mining aims to advance Duparquet to a construction-ready state over the next few years. Management believes that as existing mines deplete their reserves, new projects in tier-one jurisdictions like Duparquet will become more valued.

De-Risking Springpole with a Focus on Permits

The Springpole gold project contains one of the largest undeveloped open pittable gold deposits in Canada. The Pre-Feasibility Study released in 2021 outlines a 36,000 tonne per day operation with a 14-year mine life, averaging 322,000 ounces yearly. At base case assumptions, the NPV5% equals $1.5 billion with a 29% IRR.

Importantly, the Springpole PFS incorporates significant de-risking provisions including fully lining the tailings management facility, back-up power supply, and water treatment. The projected capital expense increased 18% over an earlier study to $718 million, largely attributable to inflationary pressures. Nonetheless, Springpole still retains extremely robust economics at recent gold prices.

First Mining believes it can achieve provincial environmental assessment (EA) approval at Springpole by mid-2025, setting the stage for construction decisions during more supportive markets. "Pretty near-term catalysts for what we think are going to be substantial rerating opportunities,” stated Wilton, referring to the Springpole permitting milestones ahead. While this timeline could face delays, the CEO expressed confidence in eventually getting Springpole “across the EA finish line” over the next couple of years.

The company continues consultation efforts with local Indigenous communities as part of its EA work. This aligns with First Mining’s strategy of maintaining continuous social license and engagement throughout this bearish period for developers rather than going into hibernation. While costly in the near term, successfully achieving EA approval should significantly enhance Springpole’s value.

Supportive Insiders Fund Key Work Programs

Despite an unfavorable environment across the junior mining segment, First Mining successfully closed it's first trance of an oversubscribed financing round in November 2023. The Company has upsized the raise to $10 million, with the first tranche coming predominantly from insiders and existing supportive shareholders. The CEO, Board Chairman and other insiders contributed over $2 million to the capital raise.

First Mining plans to allocate these funds towards advancing the Springpole EA, exploration at Duparquet to grow resources, and cover other project expenditures. This enables the company to maintain momentum on critical permitting derisking efforts at Springpole and expansion plans at Duparquet during difficult markets when accessing external capital remains challenged for developers.

While necessitating dilution at depressed prices, strong insider backing signals continued belief in advancing First Mining’s portfolio of major gold assets in Quebec and Ontario. Once permits are achieved, this could catalyze partnerships, construction decisions, or corporate M&A as the projects become increasingly scarce and valuable to larger producers. Hence for long-term, patient shareholders, supporting these near-term work programs ultimately aims to realize substantial value from Springpole and Duparquet over time.

The Investment Thesis for First Mining Gold

• Large portfolio of high-quality gold development projects located in top-tier Canadian mining jurisdictions provides substantial long-term optionality at a discounted valuation.
• Near-term Springpole EA approval could prove to be a major catalyst for share price upside and easier access to capital.
• Funding crucial derisking activities now positions First Mining to take advantage of the next bull cycle in the gold sector.
• Experienced management team continuing to advance portfolio even amidst difficult junior mining markets.
• Once the bull market returns, developers typically rerate strongly - First Mining seems well positioned to outperform peers.

First Mining Gold represents a unique leveraged play on higher gold prices and renewed interest in emerging miners. Despite some execution risks inherent across development-stage companies, the current market pricing implies minimal chance of advancing Springpole and Duparquet into production. Yet insiders continue directing capital into permitting these large-scale, high-margin Canadian gold projects. Once construction financing availability improves alongside bullish gold tailwinds, First Mining could rapidly transform into a coveted takeover target or mid-tier producer. Hence, speculative investors may find the risk-reward asymmetry compelling at current deflated valuations.

Key Takeaways

• Management remains focused on Springpole & Duparquet project de-risking like permitting while markets stay challenging for junior gold developers.
• Strong insider backing signals continued confidence in the ability to advance the portfolio over a multi-year timeframe.
• Achieving milestones positions First Mining to capitalize once the sector funding environment improves with the gold bull cycle.
• Speculative investors could be rewarded given massive upside leverage if Springpole & Duparquet get built.