First Mining Gold: A Standout in a Dwindling Field of Advanced Assets

• First Mining Gold CEO Dan Wilton discusses the company's two flagship gold projects, Springpole in Ontario and Duparquet in Quebec
• Springpole is in the final stages of the environmental assessment process, with approval targeted by end of 2025
• Duparquet released a PEA in 2023 demonstrating strong economics; now exploring a smaller, higher-grade initial development scenario
• Wilton sees a significant valuation gap between producing gold companies and developers like First Mining
• He believes the company's advanced-stage projects position it to benefit from producers' need to replenish reserves in the coming years

First Mining Gold CEO Dan Wilton discussed the company's two advanced-stage gold projects and outlook for the gold sector. With the Springpole project in Ontario in the final stages of environmental assessment and the Duparquet project in Quebec returning a positive economic study, First Mining believes it is well-positioned to benefit from the need for new gold reserves among major producers in the coming years. Wilton also addressed the current valuation disconnect between producing miners and development-stage companies like First Mining.

The Two Flagship Assets 

First Mining's key projects are the Springpole gold project in Ontario and the Duparquet gold project in Quebec. Springpole hosts 5 million ounces of gold in the Indicated category. The company submitted its final Environmental Assessment (EA) to Canadian regulators in January 2023 and is targeting approval by the end of 202.

Duparquet, also containing over 5 million ounces, produced a robust Preliminary Economic Assessment (PEA) in 2023 outlining an 11-year mine life producing over 200,000 ounces of gold per year. First Mining is now exploring a smaller, higher-grade development scenario to optimize economics and shorten timelines.

Those are the most strategic assets in the gold industry. If you are a mid-tier or large cap gold company, you are not going to build a 100,000 ounce per year gold mine. In general, they need to see something that's 200-300,000 ounces per year plus to be worth the effort.

Interview with Chief Executive Officer, Dan Wilton

The Permitting Progress 

A key focus for First Mining in 2025 will be advancing Springpole through the final EA review process. The company spent substantial time and resources in 2024 collecting environmental baseline data, conducting engineering studies, and engaging with local Indigenous communities.

Wilton emphasized the importance of the draft EA process in reducing permitting risk: 

"It's a great iterative process but what it means is when you submit the final EA, it goes to them with a table that has all the 1900 questions they've already asked and tells you where those answers are incorporated. So when we submitted our final EA three weeks ago, that document is 15,500 pages....a very long and drawn out comprehensive process and a lot of back and forth, but invaluable in taking risk out the project."

Dusting Off Duparquet 

Wilton acknowledged that the market reaction to Duparquet's PEA in a challenging 2023 environment was "muted". However, he sees potential to re-scope the project as a smaller, higher-grade operation with a shorter path to production.

"We went back and said, is there a different way, on a different time frame, that you might look at this project such that you're not necessarily building a big project right away? Maybe there's a smaller, higher-grade, higher-margin project that's quicker to revenue and less dilutive."

By focusing on a higher-grade subset of the deposit, Wilton believes Duparquet could be put into production relatively quickly and at a much lower capex than the PEA outlined. Importantly, this development scenario could be permitted under Quebec's provincial regime, avoiding the lengthier federal process.

Producers' Looming Reserve Crisis 

First Mining's investment thesis lies in the disconnect between valuations for producing gold miners and developers like First Mining. Wilton contends that most producers are facing a decline in reserves that will force them to seek out new ounces.

"The last time I checked, the average reserve life of producing gold companies is maybe seven or eight years, and if you're going to wait seven years to start building a project, hopefully you can extend that reserve life a bit, but your other assets are going to be in their twilight."

This dynamic is expected to create an intense competition for advanced-stage gold projects in safe jurisdictions, of which Wilton believes there are only about a dozen in the world. First Mining, with two projects in that rare category, appears particularly well-positioned.

Realizing Fair Value 

So how can First Mining close the valuation gap with producing peers? Wilton sees two potential paths: either an outright sale of one or both flagship projects or a joint-venture/earn-in deal with a larger miner.

He pointed to the example of Osisko Mining's Windfall project in Quebec, where South Africa's Gold Fields invested C$600 million in 2023 to earn a 50% stake, then came back a year later to buy the remaining 50% for C$2.2 billion.

"I think for us to find a partner who's going to spend that next tranche of at-risk capital is a much more attractive process than someone paying a big price up front and facing 100% of the construction risk. There's a scenario where First Mining is sitting here in 2026 or 2027 on our way to becoming Canada's version of Gold Road Resources, with a 50% ownership in a 300,000 ounce per year producing mine, operated by a large-cap partner."

Patience Required 

For investors, realizing the full value of First Mining's assets will require some patience as the company advances its projects through permitting and technical studies. However, Wilton believes the remaining timelines are relatively short compared to the potential rewards.

"The time that a new investor has to wait is not going to be that long for these catalysts. And that timeline is getting more defined all the time as we go through the EA process in the next year."

With two advanced-stage projects in top jurisdictions, a clear path to permitting, and the potential to benefit from producers' need to replace reserves, First Mining presents a sound opportunity for patient investors. If Wilton and his team can execute, shareholders could be in store for a re-rating more in line with the company's underlying asset value.

The Investment Thesis for First Mining Gold

• Two +5 million ounce development-stage gold projects in Ontario and Quebec
• Springpole in final EA review, approval expected by end of 2025
• Re-scoping Duparquet as smaller, high-grade mine for faster path to production
• Expects a reserve crisis at major producers to drive M&A for advanced projects
• Currently trading at huge valuation discount to project NPVs
• Potential sale or joint-venture of projects could unlock significant value
• Patient investors could be rewarded as projects de-risked and timelines clarified

Macro Thematic Analysis

In a broad sense, the bifurcation between investor enthusiasm for gold producers versus developers reflects the current macro backdrop. With economic uncertainty, persistent cost inflation, and a flat-to-declining production profile plaguing many senior miners, the large cap producers are enjoying premium valuations as investors place a higher multiple on their near-term cash flow.Explorers and developers, by contrast, have struggled to attract capital and are trading at historic discounts to their underlying project values. This has created an environment where the risk-adjusted returns to a producer of buying a development-stage asset are extremely compelling. As Wilton points out:

"We're sitting today at a one in a generation discrepancy and dislocation between the value of producers and the value of developers which is only going to get worse because the producers have by and large not been investing in increasing their own capacity, and they're going to need to because the last time I checked this is still an extractive industry and when you mine an ounce of gold it's gone from your reserves."

The implication is clear - at some point, the major miners will be forced into mergers and acquisitions to backfill their project pipelines and offset depleting reserves at existing operations. When that happens, companies like First Mining with advanced, de-risked projects in Tier-1 jurisdictions will be the primary beneficiaries.