First Mining Gold (FF) - Funding Options Available for Both Projects

First Mining Gold Corp. is a Canadian project developer with assets located in Ontario and Quebec. The Springpole project of the company is one of the largest, undeveloped, open-pit gold deposits in Canada.  The project’s economics include an 11-year life of mine, post-tax NPV5% of CAD$ 995 million and a post-tax IRR of 29%. The company’s 100%-owned Duparquet gold project located in Quebec is an advanced exploration asset, which holds 3.4 million ounces of gold in the measured and indicated category as well as 1.6 million ounces of gold in the inferred category. The project offers the opportunity to consolidate approximately 5 million ounces of gold in the Abitibi gold district at less than CAD$ 5 per ounce of gold.

First Mining Gold Corp. attended the 121 Mining Conference in London between 22 and 23 November 2022. The conference was attended by various large institutional investors taking notice of junior projects and companies, due to the value creation potential junior mining companies possess. The company also recently held a meeting with the local community of its Duparquet gold project. The meeting was successful in not only showing the commitment of First Mining Gold Corp. to its ESG values and communities but also as a forum for the local community to show its optimism regarding the project.

The company plans to publish a feasibility study of the Springpole project by H2 2023, from where it aims to submit the final environmental assessment of the project by H1 2024 and receive the approval of the environmental assessment by the end of H1 2025. First Mining Gold Corp. is underway with environmental baseline sampling at its Duparquet gold project. The company aims to publish an updated economic study of the project by the end of H1 2023. 

The commodities market

First Mining Gold Corp. attended the 121 Mining Conference in London between 22 and 23 November 2022. The conference was attended by various large institutional investors taking notice of junior projects and companies, due to the value creation potential junior mining companies possess. The current commodity sector is explained by Dan Wilton, the CEO of First Mining Gold Corp., as a development projects sale.

“It's like everything is on sale and particularly the developers. I've been doing this for almost 30 years now, developers, I can only think of maybe one or two other real crisis moments where you've had developers valued broadly, as a sector, where they are now, at 0.2 to 0.3 times NAV, that USD$ 20 to USD$ 30 per ounce. Those are extraordinarily attractive entry prices for later-stage, advancing, well-understood projects.” 

Wilton explains that the value creation opportunity of development projects has always been known by the investor community. The necessity of projects to be economically viable at much lower gold prices than in previous years has only added to the potential.

“People have always associated development with risk, and I think right now, people are starting to understand if that push down to USD$ 1,600 per ounce of gold was really testing the bottom, we really think this is the turn, then investors know that where you're going to get the best leverage is in the developers, not just because they're on sale, but also because they inherently have, relative to explorers, shorter time frames to development. They're better understood. A lot of the key risks in a development project have already been studied or otherwise mitigated.”

An advantage to the downed commodity market is the lowest price point of various commodities having been tested, according to Wilton. The lowest gold price seen, at approximately USD$ 1,600 per ounce, has given the investor’s sector ease of mind, with the commodity showing to the market that it will not fall to prices of USD$ 1,000 per ounce in a downed market.

“This is really the first time we've seen in years that it's something that's coming back into focus. The biggest thing is that it signals confidence in the fact that we've really tested the bottoms. They were hesitant as gold was coming down in mid-to-late 2020, coming down from that USD$ 2,000 and USD$ 2,100 per ounce level. Everyone had in the back of their mind that there's this great collapse that's going to come and we're going to be back at USD$ 1,100 per ounce and it's a terrible business. I think we've hit it pretty hard a couple of times at USD$ 1,600 per ounce and now with this bump up, gold and silver have done the same thing, it feels like this is something that's giving more confidence to the base levels longer term”

Wilton explains that the value-creation potential of development projects has only increased. The current market allows investors to enter at a low point while awaiting the market to experience an upswing.

“We keep going on that and, ultimately, as we've always said, to borrow a phrase from hockey legend Wayne Gretzky, you want to be skating to where the puck is going to be. We want to have these projects that we have ready when the industry is going to need them the most. Because the first thing that's going to happen is smart portfolio investors are going to say, okay: undervalued, the sector is coming back into favour. I want to get leverage; I will start investing in developers again. When they start moving, you will start having strategic investors and big mining companies coming back into the business of extending their reserve lives and developing new projects…”

Moving the company forward

First Mining Gold Corp. acquired the Duparquet gold project, located in Quebec, in September 2022. The project is an advanced exploration asset, which holds 3.4 million ounces of gold in the measured and indicated category as well as 1.6 million ounces of gold in the inferred category. Wilton explains that even in the downed market, the expenditure is more than justified as the project offers the opportunity to consolidate approximately 5 million ounces of gold in the Abitibi gold district at less than CAD$ 5 per ounce of gold.

“In this environment, we did have to spend CAD$ 10 million of our cash to acquire Duparquet, we did that with confidence, knowing that we were acquiring 5 million ounces in the heart of the Abitibi and at CAD$ 5 per ounce. What that leads to is that we need to sort out some longer-term capital opportunities in order to ensure that we're still fully funded. Sometimes that means you've got to prioritise some of the things that you're going to spend money on this year, and some of the things you don't need to spend money on this year, you'll put off”’

First Mining Gold Corp. has various avenues to follow regarding obtaining the necessary funds to further advance its projects. Wilton explains that not only does the company have an interest in other projects operated by other companies, but it also has a royalty portfolio, which may be monetised.

“We may not like the price of some of the marketable securities that we've had, but our partners are doing great jobs moving these projects forward, but the only thing I hate more than selling their shares is selling our shares. We've also got the royalty portfolio, which is important and probably the most marketable piece of the strategic holdings that we have.”

The company may also look at alternative sources of funding such as a royalty on its Duparquet project. Wilton explains that the project’s location and size create the ideal environment for a valuable royalty.

“We've still got big opportunities to write royalties on a couple of the bigger projects on Duparquet we acquired with no royalty. 5 million ounces in the Abitibi, is a 1% royalty worth something there? - absolutely, it is. Springpole is getting a little bit encumbered now, with the silver stream and a royalty of about 1.5%, but there's still some room there. For some of the chunkier funding, you just have to look at all of those options and then prioritise some of the work.”

‍ESG values

First Mining Gold Corp. held a meeting with the community of its Duparquet gold project, in the later months of 2022. The meeting with the local community showed not only the commitment of First Mining Gold Corp. to its ESG values and local communities but also showed the community's optimism regarding the project.

“We had our first community meeting in Duparquet. It was really interesting. From a town of 700 people, we had 160 people at our first community meeting - just take that into the context of a municipal election.”

Wilton explains that due to the Duparquet project being in such close proximity to the town, there were some individuals in the local community who had concerns regarding the project. The vast majority however was optimistic regarding the project and the opportunities it holds for the community.

“The deposit sits right near the town. You had a number of people coming to express concerns about how close the deposit is, and people broadly in the Abitibi have lived through Malartic and that whole process. For some people it was a concern, for others it was just an expression of real eagerness to work with the company and just curiosity on what the game plan is.”

Future initiatives

The company plans to publish a feasibility study of the Springpole project by the second half of 2023, from where it aims to submit the final environmental assessment of the project by the first half of 2024. The company anticipates receiving approval for the environmental assessment of the project by the middle of 2025. Wilton explains that the next two and a half years will be a busy time at the Springfield project, with the various studies planned to take place.

“I think what all of these cards give us is a lot of catalysts in the next 2.5 years. Springpole is going through all the catalysts on the EIA side, we will likely do an updated pre-feasibility study and updated feasibility study and final approval, which is now around 2.5 years away.”

First Mining Gold Corp. is underway with environmental baseline sampling at its Duparquet gold project. The company aims to publish an updated economic study of the project by the middle of 2023. 

“…at Duparquet in the next 6 months, we'd like to get an updated economic study out, so you can actually look at how we might look at moving that project forward. Probably a PEA first, that would be my sense, but we're just finalising the decisions on that.”

Wilton explains that First Mining Gold Corp. aims to initiate an infill drilling program at its Duparquet project in the near future. The aim of the infill drilling program will include following up on various high-grade intercepts found in previous exploration initiatives.

“We want to get drilling, to do a little bit of infill, but also really be able to tell people what the geology is there because that's something that I think has been widely misunderstood. When we were at the site a couple of weeks ago, James Maxwell, our VP of exploration was there, and some of the holes that he's pulling out, he was like, did you know that some of the grades are like this? Like 100 m of 3 g in this open pit? There are tens of metres of 5 g-7 g, there's some really juicy stuff in there.”

To find out more, go to the First Mining Gold website