Developer with two multi-million-ounce gold projects offers massive leverage

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Massive Leverage To The Rising Gold Price

Even though it owns two, multi-million-ounce gold projects in Canada, First Mining Gold (FF.TO; FFMGF.OTC) continues to trade at a steep discount to even conservative estimates of those projects’ inherent value.
 

At current gold prices, that value explodes to truly mind-boggling levels, making First Mining a top-notch, development-stage lever on record-high gold prices.

“What sorts of gold stocks will maximize my return on the current bull market in gold?”

With gold trading near $2,700/oz. and seemingly headed much higher, that’s the question gold bugs are asking themselves these days.
 

Gold producers, which offer the most direct exposure to higher gold prices, obviously come to mind. But as the gold market gathers steam, you’ll want to start looking at well-positioned developers as well.

One name that’s clearly at the forefront of the developer pack is First Mining Gold (FF.TO; FFMGF.OTC).

Thanks to its Springpole gold project in Ontario and its Duparquet gold project in Quebec, First Mining owns no less than two, multi-million-ounce-plus gold deposits.

Springpole is capable of producing over 300,000 oz of gold per year, and Duparquet is capable of producing over 200,000 oz of gold per year. 
 

Not only that, but both projects offer compelling economics at conservative gold prices of $1,600/oz. for Springpole and $1,800/oz. for Duparquet.
 

First Mining hasn’t even estimated those economics at current gold prices, but even at prices of $2,000/oz. for Springpole and $2,200/oz. for Duparquet, the economics absolutely sing.
 

And again, those are still far lower price levels than today’s.
 

As you’re about to see, these assets give First Mining some of the premier, development-stage assets in Canada. And they’re only going to get better.

Project Economics Offer Extreme Leverage To Gold

For a window into the value First Mining Gold brings to the table, consider that its current market cap is around C$140 million.
 

Then ponder the two charts below, which show the sensitivity analyses of Springpole’s January 2021 prefeasibility study and Duparquet’s September 2023 preliminary economic assessment.

Click image to enlarge

Even at base-case gold prices of $1,600/oz. and $1,800/oz., First Mining Gold’s two development-stage projects have combined, after-tax NPVs of almost US$1.6 billion.

At the then conservative base case of $1,600/oz., Springpole has an after-tax NPV, discounted at 5%, of US$995 million, or about 10 times First Mining’s current trading value.

At $2,000/oz gold, that after-tax NPV, discounted at 5%, jumps to US$1.6 billion. Based on that projection, the NPV at today’s price of gold is...well...much higher.

And all of this isn’t even considering the estimated value of Duparquet, which a PEA put at C$588 million (~US$435 million), discounted at 5% and using a $1,800/oz. gold price. At $2,200/oz. gold, that valuation jumps to C$1.1 billion (~US$830 million).
 

At $2,700/oz gold? Again, we’re talking a vast, vast multiple of First Mining’s current market value.

Two Development Stage Projects Make
First Mining A Premier Take-Out Target

But the value of First Mining’s two core projects is about more than just economic forecasts.
 

Springpole boasts a global gold inventory of 4.9 million ounces (4.6 million ounces indicated and 0.3 million ounces inferred). Duparquet hosts 6.0 million gold ounces (3.4 million indicated ounces and 2.6 million inferred ounces).

Better yet, both projects are near infrastructure and are located, respectively, within Ontario and Quebec, two of the most mining-friendly jurisdictions on the planet.

For proof that multi-million-ounce gold projects in Canada have value to mid-tier and senior producers, take a look at the chart below of recent M&A activity on such projects.

Click image to enlarge

This chart of major gold project transactions in Canada since 2020 underscores the takeout potential for First Mining Gold.

Since 2020 alone, major gold deposits have traded hands for as much as C$2.2 billion (in the case of Gold Fields offer for the rest of the Windfall project and Osisko Mining it didn’t already own).
 

With two of the 10 developable, multi-million-ounce gold projects in Canada, First Mining Gold could get taken out at a considerable multiple of its current market cap and share price. 

Plus:
EIS Submission Creates Huge Re-Rating Potential

Adding to Springpole’s allure is the fact that First Mining is about to submit a final Environmental Impact Statement on the project.

Once that happens, it will be one of very few development-stage, multi-million-ounce deposits that is that far advanced in the permitting process.

With a decision on the EIS expected by the end of 2025, First Mining’s shares could quickly re-rate on a price to NAV basis from less than 0.1x currently to as much as 0.6x once the EIS is approved.

And More:
 Huge Exploration Upside At Duparquet

Better still, even a re-rating of that magnitude wouldn’t account for the good work First Mining is doing with the drill bit at Duparquet.
 

This gold project sits in the heart of the Abitibi Greenstone Belt — home to over 200 million ounces of gold production and counting.

The company has completed more than 10,000 meters of drilling at Duparquet so far in 2024 and plans to drill another 20,000 meters in the months ahead.

Highlights from recent drilling on the project came from the Buzz target (6.52 g/t gold over 4.6 meters), the Valentine target (1.71 g/t gold over 8.9 meters) and the North Zone target (10.67 g/t gold over 5.3 meters, 6.63 g/t gold over 9.0 meters, 3.04 g/t gold over 33.5 meters and 5.97 g/t gold over 33.0 meters).
 

With intersections like that and a cash and marketable securities position of more than C$20 million, First Mining will have the opportunity to grow Duparquet’s already world-class gold resource.

Time To Act In This Fast-Moving Gold Market

At current trading levels and given the current state of the gold market, First Mining Gold represents a phenomenal value.

If you like gold for the medium and long terms, you’ll want to start doing your homework on this Canada-based, development-stage gold story today.

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