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A great gold lever just got stronger.
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That’s because First Mining Gold (FF.TO; FFMGF.OTC) has consolidated the land position around its Duparquet project in Quebec…
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…And in the process has brought millions of ounces of gold into its control.
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Simply put, that consolidation adds an eye-popping 5.3 million ounces (3.3 million ounces measured and indicated and 2.0 million inferred) of gold resources.
And that’s in addition to the 4.9 million ounces (4.6 million indicated and 0.3 million inferred) that First Mining has already outlined on its Springpole project in Ontario.
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In a difficult time for gold bugs, when prices for the yellow metal have tumbled, it’s important to recognize buying historic opportunities when they materialize.
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And this is one such opportunity. Because, with millions upon millions of ounces of gold to its credit, First Mining Gold is very attractively valued at current levels — remarkably, it’s trading at only around US$9 per in situ ounce of gold.
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Assembling A Second Flagship Project
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That low valuation includes this week’s addition of the consolidated Duparquet project to the First Mining project portfolio.
The project has been fractionally owned for years, with First Mining owning bits and pieces of it. Keith Neumeyer, Chairman of First Mining Gold and CEO of First Majestic Silver, orchestrated the original partial acquisition of it in 2016 and had always wanted to own 100% of the asset.
Now, in a deal valued at C$24 million in cash and shares, the company is bringing this project, which lies in Quebec’s portion of the storied Abitibi Greenstone Belt, into the fold.
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The move increases First Mining’s measured and indicated resources by 40% and its inferred resources by 50%.
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It also combines two past producing mines with the company’s nearby Duquesne and Pitt deposits to create a Tier One asset in at Tier One jurisdiction.
Thanks to the Duparquet deal, the highly fragmented and complex ownership of the project is now simplified, with properties, mineral rights and surface rights ownership under one entity.
And thanks to the summertime slump in metals and mining that entity — First Mining Gold — is currently trading at a small fraction of where it would be in a normal market environment.
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Springpole:
Advanced-Stage And
Host To Millions Of Ounces Of Gold
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The addition of a consolidated Duparquet builds upon the tremendous value First Mining Gold already enjoyed with its flagship Springpole project in northwestern Ontario.
Springpole hosts its own multi-million-ounce gold deposit and is currently in the feasibility and environmental assessment phase.
A 2021 prefeasibility study pegs Springpole’s after-tax net present value, discounted at 5%, at US$995 million.
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That’s more than seven times First Mining’s current market cap, and that valuation doesn’t even factor in the Duparquet acquisition.
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This is a potential open-pit mine in an uber-safe mining jurisdiction. It boasts a rich post-tax internal rate of return of 29.4% at a US$1,600/oz gold price and a mine life of 11.3 years. With a projected initial capex of US$718 million, Springpole would produce 287,000 ounces of gold annually over the life of the mine.
Simply put, this is exactly the type of project that mid-tier and major gold miners are looking for when they seek to grow their reserve and production profiles.
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News About To Flow From Both Projects
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First Mining has no intention of sitting on its hands with either Springpole or Duparquet.
At Springpole, the company is hard at work putting a feasibility study together. Concurrent with that effort is work to satisfy the eventual mine’s environmental requirements.
At Duparquet, once the consolidation deal closes, First Mining plans to complete an updated NI 43-101 estimate that will incorporate drilling from 2014 to 2020 not included in the previous resource estimate.
First Mining will also collect environmental data and begin engineering trade-off studies with a view to updating a 2014 prefeasibility study on Duparquet.
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Plus, Duparquet has a wealth of underexplored ground open to exploration discovery. The company plans to generate drill targets on the project and to use drilling to upgrade and expand the existing resource.
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In other words, First Mining won’t lack for news flow as we move through the back half of 2022.
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Doubling Down On Gold Value And Leverage
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Bottom line: Most junior miners would be doing backflips to have one advanced-stage, multi-million-ounce gold project in a safe jurisdiction.
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Thanks to the Duparquet consolidation, First Mining Gold now boasts two such projects.
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That’s two potential takeout targets for mid-tier and major producers…and two pathways for possible windfall returns for shareholders.
In today’s depressed mining share environment, companies with large, proven assets could multiply over and over again in value if market valuations simply normalize, much less begin the kind of bull run that’s expected.
This is the kind of rare opportunity that investors are now being offered.
But among all these values throughout the mining share market lies First Mining Gold — with millions upon millions of ounces of gold resources…including millions of ounces just added to its ledger while investors are paying little attention to gold companies.
In short, it would be hard to find a more undervalued or leveraged gold development company in today’s market.
If you’re a gold bug in bargain shopping mode, First Mining Gold could be exactly the kind of portfolio addition you’ve been looking for.
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