First Mining Gold offers a ‘unique’ investment opportunity through its development projects, active partnerships and royalty portfolio

First Mining Gold (TSE:FF) (OTCQX:FFMGF) (FRA:FMG) says its flagship Springpole project can really change the landscape of Northwestern Ontario, becoming the center of gravity by pulling in all the exploration and related ounces in the district.   With two active partnerships and five wholly owned properties, First Mining Gold has a strong foothold in eastern Canada, operating in three of the nation’s most promising gold jurisdictions: Ontario, Quebec and Newfoundland.   Although the company has a diverse portfolio, it remains laser focused on advancing the Springpole project through development and into production. Earlier this year a pre-feasibility study was completed at the Ontario project, First Mining is now in the process of conducting an environmental assessment, a key component for the advancement of the project.   According to Dan Wilton, CEO of First Mining, Springpole is shaping up to be a key strategic property in the global gold industry due to its large-scale gold resource of more than four million ounces and estimated annual production of more than 300,000 ounces.   Proactive recently spoke with Wilton to see how the year is shaping up for the gold developer and what is next on its agenda.   PROACTIVE: 2021 has been a busy year for the company, what are some of the major milestones thus far?   Dan Wilton (DW): Really, the biggest milestone was the publication of our pre-feasibility study (PFS) on Springpole, which was a little bit more than a year in the making. We announced in late January and filed the report in early March, which we're very excited about. I think it identifies Springpole as a really key strategic project in the gold industry. The PFS shows a very, very robust project at a $1600 gold price, with a NPV (net present value) just shy of US$1 billion dollars and a payback period of a little bit less than two and a half years on an after-tax basis.   Importantly, this is one of very few projects that is capable of producing in excess of 300,000 ounces a year. By sheer scale, it is large enough to be meaningful to the biggest gold producers in the world. A project with all in sustaining costs (AISC) in the lowest quartile of the cost curve and upfront, capital costs of US$718 million.   We're very excited about the outcome of the PFS and have currently moved on to a further round of optimization, and trade off studies in advance of launching full bore into the feasibility study early next year.   Another really important milestone was bringing on Steve Lines, and subsequently, all of Steve's team. Prior to Steve joining us in December as our VP Environment and Community relations he and his team spent six and a half years taking the Hard Rock project in Ontario, through the environmental assessment process, basically, from scoping study to construction permits. We're really delighted to have a team of that caliber.   First Mining has projects in Ontario, Quebec and Newfoundland, why were these jurisdictions important for the company to enter?   DW: Our projects were mostly acquired in 2015, 2016, during a real downturn in the gold sector, particularly for developers. One of the key criteria that Keith Neumeyer, our founder and chairman, had for identifying potential resources for acquisition was jurisdiction. And what are established, well understood jurisdictions for the development of mining projects?  I would say, certainly Ontario and Quebec; Newfoundland, a little bit less so just because it hasn't had the volume of projects that have been permitted in the last few years.   But Ontario and Quebec, on the other hand, are two of the most prolific permitting jurisdictions in the world. You can stack the track records of the permitting authorities in those places up against anywhere in the world.   The bulk of our portfolio and certainly, the projects that we're very actively moving forward are in Ontario. I think it goes to show the importance of jurisdiction in some of the work we have done in the last year and a half to attract partners to a number of our projects. I think the quality of the partners we've been able to attract is in some part due to the quality of the jurisdictions where our projects are located. These projects are in great jurisdictions, and I think should be worth a premium. So, we've got a long way to close the gap on valuation there.   But we've got projects in some of the best places to develop mines in the world.   In addition to exploration, your company has partnerships and royalty streams, how does this set you apart from the other gold explorers?   DW: We would characterize ourselves very much as a developer, in terms of the core skill set of the company and how we're moving the projects forward. Now the challenge for developers has been that it's been probably the most challenging sector to attract capital in the gold sector over the last few years. But I think we're making really good progress.   What sets us apart, is the quality of the asset base and the fact that all of our projects are in Tier One jurisdictions. I think the fact that we really are fully funded to move our Springpole project through the environmental assessment process; we've got in excess of $50 million in cash and marketable securities, and another $100 million dollars plus of value in these strategic partnerships, which I think gives us an enormous amount of financial flexibility going forward.   And we've still got other projects, our Cameron project, for example, in Northwestern Ontario, as well as a few projects in Quebec that we own 100% that will give us some really, really good optionality.   But importantly, we have that key strategic project in Springpole. A 5-million-ounce gold equivalent project, in excess of 4 million ounces of resources, there is 3.8 million ounces of reserves that fall into a mine plan… And importantly, it sits on the edge of a really under explored Greenstone belt.   We think the exploration [of the Greenstone Belt] is what is going to show how you make this project even better, how you make it even bigger, how you get that average annual production, from the 330,000 ounces a year range to above 400,000, potentially above 500,000. It's just about finding some more and higher-grade gold in the area.   We're just going to have such a center of gravity with Springpole that we can really change the strategic landscape in that area of Northwestern Ontario.  Springpole is described as one of the largest undeveloped open pit gold deposits in Canada. There is also silver there as well, how will this factor into the way that you develop it?   DW: It doesn't really change the game plan much with the exception of the fact that I think it gives us just some more financing flexibility. As you know, we already demonstrated that last year, when we signed a silver streaming agreement with First Majestic Silver (TSE:FR), who have a right to acquire 50% of the silver production from Springpole with an ongoing payment in this sort of typical silver stream type structure. That gave us US$22.5 million in staged funding, of which we've already got US$17.5 million of that in the bank. That was really a game changer for us in terms of [giving First Mining] that strategic longer-term funding, and the silver was a really important component of allowing us to get there.   The target price range right now for the project is $1600 gold, and we're at $1700 and change, how does this upside and the historically high price of gold benefit the project?   DW: I think it kind of cuts two ways. Number one, the project is very robust at $1,600 gold. I think the leverage to the upside is very strong. We have in our reports, upside sensitivities to $1,800 or $2,000 an ounce and you know, every $100 on the gold price adds well in excess of $100 million of value to the NPV so it starts going up very, very quickly. But as important as that is, our project also shows better than 15% IRR (Internal Rate of Return) at a $1,300 gold price. So, it's robust to the downside, which to me says, it's something that's going to be able to recoup its capital through a cycle.   The gold price, unfortunately, doesn't always just go up. But I think when you look at the macro picture of where we are in the industry cycle right now, and where we are in financial markets, I think it's a very, very robust time for gold.   You mentioned the environmental assessment, what else is on your agenda for the rest of 2021?   DW: Yeah, it's a busy agenda. The real kind of number one goal for us is completing the environmental assessment (EA) document and ultimately getting that draft EA document submitted into the ministry at the end 2021 or beginning of 2022. The timeframe is going to be driven a little bit by our ability to move through consultations with our indigenous communities. If there was one, real impact from COVID, it was that normally, when we do consultations in communities, you fly into the communities and have meetings and talk about the project, and those communities were largely closed for a year. And the leadership in the community is rightfully focused on population health.   But we're coming through that now, we have some very good momentum with a number of our communities and people are getting organized and starting to work through data, but it's important that, we are approaching this environmental assessment, ultimately, as partners with our communities, and that's where it's going to be a very important path forward.   We submitted our terms of reference for the environmental assessment last year, and so those are now in for a final discussion review, we're optimistic that sometime in July, we should be able to get our terms of reference, which is the scope of that EA, approved and then keep moving forward with the compilation.   So once that gets submitted, it starts more formal timelines in the process. That'll commence further government review, review with our communities, review with the rights holders and stakeholders in the area, and we will, hopefully, move expeditiously through that process.    Contact the author at georgia@proactiveinvestors.com