“No equity financing till 2023 is the idea,” says Dan Wilton, chief executive of First Mining Gold Corp ().
It’s not a bad statement to be making in regard to a company with upwards of seven million ounces of gold in its resource base and ambitious plans to move those ounces rapidly towards a pre-feasibility study, permitting and then onto full feasibility work.
But how can it be done?
Well, two deals have just been finalised and announced, after many long months of work, and these will likely make it happen.
The first rolls the company’s Goliath project in Ontario into the adjacent Goldlund project of Treasury Metals () to create a single project with a resource base amounting to two million ounce of gold in the indicated category, with a further million ounces inferred.
At a stroke, two small-to-medium sized projects will be consolidated into one larger district-scale proposition, with all the economies of scale that entails, and all the implication for margin and return.
The second deal secures US$22.5mln of financing for the five million ounce Springpole gold project, also in Ontario, via a silver streaming agreement with the well-known silver producer First Majestic Silver Corp ().
This looks like a win for both parties given that although the silver is not a key value-driver at Springpole, there’s also upwards of 25mln ounces of it.
All told though, the silver on its own is low grade, so whether or not there’s a streaming deal in place for half of it – as there now is – is unlikely to end up affecting First Mining’s ability to get the project financed, nor in the end make a huge difference to the financial modelling.
“All-in costs, including the costs relating to the silver streaming transaction, are likely to come in at under US$600 on a by-product basis,” says Wilton. With baseline modelling done at a US$1,300 gold price, margins would be looking healthy enough. But with gold now at US$1,700 the model suddenly starts to look very attractive indeed.
That’s in the future though.
For the present, there’s the extremely useful addition of US$22mln in cash, some of which has already arrived, which will allow First Mining to move forward with de-risking the project on all levels.
On a broader scale, it’s also a signal point in the transformation of First Mining generally, as Wilton explains.
“First Mining was created as a mineral bank to hold several projects,” he says.
“Last year we came to the view that we were getting no value for our projects outside of Springpole, but a couple of deals later and there’s now US$100mln of value you can point to from the portfolio of assets.”
Springpole is moving unequivocally to the centre of the stage, as value begins to be realised elsewhere.
The Goliath transaction is a case in point.
First Mining will initially take a 40% stake in Treasury Metals. Part of this will be disbursed directly on to shareholders, while the smaller holding that…