First Mining Gold’s chairman Keith Neumeyer first began building an asset base for his company in the second half of the 2010s, at a time when the capital markets environment was brutal, particularly for junior resource developers. However, the mining investment industry veteran glimpsed an opportunity to pick up high potential projects in trusted jurisdictions when belief in the mining sector was low, and his team went about compiling a list of 10 projects to pursue. After a rigorous screening process, First Mining bought six of those plus a few more shortly after to total eight acquisitions in a 15-month period. Today, the Toronto, US and Frankfurt-listed company has a diversified portfolio of gold assets across North America with a sharp focus on two assets in Ontario, Canada: The Springpole and Goldlund gold projects.
The onset of 2019 brought changes to the management team at First Mining, starting with the appointment of new CEO Dan Wilton in January. The experienced mining finance executive was joined by Mal Karwowska in April, both of whom arrived from mining-focused private equity firm Pacific Road Capital Management.
Next, First Mining brought in new COO Ken Engquist to lead the technical and operational teams as the company looks to drive its two flagship projects forward. Following these managerial changes, Wilton believes that First Mining has the right team set up to execute its vision in Ontario.
“I think we are blessed with these projects being where they are,” Wilton tells RGN on a recent business trip to London. “Four of our projects are in the same region of Northwest Ontario, towards the Manitoba border where there is an established resource economy.”
Mining, forestry and to a lesser extent power generation are the big drivers of industry in this part of the world, and this means that local permit authorities and regulators have a strong understanding of the mining history going back several decades.
Local regulators are highly cooperative and supportive of mineral development projects according to Wilton, and this is evidenced by Ontario’s recent track record of approving permits for three large-scale open pit gold mines in the last three years.
“There was the Côté project by IAMGOLD and Sumitomo, the Hard Rock project by Centerra Gold and Premier Gold Mines and the Magino project by Argonaut Gold. These are all 10-30,000 tonnes per day operations which have been permitted in a two-year timeframe, so I think this is one of the best jurisdictions to be operating in.”
The Springpole Gold Project
Located 110 km Northeast of the town of Red Lake in Ontario, the Springpole project is one of the largest undeveloped open pit gold deposits in Canada, capable of producing over 400,000 ounces per year at the peak of its operation.
First Mining completed an updated preliminary economic assessment (PEA) for the project in October this year, which indicated a 12-year mine life with a post-tax net present value of US$841 million and an internal rate of return of 22%.
“The real goal of that study was to update the economics and the production profile to incorporate some metallurgical work we had done in 2018–19. The test work indicated that we could take recoveries from around the 80% level to the low 90s through flotation and fine grinding.”
The outcome of improving the recoveries rate by a margin of 10% is a noteworthy drop in the costs per ounce of the project, with direct operating cash costs estimated at $575 per ounce of gold equivalent, and all-in sustaining costs (AISC) valued at $611 per ounce of gold equivalent.
Although initial capital costs went up to $809 million, the overall message that Wilton took from the PEA is that Springpole is a big enough gold project to be meaningful for any mining company in the world during the core part of its mine life.
“We’re happy with the PEA, but there still is a lot of work to do. Last week we announced that we will be taking the project through to the pre-feasibility stage (PFS) and we need to consider our plan for initial capital costs, and we’ll look into our production profile and tailings waste management. Overall, the PEA gave us a good sense of what we need to do in the PFS.”
Alongside the technical advancement of the Springpole project, First Mining is progressing along the permitting timeline, which is a lengthy process to undertake in Ontario, but one that is ultimately reliable once all the required documents are submitted to the authorities.
While detractors of the project might argue that approval could be difficult to secure, owing to the deposit’s position under the shallow bay of a lake, First Mining has collated seven years of environmental baseline work that suggests otherwise.
This wealth of information is currently being incorporated into a terms of reference (ToR) document ahead of submission to the Ontario environmental ministry by the end of the year. The ToR will effectively form the table of contents for the subsequent environmental impact assessment (EIS) document.
Throughout the next 12 months, First Mining will maintain close consultation with key indigenous groups regarding the content of the EIS, ahead of a formal submission of the document by the end of 2020. At around the same time, the company hopes to have completed the PFS for Springpole.
“Then the project goes through the environmental assessment process which in Ontario typically takes between 18 months and two years. This timeline would keep us on track for a construction decision in 2023 and financing around the same time,” Wilton projects.
Global engineering firm Ausenco will complete the Springpole PFS, in an interesting deal that will see First Mining pay the Australian company in shares for their engineering work.
“It’s an interesting model for alignment with our technical partners, and I think it’s an important vote of confidence from what I think is one of the best engineering groups in the world for a gold project of this size.”
The Goldlund Project
First Mining’s secondary focus in Ontario is the Goldlund gold project, located approximately 60 km Northeast of the town of Dryden. The property has a strike length of over 50 km and has shown strong district scale potential.
The current resource estimate stands at 809,200 ounces of gold at 1.96 g/t in the Indicated resource category and 876,954 ounces of gold at 1.49 g/t in the Inferred resource category, although there is significant exploration potential and several targets identified across the property.
“We probably under–sell the fact that the Goldlund deposit as it sits right now is one of the highest– grade open pit projects in Canada. You’re talking about 800,000 ounces of Indicated resources at 2 g/t and approximately 870,000 ounces of Inferred resources at 1.5 g/t that falls into an open pit and we think there is a lot of room to grow that just in the Goldlund Main Zone.”
In addition to the high-grade mineralisation present at Goldlund, the project is blessed with excellent infrastructural links. The property is located next to a provincial highway with existing power lines 20 km away.
However, the real value driver at the Goldlund project is its district scale potential. This outlook has been evidenced by a string of exciting results from regional prospects, most notably at the Miller target over the last two years.
Miller is located approximately 10 km Northeast and along strike of the current resource area and has been the primary focus of the company’s 2019 drill programme at Goldlund, with visible gold often observed. The prospect is not currently included in the resource estimate.
“I think Miller is a real example of one of a number of similar type targets that we can test along the big strike of this property,” says Wilton. “Ultimately, we think Goldlund could become a large gold district feeding one central mill.”
First Mining has maintained a strong relationship with its drilling partner from the Springpole project and has retained Winnipeg-based Rodren Drilling’s excellent services for the Goldlund campaigns.
Having demonstrated the district scale potential of the project via successful drill programmes at several deposits, First Mining is returning to the Goldlund Main Zone for expansion and infill drilling, which will contribute towards a better understanding of the resource estimate there.
“At some point soon, we will need to wrap some economics around this project and take it through a PEA, which shouldn’t be difficult or take long. We have an opportunity here to demonstrate the robust nature of the project, especially with the grade and strip ratio we think we can achieve in an open pit.”
A big year ahead
First Mining is on the break of a massive year in the development of its headline gold assets in Ontario, with the submission of the EIS and PFS for Springpole earmarked for 2020, while Goldlund is also set to receive more substantial economic assessment next year.
Hitting these milestones will serve to significantly de-risk the projects and demonstrate to the market that quantifiable progress is being made, which should pave the way for greater recognition of this unique opportunity to invest in world-class gold assets in a trusted jurisdiction.