First Mining Finance Corp. (“FMF”) was created in 2015 to take advantage of one of the most severe bear markets ever seen in the mining industry. In April 2015, FMF was listed on the TSX Venture Exchange with the goal of taking advantage of the bear market and the company aggressively embarked on its strategy of acquiring financially distressed junior mining equities which held high-quality mineral assets. According to Patrick Donnelly, President of FMF, “The market was so broken that it was cheaper to buy a million ounces of gold than it was to drill a million ounces.”
Mr. Keith Neumeyer, the Chairman, founder and visionary behind FMF, has a track record of identifying the bottom of mining cycles. In the past, Mr. Neumeyer benefited from similar market conditions when he founded First Majestic Silver Corp. and First Quantum Minerals Ltd., which, under his leadership, became multibillion dollar companies. During his time at First Quantum, Mr. Neumeyer assembled the current management team and together they acquired greatly undervalued yet excellent quality copper assets in southern Africa. First Quantum was one of the first North American mining companies to invest in southern Africa and today it’s one of the largest publicly-listed base-metal companies in the world. When Mr. Neumeyer created First Majestic Silver in 2003, precious metal prices were severely depressed. Realizing the opportunity to acquire highly undervalued yet high-quality silver assets, Neumeyer went about acquiring silver projects in Mexico. Today, First Majestic is the second largest silver producer in Mexico, which is the most prolific silver producing nation in the world. Knowing that the mining sector doesn't stay depressed forever, Mr. Neumeyer took advantage of those bear market conditions and grew both companies into multi-billion dollar producers.
Over a 14 month period during 2015 and 2016, FMF completed eight transactions where the company accumulated 6.5 million ounces of gold in measured and indicated categories and 3.5 million gold ounces in the inferred category, all of which are NI 43-101 compliant. Additionally, in June 2016, FMF acquired a 3.3 million ounce historic resource at the Goldlund project. The company expects to complete a NI 43-101 resource estimate at Goldund shortly and it also expects to complete updated resource estimates at its other projects.
(1) Based on NI 43-101 technical reports filed on SEDAR by First Mining Finance Corp., PC Gold Inc., Gold Canyon Resources Inc., Clifton Star Resources Inc., and Chalice Gold Mines Ltd.
FMF is very discerning when assessing possible acquisitions. Its acquisition criteria is based on the quality of the asset, location, existence or proximity of infrastructure, security of land tenure, low holding costs and a low market valuation.
In April 2015, when FMF first started trading on the TSX Venture Exchange, it had already assessed over 80 projects of interest and narrowed the list down to 10 targets that met its acquisition criteria. The first acquisition target was Coastal Gold Corp., which owned the Hope Brook Gold Project in Newfoundland, Canada. Hope Brook is currently estimated to have an indicated resource of 840,000 ounces of gold (5.5 million tonnes grading 4.77 grams per tonne) and an inferred resource of 110,000 ounces of gold (836,000 tonnes grading 4.11 grams per tonne). Additionally, the Hope Brook project has excellent exploration potential to add additional ounces. The Coastal Gold acquisition put FMF on the map given the quality of the asset and the low acquisition cost of only USD$9 million in shares of FMF.
Within 18 months since being a publicly listed company, FMF now holds a portfolio of 25 assets, all of which are at various stages of development in prime regions of Canada, the United States and Mexico. The company has seen a steady growth in its share price and market capitalization, directly influenced by its rapid resource growth and addition of quality assets. The market capitalization of FMF grew from approximately US$27.5 million in April 2015 to US$328 million by December 2016.
FMF is backed up by an A-list of mining veterans with a history of successful mining ventures.
Mr. Keith Neumeyer is the founder and Chairman of FMF. He is also the President and CEO of First Majestic Silver Corp., which operates six producing silver mines in Mexico and has a US$2 billion market capitalization. He has extensive experience making accretive deals and navigating through financial, regulatory, legal and accounting issues that are relevant in the investment community.
Dr. Chris Osterman is the CEO and a Director of FMF. He has a Bachelor of Science in Mining Engineering, a Master of Science in Geological Engineering and a Ph.D. in Geology. Dr. Osterman has thirty years of experience in mineral exploration and mining and played an integral role in the discovery of the San Jose silver deposit in Oaxaca, Mexico and the Zuun Mod molybdenum deposit in Mongolia. Dr. Osterman is an expert in project reconnaissance and assessment which has proven to be essential in assisting FMF's selection of the right projects to acquire.
The FMF management team is bolstered by Mr. Patrick Donnelly, who is President of the company. Mr. Donnelly has a Bachelor of Science in Geology and a Masters of Business Administration. He comes with 10 years of experience as a mineral exploration geologist in Canada and he was a former base metals analyst with a sell-side securities firm in Toronto where he had the opportunity to review and assess hundreds of projects around the world.
The most significant asset in FMF’s current portfolio is the Springpole project, which was acquired through First Mining Finance's acquisition of Gold Canyon Resources Inc. in late 2015. Springpole is one of Canada’s largest undeveloped gold projects and it covers a total of 32,240 hectares. The project is located in northern Ontario, about 110 kilometers northeast of Red Lake and it hosts an indicated resource of 4.4 million gold ounces (128.2 million tonnes grading 1.07 grams per tonne) and an inferred resource of 0.69 million gold ounces (25.7 million tonnes grading 0.83 grams per tonne).
Based on FMF’s aggressive acquisition strategy over the last year and a half and the fact that it's a very young company, this is a story that is worth following and investing in. An increase in stock price with every new asset acquisition has taken FMF's shares from US$0.22 per share to a high of US$1.02 per share in its first 15 months of existence.
Over the past ten months, readers may have noticed that the gold price appears to have started a recovery and there is already a vast improvement in the investor sentiment towards gold equities. Now that the market has recovered to this point, FMF sees value in advancing some of its assets by de-risking them through additional drilling, metallurgical work and conducting economic studies. Over the coming months we can look forward to future catalysts such as the release of drill results, new resource estimates and further advancement of FMF's projects. These activities should unlock internal value for the company, irrespective of the underlying price of gold. That being said, if investor sentiment for gold continues to improve, we see this company having the ability to substantially reward its shareholders.
For more information about First Mining Finance Corp., please visit: www.firstminingfinance.com
The company paid consideration to SNN or its affiliates for this article.
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