First Mining Gold (T.FF) has just released a Pre-Feasibility Study on its Springpole Lake project in Ontario. The headline numbers tell the story, Pre-Tax NPV5% of US$1.5 billion, Pre-Tax IRR of 36%, Average Annual Gold Production of 335,000 ounces and AISC of US$577/oz in Years 1 through 9. Proven and Probable Reserves of 3.8 Moz Au, 20.5 Moz silver (“Ag”). These are big, profitable, numbers and First Mining Gold is pressing ahead to permitting its Springpole Lake project.
Derisking a huge gold deposit is not just about defining the size of that deposit. It is also about coming up with an engineering solution to guide the mine development, metallurgical testing, continued exploration drilling and detailed environmental work to minimize the prospective mine’s footprint. It is about gaining the permits required for the project. And while all of this is going on, it is critical to work with First Nations and other community members to gain the social licence a big project requires.
First Mining Gold released the positive Pre-Feasibility Study on the Springpole project on January 20, 2021. In that press release CEO Dan Wilton states, “The results of the PFS confirm that Springpole has the potential to become a strategically significant, highly profitable gold mine in one of the most attractive mining jurisdictions in North America.”
Having the positive Pre-Feasibility in hand means that First Mining can proceed to permitting the Springpole Project knowing that it makes economic sense and has the potential to be a very successful mine.
“The original Springpole Lake deposit was prospected in the 1930’s and 40’s and it was drilled in the 1980’s and 90’s,” said Wilton in a phone interview. “The big zone was discovered almost by accident. Multiple hundreds of meters were drilled. Gold Canyon held the property in 2011/2012.”
First Mining Gold (or First Mining Finance as it was called back then) was a company started by Keith Neumeyer of First Majestic Silver fame, back in 2015. At the time, interest in junior mining, particularly junior exploration, stocks was very low. Companies could not get financing and were unable to advance their deposits. First Mining started to buy these companies outright and quickly became a very promising mineral bank. It bought eight companies in twelve months one of which being Gold Canyon.
“I became CEO of First Mining gold in 2019,” said Wilton. “We looked at the projects and Springpole rose to the top. We understood the geology and we understood the engineering. We did the economics and Springpole had the biggest value.”
With the Pre-Feasibility Study complete, First Mining Gold was able to attach numbers to those economics. The project is expected to cost US $718 million and is expected to produce 287 koz Au, 1.6 Moz Ag annually over the expected 11.3 year life of the mine. The after tax internal rate of return on US$1600 per ounce gold, is 29.4%.
“I am not worried about $700 million,” said Wilton. “We have a market cap of $300 million and now we have the information we need to proceed. You try to take out as much risk as you can. You need to have the permits and the social licence.”
First Mining is ready to go through the environmental review process. “We have the right team, lead by Steve Lines,” said Wilton. “The team’s recent and significant experience successfully permitting the Hardrock project in Ontario and other similar open pit mining projects in Canada will serve us well as we continue to advance Springpole.”
Wilton expects that the company will be able to submit an environmental assessment package by the end of 2021.
At the same time, First Mining is in consultation with the First Nations in the Springpole Lake area. “There is good community support for the process,” said Wilton. “We’re talking about traditional land use and understanding the traditional knowledge of the land which our First Nations communities have.”
It has all be made a bit more difficult because of COVID-19 but Wilton is confident. “Ontario has one of the best track records on permitting large, open pit, mines,” said Wilton. “Once the environmental assessment has been filed, we expect it will take 18 to 24 months for environmental approval.”
As the permitting process moves forward, First Mining continues to work on the project. “We’re doing lots of work on our property,” said Wilton. “We are doing exploration drilling on geological targets. We’re taking metallurgical samples for process improvement. And we’re looking at process optimization – from reviewing pit optimization parameters could result in better optimized open pit limits which could reduce the overall strip ratio to minimizing the use of diesel at the site.”
Springpole Lake is a huge, low cost, gold project in a very safe jurisdiction. Dan Wilton has the team he needs to secure the permits, the social licence and take the project to a Feasibility Study and on to construction.