First Mining Finance Corp.
(TSX: FF)
(OTCQX: FFMGF)
President: Patrick Donnelly
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About: First Mining Finance Corp. is a mineral bank focused on acquiring, enhancing and monetizing high-quality mineral assets. First Mining has assembled a large and diversified portfolio including 25 projects with a combined gold resource base of 7 million ounces in the Measured and Indicated categories and 5 million ounces in the Inferred category. First Mining will add value to its assets through drilling, metallurgical studies, infrastructure improvement and economic studies. When market conditions are optimal, the Company will monetize its portfolio through agreements with third parties to further advance the projects through development and production while First Mining retains residual interests in the projects (eg. joint ventures, royalties and/or streaming structures). First Mining was created by Mr. Keith Neumeyer, founding President and CEO of First Majestic Silver Corp. and a co-founder of First Quantum Minerals Ltd.
INTERVIEW TRANSCRIPTS:
WSA: Good day from Wall Street, this is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Patrick Donnelly, the President for First Mining Finance Corporation. The company trades on the Toronto Stock Exchange, ticker symbol FF, and on the OTCQX, ticker symbol FFMGF. Thanks for joining us today there, Patrick.
Patrick Donnelly: Thank you for having me on, Juan.
WSA: So starting off please give us history and overview of First Mining Finance.
Patrick Donnelly: Sure, absolutely. First Mining is a relatively new company. It was founded in early 2015. And the reason we put this company together was at that time, we were in the midst of a really severe bear market with respect to mining equities and specifically gold equities. It was a five year bear market we just went through. And we received valuations for gold equities at 20-year lows. And we saw that as an incredible opportunity to go out and acquire some of these junior mining companies that were highly undervalued. So in early 2015, we merged three private companies. We did a reverse takeover, raised $5 million, and became publicly listed on the TSX Venture exchange in April 2015. And again explicitly to take advantage of the bear market and go out and acquire highly undervalued but high quality gold assets.
WSA: So bring us up to speed on some of your most recent news including some assay results and your uplisting to the Toronto Stock Exchange?
Patrick Donnelly: Sure, yeah. So since we’ve become listed, we’ve done eight transactions and out of these transactions we’ve acquired twelve assets. And the last transactions we did were about a year ago. Since that time, we’ve seen the gold market come back to life and so it’s been much harder for us to do deals. We raised $27 million Canadian last summer and we were kind of at a crossroads where if we are not doing deals, what are we doing? So we decided to put some money into the ground and do some explorations on some of our projects. And the asset that has been getting the most attention recently has been the Goldlund project, which has 2.3 million ounces of gold. So we started drilling that last January and since that time we’ve put out five press releases from Goldlund.
And I think we’ve released about 50 holes and out of the 50 holes approximately 45 of those holes contain gold mineralization. So we’ve been incredibly happy with the results so far from Goldlund. We still have lots of assay remaining to come in. We drilled about 100 holes, so we’ve already released 50 holes so far. And we plan to continue to release results within the next couple of months or so. So once that’s done, we expect to probably complete a resource assessment of Goldlund. And then we may go forward and do an economic study on that. So again, there’s been considerable work and the drilling has so far supported our thesis that this is a compelling project.
WSA: And what are some of the factors that you feel make the company unique from some of the other players in that sector and able to take advantage despite the market?
Patrick Donnelly: Sure. Well my background is I’m a geologist, but I was also a mining analyst for four years and I used to pick equities. And one thing I learned when I was analyzing mining equities is, I’ll be honest with you, it’s a very risky sector. And because of that what I realized is management is critical. Obviously in any sector, in any company, you need good management. But I think in mining you don’t just need good management, I think you need exceptional management. And our chairman and founder is a gentleman named Keith Neumeyer who founded First Quantum Minerals, which is now one of the largest copper producers in the world. It’s a multi-billion dollar company. And Keith also founded First Majestic Silver, which I think is a $2 billion company. He’s still the president and CEO of First Majestic. So as I said before, what I’ve learned in mining is you always bet on the jockey, not the horse, and Keith Neumeyer, I think, is one of the best.
The second reason why I think this is a compelling story is I think we’re highly undervalued. We were recently in the big shakeout in the GDXJ ETF. They had approximately 90 million shares, they got down to 30 million shares, and we just got through that. So we’re trading at 65 cents Canadian. In the US, we’re trading at just under 50 cents. So I think we’re highly undervalued compared to our peers and therefore there’s compelling value.
And then the third reason is we have a lot of news flow coming out, a lot of catalysts. As I mentioned before — the drilling results from Goldlund, we’re working on an economic study at our Springpole project, which is in northern Ontario. Springpole is one of the largest gold deposits in North America. It holds approximately five and a half million ounces of gold and so we’ll hopefully have that economic study out in the next couple months. So there is plenty of news flow and plenty of unlocked value out there that we are going to demonstrate to the market and the shareholders.
WSA: And what are the main goals you hope to accomplish over the course of the next twelve months?
Patrick Donnelly: Absolutely. Like I said, we’ve got another five press releases to go for Goldlund. So the next few months we’ll have more drilling results coming from Goldlund. Springpole will hopefully have an economic study done in the next couple of months. We expected that to be positive, that could be a major catalyst for the company. So that’ll demonstrate that this asset makes money in the current price environment. We’re also going to be drilling out a couple of our other assets. Specifically we’ll be drilling out our Cameron project, which is in Northern Ontario. Cameron has about a million ounces of gold. We’ll also be drilling out our Hope Brook project in Newfoundland, which also has a million ounces of gold. So again, it’s harder for us to do deals so therefore we’re putting money back to the ground. We are well funded, we have $23 million Canadian in the treasury, no debt, and we’re very, very liquid. The market loves our liquidity. We trade at least a couple million shares a day. So that gives investors a lot of comfort, given that we’ve got very tremendous liquidity and good support in the market. And as you mentioned before we just got onto TSX last week, so again that’s a thumbs up in terms of what we’re doing and what our business plan is.
WSA: So when it comes to investors and the financial community, as you’ve mentioned uplisting to the TSX, what are some of the key drivers that you wish they better understood about you guys?
Patrick Donnelly: I think the main thing is we are a long term story — we haven’t been around very long. Our long term business model is we’re going to take these assets we have and we’re going to advance them. We’re going to derisk them though drilling, economic studies, permitting, and other work, and then unlock internal value and move these assets forward. Eventually what we’ll do is sell these assets. We’re not going to put them in the production, but what we will do is sell them. The key thing is we’ll hold on to some sort of individual interest in the form of a royalty stream, spinout, joint venture, or some combination of the above. Eventually long-term down the road, we’ll be a company that holds a collection of royalty streams, minority interests, and joint ventures and hopefully we’re producing cash flow. So that’s the long-term goal of the company. With mid-term right now it’s simply adding value to the assets through drilling, economic studies, and resource estimates.
WSA: So as far as the way that the company operates within the sector, can you talk about your acquisition strategy?
Patrick Donnelly: Yeah, absolutely. That’s a great question. While we haven’t done any deals for about a year, we’re certainly still looking. If it’s something that’s compelling, we will pull the trigger. We’re looking for assets that have at least a million ounces in the ground that’s quantifiable. And they have to make money in the current price environment, so we’re around $1250, maybe $1200 or so [gold price per ounce]. These assets we think internally would have to make money. We look for assets that have good infrastructure, they have to be near some sort of road or power or something like that. If they are up in the middle of the Canadian Arctic, in the middle of a jungle, or on top of a mountain in the middle of nowhere, we’re less likely to be enthusiastic about them.
The other thing is we’re specifically looking for assets that are highly undervalued. And it’s very difficult now to find undervalued gold assets, but there are some out there and so we continue to look for those. Also what’s important is jurisdiction. We like Eastern Canada. So the provinces of Ontario, Quebec, Newfoundland, Manitoba. We do like Arizona and Nevada, those might be the two places in the United States we’ve been looking at. And we’ve been looking at Latin America, Peru, Chile, Argentina is getting a little better, Ecuador is getting better, Colombia. But even though we do like Latin America, we always seem to keep going back to Canada, and specifically Eastern Canada. Because we want to be somewhere where the government and the local people support mining and understand the business, so we’re pretty particular on jurisdiction.
WSA: Certainly. So once again joining us today is Patrick Donnelly, the President for First Mining Finance Corporation which trades on the Toronto Stock Exchange, ticker symbol FF, and on the OTCQX, FFMGF. Currently trading at 51 cents per share US. And before we conclude here, Patrick, to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Patrick Donnelly: One thing I should mention is, if investors like gold and they like the junior mining sector, usually what they need to do is buy a basket of equities. In the case of First Mining, we have a basket of assets. We have 25 assets, mostly gold, at various stages and various jurisdictions. And so you don’t have to buy a basket of equities. Also, we are very liquid, we trade at two or three million shares a day and so liquidity is important. And then most importantly, as I said before, it’s people. You always want to bet on the jockey. And I think we have one of the best management teams led by Keith Neumeyer who is the chairman, who has already created two billion-dollar companies. And so he’s had a track record that very few people in this business have. So I think those are three key aspects I think investors need to look at when they’re looking at First Mining compared to other junior mining companies.
WSA: Well we certainly look forward to continuing to track the company’s growth and report on your upcoming progress. And we’d like to thank you for taking the time to join us today, Patrick, and update our investor audience on First Mining Finance Corp. It was great having you on.
Patrick Donnelly: Well thank you for having me on, Juan. I really appreciate the time.
