First Mining Gold Corp (TSX: FF) is engaged in the acquisition, exploration, and evaluation of mineral properties. Geographically it operates various projects in the region of Canada, Mexico, and the USA. It is exploring for minerals such as gold, silver, lead, and copper.

• Focused on Advancing Springpole Gold Project: The company is concentrating its efforts on the advancement of its flagship Springpole Gold Project, which is one of Canada's largest gold projects. It has a mineral reserve of 3.8 million ounces of gold and 20.5 million ounces of silver. Furthermore, the company completed its Pre-Feasibility Study in 2021, with a post-tax net present value at a 5% discount rate of USD 995 million and a 29% IRR at CAD 1,600 gold. Importantly, it is one of just a few projects in the world capable of generating 300 Koz (thousand ounces) per year with All-in sustaining cost (AISC) in the bottom quartile in a Tier One jurisdiction.

• Owns a significant and growing royalty portfolio: The company has a sizable and rising royalties portfolio providing additional value upside. At the moment, the business has more than 20 royalty properties spread throughout mining-friendly nations, ranging from exploration to advanced development.
  

Risks associated with investment

The company is subject to numerous risks such as government regulations which could cause delays in carrying out its operations, foreign exchange volatility, and an increase in interest rates to name a few. Furthermore, its financial performance is mostly dependent on the price of gold. Any drawdown in the gold prices would impact the group’s performance. 

Financial Overview of Q3 2021 (In 000 of CAD)

Source: Company Filing

• In Q3 2021, the company posted a lower operating loss of CAD 1.8 million as compared to a loss of CAD 3.4 million in the previous corresponding period.

• On the back of fair value gain on silver stream liability, the company posted a net income of CAD 2.4 million in Q3 2021, against a loss of CAD 12.3 million in pcp.

Stock recommendation

The Company is currently in the initial stage of mining, where they are analyzing soil research data to estimate the gold deposits contained in the soil and beneath the earth. It is, however, focused on progressing its flagship Springpole Gold Project, which is one of Canada's biggest gold projects, with a mineral reserve of 3.8 million ounces of gold and 20.5 million ounces of silver.

Additionally, the company has not shared any information that when they will be starting its full-fledged mining operations. Also, it has a limited history as an exploration company and does not have any experience in putting a mining project into production. Hence, given the above fact, we recommend a “Watch” rating on the stock at the closing price of CAD 0.305 on March 11, 2022.

One-Year Technical Price Chart (as on March 11, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Disclaimer

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