Silver Price: $19.07
NYSE: AG $10.17
TSX: FR $13.88
Frankfurt: FMV €9.63

Overview

On June 11, 2020, First Majestic announced that it has agreed to acquire from First Mining, a stream on 50% of payable silver produced from the Springpole Gold Project located in Ontario, Canada.  First Majestic will make ongoing cash payments of 33% of the silver spot price per ounce, to a maximum of $7.50 per ounce, for all payable silver delivered by Springpole.  First Majestic has agreed to pay First Mining total consideration of $22.5 million in cash and shares, over three milestone payments, for the silver stream which covers the life of the Project.  During the mines life it is anticipated that it will produce approximately 22 million ounces.  The transaction adds significant upside potential to higher silver prices, as well as substantial exploration upside over the large land holdings of 41,913 hectares. 

Springhole Project

Location

110 km northwest of the town of Red Lake, Ontario, Canada

Area

41,493 hectares

Metals

Stream on 50% of Payable Silver

Springhole Project

Project Highlights

  • Large open-pittable resources:
  • Indicated Resource: 139.1 Mt at 1.04 g/t Au, 5.4 g/t Ag, containing 4,670,000 ounces of gold and 24,190,000 ounces of silver
  • Inferred Resource: 11.4 Mt at 0.63 g/t Au, 3.1 g/t Ag, containing 230,000 ounces of gold and 1,120,000 ounces of silver
  • Significant infrastructure in-place or proximal to project: 72-man camp onsite, winter road access, logging road within 10 km, and power lines nearby
  • Project is located in a pro-mining jurisdiction within Treaty Nine and Treaty Three First Nations Agreement lands
  • Positive Updated Preliminary Economic Assessment ("PEA") completed in 2019, see news release dated October 16, 2019

Springhole Project Hhighlights

2019 PEA Highlights

The PEA contemplates an open pit mine and milling operation, evaluating recovery of gold and silver from a 36,000 tonne-per-day operation, with a process plant that includes crushing, grinding, flotation, with fine grinding of the flotation concentrate and agitated leaching of both the flotation concentrate and the flotation tails followed by a carbon-in-pulp recovery process to produce doré bullion. Key PEA highlights include:

  • $1.23 billion pre-tax NPV5%
  • $841 million after-tax NPV5%
  • 26% pre-tax IRR, 22% after-tax IRR
  • Mine life of 12 years with a 2.5-year pre-production period
  • Average annual gold production in years 2 through 9 of 410,000 ounces gold and 2.4 million ounces silver; 3.9 million ounces gold and 22 million ounces silver recovered over the life of mine ("LOM")
  • Low LOM strip ratio of 2.1 to 1 with a LOM mill grade of 1.0 g/t gold and 5.3 g/t silver
  • LOM overall metal recoveries of 88% for gold and 93% for silver
  • LOM direct operating cash costs(2) estimated at $575/oz of gold equivalent ($514/oz of gold on a by-product basis)
  • LOM all-in sustaining costs (AISC)(3) estimated at $611/oz of gold equivalent ($552/oz of gold on a by-product basis)
  • Initial capital costs estimated at $809 million, using an owner-operating mining scenario
  • LOM sustaining capital costs estimated at $124 million, plus $26 million for closure costs

Note: Base case parameters assume a gold price of $1,300/oz and a silver price of $20/oz (the same prices used in the 2017 PEA), and an exchange rate (C$ to US$) of 0.75. All currencies for the PEA are reported in U.S. dollars unless otherwise specified. NPV calculated as of the commencement of construction and excludes all pre-construction costs.

  1. Based on the technical report titled "Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada", dated November 5, 2019, which was prepared for First Mining by SRK Consulting (Canada) Inc. in accordance with NI 43-101 and is available at www.sedar.com under First Mining's SEDAR profile. Readers are cautioned that the PEA is preliminary in nature, it includes Inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
  2. Cash costs consist of mining costs, processing costs, mine-level G&A, treatment and refining charges and royalties. Cash costs are non-IFRS measures.
  3. AISC consists of cash costs plus sustaining and closure costs. AISC is a non-IFRS measure.

Mineral Resource Estimate

Total gold and silver resources in respect of the Springpole Project as of November 5, 2019.

Category Tonnes Au Grade
(g/t)
Ag Grade
(g/t)
Contained
Au (oz)
Contained
Ag (oz)
Indicated 139,100,000 1.04 5.4 4,670,000 24,190,000
Inferred 11,400,000 0.63 3.1 230,000 1,120,000
  1. Based on the technical report titled "Preliminary Economic Assessment Update for the Springpole Gold Project, Ontario, Canada", dated November 5, 2019, which was prepared for First Mining by SRK Consulting (Canada) Inc. in accordance with NI 43-101 and is available at www.sedar.com under First Mining's SEDAR profile. Readers are cautioned that the PEA is preliminary in nature, it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
  2. Cut-off grades are based on US$1,400/oz. Au price and Au recoveries of 80%; and a US$15/oz. Ag price and 60% Ag recoveries.
  3. All composites have been capped where appropriate.
  4. The rounding of tonnes may result in apparent differences between tonnes, grade and contained ounces.
  5. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental permitting, legal, title, taxation, sociopolitical, marketing or other relevant issues.

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